2012 North Dakota Century Code Title 23 Health and Safety Chapter 23-17.5 Health Care Provider Cooperative Agreements
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CHAPTER 23-17.5
HEALTH CARE PROVIDER COOPERATIVE AGREEMENTS
23-17.5-01. Definitions.
In this chapter, unless the context otherwise requires:
1. "Active supervision" means actual state direction, supervision, or control that results in
the exercise of power by the department or the attorney general to review
anticompetitive conduct that results from, or is authorized by, a cooperative agreement
for which a certificate of public advantage has been issued pursuant to this chapter.
The term includes the authority granted the department or attorney general by this
chapter to terminate or cancel a certificate of public advantage or to investigate or
enjoin a cooperative agreement, and other conditions to the certificate provided under
section 23-17.5-03.1.
2. "Cooperative agreement" means:
a. An agreement among two or more health care providers or third-party payers for
the sharing, allocation, or referral of patients, personnel, instructional programs,
support services and facilities, or medical, diagnostic, or laboratory facilities or
procedures or other services traditionally offered by health care providers; or
b. An agreement among two or more health care providers for acquisition of control,
consolidation, merger, or sale of assets of those health care providers.
3. "Department" means the state department of health.
4. "Health care provider" means any person who delivers, administers, or supervises
health care products or services, for profit or otherwise, in the ordinary course of
business or professional practice.
5. "Third-party payer" means any insurer or other entity responsible for providing
payment for health care services, including workforce safety and insurance, the
comprehensive health association of North Dakota, and any self-insured entity.
23-17.5-02. Discussions or negotiations - Certificate of public advantage.
A health care provider may discuss preliminary matters toward, or may negotiate, a
cooperative agreement with another health care provider or third-party payer if the likely benefits
to health care consumers which may result from the agreement outweigh the disadvantages
attributable to a potential reduction in competition that may result from the agreement. The
parties to a cooperative agreement may apply to the department for a certificate of public
advantage governing the agreement. Although a health care provider or third-party payer is not
required to apply for a certificate of public advantage, a party that does not apply for a certificate
does not receive the exclusion from state antitrust enforcement and intended federal antitrust
immunity provided by section 23-17.5-10. The application must include an executed copy of the
cooperative agreement and must describe the nature and scope of the cooperation in the
agreement and any consideration passing to any party under the agreement. The applicants
shall file a copy of the application and related materials with the attorney general and the
department. The department shall review the application and shall hold a public hearing on the
application. The department shall grant or deny the application within ninety days of the date of
filing of the application. The decision must be in writing and must set forth the basis for the
decision. The department shall furnish a copy of the decision to the applicants, the attorney
general, and any intervenor.
23-17.5-03. Standards for certification.
The department shall issue a certificate of public advantage for cooperative agreement if
the department determines that the applicants have demonstrated by clear and convincing
evidence that the likely benefits to health care consumers which may result from the agreement
outweigh the disadvantages attributable to a potential reduction in competition that may result
from the agreement. The department shall consult with the attorney general regarding its
evaluation of a potential reduction in competition which may result from a cooperative
agreement.
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1.
2.
In evaluating the likely benefits of a cooperative agreement to health care consumers,
the department shall consider whether any of the following benefits may result from
the cooperative agreement:
a. Enhancement of the quality of health care services provided to residents of this
state;
b. Preservation of health care facilities or services in geographical proximity to the
communities traditionally served by those facilities or services;
c. Gains in the cost efficiency of services provided by the parties involved;
d. Improvements in the utilization of health care resources and equipment;
e. Avoidance of duplication of health care resources; and
f. Enhancement of the ability to cooperatively provide services to underserved or
low-income patients.
