Angelico v. Lehigh Valley Hospital, PANEBIANCO-YIP

• Decision Date: 10 February 1998
• Docket Number: No. 97-1927,PANEBIANCO-YIP,97-1927
• Parties: (3rd Cir. 1999) RICHARD J. ANGELICO, M.D., Appellant v. LEHIGH VALLEY HOSPITAL, INC.; SAINT LUKE'S HOSPITAL OF BETHLEHEM PENNSYLVANIA; EASTON HOSPITAL;HEART SURGEONS; BETHLEHEM CARDIOTHORACIC SURGICAL ASSOCIATES, P.C.; BRIAN M. PETERS, ESQ.; POST & SCHELL, P.C. Caption amended pursuant to
• Court: U.S. Court of Appeals — Third Circuit

Page 268

184 F.3d 268 (3rd Cir. 1999)

RICHARD J. ANGELICO, M.D., Appellant v. LEHIGH VALLEY HOSPITAL, INC.; SAINT LUKE'S HOSPITAL OF BETHLEHEM PENNSYLVANIA; EASTON HOSPITAL; PANEBIANCO-YIP HEART SURGEONS; BETHLEHEM CARDIOTHORACIC SURGICAL ASSOCIATES, P.C.; BRIAN M. PETERS, ESQ.; POST & SCHELL, P.C.

No. 97-1927

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Caption amended pursuant to 2/10/98 order

ARGUED December 4, 1998

Decided July 16, 1999

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA (D.C. No. 96-cv-02861) District Judge: The Honorable J. Curtis Joyner [Copyrighted Material Omitted]

[Copyrighted Material Omitted] Henry F. Siedzikowski, Esq. (Argued), Elliott, Reihner, Siedzikowski & Egan, 925 Harvest Drive, Union Meeting Corporate Center V, Blue Bell, PA 19422, Attorney for Appellant

Richard F. Stevens, Esq. (Argued), Stevens & Johnson, 740 Hamilton Mall, Allentown, PA 18101

Edward C. Mengel, Jr., Esq., David E. Edwards, Esq., White & Williams, One Liberty Place, Suite 1800, Philadelphia, PA 19103

Wayne A. Mack, Jr., Duane, Morris & Heckscher, 4200 One Liberty Place, Philadelphia, PA 19103-7396

Donald H. Lipson, Esq., Tallman, Hudders & Sorrentino, 1611 Pond Road, The Paragon Centre, Suite 300, Allentown, PA 18104

Mark H. Scoblionko, Esq., Scoblionko, Scoblionko, Muir & Bartholomew, 40 South 5th Street, Allentown, PA 18101

Frederick B. Buck, III, Esq., Rawle & Henderson, One South Penn Square, The Widener Building, Philadelphia, PA 19107

Jeffrey G. Weil, Esq. (Argued) Dechert, Price & Rhoads, 1717 Arch Street, 4000 Bell Atlantic Tower, Philadelphia, PA 19103, Attorneys for Appellees

BEFORE: SLOVITER, NYGAARD, and WOOD,^* Circuit Judges.

OPINION OF THE COURT

NYGAARD, Circuit Judge.

Dr. Richard Angelico appeals a summary judgment for the defendants, Lehigh Valley Hospital, St. Luke's Hospital of Bethlehem, Pennsylvania, Easton Hospital, the Panebianco-Yip Heart Surgeons, and Bethlehem Cardiothoracic Surgical Associates ("Bethlehem") (collectively, the "hospital defendants") on his antitrust claims. The District Court held that Angelico did not have standing to assert antitrust claims because he had not shown an injury to competition. We will reverse and remand for further proceedings.

Angelico also appeals the dismissal of his due process claims under 42 U.S.C. S 1983 against Brian M. Peters, Esq., his law firm Post & Schell, P.C., and the firm's client, Lehigh Valley Hospital (collectively, the "attorney defendants"). Finally, he appeals the District Court's sanction in the form of attorney's fees for Peters. We will affirm the dismissal and attorney's fees award.

I. Facts and Procedural History

Angelico is a cardiothoracic surgeon. The three hospitals are located in the Lehigh Valley area in Pennsylvania. Panebianco-Yip and Bethlehem are physician practice groups specializing in thoracic and cardiothoracic surgery in the same area. Angelico began his career in the Lehigh Valley area with a group of cardiovascular specialists and became a member of the active medical staff of Lehigh Valley Hospital, where he performed cardiothoracic surgery. Just over a year later, Angelico left his original practice group, joined Panebianco-Yip as that practice group's primary surgeon, and acquired active privileges at St. Luke's.

In 1989, Angelico resigned from Panebianco-Yip and established his own practice. He maintained his privileges at both Lehigh Valley and St. Luke's until January of 1991, when he requested that his active privileges at Lehigh Valley be reduced to "courtesy" privileges, which allowed him to perform only a limited number of operations there each year. He maintained his courtesy privileges at Lehigh Valley until October 15, 1995.

