ALBANY -- The Federal Trade Commission said in a reply brief filed Tuesday that if Phoebe Putney Health System is allowed to buy cross-town rival Palmyra Medical Center, it would "reward an overt scheme to evade the antitrust laws."
Last December, the Hospital Authority of Albany-Dougherty County authorized Phoebe Health System to broker a $195 million deal with Hospital Corporation of America for Palmyra. Under the plan, Palmyra would be renamed Phoebe North and would be operated as a not-for-profit medical facility by Phoebe, which operates not-for-profit Phoebe Putney Memorial Hospital.
The FTC filed its brief as a part of a series of events that will lead to oral arguments before the 11th U.S. Circuit Court of Appeals in Atlanta on Oct. 5.
In its brief, the FTC attempts to dismantle Phoebe's claim that the Authority, not Phoebe Putney Health System, would be the de facto owner of Palmyra.
"Regardless of the Authority's erstwhile desire to acquire Palmyra, it not only failed to do so, but expressly promised PPHS that it would not do so (or, for that matter, acquire any other hospital)," the brief states.
The FTC continues its assertion that the Phoebe, not the authority, is the one with leverage in Albany over people and insurance companies and that any statement to the contrary by Phoebe is merely a "smokescreen."
"Notwithstanding its assertions about serving state policies, PPMH has exercised its already-substantial leverage in negotiations with health plans to extract high commercial reimbursement rates," the brief continued to say. "And, on a rare occasion when one Authority member questioned PPMH's pricing practices, he was admonished by the Authority's Chairman that 'the Authority really has no authority as far as running the hospital.'
"This Court should brush aside defendants' smokescreen, and 'adhere to the time-tested adage: if it walks like a duck, quacks like a duck, and looks like a duck, then it's a duck,'" the brief states.
Officials with Phoebe Health System maintain that the federal agency's intervention is misplaced.
"The FTC has once again strained to try to figure out a way to distinguish this transaction from well settled judicial precedent from both the Supreme Court of the United States and the 11th Circuit Court of Appeals," said Tommy Chambless, general counsel for Phoebe. "The law is clear.
"While health care economics and federal health care policy are necessarily driving consolidation all over the country, the FTC expends federal resources trying to achieve the opposite."
At the same time, Phoebe CEO Joel Wernick issued a one-line response to the brief filing: "The FTC forgets the focus here is on access to health care and assuring it is local and as least costly as possible. This transaction achieves that goal."
On June 27, U.S. District Court Judge Louis Sands ruled that the Hospital Authority was entitled to immunity from federal antitrust laws in its plan to purchase Palmyra. Shortly afterward, the FTC made a commitment to appeal that decision.