One of the final legal hurdles blocking the controversial Poplar Bluff, Mo., hospital acquisition was removed last week as a federal appeals court refused to reconsider its earlier decision allowing the sale to proceed.
In challenging the sale, the Federal Trade Commission has two avenues left: a possible appeal to the U.S. Supreme Court and the agency's pending administrative antitrust complaint against the two hospitals involved.
The hospitals, meanwhile, are trying to negotiate a new sales agreement and complete the acquisition by year-end. The initial agreement expired as the FTC's antitrust challenge dragged on.
"We hope this (the rehearing denial) will put an end to the case once and for all," said Charles James, a healthcare antitrust lawyer with the Washington office of Jones, Day, Reavis & Pogue. James represents Tenet Healthcare Corp., the Santa Barbara, Calif.-based hospital chain that has been trying to buy privately held 186-bed Doctors Regional Medical Center in Poplar Bluff for more than two years. Tenet owns the only other private acute-care hospital in the city, 185-bed Lucy Lee Hospital.
Tenet first announced the proposed $40.5 million acquisition in April 1997. One year later, the FTC challenged the sale, alleging it would violate Section 7 of the federal Clayton Act, which prohibits acquisitions that reduce competition or create monopolies.
The FTC filed an administrative antitrust complaint against the hospitals before a federal administrative law judge assigned to the FTC, and it filed a motion for a preliminary injunction blocking the sale in U.S. District Court in Cape Girardeau, Mo.
In July 1998, the district court granted the FTC's motion, saying that the acquisition likely would violate federal antitrust laws. But on appeal, a three-judge panel of the 8th U.S. Circuit Court of Appeals in St. Louis unanimously reversed the lower court decision, saying it erred by accepting the FTC's market analysis in the case.
The FTC then asked all 18 judges of the 8th Circuit to reconsider the panel's decision, but the judges rejected the agency's rehearing request. None of the judges issued written opinions in the case.
Tenet spokesman Lance Ignon said the hospitals will move forward with due diligence to complete the merger by year-end.
Not so fast, cautioned FTC General Counsel Debra Valentine, who said the agency has 90 days to decide whether to appeal to the U.S. Supreme Court.
"That's obviously something that will be seriously deliberated by the commission," said Valentine.
In the meantime, the FTC has filed a motion with the 8th Circuit to stay the mandate, a procedural action to prevent the hospitals from completing their transaction until the FTC makes its next move.
The commission's administrative complaint is pending.
David Ettinger, a healthcare antitrust attorney with the Detroit office of Honigman, Miller, Schwartz & Cohen, doubts the U.S. Supreme Court will hear the case, even if the FTC decides to appeal.
"They take very few cases, and those they do take generally involve very significant legal issues," Ettinger said. "The issue in Poplar Bluff was not a broad legal one, but centered on how to interpret evidence."