Med. Ctr. At Elizabeth Place, LLC v. Premier Health Partners
| Decision Date | 09 August 2017 |
| Docket Number | Case No. 3:12-cv-26 |
| Parties | THE MEDICAL CENTER AT ELIZABETH PLACE, LLC, Plaintiff, v. PREMIER HEALTH PARTNERS, et al., Defendants. |
| Court | U.S. District Court — Southern District of Ohio |
Plaintiff, The Medical Center at Elizabeth Place, LLC ("MCEP"), a 26-bed adult acute-care hospital, filed suit against Premier Health Partners, Atrium Health System, Catholic Health Initiatives, MedAmerica Health Systems Corporation, Samaritan Health Partners, and UVMC ("the Hospital Defendants" or "Defendants"), alleging a per se violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. MCEP alleges that Defendants orchestrated a group boycott of MCEP, which cut off access to necessary managed care contracts, physicians, and funding.
This case is currently before the Court on remand following the Sixth Circuit Court of Appeals' reversal of Judge Timothy Black's decision granting summary judgment in favor of Defendants on the question of whether MCEP's claim lacks the necessary plurality of actors. Medical Ctr. at Elizabeth Place v. Atrium Health Sys., 817 F.3d 934 (6th Cir. 2016).
On October 6, 2016, on remand, Judge Black issued a Sealed Order overruling several other motions for summary judgment, which he had previously overruled as moot. Doc. #183. One of the motions overruled was Defendants' Sealed Motion for Summary Judgment that the Per Se Rule Does Not Apply and that Plaintiff's Claim Should Be Dismissed. Doc. #132. Earlier this year, Judge Black recused himself, and this case was re-assigned to the undersigned. Doc. #186. Trial is set to begin on August 14, 201 7.
Although the parties have filed numerous motions in limine, the Court must first address Defendants' Motion to Clarify Issues for Trial, Doc. #195. The Court construes this as a motion for reconsideration of that portion of Judge Black's Sealed Order Resolving Defendants' Motions for Summary Judgment, Doc. #183, that held that the per se rule applies to MCEP's claim. Two other pending motions also have the potential to affect the scope of claims to be tried: (1) Defendants' Sealed Motion to Preclude Trial of Unple[d] "Rim Conspiracy" Claim, Doc. #190; and (2) Defendants' Motion to Preclude Trial of Unpled "Physicians" Conspiracy, Doc. #194.
The Court held oral argument on August 2, 2017. For the reasons set forth below, the Court concludes that Judge Black's October 6, 2016, decision was clearly erroneous, because MCEP's Sherman Act claim is not subject to per se condemnation. Because MCEP has disavowed any reliance on a rule of reason analysis, the Court agrees with Defendants that this claim must be dismissed.
At the outset, it is important to state what this decision is about and, more importantly, what it is not. MCEP has alleged that Defendants violated Section 1 of the Sherman Act by a series of actions and threats that severely restricted MCEP's ability to compete in the marketplace, and eventually required its sale of a 49% share to the Kettering Health Network. These allegations have neither been proven nor failed of proof in court; nor will they ever be, as a result of this decision. MCEP's allegations remain just that—allegations.
This decision represents the legal equivalent of "inside baseball." It merely reflects this Court's firm opinion that MCEP's claims, contentions and allegations must be considered by a different legal standard from that which MCEP maintains is applicable and, therefore, this case must be dismissed without those claims, contentions and allegations being tested in a court of law before a duly impaneled jury. This decision should not be considered either as a failure of proof by MCEP or an exoneration of the Defendants.
Antitrust laws exist to protect competition, not competitors. Expert Masonry, Inc. v. Boone Cty., 440 F.3d 336, 346 (6th Cir. 2006). Section 1 of the Sherman Act provides that "[e]very contract, combination in the form of [a] trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal." 15 U.S.C. § 1.
Despite this very broad language, only unreasonable restraints are actionable. State Oil Co. v. Khan, 522 U.S. 3, 10 (1997). The unreasonableness of a restraint of trade may be proven in one of two ways. Although a handful of categories of restraints are deemed to be per se unreasonable, the vast majority must be assessed, on a case-by-case basis, under a more exacting "rule of reason" standard. Accordingly, the court must initially determine, as a matter of law, whether the challenged restraint is per se unreasonable or whether it should be evaluated under the rule of reason. In re Southeastern Milk Antitrust Litig., 739 F.3d 262, 271 (6th Cir. 2014).
"[C]ondemnation per se is an unusual step, one that depends on confidence that a whole category of restraints is so likely to be anticompetitive that there is no point in searching for a potentially beneficial instance." Polk Bros., Inc. v. Forest City Enter., Inc., 776 F.2d 185, 189 (7th Cir. 1985) (emphasis added). As the Sixth Circuit explained in Expert Masonry, these restraints "have such a clear lack of any redeeming virtue that any restraint of that type is conclusively presumed to be unreasonable." 440 F.3d at 342 (quoting Bailey's, Inc. v. Windsor Am., Inc., 948 F.2d 1018, 1027 (6th Cir. 1991)).
The plaintiff in a per se case need not prove the challenged restraint's effect on the market; the anticompetitive effects are implied. The plaintiff need prove only that "(1) two or more entities engaged in a conspiracy, combination, or contract;" (2) "to effect a restraint or combination prohibited per se;" (3) "that wasthe proximate cause of the plaintiff's antitrust injury." Expert Masonry, 440 F.3d at 342.
"The most important per se categories are naked horizontal price-fixing, market allocation, and output restrictions." Group boycotts are also sometimes included in this category. Stop & Shop Supermarket Co. v. Blue Cross & Blue Shield, 373 F.3d 57, 61 (1st Cir. 2004). The Supreme Court has cautioned, however, that "easy labels do not always supply ready answers." Broadcast Music, Inc. v. Columbia Broad. Sys., Inc., 441 U.S. 1, 8 (1979). See also Augusta News Co. v. Hudson News Co., 269 F.3d 41, 47 (1st Cir. 2001) (). As discussed below, the fact that a challenged restraint is labeled by MCEP as a "group boycott" does not necessary mean that it is automatically subject to per se condemnation.
The vast majority of restraints are subject to a "rule of reason" analysis which requires a Expert Masonry, 440 F.3d at 342 (quoting Bailey's, 948 F.2d at 1027). This is the prevailing standard. As economic and business structures continue to become more complex, the rule of reason appears to have gained even more traction. As noted in Khan, courts are reluctant to adopt per se rules in connection with "restraints imposed in the context of business relationships where the economic impact of certain practices is not immediately obvious." 522 U.S. at 10 (quoting FTC v. Indiana Fed'n of Dentists, 476 U.S. 447, 458-459 (1986)).
The rule of reason requires the fact finder to "weigh[] all of the circumstances of a case," to determine whether the challenged restraint of trade is unreasonable. Relevant factors include information about the relevant business, the nature and history of the restraint, the justification offered by the defendant, and the existence of any anticompetitive effects flowing from the restraint. Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877, 885-86 (2007).
If the rule of reason applies, a plaintiff must first establish:
(1) that the defendants contracted, combined, or conspired; (2) that the scheme produced anticompetitive effects; (3) that the restraint affected relevant product and geographic markets;...
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