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A Look at the Recent DOJ Complaint in U.S. v. Geisinger

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Dionne Lomax, Managing Director of Antitrust and Trade Regulation, Affiliated Monitors, Inc., speaks to Lisl Dunlop, Axinn Veltrop & Harkrider LLP, and Steve Vieux, Shook Hardy & Bacon LLP, about the recent DOJ action in the U.S. v. Geisinger Health and Evangelical Community Hospital case. The speakers discuss the DOJ’s complaint and the antitrust concerns the agency action is looking to address. From AHLA's Antitrust Practice Group.

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Speaker 1:

Well, I just wanna, um, thank everyone for joining us in this podcast today, where we are going to discuss United States of America versus Geisinger Health and Evangelical Community Hospital. My name is Dionne Lomax and I am here with you in two capacities today. The first capacity is that I am the Vice Chair, one of the Vice Chairs of Education for ALA's Antitrust Practice Group, which is the Practice group that is sponsoring today's podcast. However, I'm also here in the capacity as the managing Director of Antitrust and Trade Regulation at Affiliated Monitors Inc. And I will be moderating today's podcast. So before we get started, I want to introduce our speakers today, both of whom are antitrust experts.<laugh> Liesel Dunlap is a partner at Axon Vero and Har writer. She has more than 25 years of experience in antitrust and competition issues, including counseling, litigation, and transactions. Liesl has significant experience advising, uh, leading us and multinational companies in a broad range of industries, including media technology in the healthcare sector. So, hello Liesl, and welcome.

Speaker 2:

Hi, that, that makes me sound really, really expert. Thanks Dion

Speaker 1:

<laugh>. You're welcome. We also have Steve View. Steve is of Counsel Atard and Bacon. He has extensive experience handling complex litigation as well as government investigations across a wide variety of industries. Before joining Shook, Steve was a senior attorney at the Federal Trade Commission, where he led antitrust investigations in the healthcare and pharmaceutical industries, as well as represented the agency and litigation. Now, Steve Antitrust Trusts experience includes serving on an inter-agency team that reviewed healthcare joint ventures, participating in the government's accountable care organization program, as well as analyzing settlement agreements between pharmaceutical companies that were engaged in Hatch Waxman litigation for antitrust compliance. Hello, Steven. Welcome.

Speaker 3:

Hello, welcome and thank you for the introduction.

Speaker 1:

You're welcome. So, um, on August 5th, as I mentioned, the Department of Justice filed a complaint against Geisinger Health in Evangelical Community Hospital alleging certain antitrust violations. Eliel, can you briefly summarize the case for us?

Speaker 2:

