Crosby v. Hospital Authority of Valdosta and Lowndes County, 95-8187

• Decision Date: 11 September 1996
• Docket Number: No. 95-8187,95-8187
• Citation: 93 F.3d 1515
• Parties: 1996-2 Trade Cases P 71,563, 96 FCDR 3861 R. Derry CROSBY, Plaintiff-Appellant, v. HOSPITAL AUTHORITY OF VALDOSTA AND LOWNDES COUNTY, D/B/A South Georgia Medical Center, Earl L. Creech, M.D., John R. Kendrick, M.D., Oscar E. Aguero, M.D., Archie L. Griffin, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1515

93 F.3d 1515

1996-2 Trade Cases P 71,563, 96 FCDR 3861

R. Derry CROSBY, Plaintiff-Appellant, v. HOSPITAL AUTHORITY OF VALDOSTA AND LOWNDES COUNTY, D/B/A

South Georgia Medical Center, Earl L. Creech, M.D., John R.

Kendrick, M.D., Oscar E. Aguero, M.D., Archie L. Griffin, et

al., Defendants-Appellees.

No. 95-8187.

United States Court of Appeals, Eleventh Circuit.

Sept. 11, 1996.

Wayne Ellerbee, The Ellerbee Law Firm, P.C., Valdosta, GA, Lewis H. Markowitz, Markowitz & Markowitz, P.C., York, PA, James Ponsoldt, Athens, GA, for Appellant.

William Gus Elliott, Valdosta, GA, Joseph William Watkins, Sidney F. Wheeler, Jacquelyn D. Van Tuyl, Atlanta, GA, for Hospital Authority & Lowndes County.

Kevin E. Grady, Alston & Bird, Atlanta, GA, for Amicus Curiae--Ga. Hospital Association.

Joshua L. Prober, McCullough, Campbell & Lane, Chicago, Illinois, for Amicus Curiae--American Osteopathic Association.

Appeal from the United States District Court for the Middle District of Georgia.

Before ANDERSON and BLACK, Circuit Judges, and HENDERSON, Senior Circuit Judge.

ANDERSON, Circuit Judge:

This case involves a doctor, R. Derry Crosby, who was denied staff privileges by the Hospital Authority of Valdosta and Lowndes County ("the Authority"). Dr. Crosby claimed that the Authority, its board members, and the individual doctors on hospital peer review committees (collectively "defendants") violated federal antitrust law when they denied his application for hospital privileges. ¹ The district court granted defendants' motion for summary judgment on the ground that their actions were shielded by the doctrine of state action antitrust immunity. Crosby v. Hospital Authority of Valdosta, 873 F.Supp. 1568, 1581 (M.D.Ga.1995). We affirm.

I. FACTS

Dr. Crosby graduated from West Virginia College of Osteopathy, an osteopathic medical school, where he earned a Doctor of Osteopathy ("D.O.") degree. ² Upon completion of medical school, Dr. Crosby completed a one year osteopathic internship at Memorial Hospital in York, Pennsylvania. He remained at Memorial Hospital for another four years to complete an osteopathic orthopedic surgical residency program.

On September 20, 1986, Dr. Crosby applied for orthopedic surgical staff privileges at South Georgia Medical Center ("SGMC"), the hospital doing business for the Authority. After review by numerous committees and the Authority, his application was denied. Dr. Crosby contends that the doctors on the peer review committees which gave recommendations to the Authority and the Authority itself conspired to deprive him of staff privileges because he is not an allopathic doctor and as part of a conspiracy in restraint of trade in violation of 15 U.S.C.A. § 1, and monopolization (or an attempt to monopolize) in violation of 15 U.S.C.A. § 2.

The context of this case makes it necessary to review the creation of hospital authorities in Georgia and the peer review process at SGMC and the Authority. The Authority was created pursuant to Georgia's Hospital Authorities Law, O.C.G.A. § 31-7-70 et seq. See generally Cox Enterprises v. Carroll City/County Hosp. Auth., 247 Ga. 39, 273 S.E.2d 841, 844-45 (1981). Pursuant to the Hospital Authorities Law, the Georgia legislature "created in and for each county and municipal corporation of the state a public body corporate and politic to be known as the 'Hospital Authority' of such county or city...." O.C.G.A. § 31-7-72(a). A hospital authority's board is appointed by the governing body of the county or municipal corporation in which it was created. Id. Hospital authority board members receive no compensation for their work, although they are permitted reimbursement for actual expenses. O.C.G.A. § 31-7-74(a). Hospital authorities are granted the same exemptions and exclusions from taxes as are granted to cities and counties for similar facilities. O.C.G.A. § 31-7-72(e).

