Kerth v. Hamot Health Foundation, Civil Action No. 95-212.
| Decision Date | 30 September 1997 |
| Docket Number | Civil Action No. 95-212. |
| Citation | 989 F.Supp. 691 |
| Parties | William J. KERTH, M.D. and E. Lawrence Hanson, M.D., Plaintiffs, v. HAMOT HEALTH FOUNDATION, et al., Defendants. |
| Court | U.S. District Court — Western District of Pennsylvania |
James R. Walczak, W. Patrick Delaney, Craig R.F. Murphey, Eric J. Purchase, Gerald J. Stubenhofer, MacDonald, Illig, Jones & Britton, Erie, PA, for Hamot Health Foundation, Inc., the Hamot Medical Center, of the City of Erie, Pennsylvania.
David Marx, Jr., Brent R. Austin, McDermott, Will & Emery, Chicago, IL, for George J. D'Angelo, M.D., George F. Kish, M.D., Dennis J. Michalak, M.D., Prabhaker G. Sardesai, M.D., Wilfredo S. Tan, M.D., George J. D'Angelo, M.D., Thoracic and Cardiovascular Associates, P.C., and Thoracic and Cardiovascular Associates, Inc. dba D'Angelo Clinic.
S.E. Riley, Jr., Conner & Riley, Erie, PA, Jack R. Bierig, Richard D. Raskin, Bruce M. Zessar, Sidley & Austin, Chicago, IL, for Medicor Associates, Inc.
Eric J. Purchase, MacDonald, Illig, Jones & Britton, Erie, PA, for Hamot Health Systems, Inc.
Shirley J. Christian, Harrington & Mitchell, Youngstown, OH, for Western Reserve Care System, an Ohio Not-For-Profit Corporation.
Barbara Blackmond, Horty, Springer & Mattern, Pittsburgh, PA, for Columbia Mercy Medical Center.
Linda R. Mittleman, Cleveland, OH, for University Hospitals of Cleveland.
Edward R. Ehrhardt, Jr., Pittsburgh, PA, for Shadyside Hospital.
This antitrust case involves alleged restraint of trade in the practice of open heart surgery in Erie, Pennsylvania. Plaintiffs are two cardiovascular surgeons who have sued (1) the hospital at which they used to work, (2) a group of cardiologists who used to refer cases to them and (3) a competing group of cardiovascular surgeons. Plaintiffs claim the competing surgeons coerced the hospital and the cardiologists into conspiring to destroy their practice by denying them referrals. Plaintiffs' six count complaint alleges violations of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, as well as state law claims for antitrust violations and tortious interference with prospective business relations.
Presently before the Court are motions for summary judgment filed on behalf of the following Defendants:
2. Medicor Associates, Inc. [Doc. No. 124].
3. Hamot Health Foundation and Hamot Medical Center of the City of Erie, Pennsylvania [Doc. No. 137].
We have consolidated these motions for purposes of this Memorandum Opinion and Order. For the reasons set forth below, Defendants' motions for summary judgment will be granted.
Cardiovascular surgeons derive the majority of their open heart surgery cases through referrals. The typical referral pattern for a heart patient is from a primary care physician to a cardiologist and then, if the patient needs surgery, to a cardiovascular surgeon. Obviously, the surgery is performed in a hospital that has the appropriate facilities. Thus, to succeed in the business, a cardiovascular surgeon needs surgical privileges at a hospital and a stable source of referrals.
The Defendants in this case are: (1) Hamot Health Foundation and Hamot Medical Center of the City of Erie, Pennsylvania (collectively "Hamot"); (2) Medicor Associates, Inc. ("Medicor"); and (3) the D'Angelo Clinic and various of its individually named employees (collectively the "Clinic" or the "Clinic Defendants").
Hamot is a 480-bed hospital in Erie that provides a wide range of inpatient services including open heart surgery.1 Hamot has a three-part organizational structure consisting of (1) a Board of Directors, (2) an Administrative Staff and (3) a Medical Staff. The Board has ultimate authority over the operation of the hospital, including establishment of hospital policy and the credentialling of physicians. The Administrative Staff has been delegated responsibility for the day-to-day operation of the hospital. The Medical Staff consists of physicians who have been granted privileges to practice at Hamot.
Medicor is group of cardiologists and internists that have practiced at Hamot since 1973. Currently, Medicor employs eleven cardiologists and three internists. The Medicor cardiologists receive the majority of their heart patients through referrals from other practitioners. Medicor has never employed cardiovascular surgeons and does not compete in the practice of open heart surgery. When a Medicor heart patient requires surgery, that patient is always referred to a cardiovascular surgeon. Medicor is the dominant cardiology group2 at Hamot and serves as the primary source of referrals for open heart surgeries performed at Hamot.