Sure. So, um, this is a really interesting matter. Um, Geisinger is a fairly significant healthcare system. It has, uh, 12 hospitals in Pennsylvania, New Jersey. Um, it's got a big physician practice in Pennsylvania and, uh, it has urgent care and other outpatient stuff in Pennsylvania, and it also has a health plan, so it's vertically integrated. And then Evangelical Community Hospital is, is a, a single site. They have 132 beds. Um, they're in Lewisburg, Pennsylvania. Um, and you know, like a lot of community hospitals, um, they've had, you know, constraints financially. Um, and, you know, they have been looking probably since around 2017, I think the, um, complaint said, um, to get into, uh, some kind of acquisition or partnership with another, um, healthcare entity. Um, and so they were out there exploring their options. Um, as a result of that, um, Geisinger entered into discussions with them and I think they had had a reasonably, um, close relationship over the years. Um, there's, um, material out there about their, um, urgent care center that that, that they collaborated in and various other, um, kind of ties that they've had in the past. Um, and so they, they got together and came up with an idea where rather than Evangelical going off with somebody else, um, Geisinger would actually take an interest in evangelical. And the, the equity interest is 30%. Um, and in return for that contribute about a hundred million, uh, dollars over the next several years. Um, as, as funding, um, some of it's to fund specific projects, um, some for as yet unspecified proj projects. And about 10 million of it, I think is for, um, an IP license of Geisinger's electronic medical records software. Um, in, in addition to that, um, so Geisinger had approval rights of all of these investments and was has also been given a right of first refusal for any future joint ventures or transactions, uh, relating to asset sales or changes of control that, um, evangelical might want to, uh, engage in. So, you know, the DOJ started looking at this back in October, 2018. Um, the parties actually announced at that time that they were, uh, in the process of negotiating something. And, um, you know, over the period of, you know, 2018 to now<laugh>, um, there were numerous CIDs voluntary requests. The parties produced a lot of of documents, you know, we're looking at second request type, um, production here, you know, 18 custodians, uh, 2.4 million pages, um, lots of depositions including 30[inaudible][inaudible] depositions. Uh, probably a fair bit of third party discovery, although of course, you know, we, we don't know for sure, but I, I would imagine, and, um, the, the parties say that over the period of the investigation, they amended their agreement several times to address concerns, but, you know, it was still gonna be a problem. The final agreement was si signed in October, 2019 and, um, you know, the government continued to investigate at that time. They entered into a whole separate agreement. So they didn't actually implement the agreement or most of it, um, to allow the DOJ to continue looking at it. And then of course, the complaint was filed, um, just recently. And, um, you know, I'm sure Steve, Steve will talk a little bit more about what the, um, the claims are. But we've got allegations of violations of Sherman Act, section one Clayton Act, section seven. Um, and, you know, under, through the complaint, the, the DOJ is seeking to rescind the agreement, get Geisinger to debets the 30% interest back to Evangelical, and, um, they're also asking for an injunction from the parties carrying out any other transaction that would allow Geisinger to, you know, fully or partially acquire evangelical. So that, that's a high level run through of, of what's going on.

Speaker 1:

Well, thank tha thanks for that. Um, you know, Steve, when I looked at the complaint, one of the things that kind of struck me and that that was of note to me about this particular case is that it's the Department of Justice Antitrust Division bringing this case and not the Federal Trade Commission. And so over, over the years, certainly many health industry participants have pretty much grown accustomed to dealing with the Federal Trade Commission and not the Department of Justice when it comes to hospital mergers or hospital deals. Um, why do you think the DOJ and not the ftc Steve?

Speaker 3:

Um, that's a good question, Deion, because certainly the FCC has the industry experience, as you mentioned, in terms of dealing with healthcare mergers, mergers or health systems, hospitals and, uh, physician practices. And also the FTC has, um, the relevant, you know, geographic experience. The FTC has, um, done investigations of healthcare, um, mergers and acquisitions in that area, in that area of Pennsylvania. Um, in fact, what I suspect occurred here is that both parties, dysinger and Evangelical are nonprofits. And as many, um, practitioners who are listening may know, um, the FTC under the FTC act doesn't have jurisdiction over, um, nonprofits. Um, so now the FTC has, um, gone after murders involving, um, nonprofits, and that's through the Claim Act where I suspect ha what's hap what happened is that, you know, at the beginning of this investigation, during the clearance process, um, since this isn't technically, you know, an outright merger or acquisition, um, the, the parties fought, well, the agency's far to be better, to leave this with the doj, which has, um, the authority, um, to, um, to launch enforcement actions, um, against non-profits over anti-competitive conduct, not just mergers. So I suspect that's why that occurred and why you see, uh, this litigation being advanced by the DOJ as opposed to the ftc.

Speaker 1:

Okay. That, that, I think that makes sense. Can, and you mentioned the clearance process, just for our listeners who are not, you know, for those of us antitrust practitioners or, or in my case former antitrust practitioners, we know what clearance process means, but can you just take a few seconds to explain what, what, what do you mean by that term?

