WASHINGTON WASHINGTON — The Federal Trade Commission confirmed Friday afternoon that it will seek to challenge before the U.S. Supreme Court the acquisition of Palmyra Medical Center by the Hospital Authority of Albany-Dougherty County.
The FTC voted unanimously this week to ask the Justice Department to request that the issue be brought before the nation’s highest court.
The agency contends that Phoebe Putney Memorial Hospital has improperly used what is known as the “State Action Doctrine” to shield the Hospital Authority from federal antitrust scrutiny in the $195 million acquisition.
If the Supreme Court accepts the case, the question before the court is whether the doctrine can shield anticompetitive conduct from entities seeking to merge with private organizations when the Hospital Authority wasn’t a party to the negotiations and doesn’t manage the assets on a day-to-day basis.
The authority in December 2010 authorized Phoebe Putney Health System to negotiate the deal to buy the private hospital owned by Hospital Corp. of America (HCA) and agreed that Palmyra’s former not-for-profit competitor, Phoebe Putney Hospital, would operate the facility. After a year of legal wrangling led by the FTC’s unsuccessful efforts to review the purchase under antitrust statutes, the authority was cleared to make the purchase this past December and Palmyra has been redesignated Phoebe North.
FTC officials contend the merger of Palmyra into the Phoebe system stifles health care competition in Dougherty County and Southwest Georgia, and that it will drive up health care prices and cost for consumers because of a lack of competition.
Phoebe has countered that the purchase was done out of a necessity for additional space, arguing that it would be cheaper for consumers in the area if that space were bought rather than built. Phoebe also argues that consolidation of medical facilities has been a priority under health care reform embraced by the president while shunned by the FTC.
“The law is clear, as decided by Judge (Louis) Sands and upheld by the 11th Circuit,” Phoebe Vice President for Communications Jackie Ryan said Friday. “We will be filing an opposition brief to this.”
On March 20, 2011, the FTC filed a complaint in federal district court against the purchase, arguing that it would reduce competition significantly and allow the combined Phoebe/Palmyra to raise prices for general acute-care hospital services charged to commercial health plans, harming patients and local employers and employees.
On June 27, the U.S. District Court for the Middle District of Georgia, Albany Division, dismissed the FTC’s complaint and denied its motion for a preliminary injunction to stop the deal from going forward. The FTC then appealed the District Court decision to the U.S. Court of Appeals for the 11th Circuit, which affirmed the judgment of the District Court on Dec. 9.
The filing of a challenge by the FTC doesn’t mean that the Supreme Court will agree to hear the case.