Yetter Coleman Crushes FTC Case, Private Equity Firm Walks Free After $500M Antitrust Victory Over “Roll-Up” Claims
Yetter Coleman wiped out the FTC’s antitrust lawsuit against private equity firm Welsh Carson in May 2024, delivering a stunning blow to federal regulators targeting minority investors. Judge Kenneth Hoyt ruled Welsh Carson’s 23% minority stake in U.S. Anesthesia Partners (USAP) didn’t violate antitrust law, throwing out the FTC’s “roll-up” monopolization theory. The decision protects private equity firms from liability when they hold non-controlling stakes in portfolio companies.
Yetter Coleman then crushed a follow-up $500 million class action lawsuit in September 2024, getting every claim against Welsh Carson dismissed with prejudice.
What Is The Yetter Coleman Case About?
The Yetter Coleman case refers to Houston litigation boutique Yetter Coleman LLP’s representation of Welsh Carson in two major antitrust lawsuits. Both cases alleged Welsh Carson orchestrated an illegal “roll-up” scheme to monopolize Texas anesthesiology services through its portfolio company USAP.
The FTC sued Welsh Carson and USAP in September 2023, alleging they “engaged in an anticompetitive roll-up strategy to monopolize the market for commercially insured hospital-only anesthesia services in Texas.” The agency claimed Welsh Carson created USAP in 2012 and systematically bought “nearly every large anesthesia practice in Texas” to drive up prices.
Six weeks after the FTC filed suit, benefits funds for two Houston unions filed a class action seeking treble damages plus injunctive relief, leveraging the FTC’s allegations.
Yetter Coleman partner Paul Yetter led the defense team that secured dismissals in both cases within 12 months.
What Were The Facts And Circumstances?
Welsh Carson formed USAP in 2012 as an acquisition platform for anesthesia practices. Welsh Carson created USAP and guided its initial strategy to acquire anesthesia groups in Texas, but Welsh Carson and its funds sold off their controlling stake in USAP in 2017.
By the time of the FTC lawsuit, Welsh Carson had whittled down its ownership from more than 50% to 23% and appointed only two of 14 board members. Despite this minority position, the FTC argued Welsh Carson “remained in effective control” of USAP’s alleged ongoing violations.
The FTC’s complaint centered on three anticompetitive practices:
- Market consolidation: Acquiring nearly every major Texas anesthesia practice to create dominant market power
- Price-fixing: Implementing price-setting agreements that drove up costs for patients, employers, and insurers
- Market allocation: Colluding with rivals to divide markets illegally
According to the FTC, USAP is the largest anesthesia practice in Texas and leveraged its size to raise prices, resulting in patients, employers, and insurers paying tens of millions of dollars more each year for services.
Understanding antitrust litigation requires examining how courts evaluate corporate structure and control.
What Legal Claims Were Made Against Welsh Carson?
The FTC brought claims under Section 13(b) of the FTC Act, seeking injunctive relief to stop alleged ongoing and future antitrust violations. The agency made two primary arguments:
Ongoing Violation Theory: The FTC argued that 1) receiving profits from an entity that may be violating antitrust laws and 2) continuing to hold stock in USAP constituted ongoing antitrust violations.
Future Violation Theory: The FTC claimed Welsh Carson executives’ comments expressing interest in consolidating other healthcare markets demonstrated the firm was “about to violate” antitrust laws through future roll-ups.
Welsh Carson’s defense, led by Yetter Coleman, countered with three arguments:
- The FTC lacked authority under Section 13(b) to address past conduct rather than ongoing violations
- Allegations of future violations were “purely hypothetical” speculation
- The FTC conflated Welsh Carson with USAP, disregarding corporate separateness and failing to show any Welsh Carson entity engaged in anticompetitive conduct
The class action plaintiffs alleged similar claims seeking treble damages for economic harm from alleged price increases.
What Did The Court Decide?
On May 13, 2024, the court granted Welsh Carson’s motion to dismiss. Judge Hoyt issued a decisive ruling addressing each FTC theory:
Profits Don’t Equal Ongoing Violations: The court found that receiving profits from an entity that may be violating antitrust laws is not an ongoing antitrust violation. “Profits, sales, and other benefits accrued as the result of an initial wrongful act are not treated as ‘independent acts.'”
Minority Stakes Don’t Establish Control: The district court noted that the FTC failed to cite a single case where a minority, noncontrolling investor was held liable for anticompetitive conduct of the company it partially owned.
Speculation Insufficient: If Welsh Carson signals “beyond mere speculation and conjecture” that it’s actually about to violate the law, the FTC can lodge a new lawsuit, the judge wrote.
