End of the Road in the Long-running “FTC v. Phoebe Putney” Saga

amurinoFeatured Expert Column – Antitrust/Federal Trade Commission

Andrea Agathoklis Murino, Goodwin Proctor LLP

Many months ago, I wrote about the ongoing saga that was the Federal Trade Commission’s (“FTC”) attempt to unwind the acquisition of Palmyra Park Hospital (“Palmyra”) by Phoebe Putney Health System Inc. (“Phoebe”) in Albany, Georgia. There were visits to all three levels of the federal court system (yes, even the Supremes!), as well as unexpected detours through various Georgia regulatory bodies. With the FTC’s announcement late last month that it was settling its administrative litigation with a behavioral remedy, we now know how this story ends.

Where We’ve Been

This journey began back in early-2011 with the FTC’s attempt to block the deal outright on the grounds that the combined entity would have had market shares in excess of 85% in the provision of acute care services in a six-county region. The FTC initially secured a preliminary injunction at the district court level but Phoebe successfully argued that despite the concentration levels, its acquisition was legal under the state action doctrine. The state action doctrine provides that where (1) there is a clearly articulated state policy to displace competition and (2) there is active supervision by the state of the policy or activity, otherwise anticompetitive activity will be permitted. Here, Phoebe argued the acquisition was immune under both prongs of the test because it was owned by the Hospital Authority of Albany-Dougherty County, and operated under Georgia’s Hospital Authorities Law.

Continue reading

FDA’s Next Gift to the Litigation Industry: A Veritable Ban on Partially Hydrogenated Oils?

sharkIn a recent post, we lampooned the “high trans fat intake consumer” the Food and Drug Administration (FDA) invented to advance its de facto ban of partially hydrogenated oils (PHOs) as being a cross between Augustus Gloop and Homer Simpson. The ramifications of such a PHO ban for many processed food makers and their customers, however, are no laughing matter. Among other things, FDA’s final determination could expose the food industry to an avalanche of lawsuits and potentially billions of dollars in liability costs.

The Current Litigation Environment. Plaintiffs’ lawyers have been working feverishly for the past decade to turn lawsuits against “Big Food” into the next big payday. As chronicled on this blog since its inception in 2011, a small but persistent segment of the Litigation Industry has filed hundreds of class-action lawsuits alleging that everything from a perceived excess of empty space in a bag of chips to the printing of “evaporated cane juice” on a label violates state consumer protection laws.

By Litigation Industry standards, this lawsuit product line has not yet met profit expectations. But the lawsuits have successfully established, especially in California, that private litigants can enforce federal food laws and regulations. Continue reading

Federal Regulators’ Disregard for Sound Science Displayed in Four Agencies’ Actions

4th CircuitHow federal regulators use—and abuse—science in the regulatory process has a profound impact on regulated businesses and consumers who purchase their products and services.  In addition to the financial impact, every time that an agency forces science and the scientific process to serve its ideological or political agendas, rather than be guided by the neutral data, the public becomes less trusting of government pronouncements based on science. Below are some troubling recent examples of regulatory junk science. The first example demonstrates that protections against junk science do exist in the courtroom. The subsequent three examples reflect the lack of similar protections in the rulemaking and adjudication contexts.

Fourth and Sixth Circuits Slap-down EEOC. For the second time in less than a year, a federal appellate court has rebuked the Equal Employment Opportunity Commission (EEOC) for its use of junk science in accusing an employer of discrimination for conducting criminal background checks in its hiring process. EEOC’s litigation crusade against criminal background checks has faltered since its outset, with federal district court judges in Ohio and Maryland separately dismissing Title VII claims in 2013. Last April, just 20 days after hearing oral argument, the U.S. Court of Appeals for the Sixth Circuit affirmed the Ohio trial judge’s decision in EEOC v. Kaplan. The court found the EEOC’s statistical proof of disparate impact—compiled and presented by expert witness Kevin Murphy, an industrial psychologist—unreliable and “based on a homemade methodology” not generally accepted in the scientific community. A WLF Legal Opinion Letter and a WLF Legal Pulse post, both published last spring, offer more detail on the ruling. Continue reading

Five Lessons: Ninth Circuit Upholds Decision to Block Idaho Healthcare Merger

amurinoFeatured Expert Column – Antitrust/Federal Trade Commission

Andrea Agathoklis Murino, Wilson Sonsini Goodrich & Rosati*

On February 10, the United States Court of Appeals for the Ninth Circuit affirmed a lower court ruling blocking the merger of St. Luke’s Health Systems, Ltd. (St. Luke’s) and Saltzer Medical Group (Saltzer), and handed the Federal Trade Commission (FTC) yet another victory in its efforts to halt consolidation in the healthcare sector.  This opinion is instructive both because of what it reveals on the macro-level about merger review today, and for what it may portend in future healthcare consolidation cases. Continue reading

The “21st Century Cures Act” Draft Legislation Includes Welcome Support for First Amendment Rights

FDAThe House Energy and Commerce Committee released a 400-page “discussion draft” of its proposed “21st Century Cures Act” late last month. The bill includes a broad range of reforms governing the regulation of drugs and medical devices, most of which have been warmly received by broad segments of those industries. The bill is particularly welcome to supporters of commercial speech rights; it includes several provisions designed to ensure that government regulators do not prevent manufacturers from speaking truthfully about their medical products.

