Petition to Quash or Limit Subpoena Duces Tecum and Civil ...

UNITED STATES OF AMERICA BEFORE THE FEDERAL TRADE COMMISSION

OR'G\NAL

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IN THE MATTER OF

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PROPOSED ACQUISITION BY

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THE HOSPITAL AUTHORITY OF

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ALBANY-DOUGHERTY COUNTY OF

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PALMYRA PARK MEDICAL CENTER, INC. )

FROM HCA INC.

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File No. 111-0067

HCAINC.'S PETITION TO QUASH OR LIMIT SUBPOENA DUCES TECUM AND CIVIL INVESTIGATIVE DEMAND

SIMPSON, THACHER & BARTLETT, LLP Kevin J; Arquit, Esq.

425 Lexington Avenue NewYorlc, NY 10017 (212) 455-2000 (212) 455-2502 (fax)

Counselfor Petitioner

TABLE OF CONTENTS

PRELIMINARY STATEMENT .................................................................................................... 3 FACTUAL BACKGROUND ......................................................................................................... 6

A. The Transaction ...................................................................................................... 6 B. The FTC Investigation ............................................................................................. 7 C. The Subpoena and CID ......................................................................................... 10 ARGUMENT ................................................................................................................................ 12 A. The Subpoena and CID Impose an Undue Burden on HCA Because the

Time Period Allotted for Compliance Is Unachievable........................................ 13 1. It is Unduly Burdensome to Provide Only Two Weeks to Comply

with the Subpoena..................................................................................... 14 2. It is Unduly Burdensome to Provide Only Two Weeks to Comply

with the CID.............................................................................................. 16 B. The CID and Subpoena Are Overly Broad ........................................................... 19

1. The Specifications of the Subpoena Are Overly Broad............................ 20 2. The SpeCifications ofthe CID Are Overly Broad..................................... 21 C. HCA's Efforts to Comply with the Compulsory Requests Would Obstruct Its Normal Business Operations........................~ ................................................... 22 GENERAL AND SPECIFIC OBJECTIONS ............................................................................... 23 CONCLUSION ............................................................................................................................. 40 STATEMENT OF KEVIN J. ARQUIT PURSUANT TO 16 C.F.R ? 2.7(d)(2) ........................ 41 CERTIFICATE OF SERVICE ...................................................................................................... 42

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Pursuant to Section 2.7(d)(I) ofthe Federal Trade Commission's ("FTC" or "Commission") Rules of Practice, 16 C.F.R. ? 2.7(d)(I), and Section 20 ofthe Federal Trade Commission Act ("FTC Act"), 15 U.S.C. ? 57b-l(f)(1), HCA Inc. ("HCA" or ''the Company") hereby files its Petition to Quash or Limit the Civil Investigative Demand (the' "CID") and Subpoena Duces Tecum (the "Subpoena"), FTC File No. 111-0067, served on HCA on February 15,2011 (collectively referred to as the "Compulsory Requests" or the "Requests").

PRELThflNARYSTATEMENT

The Compulsory Requests issued pursuant to the FTC's investigation (the "Investigation") of The Hospital Authority of Albany-Dougherty County's (the "Hospital Authority") pr.oposed acquisition of Palmyra Park Hospital, Inc. ("Palmyra") from HCA (the "Transaction") command HCA to achieve the impossible. Complying with the FTC's broad and detailed eID and Subpoena within a highly compressed two-week time frame is simply not achievable. Indeed, the Compulsory Requests are broader and more burdensome than a typical Second Request, which generally takes parties from three to six months to complete. FTC Staff attorneys ("Staff') are standing firm on their demand for full compliance within two weeks. As a result of this position, HCA hereby petitions to quash or alternatively to limit these demands.

The Compulsory Requests are made in connection with a Transaction that the FTC is aware may, under existing law, be exempt from federal antitrust scrutiny under the state action doctrine. Indeed, when confronted with the fact pattern at issue here -- i.e., where a political subdivision is engaging in conduct that has been statutorily authorized by the state, the 11th Circuit has consistently and uniformly held that state action immunity applies and the conduct and/or transaction is exempt from federal antitrust scrutiny. See Crosby v. Hospital Auth. of Valdosta & Lowndes County, 93 F.3d 1515 (11th Crr. 1996); F.T.c. v. Hospital Bd o/Directors

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ofLee County, 38 F.3d 1184 (11th Cir: 1994); Askew v. DCH Reg'l Health Care Auth., 995 F.2d 1033 (11 th Cir. 1993).

No one has contested that this dispositive legal question, if settled in HCA's favor, would moot any substantive examination ofthe Transaction. The FTC is nonetheless requiring RCA to review what might equate to millions of pages of documents in order to locate and produce documents relevant to the substantive antitrust aspects of the Transaction. Given that these documents and issues may never come to play, the enormous burden, consumption oftime and expense that will be incurred in responding to the CID and. Subpoena are all the more unreasonable.

Recognizing the FTC Staff's desire to examine the antitrust aspects of this matter coextensive with its review of the state action issues, HCA and the other parties have made and continue to make significant efforts and concessions in a good faith effort to cl;>operate with the FTC. That extension of cooperation includes HCA's agreements to delay the closing of the Transaction from January 31 (on which day the parties originally intended to close) to March 1, and then again to March 31.1 In addition, RCA voluntarily committed to make eyery effort to satisfy an informal voluntary information request from Staffon February 4, 2011 (the "Voluntary Request") seeking certain data and information on the substantive antitrust aspects of this Transaction by February 28, 2011.2

Further, in its efforts to comply with the FTC's Voluntary Request (which provided only a three and a half week time frame) as soon as possible, RCA and outside counsel immediately devoted significant resources to the task, both interviewing RCA employees and gathering

The parties have voluntarily moved the closing date back in an effort to cooperate, despite the fact that

delays in the anticipated closing is disruptive, leaving the hospitals and hospital employees in question in

limbo, and having financial and other implications for the business.

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2

Attached at Exhibit A.

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relevant materials for production. After RCA had already gathered a substantial volume of material potentially responsive to the Voluntary Request and was in the midst of reviewing these materials for production, without.any advance communication, the FTC subsequently served RCA with the Compulsory Requests at issue here. Received on February 15,2011, the Compulsory Requests call for a far broader range of documents, data and information (and in some instances a larger date range) than does the Voluntary Request-yet still mandate the same February 28,2011 return date. Due to the greater breadth of the Compulsory Requests, its various document and data demands are largely not cumulative. In essence, the efforts undertaken to prepare and collect responsive materials to the Voluntary Request must largely be duplicated to respond to the Compulsory Requests.

Even a cursory review of these Compulsory Requests reveals their breadth. The CID and Subpoena include over 130 requests ("Specifications") (including subparts), calling for RCA's collection, review, processing and production of hundreds of thousands (and possibly millions) ofpages of information, documents and data. Indeed, some of the requested information dates from over seven years ago. It is a physical and technical impossibility to comply with such broad Requests in a two-week period.

Upon receipt ofthe Compulsory Requests, counsel for RCA contacted Staffto discuss the impossibility of complying with the Requests in a two-week time frame and proposed both modifications and an alternative return date of March 15, 2011. Although this revised return date would still present enormous challenges to meet, counsel for RCA put forth this proposal in an effort to cooperate and use best efforts to comply, while still getting materials to the FTC in a timely manner. RCA also assured Staffthat as much as possible, some of the documents called

for in the Subpoena and some of the data called for in the cm, would be produced to the FTC by

February 28. In addition, RCA agreed that the materials would be produced on a rolling basis

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