Kartell v. Blue Shield of Massachusetts, Inc.
| Decision Date | 08 September 1982 |
| Docket Number | No. 82-1134,82-1134 |
| Citation | 687 F.2d 543 |
| Parties | 1982-2 Trade Cases 64,927 James P. KARTELL, M.D., et al., Plaintiffs-Appellees, and Grant V. Rodkey, M.D., et al., Intervenor-Plaintiffs-Appellants, v. BLUE SHIELD OF MASSACHUSETTS, INC., et al., Defendants-Appellees. |
| Court | U.S. Court of Appeals — First Circuit |
Kenneth Laurence, with whom Thayer Fremont-Smith, Michael K. Loucks, Lee T. Gesmer, and Choate, Hall & Stewart, Boston Mass., were on brief, for intervenor-plaintiffs-appellants.
Reginald H. Howe, with whom Daniel O. Mahoney, Douglas H. Wilkins, and Palmer & Dodge, Boston, Mass., were on brief, for defendants-appellees.
Christopher E. Nolin, with whom Stanley V. Ragalevsky, Deborah A. Laupheimer, Warner & Stackpole, Boston, Mass., James vanR. Springer, and Dickstein, Shapiro & Morin, Washington, D. C., were on brief, for plaintiffs-appellees.
Before CAMPBELL and BREYER, Circuit Judges, and ROSENN *, Senior Circuit Judge.
This appeal brings to the court an internecine dispute among members of the Massachusetts Medical Society (Society) regarding how best to challenge payment practices of Blue Cross of Massachusetts, Inc. (Blue Cross) and Blue Shield of Massachusetts, Inc. (Blue Shield) that effectively limit the fees that can be earned by Massachusetts physicians who render services to Blue Cross and Blue Shield subscribers. The case comes to us in an unusual posture. The Society, having lost control of litigation brought by four individual physicians but with its full financial support, moved, along with two individual physicians, to intervene in order to protect its interests in the action. By their complaint in intervention the Society and the two individual physicians also sought to enlarge the scope of the claims against Blue Cross and Blue Shield, a litigation strategy disagreement which had contributed to the schism between them and the original plaintiffs. The district court in an unexplicated order allowed the intervention, but because it denied plaintiff-intervenors (intervenors) the opportunity to raise their new claims, they have appealed. We conclude that no final order from which appeal would lie exists, and that the district court's order did not effectively deny the intervenors preliminary injunctive relief so as to create a risk of irreparable injury pendente lite. We therefore dismiss the appeal for lack of jurisdiction.
Blue Shield is a nonprofit medical service corporation that offers prepaid plans that provide coverage for the cost of medical services rendered by physicians. Blue Cross is a nonprofit hospital service corporation that offers plans covering the cost of hospital and related medical care. The organizations together issue and administer joint subscriber contracts offering their services to the public under authority of Massachusetts law.
The original plaintiffs and intervenors primarily object to two basic restrictions promulgated by Blue Shield in concert with Blue Cross. First, Blue Shield, which enters into contracts with physicians and other health care providers in Massachusetts, requires "participating physicians" to accept as full payment for any covered services an amount equal to 95% of their usual and customary charges, the latter unilaterally determined by Blue Shield. Participating physicians must therefore agree not to bill a Blue Shield subscriber for the difference between what the physician would normally charge and the amount allowed by Blue Shield ("balance billing"). The second restriction promulgated by Blue Shield, which effectively enforces the ban on balance billing, is contained in its contracts with its subscribers. In these contracts Blue Shield states that it will not cover the cost of either nonemergency medical services rendered in Massachusetts by any physicians with whom Blue Shield has not entered into a contract or emergency care provided by such "nonparticipating physicians" when a participating physician could have rendered the service. Thus only participating physicians, who in their contracts with Blue Shield have agreed to the ban on balance billing, are entitled to claim reimbursement from Blue Shield. 1
To challenge these practices, the Society sponsored a series of actions against Blue Cross and Blue Shield. The instant lawsuit, commenced on March 10, 1978, is the third of four such actions. 2 It was brought by four Massachusetts physicians represented at the Society's expense by two law firms, Warner & Stackpole and Dickstein, Shapiro & Morin. Although it did not name the Society as a plaintiff, the Society paid for substantially all counsel fees and the case was conducted in many respects as if the Society were the client. 3 Like its predecessor antitrust action, Hedberg v. Blue Cross of Massachusetts, Inc., see supra note 2, the instant action alleges violations of §§ 1 and 2 of the Sherman Act. Unlike its predecessor, the instant action did not seek damages but only injunctive relief. And unlike its predecessor, the instant action was not brought as a class action.
