Hubbard v. Medical Service Corp. of Spokane County
| Decision Date | 13 January 1962 |
| Docket Number | No. 35624,35624 |
| Citation | 59 Wn.2d 449,367 P.2d 1003 |
| Court | Washington Supreme Court |
| Parties | S. Thatcher HUBBARD, Jr., Appellant and Cross-Respondent, v. The MEDICAL SERVICE CORPORATION OR SPOKANE COUNTY, a corporation, W. H. Tousey, Robert L. Rotchford and Harold T. Pederson, officers and representative members of the Medical Service Bureau of Spokane County, an association of medical doctors, Respondents and Cross-Appellants. |
Geo. W. Young, Spokane, for appellant.
C. C. Rowan, John D. MacGillivray, Spokane, for respondents and cross-appellants.
This is an action for damages and injunctive relief. The plaintiff, who is a licensed physician in Spokane, alleged extensive financial losses in his practice as a result of the restraint of trade imposed upon the medical profession in Spokane county by the monopolistic practices of the defendants, the Medical Service Corporation of Spokane County (hereinafter called the corporation) and The Medical Service Bureau of Spokane County (hereinafter called the bureau).
The following statement of the case is taken, in most instances, practically verbatim from the trial court's findings of fact; and where any additional factual statement is deemed necessary we will so indicate.
The corporation is nonprofit and was organized in 1933 by nineteen physician members of the Spokane County Medical Society, and has operated what is generally known as a 'medically sponsored health care program.' Since 1947 the corporation has operated as a 'Health care service contractor' under the provisions of RCW 48.44.010-060. As such health care servide contractor, the corporation enters into agreements whith employee groups whereby, in consideration of prepaying of designated premiums therefor, the corporation agrees to furnish to its subscribers medical, surgical and hospital services. The corporation operates in Spokane county and five adjoining counties. Approximately eighty per cent of the population in that area is covered by some type of prepaid medical and hospital care insurance. Thirty per cent of the population are subscribers to contracts written by the corporation. Fifty per cent of the population are insured for such services under insurance contracts written by private insurance carriers.
The bureau is an unincorporated association of doctors of the Spokane area, also organized in 1933 for the purpose of cooperating with the corporation in securing medical and surgical care and treatment, hospital benefits and other allied health services for persons eligible therefor by reason of their contract relationship to the corporation; and to provide, through its members, medical and surgical services to subscribers of contracts offered by the corporation. At the present time, the bureau is composed of approximately 275 member doctors out of a total of approximately 300 doctors, licensed to practice in the area. Physician members of the bureau, by majority vote, adopt, and from time to time amend, their own rules, regulations and by-laws and operate under the 'Constitution and By-laws of the Medical Service Bureau of Spokane County.'
To the foregoing finding of the trial court, concerning the bureau, we would add that a member doctor is subject to the following rule pertinent to this case: He must refrain from associating professionally with or feferring subscribers to a doctor who is not a member of the bureau; he must not enter into a contract for his services with any competing prepaid contract medical plan, though he may treat members of an indemnity type plan; he must not criticize bureau policies to subscribers or their relatives; he may not discuss with subscribers problems relating to the authorized fee schedule which may be thought to require adjustments; he may not hold a contract with industrial employers to service their employees for occupational injuries unless he refrains from treating subscriber-employees for nonoccupational conditions; all treatment, except routine office calls, must be approved in advance by the bureau, and charges for such treatment are subject to review; and a doctor is limited by means of an 'area average' to the number of subscribers he may treat and be paid for per month.
The corporation enters into health care service contracts only with groups of employees. Individual coverage is extended only if a firm whose employees are covered ceases business, or if a covered employee terminates his employment. In such case, coverage may be continued on an individual basis with an adjustment in premium. In its contract with the group covered, the corporation agrees that it will furnish the medical and surgical care provided by the contract and that for such services the subscriber will not be billed individually by the attending physician or surgeon.
The medical and surgical services, which the corporation in its contracts agrees to provide to its subscribers, are furnished by individual physician members of the bureau who, by contract with the corporation, have agreed to furnish such services to the corporation subscribers. In order to receive medical and surgical services under a corporation contract, a subscriber must receive those services from a doctor who is a member of the bureau and who has agreed with the corporation to furnish such services. Member physicians of the bureau enter into individual contracts with the corporation whereby the physician agrees to furnish medical and surgical services to all subscribers of health care contracts written by the corporation, to accept in full for his services the fees fixed by the corporation, and to abide by all rules and regulations governing the furnishing of such services adopted by the corporation. The medical and surgical fees provided are established by a fee committee composed of members of the bureau, and become effective on approval of the corporation. The fee schedule so adopted is, from time to time, reviewed and is at all time subject to change on recommendation to the corporation by the fee schedule committee.
The plaintiff, S. Thatcher Hubbard, Jr., is licensed to practice medicine in this state; is a member of the Spokane County Medical Society and the Washington County and American Medical Associations. He specializes in anesthesia, the treatment of allergies, and pulmonary diseases, but is also engaged in a general medical practice. October 14, 1949, he was admitted to membership in the bureau and entered into a written contract with the defendant corporation which provided in part that plaintiff would, upon request, treat all subscribers of the corporation, would accept in full for such services the fees provided by the corporation, would abide by all rules and regulations covering the furnishing of such services; and which contract further provided that it was subject to cancellation at any time without cause.
To this finding of the trial court, concerning Dr. Hubbard, we would add that subsequent to 1949 he developed a specialty in inhalation or pulmonary therapy. He established a laboratory with equipment which he employs in giving a certain treatment known as intermittent positive pressure breathing (IPPB). At the time the plaintiff began to give his IPPB treatments, the bureau had set no fee for it. As a result, the plaintiff could neither be paid by the bureau nor charge the subscriber patients for them. He requested that the bureau either exclude the treatments from the coverage of the subscriber's contract or set a bureau fee schedule for them. Finally, the bureau agreed to set a fee of four dollars a treatment and allow one a week. It is the plaintiff's contention that this was completely inadequate because the reasonable cost was $5.75 a treatment and patients sometimes needed as many as two or three treatments a day and, in average cases, several a week. The plaintiff was never able to gain full bureau acceptance of his IPPB treatments as standard medical practice. Finally, he began to bill the subscribers individually for the IPPB treatments. After repeated warning failed to stop him, his contract was cancelled November 16, 1957, on the ground that he was double billing in violation of the bureau's regulation.
While not specifically so found, it is conceded that upon the cancellation of his contract by the corporation, and pursuant to the by-laws of the bureau, his membership in the bureau was automatically terminated.
Dr. Hubbard then commenced this action, and by his complaint set out a cause of action seeking a permanent injunction restraining the defendants from...
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