Capital Imaging v. Mohawk Valley Medical, 88-CV-1291.

• Decision Date: 08 May 1992
• Docket Number: No. 88-CV-1291.,88-CV-1291.
• Citation: 791 F. Supp. 956
• Parties: CAPITAL IMAGING ASSOCIATES, P.C., Plaintiff, v. MOHAWK VALLEY MEDICAL ASSOCIATES, INC., and Mohawk Valley Physicians' Health Plan, Inc., Defendants.
• Court: U.S. District Court — Northern District of New York

791 F. Supp. 956

CAPITAL IMAGING ASSOCIATES, P.C., Plaintiff, v. MOHAWK VALLEY MEDICAL ASSOCIATES, INC., and Mohawk Valley Physicians' Health Plan, Inc., Defendants.

No. 88-CV-1291.

United States District Court, N.D. New York.

May 8, 1992.

COPYRIGHT MATERIAL OMITTED

Cooper Erving Savage Nolan & Heller (Mark E. Watkins, of counsel), Albany, N.Y., for plaintiff.

Epstein Becker & Green (Linda V. Tiano, of counsel), New York City, Clifford E. Barnes, Washington, D.C., for defendants.

MEMORANDUM-DECISION AND ORDER

McCURN, Chief Judge.

I. INTRODUCTION

Plaintiff invokes this court's jurisdiction pursuant to the provisions of sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and 26, to recover treble damages for and obtain injunctive relief from defendants' alleged violations of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, and the costs of this suit including reasonable attorney's fees. In response to plaintiff's allegations, defendants moved in 1989 to dismiss plaintiff's complaint or, in the alternative, for summary judgment. In a Memorandum-Decision and Order ("order") dated November 28, 1989, defendants' motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) was granted as to plaintiff's section 2 Sherman Act claim but denied as to plaintiff's section 1 Sherman Act claim. Capital Imaging Assocs., P.C. v. Mohawk Valley Medical Assocs., Inc., 725 F.Supp. 669, 681 (N.D.N.Y.1989). Although the court denied defendants' motion for summary judgment as to plaintiff's section 1 claim, it did so without prejudice and with leave to renew pending completion of discovery limited to those factual issues set forth in the order. Id. Now that discovery has been completed, defendants renew their motion for summary judgment. Plaintiff opposes this motion and in addition cross-moves to amend its complaint to more specifically identify the relevant market. It is these motions which are presently before the court.

II. BACKGROUND¹

A. The Parties

At the time plaintiff ("Capital") commenced this action, it was one of only two private radiology practices offering a full range of diagnostic imaging services in the area around Albany, New York, including parts of southern Vermont and western Massachusetts. Capital's only competitor was Two Rivers Radiology ("Two Rivers"), a private radiology practice with offices located across the street from Capital in Latham, a community in northern Albany County, New York. Although Two Rivers is not a party to this action, plaintiff contends that the contract between Two Rivers and defendants to provide a specialized radiological procedure known as Magnetic Resonance Imaging ("MRI") is evidence that defendants acted together for the anti-competitive purpose of harming the market for radiology referrals. See Plaintiff's Memorandum of Law at 4.

Defendant, Mohawk Valley Medical Associates ("Associates"), is an independent practice association ("IPA") of member physicians organized to provide medical care to enrollees of defendant, Mohawk Valley Physicians Health Plan, Inc. ("MVP"). Together the defendants constitute an example of an IPA-model health maintenance organization ("HMO"). Under this type of arrangement, the HMO (MVP) contracts with an organization of physicians (Associates) to provide physician services to the HMO's members in the individual physicians' offices.

In order for an entity, such as MVP, to operate as an HMO, it must apply to the New York State Department of Health ("Department") for a certificate of authority. N.Y.Pub. Health Law § 4402(1) (McKinney 1985). As part of the certification process, the Department approves the service area within which the HMO can provide its approved benefits package. N.Y.Comp.Codes R. & Regs. tit. 10 § 98.7. If subsequently an HMO wants to expand its service area, it must apply for and receive an amended certificate of authority. N.Y.Comp.Code R. & Regs. tit. 10, § 98.7(b). At the time this suit was commenced, MVP was certified to provide comprehensive health services in the counties of Schenectady, Saratoga, Montgomery, Fulton, Herkimer, Oneida, Madison, Dutchess, Clinton, Essex, Franklin, St. Lawrence, and Otsego. More recently, MVP has received an amended certificate of authority which extends its service area to include the counties of Delaware, Ulster, Warren and Rensselaer. See Defendants' Memorandum of Law at 6 n. 1. MVP has never been certified to provide its services in Albany County.

