Levine v. Central Florida Medical Affiliates, Inc. ( 1996 )

United States Court of Appeals,
Eleventh Circuit.
No. 94-3145.
Scott D. LEVINE, M.D., Plaintiff-Appellant,
v.
CENTRAL FLORIDA MEDICAL AFFILIATES, INC.; Healthchoice, Inc.;
Sand Lake Hospital; Orlando Regional Healthcare System, Inc. f/k/a
Orlando Regional Medical Center, Defendants-Appellees.
Jan. 23, 1996.
Appeal from the United States District Court for the Middle
District of Florida. (No. 93-153-CIV-ORL-22), Anne C. Conway,
Judge.
Before ANDERSON and CARNES, Circuit Judges, and OWENS*, Senior
District Judge.
CARNES, Circuit Judge:
Dr. Scott Levine, the plaintiff, appeals from the district
court's grant of summary judgment in favor of the defendants on his
state and federal antitrust claims. The four defendants are
Healthchoice, Inc., a preferred provider organization ("PPO");
Central Florida Medical Affiliates, Inc. ("CFMA"), a physicians
advocacy group organized to supply physician providers to the
Healthchoice PPO; Sand Lake Hospital; and Orlando Regional
Healthcare System, Inc. ("ORHS"), the hospital's parent
corporation. The incidents giving rise to the lawsuit are Dr.
Levine's unsuccessful attempt to gain provider membership in
Healthchoice and CFMA, and the temporary suspension of his staff
privileges at Sand Lake Hospital. Because we conclude that there
is no genuine issue of material fact about Dr. Levine failing to
*
Honorable Wilbur D. Owens, Jr., Senior U.S. District Judge
for the Middle District of Georgia, sitting by designation.
establish any anticompetitive effect resulting from being denied
membership in Healthchoice and CFMA or from his hospital
suspension, and that the defendants are accordingly entitled to
judgment as a matter of law, we affirm the district court's grant
of summary judgment in their favor.
I. BACKGROUND
Because the case has come to us on appeal of summary judgment,
we construe the facts in the light most favorable to the nonmovant,
in this case Dr. Levine. Forbus v. Sears Roebuck & Co., 30 F.3d
1402, 1403 n. 1 (11th Cir.1994), cert. denied, --- U.S. ----, 115
S. Ct. 906, 130 L. Ed. 2d 788 (1995). The following is a summary of
the facts as viewed in the light most favorable to Dr. Levine.
Dr. Scott D. Levine is an internist. In 1989, a year after
completing his residency in California, Dr. Levine moved to
Orlando, Florida to begin private practice. Although Dr. Levine
explored opportunities to join established medical practices as a
salaried employee,1 he ultimately decided to become a sole
practitioner. He began his practice in the summer of 1989.
When Dr. Levine began his practice, he sought, and was
granted, provisional staff privileges at the ORHS hospitals.2 ORHS
is a nonprofit organization that owns and operates five Orlando
area hospitals: Orlando Regional Medical Center ("ORMC"); Arnold
Palmer Hospital for Children and Women; Sand Lake Hospital; St.
1
One physician offered Dr. Levine $60,000 a year plus
benefits, and another offered him $100,000 a year plus benefits.
Neither offer appealed to Dr. Levine.
2
ORHS was formerly known as the Orlando Regional Medical
Center, a name the organization shared with one of its
unincorporated hospital facilities.
Cloud Hospital; and South Seminole Hospital (ORHS owns only half
of it). Dr. Levine primarily exercised his staff privileges at
Sand Lake Hospital because it is located across the street from his
office. Around October of 1990, after Dr. Levine had successfully
exercised his provisional staff privileges for more than a year,
ORHS granted him full active staff privileges. During 1990 and
1991, Dr. Levine also applied for, and was granted, staff
privileges at several other Orlando area hospitals: the Florida
Hospital system, which operates five hospitals; Glenbeigh
Hospital; Charter of Orlando South Hospital; and Health Central.
When Dr. Levine acquired provisional staff privileges at Sand
Lake Hospital, he agreed to have his name put on the emergency room
("ER") call list. Each day doctors of various specialties would be
"on call" in the ER, which means that if a patient came to the ER
and needed to see, for example, an internist, the hospital would
contact the internist whose name appeared on the call list for that
day. Dr. Levine found that being on the ER call list provided an
effective means of building his new practice, and so during his
early years in Orlando, he asked to be placed on the list as often
as possible. Many of the patients Dr. Levine treated in the ER
would continue to see him as their internist after leaving the
hospital. In addition, these patients would often refer Dr. Levine
new patients. Dr. Levine's strategy proved lucrative; in 1990,
his first full year of private practice, Dr. Levine's pre-tax net
earnings were $553,176—more than twice the average earnings of
Florida internists in private practice that year, according to
studies conducted by the American Medical Association.
A. THE DENIAL OF HEALTHCHOICE PPO MEMBERSHIP TO DR. LEVINE
In addition to being on the ER call list, another method of
building his practice that Dr. Levine explored was the possibility
of becoming a physician provider of Healthchoice3 and CFMA.4
Healthchoice is a PPO, which is a form of managed health care
coverage in which physicians agree to accept no more than a maximum
allowable fee for services rendered to plan enrollees in exchange
for a potentially higher volume of patients. CFMA is a physicians'
advocacy group that was organized to supply the Healthchoice PPO
with a panel of physician providers. Dr. Levine had heard that
Healthchoice was one of the largest PPOs in the Orlando area, and
he believed that Healthchoice patients accounted for approximately
twenty percent of some member physicians' practices. Dr. Levine
had also heard that Healthchoice physicians were, in his words,
"very pleased with what they're getting as reimbursement."
Dr. Levine sought physician provider membership with
Healthchoice several times between 1989 and 1990, but Healthchoice
denied his request for membership each time, explaining that it did
not need any more internists in his geographical area. Believing
(incorrectly) that in order to be a member of Healthchoice, one had
to be a member of CFMA, Dr. Levine also inquired about membership
in CFMA. However, Dr. Levine's telephone call to CFMA was answered
by a Healthchoice employee, and Dr. Levine was again told that it
did not need any more internists in his area.
3
Healthchoice is owned by Healthnet Services, Inc., which is
a for-profit wholly owned subsidiary of ORHS.
4
For a detailed description of how Healthchoice and CFMA
operate, see infra pp. ---- - ----.
During his first few years of practice, Dr. Levine pursued
provider memberships in three other Orlando area PPOs—Health
Advantage, Alta, and Aetna. He joined the Health Advantage PPO
because it was part of the group health coverage he had purchased
for himself and his office staff. When his own health coverage
administrators switched to the Alta PPO, Dr. Levine then joined
Alta as well. Dr. Levine also applied to become a physician
provider of Aetna at the request of a patient, but Aetna denied his
application for the same reason that Healthchoice had—Aetna already
had enough internists in Dr. Levine's area. Although Dr. Levine
received numerous solicitations from other area PPOs inviting him
to become a physician provider, he turned down each of those
offers.
In January of 1991, Dr. Levine's practice was so busy that he
placed an advertisement in a medical journal to hire a physician as
a salaried employee. However, because of events that transpired at
Sand Lake Hospital that same month, Dr. Levine decided not to hire
another physician for his practice.
