St. Joseph's Hosp., Inc. v. Hospital Corp. of America
| Decision Date | 05 August 1986 |
| Docket Number | No. 85-8660,85-8660 |
| Citation | 795 F.2d 948 |
| Parties | , 1986-2 Trade Cases 67,212 ST. JOSEPH'S HOSPITAL, INC., Plaintiff-Appellant, v. HOSPITAL CORPORATION OF AMERICA, HCA Management Company, Chatham County Hospital Authority d/b/a Memorial Medical Center and Memorial Medical Center, Inc., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
J. Marbury Rainer, Rufus T. Dorsey, IV, John H. Parker, Jr., Atlanta, Ga., for plaintiff-appellant.
D. Robert Cumming, Jr., Thomas A. Varlan, John A. Chandler, Atlanta, Ga., for Chatham County/MMC.
Kevin D. McDonald, Joe Sims, Washington, D.C., for Hosp. Corp. of America & HCA Management.
Appeal from the United States District Court for the Southern District of Georgia.
Before VANCE and JOHNSON, Circuit Judges, and ALLGOOD *, Senior District Judge.
This appeal arose out of an action brought by St. Joseph's Hospital, Inc., against Hospital Corporation of America, HCA Management Company, and Chatham County Hospital Authority d/b/a Memorial Medical Center, for alleged violations of the Sherman Antitrust Act, 15 U.S.C. Secs. 1 and 2. 1 The United States District Court for the Southern District of Georgia, 620 F.Supp. 814, granted the defendant's motion to dismiss for failure to state a claim upon which relief could be granted and this appeal followed.
After a careful review of the entire record and the applicable law, this court has concluded that in accordance with Fed.R.Civ.Proc. 8(a)(2) the plaintiff's complaint is sufficient to put the defendants on notice of an antitrust cause of action.
St. Joseph's Hospital, Inc., is a Georgia non-profit general acute care hospital in Savannah, Georgia. Chatham County Hospital Authority, d/b/a Memorial Medical Center (MMC), is also a licensed, non-profit general acute care hospital in Savannah, Georgia. Hospital Corporation of America (HCA) is a for-profit corporation which operates over 218 HCA owned and non HCA owned hospitals world wide and manages another 175 hospitals. HCA Management Company (HCAM) is the wholly owned subsidiary of HCA that manages MMC.
Under Georgia's Health Planning and Development Act of 1983, all health care facilities are required to obtain a certificate of need (CON) from the State Health Planning Agency (SHPA) prior to the implementation or expansion of any health service. 2 Each CON application is reviewed individually according to a process which requires consideration of a number of health planning issues, including the existing services in an area and the need for additional services. 3 Any interested party may submit information to SHPA in connection with the application. This initial review is conducted without an evidentiary hearing. The Georgia Act provides for a separate Health Planning Review Board (Review Board) to handle any appeals from SHPA decisions. The Review Board, at its discretion, grants discovery rights prior to conducting a mandatory evidentiary hearing. 4
In October, 1983, St. Joseph's filed an application with SHPA for a CON to enable it to expand its cardiac care services to include cardiac surgical services. St. Joseph's currently provides a full range of cardio-vascular diagnostic and treatment services, including cardiac catheterizations, but is forced to transfer patients needing cardiac surgery to MMC. MMC is the only hospital in Southeast Georgia authorized by SHPA to provide cardiac surgery services. MMC opposed St. Joseph's application and in a letter to SHPA dated January 4, 1984, stated that it has the capacity to perform 1500 open heart procedures per year which far exceeds the requirements of the region.
In February 1984, prior to issuing a decision on St. Joseph's application, SHPA adopted the "New Cardiac Surgery Rule," SHPA Rule 272-2-09(13), which states:
Adult cardiac surgery services and pediatric cardiac catherization and surgical services are reasonably available and distributed in the State consistent with the need for such services. Absent major population changes, the availability and accessibility of these services fulfill the State's current requirement. This policy will be evaluated at least every two years unless the need is otherwise displayed.
On April 6, 1984, St. Joseph's request for a CON was denied. SHPA determined that the additional open heart services at St. Joseph's would unnecessarily duplicate the services being provided by MMC. Because SHPA determined the need for additional open heart surgery had not been shown, it concluded that the requirements of agency rule 272-2-09(13) had not been met and the application was denied.
