Tennessee Department Of Health Grants COPA Request For Health Care Alliance

On September 19, 2017, the Tennessee Department of Health ("TDOH") granted the request for a Certificate of Public Advantage ("COPA") from Wellmont Health System and Mountain States Health Alliance. This approval paves the way for the two entities to form a single corporate entity called Ballad Health. According to the TDOH, both health systems "agreed through the legislative process to meet a clear and convincing standard that their merger would create a public benefit to the residents of Northeast Tennessee that would outweigh any downsides of a monopoly of services." Notably, the Department observed that a Terms of Certification document accompanying the approval "includes how active supervision by the state of the new entity will look." This fact is important because the Federal Trade Commission ("FTC"), which is not a fan of COPA regulations, has made clear that it will closely analyze and challenge defenses based on asserted state action immunity where the state fails to provide adequate active supervision.

The federal antitrust laws do not restrict the sovereign capacity of the states to regulate their economies. Under the state action immunity doctrine, states can immunize certain conduct from antitrust liability. Certain actors delegated authority by the state can be immunized when their actions are taken pursuant to a "clearly articulated and affirmatively expressed" state policy to displace competition. Also state-authorized private action may be shielded from the antitrust laws under this doctrine if the conduct occurs pursuant to a "clearly articulated and affirmatively expressed" state policy and the conduct is "actively supervised" by the state.

In recent years, several states have begun to pass COPA statutes. In the wake of aggressive antitrust enforcement in the health care industry...