B. THE SUSPENSION OF DR. LEVINE'S STAFF PRIVILEGES AT SAND LAKE
HOSPITAL
In January of 1991, Cathy Canniff-Gilliam, the Executive
Director of Sand Lake Hospital, removed Dr. Levine from the ER call
list. A few days later, the executive committee of Sand Lake
Hospital voted to suspend Dr. Levine's remaining staff privileges
pending investigation of various patient care concerns.5 The
5
Dr. Levine's staff privileges at Sand Lake Hospital
included the privilege of admitting patients to the hospital and
treating them during their stay, and the privilege of being on ER
call and treating patients through the ER.
executive committee reported these concerns to the ORHS credentials
committee, which then assembled an investigative committee to
review the incidents giving rise to those concerns. After
interviewing Dr. Levine and reviewing his patients' charts, the
investigative committee reported its findings to the credentials
committee. The credentials committee reviewed the report and
recommended to the Sand Lake Hospital executive committee that it
place Dr. Levine on probation for six months and that it proctor
his performance of certain procedures several times each. The
executive committee decided to increase the probationary period to
one year, but other than that, it adopted the credentials
committee's recommendations. Dr. Levine appealed the executive
committee's decision, and in June of 1991, ORHS appointed a hearing
panel to review the executive committee's decision. The panel
affirmed the executive committee's decision to impose probationary
conditions upon Dr. Levine.
Subject to his new probationary status, Dr. Levine regained
admitting privileges in May of 1991, and ER call privileges in the
fall of 1991, although he chose to wait until mid-December to
resume being on ER call. Dr. Levine still has not met the
procedure proctoring requirements necessary to regain full staff
privileges, because he has chosen to admit his patients to Florida
Hospital, which is the largest hospital system in Orlando, and as
a result he has not performed the procedures that were to be
proctored at Sand Lake Hospital.
During the time that his staff privileges were suspended at
Sand Lake Hospital,6 Dr. Levine maintained staff privileges at
Glenbeigh Hospital, Charter Hospital, Health Central Hospital, and
Florida Hospital (which includes five campuses). However, he has
chosen not to exercise his staff privileges at Glenbeigh and
Charter, purportedly due to the time he has spent pursuing this
lawsuit.
The suspension of Dr. Levine's staff privileges began in the
third week of January in 1991. Notwithstanding his suspension, in
1991 Dr. Levine earned $724,722, which is $171,546 (or thirty-one
percent) more than he had earned the previous year when his Sand
Lake Hospital staff privileges were not suspended.
II. PROCEDURAL HISTORY
In March of 1993 Dr. Levine filed a complaint in the United
States District Court for the Middle District of Florida against
CFMA, Healthchoice, Sand Lake Hospital, and ORHS, alleging
violations of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1
& 2 (1988), and violations of various state laws.7 In Count 1 of
his complaint, Dr. Levine claimed that CFMA and Healthchoice
violated section 1 of the Sherman Act by maintaining a closed panel
of physicians and by denying him physician provider membership.
Dr. Levine claimed in Count 2 that all of the defendants conspired
6
Dr. Levine alleges that his staff privileges were suspended
at ORMC as well as Sand Lake Hospital; however, we have found no
evidence in the record to support that allegation.
7
In addition to the federal antitrust claims, Dr. Levine's
complaint included the following: claims under Florida's
antitrust statutes; a claim for tortious interference with
business relations; a claim under Florida's general tort
statute; and a claim for breach of contract. Dr. Levine filed a
parallel suit in state court which has been held in abeyance
pending resolution of this case in federal court.
to, and did, monopolize the market for patients "whose employers
have contracted with Healthchoice," in violation of section 2 of
the Sherman Act. In Count 3 Dr. Levine claimed that ORHS and Sand
Lake Hospital engaged in a concerted refusal to deal in violation
of section 1 of the Sherman Act by suspending his staff
privileges.8 Dr. Levine sought monetary damages in excess of
$100,000 and injunctive relief pursuant to sections 4 and 16 of the
Clayton Act.9
In June of 1994, after extensive discovery, each defendant
filed a motion for summary judgment as to the state and federal
antitrust claims. The district court granted the defendants'
motions, and, declining to exercise its supplemental jurisdiction,
the court dismissed the remaining state law claims without
prejudice. Dr. Levine now appeals the district court's grant of
summary judgment.
III. DISCUSSION
In granting the defendants' motions for summary judgment, the
district court held that Dr. Levine lacked standing to prosecute
his antitrust claims, and in the alternative that his claims lacked
8
Counts 1 through 3 also included Dr. Levine's state
antitrust law claims.
9
Section 4 of the Clayton Act authorizes a private action
for treble damages and provides, in pertinent part: "[A]ny
person who shall be injured in his business or property by reason
of anything forbidden in the antitrust laws may sue therefor...."
15 U.S.C.A. § 15(a) (West 1995). Section 16 authorizes a private
action for injunctive relief, and provides, in pertinent part:
"Any person, firm, corporation, or association shall be entitled
to sue for and have injunctive relief, in any court of the United
States having jurisdiction over the parties, against threatened
loss or damage by a violation of the antitrust laws...." 15
U.S.C.A. § 26 (West 1973).
merit. As to Dr. Levine's section 1 and 2 claims against
Healthchoice and CFMA for denying him membership, and his section
2 claim against ORHS and Sand Lake Hospital for their part in the
alleged conspiracy to monopolize, the district court held he lacked
standing because he was not an efficient enforcer of the antitrust
laws, and in the alternative, that those claims were without merit
because he had failed to prove the defendants' market power. As to
Dr. Levine's section 1 claim against ORHS and Sand Lake Hospital
for suspending his staff privileges, the district court held that
he lacked standing because he had failed to establish that his
suspension resulted in any antitrust injury, and in the
alternative, that the claims lacked merit because of Dr. Levine's
failure to show any anticompetitive effect arising out of his
suspension.
We need not decide whether Dr. Levine has met the
requirements for standing as to any of his antitrust claims,
because as to each one he has failed to establish any violation of
the antitrust laws.10 Because we believe Dr. Levine has failed to
prove any anticompetitive effect resulting from the defendants'
behavior, as is required under the Sherman Act, we follow the
advice of Professors Areeda and Hovenkamp and decide this case on
the merits rather than on standing:
When a court concludes that no violation has occurred, it
has no occasion to consider standing.... An increasing number
of courts, unfortunately, deny standing when they really mean
that no violation has occurred. In particular, the antitrust
10
Because we hold that Dr. Levine has failed to establish
any antitrust violation, we also need not consider whether he has
established standing to sue for injunctive relief under section
16 of the Clayton Act.
injury element of standing demands that the plaintiff's
alleged injury result from the threat to competition that
underlies the alleged violation. A court seeing no threat to
competition in a rule-of-reason case may then deny that the
plaintiff has suffered antitrust injury and dismiss the suit
for lack of standing. Such a ruling would be erroneous, for
the absence of any threat to competition means that no
violation has occurred and that even suit by the
government—which enjoys automatic standing—must be dismissed.
2 Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 360f, at
202-03 (rev. ed. 1995) (footnotes omitted). This approach is
consistent with our precedents. We have ruled on the merits of an
antitrust claim without ever deciding whether the plaintiff had
antitrust standing. E.g., Aladdin Oil Co. v. Texaco, Inc., 603
F.2d 1107, 1109 n. 2 (5th Cir.1979) (assuming standing and
affirming grant of summary judgment for defendants because
plaintiff failed to establish antitrust violations); Hardwick v.
