Wilk v. American Medical Ass'n

• Decision Date: 07 February 1990
• Docket Number: Nos. 87-2672,87-2777,s. 87-2672
• Citation: 895 F.2d 352
• Parties: , 1990-1 Trade Cases 68,917 Dr. Chester A. WILK, D.C., Dr. James W. Bryden, D.C., Dr. Patricia B. Arthur, D.C., and Dr. Michael D. Pedigo, D.C., Plaintiffs-Appellees, Cross-Appellants, v. AMERICAN MEDICAL ASSOCIATION, Defendant-Appellant, Cross-Appellee. Dr. Chester A. WILK, D.C., Dr. James W. Bryden, D.C., Dr. Patricia B. Arthur, D.C., and Dr. Michael B. Pedigo, D.C., Plaintiffs-Cross-Appellants, v. AMERICAN MEDICAL ASSOCIATION, Joint Commission on Accreditation of Hospitals, American College of Physicians and American Academy of Orthopaedic Surgeons, Defendants-Cross-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 352

895 F.2d 352

58 USLW 2505, 1990-1 Trade Cases 68,917

Dr. Chester A. WILK, D.C., Dr. James W. Bryden, D.C., Dr.

Patricia B. Arthur, D.C., and Dr. Michael D.

Pedigo, D.C., Plaintiffs-Appellees, Cross-Appellants, v. AMERICAN MEDICAL ASSOCIATION, Defendant-Appellant, Cross-Appellee.

Dr. Chester A. WILK, D.C., Dr. James W. Bryden, D.C., Dr.

Patricia B. Arthur, D.C., and Dr. Michael B.

Pedigo, D.C., Plaintiffs-Cross-Appellants, v. AMERICAN MEDICAL ASSOCIATION, Joint Commission on

Accreditation of Hospitals, American College of

Physicians and American Academy of

Orthopaedic Surgeons,

Defendants-Cross-Appellees.

Nos. 87-2672, 87-2777.

United States Court of Appeals Seventh Circuit.

Argued Dec. 1, 1988.

Decided Feb. 7, 1990.

Rehearing and Rehearing En Banc Denied in No. 87-2672 April

25, 1990.

George P. McAndrews (argued), Robert C. Ryan, Robert H. Resis, McAndrews, Held & Malloy, Paul E. Slater (argued), Sperling, Slater & Spitz, Chicago, Ill., for plaintiffs-appellees, cross-appellants.

Jack R. Bierig, Newton N. Minow, David W. Carpenter (argued), Sidley & Austin, Chicago, Ill., for American Medical Ass'n Robert E. Nord, D. Kendall Griffith, Hinshaw, Culbertson, Moelmann, Hoban & Fuller, Ronald J. Russel, Daniel M. Schuyler (argued), James L. Simon, Schuyler, Roche & Zwirner, Perry L. Fuller, Hinshaw, Culbertson, Moelmann, Hoban & Fuller, Phil C. Neal (argued), Neal, Gerber, Eisenberg & Lurie, Chicago, Ill., for other defendants-cross-appellees.

Before WOOD, Jr., RIPPLE, and MANION, Circuit Judges.

MANION, Circuit Judge.

The district court held that the American Medical Association ("AMA") violated Sec. 1 of the Sherman Act, 15 U.S.C. Sec. 1, by conducting an illegal boycott in restraint of trade directed at chiropractors generally, and the four plaintiffs in particular. The court granted an injunction under Sec. 16 of the Clayton Act, 15 U.S.C. Sec. 26, requiring, among other things, wide publication of its order. The court held that two additional defendants, the Joint Commission on Accreditation of Hospitals ("JCAH"), and the American College of Physicians ("ACP"), had acted independently of the AMA's boycott, and dismissed them from the case. Wilk v. American Medical Association, 671 F.Supp. 1465 (N.D.Ill.1987). The AMA appeals the finding of liability, and contends that, in any event, injunctive relief is unnecessary. Plaintiffs cross-appeal against JCAH and ACP. We affirm.

I.

We have observed before that "antitrust cases are notoriously extended." Ball Memorial Hospital Inc. v. Mutual Hospital Insurance Inc., 784 F.2d 1325, 1333 (7th Cir.1986). This case is no exception. Plaintiffs Chester A. Wilk, James W. Bryden, Patricia B. Arthur, and Michael D. Pedigo, are licensed chiropractors. Their complaint, originally filed in 1976, charged several defendants with violating Secs. 1 and 2 of the Sherman Act, 15 U.S.C. Secs. 1 and 2. It sought both damages and an injunction. (For a list of all the original defendants, see 671 F.Supp. at 1469-70. We discuss here only those relevant to this appeal.) At the first trial, plaintiffs' primary claim was that the defendants engaged in a conspiracy to eliminate the chiropractic profession by refusing to deal with plaintiffs and other chiropractors. Defendants accomplished this, plaintiffs claimed, by using former Principle 3 of the AMA's Principles of Medical Ethics, which prohibited medical physicians from associating professionally with unscientific practitioners. ¹ Plaintiffs contended that the AMA used Principle 3 to boycott chiropractors by labelling them "unscientific practitioners," and then advising its members, among others, that it was unethical for medical physicians to associate with chiropractors. According to the plaintiffs, the other defendants joined the AMA's boycott.

