On October 6, Ellwood F. Oakley III, an administrative hearing officer at Georgia’s Department of Community Health, reversed an initial staff determination that a new Certificate of Need (CON) would not be required if Phoebe Putney Health System (Phoebe Putney) were forced to divest the former Palmyra Park Hospital Inc. (Palmyra).  The Federal Trade Commission (FTC) challenged the merger between Palmyra and rival Phoebe Putney in 2011, and in February 2013, the FTC achieved a 9-0 win at the Supreme Court that the merger was not exempt from antitrust scrutiny on state action grounds. 

In August 2013, the FTC and the parties reached a “non-structural” settlement, which did not require the parties to divest any assets.   The FTC usually disfavors these types of settlements, but accepted the settlement for public comment based on the understanding that Georgia’s CON laws would prevent structural relief.  In September of this year, the FTC reversed course and rejected the settlement based on an initial determination by Georgia’s Department of Community Health that a CON would not be required if Phoebe Putney were forced to divest Palmyra, returning the matter to administrative litigation. The hearing officer’s recent reversal, assuming it stands, would remove an obstacle to settlement.  

The administrative hearing officer’s determination may be appealed to the commissioner of Department of Community Health, who would then have another 30 days to take a final agency decision on the matter.  The FTC has not commented on the administrative hearing officer’s determination.

The FTC’s docket is available here.
    
Reporter, John Carroll, Washington, D.C., +1 713 615 7632, jdcarroll@kslaw.com.