Nu-Way Oil Co., 589 F.2d 806, 807 n. 3 (5th Cir.) (same), cert.
denied, 444 U.S. 836, 100 S. Ct. 70, 62 L. Ed. 2d 46 (1979); see also
Todorov v. DCH Healthcare Auth., 921 F.2d 1438, 1446-47 (11th
Cir.1991) (reaching the merits of an antitrust claim even though
the plaintiff lacked standing to bring the claim).
We review a district court's grant of summary judgment de
novo. Flores v. Carnival Cruise Lines, 47 F.3d 1120, 1122 (11th
Cir.1995). Viewing the facts in the light most favorable to the
nonmovant, we must determine whether there exists a genuine issue
of material fact or whether the movant is entitled to judgment as
a matter of law. Tisdale v. United States, 62 F.3d 1367, 1370
(11th Cir.1995).
A. THE SECTION 1 CLAIMS
Section 1 of the Sherman Act provides that "[e]very contract,
combination in the form of trust or otherwise, or conspiracy, in
restraint of trade or commerce among the several States, or with
foreign nations, is declared to be illegal." 15 U.S.C.A. § 1 (West
1973). A section 1 plaintiff must prove an agreement between two
or more persons to restrain trade, because unilateral conduct is
not illegal under section 1. See, e.g., Fisher v. City of
Berkeley, Cal., 475 U.S. 260, 266, 106 S. Ct. 1045, 1049, 89 L. Ed. 2d
206 (1986) ("Even where a single firm's restraints directly affect
prices and have the same economic effect as concerted action might
have, there can be no liability under § 1 in the absence of
agreement."); Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S.
752, 761, 104 S. Ct. 1464, 1469, 79 L. Ed. 2d 775 (1984); Todorov,
921 F.2d at 1455. Thus, the first element of a section 1 claim is
proof of an agreement to restrain trade.
However, not every agreement that restrains competition will
violate the Sherman Act. The Supreme Court long ago determined
that section 1 prohibits only those agreements that unreasonably
restrain competition, Standard Oil Co. v. United States, 221 U.S.
1, 58-64, 31 S. Ct. 502, 515-17, 55 L. Ed. 619 (1911), thus, the
unreasonableness of the agreement is the second element of a
section 1 claim. In identifying which agreements unreasonably
restrain competition, the Supreme Court has held that certain kinds
of agreements are unreasonable per se, such as agreements among
direct competitors to fix prices or to restrict output. E.g.,
United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 224-26 n. 59,
60 S. Ct. 811, 845-46 n. 59, 84 L. Ed. 1129 (1940). The only inquiry
in such cases is whether there was an agreement to do so, because
the unreasonableness of the restraint is presumed. See, e.g.,
Arizona v. Maricopa County Medical Soc'y, 457 U.S. 332, 344-45, 102
S. Ct. 2466, 2473-74, 73 L. Ed. 2d 48 (1982); United States v.
Trenton Potteries Co., 273 U.S. 392, 397-98, 47 S. Ct. 377, 379, 71
L. Ed. 700 (1927). Agreements that do not fit within an established
per se category are analyzed under the "rule of reason," i.e.,
courts will engage in a comprehensive analysis of the agreement's
purpose and effect to determine whether it unreasonably restrains
competition. E.g., Broadcast Music, Inc. v. Columbia Broadcasting
Sys., Inc., 441 U.S. 1, 24-25, 99 S. Ct. 1551, 1565, 60 L. Ed. 2d 1
(1979).
1. The Section 1 Claim Against Healthchoice and CFMA
A more detailed description of how the Healthchoice PPO and
CFMA operate is necessary to a discussion of the merits of Dr.
Levine's claims against those two defendants.
a) How Healthchoice and CFMA Operate
Healthchoice markets to healthcare payors a panel of select
healthcare providers—which includes physicians, hospitals,
pharmacies, and durable medical equipment companies. The payors
consist of employers, insurance companies, third party
administrators, or governmental agencies. Healthchoice maintains
a limited panel of providers who have agreed to accept no more than
a maximum allowable fee for services rendered or products furnished
to Healthchoice enrollees. These maximum fees may or may not be
lower than the provider's ordinary charges. In addition, the
providers agree to be subject to Healthchoice's utilization review
and quality control program. Providers are willing to accept these
terms because Healthchoice membership may increase their number of
patients.
Healthchoice individually negotiates with each payor to arrive
at a schedule of fees that the payor is willing to pay for various
medical products and services. Healthchoice presents each
prospective payor with its schedule of fees, and the payor is then
free to negotiate with Healthchoice for lower fees. Several steps
are involved in computing Healthchoice's schedule of fees. Every
medical product and service is identified according to a
standardized "Current Procedural Terminology" code ("CPT code").
Healthchoice assigns to each CPT code, of which there are
approximately 9,000, a unit value that it adapts from information
provided by Medicare. The unit value is a reflection of the
approximate cost of resources required for each procedure or
product. Healthchoice then assigns a monetary conversion factor to
each major medical specialty, e.g., medicine has one conversion
factor, and radiology has another; these conversion factors are
collectively called the "Master Payor Rate Schedule." The
Healthchoice fee schedule is computed by multiplying the conversion
factors on the Master Payor Rate Schedule by the unit values
assigned to the CPT codes. The resulting schedule of fees, once
accepted by the payor, are the maximum that the payor will
reimburse a provider for each product or service. Thus, when a
payor receives a bill from a provider, it pays the provider the
lesser of either the actual charges submitted by the provider, or
the maximum allowable fee as reflected in the Healthchoice fee
schedule.
Healthchoice does not consult its various providers when it
compiles the unit values or the conversion factors. The
Healthchoice board of directors has eight members, four of whom are
CFMA physicians, but when that board approves the Master Payor Rate
Schedule, those four physician board members are not allowed to
participate. In its contract with a provider, Healthchoice
includes the conversion factors, but it does not include the unit
values. Thus, the provider does not know the exact fees that
Healthchoice has negotiated with the payors. Instead, the contract
with each provider includes only an example of how a fee would be
calculated for one of the more commonly used CPT codes. Should a
provider request more information about the fee schedule,
Healthchoice will give the provider a few more illustrations. The
provider is always allowed to "opt out" of a contract with a given
payor if it finds the fee reimbursement unacceptable.11
A Healthchoice enrollee is free to use non-Healthchoice
providers; however, the enrollee's payor may require the enrollee
to pay a higher deductible, and may require the enrollee to pay for
any provider charges over the payor's maximum allowable
reimbursement. The payors individually design the terms of these
benefit packages—Healthchoice itself does not create financial
disincentives for any enrollees who choose to use non-Healthchoice
providers.
The main source of Healthchoice's physician providers is CFMA,
11
Healthchoice charges each payor a nominal monthly fee for
each of the payor's enrolled employees. In 1994, the fee was
approximately $1.25 per month for each enrollee. Healthchoice
has never earned a profit.
which was organized to supply Healthchoice with a panel of
physician providers. Four members of CFMA sit on the board of
directors of Healthchoice. However, Healthchoice does not contract
only with CFMA for physician providers; many of Healthchoice's
physician providers are not members of CFMA. Healthchoice
providers, whether or not members of CFMA, are allowed to
participate in other PPOs, and most of them do participate in
several different PPOs.
For a short period of time after Healthchoice began doing
business, it accepted applications from any provider who wanted to
apply. Thereafter, Healthchoice decided to limit the size of its
panel, and so it adopted a need-based system for determining how
many providers of various specialties to include on its panel.
