Justice Department Requires Divestiture of Tufts Health Freedom Plan in Order for Harvard Pilgrim and Health Plan Holdings to Proceed With Merger

Divestiture Will Preserve Competition for Commercial Health Insurance in New Hampshire

The Department of Justice announced today that it would require Harvard Pilgrim Health Care (Harvard Pilgrim) and Health Plan Holdings (fka Tufts Health Plan) to divest Tufts Health Freedom Plan Inc. (Tufts Freedom), in order to proceed with their merger. Tufts Freedom is Health Plan Holdings’ commercial health insurance business in New Hampshire.

The department has approved UnitedHealth Group Inc. (United), as the buyer. Health insurance is an integral part of the American healthcare system, and the proposed settlement will maintain competition for the sale of commercial health insurance to private employers in New Hampshire with fewer than 100 employees.

“Americans spend trillions of dollars on healthcare each year, and competition between health insurers is vital to providing consumers with access to quality care at affordable rates. This merger, as originally structured, likely would have led to higher prices, poorer quality, and reduced choice for many consumers throughout the state,” said Assistant Attorney General Makan Delrahim of the Antitrust Division. “Today’s settlement with its divestiture will ensure that small groups and CRC groups continue to benefit from the competition that has enabled them to purchase the health insurance plans for their employees at competitive prices in the state.”   

“This case will play an important role in maintaining competition in New Hampshire’s health insurance industry,” said Scott W. Murray, U.S. Attorney for the District of New Hampshire. “By bringing this antitrust action, the Department of Justice is working to ensure that consumers in the Granite State have adequate and affordable health insurance options.”

“New Hampshire’s healthcare costs are among the highest in the country. It is an essential duty of the New Hampshire Attorney General to protect consumers of this State. Such protection requires ongoing and vigorous antitrust enforcement efforts,” said New Hampshire Attorney General Gordon J. MacDonald. “In this case, New Hampshire collaborated with our federal partner, the Antitrust Division of the United States Department of Justice, to protect consumers from an anticompetitive health insurance transaction that likely would have led to higher premiums and costs for consumers in the State. We believe the proposed settlement and remedy will restore any lessening of competition resulting from the proposed merger. We remain committed to using all available tools to protect New Hampshire consumers from higher healthcare costs.”

The Justice Department’s Antitrust Division, along with the New Hampshire Office of Attorney General, filed a civil antitrust lawsuit today in the U.S. District Court for the District of New Hampshire to block the proposed merger. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive harm alleged in its complaint.

According to the department’s complaint, Harvard Pilgrim and Tufts Freedom are two of the three top commercial group health insurers that offer plans to two types of private employers in New Hampshire: (1) employers with between one and 50 employees (small groups) and (2) employers with between 51 and 99 employees (CRC groups). The department’s complaint alleges that since Tufts Freedom’s inception in 2016, competition between it and Harvard Pilgrim has resulted in lower premiums, richer plan benefits, and better service for small groups and CRC groups in New Hampshire.

Under the terms of the proposed settlement, Harvard Pilgrim and Health Plan Holdings must divest Tufts Freedom to United or to an alternative purchaser approved by the United States, and allow United the opportunity to hire key employees who operate Tufts Freedom. Harvard Pilgrim and Health Plan Holdings must also provide transition services and use best efforts to maintain Tufts Freedom’s contracts with healthcare providers during the transition to United.

The department has also closed its investigation into the merger’s potential effects in Massachusetts after concluding that the merger was unlikely to substantially lessen competition there.

Harvard Pilgrim is a regional health insurer based in Wellesley, Massachusetts. Its annual revenue in 2019 was approximately $3 billion, with the vast majority coming from commercial insurance products.

Health Plan Holdings is a regional insurer based in Watertown, Massachusetts. Its annual revenue in 2019 was over $5.5 billion, with roughly one-third coming from commercial insurance products. Health Plan Holdings sells commercial group health insurance plans to small and large employer groups in New Hampshire through Tufts Freedom.

As required by the Tunney Act, the proposed settlement, along with a competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Eric Welsh, Chief, Healthcare and Consumer Products Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street NW, Suite 4100, Washington, DC 20530. At the conclusion of the 60-day comment period, the U.S. District Court for the District of New Hampshire may enter the final judgment upon finding it is in the public interest.

