On January 29, 2015, Suffolk Superior Court Judge Janet L. Sanders rejected a settlement between Partners Healthcare System (“Partners”) and then Massachusetts Attorney General Martha Coakley that would have allowed Partners to acquire three community hospitals and add hundreds of doctors to its network. Judge Sanders had delayed her decision in July 2014. As opposed to a “structural” settlement typically favored by DOJ and the FTC, Coakley and Partners entered into a “conduct” settlement. Structural settlements involve one or both of the merging parties’ selling certain business units or products to a third party, while conduct settlements restrict the parties’ behavior post-transaction, by, for example, placing certain limitations on pricing, which the Partners settlement included. Judge Sanders ruled that the settlement did not go far enough to alleviate competitive concerns regarding the consolidation and would be too complex to enforce. The recently elected Massachusetts Attorney General Maura Healey has indicated Massachusetts would challenge the transactions should Partners move forward.  

The decision is noteworthy, as it is part of an emerging trend of more active state involvement in antitrust healthcare matters, particularly provider combinations. Usually, the FTC investigates transactions involving healthcare providers; however, DOJ had been investigating alleged anticompetitive behavior by Partners and so have several Massachusetts payors in Eastern Massachusetts since at least 2010. Although DOJ has not stated officially that their investigation into the acquisition has been closed, DOJ is not a party to the settlement.

Judge Sanders’s decision is available here.

Reporter, John D. Carroll, Washington, D.C., + 1 202 626 2993, jdcarroll@kslaw.com.