Koefoot v. American College of Surgeons

• Decision Date: 14 January 1987
• Docket Number: No. 81 C 4333.,81 C 4333.
• Citation: 652 F. Supp. 882
• Parties: Robert R. KOEFOOT, M.D., et al., Plaintiffs, v. AMERICAN COLLEGE OF SURGEONS, et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

652 F. Supp. 882

Robert R. KOEFOOT, M.D., et al., Plaintiffs, v. AMERICAN COLLEGE OF SURGEONS, et al., Defendants.

No. 81 C 4333.

United States District Court, N.D. Illinois, E.D.

December 9, 1986.

Supplemental Memorandum Opinion and Order January 14, 1987.

COPYRIGHT MATERIAL OMITTED

William J. Sneckenberg, William J. Sneckenberg and Associates, Ltd., Jonathan D. Moses, Chicago, Ill., for plaintiffs.

John J. Cassidy, Jr., Paul G. Gebhard, Douglas J. Polk, Vedder, Price, Kaufman and Kammholz, Chicago, Ill., for defendants.

MEMORANDUM OPINION AND ORDER

ROVNER, District Judge.

I. INTRODUCTION

This is an antitrust action brought by several Nebraska physicians and community hospitals against the American College of Surgeons ("ACS") and two of its officials. At the heart of this case lies the legality of an ACS rule that proscribes "itinerant surgery." The ACS defines itinerant surgery as:

the performance of surgical operations (except on patients whose chances of recovery would be prejudiced by removal to another hospital) under circumstances in which the responsibility for diagnosis or care of the patient is delegated to another who is not fully qualified to undertake it.

In practice, the itinerant surgery rule requires ACS surgeons who do not undertake the post-operative care of their patients to delegate that care to other surgeons.¹ The plaintiffs claim that the defendants have violated Section 1 of the Sherman Act, 15 U.S.C. § 1, through the promulgation and enforcement of the rule. Because the relevant background facts are reported in a prior decision of this Court, which substantially denied defendants' motion for partial summary judgment, the Court will not repeat them here. See, Koefoot v. American College of Surgeons, 610 F.Supp. 1298 (N.D.Ill.1985).

Presently pending before the Court are six motions in limine brought by the plaintiffs, three motions in limine brought by the defendants, and a motion by two of the plaintiffs to voluntarily dismiss their claims pursuant to Fed.R.Civ.P. 41(a)(2). The Court has carefully reviewed the pending motions and the accompanying one hundred plus pages of briefs, as well as the one hundred plus pages of trial briefs and supplementary trial briefs. Based upon its review of the arguments made by the parties, the Court has concluded that the evidentiary concerns of the parties are merely tactical skirmishes that follow from two far more fundamental disputes. The two centerpiece issues are: first, whether this action is to be tried under the per se rule, the rule of reason, or a combination of the two, and second, whether the legality of the itinerant surgery rule may be allowed to turn "on whether it was adopted for the purpose of improving patient care." Jefferson Parish Hospital District No. 2 v. Hyde, 466 U.S. 2, 104 S.Ct. 1551, 1565, n. 41, 80 L.Ed.2d 2 (1984).

The plaintiffs and the defendants have extensively briefed these issues, both in their trial briefs and in their various motions in limine. Both sides recognize that a resolution of these fundamental questions must occur in advance of trial so that the parties may tailor their evidence accordingly. It cannot be disputed that the nature and scope of the evidence in an antitrust case is greatly dependent on whether the case is submitted to the jury on per se instructions, or on rule of reason instructions. In a per se case, there need be no elaborate inquiry into the motivation behind certain agreements or practices, or into the actual harm caused, because the courts have previously analyzed similar conduct and found it violative of the Sherman Act. Northern Pacific Railway Company v. United States, 356 U.S. 1, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958). Alternatively, a rule of reason case involves a wide ranging economic inquiry that is usually far more expansive than a per se case. Id. Unless the Court defines the contours of the trial before it begins, the parties will be without a map to guide them through the antitrust maze.

The Court will first address each of the two fundamental issues and then will turn to the specific motions awaiting resolution.

II. PER SE VS. RULE OF REASON

The plaintiffs have articulated four separate antitrust theories in their trial brief. They are: 1) that the itinerant surgery rule constitutes a horizontal allocation of markets because it gives ACS surgeons a mechanism by which they can block entry into their markets; 2) that the rule creates a tie-in between two separate services — surgery and post-operative care; 3) that the rule constitutes a boycott of non-surgeon physicians; and 4) that the application of the rule to Dr. Koefoot constitutes a boycott of him. (Plaintiffs' Trial Br. at 4-5). The plaintiffs further claim that each of their four theories, if proven, constitutes a per se violation of § 1 of the Sherman Act. It is the plaintiffs' position that the Court must give the Jury the opportunity to find per se violations, and that the Jury must be instructed accordingly.

