228 F.3d 429 (3rd Cir. 2000), 99-4024, Allegheny Gen. Hospital v Philip Morris Inc.

Docket Nº:ALLEGHENY GENERAL HOSPITAL; ALLEGHENY VALLEY HOSPITAL; ARMSTRONG COUNTY MEMORIAL HOSPITAL; CANONSBURG GENERAL HOSPITAL; CARBON-SCHUYLKILL COMMUNITY HOSPITAL, INC., D/B/A MINERS MEMORIAL MEDICAL CENTER; CHAMBERSBURG HOSPITAL; FORBES REGIONAL HOSPITAL; HAZLETON--ST. JOSEPH MEDICAL CENTER; LEHIGH VALLEY HOSPITAL; MUHLENBERG HOSPITAL CENTER; NORTHEASTE
Citation:228 F.3d 429
Party Name:ALLEGHENY GENERAL HOSPITAL; ALLEGHENY VALLEY HOSPITAL; ARMSTRONG COUNTY MEMORIAL HOSPITAL; CANONSBURG GENERAL HOSPITAL; CARBON- SCHUYLKILL COMMUNITY HOSPITAL, INC., D/B/A MINERS MEMORIAL MEDICAL CENTER; CHAMBERSBURG HOSPITAL; FORBES REGIONAL HOSPITAL; HAZLETON--ST. JOSEPH MEDICAL CENTER; LEHIGH VALLEY HOSPITAL; MUHLENBERG HOSPITAL CENTER; NORTHEAST
Case Date:October 06, 2000
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit
 
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228 F.3d 429 (3rd Cir. 2000)

ALLEGHENY GENERAL HOSPITAL; ALLEGHENY VALLEY HOSPITAL; ARMSTRONG COUNTY MEMORIAL HOSPITAL; CANONSBURG GENERAL HOSPITAL; CARBON- SCHUYLKILL COMMUNITY HOSPITAL, INC., D/B/A MINERS MEMORIAL MEDICAL CENTER; CHAMBERSBURG HOSPITAL; FORBES REGIONAL HOSPITAL; HAZLETON--ST. JOSEPH MEDICAL CENTER; LEHIGH VALLEY HOSPITAL; MUHLENBERG HOSPITAL CENTER; NORTHEASTERN PENNSYLVANIA CORPORATION, D/B/A HAZLETON GENERAL HOSPITAL; SAINT LUKE'S HOSPITAL OF BETHLEHEM; SAINT LUKE'S -- ALLENTOWN CAMPUS; ST. LUKE'S QUAKERTOWN HOSPITAL; SAINT VINCENT HEALTH CENTER; WAYNESBORO HOSPITAL,

V.

PHILIP MORRIS, INC.; R.J. REYNOLDS TOBACCO COMPANY; BROWN & WILLIAMSON TOBACCO CORPORATION; B.A.T. INDUSTRIES, PLC; THE AMERICAN TOBACCO COMPANY, INC., C/O BROWN & WILLIAMSON TOBACCO CORPORATION; LORILLARD TOBACCO COMPANY; LIGGETT GROUP, INC.; UNITED STATES TOBACCO COMPANY; TOBACCO INSTITUTE, INC.; THE COUNCIL FOR TOBACCO RESEARCH--USA, INC.; SMOKELESS TOBACCO COUNCIL, INC.; HILL & KNOWLTON, INC.,

ALLEGHENY GENERAL HOSPITAL; ALLEGHENY VALLEY HOSPITAL; ARMSTRONG COUNTY MEMORIAL HOSPITAL; CANONSBURG GENERAL HOSPITAL; CARBON-SCHUYLKILL COMMUNITY HOSPITAL, INC., D/B/A MINERS MEMORIAL MEDICAL CENTER; CHAMBERSBURG HOSPITAL; FORBES REGIONAL HOSPITAL; HAZLETON--ST. JOSEPH MEDICAL CENTER; LEHIGH VALLEY HOSPITAL; MUHLENBERG HOSPITAL CENTER; NORTHEASTERN PENNSYLVANIA CORPORATION, D/B/A HAZLETON GENERAL HOSPITAL; SAINT LUKE'S HOSPITAL OF BETHLEHEM; SAINT LUKE'S--ALLENTOWN CAMPUS; ST. LUKE'S QUAKERTOWN HOSPITAL; SAINT VINCENT HEALTH CENTER; WAYNESBORO HOSPITAL, APPELLANTS IN 99-4024,

