[Federal Register Volume 59, Number 36 (Wednesday, February 23, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-4043]


[[Page Unknown]]

[Federal Register: February 23, 1994]


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FEDERAL TRADE COMMISSION
[Docket 9256]

 

Columbia Hospital Corporation; Proposed Consent Agreement With 
Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: In settlement of alleged violations of Federal law prohibiting 
unfair acts and practices and unfair methods of competition, this 
consent agreement, accepted subject to final Commission approval, would 
prohibit, among other things, any hospital combination in the Charlotte 
County, Florida, area involving Columbia that would threaten 
competition. The proposed consent agreement would require the 
respondent to seek prior Commission approval, for ten years, before 
consummating any partial or total merger of a hospital in the 
designated area with any other hospital in that area.

DATES: Comments must be received on or before April 25, 1994.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
room 159, 6th Street and Pennsylvania Avenue NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:
Oscar Voss, FTC/S-3115, Washington, DC 20580. (202) 326-2750.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 3.25(f) of 
the Commission's Rules of Practice (16 CFR 3.25(f)), notice is hereby 
given that the following consent agreement containing a consent order 
to cease and desist, having been filed with and accepted, subject to 
final approval, by the Commission, has been placed on the public record 
for a period of sixty (60) days. Public comment is invited. Such 
comments or views will be considered by the Commission and will be 
available for inspection and copying at its principal office in 
accordance with Sec. 4.9(b)(6)(ii) of the Commission's Rules of 
Practice (16 CFR 4.9(b)(6)(ii)).

Agreement Containing Consent Order

    The agreement herein, by and between Columbia Healthcare 
Corporation (a corporation into which Columbia Hospital Corporation was 
merged after the issuance of the complaint in this matter), hereinafter 
sometimes referred to as ``respondent,'' by its duly designated officer 
and attorney, and counsel for the Federal Trade Commission, is entered 
into in accordance with the Commission's Rule governing consent order 
procedures. In accordance therewith the parties hereby agree that:
    1. Respondent Columbia Healthcare Corporation is a corporation 
organized, existing and doing business under the laws of Delaware, with 
its principal place of business at 201 West Main Street, Louisville, 
Kentucky.
    2. Respondent's predecessor Columbia Hospital Corporation has been 
served with a copy of the complaint issued by the Federal Trade 
Commission charging it with violation of section 7 of the Clayton Act 
and section 5 of the Federal Trade Commission Act, and has filed an 
answer to said complaint denying said charges.
    3. Respondent admits all the jurisdictional facts set forth in the 
Commission's complaint in this proceeding.
    4. Respondent waives:
    (a) Any further procedural steps;
    (b) The requirement that the Commission's decision contain a 
statement of findings of fact and conclusions of law;
    (c) All rights to seek judicial review or otherwise to challenge or 
contest the validity of the order entered pursuant to this agreement; 
and
    (d) Any claim under the Equal Access to Justice Act.
    5. This agreement shall not become part of the public record of the 
proceeding unless and until it is accepted by the Commission. If this 
agreement is accepted by the Commission it will be placed on the public 
record for a record of sixty (60) days and information in respect 
thereto publicly released. The Commission thereafter may either 
withdraw its acceptance of this agreement and so notify respondent, in 
which event it will take such action as it may consider appropriate, or 
issue and serve its decision, in disposition of the proceeding.
    6. This agreement is for settlement purposes only and does not 
constitute an admission by respondent that the law has been violated as 
alleged in the complaint issued by the Commission.
    7. This agreement contemplates that, if it is accepted by the 
Commission, and if such acceptance is not subsequently withdrawn by the 
Commission pursuant to the provisions of Sec. 3.25(f) of the 
Commission's Rules, the Commission may, without further notice to 
respondent, (1) issue its decision containing the following order to 
cease and desist in disposition of the proceeding and (2) make 
information public in respect thereto. When so entered, the order to 
cease and desist shall have the same force and effect and may be 
altered, modified or set aside in the same manner and within the same 
time provided by statute for other orders. The order shall become final 
upon service. Delivery by the U.S. Postal Service of the decision 
containing the agreed-to order to respondent's address as stated in 
this agreement shall constitute service. Respondent waives any right it 
may have to any other manner of service. The complaint may be used in 
construing the terms of the order, and no agreement, understanding, 
representation or interpretation not contained in the order or the 
agreement may be used to vary or contradict the terms of the order.
    8. Respondent has read the complaint and the order contemplated 
hereby. Respondent understands that once the order has become final, it 
will be required to file one or more compliance reports showing that it 
has fully complied with the order. Respondent further understands that 
it may be liable for civil penalties in the amount provided by law for 
each violation of the order after it becomes final.

