With $100 Million Fine in Oncology Market Allocation Case, DOJ Sets its Sights on Anticompetitive Conduct Among Specialty Providers

On April 30, 2020, the Antitrust Division of the Department of Justice announced a Deferred Prosecution Agreement (DPA) with Florida Cancer Specialists & Research Institute LLC (FCS), a large oncology practice headquartered in Fort Myers, Florida. Concurrently with the DPA, the Division filed a one-count information charging FCS with a violation of Section 1 of the Sherman Act arising out of a nearly 20-year market allocation agreement for medical and radiation oncology treatments in three Southwest Florida counties. Under the terms of the DPA, FCS will pay a $100 million criminal penalty – the statutory maximum – a significant fine for a case that hinges on localized harm.

The conspiracy, which began as early as 1999 and continued until at least 2016, involved an illegal agreement whereby FCS and its primary competitor agreed to divide up medical and radiation oncology services such that each would provide only one of those services in Southwest Florida, despite providing the full complement of services elsewhere in the state. FCS and its competitor agreed not to hire each other’s employees and employed aggressive non-compete clauses to restrict competition for oncology services. In addition to the significant monetary penalty, the DPA also requires FCS to waive any non-competes, non-solicitation, or similar agreements that would restrict the ability of its physicians to seek employment with competing practices.

The massive fine and focus on non-competes signals a heightened interest by the Division in both competition in specialty healthcare services as well as the interplay between competition in the labor market and traditional antitrust violations. The Division took the rare step of releasing a “Q&A” document with the DPA, including an entire section that details the non-compete waiver provision. Providers should be mindful of how these agreements are used in their practices and heed best practices for use of labor covenants in physician contracts.

The resolution marks another use of the once-rare DPA in the antitrust context. Since the Division’s policy shift in 2019 signaling a more widespread acceptance of DPAs, the Division has employed DPAs on an ever-increasing basis, in particular to resolve investigations in the healthcare industry where an indictment could bar the company from participating in federal healthcare programs.

In announcing the charge and the DPA, Assistant Attorney General Makan Delrahim made clear that this is a continuing investigation into anticompetitive conduct in the provision of oncology services. 

FCS also settled parallel allegations with the Florida Office of the Attorney General, agreeing to a separate $20 million state penalty.