Mercy-Peninsula Ambulance, Inc. v. San Mateo County

• Decision Date: 10 June 1986
• Docket Number: No. 85-1548,MERCY-PENINSULA,85-1548
• Citation: 791 F.2d 755
• Parties: 1986-1 Trade Cases 67,137 AMBULANCE, INC., Plaintiff-Appellant, v. COUNTY OF SAN MATEO, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 755

791 F.2d 755

1986-1 Trade Cases 67,137

MERCY-PENINSULA AMBULANCE, INC., Plaintiff-Appellant, v. COUNTY OF SAN MATEO, et al., Defendants-Appellees.

No. 85-1548.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Dec. 13, 1985.

Decided June 10, 1986.

Roderick G. Dorman, Dorman & Wheeler, Los Angeles, Cal., for plaintiff-appellant.

Michael Bradley, Murphy, Pearson, Bradley & Beattie, San Francisco, Cal., Thomas Fellows, San Jose, Cal., William J. Meeske, Michael J. Shockro, Lathan & Watkins, Los Angeles, Cal., Rochelle D. Alpert, Michael F. Ram, Morrison & Foerster, San Francisco, Cal., James C. Martin, Crosby, Heafey, Roach & May, Oakland, Cal., for defendants-appellees.

Appeal from the United States District Court for the Northern District of California.

Before CHOY, SKOPIL and SCHROEDER, Circuit Judges.

SCHROEDER, Circuit Judge.

Appellant Mercy-Peninsula Ambulance brought this antitrust action against San Mateo County and various medical care providers. The appellant, Mercy, operates ambulances in the county and wishes to deliver paramedic services. It challenges the county's granting of exclusive contracts to others for such services. The principal issue that we must decide is whether the challenged conduct enjoys state action immunity under the antitrust laws. The district court dismissed the action, 592 F.Supp. 956, and we affirm.

San Mateo County contracts with various emergency medical services providers to provide services pursuant to the California Emergency Medical Services Act System and the Prehospital Emergency Medical Care Personnel Act, Cal. Health and Safety Code Secs. 1797-1799.110 (West Supp.1986) ("EMS Act"). Since 1976, Mercy has contracted with the county to provide emergency ambulance services as a backup to the primary ambulance provider, Medevac. All of the relevant contracts for medical services were based upon competitive bidding and have become part of the county's implementation of the EMS Act. The Act is intended to improve the quality of emergency medical service programs through county regulation. Cal.Health and Safety Code Secs. 1797.5, 1797.200. Under the Act, passed in 1980, only qualified medical technicians certified by the county as paramedics can perform certain pre-hospital procedures, referred to in the statute as "advanced life support." Secs. 1797.84, 1797.172. Persons delivering such paramedic services must be an authorized part of the county's emergency medical services system. Sec. 1797.178. Since 1980, Mercy has sought to provide backup paramedic services in San Mateo County, but the county has refused to authorize its participation in the system as a paramedic provider.

Mercy filed this action against the county, two other ambulance services, including Medevac, and four hospitals, claiming that all of the defendants conspired to prevent Mercy's employees from providing paramedic services. Mercy does not contend that the county is required to permit all technicians who are able to pass a qualifying test to provide paramedic services. It cannot sustain such a position, for the state statute expressly contemplates counties limiting paramedic services by contracts and other means. See Cal.Health and Safety Code Secs. 1797.204; 1798.200(j). Mercy does contend that the county has been too selective. It argues that California law requires the county to authorize an otherwise-qualified entity to provide paramedic care if the entity comes within the county's system for provision of emergency medical services in any capacity. Mercy contends that the county should authorize it to provide paramedic care, and that the county's refusal is a violation both of the state EMS Act and of the federal antitrust laws.

Mercy thus challenges a selective certification and authorization system, based upon competitive bidding, which has the effect of excluding some providers. We affirm the district court's dismissal, because such exclusion is the foreseeable consequence of state policy as adopted in the EMS Act. It is therefore not subject to attack under the antitrust laws; it enjoys state action immunity under the doctrine as developed and applied in Parker v. Brown 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943) and subsequent decisions of the Supreme Court and this court.