Order

I

    It is ordered That, for the purposes of this order, the following 
definitions shall apply:
    A. ``Columbia'' means Columbia Healthcare Corporation, a 
corporation organized, existing and doing business under the laws of 
Delaware, with its principal place of business at 201 West Main Street, 
Louisville, Kentucky, as well as its officers, employees, agents, 
parents, divisions, subsidiaries, affiliates, successors and assigns, 
and the officers, employees, or agents of Columbia's divisions, 
subsidiaries, affiliates, successors and assigns.
    B. ``Acute care hospital'' means a health facility, other than a 
federally owned facility, having a duly organized governing body with 
overall administrative and professional responsibility, and an 
organized medical staff, that provides 24-hour inpatient care, as well 
as outpatient services, and having as a primary function the provision 
of inpatient services for medical diagnosis, treatment, and care of 
physically injured or sick persons with short-term or episodic health 
problems or infirmities. For purposes of this Order, health facilities 
whose inpatient services are limited to mental health care, 
rehabilitation or substance abuse are not ``acute care hospitals.''
    C. To ``acquire an acute care hospital'' means to directly or 
indirectly acquire the whole or any part of the assets of an acute care 
hospital; to acquire the whole or any part of the stock or share 
capital of, the right to designate directly or indirectly directors or 
trustees of, or any equity or other interest in, any person which 
operates an acute care hospital; or to enter into any other arrangement 
to obtain direct or indirect ownership, management or control of an 
acute care hospital or any part thereof, including but not limited to a 
lease of or management contract for an acute care hospital.
    D. To ``operate an acute care hospital'' means to own, lease, 
manage, or otherwise control or direct the operations of an acute care 
hospital, directly or indirectly.
    E. ``Affiliate'' means an entity whose management and policies are 
controlled or directed in any way, directly or indirectly, by the 
persons with which it is affiliated.
    F. The ``Charlotte County area'' means the combined area consisting 
of Charlotte County, Florida, together with those portions of Sarasota 
and DeSoto Counties, Florida within twelve (12) miles of the present 
site of Columbia's Fawcett Memorial Hospital in Port Charlotte, 
Florida, excluding the part of that combined area which is west of the 
Myakka River.
    G. ``Person'' means any natural person, partnership, corporation, 
company, association, trust, joint venture or other business or legal 
entity, including any governmental agency.
    H. The ``Commission'' means the Federal Trade Commission.

II

    It is further ordered That, for a period of ten (10) years from the 
date this Order becomes final, Columbia shall not, without the prior 
approval of the Commission:
    A. Acquire any acute care hospital in the Charlotte County area; or
    B. Permit any acute care hospital it operates in the Charlotte 
County area to be acquired by any person that operates, or will operate 
immediately following such acquisition, any other acute care hospital 
in the Charlotte County area.
    Provided, however, that such prior approval shall not be required 
for:
    (1) The establishment of a new hospital service or facility (other 
than as a replacement for a hospital service or facility, not operated 
by Columbia, in the Charlotte County area, pursuant to an agreement or 
understanding between Columbia and the person operating the replaced 
service of facility); or
    (2) Any transaction subject to this Paragraph II of this Order if 
the fair market value of (or, in case of a purchase acquisition, the 
consideration to be paid for) the hospital, part thereof or interest 
therein to be acquired does not exceed one million dollars 
($1,000,000).

