Recent Federal Court Decision Allows Hospitals to Avoid Premerger Scrutiny Under HSR Act with State COPA Certificate

In a groundbreaking decision, a federal district court in Louisiana has ruled that hospitals in the state who receive a Certificate of Public Advantage (COPA) need not submit premerger notification materials required by federal antitrust laws. This decision could have far-reaching implications for hospital acquisitions seeking to avoid scrutiny by the Federal Trade Commission (FTC) under the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act).

The case, Louisiana Children’s Medical Center v. Attorney General of the United States, centered around the proposed acquisition of three hospitals by the Children’s Medical Center from Hospital Corporation of America. The parties received a COPA certificate from Louisiana’s Department of Justice, which they argued exempted them from compliance with the HSR Act. The court agreed, citing the state action doctrine which allows states to regulate their domestic commerce without interference from federal antitrust laws.

The court found that Louisiana’s COPA statute clearly articulated state policy and was actively supervised by the state, meeting the requirements for the state action doctrine to apply. This ruling could set a precedent for other states with robust COPA laws to allow hospitals to avoid federal antitrust scrutiny when acquiring other facilities.

The decision has raised questions about the implications for future hospital mergers and acquisitions, as well as the potential for increased prices and reduced quality of care. The FTC, which has expressed concerns about COPA agreements in the past, is likely to appeal the decision to the Fifth Circuit. If the ruling stands, hospitals in states with similar COPA laws may have a new avenue for avoiding federal antitrust review in the future.