Nilavar v. Mercy Health System Western Ohio

• Decision Date: 19 December 2000
• Docket Number: No. C-3-99-612.,C-3-99-612.
• Citation: 142 F.Supp.2d 859
• Parties: Sundar V. NILAVAR, M.D., Plaintiff, v. MERCY HEALTH SYSTEM-WESTERN OHIO, et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

142 F.Supp.2d 859

Sundar V. NILAVAR, M.D., Plaintiff, v. MERCY HEALTH SYSTEM-WESTERN OHIO, et al., Defendants.

No. C-3-99-612.

United States District Court, S.D. Ohio, Western Division.

December 19, 2000.

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Lee C. Falke, Dayton, OH, Kenneth A. Lazarus, Washington, DC, for plaintiff.

Scott D. Phillips, Cincinnati, OH, John K. Cogan, Thomas Demitrack, Cleveland, OH, for defendants.

EXPANDED OPINION TO THIS COURT'S ENTRY OF SEPTEMBER 22, 2000 (DOC. # 41), SUSTAINING IN PART AND OVERRULING IN PART THE MOTION OF DEFENDANTS DIAGNOSTIC IMAGING ASSOCIATES OF OHIO, INC., AND ROBIN E. OSBORN, D.O., TO DISMISS, PURSUANT TO FED. R. CIV. P. 12(B)(6) (DOC. # 13) AND SUSTAINING IN PART AND OVERRULING IN PART THE MOTION OF DEFENDANTS MERCY HEALTH SYSTEM-WESTERN OHIO, CATHOLIC HEALTHCARE PARTNERS, MICHAEL PETERSON, AND JERROLD MAKI TO DISMISS, PURSUANT TO FED. R. CIV. P. 12(B)(6) (DOC. # 17); DEFENDANTS' MOTIONS FOR ORAL ARGUMENT (DOC. # 13, DOC. # 17) OVERRULED; HOSPITAL DEFENDANTS' MOTION TO STAY DISCOVERY (DOC. # 32-1) OVERRULED AS MOOT; HOSPITAL DEFENDANTS' MOTION FOR EXPEDITED HEARING ON THE MOTION TO STAY (DOC. # 32-2) OVERRULED AS MOOT; JOINT MOTION FOR STATUS CONFERENCE SUSTAINED (DOC. # 40); CONFERENCE CALL SET

RICE, Chief Judge.

For more than twenty years, Plaintiff Sundar V. Nilavar ("Nilavar") was a radiologist in the Springfield and Urbana, Ohio areas.¹ In 1976, Nilavar was hired by Springfield Radiology, Inc. ("SRI").² Between 1970 and 1995, SRI physicians provided physician diagnostic radiology services at the three hospitals and related facilities in the area centered around Springfield and Urbana, Ohio: Mercy Medical Center of Springfield, Ohio, and Mercy Memorial Hospital of Urbana, Ohio (collectively, the "Mercy Hospitals"); and Springfield Community Hospital. Mercy Health Systems-Western Ohio ("MHS-WO") owns and operates the Mercy Hospitals, in addition to several long-term and urgent care facilities in the Springfield-Urbana area. Dr. Nilavar maintained full clinical privileges at the Mercy Hospitals from 1976, until they were terminated on December 20, 1995, effective January 1, 1996.

In 1991, SRI was comprised of eleven principals. Five SRI radiologists practiced almost exclusively at Springfield Community Hospital ("Springfield group"), while the other six radiologists practiced almost exclusively at the Mercy hospitals ("Mercy group"). In 1993, SRI engaged in extensive negotiations with MHS-WO toward an exclusive contract for the provision of radiological services at the Mercy Hospitals and several other MHS-WO long-term care facilities. After several years of negotiations, no agreement had been reached.

On March 22, 1995, MHS-WO decided to conclude its negotiations with SRI, and to prepare a Request for Proposal ("RFP") for a contract of exclusive radiology services to interested radiologists and radiology groups. The physician-shareholders of SRI decided that the Mercy group would present a proposal to MHS-WO in response to the RFP. Without informing Plaintiff, Dr. Robin E. Osborn ("Osborn"), a physician-shareholder of SRI, formed his own radiology group, Diagnostic Imaging Associates of Ohio, Inc. ("DIA"), and submitted a proposal to MHS-WO on its behalf. DIA included only three physicians from SRI's Mercy group; Dr. Nilavar was not included in the new entity. In August of 1995, MHS-WO accepted DIA's proposal. An exclusive Radiology Services Agreement was signed on December 4, 1995, effective January 1, 1996. On December 20, 1995, MHS-WO notified Plaintiff that his clinical privileges would be terminated, effective January 1, 1996.³ Dr. Nilavar requested that the Mercy Hospitals grant him a hearing, in accordance with the procedures set forth in the Credentials Policy Manual. His request was refused.

In 1996, Plaintiff filed suit in the Clark County Court of Common Pleas against Dr. Osborn and DIA, alleging breach of contract, estoppel, breach of fiduciary duty, and fraud arising out of Dr. Osborn's failure to negotiate the exclusive contract on his behalf. Plaintiff states that the case was tried to a jury in June of 1999, and that he received a judgment in the amount of $100,000. On April 7, 2000, the Second District Court of Appeals issued its ruling on the cross-appeals. That court upheld the jury's verdict in favor of Nilavar on the breach of contract claim and, due to the trial court's error in overruling Nilavar's motion to compel production of financial records from Osborn and DIA, it ordered a new trial on the issue of damages. Nilavar v. Osborn, 137 Ohio App.3d 469, 738 N.E.2d 1271 (2000).

