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`
`
`No. 23-60167
`
`
`IN THE UNITED STATES COURT OF APPEALS
`FOR THE FIFTH CIRCUIT
`
`——————————————————————————
`ILLUMINA, INC. AND GRAIL, INC.,
`Petitioners,
`v.
`FEDERAL TRADE COMMISSION,
`Respondent.
`——————————————————————————
`BRIEF OF THE AMERICAN HOSPITAL ASSOCIATION
`AS AMICUS CURIAE IN SUPPORT OF PETITIONERS
`——————————————————————————
`CHAD GOLDER
`Counsel of Record
`MELINDA REID HATTON
`AMERICAN HOSPITAL ASSOCIATION
`800 10th Street, N.W.
`Two CityCenter, Suite 400
`Washington, D.C. 20001
`(202) 626-4624
`cgolder@aha.org
`
`Counsel for Amicus Curiae
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Dated: June 12, 2023
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`
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`

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`CERTIFICATE OF INTERESTED PERSONS
`
`No. 23-60167 Illumina, Inc. v. Federal Trade Commission
`
`The undersigned counsel certifies that the following listed persons and entities
`
`as described in the fourth sentence of Fifth Circuit Rule 28.2.1 have an interest in
`
`the outcome of this case. These representations are made in order that the judges of
`
`this Court may evaluate possible disqualification or recusal.
`
`
`Appellee:
`
`Federal Trade Commission
`
`
`Petitioners:
`
`Illumina, Inc.
`
`Counsel for Appellees:
`
`Matthew Michael Hoffman
`FEDERAL TRADE COMMISSION
`600 Pennsylvania Ave., NW,
`Washington, D.C. 20580
`202-326-3097
`
`Counsel for Petitioners:
`
`David R. Marriott
`Christine A. Varney
`Sharonmoyee Goswami
`Michael J. Zaken
`Jesse M. Weiss
`CRAVATH, SWAINE & MOORE LLP
`825 Eighth Avenue
`Worldwide Plaza
`New York, NY 10019
`(212) 474-1000
`
`
`
`
`
`
`
`
`i
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`

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`
`
`Petitioners:
`
`GRAIL, LLC
`
`
`
`
`Counsel for Petitioners:
`
`Gregory G. Garre
`Michael G. Egge
`Marguerite M. Sullivan
`Anna M. Rathbun
`David L. Johnson
`LATHAM & WATKINS LLP
`555 Eleventh Street NW
`Suite 1000
`Washington, D.C. 20004
`Telephone: (202) 637-2200
`
`Alfred C. Pfeiffer
`LATHAM & WATKINS LLP
`505 Montgomery Street
`Suite 2000
`San Francisco, CA 94111-6538
`Telephone: (415) 391-0600
`
`
`
`
`
`
`
`
`
`
`
`
`/s/ Chad Golder
`CHAD GOLDER
`Counsel of Record
`MELINDA REID HATTON
`AMERICAN HOSPITAL ASSOCIATION
`800 10th Street, N.W.
`Two CityCenter, Suite 400
`Washington, D.C. 20001
`(202) 626-4624
`cgolder@aha.org
`
`Counsel for Amicus Curiae
`American Hospital Association
`
`Dated: June 12, 2023
` Washington, DC
`
`
`
`ii
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`
`
`TABLE OF CONTENTS
`
`Page
`CERTIFICATE OF INTERESTED PERSONS ............................................................... i
`TABLE OF CONTENTS ......................................................................................... iii
`TABLE OF AUTHORITIES .................................................................................... iv
`INTEREST OF AMICUS CURIAE ............................................................................ 1
`INTRODUCTION AND SUMMARY OF ARGUMENT ........................................ 2
`ARGUMENT ............................................................................................................. 7
`I.
`THE FTC’S UNCONSTITUTIONAL ENFORCEMENT PRACTICES
`ARE PARTICULARLY HARMFUL TO HOSPITALS ................................ 7
`A.
`The FTC subjects hospital mergers to disproportionate
`scrutiny .................................................................................................. 7
`B. Hospital mergers reduce costs, improve care, and benefit
`patients ................................................................................................... 9
`The FTC’s disproportionate scrutiny deters pro-competitive
`hospital mergers .................................................................................. 11
`THE FTC’S ENFORCEMENT PRACTICES VIOLATE THE DUE
`PROCESS CLAUSE ..................................................................................... 14
`A.
