Cabell cleared to acquire St. Mary's following dismissal of FTC antitrust lawsuit to block transaction
Clients Cabell Huntington Hospital, Inc.
After a nearly two-year fight with the U.S. Federal Trade Commission, Cabell Huntington Hospital, Inc. has overcome all regulatory hurdles to its acquisition of St. Mary’s Medical Center, Inc., clearing the way to combine Huntington, West Virginia’s only two health systems. Jones Day served as Cabell’s lead antitrust counsel after it became apparent that the FTC would seek to block the transaction in court and ultimately obtained a dismissal of the lawsuit following West Virginia’s decision to approve the transaction pursuant to new state legislation conferring state action immunity from the antitrust laws.
The FTC issued a complaint challenging the transaction on November 5, 2015, after more than a year long investigation. The agency alleged that the combination would violate federal antitrust laws by giving Cabell a near monopoly over general acute care inpatient hospital services and outpatient surgical services in and around Huntington, West Virginia. FTC staff initiated an internal administrative proceeding to permanently block the transaction and delayed seeking a preliminary injunction in federal court, while the parties met other closing conditions. The administrative trial was set to begin on April 5, 2016.
On March 12, 2016, the West Virginia legislature passed Senate Bill 597, creating a comprehensive state regulatory process to grant antitrust immunity to cooperative agreements between academic medical centers and other healthcare providers. The FTC and the parties agreed to delay the administrative trial pending State review of the transaction under the new law. On June 22, 2016, the West Virginia Health Care Authority and the West Virginia Attorney General approved the cooperative agreement between Cabell and St. Mary’s, finding that the transaction’s benefits to the community substantially outweighed any potential for harm. The FTC subsequently dismissed its lawsuit on July 6, 2016, determining that the legislation immunized the transaction from an antitrust challenge.