A South Carolina administrative law judge issued a decision that disrupts the state’s largest health conglomerate’s plans to expand its operations – delivering a victory to its rival state provider in the process.
Judge Ralph K. Anderson III recently decided that Prisma Healthproposed purchase of Providence Health in Columbia, SC and KershawHealth in Kershaw County does not qualify for state antitrust protections.
Prisma is trying to acquire Tennessee hospitals LifePoint Health – a move that drew criticism from consumer advocates last spring.
Specifically, Anderson determined that the proposed purchase no qualify for “public benefit certificate” (or “COPA”) protections previously granted to Prisma by the SC Department of Health and Environment Control (SCDHEC).
The issuance of a COPA allows healthcare providers to work with state regulators to alleviate concerns about monopolistic behavior, rather than being subject to stricter federal antitrust regulations. Prisma had tried to apply a COPA for decades to its proposed hospital purchase – which would have allowed state regulators to decide whether the business served the best interests of South Carolina consumers.
In the absence of SCDHEC that extended these protections (which it did), the purchase would fall under the jurisdiction of the Federal Trade Commission (FTC).
According to Anderson, however, the old agreement – which governed a merger in the 1990s between Baptist Hospital and Richland Memorial Hospital – could not be changed to include Prisma’s proposed purchase of these hospital systems.
Nor, by the way, could a new COPA offer similar protections …
“Significantly, this case does not involve a merger between hospital systems, but an acquisition by (Prisma)”, decided the judge. “For an acquisition to qualify as a cooperative agreement, two or more healthcare providers must acquire assets; a health care provider that buys assets does not qualify. “
“As this transaction cannot be qualified as a cooperative agreement, it does not qualify for a COPA,” continued Anderson, specifically rebuking SCDHEC’s decision to grant such status to the proposed sale.
“(E) the ‘cooperative agreement’ cannot be extended to achieve the objective of protecting the expansion of its operations from a single hospital entity from antitrust challenges,” Anderson decided.
Anderson’s decision extends a long political struggle between Prisma and Lexington Medical Center (LMC), which is also eyeing expansions in the Midlands region.
LMC filed a lawsuit last spring to block the original extension of COPA. The case now goes to the Supreme Court of SC – assuming that Prisma is able to identify the reasons for appealing Anderson’s decision.
“The problem with Prisma is that (Anderson) actually decided against Lexington Medical on the matter before the court – whether or not Prisma could include this purchase in its original COPA,” a legal health expert told our news outlet. . “Anderson rejected that argument because he concluded that the purchase did not qualify for COPA in the first place.”
In fact, an order of clarification from Anderson noted that his original decision “determined as a matter of law that the acquisition (of Prisma) … did not qualify for a new COPA and the assets could not be included in the existing COPA through of an amendment “.
We will see if the Supreme Court decides to accept this case – or if Anderson’s position is allowed. We will also be interested in seeing if LMC lawyers will decide to take the matter to the federal court if the state supreme court takes steps that effectively overturn Anderson’s decision.
We don’t see them doing that, but it’s certainly a possibility.
There is a deadline for all of these legal disputes too …
According to Prisma, unless its business with LifePoint is completed by March 2, 2021, the company’s offering would be terminated – forcing Prisma to eat an estimate $ 10 million entry costs related to the business. In addition, Prisma officials previously told SCDHEC regulators that LifePoint would not agree to the sale unless it was incorporated into the existing COPA – since the issue of a new COPA would require additional public scrutiny of the terms of the agreement.
Let’s keep an eye on this case as it progresses … as well as the ongoing battle between Prisma and LMC
-FITSNews
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