Pennsylvania Record

Sunday, November 17, 2019

Pennsylvania, seeking $1.2M in fees from court fight over Hershey Medical Center merger, gets support

By Tomas Kassahun | Mar 23, 2018

Law money 01

PHILADELPHIA — The Commonwealth of Pennsylvania has gained support from several states that say a federal district court made a mistake by denying reimbursement for attorneys’ fees following its successful challenge to the proposed merger between Penn State Hershey Medical Center and Pinnacle Health System.

The states of Washington, Delaware, Iowa, Idaho, Minnesota, North Dakota, Utah, Louisiana and New Mexico submitted an amicus brief on Dec. 18, showing support for Pennsylvania Attorney General Josh Shapiro.

Pennsylvania is looking for about $1.2 million in attorneys fees as part of its lawsuit against a potential merger between Penn State Hershey Medical Center and Pinnacle Health System.

Pennsylvania’s request for attorneys fees was denied by the U.S. District for the Middle District of Pennsylvania in May. The court said the attorneys’ fees were denied because an earlier Third Circuit ruling in the case didn't show that Pennsylvania had “substantially prevailed."

The case opened in 2015 after Penn State Hershey Medical Center and Pinnacle Health System agreed to a merger.

The Federal Trade Commission and Commonwealth of Pennsylvania filed a lawsuit to block the merger, saying the deal would be bad for health care competition.

After the attempt to block the merger was denied, the Third Circuit overturned the decision.

“The Third Circuit issued an opinion reversing our denial of the motion for preliminary injunction and remanded the case, directing that the merger of defendants be preliminarily enjoined pending the outcome of the FTC’s administrative adjudication,” the district court said.

Ultimately, the parties abandoned their proposed merger.

When Pennsylvania made its case for attorneys’ fees, the hospitals said the state shouldn’t get attorneys’ fees because the Clayton Act bars it from doing so.

The court cited Section 16 of the Clayton Act which says “[i]n any action under this section in which the plaintiff substantially prevails, the court shall award the cost of suit, including a reasonable attorney’s fee, to such plaintiff.”

In this case, U.S. District Judge John E. Jones said Pennsylvania didn’t substantially prevail in the lawsuit, and therefore isn’t entitled to attorneys fees according to the Clayton Act.

“We find that the Commonwealth succeeded only in establishing a likelihood of success on the merits at a later stage in litigation — during the upcoming FTC adjudication,” the district court said. “Accordingly, we find that the Commonwealth did not 'substantially prevail ' under Section 16 of the Clayton Act.”

The states in support of Pennsylvania said “decisions in the Third Circuit and in other circuits support the award of attorneys’ fees under Section 16 of the Clayton Act to a plaintiff that prevails on a preliminary injunction.”

The states said that precedent should be applied in this case because the merging parties halted the merger due to the preliminary injunction that Pennsylvania obtained.

“The District Court’s ruling denying Pennsylvania an award of attorneys’ fees frustrates the intent of the Clayton Act’s fee-shifting provision and should be reversed,” the states said.

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Organizations in this Story

Commonwealth of PennsylvaniaU.S. District Court for the Middle District of Pennsylvania