LCMC Health petitions courts to toss FTC review of its Tulane University hospitals acquisition

A U.S. district judge sided with LCMC Health and Louisiana's attorneys over the Federal Trade Commission (FTC) in the below lawsuit pitting federal hospital merger regulations and state-issued exemptions against each other. Read more here.

LCMC Health petitions courts to toss FTC review of its Tulane University hospitals acquisition

April 20

The Federal Trade Commission (FTC) has thrown a wrench into LCMC Health’s planned purchase of three Tulane University hospitals, spurring the New Orleans-based nonprofit to file a lawsuit contesting the regulator’s interference.

LCMC had announced in October that it would purchase Tulane Medical Center, Lakeview Regional Medical Center and Tulane Lakeside Hospital from majority owner HCA Healthcare for a reported $150 million.

The deal was given the green light by the Louisiana Department of Justice as of January, though it still faced opposition from groups such as National Nurses United.

However, according to LCMC’s lawsuit filed Wednesday, the federal regulator told the system in March that it was required to halt the acquisition and submit to review and approval under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act. The federal regulator also told the health system that it is accruing a penalty of “at least $46,517 per day” that could be recovered in civil action should it consummate the transaction without the FTC’s permission.

In the lawsuit and an accompanying media statement, LCMC said that it is not subject to the HSR review process due to the Certificate of Public Advantage (COPA) it received from the state of Louisiana, which the system wrote in the complaint makes its acquisition “entirely shielded by the state action immunity doctrine.”

“The Certificate of Public Advantage process was rigorous and transparent, with active supervision to ensure consumer protection,” LCMC said in its media statement. “We are on solid ground and Louisiana knows what is best for our community. We are steadfast in our commitment to delivering health, care and education beyond extraordinary for all, and continuing to deliver the benefits of the partnership for our patients and community.”

LCMC’s lawsuit was filed in the U.S. District Court for the Eastern District of Louisiana. It seeks a declaratory judgment from the court that the HSR Antitrust Act does not apply to its transaction and lists the FTC, Department of Justice and U.S. Attorney General Merrick Garland as defendants.

In a Wednesday statement, Louisiana Attorney General Jeff Landry said it was “troubling” that the federal government waited more than 100 days after the COPA was approved to step in. The FTC had not submitted any public comments or attended public hearings “throughout our lengthy and transparent process” and have yet to contact the attorney general’s office with concerns, he said.

“The merger will enhance competition, lead to greater access to health care, result in higher quality health care and will likely not result in undue increases to costs,” he said. “The agreement guarantees ongoing oversight to ensure fair prices for consumers. What’s more: it will provide a world-class medical education program for both med students and nurses, at a time when our state and our nation are faced with a nursing shortage.

“I will explore all of our state’s legal options to fight this federal overreach,” he said.

LCMC’s deal includes $220 million in financial commitments toward investments in the hospitals and would add an estimated 2,300 jobs to the state, the system has said. LCMC also published Thursday a survey of greater New Orleans residents, 70% of whom “expressed positive feelings about the LCMC Health – Tulane University partnership,” according to a release.

Opponents of the deal have highlighted the 55% local market share HCA’s departure and handoff would provide to LCMC.

The Biden administration has taken a harder stance on hospital consolidation deals and contributed to a handful of interrupted deals in New York, Utah and New Jersey. The FTC has also come out as a staunch opponent of COPAs, writing in an August report that mergers approved by states with COPA legislation often bring few, if any, of the promised benefits to their markets.