United States v. National Medical Enterprises, Inc., and Nme Hospitals, Inc., Defendants

The government appeals the district court’s dismissal with prejudice of an antitrust action against National Medical Enterprises, Inc. (National Medical). The district court dismissed the action because of misconduct by government attorneys. We have jurisdiction pursuant to 28 U.S.C. § 1291 . We affirm in part, and vacate and remand in part.

I

In December 1982, National Medical, the fourth largest health care company in the United States, and owner of the largest general acute care hospital in the Modesto, California, market area, acquired the third largest hospital in Modesto (the Modesto hospital). The acquisition caused National Medical’s share of the market area, as measured by gross in-patient revenues, to rise above 50%. After conducting a seven-month investigation, the government filed a complaint in district court, alleging that the acquisition violated section 7 of the Clayton Act, 15 U.S.C. § 18 .

During discovery, a government attorney contacted seven individuals and informed them that the government was challenging National Medical’s recent acquisition of the Modesto hospital. He told them that they might be called to testify and that the government would like to…