Villalobos v. Garcia-Llorens, No. CIV. 99-2034(HL).

• Decision Date: 20 March 2002
• Docket Number: No. CIV. 99-2034(HL).
• Parties: Alga Morales VILLALOBOS, Plaintiff, v. Miguel García LLORÉNS, et al, Defendants.
• Court: U.S. District Court — District of Puerto Rico

Page 401

193 F.Supp.2d 401

Alga Morales VILLALOBOS, Plaintiff, v. Miguel García LLORÉNS, et al, Defendants.

No. CIV. 99-2034(HL).

United States District Court, D. Puerto Rico.

March 20, 2002.

COPYRIGHT MATERIAL OMITTED

Alvaro R. Calderon-Jr., Hato Rey, for Alga Morales-Villalobos, plaintiffs.

Salvador Antonetti-Zequeira, Luis A. Oliver-Fraticelli, Fiddler, Gonzalez & Rodriguez, Samuel T. Cespedes-Sabater, McConnell Valdes, Juan M. Masini-Soler, Samuel T. Cespedes, McConnell Valdes, San Juan, for Miguel Garcia-Llorens, Jose Arturo Garcia-Llorens, Manuel Matos, Hospital Dr. Susoni Inc., Dr. Susoni Health Community Service Corp., Arecibo Respiratory Care Inc., defendants.

OPINION AND ORDER

LAFFITTE, Chief Judge.

Before the Court is a joint motion by Defendants to dismiss for failure to state a claim. Defendants are Dr. Miguel García Lloréns, Dr. José Arturo García Lloréns, Dr. Manuel Matos, Hospital Dr. Susoni, Inc. ("HDS"), Dr. Susoni Health Community Services, Inc. ("Susoni Health"), and Arecibo Respiratory Care, Inc ("ARC"). The individual defendants are the sole shareholders of ARC. ARC, in turn, is the majority shareholder of HDS, which owns and administers a hospital in Arecibo. Susoni Health is a wholly-owned subsidiary of HDS. Susoni Health owns and operates the Hospital Regional de Arecibo. Plaintiff Alga Morales Villalobos ("Morales") is an anesthesiologist residing in Arecibo. She brings this claim pursuant to section 1 of the Sherman Antitrust Act.¹ She also brings Puerto Rico law claims under the Court's supplemental jurisdiction.²

Plaintiff alleges that in 1995 she became an employee of ARC and worked as an anesthesiologist; that, as an ARC employee, she was granted privileges to practice at Hospital Dr. Susoni; that ARC had an exclusive contract to provide anesthesiology services to Hospital Dr. Susoni; and that when Susoni Health began to manage the Hospital Regional, ARC was also given the exclusive contract to provide that hospital with anesthesiology services. Plaintiff further alleges that in January 1999 ARC fired her and that since the time of her termination she has been denied privileges to practice at Hospital Dr. Susoni and the regional hospital.

Plaintiff claims that ARC's exclusive contract is an unreasonable restraint of trade in violation of the antitrust laws. She claims that Dr. Emilio Ramos Escoda and other area physicians would use her as an anesthesiologist if she had access to Defendants' two hospitals, but that ARC's exclusive contract prevents her from having privileges at these hospitals. She also claims that this exclusive contract does not result in better patient care, but rather has resulted in a worsening of the quality of care for patients at the hospitals; that it prevents patients from receiving services from the anesthesiologist of their choice; that she is precluded from offering her services to her patients; and that anesthesia services at HDS are billed at higher amounts than in other sectors of the market.

She alleges that Arecibo patients have no viable alternatives for receiving elective surgery services and are thus forced to use ARC anesthesiologists; that Defendants' two hospitals are the only major medical institutions in the "Arecibo region" that are approved by Medicare and that treat Medicare patients; and that these two hospitals hold "complete market power in the hospital market" in the region. She claims that the geographic market where her services are barred is the "Health Region of Arecibo," as defined by the Puerto Rico Government's health reform program (known in Spanish as the "Reforma de Salud"). Patients in Arecibo and six surrounding towns who are covered by the Government's health plan must go to Arecibo for elective anesthesiology services.

Plaintiff alleges that she cannot practice at hospitals in the nearby Manatí region because the hospitals there also have exclusive contracts with anesthesiology groups and because the physicians in Arecibo who would refer patients to her do not have privileges at those hospitals. She further alleges that patients in Arecibo covered by the health reform may not receive treatment at San Juan hospitals for treatment. Moreover, the physicians who refer patients to her do not have privileges at San Juan area hospitals.

In their motion to dismiss, Defendants argue that Plaintiff has failed to adequately define the relevant market and that Plaintiff has not plead an antitrust injury and therefore she lacks standing.³ Plaintiff has opposed the motion. For the reasons set forth below, the Court grants the motion to dismiss.

