In a win against the FTC in the agency’s first ever lawsuit claiming that a transaction that had received a Certificate of Public Advantage (“COPA”) must comply with the HSR Act’s filing requirements, on September 27, Judge Lance M. Africk of the U.S. District Court for the Eastern District of Louisiana granted a motion for summary judgment in favor of Simpson Thacher client HCA Healthcare (“HCA”) and co-defendant Louisiana Children’s Medical Center (“LCMC”). In his order, Judge Africk agreed that the HSR Act’s filing requirements did not apply to the sale of three hospitals from HCA to LCMC because the sale had been undertaken pursuant to a COPA, approved and granted by the Louisiana Department of Justice pursuant to Louisiana state law. The court dismissed the FTC’s lawsuit with prejudice. The FTC had hoped to force HCA and LCMC to submit HSR filings and to force LCMC to pause its integration plans for the acquired hospitals.
Judge Africk explained in his decision that the state action doctrine reflects the limited reach of federal antitrust laws. Further, he held that the state action doctrine applies to the HSR Act like it does to other antitrust laws, because application of the HSR Act to COPA-approved transactions could frustrate a state’s regulatory agenda in granting the COPA. As a matter of statutory interpretation, he held that the HSR Act lacks a clear statement from Congress of an intent to preempt such state policies. On the undisputed factual record before the court, Judge Africk agreed with the hospitals that the COPA at issue in this case satisfied the requirements for state action immunity because the Louisiana Attorney General had actively supervised the acquisition pursuant to a clearly and expressly articulated state policy.
In April 2023, the hospitals sued the FTC in federal district court in Louisiana, noting that they did not need to report their deal to federal antitrust regulators since they received a COPA in Louisiana. One day later, the FTC counter-sued in the District of Columbia, contending that “LCMC and HCA flouted their HSR Act obligations by failing to report their transaction and then consummating it, without filing the required premerger notification and without a cognizable justification or exemption.” In a related win, the Simpson Thacher team secured a decision transferring the FTC’s case to the Louisiana court, where the cases were consolidated in June 2023.
The Simpson Thacher team included Sara Razi, Abram Ellis, Joshua Hazan, Avia Gridi and Matthew Munro.