Speaker 3:

Yeah, yeah. What happens is once, um, an agency, either the FTC or the doj, uh, receives a complaint, um, and is ready to, um, start, um, an investigation which may lead to an enforcement action, such as litigation like this, what they do is they submit, they, they submit, they also notify the other agency about this complaint, about their intentions to involve an investigation. And then, you know, there's, um, pretty much negotiations or discussions between the agencies, uh, to determine, you know, which of agency will actually undergo, uh, the investigation, um, whether the DOJ or the ftc. And a lot of it, for the most part, like 98, 90 9%, this is an easy, simple, uh, you know, non-cat contentious, uh, matter. Um, as you mentioned, a lot of the industries, um, are divvied up informally, um, based on experience that each agency has that industry or in that area. Um, so, you know, easily just on its face, it's easy to determine, uh, between the agencies as to which agencies, um, an investigation will be better placed in. Um, sometimes it can be more contentious, especially when the agencies as in healthcare, um, shared jurisdiction. Um, but I, but what I think happened here is since both, um, parties are nonprofits and, you know, probably wasn't clear, um, at the, um, start of this agency, whether there was at start of this investigation, whether, um, you know, there was a crane, a violation or whether this was, since this wasn't, this really isn't a traditional full-on merger, um, what will probably happen is that both agencies agree that be better placed, um, to, uh, relieve this investigation, this matter with the doj so they don't run into any jurisdictional issues.

Speaker 1:

Okay. No, I think that that makes sense. Thank you for that. I'm gonna stick with you for one, one more question, and that is, and then legal, feel free to chime in, um, on this one. So we're also used to seeing the federal government partner with the local state attorney general and litigation against various providers. And I, the Pennsylvania Attorney General is noticeably absent from this particular case. Uh, what are your thoughts on the lack of that state AG presence? Uh, we'll start with Steven, then maybe you can chime in.

Speaker 3:

Yeah, yeah. Usually, cause Pennsylvania State AG has been active in antitrust and including in healthcare, um, antitrust. That was something I noticed too. Well, usually what I, what I've seen happen, especially the ftc, is that state officials who are close to the ground, um, are perhaps, you know, more sensitive to the efficiency and quality improvement arguments, um, that the parties may advance. Uh, so, you know, um, the<inaudible> releases from the parties, um, and this is even, and, and this is even advocate, this is even excuse in, um, some of the allegations and the complaint in terms of what the doj, um, stated, um, was the parties, um, you know, justifications for this, uh, joined venture, uh, the state AG perhaps was more hesitant, uh, about, um, engaging, joining in an enforcement action that might, um, stop a joint venture where, or that they see may actually be pro-competitive, may, um, improve services provided to an underserved community. Um, you gotta realize if you, anybody, your audience has been to that area of Pennsylvania, but you know, this is, uh, central Pennsylvania, this area, um, you know, it's seen some tough times recently and, um, in healthcare, um, and including in, uh, among, in the healthcare antitrust field among healthcare antitrust practitioners, while, you know, we're concerned about competition<affirmative>, there's also a concern about access and improving, um, access as well as quality of care to, um, typically underserved communities, um, typically rural and ex-urban areas. So, you know, without knowing, um, without knowing whether the Pennsylvania State AG was involved in investigation, um, you know, just based on experience from working on matters like that, uh, I, I'm, I would assume, I would guess that the state ag was probably more sensitive, um, to some of the, you know, quality and efficiency arguments, uh, that the parties advanced and didn't wanna, you know, stand in the way of what they could see would be a efficiency enhancing, uh, joint venture that can improve, um, the provision of healthcare services, uh, to an underserved community. Especially in a case like this where you're not dealing for outright acquisition or technically, um, you know, these, these healthcare systems are still competing with each other, still negotiate contracts, uh, with customers, with, um, you know, employers and insurance companies separately.

Speaker 2:

Okay, thank you. Of course. We'll never know, you know, what, what was really going on through, you know, the investigation and, and the negotiations. I think it's highly likely that the AG was, um, involved in the investigation. Um, that's kind of usual practice for, for one of these. Um, and you know, you saw the Pennsylvania Ag being very involved in the, um, the recent, um, hospital challenge that's been going on, um, lately. So, you know, they are an ag that is, that does get active in these matters. Um, so I was surprised to see that they weren't part of the complaint. Um, and, and Steve's right, I mean, you know, you often end up in this, in these situations where, you know, you're, you're kind of trying to balance, particularly with the state agencies, you know, their, their, their interests are broader than strictly, you know, competition, um, price-based competition, uh, you know, quality innovation, you know, comes into it. But fundamentally, when you, um, see antitrust actions being brought, the, the focus is initially at least on, uh, price effects. And when you get into, um, ags, you're not only dealing with, with an antitrust group within the ag, but you're dealing with, um, you know, healthcare more generally, you know, people who are looking at, you know, health delivery focused on that and, and not so focused on the, the competition angle. And then you've also got, um, you know, charities and trusts or whatever, it's, I dunno what it's called in Pennsylvania, but you know, there's another kind of group there that has a real interest in nonprofits and the activities of nonprofits and, um, maintaining the strength of nonprofits so that they can continue their mission to invest in the community. Um, so there, there are a lot of different considerations going on there. Um, I think what the parties might have, might have been disappointed about is, you know, if the ag, and again, total speculation, right?<laugh>, you know, but this is, that's what this is about here.

