Tambone v. Memorial Hosp. for McHenry County

• Decision Date: 28 March 1986
• Docket Number: No. 79 C 2012.,79 C 2012.
• Court: U.S. District Court — Northern District of Illinois
• Parties: John R. TAMBONE, M.D., Plaintiff, v. MEMORIAL HOSPITAL for McHENRY COUNTY, an Illinois corporation, et al., Defendants.

635 F. Supp. 508

John R. TAMBONE, M.D., Plaintiff, v. MEMORIAL HOSPITAL for McHENRY COUNTY, an Illinois corporation, et al., Defendants.

No. 79 C 2012.

United States District Court, N.D. Illinois, E.D.

March 28, 1986.

David L. Clark, Chicago, Ill., for plaintiff.

Alfred C. Tisdahl, Jr., French, Rogers, Kezelis & Kominiarek, P.C., Chicago, Ill., for defendants.

MEMORANDUM OPINION AND ORDER

ROVNER, District Judge.

Plaintiff filed a three-count complaint alleging violations of Section One of the Sherman Act, 15 U.S.C. § 1, the Illinois Antitrust Act, and Section 1983 of the Civil Rights Act, 42 U.S.C. § 1983. The Section 1983 claim was dismissed by Judge McMillen on October 26, 1979. Presently before this Court is defendant's motion to dismiss the claim under the Sherman Act and the pendent state antitrust claim.¹

Facts

Plaintiff, Dr. John R. Tambone, is a licensed physician and surgeon who has practiced medicine in Woodstock, Illinois, for more than 30 years. At all times relevant to the complaint, the individual defendants were all affiliated, in various capacities, with either one or both of the corporate defendants — Memorial Hospital and Kishwaukee Valley Medical Group. The gravamen of plaintiff's complaint is that the individual defendants effected a conspiracy to restrain and injure the plaintiff's business by removing the plaintiff from the staff of Memorial Hospital and refusing to grant plaintiff staff privileges upon his subsequent reapplication. The plaintiff alleges that defendants effected the conspiracy through their positions on the medical staff of the hospital and on the hospital's Executive, Accreditation and Joint Advisory Committee and Credentials and Nominating Committee.

Specifically, Dr. Tambone alleges that in 1974, defendants, through their membership on hospital committees, wrongfully instigated a series of hearings before hospital committees and boards that resulted in the revocation of Dr. Tambone's privileges at Memorial Hospital. In September, 1977, Dr. Tambone submitted an application for certain medical and staff privileges at the hospital. The application was denied by a letter dated March 29, 1978. Dr. Tambone reapplied for limited medical and staff privileges in April, 1978. That application also was denied by a letter dated June 2, 1978. Dr. Tambone protested the denial and requested a hearing. In response, the Hospital sent Dr. Tambone a copy of the minutes of the May 11, 1978 meeting of the hospital's Credentials and Nominating Committee. Those minutes indicate that the Committee found Dr. Tambone "unqualified as to competency and professional standing" and recommended to the hospital's medical staff that his application be rejected. In summary, all of the specific factual allegations supporting Dr. Tambone's Sherman Act cause of action involve the operation of organizations within the structure of Memorial Hospital dealing with staff privileges at the hospital.

Discussion

Defendants rely almost exclusively on Marrese v. Interqual, Inc., 748 F.2d 373 (7th Cir.1984), cert. denied, ___ U.S. ___, 105 S.Ct. 3501, 87 L.Ed.2d 632 (1985), to support their motion. In Marrese, the Seventh Circuit examined the statutory and regulatory structure established by Indiana to regulate the process of peer review in Indiana hospitals. After a close analysis of the relevant statutes and regulations, the court concluded that actions taken by Indiana hospitals solely pursuant to the statutory-created peer review process are exempt, under the state action doctrine, from attack under the federal antitrust laws. To this Court's knowledge, this is the first court to address the applicability of the state action doctrine to peer review actions by Illinois hospitals since the decision in Marrese.

Under the state action doctrine, anticompetitive actions by private parties are immune from liability under the antitrust laws if two standards are met. "First, the challenged restraint must be `one clearly articulated and affirmatively expressed as state policy'; second, the policy must be `actively supervised' by the State itself." California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97, 105, 100 S.Ct. 937, 943, 63 L.Ed.2d 233 (1980) (quoting City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 410, 98 S.Ct. 1123, 1135, 55 L.Ed.2d 364 (1978)) (quoted in Marrese, 748 F.2d at 386); see also, Southern Motor Carriers Rate Conference, Inc. v. United States, 471 U.S. 48, 105 S.Ct. 1721, 1727-28, 85 L.Ed.2d 36 (1985).

