Redwood Empire Life Support v. County of Sonoma

• Decision Date: 10 September 1999
• Docket Number: Nos. 98-15170,s. 98-15170
• Citation: 190 F.3d 949
• Parties: (9th Cir. 1999) REDWOOD EMPIRE LIFE SUPPORT, a corporation; STANLEY P. CANTOR, Plaintiffs-Appellees, v. THE COUNTY OF SONOMA; THE SONOMA COUNTY EMERGENCY MEDICAL SERVICES AGENCY; MARK A. KOSTIELNEY; 911 EMERGENCY SERVICES, INC., dba SONOMA LIFE SUPPORT, Defendants-Appellants
• Court: U.S. Court of Appeals — Ninth Circuit

Page 949

190 F.3d 949 (9th Cir. 1999)

REDWOOD EMPIRE LIFE SUPPORT, a corporation; STANLEY P. CANTOR, Plaintiffs-Appellees, v. THE COUNTY OF SONOMA; THE SONOMA COUNTY EMERGENCY MEDICAL SERVICES AGENCY; MARK A. KOSTIELNEY; 911 EMERGENCY SERVICES, INC., dba SONOMA LIFE SUPPORT, Defendants-Appellants.

Nos. 98-15170

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted June 18, 1999

Filed September 10, 1999

Vernon I. Zvoleff, Preuss, Walker & Shanagher, LLP, San Francisco, California, for the defendants-appellants.

Richard P. Hill, Moody & Hill, San Francisco, California, for the plaintiffs-appellees.

Appeals from the United States District Court for the Northern District of California; Vaughn R. Walker, District Judge, Presiding. D.C. No. CV-91-01665-VRW.

Before: Mary M. Schroeder, Betty B. Fletcher, and Cynthia Holcomb Hall, Circuit Judges.

SCHROEDER, Circuit Judge:

This case requires us again to consider the scope of state action immunity from the federal antitrust laws conferred by California's Emergency Medical Services System and the Prehospital Emergency Medical Care Personnel Act ("EMS Act"). Cal. Health & Safety Code SS 1797-1799.200. See A-1 Ambulance Serv., Inc. v. County of Monterey, 90 F.3d 333 (9th Cir. 1996); Mercy-Peninsula Ambulance, Inc. v. County of San Mateo, 791 F.2d 755 (9th Cir. 1986). Appellee Redwood Empire Life Support ("Redwood") brought this antitrust action against Sonoma County and 911 Emergency Services, Inc., d/b/a Sonoma Life Support. Redwood challenged the County's exclusive contract with Sonoma Life Support to provide ambulance services, including non-emergency transports, in central Sonoma County.

The district court issued a permanent injunction against Sonoma County because it concluded that the EMS Act did not contemplate exclusive contracts for non-emergency ambulance services at a basic life support ("BLS") level of service. With the guidance of an intervening decision of the California courts interpreting the statute, Schaefer's Ambulance Service v. County of San Bernardino, 80 Cal. Rptr. 2d 385 (Ct. App. 1998), review denied, March 31, 1999, we now reverse and hold that the statute authorizes exclusive franchises covering all levels of service provided by ambulances.

FACTS

A. Background

Counties in California are authorized to develop emergency medical services programs within the auspices of the EMS Act. See Cal. Health & Safety Code SS 1797-1799.200. Counties implementing a program under the EMS Act must designate a local EMS agency that will be responsible for the administration of the county's program, including ambulance and paramedic services. The EMS Act permits a local EMS agency to create one or more exclusive operating areas for "emergency ambulance services or providers of limited advanced life support or advanced life support." Cal. Health & Safety Code SS 1797.85, 1797.224 (West 1990).¹

Section 1797.6(b) of the EMS Act explains that the California Legislature, by enacting sections 1797.85 and 1797.224, intended to confer state action immunity from federal antitrust laws for actions taken by local governmental entities under the EMS Act. Therefore, so long as a local EMS agency creates an exclusive operating area for services consistent with those described in S 1797.85, the agency's action will not be subject to federal antitrust laws. See Mercy-Peninsula, 791 F.2d at 758.

The Sonoma County Board of Supervisors enacted two ordinances that authorized the creation of exclusive operating areas in Sonoma County and designated the Sonoma County Public Health Department to serve as the local Emergency Medical Services Agency ("the Agency"). The ordinances authorized the Agency to create an exclusive operating area in which all three types of services specified inS 1797.85 of the EMS Act are offered: emergency ambulance services, advanced life support ("ALS") and limited ALS. Advanced life support incorporates various techniques for emergency medical care including cardiopulmonary resuscitation, cardiac defibrillation and intravenous therapy. See Cal. Health & Safety Code S 1797.52. Basic life support, which Redwood contends is not covered by S1797.85, is a subset of ALS comprising emergency first aid and cardiopulmonary resuscitation. See id. S 1797.60. Limited ALS consists of techniques exceeding basic life support, but less than ALS. See id. S 1797.92. Sonoma County's ordinance required that all ambulances within the exclusive operating area provide a limited ALS service.

