Plans for Phoebe North to move forward following FTC settlement | VIDEO

ALBANY —A legal battle with a federal regulatory agency over the Hospital Authority of Albany-Dougherty’s purchase of the former Palmyra Medical Center has concluded after four years at a cost that Phoebe Putney Memorial Hospital CEO Joel Wernick said was “at least seven figures and headed toward eight.”

Mobile users can see video of the news conference here.

Following news from the Federal Trade Commission Tuesday evening that a final settlement had been reached in regard to its opposition of the purchase of Phoebe North (formerly Palmyra) by the Hospital Authority, Wernick and senior administrative and board leadership for Phoebe Putney announced what the next steps would be in the utilization of its former rival.

The settlement came hours before a second extension of a temporary withdrawal of the matter from adjudication was set to expire. The FTC had objected to the December 2010 acquisition of Palmyra, then a privately-owned rival to Phoebe Putney, by the Hospital Authority. FTC officials contended that the $195 million acquisition violated antitrust laws and greatly diminished competition in the Southwest Georgia health care marketplace.

Wernick was joined Wednesday at a news conference by Tommy Chambless, senior vice president and general counsel for Phoebe; Hospital Board Chair John Culbreath; Phoebe Putney Health System Chair Lem Griffin, and Hospital Authority Chair Ralph Rosenberg.

While giving a synopsis of the four-year legal process, Chambless said he had been in contact with lawyers in Washington throughout the day Tuesday before receiving word of the settlement around 6:30 p.m. With the settlement finalized, the immediate step will be to get dissolved the preliminary federal court injunction that has been in place while the litigation was ongoing to prevent further changes at Phoebe North.

“The draft of (a document) to dissolve the injunction is floating between the attorneys here and the attorneys in Washington,” he said. “In the next day or two, (the plan is for) something to be before Judge (Louis) Sands to dissolve the injunction and allow our plans to go forward.” Sands is a senior U.S. District Court judge based in Albany.

Asked about the legal expenses that had accumulated over the course of the legal fight with the FTC, Wernick said that the money spent “was a very scarce resource.”

“While the attorneys earned every nickel,” he said, “we would have just as soon have spent the hourly rates (on employees at Phoebe).”

Phoebe officials said they were pleased overall with the resolution. “The settlement is something we can easily live with,” Wernick said.

Once development is cleared to begin at Phoebe North, decisions will be made on future use of the facility. Some of the plans on the table include space for women’s and children’s services, low-intensity emergency services — in part to fulfill Phoebe Putney Memorial Hospital’s aspiration of becoming a Level 2 trauma center, and expansion on educational opportunities for prospective health care providers.

“We will migrate where services will be used best … which services will be the best focus is under consideration,” Wernick said.

FTC officials, despite the agreement which will allow the Hospital Authority to maintain ownership of Phoebe North and to contract with Phoebe to operate the facility, said Tuesday that they still believed the transaction violated the federal Clayton Act and the FTC Act. When the 11th U.S. Circuit Court of Appeals, prior to being overturned by the U.S. Supreme Court, allowed the Hospital Authority and Hospital Corporation of America to consummate the transaction, FTC officials said, it created circumstances that precluded a divestiture because of Georgia’s Certificate of Need law.

The settlement announced Tuesday was similar to the one the FTC proposed in August 2013. It requires Phoebe and the Hospital Authority to give the FTC prior notice before acquiring any part of a hospital or a controlling interest in other health care providers in the Albany metro area for the next 10 years, prohibits the Hospital Authority and Phoebe from opposing a CON application for a general acute-care hospital in the Albany area for up to five years, and contains a stipulation that the effect of the transaction may substantially lessen competition within the relevant service and geographic markets.

Also as part of the settlement, both Phoebe Putney Memorial Hospital and the Hospital Authority will have to report to the FTC on an annual basis to ensure the terms of the settlement are being met. The Commission vote to make the consent order final was 3-0-2, with Commissioners Joshua D. Wright and Terrell McSweeny not participating.

In a news release issued by the FTC Tuesday, it noted that when the Commission issues a consent order on a final basis, it carries the force of law.

In its 2011 complaint against the purchase of Palmyra by the Hospital Authority, the FTC argued the acquisition would reduce competition for acute-care hospital services sold to commercial health plans in the five-county area that comprises metro Albany — Dougherty, Lee, Worth, Baker and Terrell counties — and in adjacent Mitchell County. The commission argued the lessened competition would give Phoebe Putney Memorial Hospital, which was chosen by the Authority to operate Phoebe North, an 85 percent market share that would cause health costs to rise.

The Hospital Authority and Phoebe argued the transaction was exempt from federal antitrust oversight under the state action doctrine, a position upheld by Sands and the 11th Circuit, but rejected in February 2013 by the U.S. Supreme Court.

The FTC withdrew its initial settlement proposal after information received during the comment period led agency officials to believe Georgia’s CON law would not preclude divestiture. The state Department of Community Health, acting on a question posed by an out-of-town interest, North Albany Medical Center LLC, said CON would not require prior review and DCH approval in the event of a ordered sale, but a state administrative officer reversed that finding on appeal.

Victor Moldovan, the attorney for North Albany, could not be reach for comment on the decision Wednesday.

The case had been expected to go into federal administrative proceedings in February before it was temporarily withdrawn from adjudication by the FTC to consider the settlement.