`The FTC’s enforcement practices implicate three interrelated
`due process principles ......................................................................... 14
`The FTC’s enforcement practices violate core due process
`principles ............................................................................................. 16
`CONCLUSION ........................................................................................................ 30
`CERTIFICATE OF SERVICE ................................................................................ 31
`CERTIFICATE OF COMPLIANCE ....................................................................... 32
`
`
`II.
`
`C.
`
`B.
`
`iii
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`
`
`TABLE OF AUTHORITIES
` Page(s)
`Cases
`
`
`
`
`
`
`
`
`Axon Enterprise, Inc. v. FTC, 143 S. Ct. 890 (2023) ................................................ 5
`Axon Enterprise, Inc. v. FTC, 986 F.3d 1173 (9th Cir. 2021) ................................... 4
`Chicago Bridge & Iron Co. v. FTC, 534 F.3d 410 (5th Cir. 2008) ......................... 21
`FTC v. Butterworth Health Corp., 946 F. Supp. 1285 (W.D. Mich.
`1996) .............................................................................................................. 11
`FTC v. Cement Institute, 333 U.S. 683 (1948) .............................................. 5, 26, 27
`FTC v. Freeman Hosp., 911 F. Supp. 1213 (W.D. Mo. 1995) .......................... 11-12
`FTC v. Hosp. Bd. of Directors of Lee Cty., 1994-1 Trade Cas. (CCH)
`¶ 70,593 (M.D. Fla.) ...................................................................................... 11
`FTC v. Tenet Healthcare Corp., 186 F.3d 1045 (8th Cir. 1999) ............................. 11
`FTC v. Whole Foods Mkt., Inc., 548 F.3d 1028 (D.C. Cir. 2008) ........................... 18
`Glossip v. Gross, 576 U.S. 863 (2015) .................................................................... 15
`In re Murchison, 349 U.S. 133 (1955) ..................................................................... 14
`In the Matter of the House of Lord’s, Inc. (FTC. Dkt. No. 8631) (Jan.
`18. 1966) ........................................................................................................ 25
`Inova Health Sys. Found., No. 9326, 2008 WL 2307161 (F.T.C. May
`29, 2008) ........................................................................................................ 22
`Isom v. Arkansas, 140 S.Ct. 342 (2019) .................................................................. 23
`Jarkesy v. SEC, 34 F.4th 446 (5th Cir. 2022) ............................................................ 5
`Joint Anti–Fascist Refugee Comm. v. McGrath, 341 U.S. 123 (1951) ................... 16
`Jones v. SEC, 298 U.S. 1 (1936) .............................................................................. 15
`
`
`iv
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`

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`
`
`TABLE OF CITATIONS—Continued
`
`Page(s)
`Johnson v. United States, 576 U.S. 591 (2015) ....................................................... 15
`Marshall v. Jerrico, Inc., 446 U.S. 238 (1980) ............................................ 14, 15, 16
`Miller v. Sam Houston State Univ., 986 F.3d 880 (5th Cir. 2021) .......................... 16
`Offutt v. United States, 348 U.S. 11 (1954) ............................................................. 16
`Philip Morris USA v. Williams, 549 U.S. 346 (2007) ............................................. 15
`Pillsbury Co. v. FTC, 354 F.2d 952 (5th Cir. 1966) ................................................ 26
`Rippo v. Baker, 580 U.S. 285 (2017) ....................................................................... 14
`Slochower v. Board of Higher Education, 350 U.S. 551 (1956) ............................. 15
`Williams v. Pennsylvania, 579 U.S. 1 (2016) ..............................4, 14, 16, 22, 23, 26
`Withrow v. Larkin, 421 U.S. 35 (1975) ................................... 4, 5, 6, 23, 25, 26, 28
`STATUTES
`15 U.S.C. § 45(b) ............................................................................................... 19, 21
`15 U.S.C. § 53(b) ..................................................................................................... 19
`REGULATIONS
`16 C.F.R. §3.51(b) ................................................................................................... 22
`16 C.F.R. § 3.52 ....................................................................................................... 22
`16 C.F.R. § 3.54(a) ................................................................................................... 20
`
`
`
`
`
`v
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`
`
`TABLE OF CITATIONS—Continued
` Page(s)
`OTHER AUTHORITIES
`
`
`
`
`
`
`A. Douglas Melamed, Comments Submitted to the Federal Trade
`Commission, Workshop Concerning Section 5 of the FTC Act 17
`(Oct. 14, 2008), https://www.ftc.gov/sites/default/files/documents/
`public_comments/section-5-workshop-537633-00004/537633-
`00004.pdf ..................................................................................... 24, 25, 27, 28
`Antitrust Modernization Commission, Report and Recommendations 130
`(Apr. 2007) .............................................................................................. 18, 19
`Asheesh Agarwal, The FTC’s Recent Moves Could Cost It in the Supreme
`Court, Yale Journal on Regulation (Oct. 23, 2022), https://www.
