backFourth Circuit Grants Emergency Injunction of Sale of Two North Carolina Hospitals, Deal Collapses—On June 18, 2024, the Fourth Circuit issued a 2-1 decision granting the FTC’s request to block the sale of two hospitals in Charlotte, North Carolina. Earlier this month, a federal court in the Western District of North Carolina declined to issue a preliminary injunction to block the proposed transaction. The district court found that the deal was not likely to lead to anticompetitive behavior, and that, on balance, the public equities weigh in favor of allowing the sale to go forward. King and Spalding’s prior summary of the District Court’s decision is available here. As a result of the Fourth Circuit’s grant of the injunction, the acquiring health system has decided to abandon the transaction.
In response to the District Court’s decision, the FTC filed for emergency injunctive relief in the Fourth Circuit Court of Appeals to halt the purchase pending appeal of the District Court’s denial of the preliminary injunction. The FTC’s motion maintained that the lower court committed several legal errors, including failing to properly apply the “failing firm” and “weakened competitor” defenses, and failing to consider relevant evidence.
Last week, a three-member panel in the Fourth Circuit voted 2-1 to grant the FTC’s request for an emergency injunction. Judge Harvie Wilkinson voted to deny the FTC’s motion, concluding that closure of one of the hospitals “may be imminent,” and that such closure “would by definition lessen any competition.” Judge Wilkinson determined that “[s]ending this back to the FTC and the administrative law judge is a process that ordinarily takes over two years. … Given the evidence I am not sure any financially hard-pressed healthcare facility would have that amount of time.”
Reporter, Elizabeth Key, Sacramento, +1 916 321 4821, ekey@kslaw.com.
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