Incomplete Production Costs Amedisys $1.1M in DOJ Settlement

The Department of Justice (DOJ) recently finalized a settlement in UnitedHealth’s proposed acquisition of Amedisys, imposing sweeping divestitures and a striking $1.1 million civil penalty. The penalty stems from the DOJ’s allegation that Amedisys falsely certified “substantial compliance” with a Second Request for information, despite knowing its document production was incomplete. This rare penalty underscores the high stakes of claiming compliance without robust supporting efforts, serving as a wake-up call for companies navigating antitrust reviews.

Settlement Details

To resolve the DOJ’s challenge, joined by the Attorneys General of Maryland, Illinois, New Jersey, and New York, Amedisys agreed to pay a $1.1 million civil penalty and implement antitrust compliance training for key executives and employees. The DOJ alleged that Amedisys violated the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) by falsely certifying compliance with a Second Request while aware of significant gaps in its document production. The settlement also mandates divestitures of 164 home health and hospice locations across 19 states, which the DOJ hailed as “the largest divestiture of outpatient healthcare services to resolve a merger challenge.”

HSR Act Merger Review Process

Under the HSR Act, parties to mergers meeting specific thresholds must file a pre-merger notification with the DOJ and Federal Trade Commission (FTC) and observe a 30-day waiting period before closing. If further scrutiny is needed, the reviewing agency may issue a Second Request, requiring extensive documents and data about the companies, transaction, and industry. This pauses the waiting period until the parties certify “substantial compliance,” attesting that their submissions are “true, correct, and complete.” If documents are unavailable, parties must provide a statement explaining noncompliance. Failure to comply risks a civil penalty of up to $53,088 per day.

The Complaint

Announced on June 5, 2023, UnitedHealth’s proposed acquisition of Amedisys aimed to combine two major players in home health and hospice care. UnitedHealth, through its Optum subsidiary, and Amedisys, a provider of home hospice and high-acuity care, faced scrutiny for potential harm to competition in numerous local markets. On November 12, 2024, the DOJ and state co-plaintiffs filed a complaint in the U.S. District Court for the District of Maryland to block the deal, alleging it would stifle competition in home health, hospice, and nurse labor markets.

The complaint also charged Amedisys with violating the HSR Act by falsely certifying substantial compliance despite known deficiencies, including:

• Missing Emails: Amedisys failed to disclose that a 30-day email archive gap coincided with key acquisition negotiations, omitting a required statement of noncompliance.
• Unproduced Hard Copy Documents: Amedisys neglected to provide any hard copy documents, including “copious handwritten notes” from its former CEO, publicly referenced in a 2023 book.
• Omitted Text Messages: Text messages from over half of Amedisys’s custodians were not produced.

After DOJ confrontation, Amedisys produced over 2.5 million additional documents, including critical materials like an email from its CEO assessing transaction risks and a text message discussing UnitedHealth’s market consolidation. The DOJ alleged Amedisys was noncompliant for at least 252 days, risking over $13 million in penalties.

Settlement

The settlement requires Amedisys to pay a $1.1 million civil penalty and train its corporate and field leadership on antitrust compliance for falsely certifying that the company had truthfully, correctly, and completely responded to the DOJ’s requests for documents. Amedisys must train its CEO, CFO, COO, chief legal officer, and field leadership on antitrust compliance, with the DOJ approving the training content.

Key Takeaways

This settlement highlights critical lessons for companies in merger reviews:

• “Substantial Compliance” Is Serious: Agencies may reject incomplete certifications, delaying mergers and imposing hefty penalties. Close coordination with antitrust counsel is essential to ensure compliance with Second Request demands.
• Thorough Document Collection: The case emphasizes the need for comprehensive collection of hard copy and text message documents, aligning with recent DOJ and FTC guidance on preserving data from collaboration tools and ephemeral messaging platforms.

This case serves as a stark reminder: cutting corners on compliance can lead to costly consequences.

Andre Barlow

abarlow@dbmlawgroup.com