On August 15, 2024, Judge Stephen A. Higginson of the United States Court of Appeals for the Fifth Circuit, writing for a panel, dismissed an appeal from U.S. Anesthesia Partners (“USAP”) in its ongoing litigation against the Federal Trade Commission (“FTC”).
In September 2023, the FTC sued USAP and its private equity investor Welsh Carson in the United States District Court for the Southern District of Texas, alleging violations of Section 2 of the Sherman Act, Section 7 of the Clayton Act, and Section 5 of the FTC Act via the pair’s “roll-up” strategy that allegedly sought to monopolize the hospital anesthesiology market in Texas through a series of small tuck-in acquisitions.[1] USAP filed a motion to dismiss the FTC’s suit, arguing (1) that the FTC had overreached its Section 13(b) authority by bringing a suit in federal court instead of an in-house administrative proceeding and (2) that the FTC “is unconstitutionally constituted because its commissioners are not removable at will by the President.”[2]
The District Court rejected both of these arguments and USAP appealed under the collateral order doctrine, claiming that it was an immediately appealable collateral order (versus an order that must be brought post-adjudication) because it conclusively determined disputed issues separate from the merits that involved a statutory and constitutional right not to be tried by an “illegitimate decisionmaker.”[3] The FTC moved to dismiss the appeal for lack of appellate jurisdiction, arguing that neither of the issues raised by USAP met the standard of the collateral order doctrine, as neither were unreviewable from a final order, nor did they involve a serious or unsettled question of law.
The Fifth Circuit agreed with the FTC and dismissed the appeal on the basis that USAP’s claims would not be effectively unreviewable on appeal from a final judgment. It distinguished USAP’s case from Axon Enterprise, Inc. v. FTC, 598 U.S. 175 (2023), which USAP relied on to claim that it had a statutory and constitutional right not to be tried by the FTC. The Fifth Circuit explained that while Axon addresses the original jurisdiction of federal courts over constitutional challenges to agency enforcement actions, it “does not address what constitutes a final order” under the collateral order doctrine.[4] The Court also noted that, in comparison to USAP, Axon involved plaintiffs attempting to get into federal court from an agency’s tribunal, and that USAP was effectively arguing that it had a “right not to be tried” in one forum and a “right to be tried first in a different, additional forum” which was rejected by the Supreme Court in Lauro Lines s.r.l. v. Chasser, 490 U.S. 495 (1989).[5]
The court also disagreed that USAP’s constitutional challenge to the FTC’s structure would render it unreviewable on appeal from a final judgment, as two recent, similar Fifth Circuit cases had made their way to the Fifth Circuit from both an agency tribunal and a district court, thereby demonstrating such constitutional challenges were indeed reviewable on appeal.[6] Both recent cases upheld the Supreme Court’s decision in Humphrey’s Executor v. United States, 295 U.S. 602 (1935), which established that Congress could limit the President's power to remove the heads of independent agencies, and thereby rejected the constitutional claims, but the Fifth Circuit declined to opine on the merits of USAP’s constitutional claims at this time.[7]
Following the Fifth Circuit ruling, USAP still faces the FTC’s case in the U.S. District Court for the Southern District of Texas.
[1] See Federal Trade Commission v. U.S. Anesthesia Partners, Inc., 4:23-cv-03560, Complaint, S.D. Tex., ECF No. 1 (Sept. 21, 2023).
[2] See Federal Trade Commission v. U.S. Anesthesia Partners, Inc., 4:23-cv-03560, Motion to Dismiss, S.D. Tex., at 23, ECF No. 99 (Nov. 20, 2023). Welsh Carson also filed a motion to dismiss, which was granted on the grounds that antitrust liability should not extend to reach minority investors in portfolio companies.
[3] See Federal Trade Commission v. U.S. Anesthesia Partners, Inc., 4:23-cv-03560, Notice of Appeal, S.D. Tex., at 1, ECF No. 153 (June 12, 2024).
[4] See Federal Trade Commission v. U.S. Anesthesia Partners, Inc., 4:23-cv-03560, Unpublished Order, S.D. Tex., at 7 (Aug. 15, 2024).
[5] Id.
[6] Id. at 7-8.
[7] Id. at 4.
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