Antitrust Law Daily Wrap Up, ANTITRUST—MDGa: FTC Granted TRO to Block Further Integration of Georgia Hospitals, (May 16, 2013)

By Jeffrey May, J.D.

The federal district court in Albany, Georgia, yesterday granted the FTC’s Motion for a Temporary Restraining Order to block further integration of the now consummated merger of Albany's Palmyra Park and Phoebe Putney Memorial hospitals. The TRO will remain in effect until the court rules on the agency’s Motion for Preliminary Injunction, which will be considered on June 14 (FTC v. Phoebe Putney Health System, Inc., May 15, 2013, Sands, W.).

The FTC moved for a TRO and a preliminary injunction in order to maintain the status quo pending the outcome of the FTC’s administrative proceedings challenging the combination and any appeals. The agency contended that temporary injunctive relief was necessary to prevent competitive harm. The TRO prohibits the defendants from making any price changes to existing contracts.

Moreover, the agency might seek the divestment of assets should it find that the effective merger of the only two competing hospitals in the Albany area violates Sec. 7 of the Clayton Act and Sec. 5 of the FTC Act. Blocking further integration could make it easier to effectuate a divestiture order.

The court explained that, in order to be entitled to the "extraordinary and drastic remedy" of a TRO, a movant must show (1) a substantial likelihood of success on the merits of its case, (2) that irreparable harm would result in the absence of the TRO, (3) that the balance of equities favors granting the TRO, (4) that the public interest would not be harmed by the injunction. The FTC carried its burden of persuasion to establish the need for the imposition of the TRO, the court concluded.

The FTC is pursuing its challenge to the transaction, following a recent, unanimous decision of the U.S. Supreme Court, holding that the acquisition was not immune from attack under the state action doctrine.

In 2011, the FTC challenged the purchase of Palmyra Park Hospital’s assets from HCA, Inc. by the Hospital Authority of Albany-Dougherty County, alleging that the transaction would substantially lessen competition or tend to create a monopoly in the inpatient general acute-care hospital services market in Dougherty County and surrounding areas. The federal district court dismissed the complaint on state action immunity grounds (793 F. Supp. 2d 1356, 2011-1 Trade Cases ¶77,508), and the appellate court affirmed (663 F.3d 1369, 2011-2 Trade Cases ¶77,722). The Supreme Court reversed and remanded to the Eleventh Circuit. On May 10, the appellate court remanded the case to the district court. The administrative proceedings resumed after the Commission lifted a stay in March.

The court ordered the defendants to file their brief in response to the FTC's PI Motion by May 31. The FTC must file its reply brief by June 7.

Response of FTC Bureau of Competition Director Richard A. Feinstein

"We are pleased that the Court has issued a Temporary Restraining Order prohibiting any further steps to consolidate the two hospitals in Albany, and prohibiting any price changes to existing health-plan contracts, pending our Motion for Preliminary Injunction," said FTC Bureau of Competition Director Richard A. Feinstein in a May 15 statement.

Attorneys: Amanda Lewis for FTC. Emmet J. Bondurant, II (Bondurant, Mixson & Elmore, LLP) for Phoebe Putney Health System, Inc.

Companies: Phoebe Putney Health System, Inc.

Cases: Antitrust FederalTradeCommissionNews GeorgiaNews