Healthchoice stopped accepting applications from physicians in
those specialties that were already adequately represented on the
provider panel. This need-based system is administered by the
Healthchoice staff; providers do not participate in determining
how many providers are needed on the Healthchoice panel. The
Healthchoice staff also handles all inquiries regarding provider
panel membership opportunities, without discussing those inquiries
with the board of directors.
Healthchoice considers numerous factors in deciding how many
providers to have on its panel, including: (1) the number of
enrollees in the plan; (2) the geographic location of enrollees
and providers; (3) the physicians' specialties; (4) the
administrative costs of managing providers; (5) the special needs
of particular payors; and (6) the availability of access to
existing members, i.e., how long a patient has to wait to get an
appointment with a Healthchoice provider. Although Healthchoice's
general policy is to add new providers only when the need arises,
if an existing Healthchoice provider adds a physician to his group
practice, that new physician is automatically eligible to become a
Healthchoice provider, subject to the new physician meeting
Healthchoice's credentialling standards. The purpose of the
exception to the need-based system is to avoid the administrative
difficulties associated with cross-coverage: because physicians in
a group practice cover for one another when they take time off,
Healthchoice determined that it would be more cost effective to
exercise its utilization review and quality control over the whole
practice group.
Healthchoice asks its providers to refer Healthchoice patients
to other Healthchoice providers whenever feasible. If a provider
continually refers Healthchoice patients to non-Healthchoice
physicians without justification, Healthchoice may remove that
provider from the panel. This provision helps assure that
Healthchoice and the payors can manage the costs of healthcare.
Because non-Healthchoice physicians are not subject to
Healthchoice's utilization review system, the payors have no
effective means of determining whether the care rendered by a
non-Healthchoice physician is necessary or cost efficient.
As of the date that discovery was complete in this case,
Healthchoice had approximately 68,000 covered lives in the Orlando
area, which had a population of more than 1.1 million.12 There were
approximately 865 Healthchoice physician providers among the more
than 2,200 licensed physicians in the Orlando area. At that time,
Healthchoice competed with thirty-seven other PPOs, eleven Health
Maintenance Organizations ("HMOs"), and numerous traditional
insurance coverage companies.
b) The Merits of the Section 1 Claim Against Healthchoice and
CFMA
Dr. Levine alleges that Healthchoice, CFMA, and their member
physicians have conspired to unreasonably restrain competition in
violation of section 1 of the Sherman Act by maintaining a closed
panel of providers physicians, by creating a financial disincentive
for enrollees who want to use non-Healthchoice physicians, and by
prohibiting Healthchoice physicians from referring Healthchoice
enrollees to non-Healthchoice physicians. Dr. Levine argues that
these features restrict the availability of physician services to
Healthchoice enrollees, lead to price stabilization in the market
for physician services, and render excluded physicians incapable of
competing for Healthchoice patients. Dr. Levine primarily
characterizes the activities of the defendants as a group boycott,
or a concerted refusal to deal, however, he occasionally refers to
the defendants' activities as illegal price fixing. We will first
discuss his contention that the defendants have illegally fixed
prices, and then his contention that they have engaged in a
concerted refusal to deal.
12
"Covered lives" includes enrolled employees and any family
members covered by their policy. The parties define "the Orlando
area" as Orange, Seminole, and Osceola counties.
i) The Alleged Agreement to Fix Prices
Although Dr. Levine did not specifically argue to this Court
that the defendants illegally fixed prices, i.e. provider fees,
there are portions of his brief where he appears to assume the
existence of such an agreement. That assumption is contrary to the
uncontroverted evidence in the record, which establishes that there
was no agreement between Healthchoice, CFMA, and their member
physicians to fix provider fees. Healthchoice negotiates the
provider reimbursement schedule directly with payors, not with
providers. Healthchoice does not consult any physician providers
when it compiles the CPT code unit values or the Master Payor Rate
Schedule, and physician members of the Healthchoice board of
directors are excluded from the reimbursement schedule proposal and
approval process. Providers must either accept not more than the
maximum reimbursement negotiated by Healthchoice with the payors
and not charge the patient for any difference between their fee and
the reimbursement, or else opt out of the plan. The result is that
the providers' actual fees are not set. The only figure that is
set is the maximum allowable fee that they will be reimbursed by
Healthchoice. Nothing prevents the physician from dropping his
fees even further in order to compete should he choose to do so.
This method of negotiating fees, in which the payors decide
the maximum amount they are willing to reimburse providers for
medical services and providers decide whether they are willing to
accept that limitation on the reimbursement they receive, is a kind
of "price fixing," but it is a kind that the antitrust laws do not
prohibit. See, e.g., Kartell v. Blue Shield, 749 F.2d 922, 923-26
(1st Cir.1984) (Breyer, J.), cert. denied, 471 U.S. 1029, 105 S. Ct.
2040, 85 L. Ed. 2d 322 (1985); Pennsylvania Dental Ass'n v. Medical
Serv. Ass'n, 745 F.2d 248, 256-57 (3d Cir.1984), cert. denied, 471
U.S. 1016, 105 S. Ct. 2021, 85 L. Ed. 2d 303 (1985); Medical Arts
Pharmacy v. Blue Cross & Blue Shield, 675 F.2d 502, 504-06 (2d
Cir.1982); see also 8 Phillip E. Areeda, Antitrust Law ¶ 1622b
(1989). Because there is no genuine issue of material fact
regarding the existence of an agreement among Healthchoice, CFMA,
or its member doctors to fix provider fees, and because the
defendants are entitled to judgment as a matter of law, Dr.
Levine's section 1 claim against these defendants, to the extent
that it alleges illegal price fixing, fails.
Our decision that Healthchoice's method of negotiating with
payors the fees it pays providers does not violate the Sherman Act
as a matter of law is supported by the Department of Justice and
the Federal Trade Commission's recently issued "Statements of
Enforcement Policy and Analytical Principles Relating to Health
Care and Antitrust" ("DOJ Enforcement Policy" or "the policy"),
available in, WESTLAW, 1994 WL 642477 (F.T.C.). The DOJ
Enforcement Policy separates those multiprovider networks wherein
competitors agree with one another regarding prices or market
allocation, from those networks wherein such decisions are handled
unilaterally by each competitor or through a third party
"messenger." The policy defines the "messenger model" as involving
"an agent or third party conveying to purchasers information
obtained individually from providers in the network about prices
the network participants are willing to accept, and conveying to
providers any contract offers made by purchasers." Id. at *38
(footnote omitted). The latter will "rarely present substantial
antitrust concerns." Id. The policy states that "[t]he critical
antitrust issue is whether the arrangement creates or facilitates
agreements that restrict price or other significant terms of
competition among the provider members of the network." Id. at
*39. In this case, there is no evidence that the Healthchoice
method of negotiating maximum fee reimbursement facilitates any
agreements among its provider panel members to restrict price or
any other forms of competition.13
ii) The Alleged Concerted Refusal to Deal
Although there is no genuine issue of material fact regarding
the existence of an agreement to fix prices, Dr. Levine submitted
evidence sufficient to establish a genuine issue of material fact
regarding the existence of a concerted refusal to deal, i.e.
agreements among Healthchoice, CFMA, and their member providers to
restrict the size of the provider panel, and to discourage
13
We also note that in Arizona v. Maricopa County Medical
Soc'y, the Supreme Court implicitly sanctioned this approach to
negotiating reimbursement rates:
[A] binding assurance of complete insurance coverage—as
well as most of the respondents' potential for lower
insurance premiums—can be obtained only if the insurer
and the doctor agree in advance on the maximum fee that
the doctor will accept as full payment for a particular
service. Even if a fee schedule is therefore
desirable, it is not necessary that the doctors do the
price fixing.... [I]nsurers are capable not only of
fixing maximum reimbursable prices but also of
obtaining binding agreements with providers
guaranteeing the insured full reimbursement of a
participating provider's fee.
