Health Care Equalization Committee of the Iowa Chiropractic Soc. v. Iowa Medical Soc.
| Citation | 851 F.2d 1020 |
| Decision Date | 20 September 1988 |
| Docket Number | Nos. 86-2588,87-1015,s. 86-2588 |
| Parties | , 1988-1 Trade Cases 68,107, 11 Fed.R.Serv.3d 647 HEALTH CARE EQUALIZATION COMMITTEE OF THE IOWA CHIROPRACTIC SOCIETY as assignee of its members, Appellant, v. IOWA MEDICAL SOCIETY, Iowa Hospital Association; Blue Shield of Iowa; Blue Cross of Iowa, American Medical Association, American Hospital Association, Joint Commission on Accreditation of Hospitals; Clarence H. Denser, Jr., M.D.; Joseph A. Sabatier, Jr., M.D.; H. Doyl Taylor; Donald C. Young, M.D.; and Nelson H. Chesney, M.D., American College of Radiology, Appellees. HEALTH CARE EQUALIZATION COMMITTEE OF THE IOWA CHIROPRACTIC SOCIETY as assignee of its members, Appellee, v. IOWA MEDICAL SOCIETY, Iowa Hospital Association; Blue Shield of Iowa; Blue Cross of Iowa; Appellants. American Medical Association; American Hospital Association; Joint Commission on Accreditation of Hospitals; Clarence H. Denser, Jr., M.D.; Joseph A. Sabatier, Jr., M.D.; H. Doyl Taylor; Donald C. Young, M.D.; and Nelson H. Chesney, M.D. |
| Court | United States Courts of Appeals. United States Court of Appeals (8th Circuit) |
Flenn L. Norris, Des Moines, Iowa, for Health Care Equalization Committee of the Iowa Chiropractic Soc.
Craig Graziano, Des Moines, Iowa, for Blue Cross/Blue Shield.
Bennett A. Webster, Des Moines, Iowa, for Iowa Hosp. Assn.
Charles S. Treat, Chicago, Ill., for American College of Radiology.
Before McMILLIAN, JOHN R. GIBSON and FAGG, Circuit Judges.
The Health Care Equalization Committee (HCEC) appeals from a final judgment entered in the District Court 1 for the Southern District of Iowa dismissing its antitrust claims against Blue Cross and Blue Shield of Iowa (the Blues) and the American College of Radiology (the ACR), granting summary judgment in favor of the Iowa Hospital Association (the IHA), and denying its motion for summary judgment on its group boycott claim. Health Care Equalization Comm. v. Iowa Medical Society, 501 F.Supp. 970, 984-86, 988-91, 993-95 (S.D. Iowa 1980) (HCEC v. IMS ); id., Civ. No. 79-381-A, slip op. at 2-5, 8-10 (Aug. 4, 1986). For reversal, HCEC argues that the district court erred in (1) dismissing its antitrust claims against the Blues by finding them exempt from the antitrust laws under the state action doctrine and the McCarran-Ferguson Act; (2) dismissing the ACR for lack of personal jurisdiction; (3) granting summary judgment in favor of the IHA; and (4) denying its motion for summary judgment on its group boycott claim. For the reasons discussed below, we affirm.
HCEC is a committee of the Iowa Chiropractic Society, and an assignee of the claims of one hundred and twenty Iowa chiropractors. In 1979 HCEC brought this action against the Blues, the ACR, the IHA, and other defendants 2 alleging violations of sections 1 and 2 of the Sherman Act. 15 U.S.C. Secs. 1, 2. 3 HCEC charged that the defendants had conspired in violation of Sec. 1 of the Sherman Act to eliminate or prevent the growth of the chiropractic profession through a group boycott or concerted refusal to deal with chiropractors. HCEC alleged that the boycott was manifested in many ways, including (1) refusal to permit medical doctors to refer patients to chiropractors, to accept patient referrals from chiropractors, or to treat patients in cooperation with chiropractors; (2) denial of access to hospitals and hospital services to chiropractors; (3) attempts to block accreditation of chiropractic educational institutions; (4) promotion of public statements critical of chiropractors; and (5) refusal to include coverage for chiropractic services in health care service plans. Additionally, HCEC alleged that the Blues monopolized, attempted to monopolize, and conspired to monopolize the "health care insurance business in Iowa" in violation of Sec. 2 of the Sherman Act.
