Two Michigan hospitals wielded some congressional clout to win legislation that would block the Federal Trade Commission from continuing its challenge to their proposed merger.
A pending Senate appropriations bill contains a provision barring the FTC from pursuing an administrative antitrust complaint in any case in which it has been denied a preliminary injunction by both a federal district and appellate court before July 9.
If the provision becomes law, it would affect only one case: the proposed merger of Butterworth Health System and Blodgett Memorial Medical Center in Grand Rapids, Mich.
"We've obviously made efforts with our own Michigan-based legislators to have them look into the matter," Blodgett Chief Executive Officer Terry O'Rourke said.
O'Rourke said he thought U.S. Sen. Spencer Abraham (R-Mich.) was working on the hospitals' behalf. Several calls to Abraham's Washington office last week were not returned.
O'Rourke said the hospitals' lead antitrust attorney, William Kopit with the Washington office of Epstein, Becker & Green, was acting as their "contact point" with Congress.
In an initial interview last week, Kopit denied knowledge of the legislation, saying, "I'm their lawyer; I'm not their lobbyist."
In a subsequent interview, Kopit acknowledged he had "talked to people from Congress several times" on behalf of the hospitals, but he declined to name the lawmakers.
Kopit identified Washington attorney Kevin McGuiness as the hospitals' registered lobbyist.
The hospitals plan to file a request with the FTC this week to drop its administrative complaint against their merger. A hearing is scheduled for Nov. 12 before an administrative law judge assigned to the FTC.
On July 8, the 6th U.S. Circuit Court of Appeals in Cincinnati affirmed a district court's denial of a preliminary injunction sought by the FTC to block the hospitals' merger (July 14, p. 4)
The bill's language would not bar the FTC from asking the 6th Circuit to reconsider nor from seeking a review by the U.S. Supreme Court.
Robert Leibenluft, assistant director for healthcare in the FTC's Bureau of Competition, said it is unusual for corporations to try to use legislation to stop an antitrust case against them.
"I think it's unfortunate," Leibenluft said. "There are always people who are concerned with what the commission is doing or what the Department of Justice is doing. I'm not sure that (bill) is the best way to handle these issues."
In antitrust challenges, the FTC typically seeks an order from federal court to block a suspect transaction until the merits of its administrative antitrust complaint against the parties is resolved. The Justice Department, in comparision, seeks both an order and a trial in court.
The Michigan hospitals argue the FTC's process constitutes double jeopardy, since their case already was reviewed by a federal district court during a five-day hearing on the merits of the FTC's motion for a preliminary injunction.
The FTC disagrees. Leibenluft said federal courts issue their decisions knowing that an administrative hearing on the merits of the merger might follow the court hearings.
In only two other hospital merger cases have both federal district and appellate courts denied injunctions sought by the FTC. In one case, the hospitals dropped their merger plans before an administrative hearing was held. In the other, the FTC dropped its administrative complaint.
O'Rourke said this would be the first time the FTC lost in two courts and then proceded with an administrative complaint. "We don't like the idea of being a test case," he said.