United States v. American Medical Ass'n, No. 63221.

CourtUnited States District Courts. United States District Court (Columbia)
Writing for the CourtPROCTOR, Justice
Citation28 F. Supp. 752
PartiesUNITED STATES v. AMERICAN MEDICAL ASS'N et al.
Docket NumberNo. 63221.
Decision Date26 July 1939

28 F. Supp. 752

UNITED STATES
v.
AMERICAN MEDICAL ASS'N et al.

No. 63221.

District Court of the United States for the District of Columbia.

July 26, 1939.


28 F. Supp. 753
COPYRIGHT MATERIAL OMITTED
28 F. Supp. 754
Thurman Arnold, Asst. Atty. Gen., and John Henry Lewin and Allan Hart, Sp. Assts. to Atty. Gen., and Smith Brittingham, of Norfolk, Va., Sp. Atty., for the United States

William E. Leahy, of Washington, D. C., Edward M. Burke, of Chicago, Ill., and Charles S. Baker, Adrien F. Busick, Seth W. Richardson and John E. Laskey, all of Washington, D.C., for defendants.

PROCTOR, Justice.

The indictment charges a conspiracy to restrain trade in the District of Columbia in violation of Section 3 of the Sherman Anti-Trust Act, 15 U.S.C.A. § 3. The defendants are American Medical Association, a national organization of physicians; two of its subordinate bodies, the Medical Society of the District of Columbia and Harris County Medical Society of Houston, Texas; also the Washington Academy of Surgery, not fully identified; and twenty-one individual doctors, all members of the national body, some officers thereof, others members and officers of the Medical Society of the District of Columbia. All defendants have demurred to the indictment. It is very long, and only abbreviated references will be made to such parts as are deemed necessary to this decision.

Group Health Association, Inc (hereinafter called Association), is alleged to be an association of Government employees, engaged "in the business of arranging for the provision of medical care and hospitalization to its members and their dependents on a risk sharing pre-payment basis". Medical care is provided by a staff of salaried practitioners engaged in group practice under a medical director. A clinic is maintained, and limited hospital expenses are defrayed for the members and their dependents.

The defendants are alleged to have conspired (1) to restrain the Association in its business of arranging for the provision of medical care and hospitalization to its members and their dependents, (2) to restrain such members in obtaining, by cooperative efforts, adequate medical care for themselves and their dependents from doctors engaged in group medical practice, (3) to restrain doctors serving on the medical staff of the Association in pursuit of their callings, (4) to restrain other doctors in the District of Columbia, including some of the individual defendants, in pursuit of their callings, and (5) to restrain Washington hospitals in the operation of their businesses.

The demurrers raise basic objections to the indictment. Of first importance is the contention that none of the alleged restraints has reference to a trade; that Section 3 comprehends only those occupations in commercial life carried on in the marts of trade activity; therefore, that the medical profession and the businesses of the Association and hospitals do not constitute "trade" within the purview of the statute. Against this contention the Government's position is that all who are occupied in any activity whereby they supply money's worth

28 F. Supp. 755
for full money payment are engaged in trade; that Section 3 does cover all such activities; therefore, that the practice of medicine and the businesses of the Association and hospitals do fall within the scope of the statute

Is medical practice a trade within the meaning of Section 3 of the Sherman Act? In my opinion, it is not. I think the matter is settled by the Supreme Court in the case of Atlantic Cleaners & Dyers v. United States, 286 U.S. 427, 52 S.Ct. 607, 610, 76 L.Ed. 1204. That case squarely presented the question whether "trade" is used in a narrow sense, as importing "only traffic in the buying, selling, or exchanging of commodities", or in a broader sense. It fairly called for a definition of the word. This the Court undertook to give. In so doing, it declared that the word "trade" was used in Section 3 of the Sherman Act in the general sense attributed to it by Justice Story in the case of The Schooner Nymph, 1 Sumn. 516, 18 Fed.Cas. 506, 507, No. 10,388. The Court, intending to give a full and broad meaning, adopted for its own definition of "trade" the language of Justice Story in that early case, quoting therefrom as follows:

"The argument for the claimant insists, that `trade' is here used in its most restrictive sense, and as equivalent to traffic in goods, or buying and selling in commerce or exchange. But I am clearly of opinion, that such is not the true sense of the word, as used in the 32d section 46 U.S.C.A. § 325. In the first place, the word `trade' is often, and indeed, generally used in a broader sense, as equivalent to occupation, employment, or business, whether manual or mercantile. Wherever any occupation, employment, or business is carried on for the purpose of profit, or gain, or a livelihood, not in the liberal arts or in the learned professions, it is constantly called a trade. Thus, we constantly speak of the art, mystery, or trade of a housewright, a shipwright, a tailor, a blacksmith, and a shoemaker, though some of these may be, and sometimes are, carried on without buying or selling goods."