`yalejreg.com/nc/ftc-recent-moves/ .................................................................. 2
`Bryan Koenig, FTC’s Khan More Worried About Inaction Than Blowback,
`Law360 (April 22, 2022), https://www.law360.com/articles/14866
`11 ..................................................................................................................... 2
`D. Bruce Hoffman & M. Sean Royall, Administrative Litigation at
`the FTC: Past, Present, and Future, 71 Antitrust Law Journal 319
`(2003) ............................................................................................................. 20
`Dan Packel, Pa. Hospital Merger Killed After FTC Broaches Challenge,
`Law360 (Nov. 19, 2012), http://www.law360.com/articles/395215/pa-
`hospital-merger-killed-after-ftc-broaches-challenge ...................................... 13
`David A. Balto, The FTC at a Crossroads: Can It Be Both Prosecutor and
`Judge?, 28 Wash. Legal Found. Legal Backgrounder 1 (Aug. 23,
`2013) .............................................................................................................. 28
`Erwin Wang, Simon Jones, Sonia Arnold, et al.; Quality and Safety
`Outcomes of a Hospital Merger Following a Full Integration at a
`Safety Net Hospital, JAMA Network Open (Jan. 2022) ............................... 11
`Exec. Order No. 14036, 86 Fed. Reg. 36987 (2021) ................................................. 8
`
`
`
`
`vi
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`
`
`TABLE OF CITATIONS—Continued
`
`Page(s)
`
`FTC Approves Publication of Federal Register Notice on Revisions to
`Parts 0-4 of the Commission’s Rules of Practice (June 2, 2023),
`https://www.ftc.gov/news-events/news/press-releases/2023/06/ftc-
`approves-publication-federal-register-notice-revisions-parts-0-4-
`commissions-rules-practice ..................................................................... 21-22
`FTC, FTC Authorizes Investigations into Key Enforcement Priorities (July
`1, 2021), https://www.ftc.gov/news-events/press-releases/2021/07/
`ftc-authorizes-investigations-key-enforcement-priorities ............................... 8
`FTC, Stats & Data 2020 (Apr. 2021), https://www.ftc.gov/reports/annual-
`highlights-2020/stats-data-2020 ...................................................................... 7
`H. Joanna Jiang, et al., Quality of Care Before and After Mergers and
`Acquisitions of Rural Hospitals, 2021 JAMA Network Open (Sept.
`2021) .............................................................................................................. 11
`Harris Meyer, FTC Official: Antitrust Push in Health Care Must Focus on
`a Merger’s ‘Human Impact, KFF Health News (July 18, 2022),
`https://kffhealth news.org/news/article/ftc-interview-antitrust-
`health-care-hospital-mergers-human-impact/ .................................................. 1
`Jeffrey W. Brennan & Sean P. Pugh, Inova and the FTC’s Revamped
`Merger Litigation Model, 23 Antitrust 28 (2008) ......................................... 22
`Joshua D. Wright, Commissioner, Fed. Trade Comm’n, Section 5
`Revisited: Time for the FTC to Define the Scope of Its Unfair
`Methods of Competition Authority (Feb. 26, 2015), https://www.ftc.