457 U.S. 332, 352-53, 102 S. Ct. 2466, 2477-78, 73 L. Ed. 2d 48
(1982) (footnote omitted).
providers from referring Healthchoice enrollees to non-Healthchoice
physicians. Thus, for purposes of defeating summary judgment
against him, Dr. Levine has established the first element of his
section 1 claim to the extent that it alleges a concerted refusal
to deal. The question remains whether the agreements in question
are an unreasonable restraint on competition as required to
establish the second element of a section 1 claim.
Before we can determine whether the Healthchoice and CFMA
agreements are an unreasonable restraint on competition, we must
first decide whether to analyze them under the per se rule or the
rule of reason. "[A] restraint may be adjudged unreasonable either
because it fits within a class of restraints that has been held to
be "per se' unreasonable, or because it violates what has come to
be known as the "Rule of Reason.' " F.T.C. v. Indiana Fed'n of
Dentists, 476 U.S. 447, 457-58, 106 S. Ct. 2009, 2017, 90 L. Ed. 2d
445 (1986). "The presumption in cases brought under section 1 of
the Sherman Act is that the rule-of-reason standard applies."
Seagood Trading Corp. v. Jerrico, Inc., 924 F.2d 1555, 1567 (11th
Cir.1991). We apply the per se rule "only when history and
analysis have shown that in sufficiently similar circumstances the
rule of reason unequivocally results in a finding of liability,"
Consultants & Designers, Inc. v. Butler Serv. Group, Inc., 720 F.2d
1553, 1562 (11th Cir.1983), i.e., when the conduct involved "always
or almost always tend[s] to restrict competition and decrease
output." Broadcast Music, Inc., 441 U.S. at 19-20, 99 S.Ct. at
1562. We will not apply the per se rule "to restraints of trade
that are of ambiguous effect." Consultants & Designers, 720 F.2d
at 1562; see also Indiana Fed'n of Dentists, 476 U.S. at 458-59,
106 S.Ct. at 2018 (declining "to extend per se analysis to
restraints imposed in the context of business relationships where
the economic impact of certain practices is not immediately
obvious"); National Soc'y of Professional Eng'rs v. United States,
435 U.S. 679, 692, 98 S. Ct. 1355, 1365, 55 L. Ed. 2d 637 (1978).
Dr. Levine characterizes the agreement to limit the size of
the provider panel and to discourage provider members from
referring Healthchoice patients to non-Healthchoice physicians as
a group boycott and urges this Court to apply the per se rule. But
this Court has stated that "[t]he attachment of the group boycott
label does not necessarily require as a consequence an application
of the per se approach." Consultants & Designers, 720 F.2d at 1561
(citation and quotation marks omitted) (alteration in original).
"The labeling of a restraint as a group boycott does not eliminate
the necessity of determining whether it is a "naked restraint of
trade with no purpose except stifling competition.' " Id. (quoting
White Motor Co. v. United States, 372 U.S. 253, 263, 83 S. Ct. 696,
702, 9 L. Ed. 2d 738 (1963)). In F.T.C. v. Indiana Federation of
Dentists, the Supreme Court described the kind of the boycotts
subject to the per se rule:
Although this Court has in the past stated that group boycotts
are unlawful per se, we decline to resolve this case by
forcing the [defendant's] policy into the "boycott" pigeonhole
and invoking the per se rule. As we observed last Term in
Northwest Wholesale Stationers, Inc. v. Pacific Stationery &
Printing Co., 472 U.S. 284, 105 S. Ct. 2613, 86 L. Ed. 2d 202
(1985), the category of restraints classed as group boycotts
is not to be expanded indiscriminately, and the per se
approach has generally been limited to cases in which firms
with market power boycott suppliers or customers in order to
discourage them from doing business with a competitor....
476 U.S. at 458, 106 S.Ct. at 2018 (emphasis added) (citation
omitted).
Dr. Levine bases his concerted refusal to deal claim on
Healthchoice's denial of his repeated attempts to apply for
membership, and its rule discouraging panel members from referring
patients to physicians outside the network. This case does not
involve the kind of group boycott that warrants application of the
per se rule, i.e., it is not a "naked restraint of trade with no
purpose except stifling competition." Consultants & Designers, 720
F.2d at 1562. We will analyze the facts of this case under the
rule of reason, instead of the per se approach, for two reasons.
First, we are persuaded that because Dr. Levine has not proven that
Healthchoice and CFMA have market power,14 the Supreme Court's
decision in Indiana Federation of Dentists, a pertinent part of
which is quoted above, precludes us from applying the per se rule
to these facts.
Second, the DOJ Enforcement Policy supports our decision to
apply the rule of reason instead of the per se rule. The policy
states that "[b]ecause multiprovider networks are relatively new to
the health care industry, the Agencies do not yet have sufficient
experience evaluating them to issue a formal statement of antitrust
enforcement policy." DOJ Enforcement Policy, available in,
WESTLAW, 1994 WL 642477, at 37 (F.T.C.). As previously noted, this
Court is loath to condemn a practice as per se violative of the
antitrust laws unless experience has shown that it always leads to
anticompetitive effects in the market, Consultants & Designers, 720
14
For a discussion of market power, see infra pp. 776-78.
F.2d at 1562, and the DOJ policy statement evidences that such
experience is lacking with respect to multiprovider networks.
The DOJ Enforcement Policy also provides guidance on how to
analyze the multiprovider network practice of excluding particular
providers:
Most multiprovider networks will contract with some, but
not all, providers in an area. Such selective contracting may
be a method through which networks limit their provider panels
in an effort to achieve quality and cost containment goals and
enhance their ability to compete against other networks. One
reason often advanced for selective contracting is to ensure
that the network can direct a sufficient patient volume to its
providers to justify price concessions or adherence to strict
quality controls by the providers. Where a geographic market
can support several multiprovider networks, there are not
likely to be significant competitive problems associated with
the exclusion of particular providers by particular networks.
A rule of reason analysis usually is applied in judging
the legality of excluding providers from a multiprovider
network. The focus of the analysis is not on whether a
particular provider has been harmed by the exclusion, but
rather whether the exclusion reduces competition among
providers in the market and thereby harms consumers.
Therefore, exclusion may present competitive concerns if
providers are unable to compete effectively without access to
the network, and competition is thereby harmed. The Agencies
also recognize, however, that there may be procompetitive
reasons associated with the exclusion, such as the provider's
competence or ability and willingness to meet the network's
cost-containment goals. In addition, in certain circumstances
network membership restrictions may be procompetitive by
giving non-member providers the incentive to form other
networks in order to compete more effectively with the
network.
DOJ Enforcement Policy at 42. We find no fault with that analysis,
and consistent with it we conclude that the rule of reason applies
to Dr. Levine's section 1 claim against Healthchoice and CFMA.
