Nurse Midwifery Associates v. Hibbett

• Decision Date: 14 March 1988
• Docket Number: No. 82-3208.,82-3208.
• Citation: 689 F. Supp. 799
• Parties: NURSE MIDWIFERY ASSOCIATES, et al. v. B.K. HIBBETT, M.D., et al.
• Court: U.S. District Court — Middle District of Tennessee

689 F. Supp. 799

NURSE MIDWIFERY ASSOCIATES, et al. v. B.K. HIBBETT, M.D., et al.

No. 82-3208.

United States District Court, M.D. Tennessee, Nashville Division.

March 14, 1988.

COPYRIGHT MATERIAL OMITTED

Irwin Venick, Nashville, Tenn., W.W. McNeilly, Jr., Andrews Baer & Melkin, Nashville, Tenn., for Steven Melken.

Julia C. Morris, Vanderbilt University, Nashville, Tenn Charles L. Kown, Hosp. Corp. of American, Nashville, Tenn., for Southern Hills.

Ames Davis, Waller Lansden Dortch & Davis, Nashville, Tenn., for Hendersonville Comm.

William H. Baumgartner, Jr., Jack R. Bierig, Sidney & Austin, Chicago, Ill., W. Harold Bigham, Barbara J. Moss, Gullett Sanford Robinson & Martin, Nashville, Tenn., for State Vol. Mut. Ins.

Mary Francis Lyle, Bruce Weathers Dughman & Lyle, Nashville, Tenn., for plaintiff.

Robert J. Walker, R. Dale Grimes, Bass Berry & Sims, and Larry Woods, Nashville, Tenn., for Vandy.

Kevin McDonald, Jones Day Reavis & Pogue, Washington, D.C., for Southern Hills.

Ward DeWitt, Nashville, Tenn., for B.K. Hibbett.

Joseph G. Cummings, Nashville, Tenn., for Shackleford.

MEMORANDUM

JOHN T. NIXON, District Judge.

The Court has received the Report and Recommendation issued by the Magistrate on July 31, 1987, concerning motions for summary judgment filed by each of the defendants in this case. Plaintiffs and certain defendants have filed written objections to the Report and Recommendation. Under Rule 72(b) of the Federal Rules of Civil Procedure, the Court must make a de novo determination of all matters to which the parties object. In its determination, the Court may adopt, modify, or reject any of the Magistrate's proposed findings or recommendations.

This is an antitrust action for injunctive relief and damages based upon sections 1 and 2 of the Sherman Anti-Trust Act ("the Act"), 15 U.S.C. §§ 1-2, and pendent state law claims. The plaintiffs are: two nurse midwives, Susan Sizemore and Victoria Henderson; their business partnership, Nurse Midwifery Associates ("NMA"); their physician associate, Dr. Darrell Martin; and several NMA clients. The defendants are: Vanderbilt Hospital ("Vanderbilt"); Hendersonville Community Hospital ("HCH"); Dr. Conrad Shackleford, a member of the pediatric staff at HCH; Southern Hills Hospital ("SHH"); Drs. Stephen Melkin, Harry Baer, and George Andrews, members of the obstetrics staff at SHH; State Volunteer Mutual Insurance Company ("SVMIC"); and Dr. B.K. Hibbett, a member of the obstetrics staff at Baptist Hospital in Nashville, and also a member of the SVMIC board of directors. Broadly stated, plaintiffs claim that the defendant doctors, hospitals, and insurance company engaged in various contracts, combinations and conspiracies that unreasonably restrained trade in violation of section 1 of the Act, and attempted to monopolize trade in violation of section 2 of the Act. Plaintiffs allege that defendants intended to prevent NMA from operating a private practice to provide nurse midwifery services at hospitals in Davidson County and Hendersonville, Tennessee, thus putting NMA out of business.

Having reviewed the record, including the Report and Recommendation, the objections thereto, and the responses to those objections, the Court ADOPTS the Magistrate's extensive findings of fact and incorporates them into this Memorandum.

To survive a summary judgment motion in an antitrust case, a plaintiff "must establish that there is a genuine issue of material fact" as to whether the defendants "entered into an illegal conspiracy that caused the plaintiffs to suffer a cognizable injury." Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986) (citing, inter alia, Fed.R.Civ.P. 56(e)). With this standard in mind, the Court now considers the Magistrate's recommendation as to each allegation and makes a de novo determination of recommendations to which objections have been filed.

1. Conspiracy Among Vanderbilt and Members of its Medical Faculty

Based on the facts set out in the Report and Recommendation, plaintiffs allege that Vanderbilt should be held liable for conspiring with members of its medical faculty to deny plaintiff nurse midwives medical staff privileges at that hospital. The Magistrate recommended that all allegations of conspiracy among Vanderbilt and any members of its full-time faculty be dismissed. For the reasons stated below, the Court ADOPTS the Magistrate's recommendation and reasoning as to this claim.

