October 2, 2018
A recent Law 360 story by Danielle Nichole Smith, “St. Luke’s Drops Appeal of $7.5M Atty Fees in Antitrust Case,” reports that St. Luke’s Health System Ltd. has agreed to drop its appeal of a more than $7.5 million attorneys’ fees award to two hospitals that spearheaded an antitrust suit against the Idaho-based health organization, according to filings in the Ninth Circuit.
St. Luke’s submitted the stipulation to the Ninth Circuit, saying it had settled its fee dispute with Saint Alphonsus Medical Center-Nampa Inc. and Treasure Valley Hospital LP. The stipulation, which gave no details of the settlement, ends St. Luke’s appeal over a federal district judge’s decision to grant the two hospitals attorneys’ fees after the judge sided with the Federal Trade Commission in their suit over St. Luke’s merger with Saltzer Medical Group PA.
The hospitals had sued St. Luke’s in November 2012, alleging that the health organization’s pending acquisition of Saltzer Medical Group would create a monopoly of certain health care markets in Idaho and could hike up the costs of health care while lowering its quality. U.S. District Judge Lynn Winmill initially allowed the deal to move forward, denying Saint Alphonsus and Treasure Valley a preliminary injunction in December 2012.
However, after the FTC and Idaho attorney general intervened in the litigation in 2013 and took the case to trial, Judge Winmill ruled in 2014 that the acquisition would likely raise health care costs and have anti-competitive effects, even if that wasn’t its intention, and ordered St. Luke’s to divest from Saltzer Medical Group. The Ninth Circuit affirmed the ruling in 2015, agreeing that there was evidence the deal would threaten competition.
Following that ruling, St. Luke’s and the FTC reached a deal that established the process for breaking Saltzer Medical Group out of the health organization, and Saint Alphonsus and Treasure Valley were eventually granted $7,247,878 and $335,382, respectively, in fees and costs for their roles in the judgment. The state of Idaho was also granted $1,041,287, but St. Luke’s only appealed the fees granted to the private hospitals.
St. Luke’s argued on appeal that the hospitals hadn’t been the prevailing party in the suit since they didn’t have standing to bring the claims that the federal government ultimately prevailed on. The court only ruled on the federal government's claims and never decided that the hospitals’ claims had merit, St. Luke’s said.
But the hospitals responded by arguing that it didn’t matter whether the court addressed their claims or not since they achieved the outcome they sought in bringing their case. And the court said that the contributions from the hospitals’ attorneys had been crucial for obtaining that judgment, Saint Alphonsus and Treasure Valley said.
The case is Saint Alphonsus Medical Center-Nampa Inc. et al. v. St. Luke’s Health System Ltd. et al., case number 16-36044, in the U.S. Court of Appeals for the Ninth Circuit.