United States v. Oregon State Medical Society
| Decision Date | 28 September 1950 |
| Docket Number | Civ. No. 4255. |
| Citation | 95 F. Supp. 103 |
| Parties | UNITED STATES v. OREGON STATE MEDICAL SOCIETY, et al. |
| Court | U.S. District Court — District of Oregon |
Philip Marcus, Sp. Asst. to the Atty. Gen., Isidore Cohen, Washington, D. C., and Gerard G. Galassi and Robert H. Weinstein, Sp. Attys., U. S. Dept. of Justice, Seattle, Wash., for plaintiff.
Nicholas Jaureguy (of Cake, Jaureguy & Tooze), and John J. Coughlin (of Griffith, Peck, Phillips & Coughlin), Portland, Or., for all defendants.
Bruce Spaulding of Salem, Or., George L. Hibbard of Oregon City, Or., Manley B. Strayer of Portland, Or., A. N. Orcutt of Roseburg, Or., Lawrence T. Harris of Eugene, Or., John H. Carson of Salem, Or., C. S. Emmons of Albany, Or., and Otto J. Frohnmayer of Medford, Or., for certain defendants at early stages of the case.
My work as a trial judge 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.
The Government contends (1) that defendants, beginning about 1936, conspired to restrain and monopolize prepaid medical care "in the State of Oregon"; (2) that "each of the medical societies" (Oregon State Medical Society and eight county and regional societies) "attempted to restrain and monopolize prepaid medical business in areas where they operated"; and (3) that "each of the medical societies (Oregon State Medical Society and eight county and regional societies) did restrain and monopolize prepaid medical business in areas where they operated".
I hold that none of the Government's charges have been proven by a preponderance of the evidence.
The Government presents its case against the Doctors under four time headings: 1930-1936; the year 1936; 1936-1941, and 1941 to date.
I prefer to group the controlling events into two periods: (1) Prior to the organization of the Doctors' own statewide plan in 1941, and (2) from the organization of the Doctors' plan (Oregon Physicians' Service) in December 1941 to date.
During the first period the Doctors were fighting defensively. They were quarreling among themselves and their chief antagonist exploited their dissension. This is the period of expulsion of doctors from medical societies — an unhappy and unfortunate period. Only death of the parties will close all the wounds that were made at that time. This period is ancient history. It has no legal or causal connection with the period 1941 to date, following the organization of Oregon Physicians' Service.
The fatal weakness of the Government's case I feel is the attempt to tie the periods 1936-1941 and 1941 to date together.
The question then left for determination is whether the Oregon doctors in the formation of their own prepaid nonprofit organization, OPS, have violated the antitrust laws. As competitors of the privately-owned-for-profit organizations in the same field, have the doctors transgressed the bounds of legitimate competition? I hold that they have not.
This was the period when the Doctors were trying to find themselves. It was a defensive period. The Doctors felt they were being exploited. They were trying to maintain their professional standards. They felt the doctor-patient relationship was being destroyed. It was a period of groping for the correct position to take to accord with changing times. The Doctors sponsored their own prepaid plan (Multnomah) and then repudiated it. What the Doctors did during this period was not conspiracy.
I really doubt that the Government believes the operations of Oregon Physicians' Service are monopolistic. Its two chief competitors are tremendously profitable; they have the cream of the business, going only into selected areas, whereas OPS must go everywhere and has many other weaknesses inherent in cooperative enterprise.
I hold that Oregon Physicians' Service is not a conspiracy but, rather, an entirely legal and legitimate effort by the profession to meet the demands of the times for broadened medical and hospital service, eliminating the evils of privately owned concerns, as well as the element of private profit.
This question has been reserved by the Supreme Court. United States v. National Ass'n of Real Estate Boards, 339 U.S. 485, 492, 70 S.Ct. 711. I discuss the question in the Notes that follow.
I am assuming (without deciding) that interstate commerce is involved in this case.
I will make a finding that the defendants did not conspire to restrain and monopolize prepaid medical care in the State of Oregon. Compare Paramount Pest Control Service v. Brewer, 9 Cir., 170 F.2d 553; Id., 9 Cir., 177 F.2d 564, where the trial court was directed to make a finding as to the existence of conspiracy.