Under the rule of reason, the "test of legality is whether
the restraint imposed is such as merely regulates and perhaps
thereby promotes competition or whether it is such as may suppress
or even destroy competition." Chicago Bd. of Trade v. United
States, 246 U.S. 231, 238, 38 S. Ct. 242, 244, 62 L. Ed. 683 (1918).
Rule of reason analysis requires the plaintiff to prove (1) an
anticompetitive effect of the defendant's conduct on the relevant
market, and (2) that the conduct has no procompetitive benefit or
justification. E.g., Consultants & Designers, 720 F.2d at 1562.
In order to prove an anticompetitive effect on the market,
the plaintiff may either prove that the defendants' behavior had an
"actual detrimental effect" on competition, or that the behavior
had "the potential for genuine adverse effects on competition." In
order to prove the latter, the plaintiff must define the relevant
market and establish that the defendants possessed power in that
market. Indiana Fed'n of Dentists, 476 U.S. at 460-61, 106 S.Ct.
at 2019; Capital Imaging Assoc., P.C. v. Mohawk Valley Medical
Assoc., Inc., 996 F.2d 537, 546 (2d Cir.) ("[W]here the plaintiff
is unable to demonstrate ... actual effects, it must at least
establish that defendants possess the requisite market power so
that their arrangement has the potential for genuine adverse
effects on competition." (citation and quotation marks omitted)),
cert. denied, --- U.S. ----, 114 S. Ct. 388, 126 L. Ed. 2d 337 (1993).
We analyze the concerted refusal to deal in this case first for
actual detrimental effect on competition, and then for potential
adverse effect.
Dr. Levine contends that he has shown actual detrimental
effects, i.e., that the defendants intended to, and did, restrict
competition. But Dr. Levine has failed to support with any
evidence his conclusory assertion that the defendants' behavior
actually had the effect of restricting competition. Indeed, the
evidence in the record suggests the contrary. Although
Healthchoice and CFMA denied him membership, Dr. Levine had no
trouble establishing a booming practice. Dr. Levine opened a solo
practice in 1989 with one patient, and in a little more than a year
his practice was so busy that he began advertising to hire another
physician. Dr. Levine acknowledges his extraordinary success—which
earned him more than half a million dollars in his first full year
of practice and nearly three quarters of a million dollars his
second year—but he argues that had he been allowed to join
Healthchoice, he would have been able to "score a touchdown." The
antitrust laws are intended to protect competition, not
competitors, see Brown Shoe Co. v. United States, 370 U.S. 294,
344, 82 S. Ct. 1502, 1534, 8 L. Ed. 2d 510 (1962); Todorov, 921 F.2d
at 1450, and we will not depart from that purpose in order to
improve Dr. Levine's income standings in the physician league or
help him win the Super Bowl of remuneration.
Dr. Levine also contends that he has shown actual detrimental
effects on competition by showing that Healthchoice's closed panel
resulted in fees rising and stabilizing, but there is no evidence
of that in the record. Dr. Levine relies upon the Healthchoice
Master Payor Rate Schedules from several years as evidence of
rising fees, but those schedules do not establish that provider
fees have risen. The Master Payor Rate Schedules include only one
of the two factors that goes into calculating a fee—the conversion
factor.15 They do not include the other critical factor, which is
15
For an explanation of how the fees are calculated, see
supra pp. 769-70.
the unit values for the more than 9,000 CPT codes. Without the
unit values for the years covered by the Master Payor Rate
Schedules, which Dr. Levine has not provided, the actual fees
cannot be calculated. Moreover, evidence in the record indicates
that Healthchoice has on many occasions lowered both the conversion
factors and the unit values when its analysis of the market
indicated the need for a more competitive fee structure. In any
event, evidence of rising fees is insufficient unless placed in
context with evidence about the fees charged by non-Healthchoice
physicians, the resource costs underlying the physician services,
and the rate of inflation. Thus, Dr. Levine has failed to
establish a genuine issue of material fact about whether
Healthchoice and CFMA have had an actual detrimental effect on
competition.
In the face of his failure to show an actual detrimental
effect on competition, Dr. Levine argues that he still need not
prove market power if he shows that the defendants intended to
restrict competition. The rule of reason analysis is concerned
with the actual or likely effects of defendants' behavior, not with
the intent behind that behavior. See U.S. Healthcare, Inc. v.
Healthsource, Inc., 986 F.2d 589, 596 (1st Cir.1993) (stating that
"effects are ... the central concern of the antitrust laws," and
that motivation is but "a clue"). Thus even if Dr. Levine had
established that the defendants intended to restrict
competition—which he has not—proof of such intent would not relieve
him of the necessity of either proving the defendants' market power
or proving an actual detrimental effect on competition, and we have
already decided that he has failed to create a genuine issue of
material fact as to actual detrimental effect.
In view of that, Dr. Levine's claim may only succeed under
our section 1 rule of reason analysis if he proves that the
defendants' acts had "the potential for genuine adverse effects on
competition." To do this, Dr. Levine must define the relevant
product and geographic markets and prove that the defendants had
sufficient market power to affect competition. See Indiana Fed'n
of Dentists, 476 U.S. at 460-61, 106 S.Ct. at 2019. Dr. Levine
contends that the relevant product market should be the provision
of internist services to Healthchoice patients, which he
characterizes as an "aftermarket," relying on Eastman Kodak Co. v.
Image Technical Services, Inc., 504 U.S. 451, 112 S. Ct. 2072, 119
L. Ed. 2d 265 (1992), and that the relevant geographic market is the
Orlando area. He argues that the product market he has defined is
separate from the market for all other physician services in the
Orlando area. We disagree.
"To define a market is to identify producers that provide
customers of a defendant firm (or firms) with alternative sources
for the defendant's product or services." 2A Phillip E. Areeda et
al., Antitrust Law ¶ 530a, at 150 (1995) (footnote omitted); see
also Eastman Kodak, 504 U.S. at 481, 112 S.Ct. at 2090. The
"market is composed of products that have reasonable
interchangeability." United States v. E.I. du Pont de Nemours &
Co., 351 U.S. 377, 404, 76 S. Ct. 994, 1012, 100 L. Ed. 1264 (1956);
see also United States Anchor Mfg., Inc. v. Rule Indus., Inc., 7
F.3d 986, 995 (11th Cir.1993), cert. denied, --- U.S. ----, 114
S. Ct. 2710, 129 L. Ed. 2d 837 (1994). Therefore, in order to provide
an accurate market definition in this case, Dr. Levine must
identify the physician services that Healthchoice enrollees would
deem to be reasonably interchangeable with the services provided by
Healthchoice providers. It is undisputed that Healthchoice
enrollees are free to choose non-Healthchoice physicians, and that
Healthchoice payors will cover at least some portion of the
non-Healthchoice physician's fee. Dr. Levine contends, however,
that it is financially impractical for Healthchoice enrollees to
visit non-Healthchoice physicians because the enrollees have to pay
more money out of their own pockets to do so. Thus, he argues,
non-Healthchoice internists are not interchangeable with
Healthchoice internists, which means Healthchoice internists are a
separate product market. We are not persuaded.
Dr. Levine has failed to present evidence showing how much
more, if any, Healthchoice enrollees must pay to visit a
non-Healthchoice physician. In fact, Dr. Levine admits that he has
treated two Healthchoice enrollees in his practice, and that for
one of those patients he waived the payor's copayment requirement
so that the patient did not have an additional out-of-pocket
expense.16 Moreover, Dr. Levine has offered no evidence to show
that the cost to the enrollee of switching to another healthcare
plan would be prohibitively expensive. Although Dr. Levine's
expert assumed that Healthchoice enrollees are locked in to the
16
Dr. Levine says that this patient stopped seeing him
because she felt too guilty about his having waived the copayment
requirement. That purported reason is somewhat ironic in view of
Dr. Levine's income level. See supra p. 776.
