Supreme Court reverses ruling on Georgia hospital acquisition
February 22, 2013
T he U.S. Supreme Court on Tuesday ruled in a unanimous decision that the acquisition of Palmyra Park Hospital in Albany, GA, by Hospital Authority of Albany-Dougherty County – the owner of Albany’s Phoebe Putney Memorial Hospital – was not immune from antitrust scrutiny under the state action doctrine.
The doctrine provides an exemption for federal antitrust law when there is a “clearly articulated and affirmatively expressed state policy to displace competition.”
In reversing a lower court decision allowing the purchase under the state action doctrine, the High Court said the doctrine did not apply because the Georgia legislature did not meet the standard of a clearly articulated and affirmatively expressed state policy of displacing competition for hospitalservices when it enacted a law giving hospital authorities the power to acquire area hospitals.
“Because Georgia’s grant of general corporate powers to hospital authorities does not include permission to use those powers anticompetitively, we hold that the clear articulation test is not satisfied and state action immunitydoes not apply,” wrote Justice Sonia Sotomayor, who delivered the opinion for the court.
“We are disappointed because the lower court rulings were clear in the applicability of state action immunity in accordance with long-standing precedent,” Phoebe Putney Health System said in a statement. “This does not alter our resolve or the commitment Phoebe has to meeting the growing needs of this community and the region we serve.”
The Federal Trade Commission had challenged the acquisition, maintaining the state action doctrine did not apply. The Supreme Court agreed, finding that there was “no evidence the State affirmatively contemplated that hospitalauthorities would displace competition by consolidating hospital ownership.”
In a friend-of-the-court brief, the AHA and the Georgia Hospital Association had urged the court to consider the impact of its ruling on state hospital authorities, which are tasked “with ensuring that their communities have needed health care and a proper safety net.”
The decision reversed a December 2011 ruling of the U.S. Court of Appeals for the Eleventh Circuit. The appeals court found the merger of the hospitals did not violate federal antitrust laws, because it was taking place under the direction of the Hospital Authority of Albany-DoughertyCounty.