Antitrust Law Daily Wrap Up, ANTITRUST NEWS: FTC Lifts Stay in Administrative Proceeding Challenging Georgia Hospital Acquisition, (Mar 18, 2013)

By Jeffrey May, J.D.

The FTC has lifted a stay in an administrative action challenging Phoebe Putney Health System, Inc.'s now completed acquisition of Palmyra Park Hospital, Inc., which was issued pending the appellate resolution of a collateral federal court action. In a March 14 order, the Commission directed the agency’s chief administrative law judge to hold a scheduling conference by July 15 to reset the necessary scheduling deadlines (In the Matter of Phoebe Putney Health System, Inc., FTC Dkt. 9348).

The Commission's decision to restart proceedings comes less than one month after the U.S. Supreme Court held that the state action immunity doctrine did not shield the transaction from the FTC challenge (2013-1 Trade Cases ¶78,269). On February 19, the Court overturned a decision of the U.S. Court of Appeals in Atlanta (663 F.3d 1369, 2011-2 Trade Cases ¶77,722), which dismissed the FTC's court action on the ground that the effective merger of the two Albany, Georgia, hospitals was immune state action.

In April 2011, the FTC had brought its action against the Hospital Authority of Albany-Dougherty County, alleging that its purchase of Palmyra Park Hospital’s assets from HCA, Inc. and subsequent lease to Phoebe Putney Health System, Inc.—the operator of Phoebe Putney Memorial Hospital—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 agency sought injunctive relief to prevent the consummation of the plan prior to the completion of the administrative proceeding.

In July of that year, the FTC granted a stay of the administrative proceeding after the U.S. Court of Appeals in Atlanta agreed to an expedited appeal of a federal district court's decision denying the agency's request for a preliminary injunction and dismissing the court action. The respondents had argued that the administrative proceedings could “resume with no prejudice” if the appellate court were to rule in the FTC’s favor.

On February 22, just three days after the Supreme Court reversed the Eleventh Circuit's decision, FTC lawyers asked the Commission to lift the stay of administrative proceedings. “Complaint Counsel is prepared to resume prosecution of its case against the challenged transaction at the soonest opportunity,” according to their motion.

The respondents objected to lifting the stay. In a March 6 motion, the respondents suggested that the Supreme Court had not issued its mandate and that it was “premature to lift the stay while the Supreme Court retains jurisdiction.” They asked that “the stay remain in place to allow the parties to consult on a new schedule and that the matter should proceed only upon entry of a new scheduling order.”

The Commission agreed with Complaint Counsel that “time is of the essence because ‘this is now a consummated acquisition in which significant integration of hospital assets and operations—and likely, interim harm to competition—may have taken place.’” The Commission went on to say that the “sole ground for Respondents’ opposition to lifting the stay—that it would be premature because the Supreme Court’s decision is not yet final—does not withstand scrutiny.”

The Commission issued the stay of the administrative proceedings in its own discretion, and it could restart its own administrative proceeding. It also was noted that the respondents had not offered an explanation for waiting for the expiration of the 25-day period for a motion for reconsideration of the Supreme Court decision before lifting the stay on the FTC proceeding.

Attorneys: Jeffrey H. Perry for FTC. Lee K. Van Voorhis (Baker & McKenzie LLP) for Phoebe Putney Memorial Hospital, Inc. Emmet J. Bondurant (Bondurant, Mixson & Elmore LLP) for Respondent Hospital Authority of Albany-Dougherty County.

Companies: Phoebe Putney Health System, Inc.

News: Antitrust FederalTradeCommissionNews