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    As of December 2019, at least 1,600 homes in Connecticut had confirmed pyrrhotite but the total number of affected homes is likely higher. According to one estimate, 4,000–6,000 more homes in Connecticut could develop crumbling foundations due to pyrrhotite. Affected homeowners may face total remediation costs of $150,000 or more and drops in property values of 25 percent or more. Connecticut established funding to provide homeowners with up to $175,000 towards the cost of foundation replacement, but affected homeowners are typically responsible for about one-third of total repair costs (which can include costs for replacing driveways and porches damaged during foundation replacement). Current funding is expected to assist 1,034 homeowners. Pyrrhotite Damage to a Basement and a Home Being Repaired Due to Pyrrhotite Damage GAO found that highly affected towns lost more than $1.6 million in tax revenue in 2018 due to lost assessment value of the houses affected by pyrrhotite, but town officials told us the losses have not yet significantly affected their budgets. However, officials were concerned that pyrrhotite could have long-term effects on their towns if the number of affected homes increased or homes were not remediated. GAO also found that homes located in highly affected towns and built when pyrrhotite-containing concrete was used sold for significantly less, on average, than similar homes in less-affected towns. Stakeholders told GAO that defaults and foreclosures related to pyrrhotite have been limited to date. Some federal funds have already been used for pyrrhotite testing and GAO identified eight additional federal programs that could be used to help mitigate financial impacts on homeowners. However, most of these programs have eligibility or funding restrictions that limit their potential for this purpose. Stakeholders with whom GAO spoke suggested other federal responses—in particular, declaring pyrrhotite damage a major disaster or establishing a federally backed insurance product. However, the Federal Emergency Management Agency determined that pyrrhotite damage did not qualify as a natural catastrophe, and a federally backed insurance program may not be feasible since it would serve a small population with high expected costs. Certain homes built in northeastern Connecticut and central Massachusetts between 1983 and 2015 have concrete foundations containing the mineral pyrrhotite. Pyrrhotite expands when it is exposed to water and oxygen and, over time, concrete foundations containing pyrrhotite may crack and crumble. The Explanatory Statement accompanying the Consolidated Appropriations Act, 2019 included a provision for GAO to study the financial impact of pyrrhotite. This report describes (1) what is known about the number of homes affected by pyrrhotite in the region; (2) the financial impact of pyrrhotite on homeowners; (3) the financial effects on towns, local housing markets, and the federal government; and (4) federal options to mitigate pyrrhotite's financial impact on affected homeowners. GAO analyzed data from state, local, and private entities about the extent of pyrrhotite in foundations and associated costs, and federal actions taken in response to pyrrhotite. GAO also interviewed federal, state, and local officials; homeowners; and other stakeholders such as banks and real estate agents. For more information, contact John Pendleton at (202) 512-8678 or pendletonj@gao.gov.
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    The U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice announced a settlement today that will require Midwest Can Company, one of the largest manufacturers of portable fuel containers in the United States, to pay a $1.7 million civil penalty to resolve Clean Air Act violations.
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  • Justice Department Announces Global Resolution of Criminal and Civil Investigations with Opioid Manufacturer Purdue Pharma and Civil Settlement with Members of the Sackler Family
    In Crime News
    Today, the Department of Justice announced a global resolution of its criminal and civil investigations into the opioid manufacturer Purdue Pharma LP (Purdue), and a civil resolution of its civil investigation into individual shareholders from the Sackler family.  The resolutions with Purdue are subject to the approval of the bankruptcy court. 
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  • Mississippi Tax Preparer Sentenced to Prison for False IRS Returns
    In Crime News
    A Moss Point, Mississippi, resident was sentenced to 22 months in prison for preparing false tax returns, announced Principal Deputy Assistant Attorney General Richard Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Mike Hurst for the Southern District of Mississippi.
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  • Defendant Was Convicted of Multiple Counts of Sex and Drug Trafficking, Several Firearm Offenses and Other Offenses, Including Witness Tampering
    In Crime News
