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Court grants FTC injunction

Photo by J.D. Sumner

Photo by J.D. Sumner

ATLANTA, Ga. -- The 11th Circuit Court of Appeals has sided with the Federal Trade Commission and temporarily barred Phoebe Putney Memorial Hospital from buying Palmyra Medical Centers while the FTC appeals a district court ruling.

The decision, which was made public just after 4:30 p.m. Wednesday, came just hours before Phoebe and Palmyra's parent company HCA, had stated in court documents that they would seal the $195 million deal.

The decision doesn't halt the merger altogether, but does prevent the sale while the FTC appeals a ruling from U.S. District Court Judge Louis Sands in Albany in which Sands found that Phoebe has immunity from antitrust scrutiny from the FTC.

According to the court order, which was provided to The Herald by the FTC, the court granted the FTC's request for an expedited appeal. A hearing on the appeal likely won't be scheduled on a court calendar for more than a month.

The order comes after Hospital Corporation of America filed documents with the court explaining how they'd be harmed if the merger was delayed any further and showing that the merger was imminent.

The documents, which were filed in opposition to the FTC's efforts to get an emergency injunction against Phoebe and HCA, state that HCA has already been harmed by delays to the transaction and that, "notwithstanding their victory in district court, the parties have agreed not to consummate the transaction until after the close of business on Wednesday, July 6."

The documents state that since the sale was announced, Palmyra employees have fled the facility at a record rate.

The hospital has lost 65 employees and has had difficulty recruiting replacements.

Those losses include Palmyra's former CEO Mark Rader, its CFO Karen Hayes, the head of pediatrics, the head of intensive care, the head of the pharmacy department, the heads of supply chain and case management.

Palmyra also says it lost its only neurosurgeon, Dr. Harry Weiser, in March 2011 because of the expected transaction.

The FTC, conversely argues that Phoebe Putney Memorial Hospital and HCA are susceptible to antitrust review because the two private entities were using the the Hospital Authority of Albany-Dougherty County to "cloak" their actions from federal scrutiny.

"The authority did no more here than provide a governmental veneer for what were, in every pragmatic sense, the actions of private actors," the FTC response states.

The lawyers for the FTC called HCA's claims of harm "specious," saying that they not only knew the legal hurdles associated with the merger, but that they built themselves a way to profit from it through the implementation of a $35 million "break-up" fee.

"At any rate, the FTC is requesting an expedited appeal to minimize disruption to all parties involved, and the relief it seeks in the instant motion is temporary, and is necessary to prevent immediate and irreversible harm to consumers while the appeal is pending," documents state.