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FTC to Appeal Phoebe / Palmyra Decision

John Commins, for HealthLeaders Media, June 29, 2011

The Federal Trade Commission will appeal a federal judge's ruling this week to deny a preliminary injunction against Phoebe Putney Health System Inc.'s proposed $195 million acquisition of rival HCA's Palmyra Park Hospital, in Albany, GA.

"There is abundant evidence – and the defendants do not dispute – that Phoebe Putney's acquisition of Palmyra, its only rival hospital in the Albany, Georgia area, will create a monopoly," FTC Bureau of Competition Director Richard Feinstein said in a media release. "This will result in dramatically higher healthcare costs for citizens of that community.  The deal was specifically structured to avoid antitrust enforcement.  We will immediately appeal the court's decision that the acquisition is immune from antitrust scrutiny."

U.S. District Judge W. Louis Sands on Monday ruled that the PPHS was immune from federal antitrust liability under the FTC Act and the Clayton Act.

PPHS issued a statement lauding the ruling: "In a well reasoned and well documented order, Federal Judge Louis Sands has affirmed our position. He has ruled that the FTC does not have jurisdiction in this case and that the Hospital Authority of Albany and Dougherty County is immune from federal anti-trust liability. His order dismisses the case and dissolves the temporary injunction that prevented us and HCA from moving forward with our consolidation plans."

The Georgia Attorney General's Office had joined the FTC in the complaint, but will not appeal Sands' ruling. "We respect the ruling of the district court, and do not intend to appeal," Attorney General Sam Olens said in a media release. "My office filed a joint complaint with the Federal Trade Commission after the FTC voted 5-0 to seek an injunction and provided my office with robust evidence that the merger will reduce competition and raise healthcare prices in Dougherty County. Through the district court litigation, we were able to highlight our concerns with the acquisition process."

In their complaint, the FTC and the Georgia AG allege that PPHS constructed an elaborate scheme that used the Hospital Authority of Albany-Dougherty County, GA as a "straw man" to "cloak private, anticompetitive activity in governmental guise in the hopes that it would exempt the acquisition from federal antitrust law."

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