Should St. Luke's antitrust case be reheard? 17 law professors think so

Seventeen law professors along with the International Center for Law and Economics have filed a friend-of-the-court brief requesting the full panel of judges from the 9th Circuit Court of Appeals rehear the antitrust case against Boise, Idaho-based St. Luke's Health System.

St. Luke's 2012 acquisition of Nampa, Idaho-based Saltzer Medical Group was challenged by the FTC, two of St. Luke's competitors — Saint Alphonsus Health System and Treasure Valley Hospital, both in Boise — and the Idaho attorney general.

In January 2014, Chief U.S. Judge B. Lynn Winmill ruled the system's acquisition of Saltzer, one of the largest independent multispecialty groups in Idaho, would cause substantial anticompetitive effects. The judge ordered St. Luke's to divest Saltzer.

In June 2014, St. Luke's appealed the January decision. In February 2015, a three-judge panel from the 9th Circuit Court of Appeals upheld the federal judge's ruling that St. Luke's acquisition of Saltzer was anti-competitive.

"One of the most significant aspects of this case was the court's findings that the transaction was designed to improve healthcare outcomes and to improve quality of care, and that those goals would probably be achieved, but that under traditional antitrust market analysis, the acquisition threatened to give the combined parties market power and therefore should be enjoined," says R. Dale Grimes, attorney at Bass, Berry & Sims and leader of the firm's antitrust and trade practices group.

Mr. Grimes' observation is one of the key points the law professors focused on in their brief. The position of the 9th Circuit's three-judge panel regarding quality efficiencies "are inconsistent with modern antitrust jurisprudence and economics, which treat improvements to consumer welfare as the very aim of competition and antitrust laws," the professors wrote.

In their brief, the professors also argued that the quality improvements provided through the transaction should have carried more weight in the panel's decision-making process.

"It is undisputed that through vertical integration, St. Luke's and Saltzer were able to improve healthcare within the Nampa region," wrote the professors. "By creating a barrier to considering quality-enhancing efficiencies associated with better care, the approach taken by the panel will deter future provider realignment and create a 'chilling' effect on vital provider integration and collaboration."

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