To meet the first prong of the state action test, the policy invoked must be clearly articulated by the state itself. Thus, if the source of the policy is the state legislature, the policy must be clearly embodied in a statute. Southern Motor Carriers, 105 S.Ct. at 1730; Marrese, 748 F.2d at 386 n. 18. Although the details of how the anticompetitive conduct may be pursued can be left to regulation by state agencies, state agencies acting alone cannot immunize anticompetitive conduct. The intent to condone the challenged conduct must be clearly articulated by the legislature itself. Southern Motor Carriers, 105 S.Ct. at 1730.

It is not necessary, however, that the legislature explicitly state that it is endorsing conduct that will have anticompetitive effects. The clear articulation prong of the state action test is met when "it is clear that anticompetitive effects logically would result" from activity authorized by the legislature. Town of Hallie v. City of Eau Claire, 471 U.S. 34, 105 S.Ct. 1713, 1718, 85 L.Ed.2d 24 (1985); see also, Marrese, 748 F.2d at 386 n. 18.

In Marrese, the court found that "(t)he State of Indiana has developed and enacted a comprehensive statutory scheme of medical peer review to protect consumer welfare." 748 F.2d at 387. The Indiana statutory scheme analyzed in Marrese places supreme authority over the appointment of members of a hospital's medical staff in the hospital's governing board. The medical staff, in turn, is responsible for reviewing professional practices and patient care.

To implement this review process, the statutory scheme provides that hospitals establish a peer review committee that shall have "the responsibility of evaluation of qualifications of professional health care providers, or of patient care rendered by professional health care providers, or of the merits of a complaint against a professional health care provider that includes a determination or recommendation concerning the complaint." Ind.Code § 34-4-12.6-1. The peer review committee must be organized, inter alia, "by the professional staff of a hospital" and a "majority of the members must be professional health care providers holding licenses in the stated profession of the committee." Id.

748 F.2d at 388.

The court concluded that

(t)he State of Indiana has "clearly articulated and affirmatively expressed as state policy" that hospital medical staffs are to form peer review committees and that such committees are to review the quality and necessity of the care provided patients, to evaluate the qualifications of staff members, and review the merits of any recommendation against a staff member. Ind.Code §§ 16-10-1-6.5, 34-4-12.6-1. As a necessary and reasonable consequence of this state mandated medical peer review process, hospital staff members must review the medical treatments, diagnostic procedures, and surgical procedures of competing staff members and, when required, recommend the revocation of staff privileges. Thus, the defendants' conduct, as members of or consultants to the hospital's peer review committees, in reviewing Dr. Marrese's surgical procedures and recommending that his staff privileges be revoked, satisfies the first element of the state action test.

748 F.2d 388-89 (citation omitted).

The statutory scheme underlying peer review in hospitals in Illinois differs from that found in Indiana. Pursuant to Ill.Ann. Stat. ch. 111½, § 151(c) (Smith-Hurd pocket part 1985), the Director of the Department of Public Health of the State of Illinois "shall prescribe rules, regulations, standards, and statements of policy needed to implement, interpret, or make specific the provisions and purposes" of the Hospital Licensing Act, Ill.Ann.Stat. ch. 111½, § 142 et seq. Rules, regulations or standards concerning the operation of hospitals licensed under the Act must be approved by the Hospital Licensing Board created under Section 151(a).

The purpose of the Act, as stated by the legislature, is as follows:

The purpose of this Act is to provide for the better protection of the public health through the development, establishment, and enforcement of standards (1) for the care of individuals in hospitals, (2) for the construction, maintenance, and operation of hospitals which, in light of advancing knowledge, will promote safe and adequate treatment of such individuals in hospital, and (3) that will have regard to the necessity of determining that a person establishing a hospital have the qualifications, background, character and financial resources to adequately provide a proper standard of hospital service for the community.

Ill.Ann.Stat. ch. 111½, § 143 (Smith-Hurd 1977).

Thus, the Act delegates broad authority to the Director of the Department of Public Health to regulate, with the approval of the Hospital Licensing Board, the operation of Illinois hospitals. Pursuant to that authority, the Director of the Department of Public Health has promulgated regulations, entitled the Illinois Hospital Licensing Requirements, to implement the provisions and purposes of the Act.

At all times relevant, the Requirements mandated that

(f)or each hospital there shall be a governing authority, hereinafter called the board, responsible for its organization, management, control and operation, including appointment of the medical staff.

Rule 2-1.1. The medical staff is defined as:

... an organized body composed of individuals granted the

...