Ropes & Gray Secures Dismissal of Closely Watched FTC Antitrust Lawsuit against WCAS

A Ropes & Gray litigation team secured a full dismissal for Welsh, Carson, Anderson & Stowe in a high-profile and closely watched antitrust lawsuit brought by the Federal Trade Commission against Welsh Carson and its portfolio company U.S. Anesthesia Partners, Inc., a prominent provider of anesthesiology services in Texas and elsewhere. The victory by the Ropes & Gray team was highlighted by The Wall Street Journal’s editorial board, “Another Lina Khan Theory Loses in Court,” (May 15, 2024).

In September 2023, the FTC filed a complaint against Welsh Carson and USAP under Section 13(b) of the FTC Act, alleging that USAP and Welsh Carson had engaged in a “multi-year anticompetitive scheme to consolidate anesthesiology practices in Texas, drive up the price of anesthesia services provided to Texas patients, and boost their own profits.” Specifically, the complaint alleged that Welsh Carson created USAP in 2012 to execute a “roll-up strategy” by which USAP would acquire large anesthesiology practices and then enter into or maintain price-setting and market allocation arrangements with its competitors. 

The FTC’s suit sought a permanent injunction preventing Welsh Carson and USAP from “engaging in similar and related conduct in the future.”

In seeking dismissal of the FTC’s complaint, Welsh Carson argued the FTC was ignoring well-established principles of corporate separateness in seeking to hold a private equity sponsor liable for the conduct of its portfolio company, which is a distinct corporate entity, and failed to meet the statutory predicate for bringing an injunctive action.

On May 13, U.S. District Judge Kenneth M. Hoyt of the Southern District of Texas granted Welsh Carson’s motion to dismiss, thereby dismissing Welsh Carson from the case.  Judge Hoyt’s decision agreed with Ropes & Gray’s arguments that the FTC had not alleged any ongoing or imminent antitrust violations by Welsh Carson and that the agency lacked authority to seek injunctive relief under Section 13(b) against an investor for actions that investor is alleged to have taken years in the past.

The Ropes & Gray team was led by litigation & enforcement partners David Hennes and Jane Willis, along with Doug Hallward-Driemeier and Kathryn Caldwell.