Antitrust and Unfair Competition Law

Competition: Spring 2015, Competition Vol. 24, No. 1

Content

ST. ALPHONSUS MEDICAL CENTER – NAMPA, INC., ET AL. AND FEDERAL TRADE COMMISSION, ET AL. V ST. LUKE’S HEALTH SYSTEM, LTD., AND SALTZER MEDICAL GROUP, P.A.: A PHYSICIANS’ PRACTICE GROUP MERGER’S JOURNEY THROUGH SALUTARY HEALTH-RELATED GOALS, IRREPARABLE HARM, SELF-INFLICTED WOUNDS, AND THE REMEDY OF DIVESTITURE

By Ari Y. Basser1

I. INTRODUCTION AND BACKGROUND

On January 24, 2014, following a bench trial in October 2013, Chief Judge B. Lynn Winmill of the United States District Court for the District of Idaho found that St. Luke’s Health System, Ltd.’s ("St. Luke’s") acquisition of the Saltzer Medical Group, P.A. ("Saltzer")2 violated Section 7 of the Clayton Act,3 and the Idaho Competition Act,4 because "the effect of such acquisition may be substantially to lessen competition."5 Upon such finding, the court entered a permanent injunction and ordered St. Luke’s to fully divest itself of Saltzer’s physicians and assets, and unwind the acquisition of Saltzer, which had been consummated at the end of 2012.

The court rejected the defendants’ request for a so-called "conduct-based remedy." The court instead elected, in its discretion and after a thorough review of the evidence presented at trial, the remedy of "divestiture" to restore the market to its pre-acquisition structure, despite having previously denied Saint Alphonsus Health System, Inc.’s ("St. Alphonsus") and Treasure Valley Hospital’s ("TVH") request for a preliminary injunction. The defendants subsequently appealed the decision and judgment to the Ninth Circuit Court of Appeals,6 where it was affirmed in favor of the Federal Trade Commission ("FTC"), the State of Idaho, St. Alphonsus, and TVH.7

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