FTC ponders next move
Georgia deal goes through, but appeals possible
The Federal Trade Commission failed in its attempt to prevent the sale of Palmyra Medical Center, a deal that gives effective control to the operator of its crosstown rival in Albany, Ga., Phoebe Putney Memorial Hospital. But the battle may not be over.
The FTC opposed as anti-competitive the now-closed $198 million sale of the hospital by HCA to the Hospital Authority of Albany-dougherty County. The hospital authority also owns 439-bed Phoebe Putney Memorial and leases it to not-for-profit Phoebe Putney Health System, as it plans to do with 102-bed Palmyra.
The purchase closed Dec. 15 after a federal appeals court in Georgia on Dec. 9 affirmed a lower court ruling that said the deal should be allowed to proceed, creating a more difficult but not insurmountable path for the FTC, which would now have to try to undo the deal. The agency could continue to pursue the action administratively within the FTC’S internal process, request a rehearing with the full 11th U.S. Circuit Court of Appeals, which ruled on the case with a three-judge panel, or it could appeal to the U.S. Supreme Court.
Given the unusual nature of the situation, the FTC’S odds of success in continu- ing to pursue the matter are unclear. If it were a more of a run-of-the-mill hospital antitrust case, it would be more likely that the FTC would ultimately fail, said attorney Toby Singer, partner in the Washington office of Jones Day.
The case is unusual, however, because of the accusation that the Hospital Authority of Albany-dougherty County and Phoebe Putney Health System had schemed to avoid antitrust concerns by having the hospital authority purchase the hospital and lease it back to Phoebe Putney, Singer said. The authority, as a government entity, has been ruled to be not bound by federal antitrust laws. The Albany-dougherty authority currently leases Phoebe Putney Memorial to Phoebe Putney Health System for $1 a year, and the FTC argued in its complaint that Phoebe Putney was the real buyer of the hospital, using the hospital authority as a conduit to do so under protection from antitrust laws.
The 11th Circuit may be receptive to a request from the FTC to have the entire court rehear the case given the facts in the situation, Singer said. But because the 11th Circuit in general has ruled in favor of allowing deals to proceed, that history works against the FTC’S chances to pursue a rehearing, she said.
The outlook would be similarly mixed in terms of getting the Supreme Court to hear the case, while the chances that the FTC would