A-1 Ambulance Service, Inc. v. County of Monterey, A-1

• Decision Date: 31 July 1996
• Docket Number: 94-16817,Nos. 94-16704,A-1,s. 94-16704
• Citation: 90 F.3d 333
• Parties: 96 Daily Journal D.A.R. 9206 AMBULANCE SERVICE, INC., a California corporation, Plaintiff-Appellee, v. COUNTY OF MONTEREY, Defendant-Appellant.AMBULANCE SERVICE, INC., a California corporation, Plaintiff-Appellant, v. COUNTY OF MONTEREY; City of Salinas, Defendants-Appellees, and The Monterey County Emergency Medical Service Agency; Robert Melton, M.D.; Kim Donnelly; Albert Maldonado; Peninsula Paramedics, a California Corporation; Brian Sinnott, Defendants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 333

90 F.3d 333

96 Daily Journal D.A.R. 9206

A-1 AMBULANCE SERVICE, INC., a California corporation, Plaintiff-Appellee, v. COUNTY OF MONTEREY, Defendant-Appellant.

A-1 AMBULANCE SERVICE, INC., a California corporation, Plaintiff-Appellant, v. COUNTY OF MONTEREY; City of Salinas, Defendants-Appellees, and The Monterey County Emergency Medical Service Agency;

Robert Melton, M.D.; Kim Donnelly; Albert

Maldonado; Peninsula Paramedics, a

California Corporation; Brian

Sinnott, Defendants.

Nos. 94-16704, 94-16817.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Jan. 10, 1996.

Decided May 7, 1996.

As Amended on Denial of Rehearing and Rehearing En Banc July

31, 1996. ^*

William K. Rentz, Deputy County Counsel, Salinas, California, for defendant-appellant-cross-appellee.

Richard P. Hill, Moody & Hill, San Francisco, California; Eugene Dong, Palo Alto, California, for plaintiff-appellee-cross-appellant.

Stephen A. Lankes, Holbrook & Lankes, Salinas, California, for defendant-appellee.

Appeals from the United States District Court for the Northern District of California William A. Ingram, District Judge, Presiding. No. CV-89-20157-WAI.

Before: ALDISERT, ^** SCHROEDER and TROTT, Circuit Judges.

TROTT, Circuit Judge:

In this case we hold that, under the state action antitrust immunity doctrine, Emergency Medical Service (EMS) agencies in California may establish exclusive operating areas for Advanced Life Support (ALS) and limited ALS ambulance service, even if the restricted market includes non-emergency ALS and limited ALS ambulance transportation between health care providers. ¹ We decline to review Monterey County's claim that the district court erred in holding that the County's ambulance service rates violated constitutional limitations on ratemaking. We affirm the district court's grant of summary judgment for the City of Salinas on A-1 Ambulance Service, Inc.'s claim that the City violated the Takings Clause. Finally, we remand for recalculation of damages.

I. State Action Antitrust Immunity

California's Emergency Medical Services System and the Prehospital Emergency Medical Care Personnel Act (EMS Act) permits counties to develop emergency medical services programs. Cal. Health & Safety Code §§ 1797-1799.200. Counties choosing to develop an EMS program must designate a local EMS agency which will have primary responsibility for the administration of emergency medical services in the county, including ambulance and paramedic services. Cal. Health & Safety Code §§ 1797.200, 1797.204. The EMS Act allows the local EMS agency to create one or more exclusive operating areas for "emergency ambulance services or providers of limited advanced life support or advanced life support". Cal. Health & Safety §§ 1797.85, 1797.224. Section 1797.6(b) explains that

It is the intent of the legislature in enacting this section and Sections 1797.85 and 1797.224 to prescribe and exercise the degree of state direction and supervision over emergency medical services as will provide for state action antitrust immunity under federal antitrust laws for actions undertaken by local governmental entities in carrying out their prescribed functions under this division.

In 1988, the Board of Supervisors of Monterey County adopted an ordinance which contemplated the initiation of a competitive process to award ambulance service providers the exclusive right to provide service in selected areas of the County. Later, the Monterey County EMS agency developed a document entitled "Request for Proposals: Exclusive Emergency/Non-Emergency Ambulance Service, Greater Salinas Area" (RFP).

In the RFP, Monterey County asked ambulance service companies to submit proposals to provide ambulance service, including 911 responses (identified in the RFP as "emergency" transports) and interfacility transfers (identified in the RFP as "non-emergency" transports), ² in the greater Salinas area. The successful bidder would be entitled to an exclusive operating area in which it would be the sole provider of all ambulance services--including both 911 responses and interfacility transfers--at the Advanced Life Support (ALS) level of care.

