Florida Healthcare Provider Receives Criminal Antitrust Conspiracy Penalties Totaling $120M
On April 30, 2020, the U.S. Department of Justice (DOJ) announced that it had reached a deferred prosecution agreement (DPA) with Florida Cancer Specialists & Research Institute LLC (FCS) under which FCS admitted liability for its participation in a criminal antirust conspiracy and would pay a $100 million penalty to avoid prosecution. Under the DPA, FCS, one of the largest privately held medical oncology practices in the United States, admitted its involvement in a criminal antitrust conspiracy to allocate medical oncology and radiation oncology treatments provided to cancer patients in Southwest Florida from 1999 to 2016. Under the alleged conspiracy, FCS provided only chemotherapy treatments, and its co-conspirator provided only radiation treatments, avoiding competition with one another in the provision of either cancer-treatment therapy and limiting treatment options available to cancer patients. FCS also admitted that, during the 17-year conspiracy, it generated more than $950 million in revenue from the provision of services affected by its illegal agreement to suppress and eliminate competition. In exchange for the DOJ's agreement to defer prosecution of FCS until 2023, the DPA imposes monetary, cooperation and compliance obligations on FCS discussed in detail below.
Also on April 30, the Florida attorney general's (AG) office announced that it had reached an agreement with FCS under which FCS would pay $20 million in exchange for the Florida AG's agreement to release FCS from all claims relating to any act or omission concerning any market allocation or any unfair methods of competition in the provision of oncology services in Florida. Unlike the DOJ's DPA, the Florida AG's consent decree did not require FCS to admit liability. It did, however, impose similar monetary, cooperation and compliance obligations on FCS discussed in detail below.
The DOJ's Deferred Prosecution Agreement
In exchange for its agreement not to pursue the one-count felony charge against FCS contained in the April 30 criminal complaint, the DOJ required that FCS agree to significant monetary, cooperation and compliance obligations. First, as discussed above, the DOJ required FCS to pay a $100 million criminal penalty, plus interest, by the end of 2023. Second, the DOJ required FCS to fully cooperate with the United States until all investigations and prosecutions arising out of the conduct underlying FCS' criminal antitrust conspiracy are concluded, including by 1) producing all non-privileged information and materials requested by the United States, 2) using its best efforts to secure the full cooperation of its current and former employees, agents and partners, and 3) consenting to the disclosure to other governmental authorities of any information, testimony or tangible evidence produced pursuant to the agreement. Third, the DOJ required that FCS maintain a compliance program to detect and prevent criminal antitrust violations by FCS as well as its corporate affiliates and subsidiaries.
In entering into a DPA with FCS, the DOJ proceeded under its new policy announced in July 2019 to reward not only the first company to report its involvement in criminal antitrust activity — under the DOJ's leniency policy — but to also incentivize cooperation by other participants. Under prior policy, FCS would have had no choice but to plead guilty to a criminal antitrust charge and seek a reduced penalty in return for its cooperation.
The Florida AG's Consent Decree
In exchange for its agreement not to further pursue the three-count civil complaint and the alleged violations of the Florida Antitrust Act and Florida Deceptive and Unfair Trade Practices Act contained therein, the Florida AG also required that FCS agree to substantial monetary, cooperation and compliance obligations. First, as discussed above, the Florida AG required FCS to pay a $20 million settlement, plus interest, by August 2024. Second, the Florida AG required FCS to cooperate with the Florida AG in its ongoing investigation and, for the purpose of securing compliance with the consent decree, permit the Florida AG to 1) access to all non-privileged documents in FCS' possession or control relating to matters contained in the consent decree, 2) interview FCS employees regarding any matters contained in the consent decree, and 3) obtain reports from FCS relating to its compliance with the requirements of the consent decree. Third, the Florida AG required FCS to implement a robust antitrust compliance program, including by
- requiring all FCS officers and board members to annually certify that they have read the FCS antitrust compliance policy
- maintaining a file of such certifications
- providing annual antitrust training of at least one hour, delivered by an attorney with relevant antitrust experience, to FCS officers, board members and business leadership in the areas of business development, marketing, human resources, managed care contracting and procurement
- providing annual antitrust training to all FCS employees
- providing antitrust training to all new FCS officers, board members and business leadership in the areas of business development, marketing, human resources, managed care contracting and procurement within 60 days of onboarding unless they have received such training during the prior year
- maintaining a compliance officer to oversee antitrust compliance
- requiring that all transactions and affiliations with competitors and potential competitors in the provision of oncology services are reviewed by the FCS chief compliance officer and counsel with relevant antitrust experience and approved by FCS board members
The Ongoing DOJ and Florida AG Antitrust Investigations
Although the DOJ's DPA and the Florida AG's consent decree provided valuable insight into what the DOJ considers full cooperation with an investigation and what the Florida AG considers a robust antitrust compliance program, perhaps the most significant revelation from the recent announcements is that both the DOJ and the Florida AG investigations into anticompetitive activity in the oncology industry remain open and active. The DOJ's announcement and Deferred Prosecution Agreement Q&A make clear that "[t]his charge is the first in the department's ongoing investigation into market allocation in the oncology industry." In addition, the Florida AG's announcement and consent decree also make clear that the Florida AG is conducting an "ongoing investigation into the alleged allocation scheme." Other companies that have received Civil Investigative Demands from the Florida AG include 21st Century Oncology LLC; HCA Inc.; Florida Medical Clinic LLC and Tampa Bay Radiation Oncology P.A. In light of these two ongoing investigations, providers of oncology services throughout the United States, but particularly in Florida, should consider taking this opportunity to make certain that they have antitrust compliance programs that are in place, up to date and enforced.