# Federal Trade Commission v. Louisiana Children's Medical Center

> District Court, E.D. Louisiana · September 27, 2023

URL: https://www.frixlaw.com/law-library/cases/10189952

## Case

- **Court:** District Court, E.D. Louisiana
- **Decided:** September 27, 2023
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10189952

## How later opinions describe it (automated extraction)

- finding that clear articulation was satisfied where the statute in question provided that hospital authorities could exercise certain powers “regardless of the competitive consequences thereof”

## Opinion text

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

LOUISIANA CHILDREN’S MEDICAL CENTER CIVIL ACTION

VERSUS No. 23-1305
c/w 23-1311
c/w 23-1890
REF: 23-1890

ATTORNEY GENERAL OF SECTION I
THE UNITED STATES ET AL.

ORDER & REASONS
Pending before the Court are three motions. First is a motion1 for summary
judgment filed by petitioner, the Federal Trade Commission (the “FTC”).
Respondents, Louisiana Children’s Medical Center, d/b/a LCMC Health (“LCMC”)
and HCA Healthcare, Inc. (“HCA”) (collectively, the “Hospitals”), and intervenor, the
State of Louisiana (the “State”), oppose this motion.2 Second is a motion3 for summary
judgment filed by the Hospitals. The FTC opposes this motion.4 Third is a motion5 for
judgment on the pleadings or alternatively summary judgment filed by the State. The
FTC opposes this motion as well.6

1 R. Doc. No. 71.
2 R. Doc. No. 78; R. Doc. No. 79.
3 R. Doc. No. 75.
4 R. Doc. No. 77.
5 R. Doc. No. 74. The State seeks the same outcome as the Hospitals in this case;
accordingly, the Court addresses the State’s arguments and the FTC’s responses to
those arguments only to the extent necessary to resolve the dispositive questions in
this case.
6 R. Doc. No. 76.
For the reasons that follow, the Court grants the Hospitals’ motion for
summary judgment, denies the FTC’s motion for summary judgment, grants the
State’s motion for summary judgment, and dismisses as moot the State’s motion for

judgment on the pleadings.
I. BACKGROUND
This case concerns LCMC’s acquisition of three hospitals from HCA pursuant
to a Certificate of Public Advantage (“COPA”) issued by Louisiana’s Department of

Justice. The parties do not dispute that the Hospitals did not comply with Section 7A
of the Clayton Antitrust Act, enacted by the Hart-Scott-Rodino Antitrust
Improvements Act (“HSR Act”), which requires parties to transactions that meet
certain statutory thresholds to notify federal antitrust authorities of their intended
transaction and observe a 30-day waiting period.7 Rather, the parties disagree about
whether the Supreme Court’s “state action doctrine” exempts the acquisition from the

federal antitrust laws, including Section 7A, given the issuance of the COPA.
Whether Section 7A reaches private parties’ conduct qualifying as “state action”
pursuant to that doctrine is a question of first impression.
The basic facts of this case are not in dispute. LCMC is a non-profit corporation
and health system based in New Orleans, Louisiana.8 HCA is a for-profit corporation
that operates 182 hospitals nationwide and previously operated three hospitals in
Louisiana through a joint venture with Tulane University.9 On October 10, 2022,

7 See R. Doc. No. 71-2 (FTC’s statement of uncontested material facts), ¶¶ 8–9.
8 Id. ¶ 1; R. Doc. No. 75-2 (Hospitals’ statement of uncontested material facts), ¶ 15.
9 R. Doc. No. 71-2, ¶ 3–4; R. Doc. No. 75-2, ¶ 16.
LCMC and HCA applied10 for a COPA pursuant to a Louisiana statute known as a
“COPA statute.” See La. Stat. Ann. § 40:2254.1 et seq. As the COPA application11
explained, LCMC sought to acquire from HCA three hospitals in the greater New

Orleans area: Tulane Medical Center, Tulane Lakeside, and Lakeview Regional
Medical Center.12
Louisiana’s COPA statute provides Louisiana’s Department of Justice (the
“LADOJ”) with “direct supervision and control over the implementation of
cooperative agreements, mergers, joint ventures, and consolidations among health
care facilities for which certificates of public advantage are granted.” La. Stat. Ann.

§ 40:2254.1. The statute states that “[i]t is the intent of the legislature that
supervision and control over [such transactions] . . . have the effect of granting the
parties to [such transactions] state action immunity for actions that might otherwise
be considered to be in violation of state antitrust laws, federal antitrust laws, or both.”
Id. The Hospitals supplemented their application multiple times before the LADOJ
deemed it complete on November 18, 2022.13
Once the application was complete, Louisiana’s COPA statute required the

LADOJ to provide notice to the public, request public comment, hold a public hearing,
and decide the application within a maximum of 180 days. Id. §§ 40:2254.4(B–C).

10 R. Doc. No. 74-2, ¶ 10 (State’s statement of uncontested material facts); R. Doc. No.
75-2, ¶ 13.
11 R. Doc. No. 75-4.
12 R. Doc. No. 75-2, ¶ 17.
13 R. Doc. No. 74-2, ¶ 16; R. Doc. No. 75-2, ¶ 21.
After “extensive[] review[],”14 the LADOJ held a notice and comment period, received
and reviewed numerous comments from the public, and held a public hearing on
December 8, 2022.15

