Flegel v. Christian Hosp., Northeast-Northwest
| Decision Date | 14 October 1993 |
| Docket Number | NORTHEAST-NORTHWEST,No. 92-3773,RTHEAST-NORTHWEST,92-3773 |
| Citation | 4 F.3d 682 |
| Parties | , 1993-2 Trade Cases 70,355 Gerhard FLEGEL, D.O.; Richard Still, D.O., Appellants, v. CHRISTIAN HOSPITAL,; Michael R. Richmond; Robert P. Margolis; Richard A. Blath; Donald A. Blum; Wilfrido C. Feliciano; Richard J. Kloecker; Stephen N. Bell; Clarence M. Benage; Leon Bialecki; Alan C. Craig; Godofredo M. Herzog; James Debnam; Barbara Ellzey; Joshua Jensen; Loretta May Roberts; Arturo C. Montes; David M. Near; Edward A. Puro; Sanford E. Rabushka; John L. Rollo; William P. Svancarek; Alan F. Tess; Thomas J. Banton, Jr.; Mariano N. Floro, Jr.; Robert H. Halley; William F. Hoffman; Gerald W. Moritz; Gerald Newport; Sharad P. Parikh; Ebello T. Pasia; Thomas E. Shine; George T. Shuert; Mardonio J.R. Yap; Yoram Hahn; Carl S. Ingber; David Landau; Michael Matar; Thomas E. Ryan; Ivan W. Sletten; Mark L. Travis; Gloria Wattler; William E. Dreyer; Paul J. McKee; Ned Taddeucci; Arthur J. Seewoester; Leo I. Mirowitz; Arnold J. Millner; David M. Margolis; Mary J. Lee; Leonard R. Kostecki; Paul Kohnen; Gerry Kamenko; Paul F. Detrick; Fred L. Brown; Peter W. Callow, Appellees. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Steven M. Hamburg, St. Louis, MO, argued (Theresa Counts Burke, on the brief), for appellants.
Glenn E. Davis, St. Louis, MO, argued (Richard Scherrer and Ann E. Buckley on the brief), for appellees.
Before BOWMAN, Circuit Judge, HEANEY, Senior Circuit Judge, and BEAM, Circuit Judge.
Gerhard Flegel and Richard Still, doctors of osteopathy (D.O.s) who were denied privileges at Christian Hospital Northeast-Northwest, sued the hospital and a number of its board members, employees, and staff physicians for antitrust violations in the United States District Court for the Eastern District of Missouri. Flegel and Still alleged that the hospital and its staff had conspired to prevent them from having access to the market of patients who would otherwise have been referred to them had they been granted privileges. The defendants moved for summary judgment, arguing, inter alia, that Christian lacked sufficient market power within a properly defined relevant market for an antitrust violation to have occurred. The district court granted the defendants' motion in an order from which Flegel and Still have appealed. We affirm.
Christian is a private, not-for-profit hospital that operates from two locations in North St. Louis County, Missouri. 1 The hospital has 565 physicians on staff, fifty of whom are D.O.s.
Flegel and Still sought to add to those numbers by becoming the first osteopathic urologists on the hospital's staff. They filed applications for privileges at Christian in the fall of 1988. Both applications underwent numerous levels of review and both were eventually denied. Although the stated reasons for those decisions have changed somewhat before and during the course of this litigation, Christian now claims that both decisions rested on inadequate specialty and subspecialty training, and some contemporaneous evidence supports that assertion.
At the time of their applications, both Flegel and Still were certified in urologic surgery by the American Osteopathic Association (AOA). Certification by the AOA required completion of a four-year training program, which could be comprised of two years in general surgery and two years in urologic surgery, as was the case with both Flegel and Still. The hospital found their training inadequate in that certification by the American Board of Medical Specialties (ABMS), the allopathic equivalent to the AOA, required three years of training specifically in urologic surgery.
Shortly after Flegel and Still filed their applications, the hospital's department of surgery revised its guidelines to require that applicants either be certified or eligible to be certified by the ABMS. Previously, applicants could receive privileges if they were certified either by the ABMS or by the AOA. The hospital asserts that it took this action to increase the quality of care within the department, to improve the department's reputation, and to respond to recommendations made by hospital accrediting organizations such as the Joint Commission for Accreditation of Hospital Organizations. In addition to receiving three years of subspecialty training, the ABMS requires that such training take place in a program accredited by the Accreditation Council for Graduate Medical Education (ACGME). The district court found that positions in such programs can be extremely difficult to attain for D.O.s. Neither Flegel nor Still attended an ACGME-accredited training program.
