July 3, 2003

JULY 3, 2003



            The Maine Attorney General’s Office has settled State antitrust claims against the Maine Health Alliance and its Executive Director, William Diggins.  The State alleged that the organization and its members entered into impermissible collective pricing agreements and refused to deal with health care purchasers except on collectively agreed terms. 

The Maine Health Alliance (the Alliance) is a network of eleven hospitals and approximately 325 physicians in five northern and eastern Maine counties.  It contracts with health insurance companies and self-funded employers to provide health services to their enrollees. 

The State alleged that the Alliance’s joint contracting activities resulted in higher fees than the Alliance’s physician and hospital members would otherwise have been able to negotiate, causing purchasers of health care services, including health plans, employers, and ultimately individual patients, to pay more for health care services.  The settlement, which has been approved by the Superior Court, contains an order designed to prevent recurrence of the concerted actions that the State believes violated antitrust laws.

            Collective contracting among competing health care providers is not automatically impermissible under antitrust laws.  Agreements among competitors on price and other competitively significant contract terms may be acceptable where the joint activities of the providers have a real potential to increase quality of care and reduce cost, and where the joint contracting appears reasonably necessary for the achievement of those benefits to patients and consumers. 

The State contended that the Alliance’s collective activities did not meet the necessary legal threshold.  While the Alliance has some commendable programs in place aimed at increasing quality for patients, the State contended that those programs do not require joint pricing to succeed.  Furthermore, the State alleged that the Alliance and its members collectively agreed not to deal except through the Alliance.

            Attorney General Rowe stated:  “We recognize that the health care sector has some unique attributes that sometimes justify activities that would be condemned as anticompetitive in other sectors of our economy, particularly in a rural, sparsely populated state like ours.  However, this case reflects our ongoing commitment to patients and consumers to pay attention to these activities and make sure they deliver promised gains, and stop them when they do not.” 

            The Attorney General also praised the efforts and contribution of the lawyers and staff of the Federal Trade Commission, with whom his office worked closely on the case. 

            The State has entered separate agreements with the hospital members of the Alliance.


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