Social Media

One particular area of concern has been Food and Drug Administration (FDA) restrictions on manufacturer use of social media. Subtitle I of Title I of the bill would overturn those restrictions. One characteristic of social media is that it places a premium on brevity. For example, Twitter limits messages to 140 characters or less. In a Draft Guidance issued on June 18, 2014, FDA concluded that drug/device manufacturers should rarely, if ever, attempt to use social media platforms with character space limitations because those limitations deprives manufacturers of sufficient space to include all the risk and benefit information that the agency asserts is a necessary part of any such communications. It is not sufficient, FDA concluded, for a Twitter message to include the name of the drug and its intended uses, and then provide a hyperlink where detailed risk and benefit information is available. But as Washington Legal Foundation (WLF) pointed out in comments urging withdrawal of the Draft Guidance, a de facto prohibition on use of social media platforms raises serious First Amendment concerns. The First Amendment does not allow the government to prohibit an entire method of communication simply because other methods of communications are available to the speaker, at least not where the government’s goals can be achieved through more narrowly tailored means. Continue reading

Linda Greenhouse’s Blatant Effort to Invoke “Greenhouse Effect” in Affordable Care Act Case Fails

NYTMark S. Chenoweth, WLF’s General Counsel, contributed to this post

Linda Greenhouse is at it again. The New York Times Supreme Court reporter-turned-opinion writer is deeply troubled by the possibility that the Supreme Court may actually construe the Affordable Care Act precisely as Congress wrote it. And she is up to her old tricks of trying to influence the justices by suggesting that they “will have a great deal of explaining to do—not to me, but to history” if they strike down the proposed IRS rule at issue in the case.

Now that the Supreme Court has agreed to decide the proper scope of tax credits available under the law, Ms. Greenhouse laments, “[n]ot only the Affordable Care Act but the court itself is in peril as a result.” Chief Justice Roberts, by her lights, “saved the day” last time around. “The fate of the statute hung in the balance then and hangs in the balance today,” she continues, but “… [t]his time, so does the honor of the Supreme Court.”

And yet King v. Burwell is precisely the sort of case that the Supreme Court is supposed to decide. Not only does it raise an issue of exceptional importance—whether the IRS is permitted to appropriate billions of dollars in tax credits each year absent an express authorization from Congress to do so—but the Fourth and D.C. Circuits have issued conflicting decisions on that question, and only the Supreme Court can resolve such a conflict.

Although the text of the ACA couldn’t be any clearer that only those taxpayers who purchase health insurance on exchanges “established by a State” are entitled to subsidies in the form of a tax credit, Ms. Greenhouse argues that the law’s “context” points in the opposite direction. But even if the law is ambiguous, Ms. Greenhouse strenuously avoids addressing the overriding reason for any ambiguity—the ACA was the sloppiest piece of legislative draftsmanship in a generation or more. Continue reading

The 2015 Dietary Guidelines: Another Federal Food Activism Vehicle?

MyPlateEvery five years, the U.S. Department of Health and Human Services (HHS) and the U.S. Department of Agriculture (USDA) jointly issue the latest iteration of the federal government’s formal guidance on healthy eating, the Nutrition Guidelines. These Guidelines not only inform as to how government feeds its millions of employees (including the military) and those who eat in a government facility (i.e. public schools, prisons), but they also influence food-related laws and regulations.

A federal advisory committee is expected to report its recommended updates for the 2015 Guideline to HHS and USDA this month. If the committee’s proceedings and its December 15, 2014 interim report are any indication, the 2015 “My Plate” will feature supersized, empty-calorie portions of activism and food-nanny nagging.  We should expect to be lectured on the need to eat “sustainably,” the imperative for mandated “added sugars” food labeling, and the importance of imposing marketing restrictions on certain foods.

The advisory committee. None of this comes as a surprise, given the makeup of the Dietary Guidelines Advisory Committee (DGAC) and the motivations of the regulators at HHS and USDA who appointed its 15 members. Every single member hails from academia, and as one assessment of the DGAC and its work published by Capital Research Center noted,

There is not a single business owner, family physician, working nutritionist, food services executive, or federal nutrition program director in the mix.

Continue reading