Flegel and Still alleged three separate violations of the federal antitrust laws:
(1) the defendants combined and conspired with one another to illegally boycott the plaintiffs from obtaining hospital staff privileges in violation of section one of the Sherman Act, 15 U.S.C. Sec. 1;
(2) the defendants entered into a combination and conspiracy in unreasonable restraint of trade and commerce in violation of section one of the Sherman Act, 15 U.S.C. Sec. 1; and
(3) the defendants entered into a contract, combination, or conspiracy to unlawfully prevent plaintiffs from obtaining active staff privileges at the hospital in violation of section two of the Sherman Act, 15 U.S.C. Sec. 2.
See Flegel, 804 F.Supp. at 1167. 2 By alleging an illegal boycott, the plaintiffs sought to prove a per se violation, but the district court found the per se analysis inapplicable and instead applied the so-called "rule of reason" to the remaining claims.
Our discussion proceeds as follows: after concluding that the alleged restraint is subject to the rule of reason rather than per se analysis, we consider whether the plaintiffs have provided sufficient evidence of actual detrimental effects on competition to obviate the need for a more detailed market analysis. Finding that they have not, we then consider the relevant geographic market definitions proposed by Flegel and Still, and the evidence of Christian's power within the appropriate market. Because plaintiffs have produced little evidence to support their assertion that Christian possesses dominant market power, we affirm the district court's grant of summary judgment to the defendants on that ground. 3
In reviewing a grant of summary judgment, we apply the same standard as does the district court, and we view the evidence most favorably to the nonmovant, granting all reasonable inferences in the nonmovant's favor as well. See Amerinet, Inc. v. Xerox Corp., 972 F.2d 1483, 1489-90 (8th Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 1048, 122 L.Ed.2d 356 (1993). "In complex antitrust cases, no different or heightened standard for the grant of summary judgment applies." Id. at 1490. When neither motive nor intent are determinative, summary judgment may be particularly useful. See id.
In this case, neither motive nor intent are determinative. Although the district court found that the hospital treated M.D.s and D.O.s alike, applying the same standards to each, our analysis rests on no such assumption. Rather, we assume for the purposes of our decision that a jury could reasonably find that the hospital discriminated against Flegel and Still because they were osteopaths. We nonetheless hold that a jury could not reasonably find that the hospital's conduct amounted to an antitrust violation.
Flegel and Still first assert that the actions of the defendants that led the hospital to deny privileges to both of them amounted to a group boycott subject to per se analysis under section one of the Sherman Act.
[A] restraint may be adjudged unreasonable either because it fits within a class of restraints that has been held to be "per se" unreasonable, or because it violates what has come to be known as the "Rule of Reason," under which the "test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition."
FTC v. Indiana Fed'n of Dentists, 476 U.S. 447, 457-58, 106 S.Ct. 2009, 2017, 90 L.Ed.2d 445 (1986) (quoting Chicago Bd. of Trade v. United States, 246 U.S. 231, 238, 38 S.Ct. 242, 244, 62 L.Ed. 683 (1918)) (IFD ). If an alleged restraint falls within the category of restraints subject to per se analysis, a plaintiff need not prove its anticompetitive effects.
The courts of appeals have generally examined the denial or revocation of hospital privileges under the rule of reason, see, e.g., Oksanen v. Page Memorial Hosp., 945 F.2d 696, 708-09 (4th Cir.1991) (en banc), cert. denied, --- U.S. ----, 112 S.Ct. 973, 117 L.Ed.2d 137 (1992); Bhan v. NME Hosp., Inc., 929 F.2d 1404, 1411-12 (9th Cir.), cert. denied, --- U.S. ----, 112 S.Ct. 617, 116 L.Ed.2d 639 (1991); Oltz v. St. Peter's Community Hosp., 861 F.2d 1440, 1445 n. 1 (9th Cir.1988); Goss v. Memorial Hosp. Sys., 789 F.2d 353, 354-55 (5th Cir.1986), but Flegel and Still argue that these cases have involved individual determinations of incompetence or unprofessional conduct rather than exclusion of a class of medical service providers such as D.O.s. The plaintiffs direct our attention to Weiss v. York Hosp., 745 F.2d 786 (3d Cir.1984), cert. denied, 470 U.S. 1060, 105 S.Ct. 1777, 84 L.Ed.2d 836 (1985), in which York Hospital was alleged to have engaged in "strict scrutiny" of all applications by D.O.s for privileges, a practice that often resulted in decisions to deny privileges, while essentially rubber-stamping applications by M.D.s. See id. at 795. The district court had instructed the jury that this practice was subject to a per se analysis, and the Third Circuit agreed:
The Medical Staff is ... entitled to exclude individual doctors, including osteopaths, on the basis of their lack of professional competence or unprofessional conduct. If...
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