In March 1994, Angelico notified St. Luke's that he was resigning his staff privileges. He then attempted to apply for staff privileges at Easton. Easton, however, informed him that it had adopted a temporary moratorium on applications in its newly established heart program because it was considering whether to award an exclusive contract. Later, Easton informed Angelico that it had awarded an exclusive contract to another surgeon from outside of the region.

Angelico asserts that he resigned from St. Luke's because the hospital willfully failed to provide him with competent surgical support and that he was therefore constructively terminated. He further contends that the hospital defendants had a sufficient share of the relevant market to control it and that they conspired to eliminate him as a competitor through "various predatory acts," including circulating defamatory remarks regarding his interpersonal and patient care skills. Angelico claims that his courtesy privileges at Lehigh Valley were improperly terminated as a part of this conspiracy and that he has now been "blackballed" by the three hospitals.

Angelico sued the three hospitals and two practice groups, alleging that they had violated the Sherman Act by conspiring to eliminate him as a competitor. Specifically, he claims that the hospital defendants engaged in exclusive dealing and a group boycott in violation of section 1 of the Sherman Act, 15 U.S.C. S 1, and that they control a dominant (monopoly) share of the market in violation of section 2 of the Sherman Act, 15 U.S.C. S 2. He seeks treble damages under section 4 of the Clayton Act, 15 U.S.C. S 15. Angelico also argues that the attorney defendants violated his constitutional rights through their use of the state subpoena process and that the District Court improperly assessed attorney's fees against him.

The District Court dismissed Angelico's claims against the attorney defendants and granted the attorney defendants' motion for sanctions. See Angelico v. Lehigh Valley Hosp., Inc., No. Civ.A. 96-2861, 1996 WL 524112 (E.D. Pa. Sept. 13, 1996) ("Angelico I"). On Angelico's antitrust claims, the District Court granted a motion by the hospital defendants for limited discovery on the issues of antitrust standing and antitrust injury. Following discovery, the court granted the hospital defendants summary judgment on the antitrust claims, holding that Angelico had failed to establish standing to pursue them. See Angelico v. Lehigh Valley Hosp., Inc., 984 F. Supp. 308 (E.D. Pa. 1997) ("Angelico II").

The District Court noted that Angelico suffered significant lost income but held that "an injury to Dr. Angelico personally does not confer standing upon him without a showing that his absence from the relevant product and geographic markets injured competition and/or the consumers of cardiothoracic surgical services in these markets." Id. at 313. Focusing on the effect of Angelico's removal on the market, the court found "no evidence" that there were any fewer competing surgeons or that the quality of cardiothoracic care had been reduced by his absence, see id., and "insufficient evidence of a negative impact on price." Id. at 314. Based on these findings, the District Court concluded that Angelico had not "suffered the type of injury that the antitrust laws were designed to prevent . . . [or] that Dr. Angelico is the most efficient enforcer of those laws." Id.

On appeal, Angelico argues that the District Court erred by: (1) holding that he failed to establish antitrust standing because he could not show an effect on the prices, quantity or quality in the relevant market; (2) failing to declare that the hospital defendants' acts were illegal "per se"; (3) holding that he failed to state a section 1983 claim upon which relief could be granted against the attorneys for Lehigh Valley, and (4) imposing sanctions against him without holding a hearing. We have plenary review of the antitrust standing question, see McCarthy v. Recordex Serv., Inc., 80 F.3d 842, 847 (3d Cir. 1996), and of the summary judgment on Angelico's claims against the hospital defendants. See Bixler v. Central Pa. Teamsters Health & Welfare Fund, 12 F.3d 1292, 1297 (3d Cir. 1993). We review an assessment of attorney's fees for abuse of discretion if the court applied the correct legal standard. See In re Tutu Wells Contamination Litig., 120 F.3d 368, 387 (3d Cir. 1997).

II. The Antitrust claims

In this case, we must distinguish the antitrust injury that is required for a plaintiff to have standing to bring an antitrust claim from the anticompetitive market effect element of a claim under section 1, which is also generally referred to as "antitrust injury."

A. Antitrust Standing

Section 4 of the Clayton Act, 15 U.S.C. S 15, provides that "any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States . . . without respect to the amount in controversy and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee." Id. Antitrust standing, however, is narrower than the statute's wording indicates. See Associated Gen. Contractors of Cal. v. California State Council of Carpenters , 459 U.S. 519, 103 S. Ct. 897 (1983) ("AGC"); II Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles and Their Application P 360, at 192 (rev. ed. 1995) ("The limitations on antitrust standing are only hinted at by the simple and apparently broad language of S4 of the Clayton Act.").

An antitrust injury is an " `injury of the type the antitrust laws were intended to prevent and that flows from that which makes the defendants' acts unlawful.' " Cargill, Inc. v. Monfort, Inc., 479 U.S. 104, 109, 107 S. Ct. 484, 489 (1986) (citing Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S. Ct. 690, 697 (1977)); see also In re Lower Lake Erie Iron Ore Antitrust Litig., 998 F.2d 1144, 1163 n.9 (3d Cir. 1993) (standing analysis involves consideration of "the nexus between the antitrust violation and the plaintiff 's harm" and "whether the harm...