The American Hospital Association (AHA) has asked the U.S. Supreme Court to consider a legal doctrine used to secure some antitrust waivers for mergers in other fields and have it apply to similar deals involving hospitals, AHA News Now reported.
The trade group wants the high court to employ the doctrine of the "weakened competitor" when evaluating certain hospital deals to determine whether they violate anti-trust laws, according to AHA News Now. Such a doctrine encourages courts to look beyond mere market dynamics where the transaction is taking place and instead focus on more intangible issues, such as whether the sector in which the deal is occurring is undergoing fundamental change.
The AHA is weighing in on ProMedica Health System v. the Federal Trade Commission (FTC), a case revolving around ProMedica's 2010 acquisition of St. Luke's Medical Center in Maumee, Ohio. The FTC and Ohio Attorney General had sued to dissolve the deal because they considered it anticompetitive. If it had gone through, ProMedica would control about 60 percent of the hospitals in the greater Toledo area. ProMedica has lost the case at the appellate level, and has asked that the Supreme Court hear the case.
The amicus brief, co-authored by AHA General Counsel Melinda Hatton, asked the Supreme Court to consider that "fundamental changes in the healthcare sector, accelerated by the Affordable Care Act, have transformed the competitive landscape of the field. Due to these changes, many hospitals that are viable today--particularly small and stand-alone hospitals--may not be competitive in the future."
The principal case on which the weakened competitor doctine rests on is a 1974 federal decision, U.S. v. General Dynamics Corp. In that case, the court ruled that General Dynamics acquisition of a coal mine operator did not breach federal antitrust laws because even though the company wound up controlling a significant portion of a market, the operational position of the acquired company itself was not very strong.
The AHA's brief suggests that the doctrine has rarely been applied in more than 40 years, and that the lower courts should have applied it in the ProMedica acquisition.
It is unknown when the Supreme Court will decide about hearing the case.
To learn more:
- read the AHA News Now article
- check out the amicus brief (.pdf)
- here's the General Dynamics case