Stone v. William Beaumont Hosp.

• Decision Date: 30 January 1986
• Docket Number: Nos. 84-1086,84-1149,s. 84-1086
• Parties: 1986-1 Trade Cases 66,932 John M. STONE, M.D., Plaintiff-Appellant, Cross-Appellee, v. WILLIAM BEAUMONT HOSPITAL, Seymour Gordon, M.D., Gerald Timmis, M.D., and Gordon-Timmis & Associates, P.C., Defendants-Appellees, Cross-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 609

782 F.2d 609

1986-1 Trade Cases 66,932

John M. STONE, M.D., Plaintiff-Appellant, Cross-Appellee, v. WILLIAM BEAUMONT HOSPITAL, Seymour Gordon, M.D., Gerald

Timmis, M.D., and Gordon-Timmis & Associates,

P.C., Defendants-Appellees, Cross-Appellants.

Nos. 84-1086, 84-1149.

United States Court of Appeals, Sixth Circuit.

Argued April 1, 1985.

Decided Jan. 30, 1986.

Andrew J. Broder, Martha B. Goodloe, Bodman, Longley & Dahling, Michael B. Lewiston (argued), Troy, Mich., for plaintiff-appellant, cross-appellee.

Philip J. Kessler (argued), Gregory V. Murray, Butzel, Long, Gust, Klein, Van Zile, Eugene Driker (argued), Sharon M. Woods, Charles S. Rudy, Andrew Zack, Detroit, Mich., for defendants-appellees, cross-appellants.

Before MARTIN and KRUPANSKY, Circuit Judges, and HOLSCHUH, District Judge ^*.

KRUPANSKY, Circuit Judge.

Plaintiff John M. Stone, M.D. (Stone) appealed the summary judgment entered in favor of defendants William Beaumont Hospital (Beaumont), Seymour Gordon, M.D. (Gordon), Gerald Timmis, M.D. (Timmis), and Gordon-Timmis & Associates, P.C. (GTA). Plaintiff's complaint, as amended, alleged that Beaumont's denial of Stone's application for staff privileges resulted from concerted activity by the defendants in contravention of federal and state antitrust laws. Specifically, Count 1 alleged violations of the Sherman Act, 15 U.S.C. Secs. 1 and 2, and sought injunctive relief and treble damages pursuant to the Clayton Act, 15 U.S.C. Secs. 15 and 26. Count 2 presented pendent state claims under the Michigan antitrust statutes, M.S.A. Secs. 28.31 and 28.62 [M.C.L.A. Secs. 445.701, 445.762].

Stone's relationship with Beaumont commenced in the late 1960's when he accepted a position on the hospital's medical staff. Shortly thereafter, Stone, a cardiologist, was offered the job of developing the "non-invasive" ¹ cardiac laboratory procedures at Beaumont. Stone declined this offer and in 1972, left Michigan and relocated in Illinois for "personal reasons."

When Stone returned to the Detroit area in the fall of 1973, he became director of the catheterization facilities at Harper Hospital (Harper) in the Detroit Medical Center, a position which he continues to occupy. In addition to his administrative responsibilities at Harper, which Stone characterized as consuming 75 percent of his time, Stone maintains an extensive private cardiology practice. In conjunction with his practice, he has obtained staff positions at six other hospitals, namely, Crittenton, Detroit Receiving, Heritage, the Troy branch of Beaumont, the Grace branch of Northwest, and Lynn Hospital.

Prior to Beaumont's unsuccessful solicitation of Stone to develop the hospital's non-invasive cardiology procedures, Beaumont had recruited Gordon and Timmis to develop and oversee the invasive techniques in Beaumont's cardiology department. Commencing in the mid-1960's, Gordon and Timmis formed GTA, through which they proceeded to expand Beaumont's cardiology division from virtually a nonexistent department to a full service state-of-the-art enterprise. In 1978, Beaumont's administration decided to further enlarge the hospital's cardiology division, a move which was not supported by Gordon and Timmis. According to Dr. Weintraub (Weintraub), Beaumont's Director of Medical Services, the purpose of the expansion was to maximize the use of Beaumont's cardiovascular surgical facilities. At the same time, however, the hospital was not desirous of overburdening its catheterization facilities. Toward this end, a physician's profile was derived to define characteristics which would complement Beaumont's expansion plan.

As explained by the district court, the profile developed by Weintraub identified two potential sets of characteristics which would conform to Beaumont's expansion plan. The first group was personnel, such as GTA physicians, who could be "full-time geographic" ² at Beaumont. The second set was comprised of physicians who had access to catheterization facilities at other nearby hospitals, but who would perform cardiac surgery procedures at Beaumont. Members of this latter group would also be required to be associated with physicians who could provide back-up care for their patients at Beaumont.