I will make a finding that defendant medical societies did not attempt to restrain and monopolize prepaid medical business in areas where they operated by express agreement or concert of action within their own groups or with third parties.
I will make a finding that defendant medical societies did not in fact restrain and monopolize prepaid medical business in areas where they operated by express agreement or concert of action within their own groups or with third parties.
I will make a finding that defendant doctors and medical societies have not restrained or sought to restrain the use of hospital facilities by others, except in cases of lawful and legitimate professional discipline of individual doctors for unprofessional conduct detrimental to their patients, to the hospitals and to the public generally.
The Government says, regardless of motive, if the necessary result of action is monopoly, the statute applies. But I find (1) that the motive (intent) of defendants was not to restrain or monopolize and (2) that monopoly did not in fact result and does not exist. Nor does unreasonable restraint exist.
I will make a finding that if there was a conspiracy, as alleged by the Government, the thread was broken and the conspiracy ended when a large percentage of Oregon doctors entered the Armed Forces in the period 1941-1945.
I will make a finding that if there was conspiracy, as alleged, the thread was broken and the conspiracy ended when the organized doctors of Oregon reversed their position in 1941 and engaged in contract practice through the medium of their own organization, Oregon Physicians' Service. If the doctors had previously been conspirators, they then became competitors, competing with the existing privately owned and operated prepaid medical care organizations.
I will make a finding that OPS and the doctor-owned county and regional plans are business competitors with the privately owned profit making organizations and that, as competitors, the doctors have conducted their organizations fairly and well within the legal limitations of competitive business practice. For legitimate competitive practices see Prosser on Torts, p. 1020, et seq.; Restatement of Torts, § 765; and see decision of L. Hand, J. in United States v. Associated Press, D.C.., 52 F.Supp. 362, 368 and following pages.
I will make a finding and/or conclusion that the practice of medicine is not a trade within the meaning of the Sherman Law, 15 U.S.C.A. §§ 1-7, 15 note.
Findings on Subsidiary Issues.
Rule of Reason.
Years ago the Supreme Court applied the "Rule of Reason" to anti-trust prosecutions. Standard Oil Co. of N. J. v. The United States, 1917, 221 U.S. 1, 31 S.Ct. 502, 55 L. Ed. 619. I will make a finding that the restraint of trade (if any) in this case was and is not unreasonable. I do not include in this fee fixing for, as I state in Note 7, if doctors are held to be engaged in a trade, they cannot "fix fees" under the Supreme Court's decisions. Incidentally, the privately owned hospital associations fix fees and they are engaged in a trade. American Medical Ass'n v. U.S., 317 U.S. 519, 63 S. Ct. 326, 87 L.Ed. 434.
I will make a finding that OPS and the various county or regional doctor-owned or doctor sponsored prepaid medical plans were not formed to eliminate or restrain organizations already in the field; on the contrary, they were formed to meet the social need which had arisen for group medical care, eliminating the element of private profit, over and above legitimate hospital and medical charges.
*On the importance of motive in modern law, see Prosser on Torts, p. 29, et seq.1 "Taking Tickets" I will make a finding that there is no present conspiracy, combination, agreement or concert of action among doctors not to "take tickets" of privately owned hospital associations.
I will make a finding and/or conclusion that refusal to "take tickets" of privately owned associations is not boycott.
I will make a finding and/or conclusion that defendants have not in recent times (if ever) boycotted privately owned hospital associations, and that they do not, so far as the evidence or legitimate inferences show, intend to boycott privately owned hospital associations in the future.
*For an interesting discussion of what boycott is, see Prosser on Torts, p. 1027, n. 44.
Restraint on hospitals was alleged but nothing substantial offered in proof.
Note 1. Restriction (?) of Prepaid Coverage.
A greater per cent. of Oregon covered by prepaid plans than in any other state. (p. 455 Government's brief.)
Note 2. This is not Monopoly.
Only 120,000 out of 1,510,000 people in the state belong to OPS.
Note 3. Hard to Follow.
The Government charges that OPS is engaged in a conspiracy to monopolize state-wide...
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