The Supreme Court on Monday questioned a monopoly on hospital services in southwestern Georgia.
The justices heard arguments in the federal government's claim that two private corporations used a public hospital authority to complete a deal that left one company as the owner of the only two hospitals in Albany, Ga. The Federal Trade Commission says the deal violates federal antitrust law.
The question at the high court is whether an exception in antitrust law for actions taken by a state or its agencies — in this case, the hospital authority — shields the transaction from federal concerns.
Lower federal courts allowed Albany's Phoebe Putney Memorial Hospital to buy Palmyra Medical Center from Hospital Corporation of America for $195 million over the FTC's objection.
Both hospitals now are nominally owned by the Hospital Authority of Albany-Dougherty County, but run by the Phoebe Putney Health System under long-term leases. The money for the Palmyra purchase came from the health system, not the authority.
The court has long accepted that the some business deals that lead to monopolies that otherwise would raise antitrust concerns are allowable if they are done by states. But in such cases, the states have to explain clearly why competition is not in the public interest and they have to ensure a level of control and oversight of the monopolies.
Justice Elena Kagan was among several members of the court who pressed Seth Waxman, the Washington lawyer representing the Georgia hospitals, about whether Georgia clearly endorsed deals that leave one company in control of all the hospital beds in a city or county.
Waxman said the hospital authority, with a duty under state law to serve the poor, had only two ways to find additional needed bed space.
"It could have tried to convince the state to spend three times as much money to get half the number of beds," by building a new facility, Waxman said. Or, "it could buy the other hospital."
A decision is expected by June.
The case is Federal Trade Commission v. Phoebe Putney Health System, 11-1160.