Speaker 1:

Total speculation. Go ahead.

Speaker 2:

You know, if the ag was, you know, really, um, you know, committed to this transaction and really thought that it would benefit the community, um, it, it's very unfortunate that they weren't able to sway the DOJ from, you know, bringing this action and, you know, reading, you know, between the lines or actually you, not even between the lines reading the black and white of some of the, um, the briefing here. You know, it sounds like the parties really made an effort to try to, um, address concerns. Um, you know, we're not given the specifics, but you know, they, they clearly offered up some stuff to try to, to, you know, allay concerns. And, you know, we've seen some firewall type things, um, going on in other, um, enforcement actions in the past. So I presume that they were offering things along those lines. Um, and so it, it's, it's a shame for, for them and for the, um, local area that, um, you know, the ag support, potential support of, of, of the transaction, um, was, was unable to sway the DOJ from, from bringing this enforcement action. I mean, you can clearly see what side of the feds I'm on in these<laugh>

Speaker 1:

Course. Well, but you know, it's interesting too because I mean, as we know, you often see state ags be more amenable to even say, conduct remedies as opposed to structural remedies, right? Right.

Speaker 2:

Yeah. And we saw that, and Dionne, you're close to this up in Boston, you know, we saw that in, in, uh, BI lady a couple of years ago where, um, you know, the FTC was investigating alongside the Mass Ag and the Mass Ag ended up negotiating quite a detailed, um, conduct reedy with the parties, um, which, which had price caps for some period of time and that kind of stuff. But, you know, the interesting thing about that settlement is that there were all of these other elements in it about investment in the community and achievement of particular, um, integration efficiencies and things like that. Um, and so you could see there the influence of all of these other parts of the ag in, you know, formulating a, a, a much broader type of, um, you know, consent order than you might see from just the, the Justice department or, or simply in a, in a, a transaction that has competition concerns. And so, um, you know, there is precedent for that, uh, with an active ag like the Massachusetts Ag is. Um, and so, you know, that might have been an avenue for Pennsylvania, but uh, clearly did not happen here.

Speaker 1:

Exactly. No, no, you're right. All right. So I'm gonna turn a little bit now into, let's dig in a little bit more into some of the substantive antitrust issues. Um, you mentioned earlier, lethal when you summarized things at a high level, the partial partial ownership issues and some of the more significant entanglements between the parties that were raising some antitrust concerns. Um, and so one of the things we obviously as for former antitrust practitioners or current antitrust practitioners, one of the things we sometimes have become accustomed, um, to is using certain rules of thumb as general guidance, right? For when the antitrust agencies might view something as problematic, right? That's kinda what we would use as our litmus test when we were advising clients. When I was advising clients. And as you currently, you both currently advise clients, so it's not obviously per se, unlawful to have an ownership interest in a rival, and 30% really doesn't seem to be that much. So why the concern here Liesl?

Speaker 2:

Yeah, I mean, first of all, Dionne, you will always be an antitrust practitioner. You know, you never get to leave this behind<laugh>.

Speaker 1:

Good. I'm still in the club. That's good. You're

Speaker 2:

Still in the club<laugh>. Um, but you know, I dunno that I agree that 30% isn't, um, significant. I, I think it's pretty significant. I mean, it's not 50%, but you know, it's, it's, it's up there. Um, and you know, you kind of look at, you know, there aren't many enforcement actions against these kinds of, you know, partial acquisitions. So, you know, we've only got a, a handful to look back on. And so I took a look at the 2007 FTC action in the Kinder Morgan, um, deal, you know, where you had these two private equity funds managed by Carlisle and Riverstone.

