Lee Memorial Hospital

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The Federal Trade Commission announced today that it has dismissed a complaint against Lee Memorial Hospital in Fort Myers, Florida, because any potential harm to consumers as alleged in the complaint has been resolved. In the complaint, the FTC alleged that the proposed acquisition of Cape Coral Hospital by Lee Memorial would lessen competition for inpatient acute care hospital services in Fort Myers, and elsewhere in Lee County Florida, and violate the antitrust laws. The Commission dismissed its complaint because Cape Coral terminated its agreement with Lee Memorial and agreed to an acquisition by a corporation that did not own or operate any hospital in Lee County. Thus, any potential harm to consumers, as alleged in the complaint, was resolved by the alternative acquisition and it was not longer in the public interest to continue with the administrative matter.

Lee Memorial, a public hospital with 647 beds and Cape Coral, a private hospital with 281 beds, are the largest and third largest of the acute care hospital competitors in Lee County.

According to the order dismissing the complaint, the Commission had brought an administrative proceeding to protect competition for hospital services in Lee County. "Had the Commission ultimately found the transaction unlawful, the best possible relief for consumers in Lee County would have been the sale of Cape Coral to a third party. Since that is precisely what has happened, further proceedings cannot better accomplish the Commission's principal law enforcement objective. Thus, the Commission does not think there is adequate reason to continue additional adjudicative proceedings against the [Lee Memorial] Hospital Board," the order states.

In April 1994, the Commission filed a motion in federal district court to prevent Lee Memorial from acquiring Cape Coral, pending the outcome of an administrative trial. Lee Memorial asked the court to dismiss the case on grounds that the acquisition was immunized under the state action doctrine. The district court ruled in favor of Lee Memorial, and its decision was upheld on appeal. In December, the Commission petitioned the U. S. Court of Appeals for the Eleventh Circuit for a rehearing. In February 1995, while the petition was pending, Cape Coral terminated its agreement with Lee Memorial and agreed to be acquired, instead, by Health Management Associates, Inc. A Commission statement to the court at that time noted "...that the change in circumstances effectively rendered the Commission's action for a preliminary injunction moot." '

According to the Commission order announced today, "Although the Commission continues to disagree with the appellate court's analysis and application of the state action doctrine, the Commission will neither seek certiorari [petition the U.S. Supreme Court to review the appeals court's decision] nor pursue an administrative trial. The Commission believes that the public interest would be best served by the Commission's waiting for some future opportunity to advance its position on the state action issue. Accordingly it is hereby ordered that this matter be dismissed."

The Commission vote to dismiss the proceeding was 5-0, with Commissioner Mary L. Azcuenaga issuing a separate concurring statement. In her statement, Commissioner Azcuenaga said, "I have voted against authorizing the action to seek a preliminary injunction to block the subject transaction, against authorizing the appeal from the district court decision, against petitioning the Court of Appeals for a rehearing, and against the issuance of the administrative complaint. I concur in the Commission's decision now to dismiss the complaint, but do not join the Commission's order."

Copies of the order and other documents related to this case are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest FTC news as it is announced, call the FTC's NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web Site at: http://www.ftc.gov

(FTC Docket No. 9265)

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