Proposed West Virginia Hospital Merger Could Have Nationwide Effects

by Proskauer - Minding Your Business
Contact

West Virginia recently passed legislation aimed at shielding an in-state hospital merger from antitrust review by the Federal Trade Commission, and if the West Virginia Health Care Authority and West Virginia Attorney General approve the merger, other states could follow suit. Recent developments, including the FTC’s reaction to West Virginia’s proposed legislation, preview how future battles between the FTC and other states may unfold as the FTC continues to oppose state action grants of immunity from federal antitrust laws.

At issue is Cabell Huntington Hospital’s proposed acquisition of St. Mary’s Medical Center, also located in Huntington. The FTC challenged the merger in a complaint filed on November 5, 2015. The FTC alleged that the merger would create a near monopoly over general acute care, inpatient hospital services and outpatient surgical services which would leave to higher prices and lower quality.

However, West Virginia believed that the FTC’s scrutiny was too strict and failed to see the benefits of the proposed merger. On March 18, 2016, West Virginia Governor Tomblin signed a bill that exempts health care providers from state and federal antitrust liability when they act under the direction or approval of the West Virginia Health Care Authority. Under the bill, the West Virginia Health Care Authority would be the sole decision-maker on health care provider consolidations and the FTC would not have the authority to challenge a proposed merger.

Traditionally, states that want to immunize healthcare deals from federal antitrust action must prove that the state has a clearly articulated and affirmatively expressed policy of displacing competition with regulation and the state must show it’s actively supervising the conduct of merging hospitals. West Virginia’s law would allow it to technically bypass those requirements, but it remains to be seen in practice whether the state-level scrutiny would be more or less burdensome.

The FTC’s administrative trial reviewing the proposed merger was scheduled to begin on April 5, 2016. However, as a result of the legislation, on March 24, 2016 in response to a joint request from the West Virginia hospitals and the FTC staff, the Commission issued an order withdrawing the matter from adjudication for thirty days. The withdrawal was to allow “the Commission to review the legislation ─ and to hear from both Complaint Counsel and Respondents as to the relevance of the legislation” to the pending proceeding.

Under the legislation, the West Virginia Health Care Authority will have to decide whether to approve the hospitals’ application to merge. Given that the decision has not been made, the FTC decided to tentatively stay on the sidelines pending West Virginia’s decision. On April 18, 2016, FTC complaint counsel and the hospital respondents filed a joint motion to extend the withdrawal of the matter from FTC adjudication and to continue that stay of the proceedings until 14 days after the West Virginia Health Care Authority “issues its written decision” regarding the hospitals’ application. As a condition of their joint motion, the hospital respondents agreed not to consummate the transaction while the matter is withdrawn from FTC adjudication. On April 22, 2016, the FTC ordered that a withdrawal of the matter and a stay of the proceedings until “11:59 p.m. EDT on the 14th calendar day after the West Virginia Health Care Authority issues its written decision, pursuant to Section 16-29B-28(e)(3) of the Code of West Virginia, regarding the Application for Approval of Cooperative Agreement (Acquisition of St. Mary’s Medical Center) filed by Respondent Cabell on March 25, 2016.”

Meanwhile, the West Virginia Health Care Authority had opened a ten-day public comment period regarding the merger ending April 18, 2016. The West Virginia Health Care Authority received eighteen letters, including one from the FTC.

The West Virginia Health Care Authority and the West Virginia Attorney General have until June 8, 2016 to issue a written decision on the proposed merger. All eyes will be on West Virginia and the FTC over the next few weeks. Some believe that if the merger is approved, that the West Virginia law will serve as a blueprint for other states to avoid federal scrutiny over mergers in their states.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Proskauer - Minding Your Business | Attorney Advertising

Written by:

Proskauer - Minding Your Business
Contact
more
less

Proskauer - Minding Your Business on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.