Hospital Acquisitions In Louisiana Avoid FTC Review, For Now

• Jurisdiction: United States,Federal,Louisiana
• Law Firm: Manatt, Phelps & Phillips LLP
• Subject Matter: Corporate/Commercial Law, Antitrust/Competition Law, Food, Drugs, Healthcare, Life Sciences, M&A/Private Equity, Antitrust, EU Competition
• Author: Stephen D. Libowsky
• Published date: 09 October 2023

More hospital acquisitions may seek to avoid premerger scrutiny of the Federal Trade Commission (FTC) under the HSR Act (or any antitrust inquiry ever) if a recent federal district court decision holds up and becomes settled law.

On September 27, 2023, in Louisiana Children's Medical Center v. Attorney General of the United States, No. 23-1305, the Eastern District of Louisiana court held that hospitals in Louisiana who receive a Certificate of Public Advantage (COPA) issued by Louisiana's Department of Justice (LADOJ) need not submit premerger notification materials required by Hart-Scott-Rodino Antitrust Improvements Act (HSR Act), pursuant to the state action doctrine.

Case Background

The case concerned the proposed acquisition by the Children's Medical Center (LCMC) of three hospitals from Hospital Corporation of America (HCA). The proposed acquisitions had gone through the processes required by Louisiana's COPA statute, and the parties received the desired COPA certificate from LADOJ. The Hospitals chose not to comply with the HSR Act, which requires parties to transactions that meet certain statutory thresholds to notify federal antitrust authorities of their intended transaction and allows federal regulators an opportunity to review and possibly challenge the transaction. Instead, LCMC and HCA sought a declaratory judgment that the "state action doctrine" exempts the proposed acquisitions from the federal antitrust laws, including the HSR Act, given the issuance of the COPA.

Whether a transaction that obtains a State-issued COPA needs to comply with the HSR Act had never been determined. The State of Louisiana moved to intervene, and the court in the Eastern District of Louisiana consolidated the LCMC and HCA lawsuits with the FTC's lawsuit (which had been transferred from the USDC for the District of Columbia) seeking declaratory and injunctive relief requiring strict compliance with the HSR Act. Prior to transfer, D.C. District Judge Amy Berman Jackson reasoned that "[g]iven the posture of the case, the state action question must be resolved first."

Parker v. Brown and State Action in the Bayou

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