On December 28, 2022, the LADOJ approved the acquisition and granted a
COPA.16 The COPA’s “Terms and Conditions” provide for ongoing supervision.17 The
COPA states that the LADOJ may “revoke the COPA” if it is “not satisfied with any
submitted corrective action plan,” if LCMC “fails to comply with the [COPA’s] terms
and conditions,” “fails to comply with any Corrective Action Plan, or if the [LADOJ]
otherwise determines that the transaction is not resulting in lower health care costs

or greater access to or quality of health care[.]”18 Following this authorization, the
Hospitals closed the transaction on January 1, 2023, and publicly announced it on
January 3, 2023.19
As stated, pursuant to Section 7A of the Clayton Antitrust Act, parties to
transactions over certain thresholds must file a pre-merger notification and report
form (an “HSR Filing”) and wait 30 days before consummating their transaction. 15
U.S.C. §§ 18a(a), 18(b)(1), 18(d)(1). In 2022 and early 2023, firms engaging in mergers

or acquisitions had to file premerger notification reports of transactions between $101
million and $403.9 million, provided that the entities involved in the transactions met

14 R. Doc. No. 74-2, ¶ 17.
15 Id. ¶ 19; R. Doc. No. 75-2, ¶ 24–26.
16 R. Doc. No. 74-2, ¶ 20; R. Doc. No. 75-2, ¶ 29.
17 R. Doc. No. 74-2, ¶¶ 21–25; R. Doc. No. 75-2, ¶¶ 30–34.
18 R. Doc. No. 75-17, at 3.
19 R. Doc. No. 71-2, ¶¶ 5–6; R. Doc. No. 74-2, ¶ 26; R. Doc. No. 75-2, ¶ 35.
the “size of person” test.20 In January 2023, these thresholds were $20.2 million for
the smaller entity and $202 million for the larger entity based on total assets or net
sales.21 Parties who consummate mergers without observing the waiting period are

currently subject to daily penalties exceeding $50,000.22
On April 19, 2023, LCMC and HCA filed23 two separate lawsuits in the Eastern
District of Louisiana based on Louisiana’s COPA statute. Each action sought a
declaratory judgment that their transaction was not subject to Section 7A’s
requirements and therefore not subject to penalties for consummating the acquisition
without complying with Section 7A. The State of Louisiana, by and through its

Attorney General, moved to intervene in both cases, and this Court granted those
motions on May 1, 2023.24 On May 9, 2023, this Court consolidated the Hospitals’ two
lawsuits.25
On April 20, 2023, the FTC filed a lawsuit in the District Court for the District
of Columbia seeking an order enjoining the hospitals from further consummating the
acquisition “until an appropriate time after LCMC has substantially complied with
the premerger notification requirements set forth in Section 7A of the Clayton Act.”26

The FTC sought this relief pursuant to Section 7A(g)(2) of the Clayton Act and Section

20 R. Doc. No. 71-2, ¶ 7.
21 Id.
22 R. Doc. No. 75-2, ¶ 44.
23 Louisiana Children’s Medical Center v. Attorney General of the United States et al.,
E.D. La. Case No. 23-1305; HCA Healthcare Inc. v. Attorney General of the United
States et al., E.D. La. Case No. 23-1311.
24 R. Doc. No. 17; E.D. La. Case No. 23-1311, R. Doc. No. 21.
25 R. Doc. No. 28.
26 R. Doc. No. 59, at 1.
13(b) of the Federal Trade Commission Act.27 The Hospitals informed the D.C.
District Court that they opposed the FTC’s motion for injunctive relief and planned
to move to transfer the case to the Eastern District of Louisiana.28

On April 21, 2023, in light of a stipulation between the parties, the D.C.
District Court ordered LCMC to take certain steps to preserve the status quo,
including: (1) not closing or otherwise undermining the viability, competitiveness,
and marketability of the three Tulane hospitals; (2) maintaining all clinical service
lines available; (3) not selling or transferring or taking any action to encumber or
otherwise impair the assets used by the Tulane hospitals and preventing the

destruction, wasting, or deterioration of the Tulane hospitals and not taking any
action that might create a material change in the operations of the Tulane hospitals;
(4) using best efforts to keep the Tulane hospitals staffed with sufficient employees
to maintain the viability and competitiveness of the Tulane hospitals; and (5) not
renegotiating, terminating, or causing termination of any contract between any
health insurance carrier and the Tulane hospitals.29 The Order provided that it would
“expire and cease to bind any party upon the earlier of (1) an order granting the

forthcoming motion to transfer this action to the United States District Court for the
Eastern District of Louisiana; or (2) an order on plaintiff’s request for a preliminary
injunction[.]”30

27 Id.
28 D.D.C. Case No. 23-1103, R. Doc. No. 31, at 6.
29 D.D.C. Case No. 23-1103, R. Doc. No. 12, at 1–2.
30 Id. at 3.
On May 23, 2023, the D.C. District Court granted the Hospitals’ motion and
transferred this case to the Eastern District of Louisiana.31 In so doing, Judge Amy
Berman Jackson reasoned that “[g]iven the posture of the case, the state action

question must be resolved first.”32 Judge Jackson’s explained that “[t]he
determination of the effect of the COPA on subsequent federal action will involve the
interpretation and application of [Louisiana] state law[,]” so this Court’s “familiarity
with that law point[ed] toward transfer.”33 The Hospitals subsequently moved to
consolidate the District of Columbia case with the Eastern District of Louisiana
case,34 and this Court granted that motion without opposition on June 22, 2023.35

On June 20, 2023, the FTC moved to dismiss the Hospitals’ lawsuits seeking a
declaratory judgment for lack of subject matter jurisdiction, or, in the alternative, to
hold in abeyance all proceedings.36 Pursuant to the discussion at a status conference
on July 6, 2023, this Court stayed and administratively closed the cases seeking a
declaratory judgment, granted the State’s motion to intervene in the FTC’s lawsuit,
and set a briefing schedule for any motions for summary judgment and/or judgment
on the pleadings in the FTC’s lawsuit.37 The parties subsequently filed the above-

mentioned motions.

