Mergers & Antitrust Law News

Pennsylvania Denied Fees in Challenge to Hospital Merger

Jan. 23, 2019, 7:58 PM

Pennsylvania can’t get attorneys’ fees for its litigation effort to block a hospital merger, the Third Circuit ruled Jan. 23.

The injunction blocking the proposed merger between Penn State Hershey Medical Center and PinnacleHealth System was issued under Section 13(b) of the Federal Trade Commission Act, which doesn’t allow for an award of attorneys’ fees to a winning party, the appeals court said. Pennsylvania sought attorneys’ fees under the Clayton Act, which allows for fee awards, but the Clayton Act’s fee-shifting provision doesn’t extend to cases brought under other antitrust statutes, the court said.

The decision is a loss for Washington, Delaware, Iowa, and seven other states that filed an amicus brief supporting Pennsylvania’s ability to receive attorneys’ fees in this case.

Only one other federal court has considered whether an injunction issued under Section 13(b) triggers the possibility of a fee award. In finding that it doesn’t, the Third Circuit followed a 2017 ruling by the U.S. District Court for the District of Columbia.

Merger Challenge

The Harrisburg, Pa., hospitals’ ill-fated merger attempt drew litigation from both Pennsylvania and the Federal Trade Commission, which objected to the deal as anti-competitive. The Third Circuit first considered the dispute in 2016, siding with the government plaintiffs.

In its latest ruling, the Third Circuit sidestepped the question of whether a preliminary injunction entered under Section 16 of the Clayton Act can be the basis for an award of attorneys’ fees.

Judge Richard L. Nygaard wrote the decision. Judges Patty Shwartz and Marjorie O. Rendell joined.

Jones Day represented the hospitals. Pennsylvania and the FTC represented themselves.

The case is FTC v. Penn State Hershey Med. Ctr., 3d Cir., No. 17-2270, 1/23/19.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bloomberglaw.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com

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