Bhan v. NME Hospitals, Inc.

• Decision Date: 25 March 1991
• Docket Number: Nos. 87-2727,87-2951,s. 87-2727
• Citation: Bhan v. NME Hospitals, Inc., 929 F.2d 1404 (9th Cir. 1991)
• Parties: , 59 USLW 2647, 1991-1 Trade Cases 69,395, 19 Fed.R.Serv.3d 644 Vinod C. BHAN, C.R.N.A., Plaintiff-Appellant, v. NME HOSPITALS, INC., a Delaware Corp., dba: Manteca Hospital, National Medical Enterprises, Inc., a Nevada Corp., California Society of Anesthesiologists, Inc., a California Corp., John E. Menaugh, Yong Suk, M.D., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1404

929 F.2d 1404

59 USLW 2634, 59 USLW 2647, 1991-1 Trade

Cases 69,395,

19 Fed.R.Serv.3d 644

Vinod C. BHAN, C.R.N.A., Plaintiff-Appellant, v. NME HOSPITALS, INC., a Delaware Corp., dba: Manteca Hospital, National Medical Enterprises, Inc., a Nevada Corp., California Society of Anesthesiologists, Inc., a California Corp., John E. Menaugh, Yong Suk, M.D. Defendants-Appellees.

Nos. 87-2727, 87-2951.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Dec. 11, 1990.

Decided March 25, 1991.

Timothy E. Morgan, San Francisco, Cal., H.E. Christian Peeples, Oakland, Cal., Michael I. Spiegel, Spiegel, Liao & Kagay, and Stephen Kaus, Kaus & Kerr, San Francisco, Cal., for plaintiff-appellant.

Robert Fabrikant, McKenna & Cuneo, Washington, D.C., and James J. Banks, Damrell, Damrell & Nelson, Michael C. Normoyle, Normoyle & Newman, Modesto, Cal., for defendants-appellees.

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

Before SNEED, SCHROEDER and CANBY, Circuit Judges.

SNEED, Circuit Judge:

This is an antitrust case concerning the exclusion of a class of nonphysician anesthesia providers from a hospital. Plaintiff Vinod Bhan charged the hospital with violations of Secs. 1 & 2 of the Sherman Act. ¹ The district court granted summary judgment for defendants. Bhan appeals the summary judgment as well as discovery sanctions imposed by the magistrate. We affirm both rulings.

I. FACTS AND PROCEEDINGS BELOW

Vinod Bhan is a certified registered nurse anesthetist ("CRNA") who worked at Manteca Hospital between 1979 and 1983. CRNAs are licensed to perform many of the same anesthesia services as physician anesthesia providers ("MDAs"). The physician providers have a medical degree and are trained to perform certain complicated procedures that nurse providers cannot perform. The physicians also charge higher fees than the nurses.

Manteca Hospital is a forty-nine bed facility located in a town of 37,000 people. Although Manteca Hospital is the only hospital in its town, at least five hospitals in neighboring towns are approximately thirty minutes drive from Manteca Hospital. It is generally accepted in the health industry and uncontested in this case that hospitals within thirty minutes traveling time of each other compete for patients. Bhan v. NME Hospitals, Inc., 669 F.Supp. 998, 1006 (E.D.Cal.1987). In addition, five other hospitals are located in the general area, although the record is unclear about precisely how close these hospitals are to Manteca Hospital.

Most of the doctors who have staff privileges at Manteca Hospital also have staff privileges at hospitals in Stockton and Modesto. In addition, many of the doctors at Manteca Hospital arrange for "coverage" by doctors based outside of the town of Manteca, most commonly in Tracy, Stockton, or Modesto. During the period that Bhan worked at Manteca Hospital, he also worked occasionally at hospitals in eight other communities and at certain family planning clinics. ²

Some hospitals in the area do not use nurse anesthetists, but at least one hospital in the area, and possibly two, do. In addition, doctors who perform outpatient surgery in their offices use nurse anesthetists.

Manteca Hospital obtained anesthesia providers from Associated Anesthesia Services ("AAS"), an organization that supplied the hospital with physician and nurse anesthesia providers and handled all billing and collections. AAS assigned Bhan and one physician to cover the Hospital's requirements.

The hospital and its surgeons became unhappy with the anesthesia coverage provided by AAS because of constant turnover in the physician provider position and lack of 24-hour coverage by a physician provider. The hospital asked AAS to provide an additional physician. AAS refused because it felt that the volume of work at the hospital could not support three anesthesia providers. The hospital then notified AAS that its contract would not be renewed. At the time of this notice, Mr. Bhan and Dr. Cull, a physician anesthesia provider, worked at Manteca under the AAS contract. Dr. Suk, a physician anesthesia provider from a neighboring town, also had expressed interest in moving to Manteca to work at the hospital.

