Group Health Co-op. of Puget Sound v. King County Medical Soc.

• Decision Date: 15 November 1951
• Docket Number: No. 31591,31591
• Citation: 237 P.2d 737,39 Wn.2d 586
• Court: Washington Supreme Court
• Parties: GROUP HEALTH COOPERATIVE OF PUGET SOUND et al. v. KING COUNTY MEDICAL SOC. et al.

Page 586

39 Wn.2d 586

237 P.2d 737

GROUP HEALTH COOPERATIVE OF PUGET SOUND et al. v. KING COUNTY MEDICAL SOC. et al.

No. 31591.

Supreme Court of Washington.

Nov. 15, 1951.

Rehearing Denied Jan. 24, 1952.

Houghton, Cluck, Coughlin & Henry and Mervyn F. Bell, all of Seattle, for appellants.

Edgar J. Wright, Morrissey, Eagen & Walsh and John E. Hedrick, all of Seattle, amici curiae.

Riddell, Riddell, Williams & Madden, Seattle, for King County Medical Soc. et al.

Lewis L. Stedman and Stedman & Stedman, all of Seattle, for Swedish Hospital.

Brightman, Roberts & Holm, Renton, for Public Hospital Dist. No. 1 of King County et al.

HAMLEY, Justice.

This action brings to a head the long and vigorous struggle of the King County Medical Society to curb independent contract medical and hospital service in King county.

In late years the battle has been waged chiefly against Group Health Cooperative of Puget Sound (Cooperative). This organization has proved itself better able than most of its predecessors in the field of independent contract medicine to withstand the opposition of King County Medical Society (Society). But the Cooperative has apparently tired of what it regards as unfair and illegal fetters placed upon its service and growth. And so, in November, 1949, it brought this suit, asking for an injunction and damages.

Plaintiff Cooperative is a nonprofit corporation, organized under Rem.Rev.Stat. § 3872 et seq., and a registered health care service contractor under Rem.Supp.1947, § 6131-10 et seq. The Cooperative is under contract with a medical staff composed of twenty licensed physicians, five of whom are plaintiffs in this action. The remaining plaintiff, Amos Huseland, is a member of the Cooperative, and is under contract with the Cooperative to receive prepaid medical and hospital care. He is also a resident and taxpayer within Public Hospital District No. 1 of King county.

Defendant Society, a nonprofit corporation, is composed of approximately nine hundred fifty licensed physicians residing and practicing medicine in King county, comprising all but a very small number of such physicians. Defendant King County Medical Service Bureau (Bureau) is an unincorporated association composed of approximately six hundred physicians who are members of the Society. The complaint alleges that the membership of the Bureau is so numerous as to make it impracticable to sue individual members by name, and that all doctors named as defendants were accordingly sued individually and as representatives of all other members of the Bureau. Defendant King County Medical Service Corporation (Service Corporation) is a nonprofit corporation organized by members of the Society to furnish medical care and hospitalization to the employees of businesses and industries in the county. Defendant Dr. Charles E. Watts was, at the beginning of this suit, president and trustee of the Society, and defendant Dr. Ralph H. Loe was president-elect and trustee.

Defendant Public Hospital District No. 1 of King county (Renton Hospital) is a municipal corporation organized under Rem.Supp.1945, § 6090-30 et seq., as amended, and operates a hospital at Renton, Washington. Defendant Elmo Wright, Rudolph Seppi and Frank D. Hanley are the commissioners of the hospital district. Defendants Drs. D. J. Laviolette, Edward W. Roberts, M. J. Schultz and Lloyd F. Lackie are members of the Bureau and of the medical staff of the Renton Hospital. Defendant Swedish Hospital is a nonprofit corporation and operates a hospital in Seattle.

It is alleged in the amended complaint that the Society, Bureau and Service Corporation and the members of each have combined, agreed and conspired: To acquire a monopoly in King county in the furnishing of prepaid medical and hospital care; to eliminate competition and restrain trade therein; to bring about a boycott of any person or organization attempting to furnish such care through doctors not members of the Society; and to injure and hamper physicians and surgeons not members of the Society in the practice of their profession, by the regular practice of intimidation, coercion, threats, libel and slander. It is alleged that, in pursuance of this combination, agreement and conspiracy, these defendants committed several kinds of overt acts. These alleged overt acts and the evidence concerning each will be separately discussed at a later point in this opinion.

