ALBANY, Ga. — The Federal Trade Commission filed a brief with the U.S. Supreme Court on Monday in the case involving the acquisition of Palmyra Medical Center by the Hospital Authority of Albany-Dougherty County.
The FTC initially filed a complaint to block the transaction in April 2011, alleging the purchase would significantly reduce competition and allow the combined hospitals of Palmyra and Phoebe Putney Memorial Hospital — which is owned by the Hospital Authority and leased to Phoebe Putney Health System — to raise prices for general acute-care hospital services charged to commercial health plans, thereby harming patients as well as local employers and employees.
The respondents named in the brief are Phoebe Putney Health System, Putney Putney Memorial Hospital, Phoebe North, Hospital Corporation of America, Palmyra Park Hospital and the Hospital Authority.
“Respondents orchestrated a transaction through which PPHS (Phoebe Putney Health System) was to acquire control of Palmyra from HCA (Hospital Corporation of America), giving PPHS an absolute monopoly in the market for inpatient general acute-care hospital services sold to commercial health care plans and their customers in Dougherty County,” the FTC states in the brief.
The key issue before the high court will be the state action doctrine, under which federal antitrust laws do not apply to the anti-competitive conduct of certain public entities created by a state if the conduct is authorized as a part of state policy to displace competition, and that policy is clearly articulated and affirmatively expressed in state law.
The FTC is arguing that the state action doctrine does not shield the transaction at issue because Georgia has not clearly articulated an intent to displace competition in the market for hospital services. It also argues that relevant state law provisions do not suggest, let alone clearly articulate, any legislative intent to displace competition in the provision of hospital services.
The FTC also says in its brief even if Georgia law had condoned the sale-and-lease arrangement at issue, the transaction would not be exempt from federal antitrust law since a state cannot authorize the acquisition by private parties of unsupervised monopoly power, and that the transaction creates a private monopoly that must be actively supervised if it is to be shielded by the state action doctrine.
The FTC is asking that the judgment of the 11th Circuit Court of Appeals be reversed and the case remanded for further proceedings.
In the brief, the FTC continues to contend that the authority had little to no involvement in the transaction process, saying the body was “akin to that of a notary public” in that it certified the purchase without playing a part in the fashioning of the terms.
“This is what is typically expected (as part of court proceedings),” Jackie Ryan, vice president of corporate strategy at Phoebe Putney Memorial Hospital, said of the brief’s filing. “Nothing has changed. Our position has been the same as it has always been.”
Ryan said Phoebe was expected to file its brief to the high court by Oct. 1.
The Court of Appeals ruled in December that the acquisition was immune from federal intervention. This paved the way for the $195 million deal to go through nearly a full year after the purchase was first announced.
Palmyra then became known as Phoebe North.
A petition for a writ of certiorari was granted by the Supreme Court on June 25. A hearing date has not yet been determined.