The Clinic and its individually named employees are a group of cardiovascular surgeons that competed with the Plaintiffs at Hamot. The Clinic Defendants still practice at Hamot. The Clinic was founded in the 1960s by Dr. George D'Angelo.3 Dr. D'Angelo is a well known and respected figure in the Erie medical community. Dr. D'Angelo performed the first open heart surgery in Erie in 1962; and also performed the first coronary bypass and valve replacement surgeries in Erie. Currently, the Clinic consists of four active cardiovascular surgeons who perform over 600 open heart surgeries at Hamot annually.
The Plaintiffs are E. Lawrence Hanson, M.D. ("Dr. Hanson") and William J. Kerth, M.D. ("Dr. Kerth"). Drs. Hanson and Kerth are cardiovascular surgeons who lost their open heart surgery privileges at Hamot in 1992 and 1993 respectively because they failed to perform enough open heart surgeries to meet Hamot's minimum surgical volume requirement.4 Plaintiffs then filed the instant antitrust action, claiming their lack of surgeries was the result of a conspiracy to destroy their practice by depriving them of referrals.
At Hamot, as at many other hospitals, neither the cardiologists nor the cardiovascular surgeons are Hamot employees. Rather, they are independent specialists who have been granted privileges to practice their specialty at the hospital.5 Hamot does, however set staffing policies and regulates the practice of specialties, including cardiovascular surgery.
For example, in 1983 Hamot placed a moratorium on granting new cardiovascular surgical privileges. The moratorium, however, was not inflexible. At various times, Hamot's Board lifted the moratorium to permit the recruitment of new cardiovascular surgeons. As discussed in more detail below, Dr. Hanson was the beneficiary of such action on several occasions.
Additionally, in August 1983, Hamot's Board authorized the formation of a committee to investigate issues relating to cardiovascular surgery at the hospital. As a result of the committee's work, in April 1984 the Board adopted a number of rules regulating cardiovascular surgery. The Board passed a "First Surgical Assistant Rule" ("FSAR"). Under the FSAR, two board certified cardiovascular surgeons were required to participate in every open heart surgery, one as the primary surgeon and the other as a first assistant. The stated purpose of the FSAR was to ensure the presence of two qualified surgeons during every procedure. This rule was in effect during the events giving rise to this case but was later abandoned when it came under criticism for, among other things, an inefficient use of surgeons' time.
The Board also established an open heart surgery volume requirement. Under the volume requirement, cardiac surgeons were required to perform at least one hundred open heart surgeries per year, twenty-five of which must be as the primary surgeon, in order to maintain their privileges. The stated purpose of the volume requirement was to ensure that surgeons participated in enough procedures to maintain their technical proficiency. The rule was supported by contemporary studies linking volume and lower mortality rates. See Pontius v. Children's Hospital, 552 F.Supp. 1352 (W.D.Pa.1982).
In October 1986, Hamot instituted its "Hamot-Centered Physicians Program" ("HCPP"). The stated purpose of the HCPP was to promote quality and uniformity of care. Under the program, physicians were offered various benefits in exchange for focusing their practice at Hamot. (Plaintiffs' Appendix of Exhibits ) 2 at pp. 7-8). According to the program's "principles of agreement," these benefits included investment opportunities, practice management support, discount malpractice insurance and consideration of a "franchise" agreement whereby Hamot agrees not to grant privileges to competing physicians.6 (Id.)
Dr. Hanson began performing open heart surgeries at Hamot with his partner, Dr. Bruce Farrell, in 1982 after having practiced at St. Vincent Medical Center in Erie since 1971. At that time, the Clinic was the only cardiovascular surgery group at Hamot. According to Dr. Hanson, he joined Hamot's staff because two Medicor cardiologists, Dr. Charles Furr and Dr. Donald Zone, had expressed concern over the Clinic's mortality rate and wanted an alternative group of cardiovascular surgeons to whom to refer their patients.
Drs. Hanson and Farrell quickly established a successful practice at Hamot. Their group routinely received referrals from several Medicor cardiologists and their practice grew. In 1982, Drs. Hanson and Farrell performed 50 open heart surgeries at Hamot. In 1983 they performed 96 open heart surgeries. In 1984, Hamot lifted its moratorium on credentialling new...
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...standing and that there was an insufficient showing of relevant markets). 95. See, e.g. , Federal : Kerth v. Hamot Health Found., 989 F. Supp. 691 (W.D. Pa. 1997), aff’d , 159 F.3d 1351 (3d Cir. 1998) (cardiovascular surgeons sued the hospital at which they used to work, a group of cardiolo......