Drs. Steuer and Latham, P.A. v. National Medical Enterprises, Inc.

• Court: U.S. Court of Appeals — Fourth Circuit
• Writing for the Court: Before K.K. HALL and SPROUSE, Circuit Judges, and BUTZNER; PER CURIAM
• Citation: Drs. Steuer and Latham, P.A. v. National Medical Enterprises, Inc., 846 F.2d 70 (4th Cir. 1988)
• Decision Date: 10 May 1988
• Docket Number: No. 87-3753,87-3753
• Parties: Unpublished Disposition NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit. DRS. STEUER and LATHAM, PA, Rudolph R. Steuer, Jr., Harry S. Latham, Plaintiffs-Appellants, v. NATIONAL MEDICAL ENTERPRISES, INC., N.M.E. Hospitals, Inc., Defendants- Appellees.

Page 70

846 F2d 70

Unpublished Disposition

NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit.

DRS. STEUER and LATHAM, PA, Rudolph R. Steuer, Jr., Harry S Latham, Plaintiffs-Appellants, v. NATIONAL MEDICAL ENTERPRISES, INC., N.M.E. Hospitals, Inc. Defendants- Appellees.

No. 87-3753.

United States Court of Appeals, Fourth Circuit.

Argued March 7, 1988.

Decided May 10, 1988.

H. Fulton Ross, Jr., John F. Beach (Ross & Beach, A. Camden Lewis, Daryl G. Hawkins, Lewis, Babcock, Pleicones & Hawkins on brief) for appellants.

Richard Feinstein (Robert Fabrikant, Peter J. Sholl, McKenna, Conner & Cuneo, Gary E. Clary, Hall, Daniel, Winter & Clary on brief) for appellees.

Before K.K. HALL and SPROUSE, Circuit Judges, and BUTZNER, Senior Circuit Judge.

PER CURIAM:

Doctors Rudolph R. Steuer, Jr., and Harry S. Latham (Steuer & Latham) appeal from the district court's judgment in favor of defendants, NME Hospitals, Inc. (NME) and National Medical Enterprises, Inc., in Steuer & Latham's action challenging a contract entered into between NME and Dr. James Mijanovich. ¹ The contract in question gave Mijanovich the exclusive right to supply primary pathology services to patients at the Cherokee Memorial Hospital (CMH), a South Carolina facility owned and operated by NME. Steuer & Latham alleged in their complaint that the contract (1) violated federal antitrust laws; (2) deprived them of a property right without due process of law; and (3) operated to strip them of medical staff privileges protected by CMH's by-laws. Ruling on summary judgment, the district court held that Steuer & Latham failed to establish essential elements critical to each of their claims. We affirm.

I.

Cherokee Memorial Hospital is a 162-bed acute care facility located in Cherokee County, South Carolina. Although it is the only hospital in the county, CMH has experienced a consistently declining occupancy rate, which in Fiscal Year 1987, fell to a low of 32 percent. The evidence demonstrated that strong competition from other hospitals was at least partially responsible for the diminishing number of patients. In 1984, for example, 38.8 percent of the residents of Cherokee County who were hospitalized were hospitalized at facilities other than CMH. In 1985, that figure amounted to 40.4 percent. Correspondingly, twelve of CMH's staff physicians, who in 1987 accounted for 42.1 percent of CMH's total admissions, also enjoyed staff privileges at hospitals other than CMH. As the district court found, consumers of hospital services in Cherokee County view hospitals located outside the county as good substitutes for the services offered by CMH.

Like most other hospitals, CMH operates a pathology laboratory with equipment that performs anatomical pathology tests on surgically removed tissue. Prior to 1985, Doctors Steuer and Latham were employed as CMH's contract pathologists in its laboratory. ² They were the only pathologists then residing in Cherokee County. Steuer had served as the hospital's contract pathologist continuously since 1962, and Latham joined Steuer as an associate in 1976. Their contracts with the hospital were automatically renewable on a year-to-year basis, but they stated that the hospital could terminate the relationship without cause by providing advance notice of such termination within a designated period of time.

In 1984, NME acquired CMH from its previous owner, Cherokee County, and it assumed authority for all decisions relating to the hospital's management and operation. In November of that year, the Joint Commission on the Accreditation of Hospitals conducted an evaluation of the hospital's pathology department. As a result of its survey, the Commission certified eighteen deficiencies in the department, five of which required immediate remedial action for the hospital to retain its accreditation. Four other deficiencies were designated as "high priority." ³

Notwithstanding the subpar operation of the pathology department, NME in 1984 offered to enter a new contract with Steuer & Latham. The doctors, however, rejected NME's offer and...