Under this Court’s state-action immunity doctrine, when a local governmental entity acts pursuant to a clearly articulated and affirmatively expressed state policy to displace competition, it is exempt from scrutiny under the federal antitrust laws. In this case, we must decide whether a Georgia law that creates special-purpose public entities called hospital authorities and gives those entities general corporate powers, including the power to acquire hospitals, clearly articulates and affirmatively expresses a state policy to permit acquisitions that substantially lessen competition. . . .

In 1941, the State of Georgia amended its Constitution to allow political subdivisions to provide health care services. . . . Under the Law, a hospital authority “exercise[s] public and essential governmental functions” and is delegated “all the powers necessary or convenient to carry out and effectuate” the Law’s purposes.

In the same year that the Law was adopted, the city of Albany and Dougherty County established the Hospital Authority of Albany-Dougherty County (Authority) and the Authority promptly acquired Phoebe Putney Memorial Hospital (Memorial), which has been in operation in Albany since 1911. In 1990, the Authority restructured its operations by forming two private nonprofit corporations to manage Memorial: Phoebe Putney Health System, Inc. (PPHS), and its subsidiary, Phoebe Putney Memorial Hospital, Inc. (PPMH). The Authority leased Memorial to PPMH for $1 per year for 40 years. Under the lease, PPMH has exclusive authority over the operation of Memorial. . . . Memorial is one of two hospitals in Dougherty County. The second, Palmyra Medical Center (Palmyra), was established in Albany in 1971 and is located just two miles from Memorial. . . .

Together, Memorial and Palmyra account for 86 percent of the market for acute-care hospital services provided to commercial health care plans and their customers in the six counties surrounding Albany. Memorial accounts for 75 percent of that market on its own.

In 2010, PPHS began discussions with HCA [Palmyra’s owner] about acquiring Palmyra.

Following negotiations, PPHS presented the Authority with a plan under which the Authority would purchase Palmyra with PPHS controlled funds and then lease Palmyra to a PPHS subsidiary for $1 per year under the Memorial lease agreement. The Authority unanimously approved the transaction.........

Discussion Questions 

1. Research and explain the community of Albany-Dougherty County and the corporate structure involved in this case. Who do you suppose were the officials in the various corporate entities?

2. Explain how the transaction was structured, and why.

3. The federal trial court was the US District Court for the Middle District of Georgia; the Court of Appeals was the Eleventh Circuit, which sits in Atlanta. Considering the locations of and incumbent judges on these courts, why might the Supreme Court have a different worldview and a different perspective on the policy aspects of this issue?