III

    It is further ordered That, for a period of ten (10) years from the 
date this Order becomes final, Columbia shall not, without providing 
advance notification to the Commission, consummate any joint venture or 
other arrangement with any other acute care hospital in the Charlotte 
County area for the joint establishment or operation of any new acute 
care hospital, hospital medical or surgical diagnostic or treatment 
service or facility, or part thereof in the Charlotte County area. Such 
advance notification shall be filed immediately upon Columbia's 
issuance of a letter of intent for, or execution of an agreement to 
enter into, such a transaction, whichever is earlier.
    The notification required by this Paragraph III of this Order shall 
be given on the Notification and Report Form set forth in the appendix 
to part 803 of title 16 of the Code of Federal Regulations (as 
amended), and shall be prepared and transmitted in accordance with the 
requirements of that part, except that no filing fee will be required 
for any such notification, notification need not be made to the United 
States Department of Justice, and notification is required only of 
Columbia and not of any other party to the transaction. If the 
transaction for which notification is required by this Paragraph III of 
this Order requires state regulatory approval under a health facilities 
certificate of need law, Columbia may, in lieu of the foregoing 
notification, submit to the Commission a copy of the application for 
such state approval.
    Columbia shall comply with reasonable requests by the Commission 
staff for additional information concerning any transaction subject to 
this Paragraph III of this Order, within fifteen (15) days of service 
of such requests.
    Provided, however, that no transaction shall be subject to this 
Paragraph III of this Order if:
    (1) The fair market value of the assets to be contributed to the 
joint venture or other arrangement by acute care hospitals not operated 
by Columbia does not exceed one million dollars ($1,000,000);
    (2) The service, facility or part thereof to be established or 
operated in a transaction subject to this Order is to engage in no 
activities other than the provision of the following services: Laundry; 
data processing; purchasing; materials management; billing and 
collection; dietary; industrial engineering; maintenance; printing; 
security; records management; laboratory testing; personnel education, 
testing, or training; or health care financing (such as through a 
health maintenance organization or preferred provider organization); or
    (3) Notification is required to be made, and has been made, 
pursuant to section 7A of the Clayton Act, 15 U.S.C. 18a, or prior 
approval by the Commission is required, and has been requested, 
pursuant to Paragraph II of this order.

IV

    It is further ordered, That, for a period of ten (10) years from 
the date this Order becomes final, Columbia shall not permit all or any 
substantial part of any acute care hospital it operates in the 
Charlotte County area to be acquired by any other person unless the 
acquiring person files with the Commission, prior to the closing of 
such acquisition, a written agreement to be bound by the provisions of 
this order, which agreement Columbia shall require as a condition 
precedent to the acquisition.

V

    It is further ordered, That Columbia shall, one year after the date 
this Order becomes final and annually for nine (9) years thereafter, 
file with the Commission a verified written report setting forth in 
detail the manner and form in which it has complied and intends to 
comply with this Order.

VI

    It is further ordered That, for the purposes of determining or 
securing compliance with this Order, and subject to any legally 
recognized privilege, upon written request and on reasonable notice to 
Columbia made at its principal offices, Columbia shall permit any duly 
authorized representatives of the Commission:
    1. Access, during office hours and in the presence of counsel, to 
inspect and copy all books, ledgers, accounts, correspondence, 
memoranda and all other records and documents in Columbia's possession 
or control relating to any matter contained in this Order; and
    2. Upon five days' notice to Columbia and without restraint or 
interference from Columbia, to interview its officers or employees, who 
may have counsel present, regarding such matters.

VII

    It is further ordered, That Columbia shall notify the Commission at 
least thirty (30) days prior to any proposed change, such as 
dissolution, assignment, sale resulting in the emergence of a successor 
corporation or association, or the creation or dissolution of 
subsidiaries or affiliates, which may affect compliance obligations 
arising out of this order.

Analysis of Proposed Consent Order To Aid Public Comment

Columbia Hospital Corp. (Docket No. 9256)

