The Federal Trade Commission must soon decide whether to continue challenging a merger between two West Virginia hospitals or drop the fight following the passage of a state law meant to shield such mergers from federal antitrust action.
West Virginia Gov. Earl Ray Tomblin signed a bill into law on March 18 that protects hospital mergers from state and federal antitrust scrutiny. The governor's signature came less than three weeks before an FTC administrative trial is scheduled to begin over the merger.
At least one expert, Jeff Miles, an antitrust expert with Ober Kaler, believes the FTC is more likely to walk away than continue the battle against Cabell Huntington Hospital's proposed acquisition of St. Mary's Medical Center, also in Huntington. Some worry that if the FTC drops its challenge, it could inspire more states to pass similar laws.
“Should the FTC leave the matter unchallenged, this new West Virginia law will be the blueprint used by monopolists to avoid consumer protection laws,” Tim Duke, president and CEO of Steel of West Virginia, said in a statement. Duke opposes the merger, saying it could lead to higher costs that could hurt his steel production business.
Cabell Huntington did not respond to requests for comment.
The FTC moved in November to block the hospitals' merger, saying it would create a near monopoly over general acute-care inpatient hospital services and outpatient surgical services that would likely lead to higher prices and lower quality.
The hospitals' leaders have said they believe the FTC challenge “misreads the highly competitive landscape” across their three-state market of Kentucky, Ohio and West Virginia. They have said they believe the acquisition would benefit the community and its patients.
Richard Feinstein, a partner at Boies, Schiller & Flexner and a former director of the FTC's Bureau of Competition, said he wouldn't be surprised if the hospitals now ask the court to dismiss the case because of the passage of the new law. The administrative law judge could then choose to agree to that request or begin the trial anyway, thus challenging the validity of the new law.