31 E.D. La Case No. 23-1890, R. Doc. No. 31 (order transferring case).
32 Id. at 22.
33 Id. at 22–23.
34 E.D. La. Case No. 23-1890, R. Doc. No. 43.
35 R. Doc. No. 58.
36 R. Doc. No. 55.
37 R. Doc. No. 67.
II. STANDARD OF LAW38
Summary judgment is proper when, after reviewing the pleadings, the
discovery and disclosure materials on file, and any affidavits, a court determines that

there is no genuine dispute of material fact and the movant is entitled to judgment
as a matter of law. Fed. R. Civ. P. 56(a). “[A] party seeking summary judgment always
bears the initial responsibility of informing the district court of the basis for its
motion, and identifying those portions of [the record] which it believes demonstrate
the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317,
323 (1986). The party seeking summary judgment need not produce evidence

negating the existence of a material fact; it need only point out the absence of evidence
supporting the other party’s case. Id.; see also Fontenot v. Upjohn Co., 780 F.2d 1190,
1195–96 (5th Cir. 1986) (“There is no sound reason why conclusory allegations should
suffice to require a trial when there is no evidence to support them even if the movant
lacks contrary evidence.”).
Once the party seeking summary judgment carries that burden, the
nonmoving party must come forward with specific facts showing that there is a

genuine dispute of material fact for trial. See Matsushita Elec. Indus. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986). The showing of a genuine issue is not satisfied by
creating “‘some metaphysical doubt as to the material facts,’ by ‘conclusory

38 Because the Court decides the case based on the motions for summary judgment,
it need not consider the State’s motion for judgment on the pleadings—which it
dismisses as moot—and therefore does not lay out the legal standard for judgment on
the pleadings pursuant to Federal Rule of Civil Procedure 12(c).
allegations,’ by ‘unsubstantiated assertions,’ or by only a ‘scintilla’ of evidence.” Little
v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citations omitted). Rather, a
genuine issue of material fact exists when the “evidence is such that a reasonable

jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986). If the nonmovant fails to meet their burden of showing a
genuine issue for trial that could support a judgment in favor of the nonmovant,
summary judgment must be granted. See Little, 37 F.3d at 1075–76.
“Although the substance or content of the evidence submitted to support or
dispute a fact on summary judgment must be admissible . . . the material may be

presented in a form that would not, in itself, be admissible at trial.” Lee v. Offshore
Logistical & Transp., L.L.C., 859 F.3d 353, 355 (5th Cir. 2017) (citations omitted).
The party responding to the motion for summary judgment may not rest upon the
pleadings but must identify specific facts that establish a genuine issue. See
Anderson, 477 U.S. at 248. The nonmoving party’s evidence, however, “is to be
believed, and all justifiable inferences are to be drawn in [the nonmoving party’s]
favor.” Id. at 255.

III. ANALYSIS
The parties disagree about the starting point for the Court’s analysis.
According to the Hospitals, the Court should begin its analysis by determining
whether the Hospitals’ transaction is exempt from Section 7A’s requirements
pursuant to the state action doctrine.39 The FTC responds that this “puts the cart

39 R. Doc. No. 75-1, at 7.
before the horse.”40 In the FTC’s view, the state action question “is not relevant to the
question of whether the Hospitals were obligated to file under the HSR Act.”41
Instead, the FTC contends that the Court should begin its analysis by interpreting

the text of Section 7A.42
As mentioned, this case was transferred to this Court from the D.C. District
Court in part because Judge Amy Berman Jackson found that “the state action
question[,]” which requires analysis of Louisiana law, “must be resolved first.”43 As
Judge Jackson pointed out, if the Court determines that the COPA does not exempt
the Hospitals from Section 7A, the FTC would be entitled to equitable relief given the

violation of the statute.44 But if the Court determines that the COPA does exempt the
transaction from the federal antitrust laws, including Section 7A, then HSR review
“would arguably be an empty exercise[.]”45 Indeed, if the transaction is exempt from
Section 7, then subjecting it to Section 7A’s requirements at this stage simply to allow
the FTC to determine whether it is in fact exempt would be pointless. See Surgical
Care Ctr. of Hammond, L.C. v. Hosp. Serv. Dist. No. 1 of Tangipahoa Par., 171 F.3d
231, 234 (5th Cir. 1999) (citation omitted) (noting that state action questions “can

often be resolved at an early stage of the litigation”). And if the transaction is exempt
from Section 7A itself, then the Hospitals could not have violated Section 7A.

40 R. Doc. No. 77, at 17.
41 Id.
42 See generally R. Doc. No. 71.
43 E.D. La. Case No. 23-1890, R. Doc. No. 31, at 22 (order transferring case).
44 Id.
45 Id.
Given the posture of this case, which was filed months after the Hospitals
completed their transaction and in which the FTC seeks equitable relief based on the
Hospitals’ failure to comply with Section 7A, the Court agrees with the Hospitals and

the D.C. District Court that it must first determine whether the COPA issued
pursuant to Louisiana’s COPA statute exempts the transaction from federal antitrust
enforcement. Because the Court finds that it does, the Court must also determine
whether—as parties to a transaction exempt from the federal antitrust laws pursuant
to the state action doctrine—the Hospitals were bound by the requirements of Section
7A. They were not.

a. The State Action Doctrine
Pursuant to the state action doctrine, the Supreme Court has consistently
presumed that Congress does “not intend to compromise the States’ ability to regulate
their domestic commerce” absent a clear statement to the contrary. S. Motor Carriers
Rate Conf., Inc. v. United States, 471 U.S. 48, 56 (1985). The doctrine, which is
grounded in “principles of federalism and state sovereignty,” provides that federal
antitrust laws do “not apply to anticompetitive restraints imposed by the States as

an act of government.” City of Columbia v. Omni Outdoor Advert., 499 U.S. 365, 370
(1991) (quotations omitted). It recognizes that “federal antitrust laws are subject to
supersession by state regulatory programs.” F.T.C. v. Ticor Title Ins. Co., 504 U.S.
621, 632 (1992).46

