Louisiana accuses FTC of stepping on state power in hospital merger dispute

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Louisiana jumps into litigation over Louisiana Children's Medical Center acquiring HCA Healthcare assets

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FTC says $150 million transaction needed federal clearance

By Mike Scarcella

(Reuters) - The Louisiana attorney general's office has accused the Federal Trade Commission of unlawfully intruding on state power in a dispute over whether a $150 million hospital transaction in New Orleans needed to be cleared by the federal agency even though the state had approved the deal.

The state on Sunday jumped into the litigation in New Orleans federal court, where Louisiana Children's Medical Center and HCA Healthcare Inc last week both sued the FTC and other defendants.

They contend the deal, involving Louisiana Children's Medical Center acquiring three hospitals from HCA Healthcare, was immune from disclosure requirements and a waiting period under the federal Hart-Scott-Rodino Act.

The FTC last week separately sued Louisiana Children's Medical Center and HCA Healthcare in Washington, D.C., federal court to compel them to submit to an antitrust review by the agency.

The central issue in the lawsuits is the scope of "state action immunity," where certain activities involving the state are shielded from liability under U.S. antitrust law. States are permitted some leeway in pursuing policy interests without fear of U.S. antitrust liability.

A spokesperson for the FTC on Monday did not immediately respond to a message seeking comment.

Louisiana Children's Medical Center in a statement on Monday called Louisiana's approval of the transaction "rigorous and transparent."

Tennessee-based HCA Healthcare did not immediately respond to a message seeking comment.

Louisiana Children's Medical Center in January closed a deal to acquire Tulane University Medical Center, Lakeview Regional Medical Center and Tulane Lakeside Hospital from HCA Healthcare. The state had given its approval in December for the deal.

The private conduct at issue in the litigation is exempt from federal antitrust liability, Louisiana argued in Sunday's court filing. The state filing argued the transaction was "authorized by clearly articulated and affirmatively expressed state policy."

The lawsuits in New Orleans federal court from HCA Healthcare and Louisiana Children's Medical Center both seek a declaration that transaction disclosure requirements don't apply to a merger and acquisition action that is "immune from federal antitrust laws."

The complaints said the Louisiana legislature and the state attorney general's office "expressly and unequivocally" approved Louisiana Children's Medical Center to acquire hospital assets from HCA Healthcare.

In the D.C. case, the FTC wants to force Louisiana Children's Medical Center and HCA Healthcare to comply with disclosure requirements and to stop any further integration until the agency has reviewed the transaction.

The cases are Louisiana Children's Medical Center v. Garland et al, U.S. District Court for the Eastern District of Louisiana, No. 2:23-cv-01305-LMA-MBN; and HCA Healthcare Inc v. Garland et al, same court, No. 2:23-cv-01311.

For Louisiana Children's Medical Center: Kenneth Field of Hogan Lovells; Robert Stander of Jones Day; and E. Paige Sensenbrenner of Adams and Reese

For HCA Healthcare: Sara Razi of Simpson, Thacher & Bartlett; and Judy Barrasso of Barrasso Usdin Kupperman Freeman & Sarver

For FTC: Neal Perlman of the FTC

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