American Medical International, Inc

Text (OCR of the scan at left; may contain errors)

IN THE MATTER OF AMERICAN MEDICAL INTERNATIONAL, INC., ET AL. MODIFYING ORDER IN REGARD TO ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION AND CLAYTON ACTS Docket 9158. Final Order, July 1984-Modifying Order, March, 1986 The Federal Trade Commission has modified, for the second time, a 1984 divestiture order with American Medical International, Inc. (104 F. C. 1). After first modifying the original order specifing the divestiture required (104 F. G 617 (1984)), the Commission has further modified the order to allow respondent to divest French Hospital in San Luis Obispo, Calif., to Summit Health Ltd. The current modified order allows respondent to retain a security interest in French Hospital until Summit finishes payment, and retain the stock of French Hospital Corp. ORDER MODIFYING MODIFIED ORDER TO CEASE AND DESIST On November 9, 1984, the Commission issued its modified order in this matter requiring, inter alia that respondent American Medical International, Inc. ("AMI" divest, absolutely and in good faith, all stock, assets, properties, licenses, leases, and other rights and privileges, tangible and intangible, that AMI acquired from Central Coast Hospital Company, French Hospital Corporation and French Medical Clinic, Inc., together with any subsequent improvements." Pursuant to the terms of Paragraph II ofthe order, AMI submitted an application requesting prior Commission approval of AMI's divestiture of French Hospital Corporation to Summit Health Ltd. ("Summit"). The application was placed on the public record for thirty days in accordance with Section 2.41 of the Commission s Rules of Practice, and no public comments were received.

Although the proposed divestiture appeared consistent with the order s express objective of"establish(ings French Hospital as a viable competitor in San Luis Obispo County, the agreement entered into between AMI and Summit varied from the provisions of Paragraph II ofthe order in certain respects. Specifically, the agreement granted AMI a security interest in the assets to be divested and an accompanying right to repossess the assets. In addition, the agreement did not provide for the transfer of the stock of French Hospital Corporation or of the data processing equipment installed by AMI at the hospital. Because it appeared that the public interest would be served by modifying the order to allow the proposed divestiture to go forward, on March 6, 1986, the Commission issued its Order To Show Cause Why Order Requiring Divestiture Should Not Be Modified ("order to show 310 Modifying Order cause ) pursuant to Section 3.72 of the Commission s Rules of Practice. The order to show cause proposed modification of Paragraph II of the order to allow AMI to retain a security interest in the assets to be divested, to require redivestiture of any assets AMI reacquires by operation of such a security interest, to delete the requirement that AMI divest the stock of French Hospital Corporation and to exclude from the assets to be divested the data processing equipment installed by AMI at French Hospital. On March 11, 1986, the order to show cause was served on AMI, and AMI answered on March 12, 1986 stating that it consents to the modifications. After reviewing AMI's answer and the materials submitted in connection with AMI's divestiture application, the Commission has concluded that the public interest warrants modifying the order as proposed in the order to show cause. As the Commission observed in the order to show cause, the proposed divestiture appears likely to advance the remedial objectives of the order. Accordingly, It is hereby ordered That pursuant to 15 U.s.C. 45(b), and Section 72 of the Commission s Rules of Practice, 16 C. R. 3. , Paragraph II of the order in this matter be modified to read as follows: It is ordered That within twelve (12) months from the date this order becomes final, AMI shall divest, absolutely and in good faith, all assets, properties, licenses, leases, and other rights and privileges tangible and intangible, that AMI acquired from Central Coast Hospital Company, French Hospital Corporation and French Medical Clin- , Inc., together with any subsequent improvements except for the stock of French Hospital Corporation and the data processing equipment installed by AMI at French Hospital. The purpose of the divestiture is to reestablish French Hospital as a viable competitor in San Luis Obispo County. The divestiture shall be subject to the prior approval of the Federal Trade Commission.

Pending divestiture, AMI shall take all measures necessary to maintain French Hospital in its present condition and to prevent any deterioration, except for normal wear and tear, of any of the assets to be divested so as not to impair French Hospital's present operating abilities or market value.

Nothing in this order shall be deemed to prohibit an eligible person from giving and AMI from accepting and enforcing a bona fide lien mortgage, deed oftrust or other form of security interest on all or any portion of the assets to be divested under the provisions of this order. If AMI accepts a security interest, in no event should such security interest be interpreted to mean that AMI has a right to participate in the operation or management of such assets. In the event that AMI Modifying Order 107 F.

as a result of the enforcement or settlement of any bona fide lien mortgage, deed of trust or other form of security interest, reacquires any of the aforementioned assets, then AMI shall promptly notify the Commission in writing and shall divest the reacquired assets in accordance with the terms of this order within twelve (12) months ofthe reacquisition.

Commissioner Strenio did not participate.

313 Complaint