A-1 and a competitor both submitted proposals under the RFP. On March 10, 1989, before the proposals were opened, A-1 filed this action against Monterey County seeking, in part, to enjoin the RFP because it would grant an exclusive operating area for interfacility transfers. After a hearing, the district court issued a preliminary injunction preventing Monterey County from proceeding further with the RFP and from initiating any other RFP which included interfacility transfers in the exclusive operating area. This injunction was later made permanent. Because the district court's decision to grant the injunction rests on the interpretation of a state statute, we review de novo. Palmer v. United States, 945 F.2d 1134, 1135 (9th Cir.1991).

Section 1 of the Sherman Act states: "Every contract, combination ... or conspiracy, in restraint of trade ... is declared to be illegal." 15 U.S.C. § 1. This law applies to local governments as well as individuals and businesses. Lafayette v. Louisiana Power and Light Co., 435 U.S. 389, 408, 98 S.Ct. 1123, 1134, 55 L.Ed.2d 364 (1978). The County's RFP would restrain trade by allowing only one ALS ambulance service provider to operate in the Greater Salinas area on Monterey County. Hence, unless the County's RFP is not subject to Section 1, the Sherman Act prohibits the County from enforcing the RFP's terms.

The County argues that its actions in relation to the RFP are immune from the Sherman Act because of the state action immunity doctrine created in Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943). Under this doctrine, a local government entity may restrict trade without violating the antitrust laws if the state has "clearly articulated" its intention to allow the municipality to replace competition with regulation or monopoly power. City of Columbia v. Omni Outdoor Advertising, 499 U.S. 365, 372, 111 S.Ct. 1344, 1349, 113 L.Ed.2d 382 (1991). To meet the "clearly articulated" requirement it is not necessary for the state to expressly permit the displacement of competition. Instead, it is only required that "suppression of competition is the foreseeable result of what the statute authorizes." Id. at 372-73, 111 S.Ct. at 1350.

A-1 argued, and the district court agreed, that the California Legislature only intended to provide state action antitrust immunity for the creation of exclusive operating areas for emergency ambulance services and not for non-emergency interfacility transfers, even if these interfacility transfers are performed at the ALS or limited ALS level of care. We disagree.

Section 1797.224 permits a local EMS agency to "create one or more exclusive operating areas" for ambulance service. "Exclusive operating area" is defined as an:

area or subarea defined by the emergency medical services plan for which a local EMS agency, upon the recommendation of a county, restricts operations to one or more emergency ambulance services or providers of limited advanced life support or advanced life support.

Cal. Health & Safety Code § 1797.85. A straightforward reading of §§ 1797.85 and 1797.224 leads us to the conclusion that the California Legislature intended to allow EMS agencies to create exclusive operating areas for: (1) emergency ambulance services; (2) providers of limited advanced life support; and (3) providers of advanced life support.

On its face, therefore, the EMS Act appears to permit Monterey County to create exclusive operating areas for ALS ambulance service providers, even if the ALS ambulance service providers are engaged in non-emergency interfacility transfers. However, A-1 argues that "advanced life support" is limited to instances of "pre-hospital emergency care." We do not find this argument persuasive.

The relevant definition of advanced life support is contained in § 1797.52:

"Advanced life support" means special services designed to provide definitive prehospital emergency medical care, including, but not limited to, cardiopulmonary resuscitation, cardiac monitoring, cardiac defibrillation, advanced airway management, intravenous therapy, administration of specified drugs and other medicinal preparations, and other specified techniques and procedures administered by authorized personnel under the direct supervision of a base hospital as part of a local EMS system at the scene of an emergency, during transport to an acute care hospital, during interfacility transfer, and while in the emergency department of an acute care hospital until responsibility is assumed by the emergency or other medical staff of that hospital.

The ALS definition pertains to the level of service the ambulance provides during certain specified circumstances, including "during interfacility transfer," not the status of the patient that the ambulance transports. Therefore, even if an ambulance transports a patient who does not require emergency care, the ambulance is providing ALS service if it offers the "special services designed to provide prehospital emergency medical care" and is engaged in one of the activities listed in § 1797.52.

In short, we hold that the California Legislature intended to permit EMS agencies to create exclusive operating areas for providers of advanced life support and limited advanced life support, even when the transportation occurs during a non-emergency interfacility transfer. Therefore, state action antitrust immunity applies to Monterey County's RFP and, accordingly, we reverse the district court's permanent injunction against Monterey County. ³

II. The County's Failure to Properly Defend Its Ratemaking

for Ambulance Service

In 1981, Monterey County adopted-and has since periodically updated-its Emergency Medical Service (EMS) ordinance. Under the County's EMS ordinance, all ambulance service providers...