Ass'n of Am. Physicians & Surgeons v. Am. Bd. of Med. Specialties, 100821 FED7, 20-3072

CourtUnited States Court of Appeals (7th Circuit)
JudgeBefore Brennan, Scudder, and St. Eve, Circuit Judges.
Writing for the CourtSCUDDER, CIRCUIT JUDGE.
PartiesAssociation of American Physicians & Surgeons, Incorporated, Plaintiff-Appellant, v. American Board of Medical Specialties, Defendant-Appellee.
Docket Number20-3072

Association of American Physicians & Surgeons, Incorporated, Plaintiff-Appellant,

v.

American Board of Medical Specialties, Defendant-Appellee.

No. 20-3072

United States Court of Appeals, Seventh Circuit

October 8, 2021

Argued September 15, 2021

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:14-cv-02705 - Martha M. Pacold, Judge.

Before Brennan, Scudder, and St. Eve, Circuit Judges.

SCUDDER, CIRCUIT JUDGE.

In

Bell Atlantic Corp. v. Twombly, the Supreme Court considered whether a complaint alleging a violation of § 1 of the Sherman Act "can survive a motion to dismiss when it alleges that major telecommunications providers engaged in certain parallel conduct unfavorable to competition, absent some factual context suggesting agreement, as distinct from identical, independent action." 550 U.S. 544, 548-49 (2007). The Court held that such a complaint "must be dismissed" for failure to allege "enough facts to state a claim to relief that is plausible on its face." Id. at 570.

Swap major telecommunications providers for hospitals, insurers, and the American Board of Medical Specialties, add an accompanying state-law deceptive trade practices claim, and you get this case. The Association of American Physicians & Surgeons has alleged that the Board orchestrated a nationwide conspiracy to restrain trade in the market for medical care. But its complaint comes nowhere close to stating a claim under the standard announced in Twombly. The district court was right to dismiss the case.

I

The Association of American Physicians & Surgeons, or AAPS, is a nonprofit membership organization of physicians and surgeons. The American Board of Medical Specialties, which we call the Board, is a nonprofit provider of medical certification services and itself an umbrella organization for 24 member boards, each dedicated to a particular medical practice area. The Board deems physicians who meet its requirements to be "Board certified."

Board certification is not a one-and-done process. To remain certified, physicians must comply with the Board's Maintenance of Certification (or MOC) program and the annual continuing-education requirements that come with it. According to AAPS, the MOC program does not measurably improve the quality of medical care and instead results in unnecessary expenditures of time and money for physicians. All else equal, AAPS says, its member physicians would not participate in the program.

But AAPS insists all else is not equal. True, all states permit physicians who choose not to become (or remain) Board certified to practice medicine. But according to AAPS's complaint, the Board has conspired with hospitals and health insurers nationwide to condition the granting of staff privileges and in-network status on physicians' continued participation in the MOC program. As a practical mater, AAPS says, physicians find themselves forced to participate in the program to practice medicine, at least if they wish to do so in hospitals or to accept certain forms of insurance.

A

AAPS claims this alleged arrangement violates the Sherman Act. Its initial complaint focused on the market for medical care in hospitals. Invoking § 1 of the Sherman Act, AAPS alleged that the Board had agreed with its member boards and with a standard-setting organization called the Joint Commission to make participation in the MOC program a requirement for hospital staff privileges. AAPS paired this § 1 claim with one for negligent misrepresentation under state law, claiming that a host of statements on the Board's website "create the false impression that [the MOC program] is indicative of the medical skills of physicians" and that physicians who do not participate in the MOC program "are likely to be less competent."

The district court granted the Board's motion to dismiss, explaining that AAPS had not stated a plausible claim under either theory of liability. The district court then afforded AAPS a chance to cure the pleading deficiency in an amended complaint with additional factual allegations.

AAPS's next attempt saw the alleged § 1 conspiracy grow vaster but not any clearer. This time around, AAPS contended that the Board had conspired individually with perhaps as many as 80% of hospitals across the country to force doctors to participate in the MOC program. The new complaint also brought insurers into the fold, claiming that the Board had conspired with an unspecified number of health insurers to impose an MOC participation requirement for in-network status. And AAPS expanded the alleged conspiracy's scope. While its first complaint focused only on hospital care, the amended complaint appeared to define the relevant market to encompass almost all medical care nationwide.

On the state-law front, AAPS repackaged its negligent misrepresentation claim as one for deceptive trade practices under 815 ILCS § 510/2(a). This new theory centered on two statements the Board makes on its website, which allows users to search physicians' names to see whether they are Board certified. First, AAPS alleged, the use of the word "Board" misleads by implying "some authority akin to an official state medical board." Second, AAPS claimed that the Board's stating on its website that particular physicians are "Not Meeting MOC Requirements" falsely conveys that nonparticipating physicians are less competent. These statements, as AAPS views them, violate Illinois law by disparaging the quality of medical care provided by physicians who do not participate in the MOC program.

The Board again moved to dismiss.

B

The case was transferred to a...

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