Defiance Hosp. v. Fauster-Cameron, Inc.
| Citation | 344 F.Supp.2d 1097 |
| Decision Date | 17 November 2004 |
| Docket Number | No. 3:01 CV 7578.,3:01 CV 7578. |
| Parties | DEFIANCE HOSPITAL, INC., et al., Plaintiffs v. FAUSTER-CAMERON, INC., et al., Defendants |
| Court | U.S. District Court — Northern District of Ohio |
Amy N. Natyshak, Marshall & Melhorn, Toledo, OH, David Marx, Jr., McDermott, Will & Emery, Chicago, IL, John A. Borell, Jr., Marshall & Melhorn, Marshall A. Bennett, Jr., Marshall & Melhorn, Toledo, OH, for Defiance Hospital, Incorporated, ProMedica West Physicians, Alan Gardner, M.D., Plaintiffs.
David W. Wicklund, Shumaker, Loop & Kendrick, Toledo, OH, Walter F. Ehrnfelt, III, Waldheger Coyne, Westlake, OH, for Fauster-Cameron, Incorporated, Terry Howarth, CRNA, Douglas Lee, CRNA, John Yeoman, CRNA, Kathyrn Schwindl Watson, CRNA, William H. Richter, M.D., John W. Shaw, M.D., Jeffrey A. Pruitt, M.D., John J. Racciato, M.D., John Doe, Defendants.
This is antitrust action arising under § 2 of the Sherman Act, 15 U.S.C. § 2. Plaintiffs, Defiance Hospital, Inc. (Hospital) and ProMedica West Physicians, LLC (ProMedica West), 1
allege that defendants, Fauster-Cameron, Inc., d.b.a. as the Defiance Clinic (Clinic) and its employees 2 monopolized and attempted to monopolize the Defiance, Ohio, market for anesthesia services by engaging in anticompetitive conduct designed to drive plaintiffs, defendants only competitors, out of the market.
Plaintiffs' first amended complaint also asserted claims under the Ohio Valentine Act, O.R.C. § 1331.01 et seq. for monopolization and attempted monopolization, as well as claims for wrongful acts and unfair competition, interference with recruiting efforts, deceptive trade practices in violation of O.R.C. § 4165.01, et seq., and defamation.3
Pending is defendants' motion for summary judgment and plaintiffs' cross-motion for summary judgment. For the following reasons, defendants' motion shall be granted as to Counts Three, Four, Five, and Six of plaintiffs' complaint and denied as to Counts One and Two.
Plaintiffs' cross motion for summary judgment shall be granted as to Counts One and Two on the issues of possession of monopoly power in the relevant market, predatory or anticompetitive conduct, and dangerous probability of achieving monopoly power. Plaintiffs' motion shall be denied as to Counts One and Two on the issues of general intent to exclude and specific intent to monopolize. Plaintiffs' motion shall also be denied as to Counts Three, Four, Five, and Six of plaintiffs' complaint.
Plaintiff, Defiance Hospital, is an Ohio non-profit corporation engaged in the business of providing hospital services to patients in the Defiance, Ohio, area. ProMedica West, an Ohio limited liability company formed by ProMedica Health Systems, provides medical services to patients and medical institutions, including the Hospital.
Fauster-Cameron, an Ohio for profit corporation, operates Defiance Clinic, a medical clinic in Defiance. The doctors named in this litigation own and operate the Clinic, which employs Certified Registered Nurse Anesthetists (CRNAs).
In the 1980s, two organizations, the Clinic and Northwest Ohio Anesthesia Services, Inc., provided anesthesia services at the Hospital. Northwest Ohio Anesthesia Services exited the market in the late 1980s, and by 1991 the remaining providers of anesthesia services were Defiance Clinic and an independent CRNA, James Fellabaum. Early that year, Mr. Fellabaum also left Defiance.
In December, 1990, the Clinic for the first time entered into non-competition agreements with its CRNAs. Those agreements prohibited the CRNAs from providing anesthesia services within twenty-five miles of the Clinic for one year following termination of their employment.
Subsequently, in a letter dated February 8, 1991, Chad Peter, Defiance Clinic's Administrator, contacted Mark Marchetti, Defiance Hospital's Assistant Administrator to discuss an arrangement by which the Clinic would become the exclusive provider of anesthesia services at the Hospital. After a meeting of the Hospital's Professional Relations Committee, the Hospital declined to enter into the arrangement.