On November 19, 1999, Plaintiff initiated the present litigation against MHS-WO; Catholic Healthcare Partners ("CHP"), MHS-WO's parent company; Michael J. Peterson ("Peterson"), the former Regional President and Chief Executive Officer of MHS-WO; Jerrold A. Maki ("Maki"), Mr. Peterson's successor as Regional President and CEO of MHS-WO; Dr. Robin Osborn; and DIA. Plaintiff asserts eight causes of action, to wit: (1) contract in restraint of trade, in violation of § 1 of the Sherman Act, 15 U.S.C. § 1; (2) tying arrangement in restraint of trade, in violation of § 1 of the Sherman Act; (3) contract and tying arrangement in restraint of trade, in violation of Ohio's Valentine Act, Chapter 1331 of the Ohio Revised Code; (4) a state law claim of tortious interference with a business relationship; (5) a state law claim of breach of implied covenant of good faith and fair dealing; (6) a state law claim of civil conspiracy; (7) a state law claim of denial of right to due process; and (8) a state law claim of breach of contract.

Two motions to dismiss are presently pending before the Court: the Motion of Defendants DIA and Osborn to Dismiss, pursuant to Fed.R.Civ.P. 12(b)(6) (Doc. # 13); and the Motion of Defendants MHS-WO, CHP, Peterson, and Maki ("the Hospital Defendants") to Dismiss, pursuant to the same provision of the Civil Rules (Doc. # 17).⁴ The two motions raise a number of identical arguments, although the Hospital Defendants' Motion is more detailed. As a means of analysis, the Court will address the two motions together, addressing the Hospital Defendants' arguments first. If necessary, the Court will turn to the additional arguments presented by DIA and Dr. Osborn. For the reasons assigned, Defendants' Motions are SUSTAINED in PART and OVERRULED in PART.

Defendants have requested oral argument on the issues raised in their Motions to Dismiss (Doc. # 13, # 17). The Court has concluded that oral argument is not necessary. The parties have thoroughly and competently briefed the issues. Based on the extensive memoranda submitted by counsel, the Court has been thoroughly apprized of the legal issues before it and the relevant case law. In addition, under Rule 12(b)(6), the Motions must be decided by reference to the Complaint only, including to the exhibits attached thereto. Fed. R.Civ.P. 10(c). Thus, the Court would not be permitted to consider any additional evidence or new factual assertions beyond the Complaint presented during oral argument. Furthermore, following the standard for Rule 12(b)(6) motions, the Court must construe Plaintiff's Complaint in the light most favorable to him and accept his factual allegations as true. Thus, the Court concludes that its review of the Complaint, construed in that manner, is sufficient to resolve the Defendants' Motions. Accordingly, the Court concludes that oral argument would not aide it in resolving the Motions. Defendants' Motions for oral argument are OVERRULED.

I. Standard for Motions to Dismiss, Pursuant to Rule 12(b)(6)

When considering a motion to dismiss pursuant to Rule 12(b)(6), the court must "construe the complaint in the light most favorable to the plaintiff, accept all factual allegations as true, and determine whether the plaintiff undoubtedly can prove no set of facts in support of his claims that would entitle him to relief." Cline v. Rogers, 87 F.3d 176, 179 (6th Cir.)(citing In re DeLorean Motor Co., 991 F.2d 1236, 1240 (6th Cir.1993)), cert. denied, 519 U.S. 1008, 117 S.Ct. 510, 136 L.Ed.2d 400 (1996); see also Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Barrett v. Harrington, 130 F.3d 246 (6th Cir.1997), cert. denied, 523 U.S. 1075, 118 S.Ct. 1517, 140 L.Ed.2d 670 (1998)("In considering a motion to dismiss for failure to state a claim, the Court is required to take as true all factual allegations in the complaint."); Lamb v. Phillip Morris, Inc., 915 F.2d 1024, 1025 (6th Cir.1990), cert. denied, 498 U.S. 1086, 111 S.Ct. 961, 112 L.Ed.2d 1048 (1991). However, the Court need not accept as true a legal conclusion couched as a factual allegation. Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986). A well-pleaded allegation is one that alleges specific facts and does not merely rely upon conclusory statements. The Court is to dismiss the complaint "only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984).

II. Antitrust Claims (Counts One, Two, and Three)

All of the Defendants seek dismissal of Plaintiff's antitrust claims. First, they argue that the first, second, and third causes of action are barred by the statute of limitations. Second, they argue that Plaintiff's first and third causes of action must be dismissed, because he has not suffered an antitrust injury. Third, the Hospital Defendants assert that Counts One, Two and Three must be dismissed, because Plaintiff is not an efficient enforcer of the antitrust laws. Fourth, all contend that Plaintiff's tying claims must be dismissed, because he has failed to allege that MHS-WO receives a "direct economic benefit" from the arrangement. Finally, Osborn and DIA...