California, Pennsylvania Attorneys General File Brief in Third Circuit Hospital Merger Case

According to a press release issued Monday, California Attorney General Rob Bonta,   Pennsylvania Attorney General Josh Shapiro, and nearly two dozen other states pressed the appellate court to affirm an injunction blocking the merger of two competing New Jersey healthcare companies. The brief argued that blocking the merger was a legally sound conclusion and essential to protecting competition in local healthcare markets.

In August, the District of New Jersey granted the Federal Trade Commission’s (FTC) motion for a preliminary injunction under the Clayton Act, halting Englewood Healthcare Foundation’s acquisition of Hackensack Memorial Hospital, a provider focused on community care in Bergen County, New Jersey. The court determined that the merger “would result in anticompetitive effects like higher prices and lower-quality care, without any extraordinary efficiencies to offset those harms,” the press release said. Hackensack and Englewood appealed

In their brief, the coalition of attorneys general argued that states have recently experienced a surge in hospital consolidation, resulting in highly concentrated markets where healthcare systems wield substantial power at the expense of insurers and patients. Healthcare providers faced with less competition have the ability to charge patients more without improving the quality or efficiency of care, they contended. Other harms include job reduction, a smaller tax base, and fewer services, the brief said.

The two-stage model of competition used by FTC in assessing the market impact of the proposed merger properly focused on the price effects of the increased bargaining power that the single, enlarged entity would enjoy from the merger, the brief alleged. “The localized geographic market resulting from this methodology accurately models the market dynamic that we see in our States today” and is consistent with a 2016 Third Circuit decision, the filing said.

The amicus brief is one of several. Others were filed in support of the FTC on behalf of professors, economists, and scholars and a non-profit dedicated to assisting employers and other health care purchasers get better value for their health care dollar. Among others, the African American Chamber of Commerce of New Jersey, the American Hospital Association, and the Association of American Medical Colleges supported the hospitals. 

Engelwood is represented by Winston & Strawn LLP and Hackensack by Faegre Drinker Biddle & Reath LLP