McElhinney v. Medical Protective Co.

• Decision Date: 21 September 1982
• Docket Number: Civ. A. No. 78-8.
• Citation: 549 F. Supp. 121
• Parties: W. Thomas McELHINNEY, M.D., Plaintiff, v. The MEDICAL PROTECTIVE COMPANY, et al., Defendants.
• Court: U.S. District Court — Eastern District of Kentucky

549 F. Supp. 121

W. Thomas McELHINNEY, M.D., Plaintiff, v. The MEDICAL PROTECTIVE COMPANY, et al., Defendants.

Civ. A. No. 78-8.

United States District Court, E.D. Kentucky, Pikeville Division.

September 21, 1982.

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Gary L. Gardner, Gary L. Gardner & Associates, Louisville, Ky., John J. Getgey, Jr., White, Getgey & Meyer Co., LPA, Cincinnati, Ohio, for plaintiff.

John T. Ballantine, Ogden, Robertson & Marsahll, Louisville, Ky., for defendants Glenn Baird, M.D., Sylvan Golder, M.D., C.C. Hugan, M.D., Robert T. Longshore, M.D., and John H. Siehl, M.D.

Rufus Lisle, Harbison, Kessinger, Lisle & Bush, Lexington, Ky., for defendants The Medical Protective Co., Carl M. Brueggeman, M.D., Robert W. O'Conner, M.D., Robert G. Heimbrock, M.D., Leroy C. Hess, M.D., Richard J. Menke, M.D., Howard A. Herringer, M.D.

G. David Schiering, Thomas C. Hill, Taft, Stettinius & Hollister, Cincinnati, Ohio, for defendant Campbell-Kenton County Medical Soc.

Edward J. Utz, Cincinnati, Ohio, for defendants George Hermann, M.D., and John Tcheng, M.D.

Roy W. Short, Edmund S. Lee, French, Short, Valleau & Bratton, Cincinnati, Ohio, for defendant Daniel M. Richfield, M.D.

William B. O'Neal, Howard F. Brietholle, Brietholle, Burdsall & Hancock, Cincinnati, Ohio, for defendant Herbert Francis, M.D.

James W. Gustin, Christopher J. Mehling, Gustin & Lawrence Co., LPA, Cincinnati, Ohio, for defendant Salvation Army.

MEMORANDUM OPINION

UNTHANK, District Judge.

PROCEDURAL BACKGROUND

Plaintiff, W. Thomas McElhinney, M.D., brought this action against Booth Memorial Hospital, the Medical Protective Insurance Company, the Kenton-Campbell County Medical Society, eighteen individually named doctors, and four "John Doe" defendants for alleged violations of the Sherman Act, Kentucky Statutes and common law. In pre-trial proceedings, the Court dismissed all but the Sherman Act claim. In addition, the Court dismissed four of the individually named defendants. The John Doe defendants are not before the Court for purposes of this ruling.

The issues of liability and damages were bifurcated, and trial on the issue of liability was held before a jury from August 3, 1982 to August 18, 1982. During the presentation of plaintiff's case, seven defendants, including the Medical Society and the Insurance Company, were dismissed by agreement of the parties. At the end of plaintiff's case, the ten remaining defendants moved pursuant to Fed.R.Civ.P. 50(a) for a directed verdict. After hearing argument thereon, the Court adjourned until August 24, 1982, at which time the Court directed a verdict for all remaining defendants.

DESCRIPTION OF PARTIES

Plaintiff

Plaintiff, Dr. McElhinney, is a general surgeon licensed to practice medicine in Kentucky and several other states. He has been a member of the medical staff of Booth Hospital since 1950.

Remaining Defendants

Defendant Booth Hospital is a non-profit corporation operated by the Salvation Army. It was previously located in Covington, Kentucky, but is presently situated in Florence, Kentucky.

The other defendants are Dr. Herringer (specialist in internal medicine), Dr. Hess (family practitioner), Dr. Richfield (pathologist), Dr. Francis (radiologist), Dr. Baird (family practitioner), Dr. Longshore (family practitioner), Dr. Golder (general practitioner), Dr. Siehl (gynecologist), and Dr. Tcheng (anesthesiologist; now deceased).

BACKGROUND FACTS

The dispute between plaintiff and defendants dates back at least a decade. Dr. McElhinney became critical of the medical practices and procedures of the other doctors at Booth Hospital, as well as of the procedures of the Hospital itself. These criticisms resulted in confrontations with the individual doctors and the local administration of Booth Hospital. Plaintiff contends that defendants perceived such criticisms as a threat to their respective practices because, he alleges, they viewed him as the instigator of medical malpractice lawsuits in the Northern Kentucky area. Dr. McElhinney further contends that as a result of defendants' concern about malpractice actions (and the higher insurance premiums occasioned by such actions), defendants conspired to rid themselves of him. More specifically, plaintiff alleges that as part of this conspiracy, defendants got together and decided to stop referring patients to plaintiff and to stop associating with him.

