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St. Luke’s Asks Ninth Circuit to Reconsider Health Care Merger Case

St. Luke’s Health System and Saltzer Medical Group last week asked the full Ninth Circuit to reconsider its ruling that their merger violated federal antitrust laws. We have previously covered the case here.

St. Luke’s purchased physician group Saltzer in 2012. The Federal Trade Commission (FTC), the State of Idaho, and two local hospitals sued, alleging that the merger violated the Clayton Act and state law. The district court ordered that the merger be dissolved, finding that the merger would give St. Luke’s too much power and that this power would likely be used to negotiate higher reimbursement rates from insurers. The Ninth Circuit affirmed in February.

In asking the court to rehear the case en banc, St. Luke’s and Saltzer point to three main errors in the Ninth Circuit’s opinion. First, they argue that the panel did not give appropriate weight to the merger’s positive effect on the quality of health care. Second, they contend that the panel adopted an improper methodology for determining the relevant geographic market, thereby creating a circuit split. Lastly, they maintain that portions of the opinion are internally inconsistent and suggest that the panel misunderstood the district court’s decision.

A group of 17 antitrust professors and the International Center for Law and Economics filed an amicus brief Monday in support of St. Luke’s and Saltzer’s petition for en banc rehearing. They believe the Ninth Circuit's opinion will ultimately make consumers worse off by preventing beneficial mergers. They further argue that the decision “will signal to market participants that the efficiencies defense is essentially unavailable in the Ninth Circuit, especially if those efficiencies go towards improving quality.”

According to the Ninth Circuit’s rules, the court will only hear a case en banc if such a move is necessary to maintain uniformity of the court’s decisions or the proceeding involves a question of exceptional importance.  Here, the health care providers argue that the resulting circuit split presents exceptionally important questions warranting en banc consideration.