Speaker 1:

Oh my god, I was involved in that. But go ahead,<laugh>. Yeah,

Speaker 2:

That, well, maybe you can tell us, you know, what, what the interest was cuz I if you added up there, the combined interest was 22.6% or something. So that's less than we're dealing with here.

Speaker 1:

You're correct. That's right,

Speaker 2:

<laugh>. So, um, but you know, the issue and, and then the, the competing entity that the, that the pe um, the PE organizations controlled, um, they only had a 50% interest in the, in the competitor, which was Magellan there. So, um, you know what, where, what it really came down to though was all of these kind of, uh, what what's the detail? You know, okay, you've got this 22.6% and 50% interest, you know, what does that actually mean in practical terms in when, when these companies operate? Because we, you know, that's what we really wanna know. Right? Exactly. Um, yeah. And so in the, in the, um, on the Kinder Morgan side, 22.6%, but they're gonna get to board seats. They're gonna get all of the, you know, board information, which is, you know, non-public, competitively sensitive. Um, and on the Magellan side, um, they had veto rights over what Magellan's activities were. So, you know, the, the, um, the remedy there, the solution there was not to cause them to divest, but they, they had to turn one of their interests and it was the Magellan one into a passive investment. So no board seats. The control went to its principle investor, which was Madison, Dearborn, you know, agreements not to influence firewalls and safeguards against information sharing. You know, that's the kind of stuff that, that they, um, imposed there.

Speaker 1:

Oh, there was also a monitor. There was a monitor that we had to deal with as well. Let me just say, look, which is the world I'm now in, but go ahead, Lisa.

Speaker 2:

<laugh>. Yeah, monitors super important, very helpful.<laugh>, but, um, yeah, a little plug for on there. Thank

Speaker 1:

You,<laugh>.

Speaker 2:

And so, you know, know, I suspect the parties here in, in the Geisinger matter, you know, came up with all kinds of things along those lines. That's what I would've done. Um, so the issue here though, it, you know, it's, it's gonna be control. And so we've got, we've got one entity that, that is the entity. You know, they can't, they can't, you know, give up their board seats and not have their vita rights over their own conduct.<laugh>, I mean, they, they're what they are. And, and then the 50%, uh, sorry, the 30% interest that they're taking in, um, evangelical, you know, is, is pretty substantial. And it came with all of these, uh, these bells and whistles. So, you know, I think that even reducing it and not having, you know, some of these other, you know, commercial indicia of control, uh, was probably just too much. Um, and then of course you have the incentive question, you know, if you have 30% interest in another entity, um, even if you don't directly control their pricing, does that, you know, blur incentives to, to compete on price more aggressively? And I think there, you know, there were all of these, um, other facts that the DOJ threw into the complaint about this, uh, close relationship that they had had over the years. Um, there's one phrase that I picked up on cuz I've seen it with other clients. There's a document, oh no, there was a, um, the Evangelical c e o um, gave some interview or something where, where they said that there, there was co-opetition Oh, between the parties. Have you ever heard that

Speaker 1:

Before?<laugh>

Speaker 2:

It, it's, it's a terrible phrase for an antitrust lawyer.<laugh>,

Speaker 3:

That's a new one.

Speaker 2:

Is that a new one for you? I, I mean I've, I've only seen it a couple of times and I looked it up and apparently it's been around for a long time. I thought it must have been, you know, coined fairly recently. But there are books on this stuff from<laugh> 50 years ago, so it's been around a long time. Um, but yeah, and I'm sure that they teach it in business school as well, but co-opetition is, you know, clearly not what we want from an antitrust perspective. And the DOJ thought that, that they, you know, that was a pretty good catchphrase for them cuz they mentioned it twice in the complaint. Um, and then there were all these other things that they had done together over the years.

