All Care Nursing Service, Inc. v. High Tech Staffing Services, Inc.

• Citation: 135 F.3d 740
• Decision Date: 18 February 1998
• Docket Number: Nos. 95-4714,95-5218,s. 95-4714
• Parties: 1998-1 Trade Cases P 72,062, RICO Bus.Disp.Guide 9426, 11 Fla. L. Weekly Fed. C 1092 ALL CARE NURSING SERVICE, INC., Benson Health Care Services, Inc., et. al., Plaintiffs-Appellees, v. HIGH TECH STAFFING SERVICES, INC., Defendant-Appellant. ALL CARE NURSING SERVICE, INC., Plaintiff-Appellant, A Complete Health Service, Inc., Quality Professional Nursing, Inc., et al., Plaintiffs-Appellants, Julie Monahan, Counter-Defendant-Appellant, v. BETHESDA MEMORIAL HOSPITAL, INC., NME Hospitals, Inc., et. al., Defendants-Appellees, High Tech Staffing Services, Inc., Defendant-Appellant-Cross-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

Page 740

135 F.3d 740

1998-1 Trade Cases P 72,062, RICO Bus.Disp.Guide 9426,

11 Fla. L. Weekly Fed. C 1092

ALL CARE NURSING SERVICE, INC., Benson Health Care Services, Inc., et. al., Plaintiffs-Appellees, v. HIGH TECH STAFFING SERVICES, INC., Defendant-Appellant.

ALL CARE NURSING SERVICE, INC., Plaintiff-Appellant,

A Complete Health Service, Inc., Quality Professional

Nursing, Inc., et al., Plaintiffs-Appellants, Julie Monahan, Counter-Defendant-Appellant, v. BETHESDA MEMORIAL HOSPITAL, INC., NME Hospitals, Inc., et.

al., Defendants-Appellees,

High Tech Staffing Services, Inc., Defendant-Appellant-Cross-Appellee.

Nos. 95-4714, 95-5218.

United States Court of Appeals, Eleventh Circuit.

Feb. 18, 1998.

Thomas J. Larkin, Palm Beach Gardens, FL, for High Tech Staffing.

Jonathan L. Diesenhaus, Richard A. Feinstein, Scott B. Whittier, McKenna & Cuneo, L.L.P., Washington, DC, Philip A. Allen, III P.A., Litow, Cutler, Zabludowski & Allen, Miami, FL, for Bethesda Memorial, et al.

Jack Scarola, Searcy, Denney, Scarola, Barnhart & Shipley, P.A., West Beach, FL, for All Care Nursing Service, Inc., PDQ Nurse, & Julie Monahan.

Blaine H. Winship, Karin M. Byrne, Winship & Byrne, Miami, FL, for A Complete Health Service, Inc., Quality Professional Nursing, Inc. and Critical Health Care, Inc.

Appeals from the United States District Court for the Southern District of Florida.

Before EDMONDSON and BARKETT, Circuit Judges, and WELLFORD ^*, Senior Circuit Judge.

EDMONDSON, Circuit Judge:

Two separate actions (with different plaintiffs) against the same defendants for alleged antitrust violations have been consolidated and are treated as one appeal. Plaintiffs appeal a jury verdict for defendants on antitrust claims. They also appeal the jury verdict against them on counterclaims for state and federal RICO violations. Many issues were raised on appeal. But we conclude that most of the challenges obviously lack merit, and we do not discuss them in this opinion. We do discuss a couple of issues in some detail, and we affirm the district courts' judgments.

Background

Beginning in the mid-1980's the United States experienced a severe nursing shortage. Southern Florida was hit especially hard due to its increased demand for nurses in winter months to accommodate the high influx of people to the area at that time of year. This shortage, along with other market considerations, caused an increase in prices for nursing services and a difficulty in staffing hospitals (and other facilities) with sufficiently licensed nurses. ¹

Hospitals use full or part-time hospital nurses, contract nurses (nurses hired for a specified period of time), travel nurses (contract nurses hired from different areas of the country), and temporary nurses (nurses employed by agencies and hired by hospitals for a shift at a time). ² Temporary nursing agencies send their nurses to hospitals, nursing homes, clinics, doctors' offices, and patients' homes. They have the choice to provide services for any facility or person in need of such care. They are not limited to providing nurses to hospitals.

During the pertinent period, hospitals were faced with quality concerns, as well as rising prices. No efficient means existed to share information with other hospitals about agency nurses. This lack of information resulted in problems with some agencies, including plaintiff-appellant All Care Nursing Services, Inc. ("All Care"). ³ These problems included "phantom booking"--where a hospital requests a specific nurse with whom it has dealt in the past, only to be sent a different nurse; "blind booking"--where a hospital sets up to receive the services of a nurse from an agency only to have the agency cancel at the last minute; fraudulent billing--billing hospitals for services of an RN when actually a less qualified LPN or CNA performed the services; cheating on certification exams; and altering certification documents.

