Gordon v. Lewistown Hosp.

• Decision Date: 11 July 2003
• Docket Number: No. CIV.1:CV-99-1100.,CIV.1:CV-99-1100.
• Citation: 272 F.Supp.2d 393
• Parties: Alan D. GORDON, M.D.; Alan D. Gordon, M.D., P.C.; Mifflin County Community Surgical Center, Inc., Plaintiffs v. LEWISTOWN HOSPITAL, Defendant
• Court: U.S. District Court — Middle District of Pennsylvania

272 F.Supp.2d 393

Alan D. GORDON, M.D.; Alan D. Gordon, M.D., P.C.; Mifflin County Community Surgical Center, Inc., Plaintiffs v. LEWISTOWN HOSPITAL, Defendant

No. CIV.1:CV-99-1100.

United States District Court, M.D. Pennsylvania.

July 11, 2003.

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Henry S. Allen, Jr., Robert W. Queeney, McBride, Baker and Coles, Chicago, IL, John B. Huck, Bluffton, SC, Orris C. Knepp, III, Knepp and Snook, Lewistown, PA, George M. Sanders, Steven B. Varick, Holland & Knight, LLC, Chicago, IL, for Alan D. Gordon, M.D., P.C.

Kathleen Chancler, Mark L. Mattioli, Jonathan B. Sprague, Post & Schell, Philadelphia, PA, Susan M. Lapenta, Horty, Springer & Mattern, Pittsburgh, PA, Michael D. Pipa, Harrisburg, PA, Craig A. Stone, Mette, Evans & Woodside, Harrisburg, PA, for Lewistown Hosp.

David E. Loder, Duane Morris, LLP, Philadelphia, PA, for Hospital and Health-system Ass'n of Pa.

Jeffrey B. Rettig, Hartman, Osborne & Rettig, P.C., Harrisburg, PA, for Penn State Geisinger Health.

MEMORANDUM FINDINGS OF FACT AND CONCLUSIONS OF LAW

RAMBO, District Judge.

                TABLE OF CONTENTS
                TABLE OF CONTENTS ........................................................................397
                MEMORANDUM ...............................................................................397
                 I. Findings of Fact ......................................................................398
                    A. The Parties ........................................................................398
                    B. The Credentialing Policy and the Peer Review Process ...............................399
                    C. Dr. Gordon and Dr. Nancollas: A Comparison .........................................399
                    D. The Relevant History of Dr. Gordon's Tenure ........................................401
                       1. The 28 Day Suspension ...........................................................401
                       2. The 45 Day Suspension ...........................................................401
                       3. The Intervening Summary Suspension ..............................................403
                       4. The 1996 Conditions of Reappointment ............................................403
                       5. The Gordon/Nancollas Advertising War ............................................405
                       6. The Hospital Revokes Dr. Gordon's Privileges ....................................406
                          a. The June 4, 1997 Letter ......................................................406
                          b. The Margaret Seecora Phone Call ..............................................407
                          c. The Hospital's Decision to Revoke Dr. Gordon's Privileges ....................407
                    E. The Hospital's Allegedly Predatory Tactics .........................................408
                       1. The Hospital's Relationship with Geisinger ......................................408
                          a. The Medical Office Building Lease ............................................408
                          b. Efforts to Recruit Other Ophthalmologists ....................................409
                       2. Dr. Everhart's Surgical Center ..................................................409
                       3. The Transfer Agreement ..........................................................411
                       4. Efforts to Discourage Other Physicians from Practicing at
                MCCSC ..........................................................................412
                    F. Relevant Antitrust Markets .........................................................413
                

