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From Antitrust Law Daily, July 8, 2014

Testimony, exhibits unsealed in Idaho health care acquisition challenge

By Jeffrey May, J.D.

The federal district court in Boise has decided to unseal much of the testimony and exhibits that were not publicly released during a trial that resulted in an order unwinding of the 2012 combination of St. Luke’s Health System, Ltd.—the largest health care system in Idaho—and Saltzer Medical Group—the state's largest independent, multi-specialty physician practice. The parties were ordered to publically disclose the transcripts and exhibits that were unsealed within 30 days (St. Alphonsus Medical Center—Nampa, Inc. v. St. Luke’s Health System, Ltd., July 3, 2014, Winmill, B.).

In January, following a month-long bench trial held last fall, the court concluded that St. Luke’s acquisition of Saltzer violated Section 7 of the Clayton Act and the Idaho Competition Act. The action was pursued by the FTC, the State of Idaho, and smaller rivals—hospital operator Saint Alphonsus Health System, Inc. and Treasure Valley Hospital (TVH), a nine-bed physician-owned, short–term care, non-emergency hospital in Boise.

The case is now on appeal to the Ninth Circuit. In June, the district court stayed the unwinding of the deal until the U.S. Court of Appeals in San Francisco rules on an emergency motion for stay under Federal Rule of Appellate Procedure 8(a)(2). Word from the appellate court on the emergency motion is expected by the end of July.

Before the case went to trial, the parties and the court had agreed to designate a significant amount of material as "Attorney Eyes Only." After the trial started, the Associated Press (AP) moved to intervene, seeking to unseal all documents and testimony in the matter. Later, the AP sought a Writ of Mandamus from the Ninth Circuit to open the entire case file. The appellate court denied the petition without prejudice. However, the appellate court imposed a July 8 deadline on the district court. The appellate court was willing to consider a renewed petition for a Writ of Mandamus if the district court had not completed its analysis of the disclosure issues by that date.

The court has now concluded that there were not compelling reasons to justify maintaining the sealed status for most of the courtroom testimony. However, certain information, particularly exhibits and testimony connected to third parties, was excluded from the order for public disclosure. The court decided to disclose more material related to one of the third parties—Blue Cross of Idaho—than the other non-parties. Blue Cross was a very active participant in the trial and much of the information they submitted was crucial to the court’s decision and to the public’s understanding of the case, the court explained.

Among the information that will remain sealed were discussions of individual physician compensation and strategies for compensating physicians. In addition, the court will not disclose certain financial data provided by parties or the companies' strategic documents or budgets and business plans that were not relevant to the court's decision. The court also decided to keep confidential certain testimony from executives for third parties Imagine Health, Primary Health, and Micron. Much of this information was not important in the court’s decision and was not necessary to the public’s understanding of the case, the court explained.

This is Case No. 1:12-CV-00560-BLW.

Attorneys: David A. Ettinger (Honigman Miller Schwartz and Cohn LLP) and Keely E. Duke (Duke Scanlan & Hall, PLLC) for Saint Alphonsus Medical Center-Nampa Inc., Saint Alphonsus Health System Inc., Saint Alphonsus Regional Medical Center, Inc. and Treasure Valley Hospital Ltd. Partnership. Danica Noble for Federal Trade Commission. J Walter Sinclair (Holland & Hart LLP) and Jack R. Bierig (Sidley Austin LLP) for St. Luke's Health System, Ltd. Brian K. Julian (Anderson Julian & Hull) for Saltzer Medical Group.

Companies: Saint Alphonsus Medical Center-Nampa Inc.; Saint Alphonsus Health System Inc.; Saint Alphonsus Regional Medical Center, Inc.; Treasure Valley Hospital Ltd.; St. Luke's Health System, Ltd.; Saltzer Medical Group

MainStory: TopStory AcquisitionsMergers Antitrust FederalTradeCommissionNews IdahoNews

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