Hearing officer determines Certificate of Need law applies to any divestiture of Phoebe North

ALBANY — An independent administrative hearing officer has ruled that prior review and approval under Georgia Certificate of Need laws would be required if the Federal Trade Commission were to order the Hospital Authority of Albany-Dougherty County to sell Phoebe North, formerly Palmyra Medical Center.

The administrative hearing officer’s ruling reverses the Georgia Department of Community Health’s earlier finding this year that Georgia’s CON law would not apply in the event the FTC ordered the divestiture of Phoebe North by the Hospital Authority.

Following oral arguments and written submissions from the parties involved, Administrative Hearing Officer Ellwood F. Oakley III, in a 39-page ruling dated Oct. 2, ordered “that summary adjudication is granted in favor of appellants” — which includes Hospital Authority, Phoebe Putney Health System and Phoebe Putney Memorial Hospital Inc.

Oakley denied the request by North Albany Medical Center for a summary adjudication in its favor, and denied a motion for partial summary judgment by the Department of Community Health.

“We are, of course, pleased with the very clear order of the hearing officer who reviewed DCH’s Determination Letter and reversed it,” Thomas Chambless, Phoebe senior vice president and general counsel, said. “This order, entered after the hearing officer received extensive briefing and oral argument by the parties, makes clear that the analysis done by the Federal Trade Commission last year when it entered into a settlement with Phoebe Putney and the Hospital Authority was and is correct.

“A divestiture of the Phoebe North Campus facility is not a remedy which can be effectuated as a result of the proceeding by the FTC. The Hearing Officer’s Order affirms the conclusion the Federal Trade Commission staff and, then, the commission itself reached last year. We are hopeful the commissioners will now act in accordance with this affirmation of their own earlier analysis and bring this matter to a conclusion, rather than continue with administrative litigation.”

Officials with the FTC chose not to comment Wednesday on the results of the hearing.

Pamela Keene, media relations manager for DCH, sent a statement out on the decision saying: “Department of Community Health Commissioner Clyde L. Reese III is in support of and in agreement with the Hearing Officer decision.”

Victor Moldovan, the attorney representing NAMC, could not be reached for comment Wednesday.

In August 2013, the FTC had developed a proposed settlement with Phoebe and the Hospital Authority that would have allowed the Authority to maintain possession of the former Palmyra and for Phoebe to operate the medical center with certain stipulations. The Hospital Authority and Phoebe agreed to the settlement, but the FTC never finalized it.

North Albany Medical Center, based in Tennessee and registered with the Georgia Secretary of State’s Office last December, requested the CON ruling from DCH last spring. With a determination by DCH in June that Georgia’s CON law would not prevent an FTC-ordered sale of Phoebe North, the federal agency later withdrew its settlement proposal and scheduled a hearing for February.

The Hospital Authority agreed to purchase the former Palmyra from Hospital Corporation of America in December 2010 for $195 million. The purchase was challenged in federal court by the FTC and Georgia Attorney General Sam Olens, who lost the argument that the purchase was not exempt from FTC antitrust reviews at both the U.S. District Court and 11th U.S. Circuit Court of Appeals levels.

The FTC continued the appeal to the U.S. Supreme Court, which reversed the lower courts’ decision in early 2013 and determined the purchase by the Authority was subject to antitrust review. That led to the FTC settlement proposal that August.