After approximately eight months of discovery, the Blues filed a motion to dismiss the antitrust allegations as to them. The Blues claimed to be exempt from the federal antitrust laws under the McCarran-Ferguson Act, 15 U.S.C. Secs. 1011-1015, and the state action doctrine of Parker v. Brown, 317 U.S. 341, 350-52, 63 S.Ct. 307, 313-14, 87 L.Ed. 315 (1943). The ACR filed a motion to dismiss for lack of personal jurisdiction. 4 In a comprehensive ruling, the district court held that the Blues were exempt from the Sec. 1 group boycott claim due to the state action doctrine, HCEC v. IMS, 501 F.Supp. at 988-91, and from the Sec. 2 monopolization claim on the basis of the McCarran-Ferguson Act, 15 U.S.C. Secs. 1011-1015. Id. at 993-95. The district court also granted the ACR's motion to dismiss for lack of personal jurisdiction because the ACR did not have sufficient minimum contacts with Iowa to satisfy the requirements of the due process clause of the fourteenth amendment.
Discovery involving the remaining defendants and claims proceeded throughout the early 1980s and ended in January 1986. Both HCEC and the IHA then moved for summary judgment on the group boycott claim. On August 4, 1986, the district court denied HCEC's motion for summary judgment, adopting a rule of reason approach to group boycott claims involving professional associations, and granted the IHA's motion for summary judgment because the undisputed facts revealed that the IHA was not involved in the alleged group boycott. 5 This appeal followed.
HCEC's first point on appeal is that the district court erred in dismissing its group boycott and monopolization claims against the Blues under the state action doctrine and the McCarran-Ferguson Act. We turn first to the state action doctrine.
The Blues are non-profit health care service corporations organized under Iowa Code Chapters 504 and 504A and governed by Iowa Code Chapter 514 in the administration of their health care service plans. These plans provide an alternative to traditional health insurance plans and revolve around two sets of contracts: provider contracts and subscriber contracts. Subscriber contracts obligate the Blues to provide to subscribers for a fixed fee various health care services through participating health care providers. Through the provider contracts, the Blues are obligated to reimburse participating health care providers for their fees and expenses in providing health care services to the Blues' subscribers. The history and development of the Blues is described in greater detail in Group Life & Health Insurance Co. v. Royal Drug Co., 440 U.S. 205, 239-243, 99 S.Ct. 1067, 1087-1089, 59 L.Ed.2d 261 (1979) (Brennan, J., dissenting). HCEC focuses its group boycott claim on the failure of the Blues to include chiropractors within their health care service plans--that is, the failure to include chiropractic services among those health care services which the Blues are obligated to provide under their subscriber contracts.
The Blues defend this exclusion by pointing to the regulatory framework governing health care service corporations set forth in Iowa Code Chapter 514, which the Blues assert mandates the exclusion of chiropractors. Thus, the Blues argue that the actions complained of by HCEC are actually those of the State of Iowa and therefore not subject to the Sherman Act under the state action doctrine.
In analyzing the Blues' defense under the state action doctrine, we begin with Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943). There, a raisin producer sought to enjoin the enforcement of an agricultural marketing program administered pursuant to state legislation intended to create price supports for various commodities, including raisins. The Court assumed for purposes of analysis that the program would have anti-competitive effects, but nevertheless concluded that Congress did not intend the Sherman Act to apply to the program because it "derived its authority and its efficacy from the legislative command of the state and was not intended to operate or become effective without that command." Id. at 350, 63 S.Ct. at 313. The Court based its decision both on federalism concerns and the legislative history of the Sherman Act.
We find nothing in the language of the Sherman Act or in its history which suggests that its purpose was to restrain a state or its officers or agents from activities directed by its legislature. In a dual system of government in which, under the Constitution, the states are sovereign, save only as Congress may constitutionally subtract from their authority an unexpressed purpose to nullify a state's control over its officers and agents is not lightly to be attributed to Congress.
Id. at 350-51, 63 S.Ct. at 313.
After more than thirty years, the Court returned to the state action doctrine in a series of cases. Goldfarb v. Virginia State Bar, 421 U.S. 773, 791, 95 S.Ct. 2004, 2015, 44 L.Ed.2d 572 (1975) (); Cantor v. Detroit Edison Co., 428 U.S. 579, 96 S.Ct. 3110, 49 L.Ed.2d 1141 (1976) (); Bates v. Arizona State Bar, 433 U.S. 350, 97 S.Ct. 2691, 53 L.Ed.2d 810 (1977) (); City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 98 S.Ct. 1123, 55 L.Ed.2d 364 (1978) (); New Motor Vehicle Board v. Orrin W. Fox Co., 439 U.S. 96, 99 S.Ct. 403, 58 L.Ed.2d 361 (1978) (same); California Retail Liquor Dealers Ass'n v....
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