United States v. Oregon State Medical Soc

• Citation: 343 U.S. 326,96 L.Ed. 978,72 S.Ct. 690
• Decision Date: 28 April 1952
• Docket Number: No. 19,19
• Parties: UNITED STATES v. OREGON STATE MEDICAL SOC. et al
• Court: United States Supreme Court

343 U.S. 326

72 S.Ct. 690

96 L.Ed. 978

UNITED STATES

v OREGON STATE MEDICAL SOC. et al.

No. 19.

Argued Jan. 4 and 7, 1952.

Decided April 28, 1952.

[Syllabus from pages 326-327 intentionally omitted] Mr. Stanley M. Silverberg, Washington, D.C., for appellant.

Mr. Nicholas Jaurequy, Portland, Or., for appellees.

Mr. Justice JACKSON delivered the opinion of the Court.

This is a direct appeal by the United States¹ from dismissal by the District Court² of its complaint seeking an injunction to prevent and restrain violations of §§ 1 and 2 of the Sherman Act. 26 Stat. 209, as amended, 15 U.S.C. §§ 1, 2, 15 U.S.C.A. §§ 1, 2.³

Appellees are the Oregon State Medical Society, eight county medical societies, Oregon Physicians Service (an Oregon corporation engaged in the sale of prepaid medical care), and eight doctors who are or have been at some time responsible officers in those organizations.

This controversy centers about two forms of 'contract practice' of medicine. In one, private corporations organized for profit sell what amounts to a policy of insurance by which small periodic payments purchase the right to certain hospital facilities and medical attention. In the other, railroad and large industrial employers of labor contract with one or more doctors to treat their ailing or injured employees. Both forms of 'contract practice,' for rendering the promised medical and surgical service, depend upon doctors or panels of doctors who cooperate on a fee basis or who associate themselves with the plan on a full or part-time employment basis.

Objections of the organized medical profession to contract practice are both monetary and ethical. Such practice diverts patients from independent practitioners to contract doctors. It tends to standardize fees. The ethical objection has been that intervention by employer or insurance company makes a tripartite matter of the doctor-patient relation. Since the contract doctor owes his employment and looks for his pay to the employer or the insurance company rather than to the patient, he serves two masters with conflicting interests. In many cases companies assumed liability for medical or surgical service only if they approved the treatment in advance. There was evidence of instances where promptly needed treatment was delayed while obtaining company approval, and where a lay insurance official disapproved treatment advised by a doctor.

In 1936, five private associations were selling prepaid medical certificates in Oregon, and doctors of that State, alarmed at the extent to which private practice was being invaded and superseded by contract practice, commenced a crusade to stamp it out. A tooth-and-claw struggle ensued between the organized medical profession, on the one hand, and the organizations employing contract doctors on the other. The campaign was bitter on both sides. State and county medical societies adopted resolutions and policy statements condemning contract practice and physicians who engaged in it. They brought pressure on individual doctors to decline or abandon it. They threatened expulsion from medical societies, and one society did expel several doctors for refusal to terminate contract practices.

However, in 1941, seven years before this action was commenced, there was an abrupt about-face on the part of the organized medical profession in Oregon. It was apparently convinced that the public demanded and was entitled to purchase protection against unexpected costs of disease and accident, which are catastrophic to persons without reserves. The organized doctors completely re- versed their strategy, and, instead of trying to discourage prepaid medical service, decided to render it on a nonprofit basis themselves.

In that year, Oregon Physicians' Service, one of the defendants in this action, was formed. It is a nonprofit Oregon corporation, furnishing prepaid medical, surgical, and hospital care on a contract basis. As charged in the complaint, 'It is sponsored and approved by the Oregon State Medical Society and is controlled and operated by members of that society. It sponsors, approves, and cooperates with component county societies and organizations controlled by the latter which offer prepaid medical plans.' 95 F.Supp. at page 121. After seven years of successful operation, the Government brought this suit against the doctors, their professional organizations and their prepaid medical care company, asserting two basic charges: first, that they conspired to restrain and monopolize the business of providing prepaid medical care in the State of Oregon, and, second, that they conspired to restrain competition between doctor-sponsored prepaid medical plans within the State of Oregon in that Oregon Physicians' Service would not furnish prepaid medical care in an area serviced by a local society plan.

