Supreme Court Sides with FTC in Phoebe Putney Case
The case centers around a $195 million transaction and the application of state action immunity, or whether states can execute hospital mergers and acquisitions despite FTC scrutiny if a state action doctrine gives local government entities power to acquire hospitals.
The Supreme Court reversed a December 2011 decision from the Atlanta-based U.S. Court of Appeals for the Eleventh Circuit, which approved the hospital merger even though the court anticipated monopolistic effects. That court based its decision on a 1941 Georgia law, or state action doctrine, which allows hospital authorities to acquire hospitals by purchase, lease or other means.
Justice Sonia Sotomayor delivered the court's opinion today. The court ruled that "because Georgia's grant of general corporate powers to hospital authorities does not include permission to use those powers anticompetitively, we hold that the clear-articulation test is not satisfied and state-action immunity does not apply."
The clear-articulation test refers to an assessment of whether the state clearly articulated and affirmatively expressed permission for hospital authorities to make acquisitions that would "substantially lessen" competition.
"Our case law makes clear that state-law authority to act is insufficient to establish state-action immunity; the substate governmental entity must also show that it has been delegated authority to act or regulate anticompetitively," the court ruled.
More Articles on Phoebe Putney Health System and the FTC:Supreme Court Justices Raise Challenges to Both Sides in FTC v. Phoebe Putney Hearing
Another Looming Supreme Court Ruling: The Phoebe Putney-Palmyra Deal
FTC Files Appeal With Supreme Court Over Palmyra, Phoebe Putney Merger
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