Home health care industry targeted in criminal antitrust probe

Companies providing in-home health care services are facing antitrust scrutiny from criminal prosecutors at the US Department of Justice, MLex has learned.

The investigation includes potential anticompetitive conduct involving hiring practices known as no-poach agreements, where companies agree not to solicit or hire each other's workers. Other potential anticompetitive conduct in the sector is also part of the investigation, it is understood.

The investigation began last year and is being run by prosecutors in San Francisco with the DOJ's antitrust division. At least some subpoenas were issued at the end of October, it is understood.

It isn't known which specific groups of employees may be subject to no-poach agreements. Home health care workers include nurses, physical therapists, and home health aides who provide general care services.

Also integral to the process are marketers. A patient receiving in-home care must have a doctor referral. Marketers leverage relationships with doctors and hospitals to bring in referrals to their employers offering home health care services. In fact, in early 2019 the Florida Supreme Court ruled that those physician and hospital relationships could form the basis of a non-compete agreement a marketer signs with an employer.

An unknown company is understood to have sought leniency with the DOJ. The DOJ's antitrust leniency program offers immunity from criminal prosecution to the first company or individual to report illegal conduct.

The specific companies under investigation by the DOJ aren't known.

The home health care industry is very fragmented, with the top 10 companies accounting for just over 26 percent of the market, according to data culled from LexisNexis Risk Solutions and published last November by Home Health News.

Those companies are Kindred at Home, Amedisys, LHC Group, Encompass Home Health and Hospice, AccentCare, Brookdale Senior Living Solutions, Bayada, Trinity Health at Home, Elara Caring and Interim Healthcare. A spokesperson for Brookdale declined to comment. A spokesperson for LHC said the company has not been contacted by the DOJ. The remaining companies didn't respond for comment.

The Justice Department declined to comment.

The investigation is understood to focus on local markets, though companies with broader footprints may be involved in more than one market under investigation

The industry has undergone a flurry of deals in recent years, including acquisitions by both private equity and corporate buyers. Among the larger deals, in 2018 a trio of private equity firms along with health insurer Humana purchased Kindred, splitting up the company's acute care and home health businesses. In 2017, LHC merged with home health provider Almost Family in a $2.4 billion deal.

In 2016, the Justice Department issued guidance that it would begin criminally prosecuting agreements among companies to not hire competitors' employees. DOJ officials have made multiple public comments about ongoing investigations, though no charges have been filed. As recently as January, Assistant Attorney General Makan Delrahim told the Wall Street Journal he expects charges in a no-poach case to be filed in the first half of the year.

That timeline could slip, given restrictions on grand jury investigations due to the Covid-19 pandemic. Though investigative work continues, as with other court proceedings, the convening of a grand jury is generally not possible given restrictions on travel and gatherings of groups of people.