Huron Valley Hosp., Inc. v. City of Pontiac, 85-1693

• Decision Date: 30 May 1986
• Docket Number: No. 85-1693,85-1693
• Citation: 792 F.2d 563
• Parties: 1986-2 Trade Cases 67,192 HURON VALLEY HOSPITAL, INC., a Michigan nonprofit corporation, Plaintiff-Appellee, v. CITY OF PONTIAC, et al., Defendants, Bailus Walker, Jr.; Maurice S. Reizen, M.D.; Herman A. Ziel, M.D.; Richard Reihmer, Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 563

792 F.2d 563

1986-2 Trade Cases 67,192

HURON VALLEY HOSPITAL, INC., a Michigan nonprofit corporation, Plaintiff-Appellee, v. CITY OF PONTIAC, et al., Defendants Bailus Walker, Jr.; Maurice S. Reizen, M.D.; Herman A Ziel, M.D.; Richard Reihmer, Defendants-Appellants.

No. 85-1693.

United States Court of Appeals, Sixth Circuit.

Argued April 8, 1986.

Decided May 30, 1986.

Frank J. Kelley, Louis J. Caruso, Marvin L. Bromley, Edwin M. Bladen (argued), William E. Molner, Lansing, Mich., for defendants-appellants.

Ann C. Yahner, Kohn, Milstein, Cohen & Hausfeld, Jerry S. Cohen, Washington, D.C., John P. Morris (argued), Tempe, Ari., for plaintiff-appellee.

Before KEITH and MARTIN, Circuit Judges, and WEICK, Senior Circuit Judge.

BOYCE F. MARTIN, Jr., Circuit Judge.

Bailus Walker, Jr., Maurice Reizen, Herman Ziel, Jr. and Richard Reihmer, former employees of the Michigan Department of Public Health, attempt to appeal the district court's denial of their motions for summary judgment. 612 F.Supp. 654 (E.D.Mich.1985). They argue that under the authority of Mitchell v. Forsyth, --- U.S. ----, 105 S.Ct. 2806, 86 L.Ed.2d 411 (1985), they may appeal the district court's denial of summary judgment on the issues of qualified immunity and the state action antitrust exemption before a final judgment is rendered. The defendants further claim that the district court wrongfully deprived them of these immunities. We have jurisdiction to review only the denial of qualified immunity and we affirm the district court's denial of qualified immunity only.

Huron Valley Hospital is a Michigan nonprofit corporation that was organized in late 1975 for the purposes of constructing, owning and operating a hospital in Oakland County, Michigan. In 1976, Huron Valley filed an application for a state certificate of need under Michigan Compiled Laws sections 331.451 et seq. ¹ Huron Valley also filed, as it was required to do, for federal capital expenditure approval under section 1122 of the Social Security Amendments of 1972, 42 U.S.C. Sec. 1320a-1, with the Michigan Department of Public Health and the federally designated regional health systems agency. The Department of Public Health had been designated by the Governor of Michigan to administer the federal section 1122 program under an agreement between Michigan and the Secretary of the United States Department of Health and Human Services. ² Both applications sought permission to proceed with the construction of a 153 bed acute care hospital in Oakland County which would cost 14.789 million dollars. The applications were complete in February of 1977.

The Michigan Department of Public Health denied Huron Valley's certificate of need application. Huron Valley then requested and received a hearing before the Michigan State Health Facilities Commission seeking a reversal of this decision. The Commission affirmed the denial in January, 1980. In the meantime, on June 27, 1977, Pontiac General Hospital, an existing facility, filed a notice of intent to request a certificate of need to build a new hospital. Pontiac General's completed application was approved on August 25, 1978.

Having exhausted all of the Michigan administrative avenues, Huron Valley filed suit in the Oakland County Circuit Court which reversed the Commission on March 27, 1981, and ordered the Department of Public Health to issue a certificate of need to Huron Valley. Huron Valley Hospital, Inc. v. Michigan State Health Facilities Comm'n, Civ. Action No. 80-200439-AA (Oakland County Div.Ct. Mar. 27, 1981). The Michigan Court of Appeals affirmed the trial court's findings, holding that the Department of Public Health had based its decision upon unpublished criteria that favored the application of Pontiac General. Huron Valley Hospital, Inc. v. Michigan State Health Facilities Comm'n, 110 Mich.App. 236, 312 N.W.2d 422 (1981). The Court of Appeals held that the use of such unpublished criteria was a violation of the statutory limitations on the Department's discretion. 110 Mich.App. at 243-44, 312 N.W.2d 422. As a result, Huron Valley was deprived of an impartial review of its application in violation of its due process rights. 110 Mich.App. at 243-46, 312 N.W.2d 422. The Court ordered the issuance of the certificate of need because the Department's decision was "unsupported by competent, material, and substantial evidence." 110 Mich.App. at 251, 312 N.W.2d 422.