                G. Dr. Gordon's Credibility ...........................................................413
                    H. Procedural History .................................................................414
                 II. Discussion ...........................................................................415
                     A. Count I: Unreasonable Restraint on Trade ..........................................415
                        1. Plaintiffs' Initial Burden .....................................................416
                           a. Concerted Action ............................................................416
                               i. The Conditions of Reappointment .........................................417
                              ii. The Alleged Conspiracy with Dr. Everhart ................................418
                           b. Market Power ................................................................419
                               i. Product Markets .........................................................420
                              ii. Geographic Markets and Market Share .....................................425
                                  -Outpatient Cataract Facility Services ..................................425
                                  -Inpatient Eye Surgery Facility Services ................................434
                                  -Emergency Eye Surgery Facility Services ................................435
                             iii. Market Analysis Conclusion ..............................................436
                           c. Actual Anti-Competitive Effects .............................................437
                           d. Summation of Plaintiffs' Initial Burden .....................................441
                        2. The Hospital's Pro-Competitive Objective .......................................442
                        3. Plaintiffs' Ultimate Burden ....................................................443
                     B. Count II: Illegal Tying Arrangement ...............................................446
                        1. Per Se Analysis ................................................................446
                        2. Rules of Reason Analysis .......................................................447
                     C. Count III: Attempted Monopolization ...............................................448
                     D. Other Pending Motions .............................................................449
                     E. Evidentiary Matters ...............................................................449
                 III. Conclusions of Law ..................................................................450
                 APPENDIX .................................................................................450
                 ORDER ....................................................................................463
                

Between April 3 and April 23, 2002, the court conducted a non-jury trial in the captioned matter. The following constitute the court's findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a).

I. Findings of Fact

A. The Parties

Plaintiffs in this action are Dr. Alan Gordon, M.D., Alan Gordon, M.D., P.C., and Mifflin County Community Surgical Center, Inc ("MCCSC"). Dr. Gordon is an ophthalmologist practicing in Lewistown, Pennsylvania. Alan Gordon, M.D., P.C. is a Pennsylvania professional corporation organized in 1981. MCCSC is a Pennsylvania corporation organized in 1998 and operating in Lewistown. Dr. Gordon is the sole stockholder in both MCCSC and Alan Gordon, M.D., P.C.

Defendant, Lewistown Hospital ("the Hospital"), is a general medical and surgical hospital. The Hospital provides primary and secondary levels of acute inpatient care. It also furnishes outpatient surgical facility services. The Hospital is the only hospital located in the area of Mifflin and Juniata Counties, Pennsylvania. The Hospital engages in activities which affect interstate commerce.

The Hospital, like most hospitals in the United States, has an organizational structure with three primary components. First, the Hospital has a Board of Trustees ("the Board") which has final decision-making authority on issues affecting the Hospital. Second, the Hospital's administration staff, led by the Hospital's Chief Executive Officer ("CEO"), oversees day-to-day operations. The Hospital does not employ any physicians. Instead, it grants physicians staff privileges to practice at the Hospital. These physicians compose the Hospital's third primary component, the Medical-Dental Staff. A physician must be a member of the Medical-Dental Staff to practice at the Hospital.

B. The Credentialing Policy and the Peer Review Process

As part of its relationship with the Hospital, the Medical-Dental Staff engages in a process known as "peer review." During this process, select members of the Medical-Dental Staff, known as "the Credentials Committee," make recommendations to the Board on whether a particular physician meets the minimum professional requirements to practice at the Hospital. These decisions involve determining whether a physician should be admitted to the Medical-Dental Staff and, once admitted, whether a physician's privileges should be renewed. The Credentials Committee's decisions are guided by the Hospital's Credentialing Policy, which sets forth the minimum professional requirements for physicians practicing at the Hospital. The Medical-Dental Staff initially adopted the Hospital's Credentialing Policy in 1991. The Board approved the Credentialing Policy that same year. The most recent revisions to the Credentialing Policy occurred in February, 1997.

The Credentialing Policy states that "[a]ppointment to the medical staff is a privilege which shall only be extended to professionally competent individuals who continuously meet the qualifications, standards and requirements set forth in this policy and in such policies as are adopted from time to time by the Board." (Def.Ex. 227(A)(1) at Article II, Part A, § 1.) Among other requirements, the Credentialing Policy states that only those physicians who can document "adherence to the ethics of their profession" and an "ability to work harmoniously with others" are qualified for staff privileges at the Hospital. (Id. at §§ 2(d)(2) and (4).) To be eligible for reappointment to the Medical-Dental Staff, a physician must agree "to abide by all bylaws and policies of the hospital, [the Credentialing] policy and rules and regulations of the medical staff as shall be enforced from time to time during the time the individual is appointed to the medical staff...." (Id. at Article II, Part C, § 2(b).)

The instant antitrust action...