Fed. Trade Comm’n v. Phoebe Putney Health Sys., Inc.

Under Georgia’s Hospital Authorities Law, Ga. Code 31-7-75, political subdivisions may create special-purpose hospital authorities to exercise public and essential governmental functions, including acquiring public health facilities. The Albany-Dougherty County Authority owns Memorial, one of two hospitals in the county, and formed private nonprofit corporations (PPHS AND PPMH)to manage it. After the Authority decided to purchase the county’s other hospital and lease it to a PPHS subsidiary, the Federal Trade Commission issued an administrative complaint alleging that the transaction would violate the Federal Trade Commission Act and the Clayton Act. The FTC and Georgia sought an injunction. The district court dismissed, citing the state-action doctrine. The Eleventh Circuit affirmed, holding that the Authority, as a local governmental entity, was entitled to immunity because the challenged anti-competitive conduct was a foreseeable result of the Law. The Supreme Court reversed. Georgia has not clearly articulated and affirmatively expressed a policy allowing hospital authorities to make acquisitions that substantially lessen competition, so state-action immunity does not apply. State-action immunity is disfavored and applies only when it is clear that the challenged conduct is undertaken pursuant to the state’s own regulatory scheme. There is no evidence Georgia affirmatively contemplated that hospital authorities would displace competition by consolidating hospital ownership. The Authority’s powers, including acquisition and leasing powers, simply mirror general powers routinely conferred by states on private corporations; a reasonable legislature’s ability to anticipate the possibility of anti-competitive use of those powers falls short of clearly articulating an affirmative state policy to displace competition. View "Fed. Trade Comm'n v. Phoebe Putney Health Sys., Inc." on Justia Law