The District Judge, after a long trial, dismissed the complaint on the ground that the Government had proved none of its charges by a preponderance of evidence. The direct appeal procedure does not give us the benefit of review by a Court of Appeals of findings of fact.

The appeal brings to us no important questions of law or unsettled problems of statutory construction. It is much like United States v. Yellow Cab Co., 338 U.S. 338, 70 S.Ct. 177, 94 L.Ed. 150. Its issues are solely ones of fact. The record is long, replete with conflicts in testimony, and includes quantities of documentary material taken from the appellees' files and letters written by doctors, employers, and employees. The Government and the appellees each put more than two score of witnesses on the stand. At the close of the trial the judge stated that his work 'does not permit the preparation of a formal opinion in so complex a case. I will state my conclusions on the main issues and then will append some notes made at various stages throughout the trial. These may be of aid to counsel in the preparation of Findings of Fact and Conclusions of Law to be submitted as a basis for final judgment.' 95 F.Supp. at page 104. These notes indicated his disposition of the issues, but the Government predicates a suggestion of bias on irrelevant soliloquies on socialized medicine, socialized law, and the like, which they contained. Admitting that these do not add strength or persuasiveness to his opinion, they do not becloud his clear disposition of the main issues of the case, in all of which he ruled against the Government. Counsel for the doctors submitted detailed findings in accordance therewith. The Government did not submit requests to find, but by letter raised objections to various proposals of the appellees.

The trial judge found that appellees did not conspire to restrain or attempt to monopolize prepaid medical care in Oregon in the period 1936—1941, and that, even if such conspiracy during that time was proved, it was abandoned in 1941 with the formation of Oregon Physicians' Service marking the entry of appellees into the prepaid medical care business. He ruled that what restraints were proved could be justified as reasonable to maintain proper standards of medical ethics. He found that supplying prepaid medical care within the State of Oregon by doctor-sponsored organizations does not constitute trade or commerce within the meaning of the Sherman Act, but he declined to rule on the question whether supplying prepaid medical care by the private associations is interstate commerce.

The Government asks us to overrule each of these findings as contrary to the evidence, and to find that the busi- ness of providing prepaid medical care is interstate commerce. We are asked to review the facts and reverse and remand the case 'for entry of a decree granting appropriate relief.' We are asked in substance to try the case de novo on the record, make findings and determine the nature and form of relief. We have heretofore declined to give such scope to our review. United States v. Yellow Cab Co., supra.

While Congress has provided direct appeal to this Court, it also has provided that where an action is tried by a court without a jury 'findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses.' Rule 5i(a), Fed.Rules Civ.Proc., 28 U.S.C.A. There is no case more appropriate for adherence to this rule than one in which the complaining party creates a vast record of cumulative evidence as to long-past transactions, motives, and purposes, the effect of which depends largely on credibility of witnesses.

The trial court rejected a grouping by the Government of its evidentiary facts into four periods, 1930—1936, the year 1936, 1936—1941, and 1941 to trial. That proposal projected the inquiry over an eighteen-year period before the action was instituted. The court accepted only the period since the organization of Oregon Physicians' Service as significant and rejected the earlier years as 'ancient history' of a time 'when the Doctors were trying to find themselves. * * * It was a period of groping for the correct position to take to accord with changing times.' 95 F.Supp. at page 105. Of course, present events have roots in the past, and it is quite proper to trace currently questioned conduct backwards to illuminate its connections and meanings. But we think the trial judge was quite right in rejecting pre-1941 events as establishing the cause of action the Government was trying to maintain, and adopt his division of the time involved into two periods, 1936—1941, and 1941 to trial.

It will simplify consideration of such cases as this to keep in sight the target at which relief is aimed. The sole function of an action for injunction is to forestall future violations. It is so unrelated to punishment or reparations for those past that its pendency or decision does not prevent concurrent or later remedy for past violations by indictment or action for damages by those...