Oral arguments were presented last week before a federal appeals court panel in the antitrust case challenging Lee Memorial Hospital's acquisition of Cape Coral Hospital. Both facilities are in the Fort Myers, Fla., area.
A decision by the three-judge panel is expected in three to six weeks, said Robert McCurdy, Lee Memorial's vice president of legal services. The panel from the 11th U.S. Circuit Court in Atlanta heard the arguments in Jacksonville, Fla.
A Cape Coral-Lee Memorial combination would control 67% of admissions in the five-hospital Lee County market.
In May, a district court judge in Tampa ruled that Lee Memorial's acquisition is exempt from federal antitrust laws because it is a public hospital and protected by state statutes.
However, the Federal Trade Commission, which had sued the hospital to block the merger, appealed to the 11th Circuit. In June, the appeals court reinstated an injunction prohibiting the merger until it could review the case.
Before the panel last week, FTC attorneys argued that the district court's ruling should be overturned because state law wasn't meant to exempt public hospitals from antitrust scrutiny.
Lee Memorial's attorneys countered with two briefs supporting the merger by the Florida attorney general and the state Agency for Health Care Administration, Mr. McCurdy said. Officials for the two state bodies support the merger on grounds it is allowable under state law and that it will reduce costs and not lead to higher prices for patients.
He added, however, that there are no cases involving a hospital in Florida that are similar to the Lee Memorial case.
Cape Coral executives believe the facility needs to merge for several reasons. One, it's a 201-bed hospital competing against two giants-602-bed Lee Memorial and Columbia/HCA Healthcare Corp., which owns two competing hospitals. Two, it lost $10.4 million in the first nine months of fiscal 1994, ended June 30. And three, it recently underwent a controversial management purge and employee layoffs.
In June, Cape Coral's board fired three top executives and accused them of embezzling $761,000 from the not-for-profit hospital from 1989 to 1992.
An attorney for two of the executives described the money as loans and bonuses. In response, the executives have sued the hospital to recover $4.3 million in severance pay and other compensation.
Federal and state agencies also are investigating the hospital's allegations.