Of course, the defendants deny that their conduct is in any way violative of the Sherman Act. The defendants further contend that the alleged conduct does not fall within any previously recognized per se category, and that therefore, this case requires a complete rule of reason analysis.

As explained below, the Court concludes that the per se approach would be inappropriate for this case and that the trial must be conducted under the rule of reason.²

A. BASIC ANALYTICAL APPROACHES

Whether the ACS's conduct violates § 1 of the Sherman Act depends on whether the prohibition of itinerant surgery "is adjudged an unreasonable restraint." Northwest Wholesale Stationers v. Pacific Stationery, 472 U.S. 284, 105 S.Ct. 2613, 2617, 86 L.Ed.2d 202 (1985) (emphasis in original). It is clear that:

rule-of-reason analysis guides the inquiry, see Standard Oil Co. v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619 (1911), unless the challenged action falls into the category of "agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use." Northern Pacific R. Co. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958).

Northwest Wholesale Stationers, 105 S.Ct. at 2617. Thus, per se violations, although common, nevertheless remain the exception to the general rule. It is the plaintiff's burden to establish the appropriateness of per se analysis by presenting "a threshold case that the challenged activity falls into a category likely to have predominantly anticompetitive effects." Id. at 2621.

The Supreme Court has explained that, even though a full rule of reason inquiry might vindicate conduct condemned by the per se approach, some erroneous decisions are tolerated "for the sake of business certainty and litigation efficiency ..." Arizona v. Maricopa County Medical Society, 457 U.S. 332, 102 S.Ct. 2466, 2473, 73 L.Ed.2d 48 (1982). See also, Northwest Wholesale Stationers, 105 S.Ct. at 2617. The Supreme Court itself is narrowly split on the issue of which analysis is appropriate for certain types of restraints. See, Jefferson Parish Hospital District No. 2, 104 S.Ct. at 1569 (J. O'Connor concurring) (four Justices suggesting that tying arrangements should always be analyzed under the rule of reason).

Whether a rule of reason analysis will in fact prove more costly in terms of judicial and litigant resources, and in terms of business certainty, depends on the facts of the particular case. "Indeed, there is often no bright line separating per se from Rule of Reason analysis. Per se rules may require considerable inquiry into market conditions before the evidence justifies a presumption of anticompetitive conduct." N.C.A.A. v. Board of Regents of University of Oklahoma, 468 U.S. 85, 104 S.Ct. 2948, 2962, n. 26, 82 L.Ed.2d 70 (1984).

During the course of this case the plaintiffs have carefully molded and refined their theories of antitrust liability in an attempt to gain the obvious advantages (to them) of a per se approach at trial.³ Although the sufficiency of the Complaint as to the ACS has never been at issue, the Complaint on its face does not articulate any of the four per se theories now espoused by the plaintiffs. Indeed, the plaintiffs' first refinement of their per se theories came more than two and one half years after the Complaint was filed in their response to the defendants' motion for partial summary judgment. The plaintiffs' final exposition of their per se theories, detailed at page 885, ante, is found in their trial brief. Unfortunately, "easy labels do not always supply ready answers." Broadcast Music, Inc. v. Columbia Broadcasting, 441 U.S. 1, 99 S.Ct. 1551, 1556, 60 L.Ed.2d 1 (1979).

B. THE NATURE OF THE ACS's ALLEGED RESTRAINT

The ACS is a professional association of surgeons. The defendants contend that the itinerant surgery rule is an ethical canon adopted and enforced by the ACS as a means of improving patient care. The plaintiffs argue that the motivation behind the adoption and enforcement of the rule is more sinister; that, in fact, the ACS's true goal is to eliminate the competition its members face from non-surgeons, non-member surgeons, and providers of "rural" medicine generally.

The itinerant surgery rule is a bylaw of the ACS. All parties agree that Dr. Koefoot's surgical practice includes the performance of itinerant surgery, as that concept is defined by the ACS. The plaintiffs freely acknowledge the fact that Dr. Koefoot delegates the day-to-day post-operative care of some of his patients to non-surgeons.⁴ Dr. Koefoot's refusal to abide by the ACS's interpretation of its bylaw resulted in his ouster from the organization.

The plaintiffs have attempted to force the defendants' conduct into three separate per se...