46 The FTC argues that the state action doctrine “is disfavored.” R. Doc. No. 71-1, at
7 (citing FTC. v. Phoebe Putney Health Sys., Inc., 568 U.S. 216, 225 (2013) (quoting
Ticor, 504 U.S. at 636)). In Ticor, however, the Supreme Court noted that “state-
The state action doctrine stems from Parker v. Brown, a Supreme Court
decision that interpreted Sections 1 and 2 of the Sherman Antitrust Act of 1890. 317
U.S. 341 (1943). Section 1 of the Sherman Act provides: “Every contract, combination

in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce
among the several States, or with foreign nations, is declared to be illegal. Every
person who shall make any contract or engage in any combination or conspiracy
hereby declared to be illegal shall be deemed guilty of a felony . . .” 15 U.S.C. § 1.
Section 2 provides: “Every person who shall monopolize, or attempt to monopolize, or
combine or conspire with any other person or persons, to monopolize any part of the

trade or commerce among the several States, or with foreign nations, shall be deemed
guilt of a felony . . .” Id. § 2.
Confronted with the question of whether a California program designed to
restrict competition among raisin growers violated the Sherman Act, the Supreme
Court held that “nothing in the language of the Sherman Act or in its history . . .
suggest[ed] that its purpose was to restrain a state or its officers or agents from
activities directed by its legislature.” Parker, 317 U.S. at 350–51. Although the

Sherman Act by its terms applied to “[e]very person,” the Supreme Court found that
the State of California did not qualify as a “person” absent a clear statement of

action immunity is disfavored” to avoid instances where that doctrine “will impede
[states’] freedom of action, not advance it.” 504 U.S. at 635–36. That rationale does
not apply to this case, where the state statute in question expresses “the intent of the
legislature . . . that this regulation have the effect of granting [certain parties] state
action immunity for actions that might otherwise be considered in violation of state
antitrust laws, federal antitrust laws, or both[,]” as discussed more fully in the next
section. La. Stat. Ann. § 40:2254.1.
Congress’s intent to reach states. See id. California was therefore exempt from the
Act. Id.
As the Supreme Court has explained, “immunity from the federal antitrust

laws may extend to nonstate actors carrying out the State’s regulatory program.”
Phoebe Putney, 568 U.S. at 224–25. The state action doctrine applies to the
anticompetitive acts of private parties only where “the challenged restraint” is
“clearly articulated and affirmatively expressed as state policy” and where that policy
is “actively supervised by the State.” California Retail Liquor Dealers Ass’n v. Midcal
Aluminum, Inc., 445 U.S. 97, 105 (1980) (internal quotation marks omitted).

States and those carrying out a state’s regulatory program are also considered
exempt from Section 7 of the Clayton Act, which provides that “[n]o person . . . shall
acquire . . . stock or other share capital” where “the effect of such acquisition may be
substantially to lessen competition, or to tend to create a monopoly.” 15 U.S.C. § 18;
see, e.g., Phoebe Putney, 568 U.S. at 222, 227–29 (determining that state-action
immunity did not exempt the defendant from liability under the antitrust laws,
including Section 7, because the state’s authorization of certain acquisitions did not

meet Midcal’s clear-articulation test); Commonwealth v. Susquehanna Area Reg’l
Airport Auth., 423 F. Supp. 2d 472, 472 (M.D. Pa. 2006) (granting the defendant’s
motion to dismiss a complaint alleging antitrust violations under Section 7 of the
Clayton Act and Section 2 of the Sherman Act “[b]ased upon clear application of
Parker immunity”); Hunnicutt v. Tafoya-Lucero, No. 21-867, 2022 WL 832566, at *4
(D.N.M. Mar. 21, 2022) (explaining that “[t]he state action exemption articulated in
Parker has been expanded to apply to all of the federal antitrust laws, including the
Clayton Act”).
In the FTC’s view, the Hospitals “overread” the Supreme Court’s decisions

regarding the state action doctrine.47 The FTC conceives of the state action doctrine
as a defense which does not confer “immunity” on private actors.48 For support, the
FTC points to Acoustic Sys., Inc. v. Wenger Corp., 207 F.3d 287 (5th Cir. 2000). That
case is not entirely on point. There, the Fifth Circuit rejected a private party’s
argument that he was immune from the lawsuit itself pursuant to the state action
doctrine. Acoustic Sys., 207 F.3d at 291–92 (noting that the private party sought

“immunity from antitrust suit” as well as immunity from liability (emphasis added)).
The Hospitals have not asserted that they are immune from an antitrust lawsuit or
that they can assert immunity akin to Eleventh Amendment immunity. They have
merely argued that, since their transaction is “exempt” from the federal antitrust
laws pursuant to the state action doctrine, they were not required to comply with
Section 7A.
Ultimately, the Court finds that the state action doctrine is neither an

immunity from litigation, nor an ordinary defense. Rather, as the State argues,49 the
doctrine reflects “a recognition of the limited reach of the Sherman Act” and other
federal antitrust laws. E.g., Acoustic Sys., 207 F.3d at 292 n.3 (citation omitted); La.
Real Est. Appraisers Bd. v. FTC, 976 F.3d 597, 602 n.5 (5th Cir. 2020) (citation

