The U.S. Supreme Court announced a decision Monday with ramifications for Georgia health care. But it was not the hyper-anticipated ruling on the 2010 health reform law.
The court said Monday that it will hear the Federal Trade Commission’s appeal of a federal appeals court ruling that an Albany hospital authority’s purchase of a local hospital is immune from antitrust scrutiny.
(The decision on the health care law, more officially known as the Affordable Care Act, will be delivered Thursday.)
The Atlanta-based 11th U.S. Circuit Court of Appeals ruled late last year that the Georgia General Assembly granted antitrust immunity to such deals through a hospital authorities law, overcoming the FTC’s argument that the acquisition would cause higher health costs in the Albany area.
After the appeals court decision, the Albany-Dougherty County Hospital Authority completed a $195 million acquisition of Palmyra in December.
Phoebe Putney Health System has since taken over operation of Palmyra, renaming it Phoebe North. But the FTC took the matter to the Supreme Court, and the court’s decision to hear the case keeps the challenge alive. The court’s ultimate ruling, whatever it may be, should help clarify the law on such mergers.
FTC Chairman Jon Leibowitz issued a statement Monday praising the Supreme Court’s decision to review the case.
“We are pleased that the Supreme Court will consider the Phoebe Putney matter in the coming term,’’ he said. “This case is important to consumers, who benefit from a competitive health care marketplace. It also may provide crucial guidance on the boundaries of the state action doctrine.”
The FTC, in an October hearing in Atlanta, argued before a three-judge panel of the appeals court that while the hospital authority was technically making the acquisition, Phoebe Putney Health System would be running the hospital once it was purchased from HCA.
But the appeal court upheld a lower court ruling that the deal was protected under the state-action doctrine – that the hospital authority is a government entity and thus immune from antitrust law.
The Phoebe system and the hospital authority said in a statement Monday that they are confident they will prevail in the case. The statement also said that the court’s decision to review the ramifications of health care consolidation is not surprising.
The hospital authority, as “a recognized entity of government as created under Georgia law, has exercised its governmental right to make an acquisition and use it for the benefit of the community’s health care needs,’’ said the statement. “Established law protects that governmental right from FTC interference.’’
“This acquisition is a key part of a health care delivery plan for this region,’’ the statement said. “The focus of the Authority and Phoebe will be to continue the delivery of the highest level of quality health care for all our citizens at a fair and reasonable cost.”
Some local physicians have voiced opposition to the deal, the Albany Herald recently reported.
If the justices ultimately decide to limit the scope of state exemptions, that would send a message to other hospitals considering acquisitions, the FTC’s Leibowitz said earlier this month in an interview with Bloomberg.
Under Leibowitz, the FTC has made it a priority to scrutinize mergers in the health-care industry to limit cost increases to patients, Bloomberg reported.
Phoebe Putney Memorial Hospital and Palmyra are the only two hospitals in the Albany area.
The antitrust case is the second one with a Phoebe Putney connection that the justices have agreed to consider recently, although the legal issues involved in the two cases are wildly dissimilar.
In April, in a unanimous decision, the Supreme Court ruled against an Albany accountant in his civil lawsuit over a prosecutorial investigator’s alleged false testimony before a grand jury.
The justices said witnesses who lie to a grand jury are protected from civil lawsuits (though not from criminal prosecution), giving them the same protection as witnesses who testify in full-scale trials.
The Albany case stemmed from a series of incidents beginning in 2003, when the accountant, Charles Rehberg, and a local physician, Dr. John Bagnato, started sending anonymous faxes to business and political leaders in Albany, criticizing the financial practices of Phoebe Putney Memorial Hospital. Here’s how the dispute wound up before the U.S. Supreme Court.