`gov/system/files/documents/public_statments/626811/150226bh_s
`ection_5_symposium.pdf ............................................................................... 27
`Kaufman Hall, Partnerships, Mergers, and Acquisitions Can Provide
`Benefits to Certain Hospitals and Communities (2021) .................................. 9
`Keith Klovers, Three Options for Reforming Part III Administrative
`Litigation at the FTC, Forthcoming, Antitrust Law Journal,
`https://ssrn.com/abstract=4270588 ............................................................ 3, 28
`
`vii
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`
`
`TABLE OF CITATIONS—Continued
`
`Page(s)
`
`Ken Summers, FTC Crackdowns on Mergers Could Harm Rural
`Healthcare, RealClear Mkts. (Dec. 13, 2021), https://www.real
`clearmakets.com/artcles/2021/12/13/ftc_crackdowns_on_mergers_c
`ould_harm_rural_healthcare_807469.html .................................................... 10
`Kenneth Kaufman, Industry Voices—In a time of need, hospitals must be
`able to transform, Fierce Healthcare (May 27, 2021), https://www.
`fiercehealthcare.com/hospitals/industry-voices-a-time-need-
`hospitals-must-be-able-to-transform ............................................................... 9
`Monica Noether, Sean May, and Ben Stearns, Hospital Merger Benefits:
`Views from Hospital Leaders and Econometric Analysis–An Update
`(Sept. 9, 2019) ................................................................................................ 10
`Nathan E. Wilson, Editor’s Note: Some Clarity and More Questions in
`Health Care Antitrust, 82 Antitrust L.J. 435 (2019) ....................................... 7
`Nicole Durkin, Comment, Rates of Dismissal in FTC Competition Cases
`from 1950–2011 and Implications for Fairness, 81 Geo. Wash. L.
`Rev. 1684, 1699 (2013) ................................................................................. 27
`Note by the United States to the OECD Directorate for Financial and
`Enterprise Affairs, Competition Committee, Working Party No. 3
`on Co-operation and Enforcement, The Standard of Review by
`Courts in Competition Cases, June 4, 2019, https://one.oecd.org/
`document/DAF/COMP/WP3/WD(2019)22/en/pdf ....................................... 20
`Philip Elman, Administrative Reform of the Federal Trade Commission,
`59 Geo. L.J. 777 (1971) ................................................................................. 25
`Raymond Z. Ling, Unscrambling the Organic Eggs: The Growing
`Divergence Between the DOJ and the FTC in Merger Review After
`Whole Foods, 75 Brook. L. Rev. 935 (2010) ................................................ 17
`
`
`
`
`viii
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`
`
`TABLE OF CITATIONS—Continued
`
`Page(s)
`
`Rebecca Kelly Slaughter, Antitrust and Health Care Providers: Policies to
`Promote Competition and Protect Patients, Address to the Center
`for American Progress (May 14, 2019), https://www.ftc.gov/
`system/files/documents/public_statements/1520570/slaughter_-
`_hospital_speech_5-14-19.pdf ......................................................................... 8
`
`Report Of The American Bar Association Section Of Antitrust Law Special
`Committee To Study The Role Of The Federal Trade Commission
`(1989), reprinted in 58 Antitrust L.J. 43 (1989) ............................................ 24
`Rich Daly, Increased FTC scrutiny of hospital deals coming,
`commissioner says, Healthcare Financial Management Assoc. (Jan.
`20, 2020), https://www.hfma. org/topics/news/2020/01/increased-
`ftc-scrutiny-of-hospital-deals-coming-commiss ioner-says.html ................... 8
`Sean May, Monica Noether, and Ben Stearns, Hospital Merger Benefits:
`An Econometric Analysis Revisited (Aug. 2021), https://www.aha.
`org/system/files/media/file/2021/08/cra-merger-benefits-revisited-
`0821.pdf ......................................................................................................... 10
`Shannon Henson, Facing FTC Challenge, Hospitals Drop Merger Plans,
`Law360 (June 10, 2008), http://www.law360.com/articles/58795/
`facing-ftc-challenge-hospitals-drop-merger-plans ........................................ 13
`Stewart Bishop, Ill. Health Systems Ditch Merger Plans After FTC
`Antitrust Suit, Law 360 (Apr. 12, 2012), http://www.law360.com/
`articles/329680/ill-health-systems-ditch-merger-plans-after-ftc-
`antitrust-suit ................................................................................................... 13
`
`
`
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`INTEREST OF AMICUS CURIAE
`The American Hospital Association (AHA) represents nearly 5,000 hospitals,
`
`healthcare systems, and other healthcare organizations. Its members are committed
`
`to improving the health of the communities that they serve, and to helping ensure
`
`that care is available to and affordable for all Americans. The AHA educates its
`
`members on healthcare issues and advocates on their behalf, so that their
`
`perspectives are considered in formulating health policy. One way in which the
`
`AHA promotes its members’ interests is by participating as an amicus curiae in cases
`
`with important and far-ranging consequences for healthcare.
