Idaho Hospital Antitrust Ruling Upheld by 9th Cir.

(CN) - St. Luke's Medical Center violated a federal antitrust law when it acquired Saltzer Medial Group, the 9th Circuit affirmed.

The 2012 merger by the two Idaho-based health care providers drew fire from the Federal Trade Commission and Idaho, and that action for an injunction was later consolidated with a separate suit brought by competing hospitals.

St. Alphonsus Medical Center-Nampa and Treasure Valley Hospital had claimed that St. Luke's was trying to create a monopoly in Boise's greater Treasure Valley market by making "sweeping" competitor acquisitions.

St. Alphonsus Nampa said it was particularly damaged by the Saltzer merger since it relief on that hospital, the largest and oldest physician practice in Idaho, as its main source of patient admissions.

The lawsuit also alleged that the merger would raise the cost of health care.

A federal judge in Boise ruled in February 2014 that the merger between St. Luke's and Saltzer violated Section 7 of the Clayton Act and the Idaho Competition Act. The Clayton Act prohibits mergers that "may be substantially to lessen competition, or to tend to create a monopoly."

The 9th Circuit affirmed Tuesday, saying the lower court's factual findings "adequately support its ultimate conclusion that the plaintiffs established 'a prima facie case that the acquisition is anti-competitive.'"

St. Luke's failed to persuade the lower court that the merger would lead to efficiencies that would positively effect competition, and that it did not abuse its discretion in its consideration of the costs and benefits of divestiture.

The ruling, from a panel in Portland, Ore., affirms a requirement that St. Luke's divest Saltzer.

Federal Trade Commission Chairwoman Edith Ramirez said the ruling ensures that costs, especially in Nampa's low-income areas, don't rise unfairly.

"Today's decision by the Ninth Circuit is a win for consumers and healthcare competition in the Nampa, Idaho area," she said in a statement. "If left unchallenged, St. Luke's acquisition of Saltzer would have created a dominant provider of physician services for adults seeking primary care in Nampa, leading to higher costs for consumers and employers there. The acquisition would have delivered no benefit to consumers that could not be achieved in ways other than the anticompetitive merger."

Judge Andrew Hurwitz signed the 32-page opinion, joined by Judges Richard Clifton and Milan Smith.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit