Two Iowa hospitals have urged a federal appeals court to affirm a lower court decision clearing their merger-like partnership of antitrust problems.
The hospitals, the only acute-care facilities in Dubuque, Iowa, said the lower court reached the correct decision in the case based on sufficient evidence and there's no reason to overturn the lower court's ruling.
Last October, U.S. District Judge Michael Melloy agreed with the hospitals and said the consolidation of Finley Hospital and Mercy Health Center wouldn't represent an illegal concentration of market share in Dubuque because they competed regionally with hospitals 70 to 100 miles away.
In March, the U.S. Justice Department, which challenged the deal, appealed Melloy's decision to the 8th U.S. Circuit Court of Appeals in St. Louis. The government said the appeals court should overturn Melloy's decision because he erred in accepting the hospitals' geographic market claims. It said he ignored evidence that Dubuque is a distinct market, that hospitals located as far as 100 miles away weren't practical alternatives for basic inpatient hospital services and that the hospitals could arbitrarily raise their prices without losing business (March 11, p. 26).
In their 49-page appeals brief, filed April 30 with the 8th Circuit, the hospitals accused the Justice Department of asking the appellate judges to retry the case and exaggerating the value of the government's "weak" evidence.
However, the hospitals do want the appellate judges to reverse several of Melloy's findings that could jeopardize the cases of other hospitals seeking federal antitrust clearance.
In his decision, Melloy said the hospitals failed to prove their deal would generate the operating efficiencies they claimed. And, he said there's nothing inherent about a hospital's not-for-profit status or community board to stop anti-competitive behavior. The hospitals said Melloy erred on those two controversial points.
The court of appeals has yet to schedule oral arguments in the case.
David Ettinger, the hospitals' outside antitrust counsel, said he expects oral arguments to occur in September, with the court rendering a decision by the end of the year.
The hospitals announced their proposed joint operating agreement nearly 30 months ago.