ARMSTRONG COUNTY MEMORIAL HOSPITAL; CARBON-SCHUYLKILL COMMUNITY HOSPITAL, INC., D/B/A MINERS MEMORIAL MEDICAL CENTER; CHAMBERSBURG HOSPITAL; HAZLETON--ST. JOSEPH MEDICAL CENTER; LEHIGH VALLEY HOSPITAL; MUHLENBERG HOSPITAL CENTER; NORTHEASTERN PENNSYLVANIA CORPORATION, D/B/A HAZLETON GENERAL HOSPITAL; SAINT LUKE'S HOSPITAL OF BETHLEHEM; SAINT LUKE'S-- ALLENTOWN CAMPUS; ST. LUKE'S QUAKERTOWN HOSPITAL; SAINT VINCENT HEALTH CENTER; WAYNESBORO HOSPITAL, APPELLANTS IN 00-3101,

ALLEGHENY GENERAL HOSPITAL; ALLEGHENY VALLEY HOSPITAL; CANONSBURG GENERAL HOSPITAL; FORBES REGIONAL HOSPITAL, APPELLANTS IN 00-3102.

Nos. 99-4024, 00-3101 and 00-3102

United States Court of Appeals, Third Circuit

October 6, 2000

Submitted Under Third Circuit LAR 34.1(a) July 19, 2000

ON APPEAL FROM THE ORDER OF THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA, D.C. Civ. No: 99-9, District Court Judge: The Honorable Donetta W. Ambrose

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Attorneys For Appellants: Terrence J. O'Rourke Sean O. Sheridan Melissa L. Staggers Nash & Company, P.C. 11 Stanwix Street Suite 700 Pittsburgh, PA 15222

Attorneys For Appellees Philip Morris, Inc. And Brown & Williamson Tobacco Corporation: Kenneth J. Parsigian, Christopher D. Moore Goodwin, Proctor & Hoar, Llp Exchange Place Boston, MA 02109, Kevin C. Harkins, Cohen & Grigsby, P.C. 11 Stanwix Street 15th Floor Pittsburgh, PA 15222

Attorney For Appellee R.J. Tobacco Company: Scott D. Livingston, Marcus & Shapira, Llp 301 Grant Street One Oxford Centre, 35th Floor Pittsburgh, PA 15219

Attorney For Appellee B.A.T. Industries P.L.C..: Thomas Finarelli Lavin, Coleman, O'Neil, Ricci, Finarelli & Gray 510 Walnut Street 1200 Penn Mutual Towers Philadelphia, PA 19106

Attorneys For Appellees The Tobacco Institute And Lorillard Tobacco Company: Howard M. Klein William J. O'Brien Conrad, O'Brien, Gellman & Rohn, P.C. 1515 Market Street 16th Floor Philadelphia, PA

Attorney For Appellee United States Tobacco Company: Stephen J. Imbriglia Hecker, Brown, Sherry & Johnson 18th & Arch Streets 1700 Two Logan Square Philadelphia, PA 19103

Attorney For Appellee The Council For Tobacco Research-usa, Inc.: Patrick W. Kittredge Kittredge, Donley, Elson, Fullem & Embick 421 Chestnut Street Fifth Floor Philadelphia, PA 19106

Attorneys For Appellee Smokeless Tobacco Council, Inc.: Wilbur L. Kipnes Schnader Harrison Segal & Lewis, Llp 1600 Market Street Suite 3600 Philadelphia, PA 19103, John K. Gisleson Schnader, Harrison, Segal & Lewis, Llp 120 Fifth Avenue Fifth Avenue Place, Suite 2700 Pittsburgh, PA 15222

Attorney For Appellee Hill & Knowlton, Inc.: Richard L. Kremnick Blank, Rome, Comiskey & McCauley, Llp One Logan Square Philadelphia, PA 19103

Attorney For Appellee Liggett Group, Inc.: J. Kurt Straub Obermayer, Rebmann, Maxwell & Hipple 1617 John F. Kennedy Blvd. One Penn Center, 19th Floor Philadelphia, PA 19103

Before: Sloviter, Nygaard, and Fuentes, Circuit Judges

OPINION FOR THE COURT

Fuentes, Circuit Judge

Sixteen Pennsylvania hospitals brought this suit against various tobacco companies and their trade associations, seeking to recover unreimbursed costs of health care provided to nonpaying patients suffering from tobacco-related disease. The hospitals alleged that the tobacco companies engaged in a conspiracy lasting more than 40 years to manipulate the nicotine content in cigarettes and other tobacco products. They alleged that the tobacco companies deceived and misled the public about the addictive properties of nicotine and the health risks of smoking. As a result,

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many people used tobacco and developed lung cancer and other tobacco-related illnesses. The hospitals expended significant resources treating these tobacco users, and now seek recovery of their expenses under federal antitrust and RICO provisions, as well as state common law theories.