DISCUSSION

In ruling on a Rule 12(b)(6) motion to dismiss, a court must accept all well-pled factual averments as true and must draw all reasonable inferences in the plaintiff's favor. Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit, 507 U.S. 163, 164, 113 S.Ct. 1160, 1161, 122 L.Ed.2d 517 (1993); Carparts Distribution Ctr., Inc. v. Automotive Wholesaler's Ass'n, 37 F.3d 12, 14 (1st Cir.1994). A court should not dismiss a complaint for failure to state a claim unless it is clear that the plaintiff will be unable to prove any set of facts which would entitle him to recovery. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957); Miranda v. Ponce Fed. Bank, 948 F.2d 41, 44 (1st Cir.1991). This deferential standard is not a "toothless tiger." Doyle v. Hasbro, Inc., 103 F.3d 186, 190 (1st Cir.1996). The court is not obliged to accept "bald assertions, unsupportable conclusions, periphrastic circumlocutions, and the like." Aulson v. Blanchard, 83 F.3d 1, 3 (1st Cir.1996). For an anti-trust plaintiff to survive a Rule 12(b)(6) motion, she must plead the essential elements of her claim in more than vague and conclusory terms. DM Research v. College of Am. Pathologists, 170 F.3d 53, 55 (1st Cir.1999); Double D Spotting Service, Inc. v. Supervalu, Inc., 136 F.3d 554, 558 (8th Cir.1998); Estate Constr. v. Miller & Smith Holding Co., 14 F.3d 213, 220-21 (4th Cir.1994).

1. Relevant market

The only provision of the antitrust laws to which Plaintiff cites in her complaint is section 1 of the Sherman Antitrust Act, which prohibits contracts, combinations or conspiracies in restraint of trade. 15 U.S.C.A. § 1. The specific conduct of which Plaintiff complains is Defendants' denying her medical privileges at their two hospitals in Arecibo. Courts have generally applied the rule of reason standard to antitrust claims involving hospital privileges and practices between doctors. See Benjamin v. Aroostook Med. Ctr., Inc., 113 F.3d 1, 1 (1st Cir.1997); Betkerur v. Aultman Hosp. Ass'n, 78 F.3d 1079, 1093 & n. 9 (6th Cir.1996); BCB Anesthesia Care v. Passavant Mem'l Area Hosp., 36 F.3d 664, 667 (7th Cir.1994); Davies v. Genesis Med. Ctr., 994 F.Supp. 1078, 1097 (S.D.Iowa 1998). In its earlier opinion and order, the Court followed the lead of these cases and applied the rule of reason standard.⁴ The parties have not challenged this approach, and the Court again applies this standard.

To state a section 1 claim under the rule of reason, a plaintiff must plead (1) concerted conduct by defendants (2) which was illegal, (3) which produced anti-competitive effects within the relevant markets, and (4) which proximately caused plaintiff's injury. Mathews v. Lancaster Gen. Hosp., 87 F.3d 624, 639 (3rd Cir. 1996). To properly plead a restraint of trade under the rule of reason, the complaint must also define the relevant market. Double D, 136 F.3d at 558-59; BCB Anesthesia, 36 F.3d at 667-69; Oksanen v. Page Mem'l Hosp., 945 F.2d 696, 709 (4th Cir.1991). A relevant market has two elements: a product market and a geographic market. Coastal Fuels of Puerto Rico v. Caribbean Petroleum, 79 F.3d 182, 197 & n. 11 (1st Cir.1996); 2 Julian O. von Kalinowski, Antitrust Laws and Trade Regulation § 24.01[4], at 24-17 (2d ed.2000). The Court assumes that the product market in this case is anesthesiology services.

Defendants argue that Plaintiff has failed to define the geographic market. The relevant geographic market is the area in which sellers of the relevant product compete and in which buyers can practicably turn for alternate sources of supply. Coastal Fuels, 79 F.3d at 196; Bathke v. Casey's Gen. Stores, 64 F.3d 340, 345 (8th Cir.1995); 2 Von Kalinowski § 24.03[1], at 24-79. The geographic market describes where the consumers could practicably go, not where they actually go. Minn. Ass'n of Nurse Anesthetists v. Unity Hosp., 208 F.3d 655, 662 (8th Cir.2000). The geographic market corresponds to the commercial reality of the industry and represents an economically significant trade area. Brown Shoe Co. v. United States, 370 U.S. 294, 336-37, 82 S.Ct. 1502, 1530, 8 L.Ed.2d 510 (1962); Davies, 994 F.Supp. at 1100; 2 Von Kalinowski § 24.03[1], at 24-79 to 24-81. Courts have generally not accepted geographic market definitions that are unrealistically narrow. 2 Von Kalinowski § 24.03[1], at 24-82. A market definition must encompass the realities of competition. Barton & Pittinos, Inc. v. SmithKline Beecham Corp., 118 F.3d 178, 183 (3rd Cir.1997); Oksanen, 945 F.2d at 709; Weiss v. York Hosp., 745 F.2d 786, 826 (3rd Cir.1984); Davies, 994 F.Supp. at 1098.

In its previous opinion and order, the Court ordered Plaintiff to address in her amended complaint the issues of why she has drawn the geographic market as she has and why patients in Arecibo could not go to the San Juan metropolitan area for health care.⁵ See Morgenstern v. Wilson, 29 F.3d 1291, 1296 (8th Cir.1994); Davies, 994 F.Supp. at 1100 (Deeming as critical the question of where consumers of anesthesiology services could reasonably turn for alternate care). In her amended complaint and in her opposition to the motion to dismiss, Plaintiff claims that the relevant geographic market is the "Health Region of Arecibo," as defined by the Puerto Rico Government's Reforma de Salud. She alleges that under this...