    Prince Bixler, 41, of Lexington, Kentucky, was sentenced today by U.S. District Court Judge Robert E. Wier to 36 years in prison followed by 10 years of supervised release and ordered to pay $333,100 in restitution to three sex trafficking victims.
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    In Crime News
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  • Drug Safety: FDA’s Future Inspection Plans Need to Address Issues Presented by COVID-19 Backlog
    In U.S GAO News
    Fiscal year 2015 was the first time that the Food and Drug Administration (FDA) conducted more inspections of foreign drug manufacturers than domestic manufacturers, with the majority conducted in China and India. However, in June 2020, GAO reported that from fiscal year 2016 through fiscal year 2018, both foreign and domestic inspections decreased, in part due to staffing vacancies. While foreign inspections increased in 2019, since March 2020, FDA has largely paused foreign and domestic inspections due to the Coronavirus Disease 2019 (COVID-19) pandemic, conducting only those deemed mission critical. In January 2021, GAO reported that FDA conducted three foreign inspections in fiscal year 2020 following the pause—significantly less than in recent years. Number of FDA-Conducted Foreign Drug Manufacturing Establishment Inspections, Fiscal Years 2019–2020, by Month FDA has used alternative inspection tools to maintain some oversight of drug manufacturing quality while inspections are paused. These tools include relying on inspections conducted by foreign regulators, requesting and reviewing records and other information, and sampling and testing drugs. FDA has determined that inspections conducted by certain European regulators are equivalent to and can be substituted for an FDA inspection. Other tools provide useful information but are not equivalent. In addition, FDA was unable to complete more than 1,000 of its planned fiscal year 2020 inspections and will likely face a backlog of inspections in future years. In January 2021, GAO recommended that FDA ensure that inspection plans for future fiscal years respond to the issues presented by the backlog and that FDA fully assess the agency's alternative inspection tools. FDA concurred with both recommendations. Even before the COVID-19 pandemic, FDA faced persistent challenges conducting foreign inspections. GAO found in December 2019 that there continued to be vacancies among the investigators who conduct foreign inspections. GAO further found that FDA's practice of preannouncing foreign inspections up to 12 weeks in advance could give manufacturers the opportunity to fix problems ahead of the inspection and raised questions about their equivalence to domestic inspections. In light of COVID-19, FDA is now preannouncing both foreign and domestic inspections for the safety of its staff and manufacturers. GAO also found that language barriers can create challenges during foreign inspections as FDA generally relies on the establishment for translation services. The outbreak of COVID-19 has called greater attention to the United States' reliance on foreign drug manufacturers. FDA reports that 74 percent of establishments manufacturing active ingredients and 54 percent of establishments manufacturing finished drugs for the U.S. market were located overseas, as of May 2020. FDA is responsible for overseeing the safety and effectiveness of all drugs marketed in the United States, regardless of where they are produced, and it conducts inspections of both foreign and domestic manufacturing establishments. GAO has had long-standing concerns about FDA's ability to oversee the increasingly global pharmaceutical supply chain, an issue highlighted in GAO's High Risk Series since 2009. This statement is largely based on GAO's Drug Manufacturing Inspections enclosure in its January 2021 CARES Act report, as well as GAO's December 2019 and June 2020 testimonies. Specifically, it discusses (1) the number of FDA's foreign inspections, (2) FDA's response to the COVID-19 pandemic pause in inspections, and (3) persistent foreign inspection challenges. For that work, GAO examined FDA data from fiscal years 2012 through 2020, interviewed FDA investigators, and reviewed documents related to drug oversight during the COVID-19 pandemic, among other things. For more information, contact Mary Denigan-Macauley at (202) 512-7114 or deniganmacauleym@gao.gov.
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  • VA COVID-19 Procurements: Pandemic Underscores Urgent Need to Modernize Supply Chain
    In U.S GAO News
