FTC v. Phoebe Putney Health System, Inc.

Since Georgia has not clearly articulated and affirmatively expressed a policy in which hospital authorities can substantially lessen competition by acquiring additional hospitals, state-action immunity does not apply to the hospital authorities.

The 1941 Georgia Hospital Authorities Law (Law) allowed for the creation of the Hospital Authority of Albany (Authority) which acquired a local hospital (Memorial) under powers to “acquire by purchase, lease, or otherwise . . . projects.” In 1990, Authority leased Memorial operations to Respondents who in 2010 sought to acquire another hospital with Authority’s approval. The FTC sued to enjoin the purchase as a violation of the Clayton Act. The trial court denied the injunction because “state-action doctrine” immunized Respondents from antitrust liability, and the Court of Appeals for the Eleventh Circuit affirmed.

The Supreme Court reversed and remanded holding that state-action immunity did not apply since Georgia did not clearly articulate or affirmatively express a policy allowing acquisitions by hospital authorities that substantially lessened competition. The Court said a reasonable legislature’s ability to foresee entities transgressing antitrust requirements with general powers falls short of clear articulation of a policy to displace competition and more was required to expressly state that authority was given.

The Court also rejected Respondent’s arguments that Georgia’s objective of providing health care was foreseeably best served by allowing anti-competitive acquisitions as opposed to building a new facility because neither the Law nor other provisions met the articulation burden. Finally, the Court rejected Respondent’s arguments that the Law was ambiguous and federal courts should err in favor of immunity because it is inconsistent with the principle in this context that “state-action immunity is disfavored.”