Welsh, Carson, Anderson & Stowe, a private equity giant, has been given the chance to escape the legal investigation on the grounds of its portfolio company, U. S. Anesthesia Partners, which is associated with the possible anti-competitive actions. A federal judge ruled to terminate the New York-based Welsh Carson, the antitrust lawsuit filed by the Federal Trade Commission (FTC) from the preceding year. The FTC claims that Welsh Carson and US Anesthesia Partners adopted a consolidation strategy in 2012 that later enabled USAP to suppress competition and raise prices in the anesthesia services market.
Welsh Carson and USAP changed the FTC’s case to a dismissal, asserting that they did not contravene any antitrust laws. USAP opposed the FTC’s interpretation of market mechanisms and pricing strategies. Judge Kenneth Hoyt of the U. S. District Court for the Southern District of Texas rejected USAP’s motion to dismiss, and considered the FTC’s accusations credible. Nevertheless, Judge Hoyt declared the FTC’s case against Welsh Carson as not substantial, for the reason that Welsh Carson is merely a minority, a non-controlling stakeholder in USAP and thus cannot be held accountable for the antitrust violations under the current legal framework.
Judge Hoyt’s judgment, as he stated in his verdict, underlines the possible consequences of the antitrust liability being extended to minority investors, which would then be a big growth in the FTC’s regulatory authority. Welsh Carson said the ruling to the press was a good thing and USAP was also confident in its stance as the legal proceedings continued.
The court’s ruling is a challenge for the FTC and the Biden administration, which have been strongly against private equity’s role in healthcare. The Biden administration launched a regulatory push against corporate greed in healthcare, and tasked the agencies to do an inquiry into the increasing power of private equity and other corporations in the sector. The regulatory workshops which took place after the directive raised the issue of private-equity-backed consolidation strategies by people like FTC Chair Lina Khan.
In March, Chair Khan stressed the FTC’s dedication to the examination of such strategies, and he pointed out the agency’s determination to use its maximum regulatory authority to protect against anti-competitive practices. Furthermore, the U. S. Department of Justice recently declared the creation of a special task force aimed at combating monopolistic practices and collusion in the healthcare industry.
The FTC’s case against Welsh Carson and USAP is about the accusation that Welsh Carson created USAP in 2012 to solve the problem of the divided anesthesiology market in Texas. Afterward, USAP bought several practices in the state and allegedly made deals with independent groups to coordinate pricing and avoid competition. The FTC claims that these methods caused the costs of anesthesia services to be higher, thus, millions of dollars a year were spent by Texans on them.
USAP’s Colorado branch also made a voluntary agreement with the Colorado Attorney General in February on the grounds of market manipulation through practice acquisitions. By the agreement, USAP agreed to terminate contracts with five Colorado hospitals and revise the noncompete agreements with clinicians, although it accused the state’s scrutiny as misguided.
