In win for LCMC, federal judge says legal fight over hospital deal should be heard in New Orleans

A federal judge in Washington D.C. has handed LCMC Health an early win in its legal battle with the Biden Administration over LCMC’s January purchase of three area hospitals, ruling that the case should be heard in a federal court in New Orleans.

In late April, LCMC and the Federal Trade Commission filed dueling lawsuits in separate federal courts — the U.S. Eastern District of Louisiana in New Orleans and the District of Columbia, respectively. Each was seeking to fight the case in its own jurisdiction.

The legal fight, which is broadly about antitrust issues, centers on whether LCMC should have sought federal approval of the $150 million deal with HCA Healthcare and Tulane University. LCMC has argued that it was exempt from FTC review because Louisiana law gives the state attorney general the authority to regulate and approve hospital consolidations.

Louisiana Attorney General Jeff Landry approved the deal in late December.

In her ruling Tuesday, U.S. District Judge Amy Berman Jackson, who was appointed by President Barack Obama, said public interest in the case and the Louisiana law at the center of it support the argument that the case should be decided in federal court in Louisiana.

“There is a significant local interest in the state hospital merger approval process in Louisiana and how it bears on the enforcement of the antitrust laws with respect to hospital in the state,” Jackson said.

In a prepared statement, LCMC applauded Jackson’s ruling, saying, “We wholeheartedly agree with the court’s action to transfer this to Louisiana, and we support the decision that the merits of our partnership with Tulane University will be considered in our own community.”

The FTC declined to comment, citing ongoing litigation. It's not clear if the agency will appeal the ruling.

The ruling is significant, according to attorneys with experience with federal cases, because of the so-called homefield advantage that transferring the case to Louisiana could give LCMC.

"A hometown party tends to do better, just generally," said Luke Hasskamp, a San Diego-based health care attorney with Bona Law. Still, he noted that since the argument is over federal antitrust law, "any federal court should be interpreting it more or less the same."

'Serious concerns'

The case is drawing national interest because of its implications for hospital consolidations around the country at a time when the FTC is taking a skeptical view on large health systems getting larger.

Earlier this month, six national health care organizations, led by the powerful American Hospital Association, signed a joint letter to the FTC outlining its “serious concerns” with the FTC’s actions against LCMC.

"The Commission’s actions appear to be part of a growing pattern of...an agency-wide policy of 'gratuitously taxing' mergers and acquisitions, which does nothing for competition," said the letter, which asked the FTC to abandon the fight.

In court documents, the FTC has argued that LCMC’s purchase of Tulane Medical Center downtown, Tulane Lakeside Hospital in Metairie and Lakeview Regional Medical Center in Covington should have been reviewed by federal regulators to ensure it will not lead to higher prices or reduced access to care in the region.

The acquisition gives LCMC control of nine hospitals in a market with just two competing health systems, LCMC and Ochsner Health.

LCMC argues it didn’t need to seek the FTC’s blessing because Louisiana is one of 20 states that gives regulatory authority over hospital consolidations to state government.

Landry issued the approval in late December, clearing the way for the deal to move forward. His office has since attempted to intervene on behalf of LCMC in the New Orleans suit and on Wednesday issued a statement in support of Jackson's ruling.

Enforcement of antitrust laws

In her ruling, Jackson made clear she was transferring the case because the central issue is whether Louisiana’s law governing hospital mergers is as effective as the federal regulatory process in guarding against antitrust concerns.

The case will be tried in U.S. District Judge Lance Africk’s court. LCMC has asked for expedited hearings as the FTC is seeking to block the health system from moving forward with any major changes to any of the hospitals until the legal issues are resolved.

It also has imposed hefty daily fines on LCMC that total millions of dollars that have continued to accrue during the legal fight.