In Steamfitters Local Union No. 420 Welfare Fund v. Philip Morris, Inc., 171 F.3d 912, 917-18 (3d Cir. 1999), cert. denied, 120 S.Ct. 844 (2000) [hereinafter Steamfitters], this Circuit affirmed the dismissal of similar claims brought by union health and welfare funds, reasoning that the funds' injuries were too remote from, and not proximately caused by, the tobacco companies' alleged wrongdoing. Relying on Steamfitters, the District Court dismissed the hospitals' claims. The hospitals appeal. We hold that because the hospitals' damages are too speculative and their injuries are too remote from the tobacco companies' alleged wrongdoing, proximate cause is lacking, and thus the hospitals do not have standing to sue. We therefore affirm.

I. Factual Background and Procedural History

The appellants are sixteen charitable not-for-profit Pennsylvania hospitals (the "Hospitals").1 They are licensed under the Pennsylvania Health Care Facilities Act, 35 Pa. Cons. Stat. SS 448.101-448.904b, and are required by Pennsylvania law to provide health care to Medicaid, medically indigent, and nonpaying patients (collectively "nonpaying patients"), see 35 Pa. Cons. Stat. S 449.8(a). The Commonwealth of Pennsylvania does not fully reimburse the Hospitals for health care provided to these patients. The Hospitals therefore bear the financial burden of their care. The defendants are various producers of tobacco products and their trade associations (the "Tobacco Companies").2

The Hospitals allege that, over a 40 year period, the Tobacco Companies conspired to conceal from the public the medical risks and addictive nature of tobacco and to limit information that might reduce the sales of tobacco products. This effort involved the suppression of scientific research on safer tobacco products and on methods of reducing individual consumption. It also involved false affirmative representations of tobacco use as a safe or even beneficial activity. The Hospitals allege that, as a result of this conspiracy, millions of Americans smoked, chewed, and snuffed tobacco. Many developed lung cancer, oral cancer, heart disease, and a host of other serious afflictions. Some tobacco users had health insurance or the resources to pay for treatment. But others, for whatever reason, were medically indigent and could not afford health care -- i.e., the nonpaying patients.

The Tobacco Companies allegedly knew that the burden of treating these patients would fall on direct health care providers,

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such as the Hospitals. In fact, the Hospitals claim that from the inception of the conspiracy, the Tobacco Companies intended to shift to the Hospitals the cost of diagnosing and treating tobacco-related diseases suffered by nonpaying patients. They do not claim that the Tobacco Companies are legally liable to the tobacco users themselves. Rather, the Tobacco Companies are allegedly liable to the Hospitals for the Hospitals' unreimbursed expenses, which reportedly amounted to millions of dollars each year.

The Hospitals' allegations encompass two theories-- an indirect injury theory and a direct injury theory.3 Under the indirect injury theory, the Hospitals allege that, through deception, the Tobacco Companies caused nonpaying patients to smoke, inducing significant tobacco-related diseases. The law required the Hospitals to provide treatment to these patients regardless of their ability to pay for it. The Hospitals therefore reason that the Tobacco Companies' wrongful acts increased the unreimbursed costs the Hospitals incurred.

Under the direct injury theory, the Hospitals allege that the Tobacco Companies' conspiracy to conceal information about the risks of tobacco, and to prevent the development of safer cigarettes and alternative nicotine delivery devices, hampered the Hospitals' efforts to reduce tobacco consumption among nonpaying patients. In other words, if the Tobacco Companies had not conspired, the Hospitals could have more effectively counseled patients to quit smoking or use safer products, reducing the health care costs of treating tobacco-related disease.

The Hospitals seek recovery under various legal theories, including claims under federal antitrust laws, 15 U.S.C...

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