LCMC Health sues after feds temporarily block acquisition of 3 Tulane system hospitals

NEW ORLEANS (WVUE) - LCMC health filed a lawsuit Wednesday (April 19) seeking to dislodge the U.S. government’s block on its planned $150 million acquisition of three hospitals from the Tulane University Medical Center system.

LCMC Health announced last October its plan to acquire the Tulane University Medical Center in downtown New Orleans, Tulane Lakeside Hospital in Metairie and Lakeview Regional Medical Center in Covington.

But according to the lawsuit filed in New Orleans’ federal court, the Federal Trade Commission has ordered an immediate halt to the sale to allow government regulators more time to review the deal for potential violations of US antitrust law.

The LCMC lawsuit -- which names the FTC, Attorney General Merrick Garland and the US Department of Justice as defendants -- seeks a declaratory judgment that the deal is immune to federal antitrust laws because Louisiana’s legislature and attorney general have “expressly and unequivocally concluded that the acquisition furthers the state’s policy goals for the health and welfare of its citizens.”

The lawsuit says Louisiana Attorney General Jeff Landry’s office reviewed the purchase application, solicited public comment, held a public hearing and issued a certificate of public advantage (COPA) authorizing the deal last Dec. 28.

“In issuing the COPA, the State of Louisiana expressly and unequivocally adopted a state policy authorizing the acquisition and removing it from regulation under the antitrust laws ... on which defendants seek to rely,” the suit says. “In other words, the acquisition is entirely shielded by the state action immunity doctrine.”

Related coverage

In $150M deal, LCMC acquires Lakeview and two Tulane hospitals

LCMC Health acquires Tulane Medical Center properties in $150 million expansion

Landry agreed, issuing a statement calling it “upsetting” that the federal government would stand in the way of the merger at this stage.

“Throughout our lengthy and transparent process, the FTC never submitted a public comment,” Landry said. “They did not attend the public hearing, and they still have not contacted our office to communicate any issues or concerns with the COPA.

“It is upsetting that the federal government would attempt to disrupt increased access to quality health care in a community with so many underserved minorities. Instead of focusing on unfair and deceptive trade practices of PBM’s (pharmacy benefit managers), the FTC is spending resources opposing a deal that is already closed. I will explore all of our state’s legal options to fight this federal overreach.”

The federal government has taken a far dimmer view of the deal, the lawsuit said.

“The FTC has ordered LCMC to halt the acquisition, submit notice of the acquisition under the HSR Antitrust Act and pay a filing fee,” the suit says. “The FTC’s directive ... is an immediate threat of imposition of a statutory penalty of tens of thousands of dollars each day until the FTC ‘clears’ the acquisition -- which it may never do.

“The FTC has informed LCMC of its view that LCMC is in the penalty period, which began on Jan. 1, 2023, and that the penalty is accruing daily.”

The case has been assigned to US District Judge Lance Africk.

See a spelling or grammar error in our story? Click Here to report it. Please include the headline.

Copyright 2023 WVUE. All rights reserved.