Antitrust Law Daily Wrap Up, ANTITRUST—D. Ida.: Private plaintiffs entitled to attorneys’ fees in St. Luke’s acquisition challenge, (May 4, 2015)

By Linda O’Brien, J.D., LL.M.

Two private plaintiffs were entitled to attorneys’ fees in a consolidated action by the private plaintiffs, FTC, and State of Idaho, challenging the acquisition of a large physician practice group by St. Luke’s Health System, the largest health system in the state, according to the federal district court in Boise, Idaho (Saint Alphonsus Medical Center-Nampa, Inc. v. St. Luke’s Health System, Ltd., April 29, 2015, Winmill, B.).

In December 2012, Idaho’s largest health care system, St. Luke’s Health System, acquired Saltzer Medical Group, Idaho’s largest independent, multi-specialty physician practice group. Two of St. Luke’s competitors, St. Alphonsus Medical Center and Treasure Valley Hospital Limited Partnership, filed suit and sought to block the transaction.

Following the private suit, the FTC and the Idaho Attorney General filed a complaint, seeking to halt St. Luke’s acquisition of Saltzer on the ground that the combined entity would have market power in the relevant market region to demand higher rates for health care services provided by primary care physicians. The cases were consolidated for discovery and trial. In January 2014, the court found that the acquisition violated the Clayton Act and Idaho Competition Act and ordered St. Luke’s to divest itself of Saltzer’s physicians and assets. In March 2014, St. Alphonsus and Treasure Valley moved to recover attorneys’ fees and costs for their successful challenge of the acquisition.

The court determined that the two private plaintiffs obtained all the relief they were seeking — a judicial ruling requiring St. Luke’s to unwind its merger with Saltzer. Under criteria set forth in Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S. 598 (2001), to qualify for fees, a litigant must show that he achieved a “material alteration of the legal relationship of the parties” and the alteration was “judicially sanctioned.”

In this case, the judicial ruling materially altered the relationship between the parties. St. Luke’s argument that the court decision was based entirely on the government’s arguments and the private plaintiffs’ participation in the lawsuit was superfluous was rejected. The court noted that, although it ruled that the merger would raise costs to consumers and did not consider the private plaintiffs’ arguments that the merger would exclude competitors, the private plaintiffs achieved all the benefits they sought in bringing suit and succeeded on a significant issue. Specifically, the government used the private plaintiffs’ evidence that the merger would result in higher prices as direct proof of its antitrust claims.

Furthermore, the private plaintiffs did not duplicate the work of the government and played a major role in discovery, pre-trial proceedings, and at trial in presenting evidence that the merger would result in higher prices for consumers. Thus, the court concluded that the private plaintiffs were entitled to attorneys’ fees and reserved the amount of the fees for further briefing.

The case is No. 1:12-CV-00560-BLW.

Attorneys: David A. Ettinger (Honigman Miller Schwartz and Cohn LLP) and Keely E. Duke (Duke Scanlan & Hall, PLLC) for Saint Alphonsus Medical Center – Nampa, Inc., Saint Alphonsus Health System, Inc., Saint Alphonsus Regional Medical Center, Inc., and Treasure Valley Hospital Limited Partnership. Douglas Eugene Litvack for Federal Trade Commission. J. Walter Sinclair (Holland & Hart LLP), and Jack R. Bierig (Sidley Austin LLP) for St. Luke's Health System, Ltd. and St. Luke's Regional Medical Center, Ltd. Brian K. Julian (Anderson Julian & Hull) for Saltzer Medical Group.

Companies: Saint Alphonsus Medical Center – Nampa, Inc.; Saint Alphonsus Health System, Inc.; Saint Alphonsus Regional Medical Center, Inc.; Treasure Valley Hospital Limited Partnership; St. Luke's Health System, Ltd.; St. Luke's Regional Medical Center, Ltd.; Saltzer Medical Group

Cases: Antitrust IdahoNews