Upon learning of the planned expansion, Stone applied for staff privileges at Beaumont. When interviewed by Weintraub, Stone stated that he would retain his position at Harper and that he would at most use Beaumont's catheterization facilities two or three times per month. During a deposition, Weintraub averred that upon conclusion of the interview, he immediately and unilaterally determined that Stone did not meet the hospital's expansion profile, and thus resolved that Stone's application should be denied.

After notification of his rejection, Stone received a full administrative hearing before Beaumont's Appeals Committee, during which he was assisted by legal counsel. Despite Stone's allegations of a GTA monopoly and/or conspiracy regarding Beaumont's cardiology division, the Appeals Committee affirmed Weintraub's decision to deny Stone's application for staff privileges. Two committee members whom Stone later deposed, Dr. Westfall (Westfall) and Dr. Catto (Catto), both testified that neither Gordon or Timmis nor anyone associated with GTA influenced their respective decisions to deny Stone staff privileges at Beaumont. To the contrary, Westfall and Catto cited reliance on Weintraub's evaluation of Stone as an inappropriate candidate due to his heavy commitments to other hospitals, his lack of back up capacity at Beaumont, and the fact that Stone's association with Beaumont would not further the institution's objectives of maintaining a staff of full-time geographic cardiologists.

Although Stone's application was denied, six cardiologists who were not affiliated with Gordon or Timmis or GTA were admitted to the Beaumont staff and granted catheter lab privileges. When the district court granted summary judgment for defendants, there were 17 cardiologists on Beaumont's staff who routinely performed catheterization, ten of whom were not affiliated with the Gordon-Timmis group. Of the ten non-GTA physicians, nine had catheterization privileges. The GTA personnel were all full time at Beaumont and remained the primary users of the catheterization facilities. Beaumont also maintained its long-standing practice of allowing all EKG readings to be performed by GTA associates.

Following the Appeals Committee's decision, Stone initiated the instant action. As observed by the district court, the thrust of plaintiff's federal antitrust claim is incorporated in paragraph 18 of his original complaint, which alleges:

The refusal to permit Dr. Stone to practice at defendant Hospital has prevented Dr. Stone from competing with those Hospital staff and cardiologists and the Gordon Timmis P.C. for general cardiology practice at defendant Hospital and constitutes a combination and conspiracy among defendants Hospital, Gordon, Timmis, and Gordon Timmis, P.C. to boycott Dr. Stone and thereby to restrain trade and commerce as hereinabove alleged, all in violation of Sec. 1 of the Sherman Act, 15 U.S.C. Sec. 1, and to monopolize the trade and commerce hereinabove alleged in that defendant Hospital has afforded to defendants Gordon, Timmis and Gordon Timmis P.C. monopolistic control and access to the defendant Hospital cardiology practice to the detriment of competing cardiologists and have acted in concert with each other to prevent entry by Dr. Stone as a competitor in that trade and commerce, all in violation of Sec. 2 of the Sherman Act, 15 U.S.C. Sec. 2.

Based on the foregoing, the district court first determined that the plaintiff had sufficiently established the necessary "interstate commerce" nexus to invoke the Sherman Act. However, after reviewing the voluminous materials submitted in support of and in opposition to defendants' motion for summary judgment, the court further determined that (1) plaintiff had provided no evidence whatsoever which supported the charges that a conspiracy existed between the hospital and GTA to monopolize or restrain trade; (2) the "physician's profile" utilized in 1978 to select new doctors for Beaumont's cardiology department was devised for legitimate medical and business needs rather than, as plaintiff urged, a pretext to coverup anticompetitive practices; (3) plaintiff's attempted monopolization and monopolization claims were similarly without merit; and (4) the federal court was without jurisdiction to entertain the pendent state claims. In response to a motion filed by defendants, the district court subsequently clarified its opinion by deleting reference to "attempted monopolization," having decided that plaintiff had not raised that issue in his pleadings. From this disposition of his case, plaintiff appealed.

In every federal antitrust case, the critical threshold inquiry is whether a sufficient nexus existed between the parties' activities and interstate commerce, thus bringing the claim within the Sherman Act's parameters. In the instant case, the district court concluded such a nexus derived from the out-of-state funds received by GTA and Beaumont for cardiological procedures, supplies which were purchased and received from out-of-state suppliers, and Stone's out-of-state patient income. This court is not convinced that these elements are sufficient to invoke the Sherman Act's protections. ³

In McLain v. Real Estate Board of New Orleans, Inc., 444 U.S. 232, 100 S.Ct. 502, 62 L.Ed.2d 441 (1980), the Supreme Court reiterated that the prerequisite for recovery under a Sherman Act, Sec. 1 claim could be satisfied by showing "either that defendants' activity is itself in interstate commerce or, if it is local in nature, that it has an effect on some other appreciable activity demonstrably in interstate commerce." 444 U.S. at 242, 100 S.Ct. at 509. Since the operation of Beaumont is local in nature, the ...