The hospital notified Dr. Cull that after the AAS contract expired, he would no longer be allowed to work there and that the hospital intended to form an exclusive arrangement with some combination of anesthesia providers. In response, Cull's attorney threatened legal action if the hospital signed an exclusive agreement that did not include Cull. At this point, the hospital learned that a Fifth Circuit decision had raised doubts about the legality under the antitrust laws of an exclusive contract for anesthesia services at a hospital. See Hyde v. Jefferson Parish Hosp. Dist. No. 2, 686 F.2d 286 (5th Cir.1982), rev'd, 466 U.S. 2, 104 S.Ct. 1551, 80 L.Ed.2d 2 (1984). The hospital decided not to pursue any exclusive contracts.

Instead, the hospital implemented an MDA-only policy, thus risking being impaled on the other horn of an antitrust dilemma. Any physician anesthesia provider under this new policy would be allowed to apply for staff privileges but no nurses could apply. The hospital offered three justifications. First, surgeons were afraid they would be held legally accountable for mistakes made by nurses because state law required the surgeon to "sign off" on the nurse's patient report. No sign-off was required for physicians. Second, the hospital felt that 24-hour coverage by a physician provider was essential in case of complicated emergencies. Third, the hospital felt physician anesthesia providers were better trained than nurse anesthesia providers. Malpractice claims and the cost of malpractice insurance lurk behind these justifications.

Dr. Suk and Dr. Cull became the two primary anesthesia providers under the new policy. They split the coverage schedule.

Bhan, the excluded provider, alleges that patient care and legal liability were

smokescreen issues. He claims that Suk and Cull conspired with the hospital to eliminate him and other potential nurse applicants from competing in the local market in order to protect the doctors' income. Bhan characterizes the arrangement as a group of suppliers (the doctors) convincing a buyer (the hospital) to join a conspiracy to boycott the suppliers' lower-priced competitors.

The district court initially dismissed the claim on the ground that Bhan lacked antitrust standing. This court reversed. The district court then granted defendants' motion for summary judgment. Bhan appeals the summary judgment grant as well as discovery sanctions imposed by the magistrate and affirmed by the district court.

II. JURISDICTION AND STANDARDS OF REVIEW

The district court had jurisdiction under 15 U.S.C. Secs. 15, 22 (1988). This court has appellate jurisdiction according to 28 U.S.C. Sec. 1291 (1988). A grant of summary judgment is reviewed de novo. Kruso v. International Tel. & Tel. Corp., 872 F.2d 1416, 1421 (9th Cir.1989), cert. denied, --- U.S. ----, 110 S.Ct. 3217, 110 L.Ed.2d 664 (1990).

III. SUMMARY JUDGMENT

Summary judgment is appropriate where no genuine issue of material fact exists and a party is entitled to prevail in the case as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986); Fed.R.Civ.P. 56(c). The party requesting summary judgment has the initial burden to show that there are no genuine issues of material fact. T.W. Elec. Serv. v. Pacific Elec. Contractors Assoc., 809 F.2d 626, 632 (9th Cir.1987). He does not necessarily need to put on evidence to negate his opponent's claim; he may simply point to portions of the pleadings, admissions, answers to interrogatories, and depositions which, along with any affidavits, show the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986).

If the moving party satisfies his initial burden, the opposing party may not rely on denials in the pleadings but must produce specific evidence, through affidavits or admissible discovery material, to show that the dispute exists. Fed.R.Civ.P. 56(e). In addition, the dispute must be genuine. The "opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp, 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986).

In general, it is difficult to resolve antitrust cases on summary judgment because of their factual complexity. See Rickards v. Canine Eye Registration Found., 783 F.2d 1329, 1332 (9th Cir.1986), cert. denied, 479 U.S. 851, 107 S.Ct. 180, 93 L.Ed.2d 115 (1986). This does not mean, however, that a district court may not award summary judgment when appropriate. In fact, an appropriate award of summary judgment may save the parties and the courts from unnecessarily spending the extraordinary resources required for a full-blown antitrust trial. The Supreme Court's decision in Matsushita significantly clarified the standards for resolving summary judgment cases in the antitrust arena. See Matsushita, 475 U.S. at 585-88, 106 S.Ct. at 1355-57; see also Bhan, 669 F.Supp. at 1004-05. Since that time, this court has shown on numerous occasions that summary judgment on an antitrust claim may be appropriate. See, e.g., Morgan, Strand, Wheeler & Biggs v. Radiology, Ltd., 924 F.2d 1484, 1488-92 (9th Cir.1991); R.C. Dick Geothermal Corp. v. Thermogenics, Inc., 890 F.2d 139, 152-53 (9th Cir.1989) (en banc); Eichman v. Fotomat Corp., 880 F.2d 149, 161-63 (9th Cir.1989); Thurman Indus., Inc. v. Pay'N Pak Stores, Inc., 875 F.2d 1369, 1380 (9th Cir.1989); Christofferson Dairy, Inc. v. MMM Sales, Inc., 849 F.2d 1168, 1175 (9th Cir.1988); Ferguson v. Greater Pocatello Chamber of Commerce, 848 F.2d 976, 984 (9th Cir.1988).

IV. SECTION 1 OF THE SHERMAN ACT

Section 1 of the...