FTC Proceeding Stayed in Georgia Hospital Acquisition Challenge

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

An FTC administrative challenge to Phoebe Putney Health System, Inc.’s proposed acquisition of rival Palmyra Park Hospital, Inc. in Albany, Georgia, was stayed by the Commission on July 15.

The respondents sought the stay pending the outcome of the FTC’s appeal of a federal district court’s dismissal of the agency’s court action. In the court action, the FTC sought preliminary injunctive relief against the acquisition until the administrative trial was resolved.

The FTC staff did not did not oppose the respondents’ motion for stay of the administrative challenge. The administrative law judge had recommended that the Commission grant the stay (CCH Trade Regulation Reporter ¶16,619).

In April, the FTC and the State of Georgia filed suits to block the deal that would allegedly create “a virtual monopoly for inpatient general acute care services sold to commercial health plans and their customers in Albany, Georgia and its surrounding area.”

State Action Immunity

Last month, the federal district court in Albany, Georgia, denied the request for a preliminary injunction and dismissed the suits (2011-1 Trade Cases ¶77,508). (See Trade Regulation Talk, June 30, 2011). The court ruled that the challenged transaction was state action immune from the antitrust laws. The FTC made a motion for an expedited appeal, which was granted by the U.S. Court of Appeals in Atlanta on July 7 (2011-1 Trade Cases ¶77,527).

In granting the stay of the administrative action, the Commission noted the respondents’ argument that “there was no benefit to undergoing the burdens and expense of continuing this administrative proceeding given the pendency of an appeal to the Eleventh Circuit in collateral federal court litigation on the `critical issue’ in the proceedings, namely state action immunity.”

The respondents asserted that the administrative proceeding could “resume with no prejudice” if the appellate court were to rule in the FTC’s favor.”

The administrative proceeding is In the Matter of Phoebe Putney Health System, Inc., Docket No. 9348. The July 15 order granting the respondents’ unopposed motion to stay the proceeding appears here. It will be reported at CCH Trade Regulation Reporter ¶16,620.