Section 1 of the Act prohibits all contracts, combinations, or conspiracies in restraint of trade. Section 2 of the Act prohibits all combinations or conspiracies to monopolize. Because these activities cannot be performed by a single person acting alone, it is well established that two or more persons are necessary to perform an actionable contract, combination, or conspiracy under the Act. See, e.g., 2 Kintner, Federal Antitrust Law § 9.7 (1980). It is also well established that unilateral action, no matter what its motivation, does not violate the Act. See Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 761, 104 S.Ct. 1464, 1469, 79 L.Ed.2d 775 (1984); United States v. Colgate & Co., 250 U.S. 300, 39 S.Ct. 465, 63 L.Ed. 992 (1919).

A corporation cannot combine or conspire with itself, and the acts of a corporation alone, acting through its directors, officers, and employees, generally are not cognizable under the Act. See Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 769, 104 S.Ct. 2731, 2740, 81 L.Ed. 2d 628 (1984). If this were not the rule, every decision of a corporation on pricing, marketing, and customer relations would be the result of a conspiracy actionable under the Act.

In Weiss v. York Hospital, 745 F.2d 786, 816-17 (3d Cir.1984), cert denied, 470 U.S. 1060, 105 S.Ct. 1777, 84 L.Ed.2d 836 (1985), the Third Circuit held that a medical staff of a hospital cannot conspire with the hospital. The Court stated:

Finally, we deal with the plaintiff's assertion that the district court erred in charging the jury that the hospital could not conspire with its medical staff. The district court found that the medical staff was an unincorporated division of the hospital, and as such the court determined that the two could not conspire. Although we do not necessarily agree with the district court's characterization of the medical staff as an unincorporated division of the hospital, we agree with its basic conclusion that, with respect to the issues in this case, the hospital could not, as a matter of law, conspire with the medical staff. The medical staff was empowered to make staff privilege decisions on behalf of the hospital. As such, with regard to these decisions, the medical staff operated as an officer of a corporation would in relation to the corporation. Although the members of the medical staff had independent economic interests in competition with each other, the staff as an entity had no interest in competition with the hospital. Accordingly, we conclude that the district court correctly charged the jury that there could not be a conspiracy between the hospital and the medical staff.

See also McMorris v. Williamsport Hospital, 597 F.Supp. 899, 914 (M.D.Pa.1984). Likewise, Vanderbilt argues that plaintiffs' claim must fail because they allege only intra-corporate conspiracy.

Plaintiffs argue in response that Weiss states merely that a medical staff cannot conspire with a hospital where the staff has no interest in competition with the hospital. Plaintiffs argue that the individual members of the medical faculty had an "independent personal stake" separate from Vanderbilt's and, thus, could conspire with the hospital. Plaintiffs cite the only known case finding the possibility of an independent personal stake in a hospital privileges case, Robinson v. Magovern, 521 F.Supp. 842 (W.D.Pa.1981), aff'd, 688 F.2d 824 (3d Cir.), cert. denied, 459 U.S. 971, 103 S.Ct. 302, 74 L.Ed.2d 283 (1982). There, the court found that a conspiracy between a hospital and the head of its surgery department would be possible where "the officer, agent or employee has an independent, personal stake in achieving the object of the conspiracy." Id. at 907.

The head of the hospital surgery department in Robinson also conducted a private surgical practice, which in that court's view provided an independent personal stake. Plaintiffs argue that, likewise, Vanderbilt's medical staff maintained private practices in addition to their duties at the hospital.

The independent personal stake exception relied upon by plaintiffs has never been adopted by the Sixth Circuit, which has expressed disfavor with the exception in the only two instances in which it has been argued to that court. In Smith v. Northern Michigan Hospitals, 703 F.2d 942 (6th Cir.1983), the court found that the individual hospital emergency room staff personnel did not have an independent personal stake separate from the hospital, but that even if they did, "it is doubtful that we would follow the analysis" of the independent personal stake exception. Id. at 951 n. 17.

In Potters Medical Center v. City Hospital Association, 800 F.2d 568 (6th Cir. 1986), the court went even further in voicing its reluctance to adopt the exception. In Potters, plaintiffs alleged that the hospital's staff attorney and its internal medicine department chairman had conspired with each other and with the hospital in violation of the Act. The staff attorney also owned an interest in a construction company that did work for the hospital, and the staff physician also received revenue from the hospital's use of EKG equipment that he owned. The plaintiffs in Potters argued that these interests gave these defendants an independent personal stake in harming plaintiffs and in furthering the alleged monopolistic goals of the hospital. The court stated:

Although several courts have recognized the "independent personal stake" exception

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