United States: In The Wake Of Phoebe Putney, New York Passes Law Giving Antitrust Immunity To State Health Care System

Last Updated: November 7 2013
Article by Jan P. Levine, Sarah Sandok Rabinovici and Melissa J. Hatch

Earlier this year, the Supreme Court issued its decision in FTC v. Phoebe Putney Health System, Inc., 133 S.Ct. 1003 (2013), which held that the state action antitrust immunity doctrine applies only when the state legislature has "clearly articulated and affirmatively expressed" a policy displacing competition. In the wake of Phoebe Putney, last week New York passed a bill amending Public Authority Law Sections 3401 and 3405 ("the new law"), which concerns Nassau Health Care Corporation (NuHealth). The new law is modeled under the Supreme Court's standard and permits a specific entity to enter into health care-related affiliations and to receive immunity from federal and state antitrust laws.

The "state action doctrine" allows the extension of state immunity from the federal antitrust laws to municipalities and even private parties, but only when they act pursuant to a "clearly articulated and affirmatively expressed state policy" to displace competition. Justice Sonia Sotomayor, writing for a unanimous Court in Phoebe Putney, held that state regulatory statutes that confer general corporate powers are not sufficient to meet the "clearly articulated" standard and cannot be interpreted to mean that the state intended to displace competition. In summary, the Supreme Court reined in the state action doctrine by requiring a specific mandate in legislation conferring immunity from antitrust scrutiny.

Despite strong objections by both the New York Attorney General and Antitrust Bureau Chief, Gov. Andrew Cuomo signed the new law, which then went into effect, protecting state-chartered NuHealth from state and federal antitrust laws. NuHealth is a New York public benefit corporation that includes Nassau University Medical Center, the A. Holly Patterson Extended Care Facility in East Meadow, and five community health centers. The new law is intended to clear the way for NuHealth to enter a planned public-private partnership with North Shore-LIJ Health System, a network of 16 hospitals and about 400 ambulatory and physician practices on Long Island and Staten Island. The partnership would strengthen an already existing affiliation agreement between the two systems, which dates back to 2005, by creating a jointly owned limited liability company. The new structure will allow the two systems to consolidate duplicative health care service units and jointly negotiate rates with insurance companies, along with a host of other consolidation activities.

The new law states that NuHealth "is authorized to engage in arrangements, contracts, information sharing and other collaborative activities with public or private entities and individuals regardless of the competitive consequences of these activities and notwithstanding that these activities may have the effect of displacing competition in the provision of hospital, physician, or other health care-related services." In undertaking these collaborative activities, NuHealth "and the public or private entities or individuals with which it collaborates shall be immunized from liability under the federal and state antitrust laws." (emphasis added.) Under the new law, NuHealth must file an annual report with the State Department of Health regarding the impact of the collaborations. The Department of State (which does not have antitrust enforcement authority) has the authority to request that NuHealth voluntarily make changes to its policies.

Eric Schneiderman, New York's Attorney General since 2011, and Eric Stock, recently named Chief of the Antitrust Bureau, vehemently opposed the new law. They argued that it gives NuHealth and any company it partners with an overly broad exemption that may negatively affect patients by allowing NuHealth to accumulate too much market power. Schneiderman, who is typically regarded as an aggressive enforcer of the antitrust laws, would have preferred that the state retain a right to review any of the company's potential collaborations and provide "very narrow" exemptions on a case-by-case basis.

The New York State Assembly and Senate passed the new law unanimously, with some legislators arguing that, without the new law, NuHealth is at risk of going out of business because of low reimbursement rates. Legislators also recognized that the new law as drafted was necessary to afford "state action" protection in light of the Supreme Court's decision in Phoebe Putney. The new law avoids any doubt that the state has "clearly articulated and affirmatively expressed" a policy to displace competition.

A state, however, need not go so far as New York to satisfy the Phoebe Putney standard. For example, the state might have chosen to immunize only the North Shore-LIJ collaboration, to limit the exemption to certain types of health services, or to immunize joint negotiations with certain groups (like physicians), but not others (like payors). Because of the new law's wide breadth and vocal opposition from Schneiderman and Stock, critics view it as the ill-considered consequence of both intense lobbying and the political aspirations of New York lawmakers, including Gov. Cuomo, who is rumored to be considering a presidential run in 2016.

In any event, it will be interesting to see what collaborations are protected in New York in the future stemming from the present legislation. Further, as consolidation continues in the health care space, we can anticipate seeing additional health care entities pressing for antitrust legislative protections akin to NuHealth's.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Sarah Sandok Rabinovici
Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions