Korshin v. Benedictine Hosp.

• Decision Date: 02 February 1999
• Docket Number: No. 98-CV-0677.,98-CV-0677.
• Citation: 34 F.Supp.2d 133
• Parties: Jonathan D. KORSHIN, M.D., Plaintiff, v. BENEDICTINE HOSPITAL, Kingston Hospital, Northern Dutchess Hospital, Cross River Healthcare, Inc., and Cross River Anesthesiologists, P.C., Defendants.
• Court: U.S. District Court — Northern District of New York

34 F.Supp.2d 133

Jonathan D. KORSHIN, M.D., Plaintiff, v. BENEDICTINE HOSPITAL, Kingston Hospital, Northern Dutchess Hospital, Cross River Healthcare, Inc., and Cross River Anesthesiologists, P.C., Defendants.

No. 98-CV-0677.

United States District Court, N.D. New York.

February 2, 1999.

Woods, Oviatt Law Firm, Rochester, NY (Daneil O'Brien, Jr., of counsel), Friedman, Hirschen Law Firm, Schenectady, NY (Jeffrey Miller, of counsel), for Plaintiff.

O'Connor, Yoquinto Law Firm, Troy, NY (Thomas J. O'Connor, of counsel), for Defendants Kingston Hosp., Northern Dutchess Hosp. and Cross River Healthcare, Inc.

Van DeWater, Van DeWater Law Firm, Poughkeepsie, NY (Michael G. Hayes, of counsel), for Defendant Benedictine Hosp.

MEMORANDUM—DECISION & ORDER

McAVOY, Chief Judge.

This is an antitrust case brought by an anesthesiologist against various hospitals and a group of anesthesiologists. Plaintiff Jonathan Korshin, M.D. ("Korshin") claims violations of section 1 of the Sherman Act, 15 U.S.C. § 1 and section 4 of the Clayton Act, 15 U.S.C. § 15.¹ Korshin alleges that Benedictine Hospital ("Benedictine"), Kingston Hospital, and Northern Dutchess Hospital ("Northen Dutchess") (collectively the "Hospitals"), in anticipation of a merger, entered into exclusive agreements with Defendant Cross River Anesthesiologists, P.C. ("CRA") of which he was not a member and, therefore, he is unable to practice medicine in the regional market. Korshin alleges that the exclusive agreements with CRA constitute a group boycott and unreasonable restraint of trade that prevents him from rendering anesthesiology services in the relevant market area. The defendants now move to dismiss the Complaint pursuant to FED.R.CIV.P. 12(b)(6) on the grounds that: (1) Korshin has failed to adequately allege antitrust injury, and (2) Korshin violated the doctrine of primary jurisdiction.

I. BACKGROUND

The following facts are taken from the Complaint which, for purposes of a motion pursuant to Rule 12(b)(6), must be accepted as true. See Bernheim v. Litt, 79 F.3d 318, 321 (1996).

Effective January 1, 1995, Korshin was appointed as a member of the courtesy medical staff in the Department of Anesthesia at Benedictine (the "Department"). Korshin was reappointed as a member of the active medical staff with privileges for anesthesiology and pain management as of April 1, 1996.

On August 16, 1996, the Benedictine Board of Directors (the "Board") adopted an exclusivity policy (the "Policy") which provided that all anesthesiology services be provided by anesthesiologists and certified registered nurse anesthetists ("CRNA") employed or engaged by Benedictine. The Policy contained a "grandfather clause" that permitted physicians, such as Korshin, who had staff privileges at Benedictine prior to the adoption of the Policy to provide services on elective cases when a specific request for that anesthesiologist was made by the surgeon performing the procedure.

Sometime in 1996 or early 1997, the date of which is unclear, the Hospitals entered into merger negotiations. In June 1997, prior to merger, the Hospitals agreed that they would all obtain anesthesiology services exclusively from CRA, which was already providing services at Northern Dutchess.² In accordance with this agreement, by June 5, 1997, Benedictine selected CRA as the exclusive provider of anesthesiology services, effective September 1, 1997. CRA was instructed to meet with each member of the Department, including Korshin, to discuss potential employment opportunities with CRA. Korshin alleges that he sought to become an employee of CRA, "but was unable to do so." Compl., ¶ 34. Benedictine notified Korshin that it was terminating any and all contract and agreements, written or oral, effective September 1, 1997.

By memorandum dated June 17, 1997 the Board advised all physicians in the Department that the Policy was under review and that the Board was considering amending or deleting the grandfather clause. A meeting was scheduled for June 19, 1997 to discuss the proposed changes to the Policy.

In September 1997, the Board adopted a resolution that eliminated the grandfather clause to the Policy and selected CRA as the exclusive provider of anesthesiology services effective October 1, 1997. The resolution further provided that any anesthesiologist and CRNA currently on the medical staff and not part of the exclusive group would retain membership on the medical staff and clinical privileges, but would no longer be able to exercise clinical privileges within the Department.

As indicated in the Board's resolution (a copy of which is annexed to the Complaint at Exhibit "D"), Benedictine's decision to remove the grandfather clause and award an exclusive contract to CRA was based upon concerns that the grandfather clause impeded the institutional objectives of the hospital. The Board had concerns about quality of care in the Department and, thus, retained an outside expert to perform an analysis of the structure of the Department.³ In accordance with the conclusions of the consultant and the concerns raised within the Department, the Board provided the following reasons for its decision to remove the grandfather exception and enter into an exclusive agreement for the provision of anesthesiology services:

1. A non-exclusive practice situation leads to competition among anesthesiology providers for patients with widely differing potentials for reimbursement, leads to internal strife within the Department, is detrimental to practice and has the potential to adversely impact quality of care.

2. A single group arrangement eliminates the issue of economics among the individual Anesthesiologists because all losses and gains of the group are shared. Thus, a single group arrangement facilitates assignment of Anesthesiologists to particular cases based on the best interests of the patient without regard to economic concerns.

3. A single group arrangement will promote consistency of service, day to day operation of the operating suite, quality control and safety of patients; promote effective selection and utilization of equipment within the Department; facilitate continuous availability of anesthesiology services; more clearly assign responsibility for the administration, supervision and training of Department personnel; and promote efficient and economical operation of the Department and cooperation among members of the Department and Medical Staff Members who use the operating suite.

4. Creating a unified structure will facilitate development of diverse practice skills among the Anesthesiologists, thereby increasing the group's capacity to develop programs of quality to focus on special areas of importance and to be flexible and responsive to the needs of patients and their families.

5. The unified structure will also provide centralized control and simplified scheduling of the anesthesia facilities; and improve the coordination of the use of anesthesia services with other services of the Hospital.

On April 28, 1998, Korshin commenced the instant litigation pursuant to the Sherman Act, 15 U.S.C. § 1, and for treble damages and attorneys' fees under section 4 of the Clayton Act, 15 U.S.C. § 15. Korshin also asserts a state law cause of action. The Complaint alleges that Benedictine's actions were the latest in a series of efforts to reduce competition and alleges that "[a]s a direct result of [the Hospitals'] exclusive dealings agreement and the elimination of the exception to the [ ] Policy at [ ] Benedictine ... Korshin is unable to practice his specialty of anesthesiology at any location which is within the distance from his residence which would meet his professional obligations to his patients and which would satisfy a hospital's legal obligations to its patients."⁴ Compl., ¶ 35. The Complaint further alleges that, as a result of defendants' conduct, "patients and their physicians at the defendant Hospitals are unable to select Dr. Korshin to provide anesthesiology services in competition with defendant [CRA]." Compl., ¶ 36.

Finally, as part of his state law cause of action, Korshin alleges that he was induced to move from out of state by Benedictine's promise to compensate him at an annual rate of $240,000.00 as director of the anesthesiology department. Korshin alleges that, thereafter, Benedictine engaged in a "deliberate pattern and practice of conduct which resulted in reduced earning to Dr. Korshin and ultimately eliminated his ability to practice anesthesiology anywhere in the Kingston-Northern Dutchess area, to his great economic damages, all contrary to the assurances and representation which [Benedictine] had made to Dr. Korshin and on which he detrimentally relied." Compl., ¶ 43.

The defendants now move pursuant to FED.R.CIV.P. 12(b)(6) for dismissal of the Complaint in its entirety on the grounds that Korshin lacks standing to assert an antitrust action and that Korshin violated the doctrine of primary jurisdiction.

II. DISCUSSION

A. Standard Under Rule 12(b)(6)

"A complaint may not be dismissed under Rule 12(b)(6) unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. In reviewing a Rule 12(b)(6) motion, this Court must accept the factual allegations of the complaint as true and must draw all reasonable inferences in favor of the plaintiff. The review of such a motion is limited, and the issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims ..." Bernheim v. Litt, 79 F.3d 318, 321 (1996) (internal quotations and citations omitted). "In order to survive dismissal, a plaintiff must assert a cognizable claim and allege facts that, if true, would support such a claim." Boddie v. Schnieder, 105 F.3d 857, 860 (2d Cir.1997). Because this is a motion pursuant to Rule 12(b)(6), the Court considers only the pleadings and any...