Thus, we have this recent controlling decision defining the word trade, and expressly excepting the learned professions of which admittedly the practice of medicine is one. The decision is in harmony with others rendered before and after the Cleaners & Dyers case. See Federal Trade Comm. v. Raladam Co., 283 U.S. 643, 51 S. Ct. 587, 75 L.Ed. 1324, 79 A.L.R. 1191; Graves v. Minnesota, 272 U.S. 425, 47 S.Ct. 122, 71 L.Ed. 331; and Semler v. Board of Dental Examiners, 294 U.S. 608, 55 S.Ct. 570, 79 L.Ed. 1086. The restraints alleged against the doctors in specifications 3 and 4 of the charge are clearly not within the purview of the statute. I cannot accept the refinements of thought whereby it is argued for the Government that the Court in quoting Justice Story was not defining "trade" but merely illustrating the narrow and broad concepts of the word. Nor does the decision lend any support to the idea that by enacting Section 3 Congress intended to exercise all its plenary power over the District of Columbia to prohibit restraints against all business activities of the citizen. The Court has simply said that Congress meant to deal effectively with the evils resulting from contracts, combinations and conspiracies in restraint of trade — not all restraints upon every business pursuit, but only those affecting trade. Doubtless, in the fullness of its power over the District, Congress could have prohibited restraints upon all occupations of the citizen. But there is nothing in the history of the legislation to suggest the need...

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5 practice notes
  • Goldfarb v. Virginia State Bar, No. 73-1247
    • United States
    • United States Courts of Appeals. United States Court of Appeals (4th Circuit)
    • 8 Mayo 1974
    ...reversed on the issue, and the Supreme Court avoided it on the second appeal of the case. United States v. American Medical Ass'n, 28 F.Supp. 752 (D.D.C.1939), rev'd, 72 App.D.C. 12, 110 F.2d 703, cert. denied 310 U.S. 644, 60 S.Ct. 1096, 84 L.Ed. 1411 (1940) ; United States v. American Med......
  • United States v. B. Goedde & Co., No. 15253.
    • United States
    • United States District Courts. 7th Circuit. United States District Court of Northern District of Indiana
    • 6 Septiembre 1941
    ...v. United States, 273 U.S. 593, 47 S.Ct. 531, 71 L.Ed. 793. But, as was said in United States v. American Medical Association, D. C., 28 F.Supp. 752, it is doubtful if such treatment will suffice to relieve defendants from the prejudice likely to arise from a recital which smacks so much of......
  • American Medical Ass v. United States Medical Society of the District of Columbia v. Same 11 8212 14, 1942, Nos. 201
    • United States
    • United States Supreme Court
    • 18 Enero 1943
    ...1 Act of July 2, 1890, § 3, c. 647, 26 Stat. 209, 15 U.S.C. § 3, 15 U.S.C.A. § 3. 2 United States v. American Medical Association, D.C., 28 F.Supp. 752. 3 United States v. American Medical Association, 72 App.D.C. 12, 110 F.2d 703, 710, 711. 4 American Medical Association v. United States, ......
  • Eastex Aviation, Inc. v. Sperry & Hutchinson Company, Civ. A. No. 5601.
    • United States
    • United States District Courts. 5th Circuit. United States District Court of Eastern District Texas
    • 20 Noviembre 1973
    ...F.2d 806 (3d Cir.) cert. denied, 384 U.S. 961, 86 S.Ct. 1588, 16 L.Ed.2d 674 (1966); see also United States v. American Medical Ass'n, 28 F.Supp. 752 (D.D.C.), rev'd on other grounds, 72 App.D.C. 12, 110 F.2d 703, cert. denied, 308 U.S. 599, 60 S.Ct. 131, 84 L.Ed. 502 (1939) (professional o......
  • Request a trial to view additional results
5 cases
  • Goldfarb v. Virginia State Bar, No. 73-1247
    • United States
    • United States Courts of Appeals. United States Court of Appeals (4th Circuit)
    • 8 Mayo 1974
    ...reversed on the issue, and the Supreme Court avoided it on the second appeal of the case. United States v. American Medical Ass'n, 28 F.Supp. 752 (D.D.C.1939), rev'd, 72 App.D.C. 12, 110 F.2d 703, cert. denied 310 U.S. 644, 60 S.Ct. 1096, 84 L.Ed. 1411 (1940) ; United States v. American Med......
  • United States v. B. Goedde & Co., No. 15253.
    • United States
    • United States District Courts. 7th Circuit. United States District Court of Northern District of Indiana
    • 6 Septiembre 1941
    ...v. United States, 273 U.S. 593, 47 S.Ct. 531, 71 L.Ed. 793. But, as was said in United States v. American Medical Association, D. C., 28 F.Supp. 752, it is doubtful if such treatment will suffice to relieve defendants from the prejudice likely to arise from a recital which smacks so much of......
  • American Medical Ass v. United States Medical Society of the District of Columbia v. Same 11 8212 14, 1942, Nos. 201
    • United States
    • United States Supreme Court
    • 18 Enero 1943
    ...1 Act of July 2, 1890, § 3, c. 647, 26 Stat. 209, 15 U.S.C. § 3, 15 U.S.C.A. § 3. 2 United States v. American Medical Association, D.C., 28 F.Supp. 752. 3 United States v. American Medical Association, 72 App.D.C. 12, 110 F.2d 703, 710, 711. 4 American Medical Association v. United States, ......
  • Eastex Aviation, Inc. v. Sperry & Hutchinson Company, Civ. A. No. 5601.
    • United States
    • United States District Courts. 5th Circuit. United States District Court of Eastern District Texas
    • 20 Noviembre 1973
    ...F.2d 806 (3d Cir.) cert. denied, 384 U.S. 961, 86 S.Ct. 1588, 16 L.Ed.2d 674 (1966); see also United States v. American Medical Ass'n, 28 F.Supp. 752 (D.D.C.), rev'd on other grounds, 72 App.D.C. 12, 110 F.2d 703, cert. denied, 308 U.S. 599, 60 S.Ct. 131, 84 L.Ed. 502 (1939) (professional o......
  • Request a trial to view additional results

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