A jury returned a verdict for the defendants. An earlier panel of this court, however, reversed that judgment. Wilk v. American Medical Association, 719 F.2d 207 (7th Cir.1983) (Wilk I ). In reversing and ordering a new trial, we held that, in applying the rule of reason, the jury had been allowed to consider factors beyond the effect of the AMA's conduct on competition. The district court had improperly failed to confine the jury's consideration to the "patient care motive as contrasted with [the] generalized public interest motive." Id. at 229.

Just before the 1987 retrial, plaintiffs abandoned their damages claim and sought only injunctive relief. This shifted the case's focus from the past to the present regarding whether plaintiffs were entitled to an injunction under Sec. 16 of the Clayton Act. After a lengthy bench trial, the district court concluded that the AMA, through former Principle 3, had unreasonably restrained trade in violation of Sec. 1 of the Sherman Act. Because the district court adequately detailed the rather lengthy and complex facts of this case, we only briefly summarize them here. (The facts relevant to the claims against JCAH and ACP are set out in section IV of this opinion regarding plaintiffs' cross-appeal.)

In 1963 the AMA formed its Committee on Quackery ("Committee"). The Committee worked diligently to eliminate chiropractic. A primary method to achieve this goal was to make it unethical for medical physicians to professionally associate with chiropractors. Under former Principle 3, it was unethical for medical physicians to associate with "unscientific practitioners." In 1966, the AMA's House of Delegates passed a resolution labelling chiropractic an unscientific cult.

The district court found the AMA's purpose in all of this was to prevent medical physicians from referring patients to chiropractors and from accepting referrals of patients from chiropractors, so as to prevent chiropractors from obtaining access to hospital diagnostic services and membership on hospital medical staffs, to prevent medical physicians from teaching at chiropractic colleges or engaging in any joint research, and to prevent any cooperation between the two groups in the delivery of health care services. Despite the Committee's efforts, chiropractic ultimately became licensed in all 50 states.

In 1977, the AMA's Judicial Council (now known as the Council on Judicial and Ethical Affairs, although we will use its previous name, as did the district court) adopted new opinions which permitted medical physicians to refer patients to chiropractors, as long as the physicians were confident that the services would be performed according to accepted scientific standards. In 1979, the AMA's House of Delegates begrudgingly adopted Report UU, stating that some things chiropractors did were not without therapeutic value; but even so, it stopped short of saying that these services were based on scientific standards. In 1980, the AMA revised its Principles of Medical Ethics, eliminating Principle 3. With this gesture, the district court found, the AMA's boycott ended. 671 F.Supp. at 1477. (We discuss plaintiffs' contention that the boycott continued until 1983 in the section addressing their cross-appeal against JCAH.)

At trial, the AMA raised the so-called "patient care defense" which this court had formulated in its earlier opinion in this case. Wilk I, 719 F.2d at 227. That defense required the AMA generally to show that it acted because of a genuine, and reasonable, concern for scientific method in patient care and that it could not adequately satisfy this concern in a way that was less restrictive of competition. The district court rejected the defense. The court found the AMA failed to establish that throughout the relevant period (1966-1980) their concern for scientific methods in patient care had been objectively reasonable. The court also found the AMA similarly failed to show it could not adequately have satisfied its concern for scientific method in patient care in a manner less restrictive of competition than a nationwide conspiracy to eliminate a licensed profession. 671 F.Supp. at 1481-84.

The AMA settled three antitrust lawsuits in 1978, 1980, and 1986 brought by chiropractors, stipulating and agreeing that under the Judicial Council's current opinions, a medical physician could, without fear of discipline or sanction by the AMA, refer a patient to a licensed chiropractor when the physician believed that such a referral would benefit the patient. Similarly, physicians could also choose to accept or decline patients sent to them by chiropractors. The AMA also confirmed that physicians could teach at chiropractic colleges or seminars.

The AMA's present position regarding chiropractic is that it is ethical for a medical physician to professionally associate with chiropractors, if the physician believes that the association is in his patient's best interests. The district court found that the AMA had not previously communicated this position to its membership.

Based on these findings, the court held that the AMA and its members violated Sec. 1 of the Sherman Act by unlawfully conspiring to restrain trade. According to the court, the AMA's boycott's purpose had been to eliminate chiropractic; the boycott had substantial anticompetitive effects; the boycott had no counterbalancing pro-competitive effects; and the AMA's unlawful conduct injured the plaintiffs.

Despite the fact that the district court found the conspiracy ended in 1980, it concluded that the illegal boycott's "lingering effects" still threatened plaintiffs with current injury and ordered injunctive relief. The court concluded that the boycott caused injury to chiropractors' reputations which had not been repaired, and current economic injury to chiropractors. Further, the AMA never affirmatively acknowledged that there are no impediments to professional association and cooperation between chiropractors and medical physicians, except as provided by law. Thus, chiropractors continued to suffer because the boycott's negative effects (namely, inhibiting AMA members' individual decision-making in...