Defendants claim that any refusal to deal with plaintiff was the result of independent, unilateral acts, and was not, therefore, the result of a conspiracy.

BRIEF SUMMARY OF THE EVIDENCE PRESENTED AT TRIAL

At trial, volumes of evidence concerning the criticisms exchanged between the parties were introduced. The evidence reflects the minutes of a series of meetings which were held by the various organizations of Booth Hospital beginning in January, 1973.¹ These minutes contain various complaints of both a professional and personal nature lodged by defendants against Dr. McElhinney. The evidence shows that the Board of Trustees of Booth Hospital was asked to investigate these complaints. The evidence also shows that on February 27, 1973, the medical staff voted not to reappoint plaintiff as a member of the Staff at Booth Hospital. The record reflects that on February 5, 1974, the Board of Trustees ordered the non-reappointment of plaintiff to the medical staff.

Dr. McElhinney sought and was granted injunctive relief at the state court level after the order of non-reappointment by the Board of Trustees. The proceedings in the state courts concluded with the Supreme Court of Kentucky reversing the judgment of the Kenton Circuit Court and ordering the reinstatement of Dr. McElhinney's staff privileges. Plaintiff filed this action on February 2, 1974.

SUMMARY OF THE ISSUES

At the close of plaintiff's case, defendants moved for a directed verdict on the ground that there was insufficient evidence presented on which a jury could base a verdict finding a violation of section 1 of the Sherman Act. Specifically, the issues raised by the motion are as follows:

1. Whether the applicable statute of limitations bars this action;

2. Whether this Court lacks subject matter jurisdiction;

3. Whether there was a conspiracy in restraint of trade, or a boycott; and

4. Whether the per se rule or Rule of Reason applies in this action.

After hearing and reviewing the evidence presented, the Court finds:

1. That the statute of limitations does not bar this action.

2. That the Court has subject matter jurisdiction in this case.

3. That there was prima facie evidence of an agreement to effect a concerted refusal to deal and/or associate with plaintiff as to defendants Salvation Army, Dr. Hess, Dr. Herringer, and Dr. Richfield.

4. That there was no "group boycott" by the four defendants named in number 3 above.

5. In the alternative, the Court finds that even if the actions of defendants' in number 3 constituted a boycott, the Rule of Reason would apply in such case.

6. That there was insufficient evidence presented on the issue of actual restraint of trade under the Rule of Reason standard to survive the motion for a directed verdict as to the four defendants named in number 3 above.

7. That the motion for a directed verdict as to all defendants must be granted.

STATUTE OF LIMITATIONS

Defendants contend that, even assuming there is a conspiracy, the statute of limitations bars plaintiff's claims. The applicable statute of limitations, found in 15 U.S.C.A. § 15b, provides:

Any action to enforce any cause of action under Section 15 or 15a of this title shall be forever barred unless commenced within four years after the cause of action accrued.

The statute of limitations begins to run from the commission of the last overt act causing injury or damage. Akron Presform Mold Company v. McNeil Corporation, 496 F.2d 230, 233 (6th Cir. 1974); Garelick v. Goerlich's Inc., 323 F.2d 854, 855 (6th Cir. 1963); Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 338, 91 S.Ct. 795, 806, 28 L.Ed.2d 77 (1971). Because the complaint was filed on February 2, 1978, plaintiff's suit is barred if his cause of action accrued on or before February 1, 1974.

Defendants rely on Garelick for the proposition that a cause of action based on a refusal to deal accrues when a defendant first refuses to deal with a plaintiff. Garelick, supra, at 856. In view of the fact that defendants who presently refuse to deal with plaintiff first refused to deal with him prior to February 1, 1974, defendants contend that the statute bars this action. Plaintiff argues that the Board of Trustees' meeting on February 5, 1974, wherein it was finally resolved to not reappoint Dr. McElhinney to the Staff, constituted the last overt act causing damage. In the alternative, plaintiff argues that this case is a "continuing conspiracy", and therefore, more analogous to the situation involved in Poster Exchange, Inc. v. National Screen Service, Corp., 517 F.2d 117 (5th Cir. 1975).² Assuming there was a conspiracy resulting in damage to plaintiff's business, it is the Court's opinion that the last overt act causing such damage would have been the vote of non-reappointment by the Board of Trustees of the Salvation Army on February 5, 1974, four days prior to the running of the statute of limitations.

JURISDICTION

Defendants contend that plaintiff has failed to lay the necessary foundation on which this Court may base jurisdiction.

The broad reach of the Sherman Act extends not only to those activities that are "in" interstate commerce, but also to those wholly local activities that substantially "affect" interstate commerce. McLain v. Real Estate Board of New Orleans, Inc., 444 U.S. 232, 100 S.Ct. 502, 62 L.Ed.2d 441 (1980). In this case, plaintiff argues that defendants' actions come within the "effect on commerce" test. Under this theory, plaintiff must show "either that defendants' activity is itself in...