Speaker 1:

Okay, great. So, so as I mentioned before, though, it's not, it's still not per se unlawful, automatically unlawful right. To have an ownership interest in arrival, but there are certain rules around it dictated by section eight. And so Steve, I wanted to ask you, you know, I'm curious as to why there were no allegations regarding Section eight and interlocking directorates. Do you have any thoughts about that?

Speaker 3:

Yeah, I mean, that is something, you know, that's one of the things I thought too is why don't they do that? Cause you know, it, it seems to me, yeah, Geisinger will have the ability to appoint 30% of the board members on evangelicals board. So that seems that would be an easy allegation, um, to add on. And on top of that, I mean, there are exceptions to section eight, um, when you're dealing with the amount of commerce, um, that is involved in terms of, you know, that's involved in the relevant market, uh, average of the market where there's competition, um, between, um, the two, the two parties. Um, so I, and I'm thinking it definitely, um, you know, there's definitely, definitely, definitely the amount of commerce goes away above that threshold in section eight. Um, what I'm, what I'm thinking is that, you know, at the end of the day, just strategically, um, they wanted to, um, draft this complaint and fight this case as if there were fighting a merger. Um, this reads very much like, um, you know, a regular straight out, full-on acquisition, full-on merger, um, buying out, uh, one hospital by another, um, one health system by another. Um, so I think there may have been a strategic decision, um, in, in, in not including, um, the section eight violation and just, um, drafting this as if it's just another merger.

Speaker 2:

Yeah, I, I, I agree with that. Um, you know, there, there was some stuff out there about the, the board seats actually being, uh, community member board seats. So I don't know if that might have made it made a difference to them, or at least, you know, to the argument that those community board members would be beholden to Geisinger might have been a little too hard for them to make. Um, and that might have been a mechanism for them to try to get around that problem. Um, but yeah, I agree with you on the strategy, um, the DOJ strategy in terms of keeping it very focused on, on the, um, the partial acquisition on the, the interest. Yeah. Um, the section seven questions around that really kind of casting it as a, as a merger question. And you know, Steve, there were, there were some things in there about no poach, um, with, and there wasn't any no poach allegation. Did, did you have any views about that? I think could have been the same kind of thing.

Speaker 3:

Yeah. Yeah. I mean, again, I think just strategic, it may not have been a strong enough evidence, although, um, and Lisa, you, you hinted at this before in terms of bad documents or in the case of that, um, CEO's, um, the evangelical CEOs statement, bad interviews with the press, bad press statements, um, what it strikes to me, what really pushed the doj, excuse me in taking this action, is that you just have a lot of bad documents. You know, a lot of statements, a lot of statements in emails, or just an internal documents that, you know, we warn, um, our clients not to make<laugh> because they can be interpreted, um, you know, by, by eagle eye and aggressive antitrust enforcers to mean something that you may not mean it, um, you may not mean it to mean. Um, and you know, one, one example is that, you know, the non poach, potential non poach allegation in that you had, um, a CEO from the Evangelical, um, emailing, uh, Geisinger executives complaining, uh, about Geisinger's, um, HR people, recruiting evangelical nurses, um, via Facebook. Um, and then apparently there was some follow on up documents where the Geisinger, that Geisinger, um, executive who received that angry miss email actually alerted their HR folks, you know, stop doing that<laugh>. Um, so I don't know if there's any more evidence on that. So, you know, I don't know why, um, again, that's another area where I don't see why, I don't know, understand why there's not a separate allegation, um, before that, especially considering that the DOJ and the ftc, especially the doj, um, has expressed an interest or strong interest in, um, uh, pursuing, um, you know, uh, cases dealing with, um, labor competition, um, and these, um, so-called non and non poach, um, agreement. Uh, and Steve,

Speaker 1:

Steve, this is Dean. I just wanna jump in real quick. And you're absolutely right. It's, it's not only has DOJ expressed an interest in investigating and getting at no poach agreements, they basically said they're gonna start prosecuting them criminally<laugh>, which is also another interesting, it's also interesting that there's no, there's not even a civil allegation in the complaint about that. So, um, so anyway, I just wanted to say that

Speaker 2:

Maybe there's, maybe they're still looking at it, you know, that could be, you know, watch this space<laugh>.