    What GAO Found Like most medical institutions nationwide, the Department of Veterans Affairs (VA) faced difficulties obtaining medical supplies, including personal protective equipment for its medical workforce, particularly in the early stages of the COVID-19 pandemic. Long-standing problems with its antiquated inventory management system exacerbated VA's challenges. GAO found VA obligated over $4 billion for COVID-19-related products, such as ventilators, and services, such as information technology to support VA's telework environment, as of May 2021. GAO also found that some vendors were unable to deliver personal protective equipment, which resulted in VA terminating some contracts, particularly early in the pandemic. VA also took additional steps to screen vendors. VA has several initiatives underway to modernize its supply chain and prepare for future public health emergencies, but each faces delays and is in early stages (see figure). For example: Inventory management. VA intended to replace its system with the Defense Medical Logistics Standard Support (DMLSS), with initial implementation in October 2019, and enterprise-wide implementation by 2027. Prior to the pandemic, however, this schedule was at significant risk. VA hopes to accelerate full implementation to 2025, and has received COVID-19 supplemental funds to help, but it is too soon to tell if this will occur. Regional Readiness Centers. VA planned to establish four centers—as central sources of critical medical supplies—by December 2020. As of March 2021, VA has not completed a concept of operations or implementation plan for the project. VA faces an additional year delay in achieving full operational capability, which is now expected in 2023. According to VA officials, the pandemic, among other things, contributed to delays. Warstopper program. VA seeks participation in this Defense Logistics Agency program, which would allow VA emergency access to critical supplies. Legislation recently was introduced to require VA participation. However, as GAO reported in March 2021, several questions remain, such as the range of products the program will cover, the amount of funding needed, and the way the program links to Regional Readiness Centers. Department of Veterans Affairs' Selected Ongoing and New Supply Chain Initiatives, Fiscal Years 2021 through 2028 Why GAO Did This Study In March 2020 and March 2021, Congress appropriated $19.6 billion and $17 billion in supplemental funds, respectively, for VA's COVID-19 response effort. VA also authorized use of emergency flexibilities and automated aspects of its inventory system. In accordance with Congress's direction in the CARES Act to monitor the exercise of authorities and use of funds provided to prepare for, respond to, and recover from the pandemic, relevant committees requested our sustained focus on VA. GAO was asked to assess VA's acquisition management during its COVID-19 pandemic response. This report examines VA's efforts to obtain and track COVID-19-related products and services amid its ongoing struggle to improve its inventory and supply chain management. GAO reviewed federal procurement data, analyzed selected VA contract documents, reviewed selected interagency agreements, assessed VA documents on modernization and other initiatives, and interviewed VA officials and staff.
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  • Justice Department Files Lawsuit Against Tampa-Area Physician, Pharmacy, and Clinic Owners for Controlled Substances Act Violations
    In Crime News
    The United States filed a civil complaint seeking to permanently enjoin the owners of a Tampa-area clinic and pharmacy from unlawfully dispensing opioids and other controlled substances, the Department of Justice announced today.
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  • Michigan Man Indicted for Hate Crimes After Attacking African-American Teenagers
    In Crime News
    The Justice Department announced today that Lee Mouat, 42, has been indicted for federal hate crimes. Mouat is charged with two counts of violating 18 U.S.C. § 249 by willfully causing bodily injury to a Black teenager and attempting to cause bodily injury to another Black teenager, through the use of a dangerous weapon, because of the teenagers’ race. Mouat was previously charged with the former count by criminal complaint in federal district court on Oct. 13, 2020.
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  • Statement from Assistant Attorney General Eric Dreiband and Michigan U.S. Attorneys on Michigan Supreme Court Ruling Striking Down Governor Whitmer’s Pandemic-Related Orders
    In Crime News
    Assistant Attorney General for Civil Rights Eric Dreiband, U.S. Attorney Matthew Schneider for the Eastern District of Michigan, and U.S. Attorney Andrew Birge for the Western District of Michigan issued the following statements:
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  • Five Alleged MS-13 Members Charged Federally for Their Participation in a Violent Racketeering Conspiracy Including Eight Murders and Four Attempted Murders
    In Crime News
    A federal grand jury returned an eleventh superseding indictment Monday, charging five men in connection with a conspiracy to participate in a racketeering enterprise known as La Mara Salvatrucha, or MS-13. The eleventh superseding indictment adds a new defendant charged with a racketeering conspiracy related to his membership in MS-13, including a double homicide and drug trafficking.
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  • Justice Department Secures Relief for U.S. Army National Guard Reservist on Employment Discrimination Claim Against Luxury Jeweler Harry Winston
    In Crime News