The department's evaluation of the disadvantages attributable to a potential reduction
in competition which may result from the agreement may include the following factors:
a. The extent of any likely adverse impact on the bargaining power of health
maintenance organizations, preferred provider organizations, managed health
care service agents, or other health care payers in negotiating payment and
service arrangements with hospitals, physicians, allied health care professionals,
or other health care providers;
b. The extent of any reduction in competition among physicians, allied health
professionals, other health care providers, or persons furnishing goods or
services to or in competition with providers or third-party payers that is likely to
result directly or indirectly from the cooperative agreement;
c. The extent of any likely adverse impact on patients in the quality, availability, and
price of health care services; and
d. The availability of arrangements that are less restrictive to competition and
achieve the same benefits or a more favorable balance of likely benefits to health
care consumers over disadvantages attributable to a potential reduction in
competition which may result from the agreement.
23-17.5-03.1. Active supervision.
The decision granting an application for a certificate of public advantage must include
conditions for active supervision. The active supervision must be sufficient for the department to
determine periodically whether circumstances may be present to meet the criteria for certificate
termination pursuant to section 23-17.5-04 and must otherwise be structured to provide a
reasonable basis for state action immunity from federal antitrust laws as interpreted by
applicable laws, judicial decisions, opinions of the attorney general, and statements of antitrust
enforcement policy issued by the United States department of justice and the federal trade
commission. The conditions for active supervision, except the authority granted the department
or attorney general by this chapter, may be modified or terminated by agreement between the
parties to the cooperative agreement and the department.
23-17.5-04. Certificate termination.
The department may, after notice and hearing, terminate a certificate of public advantage if
the department determines that:
1. The likely or actual benefits to health care consumers that result, or may result, from
the certified agreement no longer outweigh the disadvantages attributable to a
potential or actual reduction in competition which results, or may result, from the
agreement; or
2. Performance by the parties under the certified agreement does not conform to the
representations made by the parties in the application or to the provisions of any
conditions attached to the certificate of public advantage by the department at the time
the application was granted.
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23-17.5-05. Records.
The department shall maintain all cooperative agreements for which the certificates of
public advantage remain in effect. Any party to a cooperative agreement who terminates the
agreement shall file a notice of termination with the department within thirty days after
termination.
23-17.5-06. Investigation by attorney general.
The attorney general, at any time after an application is filed under section 23-17.5-02, may
require by subpoena the attendance and testimony of witnesses and the production of
documents in the county in which the applicants are located for the purpose of investigating
whether the cooperative agreement satisfies the standards set forth in section 23-17.5-03. The
attorney general may seek an order from the district court compelling compliance with a
subpoena issued under this section.
23-17.5-07. Cooperative agreement enjoined - Automatic stay - Standards for
adjudication.
The attorney general may seek to enjoin the operation of a cooperative agreement for which
an application for certificate of public advantage has been filed by filing suit against the parties
to the cooperative agreement in district court. The attorney general may file an action before or
after the department acts on the application for a certificate, but the action must be brought no
later than forty days following the department's approval of an application for certificate of public
advantage. Upon the filing of the complaint, the department's certification, if previously issued,
must be stayed and the cooperative agreement is of no further force unless the court orders
otherwise or until the action is concluded. The attorney general may apply to the court for
ancillary temporary or preliminary relief necessary to stay the cooperative agreement pending
final disposition of the case. In any action, the applicants for a certificate bear the burden of
establishing by clear and convincing evidence that the likely benefits to health care consumers
which may result from the cooperative agreement outweigh the disadvantages attributable to a
potential reduction in competition which may result from the agreement. The court shall review
whether the agreement constitutes an unreasonable restraint of trade under state or federal law
in assessing the disadvantages attributable to a potential reduction in competition which may
result from the agreement.
23-17.5-08. Cancellation of a certificate of public advantage.