The court allowed the FTC’s case against USAP itself to proceed, finding “The FTC has plausibly alleged acquisitions resulting in higher prices for consumers, along with a market allocation and price-setting scheme.”
In September 2024, Yetter Coleman secured dismissal with prejudice of the class action, completing Welsh Carson’s victories.
For similar business litigation defense strategies, corporate structure analysis proves critical.
Why Did The Court Rule This Way?
Judge Hoyt’s reasoning established clear boundaries for private equity antitrust liability based on ownership structure and timing.
Corporate Separateness Matters: The court emphasized that minority investors remain distinct legal entities from their portfolio companies. The ruling makes clear that Section 13(b) should not be used to expand antitrust liability to reach active minority investors in subsidiary companies alleged to violate antitrust law.
Timing Is Critical: While Welsh Carson created USAP and guided its initial strategy to acquire anesthesia groups in Texas, Welsh Carson sold off their controlling stake in 2017. The remaining minority ownership stake of 23% led the judge to find there was no ongoing or likely future antitrust violation.
Past Acts vs. Ongoing Conduct: Courts distinguish between past completed actions and continuing violations. Merely benefiting from past conduct doesn’t constitute present law-breaking.
The decision rejected the FTC’s attempt to hold passive minority investors responsible for active company operations they no longer control.
What Are The Legal Implications For Private Equity?
The Yetter Coleman victory establishes crucial precedent protecting minority investors from derivative antitrust liability.
Minority Investor Shield: The decision shows that courts continue to check attempts by the FTC and DOJ to push the boundaries of antitrust enforcement. Private equity firms with non-controlling stakes cannot be held liable solely for portfolio company conduct.
Acquisition Strategy Protection: Because the court’s reasoning for dismissing Welsh Carson centered on its position as a minority owner, the decision unsurprisingly would not shield majority owners from similar antitrust enforcement actions.
HSR Threshold Considerations: The ruling doesn’t eliminate antitrust risk for roll-up acquisitions below Hart-Scott-Rodino filing thresholds. Firms must still evaluate individual transactions for competitive effects.
Understanding contract law implications helps structure private equity deals to minimize regulatory exposure.
What Precedent Does This Case Set?
The Yetter Coleman case creates binding precedent in the Southern District of Texas and persuasive authority nationwide on private equity antitrust exposure.
Corporate Veil Reinforcement: Courts will respect corporate separateness between PE firms and portfolio companies when there’s no direct control or participation in alleged violations.
Control Threshold: Welsh Carson appointed only two of 14 board members, establishing that board representation alone doesn’t establish control sufficient for liability.
Profit Participation: Passive receipt of profits from potentially anticompetitive conduct doesn’t constitute active participation in violations.
Judge Hoyt determined that the FTC’s more appropriate antitrust attack against Welsh Carson was on its initial acquisition of an anesthesiology practice in Texas, rather than in the subsequent purchases technically done by USAP.
This guidance directs future enforcement focus toward controlling investors at the time of alleged violations rather than passive minority holders.
How Did The FTC Respond?
Despite the federal court defeat, the FTC pursued alternative enforcement. In January 2025, the FTC announced a settlement with Welsh Carson that resolves a potential second, administrative antitrust case.
The consent order requires Welsh Carson to:
- Freeze investment in USAP at current levels
- Reduce board representation to a single, non-chair seat
- Obtain prior FTC approval for future anesthesia investments nationwide
- Provide 30-day advance notice for hospital-based physician practice transactions
Welsh Carson stated: “In a last-minute effort to claim a political victory, the outgoing FTC leadership threatened to re-litigate in its captive administrative court the exact same overreaching claims dismissed by an independent federal judge unless we agreed to a settlement by Inauguration Day.”
The settlement allows the FTC to save face while Welsh Carson avoids protracted administrative litigation, though the firm maintains the restrictions don’t materially affect its business.
What Are Common Misconceptions About This Case?
Misconception #1: The ruling endorses roll-up strategies
The court didn’t validate roll-up acquisitions as competitive. The government’s suit against USAP was allowed to continue, with the court finding USAP’s “monopolization scheme remains intact.” The ruling addresses liability scope, not conduct legality.
Misconception #2: Private equity has blanket immunity
The decision would not shield majority owners from similar antitrust enforcement actions. Controlling investors remain exposed to liability for portfolio company violations.
Misconception #3: The FTC lost completely
While Welsh Carson won dismissal, the FTC’s USAP case continues, and the agency secured restrictive settlement terms limiting Welsh Carson’s future healthcare investments.