47 R. Doc. No. 88, at 7.
48 R. Doc. No. 71-1, at 15–19.
49 R. Doc. No. 74-1, at 21.
omitted). Where it applies, that doctrine places certain parties outside the reach of
the federal antitrust laws; in other words, it exempts them from those laws.
b. The Acquisition Pursuant to Louisiana’s COPA Statute Is
“Exempt” from “the Federal Antitrust Laws”
Despite the D.C. District Court’s framing of the issue, the FTC chose not to
brief the question of whether the Hospitals’ transaction pursuant to Louisiana’s
COPA statute is in fact exempt from the federal antitrust laws. Rather, based on its

view that Section 7A is not among “the federal antitrust laws” from which private
parties acting pursuant to the state action doctrine are exempt, the FTC argues that
this question is “premature.”50 According to the FTC, the state action question is
“fact-intensive” and cannot be decided on the “redacted” record before the Court
without the type of unredacted materials typically included in HSR Filings.51
However, as the Fifth Circuit has previously found, state action questions “can
often be resolved at an early stage of the litigation” because “[s]tate authorization is

generally interpreted by an objective test that looks at the language of the statute[.]”
Surgical Care Ctr. of Hammond, 171 F.3d at 234 (citation omitted). And while the
question of active supervision will inherently require a court to look at facts, the FTC
has not adequately explained why it believes the Court cannot evaluate active
supervision on the record before it. As discussed below, the record provides ample
evidence of active supervision. Moreover, the relief the FTC seeks would be futile if

the transaction were exempt from federal antitrust laws in the first place. It therefore

50 R. Doc. No. 77, at 19.
51 Id. at 19–22.
makes sense to determine at the outset whether the Hospitals were exempt from the
statute pursuant to the state action doctrine.
The D.C. District Court advised the parties that the state action question

“must be resolved first.”52 The FTC chose not to listen. The FTC cannot now rely on
its own litigation strategy—specifically, its choice not to brief this issue fully or
pursue discovery—to prevent the Court from reaching the state action question.
i. Louisiana’s COPA Statute Satisfies MidCal’s Test
For the state action doctrine to apply to private parties’ transactions, the
challenged restraint must be (1) “clearly articulated and affirmatively expressed as

state policy[,]” and (2) “actively supervised” by the state. Midcal, 445 U.S. at 105.
A. Clearly Articulated State Policy
To satisfy the clear articulation requirement, the State must have “clearly
articulated and affirmatively expressed” the anticompetitive conduct “as state
policy.” Phoebe Putney, 568 U.S. at 225. The State also “must have foreseen and
implicitly endorsed the anticompetitive effects.” N.C. State Bd. Of Dental Exam’rs v.
FTC, 574 U.S. 494, 507 (2015).

Louisiana’s COPA statute easily satisfies this requirement. The statute states:
“[i]t is the intent of the legislature that supervision and control over the
implementation of these agreements, mergers, joint ventures, and consolidations
substitute state regulation of facilities for competition between facilities and that this
regulation have the effect of granting the parties to the agreements, mergers, joint

52 E.D. La Case No. 23-1890, R. Doc. No. 31, at 22 (order transferring case).
ventures, or consolidations state action immunity for actions that might otherwise be
considered to be in violation of state antitrust laws, federal antitrust laws, or both.”
La. Stat. Ann. § 40:2254.1. This language plainly indicates the state’s policy in favor

of COPA-approved mergers regardless of their anticompetitive effects. See, e.g.,
Jackson, Tenn. Hosp. Co., LLC v. W. Tenn. Healthcare, Inc., 414 F.3d 608, 612 (6th
Cir. 2005) (finding that clear articulation was satisfied where the statute in question
provided that hospital authorities could exercise certain powers “regardless of the
competitive consequences thereof”) (emphasis in original); DFW Metro Line Servs. v.
Sw. Bell Tel. Corp., 988 F.2d 601, 605 (5th Cir. 1993) (affirming previous holding that

a Texas statute specifying that “regulation shall operate as a substitute for . . .
competition” satisfied the clear articulation prong).
B. Active State Supervision
In order to evaluate active supervision, the Court must first identify the
“particular anticompetitive acts” requiring supervision. Dental Exam’rs, 574 U.S. at
507, 515. As the Hospitals note,53 the challenged conduct in this case is the closing of
LCMC’s acquisition of three hospitals from HCA on January 1, 2023. Specifically, the

FTC argues that the Hospitals violated Section 7A by failing to notify the FTC and
abide by the statute’s waiting period before closing the transaction.54
To satisfy Midcal’s active supervision requirement, the state must exercise
ultimate control over the challenged anticompetitive conduct. Patrick v. Burget, 486

53 R. Doc. No. 75-1, at 11.
54 R. Doc. No. 71, at 1.
U.S. 94, 101 (1988). “The mere presence of some state involvement or monitoring does
not suffice.” Id. “The active supervision prong of the Midcal test requires that state
officials have and exercise power to review particular anticompetitive acts of private

parties and disapprove those that fail to accord with state policy.” Id.
Louisiana’s COPA statute makes clear that its purpose is to “provide the state,
through the department, with direct supervision and control over the implementation
of cooperative agreements, mergers, joint ventures, and consolidations among health
care facilities for which certificates of public advantage are granted.” La. Stat. Ann.
§ 40:2254.1. Pursuant to this statute, the LADOJ had the “power to veto or modify”

the acquisition, as required for the state action doctrine to apply. Dental Exam’rs, 574
U.S. at 515. In fact, “[t]he [LADOJ] may not issue a certificate unless the [LADOJ]
finds that the agreement is likely to result in lower health care costs or is likely to
result in improved access to health care or higher quality health care without any
undue increase in health care costs.” La. Stat. Ann. § 40:2254.4(B).
The LADOJ also “review[ed] the substance” of the acquisition, as required for
application of the state action doctrine. Dental Exam’rs, 574 U.S. at 515. The

Hospitals’ application extensively detailed the substance of the acquisition and its
likely effects on health care and competition.55 According to the affidavit of the

