U.S. District Judge Backs Louisiana State’s Hospital Merger Decision Over FTC

In a recent legal battle between LCMC Health, Louisiana's attorneys, and the Federal Trade Commission (FTC) over hospital merger requirements, a U.S. district judge, Lance Africk, ruled in favor of the state and the healthcare provider. The dispute arose after LCMC Health acquired three Tulane University hospitals from HCA Healthcare for $150 million, a move that received approval from the Louisiana Department of Justice under a Certificate of Public Advantage (COPA).

Despite this state-sanctioned approval, the FTC insisted on subjecting LCMC Health to a federal review, leading to daily penalties for the completion of the transaction. In response, both the Louisiana DOJ and HCA rallied behind LCMC Health in support.

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In his judgment, Judge Africk dismissed the FTC's claims against the hospitals and denied the FTC's motion against the state's action. He determined that the transaction fell outside the scope of federal antitrust regulations, asserting that it did not need to comply with the Clayton Antitrust Act Section 7A.

Africk acknowledged that this decision might pose enforcement challenges for the FTC, particularly concerning transactions closed under state COPAs. He emphasized that parties already have incentives to adhere to the California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc. precedent, which allows potentially anticompetitive activities under state supervision.

Diane Hazel, a former FTC lawyer now with Foley & Lardner's Antitrust Practice, described the ruling as "significant" for hospital deals in COPA states. She pointed out that hospital mergers with state COPAs could bypass the substantial burden of preparing a Hart-Scott-Rodino filing and abiding by the mandatory waiting period under the HSR Act.

However, Hazel advised hospital entities to consult with legal experts, as the court's decision was specific to the COPA in Louisiana. She also noted that another federal district court might have a differing opinion.

While this ruling carries substantial implications for the FTC's merger review process, it may not mark the end of the legal saga. There is anticipation that the FTC might appeal the decision to the Fifth Circuit, ensuring that the case continues to unfold.