Misconception #4: All minority stakes are protected
Courts will examine actual control regardless of ownership percentage. Active participation in anticompetitive strategy can pierce the corporate veil even with minority holdings.
What Are The Practical Implications For Similar Cases?
The Yetter Coleman victory provides defensive playbook for private equity firms facing antitrust scrutiny over portfolio company conduct.
Structural Defenses: Maintaining clearly documented minority status with limited board representation creates strong immunity from derivative liability claims.
Timing Documentation: Establishing when controlling stakes were sold and decision-making authority transferred proves critical to defeating ongoing violation theories.
Passive Investor Posture: Avoiding active involvement in portfolio company strategy after selling control strengthens separateness arguments.
Despite the FTC’s setback, the agencies are likely to continue to probe minority holdings for conduct that may violate antitrust laws.
Future enforcement will likely target:
- Majority owners during acquisition periods
- Minority holders exercising operational control
- Initial formation transactions creating dominant market positions
- Coordinated conduct between PE firms and portfolio companies
What Recent Developments Affect This Case?
In May 2025, the FTC finalized a consent order with Welsh Carson. The settlement puts restrictions on future deals but lets Welsh Carson keep its minority USAP stake and continue healthcare investments with regulatory oversight.
Yetter Coleman achieved other major victories in 2024, including a reversal on appeal of a $1.6 billion judgment against IBM and securing a dismissal in a billion-dollar oil and gas lease dispute.
The firm’s success rate in high-stakes commercial litigation has attracted national attention as a model for boutique litigation practice focused exclusively on trial work.
Frequently Asked Questions
What is the Yetter Coleman lawsuit about?
The Yetter Coleman case refers to the litigation boutique’s representation of Welsh Carson in defeating two antitrust lawsuits. The FTC sued Welsh Carson in September 2023 for allegedly orchestrating a “roll-up” scheme to monopolize Texas anesthesia services through portfolio company USAP. A class action followed six weeks later. Yetter Coleman secured complete dismissals in both cases by May 2024 and September 2024.
What did the court decide in the Welsh Carson case?
Judge Kenneth Hoyt dismissed the FTC’s lawsuit against Welsh Carson in May 2024, ruling that Welsh Carson’s 23% minority stake in USAP didn’t constitute ongoing antitrust violations. The court held that receiving profits from a portfolio company isn’t an independent antitrust violation and that the FTC failed to show Welsh Carson was about to violate antitrust laws. The case against USAP itself continues.
What are the legal implications for private equity firms?
The ruling shields minority investors from derivative antitrust liability for portfolio company conduct. Private equity firms holding non-controlling stakes with limited board representation cannot be held liable solely for their portfolio companies’ alleged violations. However, majority owners and firms exercising actual control remain exposed to enforcement regardless of ownership percentage.
Why did Welsh Carson win the dismissal?
Welsh Carson prevailed because it reduced ownership from over 50% to 23% and held only two of 14 board seats by lawsuit time. The court found this minority, non-controlling position insufficient to establish ongoing violations or imminent future violations. The FTC failed to cite any case holding minority investors liable for portfolio company antitrust conduct.
What precedent does this case set?
The case establishes that courts will respect corporate separateness between private equity firms and portfolio companies when the PE firm holds minority, non-controlling stakes. Passive receipt of profits doesn’t constitute active participation in violations. Future enforcement should target controlling investors at the time of alleged violations rather than passive minority stakeholders.
Did the FTC completely lose the case?
The FTC won partial victory—its case against USAP continues, with the court finding plausible allegations of anticompetitive acquisitions, price-fixing, and market allocation. In January 2025, the FTC also secured a settlement requiring Welsh Carson to freeze USAP investment, reduce board representation, and obtain prior approval for future anesthesia investments.
How does this affect roll-up acquisition strategies?
The ruling doesn’t validate roll-up strategies as competitive. Courts will still scrutinize serial acquisitions for anticompetitive effects. The decision addresses when private equity sponsors become liable for portfolio company conduct, not whether roll-ups themselves violate antitrust law. Firms conducting roll-ups below HSR thresholds must remain vigilant for antitrust risks.
Disclaimer: This information is for educational purposes only and does not constitute legal advice. Case details, legal implications, and applications vary by individual circumstances and applicable law. Consult official court resources or a qualified attorney for specific guidance regarding the Yetter Coleman case or similar antitrust matters.
About the Author
Sarah Klein, JD, is a licensed attorney and legal content strategist with over 12 years of experience across civil, criminal, family, and regulatory law. At All About Lawyer, she covers a wide range of legal topics — from high-profile lawsuits and courtroom stories to state traffic laws and everyday legal questions — all with a focus on accuracy, clarity, and public understanding.
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