`
`The AHA’s member-hospitals are frequent targets of FTC enforcement
`
`proceedings. They are certain to remain so in the future. The healthcare sector
`
`already is the target of nearly half of FTC enforcement actions, and the agency has
`
`declared hospitals to be a priority for the coming years. As one FTC official recently
`
`stated with respect to hospital mergers in particular and healthcare transactions more
`
`generally: “[w]e are feeling invigorated and looking to fulfill [President Biden’s]
`
`executive order’s call to be aggressive on antitrust enforcement.”1 But regrettably,
`
`
`1 Harris Meyer, FTC Official: Antitrust Push in Health Care Must Focus on a
`Merger’s ‘Human Impact, KFF Health News (July 18, 2022), https://kffhealth
`news.org/news/article/ftc-interview-antitrust-health-care-hospital-mergers-human-
`impact/.
`
`1
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`

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`the FTC’s actual practice across decades demonstrates that the agency is
`
`fundamentally incapable of abiding by basic due process guarantees. As a result,
`
`the AHA and its members have an acute interest in the constitutional issues presented
`
`in this case.
`
`INTRODUCTION AND SUMMARY OF ARGUMENT
`
`When a hospital is targeted by the FTC, the process that results is costly,
`
`protracted, and stacked against the hospital—regardless of the merits of the FTC’s
`
`position. This is all the more troubling given recent statements by the FTC’s Chair,
`
`who has touted recent enforcement actions that “push the envelope.”2 “Even if FTC
`
`enforcement gets struck down as overreach, [the FTC Chair] said, ‘there are huge
`
`benefits to still trying.’”3 Hospitals are rightly concerned about such “overreach,”
`
`and this Court should be too.4
`
`
`2 Bryan Koenig, FTC’s Khan More Worried About Inaction Than Blowback,
`Law360 (April 22, 2022), https://www.law360.com/articles/1486611.
`3 Id.
`4 Id.; see Asheesh Agarwal, The FTC’s Recent Moves Could Cost It in the Supreme
`Court, Yale Journal on Regulation (Oct. 23, 2022), https://www.yalejreg.
`com/nc/ftc-recent-moves/ (“[T]he FTC is charging ahead with new rules and novel
`theories that stretch the limits of its authority.… These initiatives could prod the
`high court to take a hard look at the FTC’s place in the constitutional order.”).
`2
`
`

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`
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`But as disturbing as Chair Khan’s statements are, they are mere extensions
`
`of systematic problems that have long plagued the FTC. Since the 1940s,
`
`“commentators, courts, and even the occasional FTC Commissioner has expressed
`
`concerns that the Commission’s” practices “may at least appear to deny respondents
`
`their right to a fair hearing before an impartial decision-maker.”5 This unfairness—
`
`or appearance thereof—is caused by several interrelated features of the FTC’s
`
`enforcement process. For starters, when the federal government is considering
`
`whether to bring an action, cases are arbitrarily divided between the FTC and DOJ,
`
`with important substantive consequences turning on this standardless assignment
`
`decision. Next, if a case is sent to the FTC, the Commissioners make another
`
`standardless determination whether to prosecute their case before an Article III
`
`district court (where, among other things, the Federal Rules of Evidence apply) or
`
`an Administrative Law Judge (where those Rules decidedly do not apply). Finally,
`
`if the case is brought in-house, the Commissioners who approved the prosecution of
`
`the case act as final adjudicators, with full authority to overrule the ALJ’s factual
`
`findings on de novo review. Together, these practices pile arbitrariness on top of
`
`arbitrariness, while mixing in an unconstitutional dose of partiality, all of which “so
`
`
`5 Keith Klovers, Three Options for Reforming Part III Administrative Litigation at
`the FTC (“Reforming Part III”), Forthcoming, Antitrust Law Journal, https://
`ssrn.com/abstract=4270588.
