The Department of Justice (“DOJ”) Antitrust Division recently announced plans to hold a series of public roundtable discussions to analyze the relationship between competition and regulation, and its implications for antitrust enforcement policy. As the Antitrust Division continues to scrutinize the healthcare industry, these roundtables may give a window into the Division’s current thinking about mergers and acquisitions and contracting practices in the industry. The roundtable series starts on Wednesday, March 14, 2018, with a focus on antitrust exemptions and immunities, including a focus on the appropriate role of the state action doctrine. The roundables will include perspectives from various industry participants as well as “academics, think tanks, and other interested parties to discuss the economic and legal analyses of competition and deregulation.” The second roundtable will be held on April 26, 2018, and will focus on consent decrees. The third roundtable will be held on May 31, 2018, and will analyze the consumer costs of anticompetitive regulations. The DOJ will accept public comments (not to exceed 20 pages) in advance of each of the roundtables. The federal antitrust agencies often hold public events of this nature to further inform their antitrust enforcement agendas. It will be interesting to see if this roundtable series results in any major enforcement policy changes for the Antitrust Division, which is now under the leadership of Assistant Attorney General, Makan Delrahim.
The Federal Trade Commission (“FTC”) and the State of Illinois successfully concluded their challenge to the proposed merger of Advocate Health Care and NorthShore University Health System earlier this month, when the U.S. District Court for the Northern District of Illinois granted the plaintiffs’ request for a preliminary injunction enjoining the health systems from consummating their proposed merger. The parties subsequently abandoned the transaction without appealing the district court’s decision.
The district court had previously denied the motion for a preliminary injunction. It believed that the geographic market proposed by the plaintiffs was too narrow and found the evidence “equivocal” regarding the importance of patients having access to hospitals close to their homes. As such, it held that the plaintiffs had not met their burden of proving a relevant geographic market and thus, did not demonstrate a likelihood of success on the merits. However, in October 2016, the U.S. Court of Appeals for the Seventh Circuit reversed and remanded for further proceedings on the issue of geographic market definition, holding that the lower court erred in its factual findings regarding critical aspects of the geographic market, as well as the remaining preliminary injunction elements that the district court did reach in its first decision.
This alert examines the court’s decision, which not only supports the FTC’s hospital merger enforcement program but continues to up the ante for merging parties attempting to persuade a court that the proposed efficiencies are sufficient to offset alleged anticompetitive effects.
The Federal Trade Commission (“FTC”) and the state of Pennsylvania have two weeks to persuade the Court of Appeals for the Third Circuit that the pending merger of Penn State Hershey Medical Center (“Hershey”) and Pinnacle Health System (“Pinnacle”) is anticompetitive. The FTC’s request for a preliminary injunction against the pending merger was denied on Monday by the U.S. District Court for the Middle District of Pennsylvania which found that the deal was likely to benefit patients. FTC v. Penn State Hershey Medical Center, 1:15-cv-02362 (M.D. Penn May 9, 2016). That decision is analyzed here. On Tuesday, the government filed a motion in the district court seeking an injunction enjoining the proposed merger pending an emergency appeal to the Third Circuit.
Pursuant to a December stipulated temporary restraining order (“TRO”), the hospitals are entitled to consummate the merger within three business days following a ruling denying the preliminary injunction. Thus, under that TRO, the merger could have closed today. In their opposition to the FTC’s motion for an injunction pending appeal, the hospitals indicated that they would not oppose a two week extension of the TRO if the government filed for an injunction with the Third Circuit. The FTC filed its emergency appeal and the district court granted the two week extension, setting the new TRO expiration date to May 27. The hospitals’ response to the emergency motion is due Wednesday May 18th. Continue Reading FTC Granted 2-Week Reprieve in Effort to Block Pennsylvania Hospital Merger
Last week, the Federal Trade Commission (“FTC” or “Commission”) authorized staff to file an administrative complaint and to seek in federal court a temporary restraining order and a preliminary injunction to block the proposed merger of Advocate Health Care Network (Advocate) and NorthShore University HealthSystem (NorthShore) in the Chicago area. In the Matter of Advocate Health Care Network, Advocate Health and Hospitals Corporation, and NorthShore University HealthSystem, FTC Docket No. 9369 (December 17, 2015). The FTC alleged that the combined entity would operate the majority of the hospitals in the North Shore area of Chicago, and control more than 50% of the general acute care inpatient hospital services. Continue Reading A Return to Evanston: FTC Revisits Old Ground in Yet Another Hospital Merger Challenge
The Federal Trade Commission (“FTC”) and Department of Justice Antitrust Division (“DOJ”) (collectively, “agencies”) issued a joint statement to Virginia’s Certificate of Public Need (“COPN”) Work Group, which was recently charged with reviewing Virginia’s certificate of public need process and its impact on health care services in Virginia, including the development of “specific recommendations for changes to the certificate of public need process to address any problems or challenges identified during [its] review.” The agencies’ statement encourages the Work Group and the General Assembly to reconsider whether “Virginia’s COPN laws best serve its citizens” and suggests that the Work Group consider the repeal or retrenchment of the COPN laws in order to promote the efficient functioning of health care markets. This statement is another example of the agencies’ continued vigilance in their efforts to prevent CON laws from suppressing competition by “limiting the availability of new or expanded health care services.”