Healthchoice plan, he admitted that he had seen no evidence that
the enrollees' choice of plan had been so restricted. To the
contrary, the evidence in the record establishes that the largest
Healthchoice payor offers its enrollees several choices for
healthcare coverage, and that those enrollees are allowed to switch
plans. There is nothing to indicate that the other Healthchoice
payors offer their enrollees any less choice. Thus, we hold that
Dr. Levine's narrow definition of the relevant product market does
not satisfy his burden of presenting prima facie evidence of the
relevant market.17 See L.A. Draper & Son v. Wheelabrator-Frye,
Inc., 735 F.2d 414, 422 (11th Cir.1984) ("An antitrust plaintiff
... makes out a prima facie case under the rule of reason only upon
proof of a well-defined relevant market upon which the challenged
anticompetitive actions would have substantial impact." (citation
and quotation marks omitted)); see also Bathke v. Casey's Gen.
Stores, Inc., 64 F.3d 340, 345 (8th Cir.1995); Pastore v. Bell
Tel. Co., 24 F.3d 508, 512 (3d Cir.1994).
Even if Dr. Levine had adequately defined the relevant market,
he has presented no evidence to prove the defendants' market power.
Absent evidence that the defendants had sufficient market power to
affect competition, Dr. Levine's section 1 claim must fail.
Therefore, because Dr. Levine has not established either that the
defendants' behavior had an "actual detrimental effect" on
competition or "the potential for genuine adverse effects on
17
Dr. Levine was required to define both the relevant
product market and the relevant geographic market; however,
because we have held that he failed to adequately define the
relevant product market, we need not reach whether the Orlando
area is a proper relevant geographic market.
competition," Indiana Fed'n of Dentists, 476 U.S. at 460-61, 106
S.Ct. at 2019, we hold that the district court properly dismissed
Dr. Levine's section 1 claim against Healthchoice and CFMA.18
2. The Section 1 Claim Against ORHS and Sand Lake Hospital
Dr. Levine claims that ORHS, Sand Lake Hospital, and other
unnamed co-conspirators on the Sand Lake Hospital medical staff
violated section 1 of the Sherman Act by conspiring to suspend his
staff privileges without good cause, and that this activity
constituted a concerted refusal to deal resulting in an
unreasonable restraint of trade. As Dr. Levine conceded at oral
argument, the per se rule does not apply to the defendants'
decision to suspend his staff privileges. As with Dr. Levine's
section 1 claim against Healthchoice and CFMA, we will apply the
rule of reason to his section 1 claim against ORHS and Sand Lake
Hospital.
We need not decide whether Dr. Levine has offered sufficient
proof of a conspiracy to restrain trade between ORHS, Sand Lake
Hospital, and members of its medical staff, the first element of a
section 1 claim, because once again Dr. Levine has failed to
demonstrate that any resulting restraint on competition is
unreasonable, the second element of a section 1 claim. More
particularly, Dr. Levine has not met the rule of reason's
requirement of proving an actual or potential detrimental effect on
competition.
18
Because we hold that Dr. Levine has failed to establish
any anticompetitive effect, we need not reach the second part of
the rule of reason analysis and decide whether the defendants'
conduct may be excused by some procompetitive benefit or
justification.
The only evidence Dr. Levine offers to show that his
suspension had an actual detrimental effect on competition is that
one of his patients came to the Sand Lake Hospital ER during his
suspension and was unable to use Dr. Levine's services. The
practical effect of this incident is no different than if Dr.
Levine's patient had been taken to the ER at a hospital where he
had never even applied for staff privileges—the patient would be
unable to see Dr. Levine at that location at that particular time.
However, had the patient gone or been taken to Florida Hospital
(which has five locations), where Dr. Levine did have staff
privileges, she would have been able to use Dr. Levine's services.
We are convinced that a patient's inability to see Dr. Levine in
the Sand Lake Hospital ER when she asked for him does not rise to
the level of an actual detrimental effect on competition. Cf. Lie
v. St. Joseph Hosp., 964 F.2d 567, 569-70 (6th Cir.1992) (holding
that plaintiff doctor's proof that hospital staff suspension
resulted in him having a lower income did not rise to level of
actual detrimental effects on competition); Tarabishi v. McAlester
Regional Hosp., 951 F.2d 1558, 1569 n. 15 (10th Cir.1991) (holding
that plaintiff's staff privileges suspension was not an actual
detrimental effect on competition because it did not result in
restriction of choice to consumers or in a reduction of
competition), cert. denied, 505 U.S. 1206, 112 S. Ct. 2996, 120
L. Ed. 2d 872 (1992). Thus Dr. Levine's only remaining recourse for
establishing his section 1 claim is to demonstrate the potential
for detrimental effects on competition, and to do that he must
establish that the defendants had sufficient market power to affect
competition. Indiana Fed'n of Dentists, 476 U.S. at 460-61, 106
S.Ct. at 2019.
Dr. Levine maintains, however, that he need not prove the
defendants' market power, and for that proposition he relies on
Summit Health, Ltd. v. Pinhas, 500 U.S. 322, 111 S. Ct. 1842, 114
L. Ed. 2d 366 (1991), Boczar v. Manatee Hosp. & Health Sys., Inc.,
993 F.2d 1514 (11th Cir.), reh'g denied, 11 F.3d 169 (11th
Cir.1993), and Bolt v. Halifax Hosp. Medical Ctr., 891 F.2d 810
(11th Cir.), cert. denied, 495 U.S. 924, 110 S. Ct. 1960, 109
L. Ed. 2d 322 (1990). None of those decisions supports Dr. Levine's
position.
The sole issue to be decided in Pinhas was whether a
hospital's exclusion of a physician from its medical staff could
satisfy the "effect on interstate commerce" jurisdictional
requirement. 500 U.S. at 324, 111 S.Ct. at 1844. Dr. Levine
quotes the following language from Justice Scalia's dissent in
Pinhas to support his argument: "Since group boycotts are per se
violations ... [the plaintiff] need not prove an effect on
competition in the Los Angeles area to prevail...." Id. at 337,
111 S.Ct. at 1851. However, this is no more than a restatement of
the basic analysis under the per se rule. Because Dr. Levine has
already conceded that the per se rule does not apply to his claim
against the hospital, the language from Justice Scalia's dissent
does not help him. Moreover, Dr. Levine ignores Justice Scalia's
final position in his dissent, which is that the Sherman Act should
not even apply to the hospital's actions because the hospital
suspension did not effect interstate commerce. Id. at 341-43, 111
S.Ct. at 1853-54.
Dr. Levine's reliance on Bolt is no more persuasive. He
interprets Bolt to stand for the proposition that, in his words,
"there was no requirement to prove [market definition or market
share] when there is evidence of anticompetitive intent." Dr.
