Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS—N.D. Ill.: Hospitals intervene in FTC challenge to Chicago-area deal, (Jan 28, 2016)

By Greg Hammond, J.D.

The federal district court in Chicago has allowed a group of four Chicago-area health systems to intervene in the FTC’s challenge to the proposed merger between Advocate Health Care Network and NorthShore University HealthSystem—two of the leading providers of general acute care inpatient hospital services in the North Shore area of Chicago (FTC v. Advocate Health Care Network, Case No. 1:15-cv-11473).

According to their motion to intervene, The University of Chicago Medical Center, Presence Health Network, Rush University Medical Center, and Northwestern Memorial HealthCare allege that the FTC issued subpoenas and civil investigative demands to the four health systems and that they produced documents and information relevant to competition for health care services in the Chicago area. The documents include strategic plans; market and competitive assessments, analyses, studies, profiles, and forecasts; peer analyses; responses to requests for proposals; and pricing lists and reports.

Although the court entered an Agreed Confidentiality Order that allows parties to designate material either “Confidential” or “Highly Confidential,” the four health systems claim that a third category is needed. In particular, the health systems suggest that a “Highly Confidential—Outside Counsel Only” category is necessary so that no employee of any of the defendants would have access to the health systems’ “most competitively sensitive information and materials that were produced to the FTC.” The health systems further claim that they are the only ones who can adequately represent their own interests.

After the court granted the motion to intervene, the health systems moved to amend the confidentiality order to add the “Highly Confidential—Outside Counsel Only” category.

The FTC issued its administrative complaint on December 18, 2015, alleging that the deal would cause significant harm to consumers through increased health care costs and lower incentives to upgrade services and improve quality (In the Matter of Advocate Health Care Network, File No. 141 0231, Dkt. 9369).

The instant action was filed by the FTC and the State of Illinois on December 21, 2015, in the federal district court in Chicago, Illinois, Attorney General Lisa Madigan announced. The lawsuit claims that the merger would substantially reduce competition in the North Shore area of Chicago and would increase inpatient hospital services costs to commercial payers and insured members. Madigan also claims that the merged system would have less incentive to improve its service offerings and quality of care.

Attorneys: James Thomas Greene, FTC. Blake Lee Harrop, Attorney General's Office, for State of Illinois. Robert Walter McCann for Advocate Health Care Network and Advocate Health and Hospitals Corp. David Edward Dahlquist (Winston & Strawn LLP) for NorthShore University HealthSystem.

Companies: Advocate Health Care Network; Advocate Health and Hospitals Corp.; NorthShore University HealthSystem; The University of Chicago Medical Center; Presence Health Network; Rush University Medical Center; and Northwestern Memorial HealthCare

Cases: AcquisitionsMergers Antitrust FederalTradeCommissionNews IllinoisNews