Johnson v. University Health Services, Inc.

• Decision Date: 03 December 1998
• Docket Number: No. 96-8787,96-8787
• Citation: 161 F.3d 1334
• Parties: 1998-2 Trade Cases P 72,358, 12 Fla. L. Weekly Fed. C 309 Cherie JOHNSON, M.D., Plaintiff-Appellant, v. UNIVERSITY HEALTH SERVICES, INC. d.b.a. University Hospital; Hossam E. Fadel, M.D.; Hossam E. Fadel, M.D., P.C., Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1334

161 F.3d 1334

1998-2 Trade Cases P 72,358, 12 Fla. L.

Weekly Fed. C 309

Cherie JOHNSON, M.D., Plaintiff-Appellant, v. UNIVERSITY HEALTH SERVICES, INC. d.b.a. University Hospital Hossam E. Fadel, M.D.; Hossam E. Fadel, M.D P.C., Defendants-Appellees.

No. 96-8787.

United States Court of Appeals Eleventh Circuit.

Dec. 3, 1998.

Carl Mullis, J. James Johnson, Long, Aldridge & Norman, Atlanta, GA, for Plaintiff-Appellant.

R. Perry Sentell, III, Raymond G. Chadwick, Kilpatrick & Cody, Augusta, GA, for Defendants-Appellees.

John C. Bell, Jr., Bell & James, Augusta, GA, for Fadel.

Appeal from the United States District Court for the Southern District of Georgia.

Before TJOFLAT, BIRCH and MARCUS, Circuit Judges.

TJOFLAT, Circuit Judge:

The plaintiff in this case claims that a hospital's refusal to provide her with over $1 million to start her own private practice constitutes a violation of the antitrust laws. We disagree, and thus affirm the judgment of the district court.

I.

Cherie Johnson, M.D., is a perinatologist, which is an obstetrician who specializes in high-risk pregnancies. She was recruited in May 1992 by Hossam E. Fadel, M.D. (a fellow perinatologist), to work for his obstetrics/perinatology practice in Augusta, Georgia. Dr. Fadel is a member of the obstetrics department of University Hospital in Augusta, which is run by the non-profit University Health Services (UHS).

Only a few months into her employment, Dr. Johnson became dissatisfied with her position. Her primary dissatisfaction was based on the low number of new patients that Dr. Fadel allowed her to admit to University Hospital. According to Dr. Johnson, it was important that she admit a large number of new patients in order to become a board certified perinatologist; Dr. Fadel was not permitting her to admit patients in sufficient numbers to allow her to qualify for certification as quickly as she would have liked. This violated Dr. Fadel's oral promise, made prior to the commencement of her employment, that he would allow Dr. Johnson to admit all of the practice's new patients. ¹ Dr. Johnson also had concerns regarding the quality of care provided by Dr. Fadel to his patients.

In response to these problems, Dr. Johnson considered opening her own perinatology practice in Augusta. She spoke with Clyburn Davis, a physician recruiter at UHS, and Lou Imbrogno, UHS' Vice President of Physician Services, about the possibility of receiving financial assistance from UHS in setting up her own practice. These individuals led her to believe that UHS would provide her with financial support to open her own practice should she be unable to work out her differences with Dr. Fadel. Specifically, by April 1993, Dr. Johnson claims to have been promised an $800,000 line of credit, an income guarantee of $200,000 for her first year of practice, ² an income guarantee of $250,000 for her second year of practice, loan forgiveness if she practiced in Augusta for two years and agreed to treat Medicare and Medicaid patients, office space, staff, and medical equipment. UHS, however, insisted that Dr. Johnson inform Dr. Fadel that she was considering other alternatives before it would provide any assistance.

Dr. Johnson's subsequent discussions with Dr. Fadel proved unhelpful; in response, UHS organized a meeting of the obstetrics department to discuss the situation. At the meeting, Drs. Johnson and Fadel both made oral presentations. The department then discussed the matter privately, and voted against subsidizing the establishment of a separate practice for Dr. Johnson. ³ Later that day, Dr. Fadel terminated Dr. Johnson's employment with his practice. She subsequently joined a perinatology practice in Spokane, Washington.

Dr. Johnson then sued Dr. Fadel and UHS in the United States District Court for the Southern District of Georgia. ⁴ She brought five claims. First, Dr. Johnson claimed that Dr. Fadel and UHS conspired to restrain trade in violation of section 1 of the Sherman Act, 15 U.S.C. § 1 (1994), by preventing her from starting her own practice in competition with Dr. Fadel. Second, Dr. Johnson claimed that Dr. Fadel violated section 2 of the Sherman Act, 15 U.S.C. § 2 (1994), by monopolizing the practice of perinatology in the Augusta market. Third, Dr. Johnson claimed that UHS breached its contractual agreement to provide her with a financial assistance package to start her own perinatology practice. Fourth, as an alternative claim to breach of contract, Dr. Johnson claimed that UHS was estopped from refusing to provide her with financial assistance under the doctrine of promissory estoppel. Fifth, Dr. Johnson claimed that Dr. Fadel fraudulently induced her to come to Augusta and work for him by giving her the false promise that he would allow her to admit all of the practice's new patients.