55 R. Doc. No. 75-2, ¶ 18. In its response to the Hospitals’ Statement of Undisputed
Material Facts, the FTC stated that Paragraph 18 was “undisputed as to the general
claims in the Hospitals’ COPA application (to the extent they are not redacted).” R.
Doc. No. 77-1, ¶ 18. As discussed more fully on the following page, the Court is not
persuaded that the redactions can serve as a basis for denying the Hospitals’ motion
for summary judgment.
Director of the Civil Division for the Louisiana Department of Justice, the LADOJ
considered the application and, “after extensive analysis by LADOJ attorneys and
staff regarding the transaction, the facilities, and the likely effects on health care and

competition in the state, which also included input from expert consultants who
reviewed the COPA application, the LADOJ determined that the application
materials satisfied the statutory requirements and that a COPA should be issued.”56
Again, the FTC argues that the Court should not perform this analysis at all
because the active supervision test in particular is “fact-specific” and the
determination cannot be made until the Hospitals make an HSR Filing.57 However,

as discussed, if the Hospitals are exempt from the antitrust laws as they argue, there
is no reason for them to make an HSR Filing at all. Accordingly, the Court must make
this determination on the record before it.
The FTC makes much of the fact that the COPA application in the record is
redacted, but—as the Hospitals note—the FTC has not sought to obtain an
unredacted copy of the COPA application, nor has it explained how the redacted
information, which the Hospitals characterize as “largely concern[ing] the Hospitals’

finances and details of planned investments[,]” would bear on the analysis of active
supervision.58 Further, the FTC states that “[t]he granting of a COPA does not, in
itself, show active supervision[,]”59 but does not engage with the Hospitals’ other

56 R. Doc. No. 75-14, ¶ 28; R. Doc. No. 75-2, ¶¶ 28–29.
57 R. Doc. No. 77, at 19–22.
58 R. Doc. No. 89, at 3.
59 R. Doc. No. 77, at 20.
evidence, including the declaration of Angelique Freel, Director of the Civil Division
for the LADOJ, detailing the State’s supervision of the transaction to date and the
“terms and conditions empower[ing] the LADOJ to ‘actively supervise’ both the

transaction itself and the new health system on an ongoing basis.”60 This is not
enough to raise a genuine dispute of material fact pursuant to Rule 56.
c. The Parties to This Transaction Exempt from the Federal
Antitrust Laws Need Not Comply with Section 7A

i. The Text of the Statute
As stated, Section 7A, enacted as part of the HSR Act, provides that, “[e]xcept
as exempted pursuant to subsection (c), no person shall acquire, directly or indirectly,
any voting securities or assets of any other person, unless both persons . . . file
notification [with the FTC and the United States Department of Justice] . . . and [a
30-day] waiting period . . . has expired.” 15 U.S.C. § 18a et seq. The question,
therefore, is whether private parties to a transaction consummated pursuant to a
COPA issued by the LADOJ in accordance with Louisiana’s COPA statute qualify as
“persons” within the meaning of this statute.
The FTC contends that the HSR Act is clear on this question, emphasizing that
Section 7A enumerates certain transactions that are exempted from its requirements
and states: “Except as exempted pursuant to subsection (c), no person shall [acquire
assets without complying with notification and waiting period requirements].”61

Based on this, the FTC urges that any transactions not explicitly appearing on the

60 R. Doc. No. 75-14, ¶¶ 12–14, 30–37.
61 R. Doc. No. 71-1, at 8–15 (quoting 15 U.S.C. § 18a(a)) (emphasis added).
list of exemptions should not be exempted, and that the Court should not “invent an
implied exemption by extending the state action doctrine to the procedural
requirements of the HSR Act.”62

The Hospitals disagree, correctly noting that the state action doctrine has been
applied to Section 7, “which, like Section 7A, contains its own set of enumerated
exceptions and does not specifically refer to the state action doctrine.”63 In its reply
brief, the FTC takes issue with the Hospitals’ reliance on Phoebe Putney for this
proposition and contends that “nowhere did the Supreme Court in Phoebe Putney
even mention a ‘clear statement’ rule or evaluate the term ‘person.’”64 That is

technically correct since, in Phoebe Putney, the Supreme Court found the state action
doctrine did not exempt the defendant from liability under the antitrust laws,
including Section 7. 568 U.S. at 224. The Court ruled that way not because it found

62 Id. at 12. With respect to the question of whether the Hospitals’ transaction fits
within the enumerated exemptions of Section 7A, the Court finds the FTC has the
better argument. The Hospitals first strain to fit their transaction within the
exemption listed in Section 7A(c)(5) as a “transaction[] specifically exempted from the
antitrust laws by Federal statute[.]” R. Doc. No. 75-1, at 18. The FTC rightly counters
that the state action defense is not a statutory exemption and that transactions
“specifically exempted” by statute do not include transactions implicitly exempted by
a judicial doctrine like the state action doctrine. Next, the Hospitals suggest their
transaction is exempt pursuant to Section 7A(c)(4) on the theory that their
transaction is a “transfer[] to or from a Federal agency or a State or political
subdivision thereof.” R. Doc. No. 75-1, at 18. This also misses the mark. As the FTC
points out, the Hospitals are neither a state nor a political subdivision of a state and
therefore do not qualify for this exemption. R. Doc. No. 71-1, at 9–11. Ultimately,
however, as discussed throughout this section, the Court decides the legal question
before it based on ambiguities in the term “person,” not based on these enumerated
exemptions.
63 R. Doc. No. 78, at 15 (citing Phoebe Putney, 568 U.S. at 224–27).
64 R. Doc. No. 88, at 3.
the word “person” reached private entities acting pursuant to a state program, but
because the state’s authorization of certain acquisitions did not meet Midcal’s clear-
articulation test. Id. at 236.

However, the Phoebe Putney Court suggested—and other courts have since
reaffirmed—that Section 7 does not apply to private entities acting pursuant to a
state “restraint . . . clearly articulated and affirmatively expressed as state policy”
with active supervision by the state. See id.; Commonwealth v. Susquehanna Area
Reg’l Airport Auth., 423 F. Supp. 2d 472, 472 (M.D. Pa. 2006). The FTC does not
contest that “person” in the context of Section 7 does not reach private entities covered

by the state action doctrine. Yet it inexplicably argues that the exemptions in Section
7A preclude such a reading of “person” without adequately explaining why the
exemptions in Section 7 do not preclude that same reading of “person.” Additionally,
as the Hospitals note,65 the FTC’s inference that the textual exemptions preclude the
state action doctrine is an implicit inference, which cannot serve as a clear statement
of Congress’s intent to upset the balance between federal power and states’ power to
regulate domestic commerce. See Landgraf v. USI Film Prods., 511 U.S. 244, 288

(1994) (Scalia, J., concurring in judgment) (finding a negative inference—the
argument that a statute’s specification of prospective-only application for two sections
implied that its other provisions were retroactive—was “no substitute for clear
statement”).

