Judge denies latest FTC attempt to halt Novant-CHS deal

A North Carolina federal judge denied the Federal Trade Commission's request to bar Winston-Salem, N.C.-based Novant Health from acquiring two North Carolina hospitals from Franklin, Tenn.-based Community Health Systems until its appeal is resolved.

District Judge Kenneth Bell, however, did extend the expiration of a temporary restraining order until noon June 21, which he said in his June 11 ruling will allow the FTC time to seek an injunction from the 4th U.S. Circuit Court of Appeals.

The FTC has been attempting to block Novant from acquiring Lake Norman Regional Medical Center and Statesville, N.C.-based Davis Regional Medical Center in a $320 million deal. The commission has argued Novant's acquisition of the hospitals would "irreversibly consolidate the market for hospital services in the Eastern Lake Norman Area in the northern suburbs of Charlotte." 

Mr. Bell on June 5 denied the FTC's request for a preliminary injunction, writing in his ruling that he believes the proposed merger "carries at least as much likelihood of competitive benefits as it does competitive harm and the FTC is unlikely to ultimately be successful in proving that the transaction may 'substantially lessen competition.'" 

The FTC filed a notice June 9 that it plans to appeal Mr. Bell's decision to the 4th Circuit. The commission filed a motion June 10 seeking to stop the deal from moving forward until the 4th Circuit rules on its appeal. The FTC had asked for a decision on its motion by noon June 11. It argued that "it would be extraordinarily difficult to 'unscramble the egg' if the proposed transaction is deemed unlawful after defendants have integrated their operations, shared competitively sensitive confidential information and laid off staff." 

In a footnote in his June 11 ruling, Mr. Bell said although he issued his order denying the preliminary injunction June 5, the FTC waited until after noon June 10 to seek an injunction pending appeal, creating a situation where had he "simply denied the motion, the appeals court would have had at most only a single day to consider the FTC's injunction request."

"This court will not put the court of appeals under that time pressure; rather, it will defer the earliest date of the closing to ten days from this ruling to allow the court of appeals a more reasonable period of time to consider the FTC's so-called 'emergency' motion," he wrote. 

Novant told Becker's in a statement it has been trying to move the transaction forward for more than a year and is "disheartened that the FTC continues to impede the progress of healthcare and the restoration of specialty services."

"Our hope is that this extension is the final delay and that we can soon begin delivering on our commitments to the patients served by these two hospitals," the statement said.

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