Speaker 1:

I

Speaker 2:

Mean, there's nothing to stop them bringing a separate action, um, about that. Exactly. And, uh, it could still be going on.

Speaker 1:

That's true.

Speaker 3:

Yeah. I mean, yeah, there's a lot of cases where we, you know, we've had like mergers where the, the evidence, the information that the agencies get out of a merger investigation or even merger litigation has been used, um, either follow on, you know, cartel cases or in follow on like private, um, you know, cartel, um, cases. So, you know, we'll see what, although I'd assume through the investigation, through all of the materials they got in the investigation, um, a lot of that information that were formed, the basis for a strong section one, um, non poaching case would've been already produced. But, you know, we'll see, um, how things transpire through discovery. I'm sorry, I interrupted you.

Speaker 1:

No, no, you didn't interrupt me that this is perfect. Um, I just wanted to ask you, uh, briefly to kind of, well, maybe not so briefly, whatever you wanna say about section seven<laugh>, whatever you wanna say about section

Speaker 3:

I can get, I can get wordy on these issues. So let's, let's,

Speaker 1:

Let's deal with, let's deal with section seven and uh, why don't you give us a little bit more information about that?

Speaker 3:

Yeah, section seven, I mean, pretty much what that, um, deals with that's like, you know, for lack of a, you know, a better term and just to keep this as simple as possible, that's pretty much the merger. Uh, you know, you know, the merger allegation, that's the merger. Well, in terms of emerging enforcement law, in terms of antitrust, and that deals with, you know, mergers, acquisitions, or even joint ventures that, you know, have the potential to substantially lessen, um, competition. And, um, when you look for the allegations of a complaint, um, and I think the reason why, hey, just looking at this, I think strategically, I'm a little smart for the DOJ to attack it this way, to attack this as, you know, a merger, um, is that the concern here is that this joint venture reduces, uh, the ability of these close competitors to compete as aggressively. And in the complaint, um, the DOJ even cites examples of that cites examples of not only, you know, statements or actions of the parties after, um, the agreement talking about how they're going to quote unquote co-op, there's gonna be co-optation, it's gonna replace competition, but beforehand talking about how they recognize the other party as a strong, um, direct competitor, um, you know, statements reflecting to the effect that, you know, price reductions have on their ability, um, to, um, negotiate prices with, um, health insur with payers. Um, whether that's, um, insurance companies, third party payers, or, um, one case they mentioned that's probably unique in this community, um, actually non-insured, um, of, um, uh, on patients who pay directly. Uh, these are members of the Amish and Mennonite community. Um, so the section seven complaints, I mean, section seven allegations are concerned about that. Um, there's also, you know, the concern about how, um, now due to Geisinger's interest and Geiser as, um, Lisa mentioned in her description of the case, Geisinger's right of first refusal, first offer their ability to interf interfere with, um, any, um, attempts by Evangelical to like align or enter to strategic alignments or, you know, other types of joint ventures with other health systems like for example, you U P M C, um, that also, that that is al that also forms a basis, I think a strong basis for section seven, um, count. Um, and then there's also the section one, um, issues too, as we mentioned. Um, the ability to labor market competition, the, the, the indication that there may be a non poaching, a non-solicitation agreement between the parties and how that's gonna point to further coordination of these direct competitors, um, after this joint venture is finalized. And then also the concern which ties into the issues of the parties sharing, um, their strategic plans and their, um, plans to engage in joint ventures with other health systems, um, even new market entrance, um, how that deals with the share competitive sense sensitive information. Cuz obviously, um, in order to put this joint venture together, evangelical is gonna have to share some of this competitive sensitive information on future strategic plans. Um, with, um, Geisinger, even if it's not, um, you know, information on prices, um, there are gonna have to share that strategic, um, information. Um, they even brought up one example about how Evangelical was planning on, um, beefing up, um, its orthopedic services. And again, this points to bad documents and talking, and there's even statements about, um, them doing that in order to compete effectively with Geisinger. Uh, but now after this joint venture has entered into, they've kind of, they've dropped those plans and are now gonna seek to, uh, as part of their joint venture cooperative Geisinger in developing, um, I guess a mutual, uh, mutual orthopedic services. Um, so that just shows how this complaint, how the section seven issues and section one issues interplay between those issues, um, and those counts, um, and how they overlap with each other.