Following the Michigan Supreme Court's denial of the Commission's application for leave to appeal, 413 Mich. 853 (1982), the Department of Public Health issued a certificate of need to Huron Valley but limited its authorized capital expenditure to 14.789 million dollars, the amount requested in the outdated 1976 application. Huron Valley next filed a petition for clarification in the Oakland County Circuit Court and the court ordered the Department to issue a certificate of need in a reasonable amount which would allow construction of the planned facility. Huron Valley Hospital, Inc. v. Michigan State Health Facilities Comm'n, Civ. Action No. 80-200439-AA (Oakland County Civ.Ct. Oct. 21, 1982). The Department finally issued a certificate of need to Huron Valley on October 27, 1982, for 44.651 million dollars.

During the same period, Huron Valley was also discussing the federal section 1122 approval with the Michigan Department of Public Health. On February 23, 1983, the Regional Health Administrator issued a section 1122 approval after the Michigan Department of Public Health, after discussions and intervention by the Michigan Attorney General, recommended approval. Shortly thereafter, an Assistant United States Surgeon General vacated the section 1122 approval. More litigation followed in the United States District Court which ordered that the section 1122 approval be reinstated. Huron Valley Hospital, Inc. v. City of Pontiac, 585 F.Supp. 1159 (E.D.Mich.1984). Construction finally began on the hospital in 1984.

In addition to the litigation discussed earlier, Huron Valley began the present action in 1978, claiming that numerous defendants conspired to violate the antitrust laws by preventing Huron Valley from entering the Oakland County health care market. In 1979, Huron Valley sought to amend its original complaint to add 42 U.S.C. Sec. 1983 violations and to add the state defendants who are now before us. The district court did not allow the tendered amendment and granted summary judgment in favor of the various defendants. Huron Valley Hospital, INc. v. City of Pontiac, 466 F.Supp. 1301 (E.D.Mich.1979). On appeal, we disagreed and vacated the district court judgment, remanding the case for the entry of a stay pending the completion of the state administrative and judicial proceedings. Huron Valley Hospital, Inc. v. City of Pontiac, 666 F.2d 1029 (6th Cir.1981). State proceedings were complete in 1982 when the Michigan Supreme Court denied leave to appeal, thus affirming the Oakland County Circuit Court's order that a certificate of need be issued to Huron Valley Hospital.

With the present case thus reactivated, Huron Valley filed an amended complaint in 1983, adding the four defendants who now pursue this appeal. Huron Valley claims that beginning in 1976, the various defendants engaged in a general conspiracy to restrain trade in violation of section one of the Sherman Act and that certain of the defendants, including those before us on appeal, conspired to deprive Huron Valley of its fourteenth amendment due process rights in violation of 42 U.S.C. Sec. 1983.

The defendants moved the district court to dismiss this action and alternatively moved for summary judgment. The court denied the motions on various grounds, finding, among other things, that these defendants could not claim qualified immunity or the state action antitrust exemption.

Denials of summary judgment usually may not be appealed immediately because they are not "final decisions of the district courts." 28 U.S.C. Sec. 1291. The requirement of finality means that all claims must be raised in a single appeal after a judgment on the merits. Richardson-Merrell, Inc. v. Koller, --- U.S. ----, 105 S.Ct. 2757, 2760, 86 L.Ed.2d 340 (1985); Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 374, 101 S.Ct. 669, 673, 66 L.Ed.2d 571 (1981). The Supreme Court has frequently recognized the extraordinary delay and expense which would occur if immediate appeals were allowed from each and every order of the district court. United States v. Hollywood Motor Car Co., 458 U.S. 263, 265, 102 S.Ct. 3081, 3082-83, 73 L.Ed.2d 754 (1982).

For every rule, however, we generally have found a "narrow exception," Firestone, 449 U.S. at 374, 101 S.Ct. at 673, and the same is true for the finality rule of section 1291. We traditionally have not looked upon piecemeal appeals with any degree of favor. See Solomon v. Aetna Life Ins. Co., 782 F.2d 58, 60-61 (6th Cir.1986) (district court certification under Fed.R.C.P. 54(b), which governs multiple claims or claims involving multiple parties, vacated because no justification for certification given). Yet, the collateral order doctrine has evolved so that a "small class" of prejudgment orders may be appealed immediately. Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546, 69 S.Ct. 1221, 1225-26, 93 L.Ed. 1528 (1949). To be appealable, these prejudgment orders must "finally determine claims of right separable from, and collateral to, rights asserted in the action, [and must be] too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated." Id. The Supreme Court clarified this collateral order doctrine in Richardson-Merrell, Inc. v. Koller, --- U.S. ----, 105 S.Ct. 2757, 86 L.Ed.2d 340 (1985), a case holding that attorney disqualification in the civil context is not immediately appealable. "[A]t a minimum," the order must "satisfy three conditions: It must ...