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David Garcia is a partner in the Antitrust and Competition Practice Group in the firm's Century City office.

The FTC just suffered a major setback in its concerted efforts to challenge the ever growing number of consolidations in the healthcare industry, failing to secure a preliminary injunction to block a hospital merger in central Pennsylvania.  In a decisive and strongly-worded opinion, the Honorable John Jones III of the Middle District of Pennsylvania concluded that (1) the FTC had fatally alleged an unrealistically narrow geographic market; and (2) the merger was likely to benefit (not harm) consumers, in part by allowing the merged entity to remain competitive in the new healthcare environment which “virtually compels” consolidations.  Federal Trade Commission et al. v. Penn State Hershey Med. Ctr. et al., Case No. 1:15-cv-02362 (May 9, 2016, M.D. Penn).
Continue Reading FTC Suffers Setback in Campaign to Slow the Rising Tide of Healthcare Consolidations

On April 22, 2015, the Federal Trade Commission submitted a public letter to the New York State Department of Health (DOH) expressing “strong concerns” over state regulations offering to provide antitrust immunity to certain healthcare collaborations undertaken with DOH’s approval and supervision.  This letter is consistent with the FTC’s continued opposition to grants of immunity from federal antitrust laws based on state action.  The letter also presents a meaningful opportunity to re-evaluate the interplay between state and federal antitrust enforcement authority, and the related doctrine of state action immunity, particularly in the healthcare arena which has seen an unprecedented spike in collaborative arrangements following passage of the Affordable Care Act.
Continue Reading State Regulatory Scheme Offering Antitrust Immunity to Healthcare Collaborations Creates Tension Between Federal and State Antitrust Enforcement

The Massachusetts Attorney General and others are currently advocating for legislation that would accord greater legal weight to the findings of an independent state agency, the Health Policy Commission, on the effects of proposed mergers and acquisitions.[1]  Currently, a “Cost and Market Impact Review” report is referred to the Attorney General’s Office if the Health Policy Commission determines that a transaction will likely result in a provider gaining a dominant market share, higher prices for services and increased medical spending. Under the legislation, such a report would be prima facie evidence that a transaction violates the Massachusetts Consumer Protection Act and could be used in an action brought by the Attorney General to block the transaction pending the outcome of litigation.
Continue Reading State Oversight of Anticompetitive Activity in Healthcare: Is a New Wave Ahead?

On February 10, 2015, the Ninth Circuit issued its highly-anticipated decision at the intersection of health care and antitrust, affirming the lower court’s finding that a hospital-physician group merger completed nearly three years ago violated Section 7 of the Clayton Act.  St. Alphonsus Med. Ctr. – Nampa Inc. v. St. Luke’s Health Sys., Ltd., No. 14-35173 (9th Cir. Feb. 10, 2015) (“St. Luke’s”).  The significance of St. Luke’s cannot be overstated.  It is the first challenge of a hospital-physician group merger by the Federal Trade Commission which proceeded to trial.  The Ninth Circuit’s opinion includes significant judicial guidance for future health care mergers, casting serious doubt on the viability of a “post-merger efficiencies defense” to a prima facie case of a Section 7 violation and declaring that proof of “extraordinary efficiencies” which are “merger-specific” is required in order to successfully offset anticompetitive concerns in highly concentrated markets.
Continue Reading In Highly-Anticipated Decision, Ninth Circuit Affirms That Hospital-Physician Group Merger in St. Luke’s Violated Section 7 and Casts Serious Doubt on Viability of Efficiencies Defense

The Centers for Medicare & Medicaid Services (CMS) released proposed regulations to clarify and build on current regulatory requirements for Accountable Care Organizations (ACOs) that participate in the Medicare Shared Savings Program (MSSP).  Among the changes is one addressing when an ACO must be formed as an independent legal entity, separate from any of its multiple participants.  According to CMS, this proposed change is designed to clarify existing regulations and to ensure that ACO decision-making is governed by individuals with fiduciary duties to the ACO alone.
Continue Reading CMS’ Proposed Regulations Include Significant Antitrust Implications For Entities Interested In Forming ACOs

In Medical Center at Elizabeth Place v. Premier Health Partners et. al, Case No. 12-cv-26 (S.D. Oh. Oct. 20, 2014), the Southern District of Ohio held that previously-competing health care systems who join together in a revenue-sharing arrangement are incapable of conspiring with each other under Section 1 of the Sherman Act.  This is the latest decision to weigh in on the level of integration required among legally separate entities to be deemed a single economic actor for antitrust purposes, and particularly significant given the rapidly increasing number of collaborations within the health care industry following passage of the Affordable Care Act.
Continue Reading District Court Weighs in on Level of Integration Required to Shield Health Care Collaborations from Section 1 Scrutiny

The Department of Justice and Federal Trade Commission recently issued their final “Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program” pursuant to the 2010 Patient Protection and Affordable Care Act. The final statement was issued in conjunction with the Department of Health and Human Services’ Centers for Medicare and Medicaid Services’ final regulations implementing the shared savings program as part of a coordinated interagency effort to facilitate health care provider participation in the shared savings program, so as to achieve the cost savings and improvement in quality of care Congress intended. Both the final statement and CMS’ final regulations aim to further encourage and incentivize formation of Accountable Care Organizations and participation in the shared savings program. As such, the final statement includes significant, material changes from the proposed statement of antitrust enforcement policy with respect to ACOs issued earlier this year. (See the April 15 article on the proposed statement.)
Continue Reading No Mandatory Antitrust Review for ACOs