WASHINGTON — Arguments from both sides were heard Monday by the justices of the U.S. Supreme Court in the case involving the purchase of Palmyra Medical Center, now known as Phoebe North, by the Hospital Authority of Albany-Dougherty County late last year.
"The case was well argued to a court that appeared to be very knowledgeable about the issues," said Thomas Chambless, general counsel for Phoebe Putney Health System — which oversees the day-to-day operations of Phoebe North. "They asked many questions about the main issue, which is state action immunity."
The case was heard by the high court after the Federal Trade Commission appealled a decision from the 11th U.S. Court Court of Appeals, which determined that the purchase of the hospital was immune from federal intervention. That ruling upheld a decision made by U.S District Judge Louis Sands in June 2011.
The decision from the Court of Appeals allowed for the $195 million acquisition to go through in December 2011, which was followed by an amended and fully restated lease that put Phoebe Putney Memorial Hospital and Phoebe North under the same lease effective Aug. 1.
Seth Waxman, a former U.S. solicitor general, argued the case for Phoebe and the Hospital Authority, while the FTC was represented by Benjamin Horwich, assistant to the solicitor general.
At question was whether the Georgia Legislature, by vesting a local government entity with general corporate powers to acquire and lease out hospitals and other property, has clearly articulated and affirmatively expressed a state policy to displace competition in the market for hospital services.
Under the State Action Doctrine, federal antitrust laws do not apply to anti-competitive conduct of certain subordinate public entities created by a state if the conduct is authorized as part of a "state policy to displace competition" that is "clearly articulated and affirmatively expressed" in state law.
"The state action doctrine provides a defense to a federal antitrust suit when a state had clearly articulated and affirmatively expressed an intent to displace competition with respect to the particular activity at issue in the suit," Horwich said in his remarks during Monday's proceedings. "Now, in practical terms, what that comes down to is whether application of federal competition law would somehow subvert a sovereign state policy choice that's clearly evident in state law.
"Now, that policy might be expressed in mandatory or compulsory terms, but, short of that, it would be enough, if the ... state had specifically permitted conduct that is inherently anticompetitive."
Near the end of his remarks, Waxman addressed the "buy versus build" argument that Phoebe officials used as a means to help justify the buyout.
"... (T)his county, this hospital authority, like many, facing a capacity constraint and a ...nondiscretionary mandate to serve the public needs for hospitalization, had two choices: It could have tried to convince the state to spend three times as much money to get half the number of beds, notwithstanding the existence of excess capacity; or it could buy the other hospital and get that capacity in a consensual transaction by the authority," he said.
The Supreme Court is expected to rule on the matter in the spring. All cases argued during a term of court are decided before the summer recess begins, usually by the end of June.
The FTC does not typically comment on pending litigation. A spokesman for the agency said there would likely be a statement from the case's petitioner when a decision is rendered.
In the meantime, Chambless said that officials will continue to move forward with the long-term plans for Phoebe North, which officials plan to turn into a freestanding women's and children's hospital.