Levine's interpretation of Bolt misses the point that our focus in
that opinion was only on the first element of the section 1
claim—whether there was sufficient evidence of a contract,
combination, or conspiracy to submit to the jury. 891 F.2d at 818,
829. We held that as to some of the defendants, there was
sufficient evidence of a conspiracy to go to the jury, and thus
remanded the case to the district court. All discussion of intent
in Bolt was in the context of its value as circumstantial evidence
of the existence of an agreement. Id. at 819-20. As to the second
element of the section 1 claim in Bolt, we explained that the
district court had granted a motion for directed verdict "before
[the plaintiff] reached that part of his case involving restraint
on competition." Id. at 829. We criticized the district court's
premature ruling and stated that "[t]he better course would have
been to defer ruling on the motions for directed verdict until
after [the plaintiff] had presented his entire section 1 case."
Id. at 828. If anything, Bolt is inconsistent with Dr. Levine's
position that he should be relieved of proving market power.
His reliance on Boczar is equally misplaced. In Boczar, we
reviewed the district court's grant of a post-verdict motion for
judgment as a matter of law in favor of the defendants based on its
finding that there was insufficient evidence of a conspiracy. We
reversed the district court and held that the plaintiff had
presented sufficient evidence to support the jury's verdict. 993
F.2d at 1519. As to the anticompetitive effect element of the
plaintiff's case, we simply observed—without discussing the
evidence that had been presented at trial—that the defendants'
actions had "effectively ended [the plaintiff's] ability to compete
and to practice ... and burdened her ability to compete generally."
Id. That was nothing more than a fact-specific observation that
the plaintiff in Boczar had proven anticompetitive effect. By
contrast, the record in this case establishes beyond legitimate
dispute that Dr. Levine's ability to compete and practice have
flourished. Nothing in Boczar supports his position that he need
not prove the defendants' market power.
In order to prevail in a rule of reason case, absent a
demonstrated adverse effect on competition, a plaintiff must define
the market and prove that the defendants had sufficient market
power to adversely affect competition. See Indiana Fed'n of
Dentists, 476 U.S. at 460-61, 106 S.Ct. at 2019. Because he has
offered no evidence defining the relevant product or geographic
market, and because he has not established ORHS's or Sand Lake
Hospital's market power, the district court properly granted
summary judgment to the defendant on this section 1 claim.
B. THE SECTION 2 CLAIMS
In Count 2 of his complaint Dr. Levine claimed that CFMA
monopolized, attempted to monopolize, and conspired with
Healthchoice, ORHS, and Sand Lake Hospital to monopolize the market
for physician medical services to Healthchoice enrollees in the
Orlando area in violation of section 2 of the Sherman Act.19 "The
offense of monopoly under § 2 of the Sherman Act has two elements:
(1) the possession of monopoly power in the relevant market and (2)
the willful acquisition or maintenance of that power as
distinguished from growth or development as a consequence of a
superior product, business acumen, or historic accident." United
States v. Grinnell Corp., 384 U.S. 563, 570-571, 86 S. Ct. 1698,
1704, 16 L. Ed. 2d 778 (1966); see also T. Harris Young & Assocs.,
Inc. v. Marquette Elec., Inc., 931 F.2d 816, 823 (11th Cir.), cert.
denied, 502 U.S. 1013, 112 S. Ct. 658, 116 L. Ed. 2d 749 (1991);
Austin v. Blue Cross & Blue Shield, 903 F.2d 1385, 1391 (11th
Cir.1990). "Monopoly power under § 2 requires, of course,
something greater than market power under § 1." Eastman Kodak, 504
U.S. at 480, 112 S.Ct. at 2090.
To establish a violation of section 2 for attempted
monopolization, "a plaintiff must show (1) an intent to bring about
a monopoly and (2) a dangerous probability of success." Norton
Tire Co. v. Tire Kingdom Co., 858 F.2d 1533, 1535 (11th Cir.1988).
To have a dangerous probability of successfully monopolizing
a market the defendant must be close to achieving monopoly
power. Monopoly power is "the power to raise prices to
supra-competitive levels or ... the power to exclude
competition in the relevant market either by restricting entry
of new competitors or by driving existing competitors out of
the market."
United States Anchor Mfg., 7 F.3d at 994 (quoting American Key
19
Section 2 provides that "[e]very person who shall
monopolize, or attempt to monopolize, or combine or conspire with
any other person or persons, to monopolize any part of the trade
or commerce among the several States, or with foreign nations,
shall be deemed guilty of a felony." 15 U.S.C.A. § 2 (West
1973).
Corp. v. Cole Nat'l Corp., 762 F.2d 1569, 1581 (11th Cir.1985)).
A claim for conspiracy to monopolize, on the other hand, does not
require a showing of monopoly power. Instead, a plaintiff proves
a section 2 conspiracy to monopolize by showing: "(1) concerted
action deliberately entered into with the specific intent of
achieving a monopoly; and (2) the commission of at least one overt
act in furtherance of the conspiracy." Todorov, 921 F.2d at 1460
n. 35.
Although Dr. Levine's complaint is somewhat ambiguous, it
appears that he is alleging all three types of
claims—monopolization, attempted monopolization, and conspiracy to
monopolize—only against CFMA. Healthchoice, ORHS, and Sand Lake
Hospital are each alleged only to have conspired to monopolize the
relevant market. Even assuming that Dr. Levine is alleging that
all four defendants are liable for all three section 2 claims, the
defendants are entitled to summary judgment as a matter of law.
Proof of monopoly power in the relevant market is the first
element of a monopolization claim, and proof that there is a
dangerous probability of the defendant successfully attaining
monopoly power is the second element of an attempted monopolization
claim. Dr. Levine's failure to adequately define the relevant
market, and his failure to prove that the defendants possessed or
were close to possessing monopoly power in that relevant market,
are fatal to his section 2 claims for monopolization and for
attempted monopolization. Moreover, as to his claim for conspiracy
to monopolize, Dr. Levine has presented no evidence that the
defendants possessed a specific intent to monopolize, which is the
first element of a conspiracy to monopolize claim, when they denied
him membership or when they suspended his staff privileges.
Because Dr. Levine has failed to establish a genuine issue of
material fact as to necessary elements of these section 2 claims,
we affirm the district court's grant of summary judgment in favor
of the defendants as to these claims.20
IV. CONCLUSION
The district court's grant of summary judgment in favor of the
defendants is AFFIRMED.
20
We also reject Dr. Levine's argument that the district
court erroneously granted summary judgment against him on his
state law antitrust claims. Florida's statute regulating
combinations in restraint of trade provides: "It is the intent
of the Legislature that, in construing this chapter, due
consideration and great weight be given to the interpretations of
the federal courts relating to comparable federal antitrust
statutes." Fla.Stat.Ann. § 542.32 (West 1988); see also All
Care Nursing Serv., Inc. v. Bethesda Memorial Hosp., Inc., 887
F.2d 1535, 1539 n. 1 (11th Cir.1989) (Tjoflat, J. concurring);
Ad-Vantage Tel. Directory Consultants, Inc. v. GTE Directories
Corp., 849 F.2d 1336, 1340 (11th Cir.1987) ("In applying this
provision, the Florida courts held that the Florida legislature
has, in effect, adopted as the law of Florida the body of
anti-trust law developed by the federal courts under the Sherman
Act. St. Petersburg Yacht Charters, Inc. v. Morgan Yacht, Inc.,
457 So. 2d 1028 (Fla.App.1984). Thus, in analyzing this case, we
may, and indeed must, apply the federal precedent developed under
Section 2 of the Sherman Act."). Therefore, the district court's
grant of summary judgment on the state law antitrust claims was
proper for the same reasons its grant of summary judgment on the
federal antitrust claims was proper.