The Federal Trade Commission, in the wake of a favorable U.S. Supreme Court ruling, has taken new legal steps in its battle against the merger of two Albany hospitals.
The agency, which has been fighting the deal for two years, filed motions last week in federal district court seeking a temporary restraining order and preliminary injunction to stop the further integration of Phoebe Putney Memorial Hospital and Palmyra Medical Center.
The FTC said the goal of the legal action is to ensure that Palmyra’s assets are maintained until an administrative trial on the merits of the acquisition, scheduled to begin on August 5.
Last month, the federal agency lifted a stay on the case and directed an administrative law judge to set a new hearing date on the antitrust issues “as soon as is practicable.’’
The agency’s actions followed a February Supreme Court ruling that set aside two previous court decisions upholding the merger. The justices, in a unanimous ruling, said the acquisition by the local hospital authority of Palmyra was not immune from antitrust scrutiny.
Lower courts had ruled the Georgia General Assembly had already granted antitrust immunity to such deals through a hospital authorities law.
The $195 million deal, which consolidated operations of Phoebe Putney and Palmyra, was completed in December 2011. Phoebe officials have noted that the integration has proceeded to the point where it would be very difficult to unravel.
Phoebe Putney officials said the FTC’s requests for a restraining order and injunction would prevent any improvements or renovations to enhance patient care at the facility.
Phoebe officials also said in a statement that before this latest filing, the FTC, on two separate occasions, refused Phoebe’s offer to “stand down” and do nothing to alter the facility pending further administrative proceedings in Washington, D.C.
“We will proceed to protect the organization and community interests in court,’’ said Tommy Chambless, Phoebe senior vice president and general counsel, in a statement. “It’s unfortunate that so many resources must be committed by Phoebe, interfering with the Phoebe mission to deliver the best possible care and exceed the expectations of all we serve.”
During the recent Georgia General Assembly session, Phoebe supporters sought to blunt FTC action against the deal by changing state law.
Legislation was proposed to buttress antitrust immunity for hospital authorities in Georgia – and make those protections retroactive.
But the legislation failed to pass.
The upcoming administrative hearing will explore whether the merger has an anti-competitive effect on the Albany marketplace.
From the start, the FTC opposed the merger of the Albany area’s only two hospitals, saying it would drive up health costs in the area. Since the deal was completed, Phoebe officials have said that costs have not increased.
After the Supreme Court ruling, Phoebe said it would continue business as usual at the former Palmyra hospital, now called Phoebe North.
CEO Joel Wernick, at a news conference after the court decision, said, “We will proceed with the plans we have until someone tells us we cannot.’’
Chambless, the attorney for Phoebe, told GHN, “The eggs have been scrambled’’ since the 2011 acquisition, making the merger hard to undo.