The district court granted summary judgment for the defendants on all counts. ⁵ Dr. Johnson appeals.

II.

In this part, we address each of Dr. Johnson's claims. We conclude that they are without merit, and thus affirm the judgment of the district court.

A.

Dr. Johnson's first two causes of action are antitrust claims. We hold that she lacks standing to bring these claims.

Any cause of action, whether created by statute or common law, is designed to protect a certain class of people from certain types of injury. For instance, "breach of contract" is designed to protect parties to a contract (the class) from noncompliance with the terms of their contract (the type of injury). If A violates his supply contract with B, C cannot sue A for breach of contract because C is not a party to the contract, and thus not among the class of people protected by breach of contract. Likewise, if A assaults B, B cannot then sue A for breach of contract, because B's injury does not arise from noncompliance with the contract and thus B has not suffered the type of injury against which breach of contract protects. These two facets of a cause of action--class of plaintiff and type of injury--are the basis for the requirement that a plaintiff have "standing."

In antitrust law, the type of injury against which the law protects is unhelpfully called "antitrust injury." See Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 697, 50 L.Ed.2d 701 (1977). What constitutes an antitrust injury is of course determined by the intent of the antitrust laws--in this case, the Sherman Act. See Todorov v. DCH Healthcare Auth., 921 F.2d 1438, 1449 (11th Cir.1991). The Sherman Act, which the Supreme Court has called "the Magna Carta of free enterprise," was intended to protect "the economic freedom of participants in the relevant market." Associated Gen. Contractors of Cal., Inc. v. California State Council of Carpenters, 459 U.S. 519, 538 & n. 38, 103 S.Ct. 897, 908 & n. 38, 74 L.Ed.2d 723 (1983) (quoting United States v. Topco Assocs., Inc., 405 U.S. 596, 610, 92 S.Ct. 1126, 1134, 31 L.Ed.2d 515 (1972)). Thus, antitrust injuries include only those injuries that result from interference with the freedom to compete.

In this case, absolutely no one interfered with Dr. Johnson's freedom to compete in the Augusta market as an obstetrician/perinatologist. On the contrary, even after deciding to deny Dr. Johnson her requested funding, UHS allowed Dr. Johnson to retain her privileges at University Hospital, offered to help her obtain a commercial loan and office space, and encouraged her to stay in Augusta. Neither UHS not Dr. Fadel did anything to impede Dr. Johnson's access to the necessary resources to start her own practice--she had full access to the capital markets, the labor market, land for office space, necessary supplies, and so forth. ⁶ Dr. Johnson could have even taken any patients that were willing to follow her away from Dr. Fadel's practice, because her employment contract did not contain a covenant not to compete. In sum, the evidence demonstrates that Dr. Johnson had every opportunity to enter and be fully competitive in the Augusta obstetrics/perinatology market; she simply chose not to do so.

The only "injury" that Dr. Johnson alleges is that UHS failed to confer an extraordinary benefit upon her. ⁷ UHS is a private, non-profit organization that generally is free to spend its money however it chooses, consistent with its non-profit purposes. Its decision not to subsidize Dr. Johnson's proposed practice is not the type of injury that the antitrust laws were intended to prevent. We therefore affirm the district court's grant of summary judgment on Dr. Johnson's antitrust claims.

B.

Dr. Johnson claims that her discussions with UHS officials regarding financial assistance were sufficient to create a contract, and that UHS breached that contract by ultimately deciding not to provide her with any such assistance. We hold that this claim is barred by the statute of frauds.

Georgia's statute of frauds provides, inter alia, that an "agreement that is not to be performed within one year from the making thereof" must be in writing. See Ga.Code Ann. § 13-5-30(5) (1982). Dr. Johnson concedes that the purported contract is not in writing; the question thus becomes whether the alleged contract was to be performed more than one year from its making. According to Dr. Johnson, UHS promised her the following: an $800,000 line of credit, an income guarantee of $200,000 for her first year of practice, an income guarantee of $250,000 for her second year of practice, loan forgiveness if she practiced in Augusta for two years and agreed to treat Medicare and Medicaid patients, office space, staff, and medical equipment. Dr. Johnson does not state exactly what she was required to do in exchange for this package of benefits (with the exception of the conditions on loan forgiveness), but presumably she was expected to open a perinatology practice in Augusta.

Certain of UHS' promises clearly could not have been performed within one year from the making of the...