Novant, FTC legal fight rolls on. Feds appeal latest hospital expansion plan ruling
After losing a district court decision last week, the Federal Trade Commission’s battle against Novant Health’s $320 million deal to buy two Lake Norman Hospitals shifted to U.S. Appeals Court.
Last Wednesday, a federal judge denied the FTC’s request for a preliminary injunction to stop Novant Health from buying Lake Norman Regional Medical Center in Mooresville and Davis Regional Medical Center, a behavioral health hospital in Statesville.
A few days later on Sunday, the FTC filed its appeal to the U.S. Court of Appeals for the Fourth Circuit. The Richmond, Virginia-based court hears appeals from district courts in North Carolina, Maryland, South Carolina, Virginia and West Virginia.
The FTC said the deal could hurt consumers by eliminating competitors and increasing insurance rates, which Novant has denied.
In January, FTC attorneys filed a lawsuit in the U.S. District Court for the Western District of North Carolina, as it sought a preliminary injunction to stop the Winston-Salem health care system from buying the hospitals. Both Lake Norman centers are owned by Community Health Systems, Inc., which is also a defendant.
U.S. District Judge Kenneth Bell denied the preliminary injunction request June 5.
Officials from both companies were ready to move forward with plans involving facilities, related businesses, physician clinic operations and outpatient services.
“Overall, the public interest is best served by Novant being permitted to own and operate (Lake Norman Regional Medical Center) and (Davis Regional Medical Center), pending the conclusion of the FTC administrative process,” the judge’s order said.
In a court filing, Novant and CHS said they were ready to close their deal this Wednesday after a seven-day trial with 23 witnesses and hundreds of exhibits.
The parties said the FTC waited until Sunday night to notify them about the appeal.
“The FTC’s delay appears strategic: an attempt to squeeze the Fourth Circuit so that the Fourth Circuit upends Wednesday’s closing by issuing an emergency injunction during its consideration of the FTC’s injunction request,” the defendants said in the filing.
Novant and CHS said the FTC would be unsuccessful with the appeal since the agency failed with its request and couldn’t show irreparable harm.
In their latest filing, CHS and Novant said without the deal, “Davis will close,” given its $1-million-per-month losses and lack of alternative buyers.
Attorneys for the hospitals also said Lake Norman will not be able to sustain its “current level of competition,” considering CHS’s decisions to close lines of service and cut off additional investments in that hospital.
Bell denied the injunction pending appeal on Tuesday because of the FTC’s timing with filing it. An existing temporary restraining order was extended to June 21 to give the Court of Appeals more time to consider the FTC’s motion.
Novant hopes the extension is the final delay, a spokesperson said.
The FTC declined to comment on the appeal. Requests for comments from CHS were not returned Tuesday.
FTC’s concerns
In its court filings, the FTC brought up several concerns about the deal between Novant and CHS:
▪ Novant’s plan is unlawful in part because it would give the combined entity a 64% share of the market in the eastern Lake Norman area.
▪ Novant continues to grow through a decades-long series of mergers, the FTC said. The company has worked to control six hospitals in the Carolinas within the last year, the FTC added.
▪ The FTC said Novant had rounds of layoffs and cut hundreds of jobs at the company in recent years. In October, Novant announced plans to cut 160 jobs across its network.
Novant and Community Health Systems
Novant is one of the largest hospital systems in North Carolina and the Southeast, and operates more than 800 outpatient facilities and physician office in the Carolinas. Its total revenue was $7.6 billion in 2022, according to the complaint filed by the FTC.
Novant also is one of the two major health care systems in Charlotte, along with Atrium Health.
Tennessee-based Community Health Systems operates 71 hospitals and thousands of care sites across 15 states. Its annual revenue was $12.2 billion in 2022.
The two hospitals Novant wants to buy are the only CHS centers in North Carolina.
This story was originally published June 12, 2024 at 5:56 AM.