`
`3
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`

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`endanger[] the appearance of neutrality that” the they “must be forbidden if the
`
`guarantee of due process is to be adequately implemented.”6
`
`If there were any doubts that these practices violate elemental due process
`
`principles, the FTC’s record easily puts them to rest. Decades of actual FTC practice
`
`have borne out exactly as one would expect under a system like this. The FTC has
`
`not lost before the Commission since the mid-1990s. “Even the 1972 Miami
`
`Dolphins would envy that type of record.”7 With one-sided procedures that favor
`
`the agency and a win-loss tally that proves it, the only possible conclusion is that the
`
`FTC is not a fair, neutral, and unbiased tribunal, as required by the Due Process
`
`Clause.
`
`This case is the paradigmatic example of these due process maladies.
`
`Proceeding behind closed doors, a “black-box” decision was made to assign the case
`
`to the FTC, not the DOJ’s Antitrust Division. Then, the Commission, acting as
`
`prosecutor, approved a complaint. Governed by no standard whatsoever, it chose to
`
`try the case before its ALJ, not a federal district court. (Adding to the appearance of
`
`bias, the Commission also initially sought a preliminary injunction in an Article III
`
`
`6 Williams v. Pennsylvania, 579 U.S. 1, 14 (2016) (quoting Withrow v. Larkin, 421
`U.S. 35, 47 (1975)).
`7 Axon Enterprise, Inc. v. FTC, 986 F.3d 1173, 1187 (9th Cir. 2021).
`4
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`court but quickly reversed course, keeping all consideration of the facts in-house.)
`
`When the ALJ ruled against the Commission—the first time in many decades that
`
`the FTC’s ALJ dismissed an FTC merger challenge—the Commission stepped in as
`
`adjudicator and reversed. Alarmingly, it did so under series of “relaxed rules of
`
`procedure and evidence—rules [the Commissioners] ma[d]e for themselves.”8
`
`In both appearance and reality, this case does not display fairness and
`
`neutrality consistent with the Constitution. Unique among federal agencies, it is
`
`sadly par for the course with the FTC. So, while this appeal can be straightforwardly
`
`decided under Jarkesy v. SEC9, Jarkesy’s uncertain future with the government’s
`
`petition for certiorari pending counsels strongly in favor of deciding Illumina’s due
`
`process claims as well.
`
`To be clear: the AHA and its members have no quarrel with cases like FTC
`
`v. Cement Institute10 or Withrow v. Larkin11. Nor does it seek to overturn the
`
`
`8 Axon Enterprise, Inc. v. FTC, 143 S. Ct. 890, 917 (2023) (Gorsuch, J., concurring);
`see Petrs’ Br. 25-26 (listing the Commission’s evidentiary decisions in this case that
`were inconsistent with the Federal Rules of Evidence, including reliance on
`“nonparty testimony given in proceedings that neither Petitioners nor their counsel
`were permitted to attend” and the refusal to “consider evidence from FTC’s own
`witnesses when it contradicted FTC’s theory of the case”).
`9 34 F.4th 446 (5th Cir. 2022).
`10 333 U.S. 683 (1948).
`11 421 U.S. 35.
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`proposition that “the combination of investigative and adjudicative functions” does
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`not “necessarily create[] an unconstitutional risk of bias in administrative adjudica-
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`tion.”12 Hospitals are regulated by numerous federal and state agencies, and they
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`have fair and productive working relationships with them. But no court has
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`considered whether all of the FTC’s practices together violate the Due Process
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`Clause. What’s more, it important to bear in mind Withrow’s directive that courts
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`“should be alert to the possibilities of bias that may lurk in the way particular
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`procedures actually work in practice.”13 Decades of actual FTC practice—including
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`in this case—make manifest the agency’s due process defects.
`
`The FTC has had more than half a century to demonstrate that its processes
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`work fairly. It has failed. The regulated public, including hospitals and health
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`systems, know that when it comes to FTC enforcement actions, the house always
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`wins. But as the facts of this case and countless hospital mergers demonstrate,
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`constitutional principles are not the only things at stake. The health of the public is
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`too. Whether it is an acquisition that prevents a rural hospital from closing or, as
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`here, the future of cutting-edge, life-saving medical technology, the FTC’s unfair
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`practices have stood in the way of improved healthcare again and again. It is long
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`
`12 Id. at 47 (emphasis added).
`13 Id. at 54 (emphasis added).
