Not-for-Profit Hospitals and Enforcement of Section 5 of the FTC Act

Antitrust Byte

The Federal Trade Commission (“FTC”) has broad authority to address conduct that violates the antitrust laws. One of the FTC’s primary tools is its ability to prosecute “unfair methods of competition,” as well as “unfair or deceptive acts and practices” prohibited by section 5 of the FTC Act. Although not clearly delineated by the FTC Act, section 5 covers a broad range of conduct, including, but not limited to, conduct that violates the Sherman Act.

However, the FTC’s ability to enforce section 5 of the FTC Act is not without boundaries. Importantly, section 5 may only be enforced against “persons, partnerships, or corporations.” Furthermore, the FTC Act defines the term “corporation” as an entity “organized to carry on business for its own profit or that of its members,” thereby rendering certain conduct engaged in by nonprofit entities beyond the FTC’s reach.

Recent speeches by sitting commissioners and politicians running for higher office reflect a renewed interest in trying to close this “gap” in the FTC’s enforcement authority, particularly as it pertains to not-for-profit hospitals. However, whether these recent statements reflect true momentum to make a lasting change or just noise preceding an election year is unclear.  Moreover, and at least as far as conduct covered by the Sherman Act goes, it is important to remember that the U.S. Department of Justice (“DOJ”) is not so restricted, and will continue to pursue cases against not-for-profit hospitals as DOJ deems appropriate.

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For additional information about the issues discussed above, or if you have any other antitrust concerns, please contact the Epstein Becker Green attorney who regularly handles your legal matters, or one of the authors of this Antitrust Byte:

E. John Steren
Member of the Firm
[email protected]

Patricia Wagner
General Counsel / Chief Privacy Officer
[email protected]