On June 9, 2016, DOJ and North Carolina AG filed a civil suit in federal court in North Carolina against Carolinas Healthcare System (later became Atrium Health). The complaint alleges that the provider uses anticompetitive, illegal anti-steering clauses in its contracts with insurers, which prohibit commercial health insurers in the Charlotte area from offering patients financial benefits to use less-expensive healthcare services offered by CHS’s competitors.

Defendants filed a motion for judgment on the pleadings, and supplemental briefing about a subsequently decided DOJ case challenging similar anti-steering provisions in American Express’ contract. Defendants argued that the Second Circuit decision to uphold similar contract provisions in the Amex case undermined the government’s claims (see Source blog post). The court denied the motion on March 30, 2017, finding that the DOJ plausibly alleged that the steering restrictions limited consumer choices and drove up insurance prices, and that the Amex case “involved a different product and a different market.”

Despite Supreme Court’s decision to uphold the Amex decision, Defendants reached a settlement with the DOJ in November 2018, prohibiting Atrium from using or enforcing these anti-steering provisions in its contracts with insurers. A final judgement was issued on April 24, 2019.

Court Documents:

4/24/2019: Final Judgement
11/15/2018: Proposed Settlement Agreement
3/30/2017: Order Denying Motion for Judgment on the Pleadings
10/25/2016: DOJ Supplemental Brief on Second Circuit decision in Amex
9/21/2016: Defendant’s Brief in Support of Motion for Judgment on the Pleadings
8/31/2016: DOJ and North Carolina Brief in Opposition of Defendant’s Motion for Judgment on the Pleadings
6/9/2016: Complaint: North Carolina v. Carolinas Healthcare System (CHS; later Atrium Health)

Case Watch Related Articles:

11/16/2020: [Case Brief] Atrium Health Settlement Encourages Enforcement of Anti-tiering/Anti-steering Clauses in Healthcare Contracts
4/24/2019: U.S. and the State of North Carolina v. Carolinas Healthcare System
12/17/2018: Major North Carolina Hospital System Settles Anti-Steering Suit with DOJ, Encourages Antitrust Enforcement Efforts
10/26/2017: Perkins Coie: Five Things to Watch for in DOJ’s Carolinas HealthCare System Case
10/17/2016: Carolinas Healthcare Cites DOJ Second Circuit Loss in Anti-Steering Case
9/24/2016: Carolinas Healthcare Argues DOJ Fails to Allege Actual Competitive Harm in Anti-Steering Suit
6/14/2016: DOJ & North Carolina AG Target Same Insurer-Provider Contract Clauses as California’s Sutter Plaintiffs