The action proceeded by first amended complaint, and on March 31 the original plaintiffs filed a motion for a preliminary injunction. Thereafter defendants filed a motion to dismiss, relying primarily on the defense of Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), and on McCarran-Ferguson Act immunity from the antitrust laws, see 15 U.S.C. §§ 1011-15. On August 3, 1978, the district court granted defendants' motion to dismiss on the ground that defendants were compelled by state law, M.G.L. c. 176A and c. 176B § 7, to refrain from compensating nonparticipating physicians, thereby rendering their arguably anticompetitive conduct immune from prosecution under the state action doctrine enunciated in Parker v. Brown, supra.
This court vacated the judgment of the district court in Kartell v. Blue Shield of Massachusetts, Inc., 592 F.2d 1191 (1st Cir. 1979). The court held that the district court should have abstained from deciding the state law question, namely whether defendants' conduct was in fact compelled by statute, and directed the court to await the outcome of cases then pending before the Supreme Judicial Court of Massachusetts. This court also indicated that if the decisions in the pending cases did not resolve the state law question, the district court might consider certifying it to the Massachusetts court. The district court eventually adopted this suggestion. 4
Meanwhile, during the summer of 1981 the Society, upset at the slow progress of the Kartell action and legal fees it had incurred in excess of $500,000, determined that the interests of its constituents would best be served by changing counsel and litigation strategy. The original individual plaintiffs disagreed, 5 however, and refused to cooperate with the Society. 6 The Society therefore found itself in the awkward position of having lost control of a lawsuit it had financed for three years. It retained new counsel. Shortly thereafter, the Supreme Judicial Court filed its opinion answering the certified questions. The intervenors, a participating physician, a nonparticipating physician, and the Society, then moved to intervene in the instant action pursuant to both Fed.R.Civ.P. 24(a), as of right, and 24(b), by permission. In conjunction with their motion to intervene they filed a "Complaint of Intervenor-Plaintiffs." The proposed complaint in intervention differs from original plaintiffs' first amended complaint in three principal respects. First, the proposed complaint seeks relief on behalf of two classes of physicians, participating and nonparticipating. It also adds claims for damages as well as injunctive relief. Finally, the proposed complaint appears to assert broader legal theories than does the first amended complaint. 7
The district court, in a cryptic order, dismissed the Hedberg action, allowed the intervention in this proceeding, but barred intervenors from introducing any new claims in their complaint in intervention. 8 The court did not indicate whether it had acted under authority of Rule 24(a) or 24(b).
Intervenors filed a timely notice of appeal. Defendants moved to dismiss under Local Rule 12 for lack of appellate jurisdiction. Expressing some doubts about the appealability of the court's order, on April 14, 1982, this court issued a Memorandum and Order "hold(ing) the motion to dismiss for lack of jurisdiction in abeyance pending full briefing of the case." Because we now conclude that we are without jurisdiction of the appeal we do not reach the substantive question whether the district court properly allowed the intervention without allowing intervenors to raise any new claims at this stage of the litigation.
The intervenors on appeal maintain that the district court erred in barring them from raising the claims in their complaint in intervention not already before the court. They argue that as intervenors of right under Fed.R.Civ.P. 24(a)(2) they are entitled to assert all claims relating to the nature of the relationship between Massachusetts physicians and Blue Cross and Blue Shield. In support of their claim that this court has jurisdiction to hear the appeal, notwithstanding that the underlying action is still pending in the district court, intervenors assert two bases of appellate jurisdiction. They argue that the district court's order is appealable as a final order because it denied them the full intervention of right to which they are entitled. Alternatively, intervenors assert that the district court's order is immediately appealable under 28 U.S.C. § 1292(a)(1) as the denial of injunctive relief. Neither ground is adequate to support the appellate jurisdiction of the court at this time.
Intervenors' first argument for jurisdiction is predicated on their asserted status as intervenors of right. They argue that once entitled to...
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