    The Justice Department and the U.S. Attorney’s Office for the Southern District of Texas announced today that they resolved a claim that luxury jeweler Harry Winston, Inc. violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) by refusing to offer full-time employment to U.S. Army National Guard Reservist John A. Walker because of his military service obligations.
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  • Federal Protective Service: Better Documented Cost Estimates Could Help Stakeholders Make Security Decisions
    In U.S GAO News
    What GAO Found The Federal Protective Service (FPS) provides security and protection at more than 9,000 federal facilities. FPS performs a variety of security activities in conjunction with the General Services Administration (GSA), which functions as the landlord at most of these facilities, and with the federal agencies, which occupy these facilities as tenants. These stakeholders can provide important perspectives on FPS's performance of its key activities (see figure). The Federal Protective Service's Three Key Security Activities Stakeholders expressed satisfaction with many aspects of FPS's performance of key activities but also identified aspects where they thought FPS could make improvements. For example, stakeholders expressed satisfaction with the professionalism of FPS personnel and commended FPS's coordination in responding to law enforcement incidents. However, some stakeholders said they would like to see FPS oversee contract guards more often. In addition, many stakeholders said that FPS could improve the cost estimates in its security assessment reports. GAO's review of FPS's Facility Security Assessment reports found that cost estimates for the recommended security measures lacked information that could help stakeholders make decisions to accept or reject FPS's recommendations. Specifically, recent reports for 27 selected buildings did not document (1) the assumptions FPS made to produce the cost estimates (e.g., the scope of work) and (2) the sources FPS used to create the estimate. In one report, for example, FPS recommended additional fencing and provided a cost estimate with an exact dollar amount. However, FPS did not document the assumptions it used to develop the estimate, such as the height and linear feet of fence or the fencing material. According to GAO's Cost Estimating and Assessment Guide , cost estimates should provide information about the assumptions and sources used to develop an estimate so that decision-makers can understand the level of uncertainty around the estimate. By providing detailed information about the cost estimates in Facility Security Assessment reports, FPS could better inform stakeholders and potentially increase implementation of recommended security measures, designed to increase the safety of people and property at these facilities. Why GAO Did This Study Over one million employees and a range of visitors seeking services at federal facilities depend on FPS to ensure the safety of both people and property at these locations. This report examines stakeholders' perspectives on FPS's performance of three key activities. GAO identified key activities from FPS data on work hours. GAO held discussion groups with stakeholders from 27 randomly selected facilities where FPS provided guard services and responded to incidents in fiscal year 2019 and analyzed stakeholder responses from 2017-2019 to GSA's and FPS's feedback instruments. These sources of stakeholder views are not representative but collectively provide insight into stakeholders' satisfaction with how FPS is performing key activities. GAO also reviewed agency documents; interviewed FPS officials about FPS's performance; and compared FPS's security assessment reports to criteria in GAO's Cost Estimating and Assessment Guide .
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    In Crime News
    Three Peruvian nationals pleaded guilty to operating a series of call centers in Peru that defrauded Spanish-speaking U.S. residents by threatening, among other things, arrest and deportation.
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    In Crime News
    Seizure warrants have been executed against three domain names of commercial websites engaged in the illegal reproduction and distribution of copyrighted works in support of a Brazilian-led takedown of digital piracy sites there, dubbed “Operation 404”.
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    In Crime News
    A Coram, New York, car wash owner pleaded guilty today to tax evasion, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Seth D. DuCharme for the Eastern District of New York. According to court documents and statements made in court, Nicholas Pascullo, 56, operated a car wash and detailing business called H2O Car Wash & Exotic Detailing LLC (H2O), based in Lindenhurst, New York. From 2012 to 2017, Pascullo attempted to evade income and employment taxes owed by him and H2O for calendar years 2012 through 2016. As part of the scheme, Pascullo filed false partnership and individual income tax returns with the IRS that underreported the gross receipts earned by H2O and the flow-through income received by Pascullo and his partners.
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