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In June 2016, AmSurg Corp. and Envision Healthcare Holdings, Inc. (Envision) announced they have signed a definitive merger agreement pursuant to which the companies will combine in an all-stock transaction. Upon completion of the merger, which is expected to be tax-free to the shareholders of both organizations, the combined company will be named Envision Healthcare Corporation and co-headquartered in Nashville, Tennessee and Greenwood Village, Colorado. The company's common stock is expected to trade on the New York Stock Exchange under the ticker symbol: EVHC. Bass, Berry & Sims served as lead counsel on the transaction, led by Jim Jenkins. Read more.

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Inside the FCA blogInside the FCA blog features ongoing updates related to the False Claims Act (FCA), including insight on the latest legal decisions, regulatory developments and FCA settlements. The blog provides timely updates for corporate boards, directors, compliance managers, general counsel and other parties interested in the organizational impact and legal developments stemming from issues potentially giving rise to FCA liability.

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Department of Justice Urges Repeal of Antitrust Exemption for Tennessee Public Hospitals


May 26, 2011

Key Points

  • Tennessee State Representative Phillip Johnson requested that the U.S. Department of Justice, Antitrust Division comment on a proposed amendment to repeal Tennessee’s antitrust exemption for private act metropolitan hospital authorities ("public hospitals").
  • In a letter dated May 18, 2011, the Antitrust Division urged the Tennessee legislature to adopt the proposed amendment, opining that applying the antitrust laws to the conduct of public hospitals in Tennessee would promote hospital competition and benefit Tennesseans.1

The DOJ’s Case for Repeal

Tenn. Code Ann. § 7-57-501 et seq. grants broad authority to public hospitals in Tennessee. Under this statute, public hospitals may exercise "all powers necessary or convenient to effect any or all the purposes for which [they are] organized," and they may do so "regardless of the competitive consequences." In 2005, the U.S. Court of Appeals for the Sixth Circuit held that this statute creates an antitrust exemption for public hospitals for a wide range of potentially anticompetitive actions, including exclusive contracts with health insurers.2

Representative Johnson’s letter discussed the impact of the statute on two acute care hospitals in Jackson, Tennessee – one a public hospital and the other privately owned. The letter reportedly stated that the public hospital had "used its organizational structure, size and market presence to demand exclusive insurance contracts with many of the major insurance plans . . . for the past fifteen years."

The Antitrust Division began its analysis by stating that its experience has shown that such exclusive contracts can restrict competition between hospitals and harm consumers. The Antitrust Division further opined that anticompetitive conduct by dominant hospitals—including dominant public hospitals—can lead to higher prices and lower quality care to Tennessee’s healthcare consumers. The type of anticompetitive conduct that the Antitrust Division had in mind when making this statement included: exclusive contracting with commercial insurers, anticompetitive acquisitions, unlawful predatory pricing, certain types of economic credentialing and horizontal agreements with competitors. The Antitrust Division urged repeal of the antitrust exemption so that alleged anticompetitive conduct could be investigated, prosecuted and deterred, all of which protects competition.

What’s Next?

Whether the public hospital exemption will be repealed remains to be seen. While the proposed legislation reportedly has been heavily lobbied, the bill has been rolled to 2012 in the Tennessee House Commerce Committee and referred to the General Subcommittee of Senate Commerce, Labor and Agriculture.

1  A copy of the Antitrust Division’s comments can be found at: 
2  See Jackson, Tennessee Hosp. Co., LLC v. West Tennessee Healthcare, Inc., 414 F.3d 608, 612 (6th Cir. 2005).

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