65 Id.
The FTC also argues that “Congress empowered the FTC and DOJ to define
the terms used in the HSR Act” and that, through regulations, those agencies defined
the term “person” to mean “an ultimate parent entity and all entities which it controls

directly or indirectly[.]”66 The regulations also specify that “the term entity shall not
include . . . the United States or any of the States thereof, or any political subdivision
or agency of either (other than a corporation or unincorporated entity engaged in
commerce).” 16 C.F.R. § 801.1(a)(2). Although the Hospitals in this case acted
pursuant to state approval and supervision, the FTC is correct that both LCMC and
HCA are corporations engaged in commerce and neither states nor political

subdivisions of states.
However, as the Hospitals rightly observe, the FTC’s regulations only define
“person” to exclude states and include private parties.67 Neither the statute nor the
regulation addresses the question actually at issue in this case: whether a transaction
is exempt from Section 7A if that transaction was consummated pursuant to a COPA
statute that exempts private parties from the federal antitrust laws under the state
action doctrine. Additionally, the Hospitals contend that the FTC’s regulations

cannot supply the requisite clear statement regarding the state action doctrine
because Congress—not an agency—must be the one to speak clearly on major
questions of federalism.68

66 R. Doc. No. 77, at 7 (citing 15 U.S.C. § 18a(d)(2)(A) and 16 C.F.R. § 801(a)(1)).
67 R. Doc. No. 78, at 11–12.
68 R. Doc. No. 89, at 4–5 (citations omitted).
The Hospitals primarily argue that, with respect to the question of whether
state action by a private party pursuant to Midcal is exempt from the federal
antitrust laws, “Congress used the operative word ‘person’ the same way in Section

7A, Section 7, and the Sherman Act.”69 Interpreting the word “person” in the
Sherman Act,70 the Supreme Court in Parker determined that it did not encompass
states. Parker, 317 U.S. at 350–51. As explained, the Supreme Court later clarified
that the state action doctrine applies also to nonstate actors carrying out the state’s
regulatory program where “the challenged restraint” is “clearly articulated and
affirmatively expressed as state policy” and where that policy is actively supervised

by the state.” Midcal, 445 U.S. at 105. States and those acting pursuant to state policy
also do not qualify as “person[s]” within the meaning Section 7 of the Clayton Act.71
See, e.g., Phoebe Putney, 568 U.S. at 222, 227–29 (determining that the state action
doctrine did not exempt the defendant from liability under the antitrust laws,
including Section 7, because the state’s authorization of certain acquisitions did not
meet Midcal’s clear-articulation test); Commonwealth v. Susquehanna Area Reg’l

69 R. Doc. No. 78, at 11.
70 Section 1 of the Sherman Act provides: “Every contract, combination in the form of
trust or otherwise, or conspiracy, in restraint of trade or commerce among the several
States, or with foreign nations, is declared to be illegal. Every person who shall make
any contract or engage in any combination or conspiracy hereby declared to be illegal
shall be deemed guilty of a felony . . .” 15 U.S.C. § 1. Section 2 provides: “Every person
who shall monopolize, or attempt to monopolize, or combine or conspire with any
other person or persons, to monopolize any part of the trade or commerce among the
several States, or with foreign nations, shall be deemed guilt of a felony . . .” Id. § 2.
71 Section 7 of the Clayton Act provides that “[n]o person . . . shall acquire . . . stock
or other share capital” where “the effect of such acquisition may be substantially to
lessen competition, or to tend to create a monopoly.” 15 U.S.C. § 18.
Airport Auth., 423 F. Supp. 2d 472, 472 (M.D. Pa. 2006) (granting the defendant’s
motion to dismiss a complaint alleging antitrust violations under Section 7 of the
Clayton Act and Section 2 of the Sherman Act “[b]ased upon clear application of

Parker immunity”).
In response, the FTC points out certain important differences between the
Sherman Act and Section 7 of the Clayton Act, on the one hand, and Section 7A on
the other.72 For example, the Sherman Act, as analyzed in Parker, “makes no mention
of the state as such, and gives no hint that it was intended to restrain state action or
official action directed by a state.” Parker, 317 U.S. at 351. The Clayton Act defines

“person” to “include corporations and associations” and says nothing about whether
“person” encompasses states. See 15 U.S.C. § 12(a). By contrast, the HSR Act does
mention states by exempting “transfers to or from a Federal agency or a State or
political subdivision thereof.” 15 U.S.C. 18a(c)(4). Ultimately, however, this reference
to states does not speak to the question of whether parties acting pursuant to a state’s
regulatory program like Louisiana’s COPA statute are exempt from Section 7A.
What this discussion demonstrates is that—contrary to the FTC’s position—

the HSR Act is not clear about whether the term “person” in Section 7A encompasses
private parties who consummate their transaction pursuant to a state COPA statute
exempting them from the federal antitrust laws. The Court finds that the statute is
silent as to Section 7A’s application to transactions exempt from the federal antitrust
laws pursuant to Midcal.