If, at any time following the forty-day period specified in section 23-17.5-07, the attorney
general determines that, as a result of changed circumstances, the benefits to health care
consumers which result from a certified agreement no longer outweigh the disadvantages
attributable to a reduction in competition resulting from the agreement, the attorney general may
file suit in district court seeking to cancel the certificate of public advantage. In an action brought
under this section, the attorney general has the burden of establishing by a preponderance of
the evidence that, as a result of changed circumstances, the likely or actual benefits to health
care consumers which result, or may result, from the agreement and the unavoidable costs of
canceling the agreement are outweighed by the disadvantages attributable to a potential or
actual reduction in competition which results, or may result, from the agreement. If the attorney
general first establishes by a preponderance of the evidence that the department's certification
was obtained as a result of material misrepresentation to the department or the attorney general
as the result of coercion, threats, or intimidation toward any party to the cooperative agreement,
the parties to the agreement bear the burden of establishing by clear and convincing evidence
that the likely or actual benefits to health care consumers which result, or may result, from the
agreement and the unavoidable costs of canceling the agreement are outweighed by the
disadvantages attributable to a potential or actual reduction in competition which results, or may
result, from the agreement.
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23-17.5-09. Resolution by consent decree - Attorney's fees.
The district court may resolve any action brought by the attorney general under section
23-17.5-07 or 23-17.5-08 by entering an order that, with the consent of the parties, modifies the
cooperative agreement. Upon the entry of the order, the parties to the cooperative agreement
have the protection specified in section 23-17.5-10 and the cooperative agreement has the
effectiveness specified in section 23-17.5-10. If the attorney general prevails in an action under
section 23-17.5-06, 23-17.5-07, or 23-17.5-08, the attorney general is entitled to an award of the
reasonable costs of the investigation or litigation and reasonable attorney's fees, expert witness
fees, and court costs incurred in litigation.
23-17.5-10. Exclusion from state antitrust enforcement - Federal antitrust immunity
intended - Application.
A health care provider or third-party payer who participates in the discussion or negotiation
of a cooperative agreement for which an application is filed is engaged in conduct for which no
action may be brought pursuant to chapter 51-08.1 for penalties, damages, injunctive
enforcement, or other remedies. A health care provider or third-party payer who participates in
the implementation of a cooperative agreement, for which a certificate of public advantage was
issued, is engaged in conduct for which no action may be brought pursuant to chapter 51-08.1
for penalties, damages, injunctive enforcement, or other remedies. The intent of this section is
that the conduct be provided state action immunity from federal antitrust laws. This exclusion
from state antitrust enforcement and intended federal antitrust immunity applies unless the
discussion or negotiation exceeds the scope of a cooperative agreement as authorized by this
chapter or the implementation exceeds the scope of the cooperative agreement for which a
certificate of public advantage was issued. This section does not exempt hospitals or other
health care providers from compliance with laws governing hospital cost reimbursement.
23-17.5-11. Assessment - Health care cooperative agreement fund.
The department shall establish an assessment to be paid by each party to a cooperative
agreement. The aggregate amount of the assessment for a cooperative agreement may not
exceed forty thousand dollars, unless the department determines that an extraordinary need
exists for an additional amount to ensure effective evaluation of the application or supervision
under section 23-17.5-03.1. The parties may require that the determination of the need for an
additional amount is subject to approval by the state health council. An appeal may be taken
under chapter 28-32 from a determination of the health council. After consultation with the
parties, the department may require the payment of the assessment on an incremental basis
and may require separate payments for the process of evaluating the application or for the
process of active supervision. The assessment may be modified by agreement between the
department and the parties to the cooperative agreement. The department shall deposit the
moneys received under this section in the health care cooperative agreement fund of the state
treasury.
23-17.5-12. Health care cooperative agreement fund - Appropriation.
The funds in the health care cooperative agreement fund are available to the state
department of health, subject to legislative appropriation, for evaluation and active supervision
of cooperative agreements among health care providers or third-party payers and for
reimbursement to the attorney general for expenses incurred pursuant to this chapter. Any
amounts reimbursed to the attorney general under this section are hereby appropriated.
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