The County adopted an "exclusive franchise zone " covering a portion of Sonoma County in which only one provider would be allowed to provide ambulance services. In accordance with the EMS Act and the County's ordinances, the Agency initiated a competitive bidding process for the selection of the exclusive ambulance services provider for this zone. The County awarded the contract to Sonoma Life Support. Plaintiff Redwood, which had previously provided emergency and non emergency services in the county, was an unsuccessful bidder.

Following the contract award to Sonoma Life Support, the County notified Redwood that it could not continue to provide ambulance services in the exclusive operating area. Furthermore, the County denied Redwood's request for a permit to provide "non-emergency ambulance services" because the County's ordinances authorized the issuance of ambulance permits to operators of emergency ambulances that respond to 911 calls. In the exclusive operating area, only Sonoma Life Support was entitled to an emergency ambulance permit. Consequently, the County informed Redwood that it could operate "non-emergency vehicles," such as "gurney cars and wheelchair vans" within the exclusive operating area. These vehicles are not routinely equipped with the medical equipment and personnel required for the specialized care offered by ambulances. See Cal. Code Regs. tit. 22,SS 51151.3, 51151.5 (defining "litter van" (similar to a gurney car) and "wheelchair van" for the purposes of Medi-Cal program).

B. Procedural History of this Litigation

In 1991, Redwood filed suit against Sonoma County and Sonoma Life Support, alleging that the County's exclusive contract with Sonoma Life Support is not immune from federal antitrust laws insofar as it purports to grant an exclusive franchise in non-emergency inter-facility transfers. Non-emergency inter-facility transfers involve the transportation of a patient from one health care facility, such as a hospital or nursing home, to another. The district court issued a preliminary injunction precluding the County from implementing the contract as to "non-emergency medical transportation as defined in Title 22 S 51151.7 of the California Code of Regulations." The preliminary injunction was affirmed by this court in an unpublished disposition.

After a trial, the district court dismissed Redwood's antitrust claims by relying on this court's decision in A-1 Ambulance Service, Inc. v. County of Monterey, 90 F.3d 333 (9th Cir. 1996). In A-1 Ambulance, we held that an exclusive provider of ALS ambulance services can engage in non-emergency inter-facility transportation, even though ALS services typically are used for emergency responses. Following the reasoning of A-1 Ambulance, the district court concluded that the exemption from the antitrust laws covered Sonoma County's contract with Sonoma Life Support, including the provision of non-emergency transportation, because all of that company's ambulances are required to provide an advanced life support level of service.

Redwood filed a motion to amend the district court's judgment on the antitrust issue. Pointing to Footnote 1 of the A-1 Ambulance opinion, Redwood argued that the district court had failed to consider that Sonoma County's exclusive operating area also incorporates BLS ambulance services. Footnote 1 states that:

Nothing in this opinion should be read to imply that EMS agencies may establish exclusive operating areas for basic life support ambulance service.

A-1 Ambulance, 90 F.3d at 335 n.1.

The district court requested the parties to brief whether Sonoma County had created an exclusive operating area for "basic life support ambulance service" as that term is used in A-1 Ambulance. The district court then granted Redwood's motion and issued a permanent injunction against the County prohibiting enforcement of the contract with Sonoma Life Support to the extent that the contract prevents Redwood from providing "non-emergency ambulance services at a basic life support level of service."

The district court awarded Redwood its costs of suit and attorney's fees in the amount of $47,243.25 under 15 U.S.C. S 26.

ANALYSIS

I.

Section 1 of the Sherman Act declares that every contract "in restraint of trade" is illegal. See 15 U.S.C. S 1. This law applies to local governments. See City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 408 (1978). If the County's contract granting a monopoly to Sonoma Life Support for ambulance services in central Sonoma County is subject to S 1 of the Sherman Act, it is an illegal restraint of trade. But the contract is not subject to the Sherman Act if it is authorized by state law and hence protected by state action immunity, a doctrine first recognized in Parker v. Brown, 317 U.S. 341 (1943).

Under the state action immunity doctrine, a local government may restrict trade without violating the antitrust laws if the state has "clearly articulated" and affirmatively expressed its intention to allow the municipality to replace competition with regulation or monopoly power. A-1 Ambulance, 90 F.3d at 336 (citing City of Columbia v. Omni Outdoor Advertising, 499 U.S. 365, 372 (1991)). This court previously has held that California has "clearly articulated" its intention to grant state action immunity to local governments that implement emergency medical services plans that are consistent with the terms of the EMS Act. See ...