Feds try again to block Albany hospital merger

The Federal Trade Commission is resuming its challenge of the merger of two Albany hospitals.

The Albany-Dougherty County Hospital Authority and Phoebe Putney Health System said Sunday that U.S. Solicitor General Donald Verrilli, on behalf of the FTC, has asked for an extension of the deadline to seek the Supreme Court’s review of the federal appeals court ruling that allowed the acquisition.

After the appeals court decision, the hospital authority completed a $195 million acquisition of Palmyra Medical Center in December.

Last week, though, FTC Chairman Jon Leibowitz said his agency was considering another legal challenge to the deal.

“If this hospital merger is allowed to go through, it’s going to give a blueprint for how to design the most anti-competitive outcome that will raise health care costs for every consumer in rural areas and small cities, and that will be a huge problem for all of us,” Leibowitz told the Huffington Post.

Phoebe Putney and the hospital authority issued a joint statement Sunday criticizing the FTC move.

“The FTC’s intent to challenge again the decision of the 11th Circuit Court of Appeals is misguided and wrong,’’ the statement said. “We are frankly stunned by the FTC’s continued assault on the hospital authority, which has diligently and correctly carried out its responsibility in this matter to the benefit of the citizens of Dougherty County.’’

An FTC spokesman could not be reached for comment early Monday.

For months, the federal agency argued that merger was anti-competitive and would raise health costs. The FTC, in an October hearing in Atlanta, argued before a three-judge panel of the 11th U.S. Circuit Court of Appeals 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 appeals 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.

Phoebe Putney CEO Joel Wernick said in a statement Sunday, “There is no legal or factual information to support the FTC’s actions and no rationale to explain its apparent desire to centralize control of local health care resources.”

Wernick and Ralph Rosenberg, the hospital authority chairman, said they would not halt plans for the consolidation of the hospitals.

If the Supreme Court reviews the decision, it would be the second case with a Phoebe Putney connection that the justices would take up — although the legal issues involved in the two cases are wildly dissimilar.

The case now under review focuses on whether prosecutorial investigators have total immunity from being sued for giving false testimony before a grand jury.

An Albany accountant, Charles Rehberg, alleges that an investigator for the Dougherty County district attorney’s office, James Paulk, lied before a grand jury that eventually indicted Rehberg. That case began with Rehberg and Dr. John Bagnato, a local physician, began sending out faxes critical of Phoebe Putney’s financial practices.

Rehberg’s suit was tossed out by the 11th U.S. Circuit Court of Appeals.

Here’s a GHN recap of the Albany fax saga.