FTC Urges Supreme Court to Strike Previous Rulings in Phoebe Putney Case

The Federal Trade Commission has submitted its argument to the Supreme Court in its case against Albany, Ga.-based Phoebe Putney Health System, urging the high court to reverse previous rulings.

The main issue of the FTC v. Phoebe Putney case is whether states can execute hospital mergers and acquisitions despite FTC scrutiny under state action doctrines that give local government entities power to acquire hospitals.

The FTC filed suit in April 2011 to block Phoebe Putney's acquisition — through an arranged lease with the Hospital Authority of Albany-Dougherty County — of Palmyra Medical Center, also in Albany. The Hospital Authority of Albany-Dougherty County maintains ownership and oversight responsibility and fiduciary supervision of the assets of Phoebe Putney.

Under the planned acquisition, the Hospital Authority would lease Palmyra to Phoebe Putney for $1 per year.

The FTC claimed the transaction would create a monopoly in the region, raising prices for healthcare services while reducing competition.

In June 2011, a federal judge ruled that the Hospital Authority could work with Phoebe Putney Memorial Hospital in Albany, Ga., to acquire Palmyra.

In December 2011, the Atlanta-based 11th Circuit Court of Appeals upheld that decision, basing their opinion on a 1941 Georgia law that allows hospital authorities to acquire hospitals by purchase, lease or other means. The court ruled that this "state action doctrine" gave the Hospital Authority and Phoebe the power to acquire Palmyra and also noted that anticompetitive effects were anticipated at the time the law was enacted.

In its petition, the FTC questions whether the state has "clearly articulated and affirmatively expressed" a "state policy to displace competition" in the hospital market. If so, the FTC still questions whether such a policy is sufficient enough to validate the allegedly anticompetitive conduct.

The FTC claims Phoebe Putney used the Hospital Authority as a "conduit" to acquire Palmyra. In its petition, the FTC contends the Hospital Authority "neither actively participated in negotiating the terms of the hospital sale nor has any practical means of overseeing the hospital's operation."

More Articles on Phoebe Putney and the FTC:

Another Looming Supreme Court Ruling: The Phoebe Putney-Palmyra Deal
An Overview of Recent Challenges to Hospital Transactions: Is the FTC Really More Aggressive?
FTC Files Appeal With Supreme Court Over Palmyra, Phoebe Putney Merger

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