Speaker 1:

Yeah, no, very, very interesting. Um, so I feel like you both have wet my whistle to be able to<laugh> to see what happens next. You know, it's like, woo, what's gonna happen next,<laugh>. So Steve, I mean, what do you think we should be on the lookout for? I mean, you mentioned the discovery process before, how long before a decision on a dispositive motion and what, what should we be on the lookout for?

Speaker 3:

Okay, yeah, I mean these, yeah, there's no, unfortunately, like, you know, it's not like a FTC administrative action, you know, front of the ALJ where, um, you know, these actions in district court, you know, what his actions, um, you know, follow a strict, um, schedule. Um, so a lot of it is just, you know, speculation. Um, the complaint was filed, um, in early August. So initially an answer or a rule 12, you know, motion to dismiss, um, by the parties would've been due today. However, the parties sought an extension, um, from the court, um, and they got an extension on their answer or, you know, or whatever response, like a rule 12 motion. They got an extension so till November 19th. So we'll have to wait till, uh, mid-November to see how they're gonna respond. And then after that, excuse me again, you know, just speculation. Um, even though I'm assuming a lot of discovery has been taken already, um, in investigation phase by the doj, there's still some more discovery, especially discovery by the parties of the doj. There's still gonna be more discovery, both fact and expert discovery. Um, not only materials, not only written discovery, but also depositions of fact and expert witnesses. And I assume there's gonna be a lot of expert, um, expert, um, testimony's gonna be very important in terms of economic experts and even, um, industry experts. But, um, uh, when once that's completed, then we'll look for, you know, the filing of a motion motions or summary judgment, um, and a decision on that. So that can take, you know, between six months to a year, um, if we're being optimistic after, uh, the parties, um, submit file their answer, um, to answer on November 19th to the DOJs complaint.

Speaker 2:

Yeah, this is, this is a little bit different from, you know, your usual merger matter where you've got, you know, the, the transaction standing open and you'd usually have the, you know, things moving on a lot faster track. Um, although it, it could move faster. I mean, as, as Steve said, you know, a lot of discoveries already happened. Um, you know, the parties will be probably updating their, whatever they've, you know, submitted in terms of documents and data and stuff like that, but mm-hmm.<affirmative>, you know, third party discovery is, is, you know, really the trip here, um, just from experience, you know, soon as this gets going, you're in this huge round of, you know, depositions and, you know, trying to get documents out of, uh, the party, uh, out of third parties and things like that. At least they won't have to, you know, travel to all of these<laugh>. Well,

Speaker 1:

There you go. Ions

Speaker 2:

Remote depositions

Speaker 1:

Now, right?<laugh>. Yeah,

Speaker 2:

No, in some ways it, it, it might make it a little easier for them. Um, but yeah, um, I, I I hope it goes fast and we'll have more stuff to talk about, but

Speaker 1:

Absolutely. It'll a while<laugh>. Well, yeah, no,

Speaker 3:

I think a good point about third party discovery. Yeah, like definitely the insurers, um, third party payers. Yep. Um, you know, they obviously haven't been, I mean, while, uh, the DOJ has took in like, you know, pre complaint depositions or investigation hearings, I'm sure, uh, uh, the fat witnesses, the, like Cedar executives at the parties, yeah. Um, they probably don't have those kind of, um, you know, uh, those on the record, someone testimony from third party payers from insurers yet. So it'd be interesting to see, since they're the primary customers, it'd be interesting to see, um, you know, what testimony, um, they offer. I'm assuming that before DOJ decided to launch this, I'm assuming, um, you know, they've heard from, you know, those parties, um, already and are confident that, you know, they'll support them, um, in litigation.

Speaker 1:

Yeah, no, absolutely. Absolutely. Well, um, we are at the end of our time. This has been a fabulous discussion. I'm so glad that you all were, that you both were willing to join me. And so on behalf of ALA's Antitrust Practice Group, I thank you and I, we look forward to you both back to discuss various aspects of the thank.