Novant Health Abandons Proposed Purchase Following Fourth Circuit’s Issuance of Injunction

We have been reporting on the Federal Trade Commission’s continuing effort to block Novant Health’s purchase of Lake Norman Regional Medical Center and Davis Regional Psychiatric Hospital from Community Health Systems.

Last week, the U.S. District Court for the Western District of North Carolina denied the FTC’s request for a preliminary injunction to stop the sale pending the FTC’s conclusion of its administrative process. At the same time, the Court granted the FTC’s alternate request to extend until June 21 the temporary restraining order that has been in place in order to allow the FTC time to seek an injunction from the Fourth Circuit Court of Appeals.

The FTC filed a motion for an injunction pending its appeal and yesterday a split Fourth Circuit panel granted the motion and enjoined the acquisition pending appeal.

Several hours later, Novant announced that it was abandoning the planned purchase.

U.S. Circuit Judge J. Harvie Wilkinson III dissented from the grant of the injunction stating that “the district court would seem to have the best view of the market concentration and conditions in the Charlotte area,” and that he “could not find the trial court’s fact finding, reached after an exhaustive examination of the evidence, to be clearly erroneous.”

According to Judge Wilkinson, the Davis hospital seems on its “last legs” and, without the transaction, Lake Norman Regional’s future “is decidedly uncertain as well.” He added, “such closures would by definition lessen any competition.”

He went on to state that “[s]ending this back to the FTC and the administrative law judge is a process that ordinarily takes over two years. … Given the evidence I am not sure any financially hard-pressed healthcare facility would have that amount of time.”