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`past time to put an end to the FTC’s unconstitutional enforcement practices. This
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`Court should reverse.
`
`ARGUMENT
`
`I.
`
`THE FTC’S UNCONSTITUTIONAL ENFORCEMENT PRACTICES
`ARE PARTICULARLY HARMFUL TO HOSPITALS
`A. The FTC subjects hospital mergers to disproportionate
`scrutiny.
`Despite their pro-competitive and pro-patient benefits, hospitals mergers face
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`disproportionate scrutiny from the FTC. As a 2019 analysis explains, “of the 154
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`merger enforcement actions that the FTC brought from the 2000 fiscal year through
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`the 2018 fiscal year, 75 pertained to parts of the health care sector. The agency
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`brought still more non-merger actions.”14 Likewise, 46% of the FTC’s enforcement
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`actions in 2020 were in the healthcare sector.15
`
`In prepared remarks, an FTC Commissioner noted the 2019 study, then added
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`that “a significant portion of [those actions] focused on healthcare providers
`
`
`
`
`14 Nathan E. Wilson, Editor’s Note: Some Clarity and More Questions in Health
`Care Antitrust, 82 Antitrust L.J. 435 (2019).
`15 FTC, Stats & Data 2020 (Apr. 2021), https://www.ftc.gov/reports/annual-
`highlights-2020/stats-data-2020.
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`generally and hospitals in particular.”16 Less than a year later, the FTC threatened
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`to increase its targeting of hospitals.17 Then, in July 2021, the FTC declared
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`“hospitals” were a “[p]riority target.”18 Days later, President Biden issued an
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`executive order urging the FTC to enforce the antitrust laws “vigorously” with a
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`focus on a few key markets, including “hospitals.”19
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`This lopsided scrutiny is, in itself, concerning. It is especially concerning
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`when the agency conducting that scrutiny has engaged in a decades-long pattern of
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`enforcement practices that cannot be squared with the Due Process Clause.
`
`
`
`
`16 Rebecca Kelly Slaughter, Antitrust and Health Care Providers: Policies to
`Promote Competition and Protect Patients, Address to the Center for American
`Progress (May 14, 2019), https://www.ftc.gov/system/files/documents/public_
`statements/1520570/slaughter_-_hospital_speech_5-14-19.pdf.
`17 Rich Daly, Increased FTC scrutiny of hospital deals coming, commissioner says,
`Healthcare Financial Management Assoc. (Jan. 20, 2020), https://www.hfma.
`org/topics/news/2020/01/increased-ftc-scrutiny-of-hospital-deals-coming-commiss
`ioner-says.html.
`18 FTC, FTC Authorizes Investigations into Key Enforcement Priorities (July 1,
`2021), https://www.ftc.gov/news-events/press-releases/2021/07/ftc-authorizes-inve
`stigations-key-enforcement-priorities.
`19 Exec. Order No. 14036, 86 Fed. Reg. 36987 (2021).
`8
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`B. Hospital mergers reduce costs, improve care, and benefit
`patients.
`It is unclear why the FTC has devoted such a disproportionate amount of its
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`resources to hospitals. Hospital mergers provide a range of pro-competitive
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`benefits—especially for small and rural hospitals, which typically operate, at best,
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`on razor-thin margins.
`
`Perhaps most important, mergers frequently allow struggling hospitals to
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`remain open. Without mergers, hospitals would shutter, patients would lose access
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`to care, and communities would suffer—particularly in rural and other underserved
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`areas.20 Even before the pandemic, “about one in five hospital partnership
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`transactions involved a financially distressed hospital, many at risk of imminent
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`closure.”21 The pressure on rural and smaller hospitals “has only accelerated” since
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`COVID: “in 2020 alone, 21 rural hospitals closed their doors and more than three
`
`
`20 See Kaufman Hall, Partnerships, Mergers, and Acquisitions Can Provide Benefits
`to Certain Hospitals and Communities 5 (2021). Four out of five bankrupt hospital
`acquisition targets were saved from bankruptcy in 31 recent hospital transactions,
`and almost four in 10 acquired hospitals added one or more services post acquisition,
`including tertiary and quaternary services. Id. at 9-11. As a result, patient outcomes
`in at-risk communities often improve.
`21 Kenneth Kaufman, Industry Voices—In a time of need, hospitals