In response to the problems the South Florida Hospital Association ("SFHA") approached hospitals in Palm Beach County about a potential purchasing arrangement. In 1988, twelve (12) Palm Beach County hospitals set up an arrangement whereby they would solicit bids from temporary nursing agencies and would then select agencies to be preferred providers of such services, the Preferred Provider Program ("PPP"). The selection of the preferred agencies was to be made based upon competence, services provided, quality, and bid price. Under this joint-buying arrangement all the participating hospitals agreed to seek first nurses from preferred providers before going to nonpreferred agencies for nurses on each occasion.

All agencies were invited, either by letter or by advertisement in the Palm Beach newspaper (Palm Beach Post ), to participate in the bidding. Sixteen (16) agencies presented bids and eight (8) were selected as preferred. ⁴

In November 1988, the PPP began operation. Each hospital entered into individual contracts with each of the preferred agencies. All the agencies selected as preferred providers were required to agree to things like treating their nurses as employees by providing workers' compensation, paying taxes, and providing necessary insurance. Before the PPP, agencies had treated their nurses as independent contractors, not employees; and the higher costs associated with unprotected workers were borne by the hospitals. ⁵

The preferred agencies did not contract with the hospitals at the same prices, but instead at the prices that each particular agency had bid. Agencies were also required to agree in the contracts not to change their prices for one year--the length of each contract--and, thus, were somewhat tied into their bid prices. But to allow for shifts due to market changes, each agency could terminate its contract with a particular hospital upon 30 days notice (the "escape clause").

After the creation of the PPP, plaintiffs-appellants filed suit against the participating hospitals, preferred agencies, and the SFHA ⁶ alleging antitrust violations under sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, and under Florida Statutes §§ 542.18 and 542.19. Defendants then filed a counterclaim against All Care, and its operator Monahan, for violations of federal and state RICO statutes by billing fraudulently, aiding cheating on certification exams, and aiding persons to obtain false certification. ⁷

Awaiting trial, plaintiffs-appellants sought and received a preliminary injunction, which halted implementation of the PPP. That preliminary injunction, however, was vacated by this court because of the district court's failure to hold the necessary evidentiary hearing. All Care Nursing Serv., Inc. v. Bethesda Memorial Hosp., Inc., 887 F.2d 1535 (11th Cir.1989). The request for an injunction was never reinstated.

After a four-week jury trial, a verdict was entered in favor of defendants on all relevant claims. Plaintiffs filed motions for new trial, for judgment as a matter of law, and for amendment of the pleadings to conform with the evidence. All these motions were denied by the district court; and we now affirm those denials. ⁸ Plaintiffs-appellants also appeal the antitrust and RICO counterclaim verdicts against them; but we affirm those judgments, too.

Discussion

I. Federal and State RICO Claims

Plaintiffs-appellants All Care and Monahan argue that the Florida and Federal RICO claims against them are barred by the economic-loss rule. That rule provides that "parties to a contract can only seek tort damages if conduct occurs that establishes a tort distinguishable from or independent of [the] breach of contract." Jones v. Childers, 18 F.3d 899, 904 (11th Cir.1994) (citations and quotations omitted). The rule is based upon the idea that "contract principles are more appropriate than tort principles for resolving economic loss claims." Florida Power & Light Co. v. Westinghouse Elec. Corp., 510 So.2d 899, 901 (Fla.1987).

Neither All Care nor Monahan can use the economic-loss rule to escape liability under the federal RICO statutes. ⁹ We have already ruled that Florida's economic-loss rule does not bar a plaintiff from "bringing a [federal] RICO action where a breach of contract claim also exists .... many RICO cases involve contract disputes." Arabian American Oil Co. v. Scarfone, 939 F.2d 1472, 1478 (11th Cir.1991).

About the state RICO claims, Florida's RICO statutes have consistently been interpreted using federal RICO claims cases. No reason has been presented to us to justify applying the economic-loss rule differently to RICO claims made under state and federal RICO statutes. ¹⁰ Thus, the economic-loss rule does not bar these claims.

II. Antitrust Claims

Plaintiffs-appellants argue that the formation and operation of the Palm Beach County PPP is a violation of the antitrust laws of the Sherman Act and Florida Statutes §§ 542.18 and 542.19, ¹¹ prohibiting restraints on trade. The Sherman Act, in relevant part, sets out these rules:

Section 1: Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal....

Section 2: Every person who shall monopolize, or attempt to monopolize, or combine or conspire ... to monopolize ... shall be deemed guilty of a felony.

15 U.S.C. § 1; 15 U.S.C. § 2.

Despite the expansive language of the statute, the Supreme Court has interpreted this statute to prohibit only "unreasonable" restraints on trade. "A restraint may be violative of the Sherman Act because it is solely a naked restraint of trade so offensive to competition as to be unreasonable per se, or because it runs afoul of the more detailed rule of reason inquiry." Retina Assocs., P.A. v. Southern Baptist Hosp. of Florida, Inc., 105 F.3d 1376, 1380 (11th Cir.1997).

Some acts have been said to be so facially anticompetitive that by their very nature they are deemed unreasonable and, thus, per...