In Parker v. Brown, the Supreme Court relied on principles of federalism and state sovereignty when it held that the Sherman Act was not intended to restrain "state action or official action directed by a state." Parker, 317 U.S. at 351, 63 S.Ct. at 313. This immunity extends to local subdivisions such as counties or municipalities when the alleged anticompetitive conduct is "pursuant to state policy to displace competition with regulation or monopoly public service." City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 413, 98 S.Ct. 1123, 1136, 55 L.Ed.2d 364 (1978). More recently, the Supreme Court has stated that the test of exemption from antitrust liability with respect to governmental subdivisions is whether the anti-competitive conduct was a foreseeable result of the authority granted by the state legislature to the locality to provide and regulate a service. Town of Hallie v. City of Eau Claire, --- U.S. ----, 105 S.Ct. 1713, 1718, 85 L.Ed.2d 24 (1985).

Hallie involved a challenge to a city's monopolization of sewage treatment services under state statutes regulating sewage service. The Court stated:

[i]t is not necessary ... for the state legislature to have stated explicitly that it expected the City to engage in conduct that would have anticompetitive effects.... [I]t is sufficient that the statutes authorized the City to provide sewage services and also to determine the areas to be served. We think it is clear that anticompetitive effects logically would result from this broad authority to regulate.

Id. 105 S.Ct. at 1718.

This court has had occasion to consider whether anti-competitive conduct on the part of local governments was subject to exemption from the antitrust laws, and in several recent cases has reaffirmed the principle that state statutes need not require anti-competitive conduct for the exemption to apply when it is apparent that anti-competitive effects would result from a broad authority to regulate. Springs Ambulance Service v. City of Rancho Mirage, 745 F.2d 1270, 1273 (9th Cir.1984) (statute providing that "city may contract for ambulance service to serve the residents of the city as convenience requires" held to demonstrate a sufficiently clear articulation of state policy to displace competition); Golden State Transit v. City of Los Angeles, 726 F.2d 1430, 1434 (9th Cir.1984), cert. denied, --- U.S. ----, 105 S.Ct. 1865, 85 L.Ed.2d 159 (1985) (statute providing for state regulation of taxicabs if cities did not regulate held to provide basis for municipality's immunity).

The statute in this case directs the counties to establish a plan for the provision and regulation of emergency medical services, including ambulance and paramedic services. Cal.Health and Safety Code Sec. 1797.204. It requires the counties to license and certify qualified paramedic personnel, Secs. 1797.210, 1797.214, and it specifically authorizes the counties to restrict and limit provision of paramedic services to persons or organizations who are "an authorized part of the emergency medical services system of the local EMS agency...." Sec. 1797.178; see also Sec. 1798.200(j). The Act requires the local emergency medical services system plan to be "based on public and private agreements...." Sec. 1797.204, and the State Emergency Medical Services Authority must review and approve the local plans. Sec. 1797.105. With respect to paramedic services, the most recent amendments to the EMS Act's provisions permit the local agency to "restrict operations to one or more ... providers of ... advanced life support." Secs. 1797.85, 1797.224. ¹ These provisions indicate that not every organization desiring to provide emergency medical services will be permitted to provide such services in San Mateo County and expressly authorize a monopoly for paramedic services.

There can thus be no question that the statute's authorization for the counties to contract for paramedic services, and to regulate those who can provide them, has a foreseeably anti-competitive effect which excludes some potential service providers. Mercy itself concedes that the foreseeable and logical result of the EMS Act's authorization to counties to develop local emergency services systems is to exclude some providers from the system. We have held as much. See, e.g., Springs Ambulance Service, Inc., 745 F.2d at 1273 (foreseeable result of authorizing city to contract for ambulance services is exclusion of ambulance providers not awarded the contract). Furthermore, the California Legislature has realized that the EMS Act reduces competition among providers of emergency medical services and might generate antitrust litigation. ² Section 1797.6(b) of the EMS...