By Jeffrey May, J.D.
North Dakota health care providers Sanford Health and Sanford Bismarck and Mid Dakota Clinic, P.C. (MDC) have been temporarily enjoined from consummating their proposed merger. A magistrate judge in the federal district court in Fargo, North Dakota, granted the motion filed by the FTC and the State of North Dakota. The combination has been blocked pending an FTC administrative trial that is set to begin on January 17, 2018 (FTC v. Sanford Health, December 13, 2017, Senechal, A.).
The federal district court did not provide its reasons for granting the preliminary injunction. The court’s findings of fact and conclusions of law were filed under seal. The parties were asked to submit their proposed redactions to the court by December 15. A redacted version is expected to be made available shortly thereafter.
In June, the FTC announced that it would challenge the combination on the ground that the deal would purportedly create the largest group of physicians offering adult primary care physician (PCP) services, pediatric services, obstetrics and gynecology (OB/GYN) services, and general surgery physician service in the market. The FTC filed an administrative complaint and, along with the state, a court complaint for a preliminary injunction pending the outcome of the administrative litigation.
According to the FTC, the proposed transaction threatens substantial harm to competition in four relevant service markets: (1) adult PCP services; (2) pediatric services; (3) OB/GYN services; and (4) general surgery physician services. Sanford and MDC are the two largest providers of each of the relevant services in the Bismarck-Mandan area, according to the FTC.
Administrative proceedings. An administrative trial in the matter had been scheduled to begin on November 28. The trial date was moved to next year after the merging parties were granted a continuance of further proceedings until January. In seeking the delay, Sanford and MDC contended that the parallel action in the North Dakota federal district court obviated the need for an administrative trial. They said that if, after all appeals in the injunction proceedings were exhausted, they were enjoined from consummating the acquisition, they would abandon the transaction.
Acting FTC Competition Bureau Director’s reaction. "The Court's Dec. 13 ruling temporarily blocking Sanford Health’s proposed acquisition of Mid Dakota Clinic is good news for patients and their families in the Bismarck and Mandan metropolitan area," said Acting FTC Bureau of Competition Director Bruce Hoffman in reaction to the decision. "We look forward to proving at trial that this merger would likely reduce competition, resulting in higher prices and lower quality of adult primary care physician services, pediatric services, obstetrics and gynecology services, and general surgery physician services in that area of North Dakota."
North Dakota Attorney General statement. Responding to the preliminary injunction order, North Dakota Attorney General Wayne Stenehjem said that the decision was "in the best interests of the community." He also said that he felt "confident that the Court recognized the potential negative consequences for patients in the Bismarck-Mandan area."
The case is No. 1:17-cv-00133-ARS.
Attorneys: Kevin K. Hahm for the FTC. Parrell D. Grossman, Attorney General's Office, for State of North Dakota. Cynthia M. Christian (Boies Schiller Flexner LLP) for Sanford Health and Sanford Bismarck. Gregory Merz (Gray, Plant, Mooty, Mooty & Bennett, PA) for Mid Dakota Clinic, PC.
Companies: Sanford Health; Sanford Bismarck; Mid Dakota Clinic, PC
MainStory: TopStory AcquisitionsMergers Antitrust FederalTradeCommissionNews NorthDakotaNews
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