A hospital authority is "deemed to exercise public and essential governmental functions and [has] all the powers necessary and convenient to carry out and effectuate the purposes and provisions of [the Hospital Authorities Law]." O.C.G.A. § 31-7-75. These powers include, in addition to those necessary to operate a hospital, the power to sue and be sued, to execute contracts, to exercise the right of eminent domain, to receive proceeds from the sale of general obligation or county bonds, and to issue revenue anticipation certificates or other evidence of indebtedness. Id. An authority may not operate for profit, but rather, must adjust its prices to produce only enough revenue to cover costs with reasonable reserves. O.C.G.A. § 31-7-77. Hospital authorities are authorized to sell "negotiable revenue anticipation certificates" for the purpose of funding their activities. O.C.G.A. §§ 31-7-75(16), 31-7-78. These certificates, however, are not a debt of the city, the county, the State, or any political subdivision. O.C.G.A. § 31-7-79. Although not a debt of any "political subdivision," these certificates "are declared to be issued for an essential public and governmental purpose and together with interest thereon and income therefrom, [are] exempt from all taxes." O.C.G.A. § 31-7-79. Although an authority does not have the power to tax, counties and cities possess the power to levy an ad valorem tax for the purpose of contracting with the authority for the provision of specific services. O.C.G.A. § 31-7-84(a). Indeed, counties and their component municipalities are specifically authorized to contract with hospital authorities for the purpose of providing medical care to indigent residents of that county or municipality. O.C.G.A. § 31-7-85. Upon dissolution, a hospital authority is not authorized, in the absence of other specific legislation, to convey any of its property to a private person, association, or corporation. O.C.G.A. § 31-7-89. Finally, the board of trustees of each authority is required to file with the governing body of the particular municipality an annual report of its activities. O.C.G.A. § 31-7-90.

Dr. Crosby's application for staff privileges was governed by the bylaws of SGMC's medical staff (the "Bylaws"). ³ In particular, Article X, § 2(b)(4) sets forth educational and other related requirements for orthopedic surgeons applying for staff privileges: "Physicians applying for Staff Membership in the specialty of Orthopedics must demonstrate by training, experience, and performance the requirements for eligibility in the specialty as designated by the American Board of Orthopedics and be either board certified or board eligible." (Bylaws, Art. X, § 2(b)(4)).

Pursuant to the Bylaws, Dr. Crosby's application for staff privileges was reviewed by the following committees of the medical staff: (1) the Orthopedic Service of the Department of Surgery; (2) the Credentials Committee; (3) the Executive Committee; and (4) the Ad Hoc Hearing Committee. The Orthopedic Service recommended denial of Dr. Crosby's application because he did not have the background (i.e., training, experience, and performance) required by the Bylaws. ⁴ In addition, the Orthopedic Service stated that its decision was based on its determination that there were a sufficient number of orthopedic surgeons already on the hospital staff. Next, the Credentials Committee recommended denial of Dr. Crosby's application for failure to comply with the Bylaws' orthopedic residency requirements. ⁵ The Executive Committee reviewed the Credentials Committee's denial and affirmed its conclusion. The Ad Hoc Hearing Committee then conducted a hearing and concluded that the recommendation of the Executive Committee was appropriate. Pursuant to the Bylaws, the application was referred back to the Executive Committee, which voted to uphold the Ad Hoc Hearing Committee's recommendation of denial on the grounds that Dr. Crosby failed to meet the criteria established by the Bylaws.

Finally, the Authority, acting through its Appellate Review Committee, conducted a thorough hearing ⁶ during which it considered Dr. Crosby's application in light of the recommended denial by the staff committees. ⁷ As a result of this hearing, the Authority unanimously voted to deny Dr. Crosby's application. It stated its grounds for this denial as follows:

(1) The medical staff of South Georgia Medical Center, through its Executive Committee, has found that the applicant has not demonstrated by training, experience and performance the requirements for eligibility in the specialty of orthopedics.

(2) The applicant has not met the "burden" placed on him by Article V, § 1, b of the Medical Staff Bylaws of South Georgia Medical Center.

(3) The applicant fails to meet the requirements of Article X, § 2, b.--Surgical Service, 4., in that he has not demonstrated that he is either Board Certified or Board Eligible by the American Board of Orthopedics.

Thereafter, on March 14, 1990, Dr. Crosby filed the present action against three groups of defendants: 1) the Authority, d/b/a South Georgia Medical Center; 2) the board members of the Authority; and 3) the physicians who participated in the various review committees. He alleged violations of federal antitrust law (restraint of trade and monopolization) and Georgia law. ⁸

The district court, in a well-reasoned opinion, granted summary judgment, holding that all defendants were immune from suit by virtue of state action immunity under Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), and its progeny. Crosby, 873 F.Supp. at 1580-81. The Authority and its members, it reasoned, were a "political subdivision" of the State and Georgia had clearly articulated a policy authorizing the challenged anticompetitive conduct. Id. at 1575-81. Further, it found that the individual staff members on peer review committees, because they acted as the Authority's agents, were protected by the Authority's state action immunity. Id. at 1576-77. Finally, the court held that, even if defendants were not...