Virginia’s CON program requires providers such as hospitals, nursing homes, rehabilitation facilities and other general acute care service providers to obtain a COPN from the State Health Commissioner (“Commissioner”) before initiating certain projects. The Commissioner can only issue a COPN after determining that there is a public need for the project. According to Virginia’s Department of Health, the review process can take six to seven months to complete — applications are examined during 190-day review cycles designated for certain batch groups which occurs just twice a year for most groups. Aggrieved parties, including incumbent providers, can appeal the Commissioner’s decision to the circuit court. From the agencies’ perspective, this time-consuming and costly process may deter beneficial entry “since a potential entrant may decide that the process itself is too costly.” Continue Reading FTC-DOJ Join Forces: Encourage Repeal/Retrenchment of Virginia CON Laws
In an April 22, 2015 letter to the New York State Department of Health, the Federal Trade Commission (FTC) cautioned that part of the state’s Medicaid reform program may sanction anticompetitive behavior. The FTC’s concern stems from the Certificate of Public Advantage (COPA) regulations, which offer federal antitrust immunity for certain collaborations among providers participating in the Delivery System Reform Incentive Payments (DSRIP) program. Mintz Levin has prepared an advisory examining the FTC’s letter and its antitrust warnings, and what they mean for hospitals and providers looking to achieve greater efficiencies through collaborative activities.
A small regional hospital’s antitrust suit alleging illegal exclusive dealing and attempted monopolization against its largest competitor will move forward following a district court’s denial of the defendant hospital’s motion for judgment on the pleadings. Methodist Health Svcs. Corp. v. OFS Healthcare System, d/b/a Saint Francis Med. Ctr., No. 1:13-cv-01054 (C.D. Ill. Mar. 25, 2015). The complaint alleges that defendant is a “must have” for health insurers, and that defendant leverages that status to prevent health insurers from contracting with plaintiff and other competing hospitals. Saint Francis filed a motion for judgment on the pleadings, arguing that the complaint failed to plead, and cannot adequately plead, plausible relevant product markets or substantial foreclosure in those markets. The court disagreed.
In “Hospital Wins First Round Against Largest Rival” Mintz Levin antitrust attorneys explain the importance of this case, noting that it has the potential to create important precedent and guidance regarding the use of exclusive contracts, particularly when employed by parties with market power. The case also serves as an important reminder that private antitrust litigation can often spark the interest of federal antitrust enforcers, as was the case in the FTC’s seminal St. Luke’s matter. Beyond private litigants, the potential competitive harm from exclusive dealing has been and continues to be scrutinized by the federal antitrust enforcers.
This week, the Sixth Circuit unanimously upheld the March 28, 2012 Federal Trade Commission (FTC) administrative decision that ordered ProMedica Health System, Inc. to divest itself of its August 2010 purchase of St. Luke’s Hospital in Lucas County, Ohio.
The Sixth Circuit held that the merger created no substantive or compelling efficiencies and that it would increase ProMedica’s pricing and bargaining power anticompetitively.
Mintz Levin’s Antitrust Practice attorneys Bruce Sokler, Helen Kim, and Timothy Slattery analyze the Sixth Circuit’s decision and discuss how this landmark decision could be a harbinger of greater scrutiny and enforcement against health care provider mergers that the FTC view as anticompetitive. Read the Antitrust Practice Alert at this link.