The Senate is considering a bill, H.R. 2745, that could help health insurers, hospitals and other companies complete major mergers and acquisitions more easily.

See also: Doctor group asks regulators to block health insurer mergers

Members of the House voted 235-171 to approve the bill last week. All but one Republican who voted favored the bill, and all but five of the Democrats who voted opposed the bill. Rep. John Garamendi, a former California insurance commissioner, is one of the handful of Democrats who voted for the bill.

H.R. 2745, also known as the Standard Merger and Acquisition Reviews Through Equal Rules (SMARTER) Act bill, would change the rules that govern how the Federal Trade Commission (FTC) handles antitrust deal reviews.

Under the current antitrust rules, the U.S. Department of Justice and the FTC share jurisdiction over corporate deals. The Justice Department lawyers normally get just one chance to try to persuade a judge to issue an injunction blocking a deal.

However, the rules that govern the FTC — which reviews many deals involving hospitals, health insurers and other health care organizations — grant them more internal administrative powers than the Department of Justice. The FTC has its own internal administrative litigation process.

When FTC lawyers go to court, they file a motion seeking a preliminary injunction and a motion seeking a permanent injunction at the same time, according to an analysis prepared by the House staff. In some cases, when a federal judge rejects a request for a motion imposing a preliminary injunction blocking a deal, the FTC keeps moving forward with its request for a permanent injunction, the staff says. The FTC may also continue to put a deal subject to a court’s preliminary injunction denial through its own internal litigation process.

In 2003, a commission formed under the federal Antitrust Modernization Commission Act of 2002 recommended that Congress eliminate the injunction difference, to end the perception that the FTC and the Justice Department handle reviews of comparable deals differently.

H.R. 2745 would keep the FTC from challenging a transaction without going to court, and it would require the FTC to meet the same preliminary injunction standards that the Justice Department must meet, according to the American Hospital Association (AHA).

Rep. Blake Farenthold, R-Texas, is the lead sponsor of the bill. And Sen. Mike Lee, R-Utah, has introduced a companion bill, S. 2102, in the Senate.

The AHA is supporting the bill, saying that it will help hospitals proceed with much-needed mergers. “Hospital integration and realignment is essential if the field is to be successful in its drive to build an efficient and effective continuum of care that delivers care to communities in innovative ways and in new, more convenient settings,” the AHA says in a commentary on the bill. 

The American Antitrust Institute (AAI) has objected to the bill, saying that there’s no evidence that there’s much of difference between the likelihood that the FTC or the Justice Department will get a preliminary injunction, and that eliminating the FTC’s administrative powers could have unexpected consequences.

See also:

U.S. health insurers slip as Clinton calls for merger review

AMA quantifies Cigna and Humana deal effects on market competition

     

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