A three-judge panel of a federal appeals court in Atlanta heard arguments Wednesday on whether a proposed purchase of an Albany hospital would violate antitrust law or is exempt from such regulatory scrutiny.
The proposed $195 million acquisition of Palmyra Medical Center by the Albany-Dougherty County Hospital Authority, originally announced in December, has drawn fierce opposition from the Federal Trade Commission.
The 11th U.S. Circuit Court of Appeals granted the FTC a temporary injunction halting the deal in July, after U.S. District Court Judge Louis Sands ruled that the hospital authority is exempt from federal antitrust scrutiny.
An FTC lawyer, Imad Abyad, argued Wednesday before the appeals panel that while the hospital authority is technically making the purchase, Phoebe Putney Health System will be running the acquired facility, currently owned by HCA.
The federal agency has said that the purchase of Palmyra is anti-competitive and would raise health costs by merging the only two hospitals in the southwest Georgia city.
The FTC also alleged that the hospital authority has not actively supervised Phoebe Putney for at least two decades and is now being used simply to shield the proposed transaction from antitrust legislation.
But Frank Lowrey, an Atlanta lawyer representing the hospital authority, countered that it is a government entity and therefore immune from antitrust law. There is no active supervision requirement in such “state action” cases, he said.
Lowrey, of the Atlanta firm Bondurant Mixson & Elmore, noted that the new closing date of the transaction is Dec. 15, and that HCA, a Nashville-based hospital chain, will have to be paid a $35 million breakup fee if the deal for Palmyra isn’t consummated.
Phoebe Putney CEO Joel Wernick said after the morning hearing that both Phoebe and HCA have cooperated with the government, but are now looking for closure. The deal “is the right thing for citizens,’’ he said.
Wernick said in a recent statement, as reported by the Albany Herald: “Now more than ever the national health care landscape makes hospital consolidations and regional partnerships a necessary strategy to provide cost-effective, quality care to citizens.”
Ted Hassi of the FTC, though, said the price of medical care is already high in the Albany area, even though many residents of the region live in extreme poverty. If the deal goes through, Hassi said, ‘‘prices will only go up.’’