In response to the Hospital's refusal, the Clinic sought to enter into anesthesia services agreements with independent physicians in the area. Pursuant to these contracts, the physicians agreed to use the Clinic's CRNAs as their "primary source" for anesthesia services. Plaintiffs contend that these agreements created "serious anesthesia coverage problem[s] for the hospital":
If the patient of a non-signing physician presented himself at the Defiance Hospital for emergency medical treatment requiring anesthesia, and the Clinic declined to provide anesthesia service because of the refusal of that patient's physician to sign the "primary source" contract, the patient could suffer great detriment.
Due to these concerns, the Hospital reopened discussions regarding an exclusive arrangement with the Clinic for anesthesia services, but the parties failed to reach an agreement. By September 3, 1991, with the exception of one physician, D. Said Shehata, all independent physicians in the community had entered into primary source agreements with the Clinic.4 One year later, that physician also entered into a primary source agreement with the Clinic.
In May, 1999, the Hospital began exploring the feasibility of adding an anesthesiologist to its staff. The Clinic responded by developing a contingency plan which contemplated challenging the Hospital's right to limit or exclude Clinic CRNAs, asserting that surgeons and patients are allowed to choose an anesthetist, and suggesting that if all else fails, patients should be taken to other facilities where Clinic CRNAs are used. (Doc. 113, 115, at 10.)
On May 19, 2000, ProMedica West and Alan Gardner, M.D., an anesthesiologist, entered into an employment agreement. The Hospital and ProMedica West planned to use Dr. Gardner in a coordinated effort with the Clinic's CRNAs to provide anesthesia services at the Hospital.
The Clinic reacted by refusing to work with and share call coverage with Dr. Gardner, thereby requiring Dr. Gardner to supervise the CRNAs twenty-four hours a day, seven days a week.
Shortly after Dr. Gardner's arrival, the Clinic issued a letter to all independent physicians demanding that they sign new primary source contracts. These contracts required that at least ninety percent of the physicians' anesthesia services in any thirty day period must be provided by the Clinic. None of the independent physicians signed the Clinic's contracts.
Dr. Jeffrey Pruitt, on behalf of the Clinic, informed Robert Coholich, President of the Hospital, that effective October 13, 2000, the Clinic CRNAs would provide anesthesia services for only patients of those physicians who signed the new primary source contracts. Mr. Coholich reminded Dr. Pruitt of the CRNAs' obligations under the Medical Staff bylaws to provide on-call services to any patient seeking surgical services at the Hospital regardless of their attending physician. The Clinic, however, reaffirmed its determination to refuse to serve the patients of physicians who did not sign the new agreements.
The Clinic's actions forced the Hospital to create its own comprehensive anesthesia service. Shortly thereafter, the Hospital entered into an exclusive service agreement with ProMedica West, Dr. Gardner's employer, to provide anesthesia services.
Count One of plaintiffs' complaint alleges that, contrary to § 2 of the Sherman Act, 15 U.S.C. § 2, defendants monopolized and attempted to monopolize the market for anesthesia services by: 1) entering into non-competition agreements with its employees; 2) refusing to work with or share on-call rotations at the Hospital with Dr. Gardner; 3) demanding that independent physicians in the Defiance area enter into primary source agreements; and 4) refusing to provide anesthesia services to patients of physicians who did not enter into primary source agreements.
Defendants contend that they have not violated § 2 because: 1) plaintiffs have failed to define the geographic scope of the relevant market; 2) defendants do not have sufficient market power to monopolize or attempt to monopolize; and 3) plaintiffs have not suffered an antitrust injury and therefore lack standing to bring an antitrust claim.
For the following reasons, I decline to grant summary judgment in full for either party on plaintiffs' monopolize and attempt to monopolize claims.
Defendants contend that plaintiffs have not suffered an antitrust injury, and thus lack standing to bring an antitrust claim.
Section 2 of the Sherman Act makes it unlawful to "monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations." 15 U.S.C. § 2.
The Sherman Act protects competition, not competitors. Am. Council of Certified Podiatric Physicians & Surgeons v. Am. Bd. of Podiatric Surgery, Inc., 323 F.3d 366, 372 (6th Cir.2003) (citing Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 458, 113 S.Ct. 884, 122 L.Ed.2d 247 (1993)). In Spectrum Sports the Supreme Court explained the purpose of the Sherman Act:
The purpose of the Act is not to protect businesses from the working of the market; it is to protect the public from the failure of the market. The law directs itself not against conduct which is competitive, even severely so, but against conduct which unfairly tends to destroy competition itself. It does so not out of solicitude for private concerns but out of concern for the public interest.
506 U.S. at 458, 113 S.Ct. 884.
Standing requirements for antitrust litigation are...
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