72 R. Doc. No. 77, at 8–9.
ii. Clear Statement Rule
As discussed, the state action doctrine is motivated by “respect for ongoing
regulation by the State.” Ticor, 504 U.S. at 633. Concerns about federalism have

prompted the Supreme Court to apply “the well-established principle that it is
incumbent upon the federal courts to be certain of Congress’ intent before finding that
federal law overrides the usual constitutional balance of federal and state powers.”
Bond v. United States, 572 U.S. 844, 858 (2014) (internal quotation marks omitted).
Absent a clear statement of Congress’s intent to displace a state’s ability to regulate
its own commerce, courts in the antitrust context presume that Congress did not so

intend. See Motor Carriers, 471 U.S. at 56 (explaining that the Parker Court “refused
to find in the Sherman Act ‘an unexpressed purpose to nullify a state’s control over
its own officers and agents . . . .’” and explaining that Parker “was premised on the
assumption that Congress, in enacting the Sherman Act, did not intend to
compromise the States’ ability to regulate their domestic commerce”).
The FTC argues that the Court should not require such a clear statement in
this case because the Hospitals and the State have not demonstrated that the statute

is ambiguous and they have not demonstrated that there is a conflict between the
HSR Act and Louisiana’s COPA law.73 As discussed in the previous section, the Court
finds that Section 7A is ambiguous with respect to its application to private parties’
transactions which are exempt from the federal antitrust laws pursuant to the state
action doctrine and Midcal.

73 R. Doc. No. 77, at 10.
Additionally, the Court finds that there is a conflict between the HSR Act and
Louisiana’s COPA law sufficient to implicate the federalism concerns motivating the
clear statement rule. Louisiana’s COPA statute expresses the state legislature’s

policy to “substitute state regulation . . . for competition” among health care facilities.
La. Stat. Ann. § 40:2254.1. As the Hospitals point out, Louisiana’s COPA statute and
the FTC’s premerger review pursuant to Section 7A operate on different and
conflicting timelines.74 By granting the COPA, the State authorized the Hospitals to
close their transaction immediately, subject to the execution of certain documents,
submission of annual reports, and full compliance with the COPA’s terms and

conditions.75 Section 7A, if it applied, would have required the Hospitals to wait at
least 30 days to close the transaction, and the FTC in its discretion could have
extended that waiting period significantly by requesting further information and
documentation. 15 U.S.C §§ 18a(b)(1), (e)(2). COPA approval may be contingent on
terms and conditions that may only be possible through immediate integration76 and,
generally, timing is crucial in the context of such transactions. Further, as the State
points out, the allegations of the FTC’s petition indicate that the purpose of this

lawsuit is to subject the Hospitals’ transaction to the precise “antitrust scrutiny” that

74 R. Doc. No. 89, at 6–7.
75 R. Doc. No. 75-16, at 3–4.
76 For example, as part of the COPA application in this transaction, LCMC committed
to making $220 million in capital investments to modernize facilities, offer new
medical services, and add new specialty care units. R. Doc. No. 75-2, ¶ 20.
the Attorney General intended to avoid by issuing the COPA.77 The Court therefore
concludes that applying Section 7A to mergers exempt from the antitrust laws
through a COPA would “frustrate” the state’s regulatory program. See Motor

Carriers, 471 U.S. at 56–57.78
IV. CONCLUSION
Based on the analysis above, the Court holds that the Hospitals’ transaction is
exempt from the federal antitrust laws and need not comply with Section 7A’s
requirements. The Court finds no reason to subject a merger exempt from Section 7
to a waiting period and filing requirements designed to allow the FTC to determine

whether that merger may violate Section 7. As discussed throughout, there is no
genuine dispute of material fact in this case, and the Hospitals are entitled to
judgment as a matter of law. Fed. R. Civ. P. 56(a).

77 R. Doc. No. 74-1, at 19–20 (citing Phoebe Putney, 568 U.S. at 225–26; Patrick, 486
U.S. at 98, 105–06; Fisher v. City of Berkeley, 475 U.S. 260, 265 (1986); Hallie v. City
of Eau Claire, 471 U.S. 34, 44 (1985)).
78 The FTC cites several cases holding that defenses to liability, including the state
action doctrine, cannot be used to quash a subpoena issued pursuant to the FTC Act.
R. Doc. No. 71-1, at 17–19. According to the FTC, like the FTC Act’s provisions
regarding subpoena power, Section 7A “do[es] not impose antitrust liability, but
merely facilitate[s] investigation.” Id. at 19. However, Section 7A, which prevents
parties from merging before notification and a waiting period, requires a filing fee,
and imposes monetary penalties for any failure to comply, does more than “facilitate
investigation.” The FTC also argues that the state action doctrine does not apply to
Section 7A because its requirements are “procedural.” Id. at 16–18. But the FTC cites
no cases distinguishing between “procedural” antitrust laws and “substantive” ones
in the context of the state action doctrine. Regardless, as explained, based on the
statute’s ambiguity, the Court does not find a clear statement of Congress’s intent to
displace the State’s power to regulate commerce in the language of Section 7A or the
HSR Act. The statute’s text simply does not address whether it applies to transactions
consummated pursuant to the state action doctrine that satisfy Midcal’s two-part
test. That is the dispositive question.
Although the Court appreciates that this holding may make enforcement more
difficult for the FTC in the narrow context of transactions that close pursuant to state
COPAs, parties to such transactions are already incentivized to ensure that their
transactions satisfy Midcal’s demands. If they are wrong about Midcal’s application,
those parties face equitable measures and steep daily fines. Accordingly,
IT IS ORDERED that the Hospitals’ motion for summary judgment is
GRANTED and the FTC’s claims against the Hospitals are DISMISSED WITH
PREJUDICE.
IT IS FURTHER ORDERED that the State’s motion for summary judgment
is GRANTED, and the State’s motion for judgment on the pleadings is DISMISSED
AS MOOT.
IT IS FURTHER ORDERED that the FTC’s motion for summary judgment
is DENIED.
New Orleans, Louisiana, September 27, 2023.

UNITED STATES DISTRICT JUDGE

29

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10189952. Public record. Not legal advice.