The Department also regulates the operation of Associates. In accordance with New York State law, an IPA is organized to contract with physicians and other providers of medical or medically-related services in order to contract with a single HMO to make such provider services available to that HMO and its enrollees. N.Y.Comp.Codes R. & Regs. tit. 10, § 98.4(b)(6)(iv). In this case, Associates has contracted with MVP to provide physician services in a specified service area which includes the counties of Schenectady, Fulton, Montgomery and Saratoga. Pursuant to state law, Associates and MVP have entered into an agreement whereby Associates has agreed, inter alia, to (1) arrange for the provision of physician and other health professional services at such times and in such locations as MVP may require to satisfy the needs of its members; (2) establish credentialling requirements for membership in Associates; (3) maintain contracts with a sufficient number of physicians to guarantee its ability to deliver health services; and (4) arrange for member accessibility to all health services in the service area. N.Y.Comp.Codes R. & Regs. tit. 10, § 98.2(aa).

B. The Complaint

In its complaint, Capital alleges that from a date at least as early as September 16, 1986, and continuing to the present, the defendants, Two Rivers, and other unnamed co-conspirators have engaged in an unlawful combination or conspiracy in unreasonable restraint of interstate commerce in violation of section 1 of the Sherman Act ("section 1"). According to Capital, this alleged conspiracy consists of a continuing agreement, understanding, and concert of action among the defendants and co-conspirators to exclude Capital from membership in Associates, thereby unlawfully restricting Capital's access to the market for radiological services controlled by defendants.

This action arises as a result of defendants' exclusion of Capital from their health insurance plan. Capital applied for, but was denied, membership in the Associates. The reason given for this denial was that Capital's only office was in Albany County, outside MVP's designated service area. Capital contends that this reason is inconsistent with MVP's description of its service area in its promotional materials and with MVP's treatment of other physicians with offices in Latham, New York. In addition, Capital contends that Associates' refusal to allow it to participate in defendants' provider network, among other things, effectively denies Capital the ability to compete for radiology referrals from Associates' participating physicians. Finally, Capital contends that this inability to compete for radiology referrals denies Associates' participating primary care physicians and specialists the ability to choose among radiologists on the basis of quality and service.

C. Prior Proceedings

In its previous order, this court denied defendants' motion to dismiss Capital's section 1 claim because "plaintiff has alleged a restraint on trade sufficient to defeat the motion to dismiss." Capital Imaging, 725 F.Supp. at 679 (emphasis in original).² Nonetheless, the court went on to say that "plaintiff has failed, at this stage, to come forth with any proof of the impact of defendants' actions on competitive conditions sufficient to defeat a motion for summary judgment." Id. Rather than grant defendants' motion for summary judgment with respect to plaintiff's section 1 claim at that time, however, the court granted Capital's cross-motion to continue this action pending discovery pursuant to Fed.R.Civ.P. 56(f).

In order to be granted relief pursuant to Fed.R.Civ.P. 56(f), plaintiff must by affidavit (1) identify the specific controverted facts which are the basis of the discovery request; and (2) show that such controverted facts could create a genuine issue of material fact sufficient to defeat the defendants' motion for summary judgment. Capital Imaging, 725 F.Supp. at 680 (citing Paul Kadair Inc. v. Sony Corp. of America, 694 F.2d 1017, 1028 (5th Cir. 1983)). In compliance with Rule 56(f), Capital identified its "controverted facts" in the Watkins Affidavit. According to this affidavit, the factual issues which required discovery were:

1. the extent to which Associates' network of participating physicians has penetrated the market;

2. the market share of Two Rivers Radiology P.C.; and

3. the nature and purpose of the arrangements and connections linking defendants with Two Rivers and possibly other co-conspirators.

Capital Imaging, 725 F.Supp. at 680 (quoting Watkins Affidavit at ¶ 5).

Based on this affidavit, the court found that the "issues proposed are relevant to the question of the impact of defendants' actions on competitive conditions, and that they could create genuine issues of material fact if supported by sufficient probative evidence." Id. Therefore, the court granted plaintiff's cross-motion for "continuance of this action pending discovery related to its section 1 conspiracy claim, limited to the issues identified here." Id. (emphasis added). Now that discovery has been completed, defendants renew their motion for summary judgment pursuant to Fed. R.Civ.P. 56.

III. DISCUSSION

A. Summary Judgment Standard

Summary judgment is appropriate where there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202, 210-12 (1986). The mere existence of some alleged factual dispute,...