It is also alleged in the amended complaint that defendants Swedish Hospital and Renton Hospital, and defendant commissioners of Renton Hospital, have entered into the combination, agreement and conspiracy described above. It is alleged that the part played by defendant hospitals in such combination and conspiracy has consisted in the adoption of by-laws or regulations, submitted by members of the Bureau at the instance of the Society and Service Corporation, under which access to the respective hospitals has been denied to any physician not a member of the Society. It is further alleged that defendants Drs. Laviolette, Roberts, Schultz and Lackie actively participated in the formulation, adoption and enforcement of such by-laws or regulations, solely with the intention of consummating the alleged conspiracy, and to injure plaintiffs.

As a basis for injunctive relief, it is alleged that, by reason of the wrongful acts of defendants, plaintiffs have been subjected to serious and irreparable injury and damage, for which their remedy at law is wholly inadequate. Plaintiffs also ask for monetary damages in the sum of $4,500 by reason of expenses incurred by the Cooperative in securing the services of doctors from other localities when prevented, through defendants' course of conduct, from employing local doctors, and in the sum of $15,000 each, suffered by each of the five plaintiff doctors, by reason of injury to professional reputation and standing in the community, mental distress and humilitation. The total monetary damages prayed for aggregate $79,500.

The answers filed on behalf of the defendants in substance deny the allegations of the amended complaint respecting an alleged combination, agreement and conspiracy, the alleged motives therefor, the alleged overt acts in pursuance thereto, and the alleged resulting damages. The answer filed on behalf of the Society, Bureau, Service Corporation and defendants Drs. Watts and Loe, also contains an affirmative defense in which is recounted the efforts of the Society, over the years, to curb so-called 'unethical' prepaid contract practice of medicine.

It is also alleged in this answer, by way of affirmative defense, that one corporation which in 1933 was engaged in 'unethical' contract practice in King county, brokering medicial service, was owned by a layman, one Prendergast, operating under various corporate names; that Prendergast became wealthy as a result of this operation, and sold the business to a group of individuals who likewise made a substantial sum of money from the profits of the corporation; and that plaintiff Cooperative has since bought the good will, corporate stock and business of the Prendergast corporation, and is now continuing to operate the same as a commercial enterprise in violation of the ethics of the medical profession and in violation of its charter as a charitable corporation.

The reply puts in issue all of the adverse allegations of the affirmative defense summarized above.

The trial, which began on May 24, 1950, lasted four and a half weeks, and is recorded in a twenty-three-volume statement of facts. At the conclusion of the trial, the court took the case under advisement. Three weeks later the trial court issued its memorandum opinion, in which it was indicated that the action would be dismissed. No formal findings of fact and conclusions of law were entered. However, the decree, dated July 26, 1950, which dismisses the action with prejudice, contains a provision adopting, as the court's findings of fact and conclusions of law, the memorandum opinion of July 14, 1950.

Plaintiffs have appealed. They rely upon fourteen assignments of error. The first eight assignments challenged specific findings of fact. The next five assignments contest specified conclusions of law. The final assignment is generally in nature, reciting that the court erred in making and entering its decree providing that the action be dismissed with prejudice.

This being an action in equity, findings of fact were not necessary at the time this decree was entered. Thomas v. Hensel, Wash., 230 P.2d 290. Where such findings have been entered, however, we have given them great weight. State ex rel. Bradford v. Stubblefield, 36 Wash.2d 664, 220 P.2d 305, 17 A.L.R.2d 1258.

We have previously expressed disapproval of the practice of attempting to enlarge the formal findings of fact by reference to a memorandum decision. In re Sipes, 24 Wash.2d 603, 167 P.2d 139. See, also, 2 Bancroft's Code Practice and Remedies, § 1682, p. 2161, quoted with approval in Clifford v. State, 20 Wash.2d 527, 148 P.2d 302.

The practice of adopting the memorandum opinion as the complete findings of fact and conclusions of law is still more objectionable. This is particularly true in the instant case where it becomes necessary to glean through a fifty-one-page memorandum opinion, and to segregate recitals of fact from interspersed discussions of pleadings, evidence and points of law, in order to arrive at the actual findings of fact intended by the court. Moreover, after completing this process, we learn that the findings on many important points consist of statements that plaintiffs' allegation 'is not sustained by the evidence,' no attempt being made to indicate affirmatively, what the evidence does show. On other important points we are unable to discover even this much of a finding.

In what is said above no criticism is intended, since, as just indicated, findings of fact were not required under our rules. Our purpose has...