St. Joseph's appealed SHPA's denial to the Review Board on April 27, 1984. MMC was not a party to those proceedings but actively tried to have the appeal dismissed without a hearing by encouraging SHPA to move for a dismissal. The Hearing Panel Chairman, John Woodall, refused to grant SHPA's motion to dismiss and ruled that St. Joseph's was entitled by statute to a full evidentiary hearing. MMC then requested the right to intervene. In spite of some reservations Woodall granted the motion. In arguing the motion to intervene MMC stated that it would do nothing to obstruct or delay the proceedings. However, as soon as MMC was allowed to intervene, it began a course of conduct designed to delay the proceedings. Pursuant to a motion filed by MMC, John Sibley, Chairman of the Review Board, disqualified Woodall as the hearing officer because Woodall had previously represented St. Joseph's insurance carrier in workmen's compensation cases. Sibley appointed himself as the hearing officer. MMC again filed a motion to dismiss the appeal and, before a ruling was made on that motion, filed a request to stay the appeal. Sibley granted the request for a stay, pending determination of the validity of the New Cardiac Surgery Rule and its application to St. Joseph's CON by the courts.
On the same date that the stay was issued, St. Joseph's filed a petition and complaint for mandamus and injunctive relief in Fulton Superior Court requesting the stay be lifted and the hearing granted. On August 17, 1984 the stay was lifted. St. Joseph's Hospital, Inc. v. Sibley, Civil Action No. C-12402 (Fulton Superior Ct., August 17, 1984). A hearing was conducted on September 5, 1984 and on December 6, 1984 the Review Board found that need had been shown for the additional cardiac services proposed by St. Joseph's. However, the Review Board determined that under the New Cardiac Surgery Rule only SHPA could issue the CON and that even SHPA could not issue the CON until the validity of the rule had been resolved by the Georgia Court of Appeals. The Georgia Court of Appeals already had before it two cases in which the New Cardiac Surgery Rule was being challenged. Those appeals were ultimately dismissed on jurisdictional grounds. State Health Planning Review Board v. Piedmont Hospital, 173 Ga.App. 450, 326 S.E.2d 814 (1985). Following the decision in which the stay was lifted St. Joseph's filed a complaint and petition for review in the Superior Court of Chatham County. The court agreed with the Review Board's findings on the merits of the application, but rejected the Review Board's determination that only SHPA could make the ultimate determination of whether "need was otherwise displayed" and issue the CON. The court modified the Review Board's decision to direct SHPA to issue the CON. MMC appealed to the Georgia Court of Appeals.
On April 4, 1986, a final order was issued by the court of appeals. Chatham County Hospital Authority v. St. Joseph's Hospital, Inc., 344 S.E.2d 463 (Ga.App.1986). The court determined that the New Rule does not require a moratorium on considering applications for a certificate and affirmed the superior court's and the board's finding that need for the additional services had been shown.
In August, 1984, before the superior court's decision, St. Joseph's filed a complaint in federal court, alleging that the defendants had conspired to prevent St. Joseph's establishment of a cardiac surgery program in violation of the Sherman Antitrust Act. St. Joseph's also charged the defendants with monopolizing or attempting to monopolize trade in violation of Sec. 2 of the Sherman Antitrust Act. The central focus of St. Joseph's allegations was that the defendants had submitted false information to SHPA and SHPA relied on that information in denying St. Joseph's application. St. Joseph's also charged the defendants with acting in bad faith to obstruct, delay and prevent St. Joseph's obtaining a hearing and later a review of the adverse decision.
HCA and MMC each filed a 12(b)(6) motion to dismiss. St. Joseph's filed an amended complaint; and the defendants again filed motions to dismiss. The district court granted the motions without granting the plaintiff leave to amend. This appeal followed.
Although authorized by the Federal Rules of Civil Procedure, the liberal rules as to the sufficiency of a complaint 5 make it a rare case in which a motion on this ground should be granted. "[I]n appraising the sufficiency of the complaint we follow, of course, the accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, at 45, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). In spite of the defendant's protestations to the contrary the liberal standard of Rule 8 is also generally accepted as the standard in an antitrust action. McLain v. Real Estate Bd. of New Orleans, Inc., 444 U.S. 232, 100 S.Ct. 502, 62 L.Ed.2d 441 (1980); Radovich v. National Football League, 352 U.S. 445, 77 S.Ct. 390, 1 L.Ed.2d 456 (1957); Quinonez v. National Association of Securities Dealers, Inc., 540 F.2d 824 (5th Cir.1976).
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