In a nationally watched lawsuit, Phoebe Putney Health System, Albany, Ga., has fought back against the Federal Trade Commission's “meddling” with the $195 million acquisition of its sole competitor, Palmyra Park Hospital.
Phoebe Putney fights FTC 'meddling' in Palmyra deal
In briefs filed with the 11th Circuit Court of Appeals in Atlanta, Phoebe Putney defended the proposed purchase of Palmyra Park from for-profit hospital operator HCA, which only agreed to sell the hospital after Phoebe attorneys promised that a public hospital authority would pay more than twice the hospital's annual revenue.
The litigation hinges on the hospitals' somewhat novel argument that the proposed acquisition is immune from antitrust review because the legal purchaser will be Hospital Authority of Albany-Dougherty County, which also owns Phoebe Putney Memorial Hospital. Attorneys say the acquisition is therefore protected under the state-action doctrine that says governmental entities can take monopolistic actions to advance the public interest.
The FTC has challenged the sale, saying it will give Phoebe the ability to drive up healthcare costs because it would be the sole acute-care provider in a six-county area. Government lawyers say the not-for-profit Phoebe Putney Health System, which leases the hospital from the public for $1 per year, is using the hospital authority as a “strawman” to shield the sale from scrutiny.
But the FTC lost at the trial court level in June, when a federal district court judge in Albany ruled that federal officials essentially have no jurisdiction in the matter because of state-action protection. The FTC immediately appealed the case to the 11th Circuit, even though that court has previously ruled in favor of hospitals in similar cases in the past.
“This transaction is between a willing seller, HCA, and our community's hospital authority,” Phoebe President and CEO Joel Wernick said in a news release. “We are looking forward to the court's ruling. We believe the U.S. Supreme Court has made it clear this transaction is beyond FTC meddling.”
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