    The Federal Trade Commission has accepted, subject to final 
approval, an agreement to a proposed consent order from Columbia 
Healthcare Corporation, successor to respondent Columbia Hospital 
Corporation (hereinafter collectively ``Columbia''). The agreement 
would settle charges by the Federal Trade Commission that Columbia's 
proposed acquisition of Medical Center Hospital, in Punta Gorda, 
Florida, violated section 5 of the Federal Trade Commission Act, and 
would also have violated section 7 of the Clayton Act if it had been 
carried out.
    The proposed consent order has been placed on the public record for 
sixty (60) days for reception of comments by interested persons. 
Comments received during this period will become part of the public 
record. After sixty (60) days, the Commission will again review the 
agreement and the comments received and will decide whether it should 
withdraw from the agreement or issue and serve the agreement's proposed 
order.
The Complaint
    The Commission issued an administrative complaint against Columbia 
Hospital Corp. on February 18, 1993. According to the complaint, 
Columbia operates Fawcett Memorial Hospital, a general acute care 
hospital in Port Charlotte, Florida, and related health care 
facilities. Columbia agreed to acquire Medical Center Hospital, a 
general acute care hospital in Punta Gorda, Florida, about five miles 
south of Port Charlotte. The complaint alleges that Fawcett and Medical 
Center were competitors in the market for acute care inpatient hospital 
services in an area including all but the westernmost portions of 
Charlotte County, Florida, plus adjacent portions of DeSoto and 
Sarasota Counties in Florida. That market, according to the complaint, 
was already highly concentrated, and entry by new competitors would be 
difficult. The complaint charged that if Columbia carried out its 
agreement to acquire Medical Center, the effect of that acquisition 
would be substantially to lessen competition in the Charlotte County 
area hospital market, in violation of section 5 of the Federal Trade 
Commission Act and section 7 of the Clayton Act.
    The proposed acquisition challenged in the administrative complaint 
was never completed. After the Commission issued the complaint, the 
proposed acquisition was preliminarily enjoined by a Federal court, 
pursuant to section 13(b) of the FTC Act. Federal Trade Commission v. 
Columbia Hospital Corp., 93-30-Civ-FTM-23D (M.D. Fla., injunction 
issued May 21, 1993). The court's injunction prohibiting the 
acquisition will remain in effect until the Commission gives final 
approval to the proposed consent order, or until the Commission's 
administrative proceeding against Columbia is otherwise concluded.
The Proposed Consent Order
    The first paragraph of the proposed order defines certain other 
terms used in the order.
    Paragraph II would prohibit Columbia from acquiring, without the 
prior approval of the Federal Trade Commission, all or any significant 
part of a general acute care hospital in the ``Charlotte Country area'' 
(an area including most of Charlotte County, Florida, and some adjacent 
portions of DeSoto and Sarasota Counties in Florida). It would also 
prohibit Columbia from transferring, without prior Commission approval, 
any general hospital or significant part thereof it operates in that 
area to another person operating (or simultaneously acquiring) a 
general hospital in the area. These provisions would give the 
Commission authority to prohibit any substantial combination of the 
general acute care hospital operations of Columbia with those of any 
non-Columbia general hospital in the Charlotte County area, unless 
Columbia convinced the Commission that a particular transaction would 
not endanger competition in the Charlotte County area hospital market.
    Paragraph III would require Columbia to provide advance notice to 
the Commission of joint ventures with non-Columbia hospitals for the 
establishment of new hospital facilities or services in the Charlotte 
County area. This Paragraph would not apply to transactions subject to 
the prior approval requirement of Paragraph II, or to the Clayton Act's 
premerger notification requirements.
    Both Paragraph II and Paragraph III would not cover acquisitions 
and joint ventures where the value of the acquired assets, or the 
assets contributed to a joint venture by participants other than 
Columbia, is $1 million or less. Nor would Paragraph III apply to joint 
ventures between Columbia and non-Columbia hospitals that are limited 
to the provision of certain specified hospital support services (such 
as laundry or laboratory testing) or the establishment of new health 
plans (such as health maintenance organizations). In addition, 
Paragraphs II and III would both expire ten years after the order 
becomes final.
    Paragraph IV of the proposed order would prohibit, for ten years, 
Columbia from transferring any hospital in the Charlotte County area to 
any other person without first filing with the Commission an agreement 
by the transferee to be bound by the order. Paragraphs V and VI of the 
proposed order would require Columbia to make annual reports to the 
Federal Trade Commission, and to make certain documents and personnel 
available to the Commission upon request, so the Commission may verify 
compliance with the order. Finally, Paragraph VII of the proposed order 
would require Columbia to notify the Commission at least thirty days 
before any proposed change in corporate structure that may affect 
compliance with the order.
    The purpose of this analysis is to invite public comment concerning 
the proposed order, in order to assist the Commission in its 
determination whether to make the order final. This analysis is not 
intended to constitute an official interpretation of the agreement and 
order or to modify their terms in any way.
    The agreement is for settlement purposes only and does not 
constitute an admission by the respondent that its proposed acquisition 
violated or would have violated the law, as alleged in the Commission's 
complaint.
Donald S. Clark,
Secretary.

Separate Statement of Commissioner Mary L. Azcuenaga Concurring in Part 
and Dissenting in Part in Columbia Hospital Corporation, Docket 9256

    I concur in the decision to publish the proposed consent agreement 
for comment, but I would have preferred that the proposed order require 
Columbia to provide notice of acquisitions outside the relevant market. 
Prior notice can be useful, the Commission has required such relief in 
other litigated hospital merger cases, see, e.g., Hospital Corporation 
of America, 106 F.T.C. 361, 524 (1985), aff'd, 807 F.2d 1381 (7th Cir. 
1986), cert. denied, 107 S. Ct. 1975 (1987), and there is no apparent 
reason for granting more favorable treatment to this respondent.

[FR Doc. 94-4043 Filed 2-22-94; 8:45 am]
BILLING CODE 6750-01-M