Federal Appeals Court to Review Phoebe / Palmyra Merger

A federal appeals court has temporarily blocked Phoebe Putney Health System Inc.'s proposed $195 million acquisition of rival HCA's Palmyra Park Hospital, in Albany, GA.

The U.S. Court of Appeals for the 11th Circuit in Atlanta issued an injunction that was sought by the Federal Trade Commission in its antitrust complaint against the two hospital systems. The appeals court order late Wednesday afternoon was handed down minutes before the two hospital systems were preparing to finalize the deal. The appeals court agreed to an expedited hearing for the case.

"We are gratified by the 11th Circuit's order and are pleased that Phoebe Putney will not be permitted to complete its acquisition of Palmyra Park Hospital while the Eleventh Circuit considers our appeal," FTC Bureau of Competition Director Richard Feinstein said in a media statement. "We intend to show that the proposed transaction – which will lead to a monopoly in the Albany, Georgia area – will result in higher health care costs for local patients and should not be immune from federal antitrust scrutiny."

In its complaint, the FTC alleged 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."

"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," Feinstein said earlier this year. "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."

However, U.S. District Judge W. Louis Sands in late June ruled that the PPHS was immune from federal antitrust liability under the FTC Act and the Clayton Act.

Earlier this year the FTC voted 5-0 to issue the administrative complaint and authorize staff to file a complaint for preliminary injunction in federal district court. The evidentiary hearing is scheduled before an administrative law judge at the FTC on Sept. 19.

A statement issued by Phoebe Putney reads in part, "While the Hospital Authority has been prepared to sign all necessary documents for the purchase by the close of this week, we are not surprised by the 11^th Circuit action at this time. We are, however, pleased that the 11^th Circuit has also agreed to expedite the appeal process. "

See Also:
FTC to Appeal Phoebe / Palmyra Decision
FTC, GA Challenge 'Anticompetitive' Phoebe/Palmyra Acquisition