Brader v. Alghny Gen Hosp ( 1995 )

Opinions of the United
1995 Decisions States Court of Appeals
for the Third Circuit
9-1-1995
Brader v Alghny Gen Hosp
Precedential or Non-Precedential:
Docket 94-3578
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UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
No. 94-3578
ALAN H. BRADER,
Appellant
v.
ALLEGHENY GENERAL HOSPITAL; GEORGE J. MAGOVERN
and DANIEL L. DIAMOND
On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. No. 93-cv-01920)
Argued May 2, 1995
Before: SLOVITER, Chief Judge, ALITO and
McKEE, Circuit Judges
(Filed September 1, 1995)
Michael A. Cassidy (Argued)
Kabala & Geeseman
Pittsburgh, PA 15222
Melvin L. Vatz
Grossinger, Gordon & Vatz
Pittsburgh, PA 15219
Attorneys for Appellant
David L. McClenahan (Argued)
Paul K. Stockman
Kirkpatrick & Lockhart
Pittsburgh, PA 15222
Attorneys for Appellees
1
OPINION OF THE COURT
SLOVITER, Chief Judge.
I.
Facts and Procedural History
Appellant Dr. Alan H. Brader challenges the district
court's dismissal of his antitrust and breach of contract claims
against defendants Allegheny General Hospital, Allegheny Surgical
Associates ("ASA"), Cardio-Thoracic Surgical Associates ("CTSA"),
Dr. George J. Magovern, and Dr. Daniel L. Diamond. Because the
district court dismissed the complaint, the only facts before us
are those alleged in the complaint itself.
Allegheny General, a hospital located in Pittsburgh,
Pennsylvania, also serves as a regional referral hospital
treating patients referred to it from Western Pennsylvania,
Eastern Ohio and West Virginia. ASA, a Pennsylvania corporation
with offices in Pittsburgh, engages in the practice of general
surgery, with principal emphasis in trauma and vascular surgery.
Dr. Diamond is the President of ASA and Division Director for
General Surgery at Allegheny General. ASA obtains its patients
through referrals from other physicians; Allegheny General uses
ASA exclusively to perform its trauma service. CTSA, a
Pennsylvania corporation that also maintains its offices in
Pittsburgh, practices in the field of cardio-thoracic surgery.
Dr. Magovern is the President of CTSA and Chairman of the
2
Department of Surgery at Allegheny General. CTSA obtains its
patients through physician referrals and from on-call trauma
referrals.
In July 1988, Brader, a physician licensed to practice
in Pennsylvania and North Carolina, became a provisional staff
member of Allegheny General and an employee of ASA. In June
1989, Magovern accused Brader of incompetence and of having
improperly rendered trauma treatment to a patient who was on the
call service of CTSA (Magovern's group) although the details of
Magovern's displeasure are not spelled out in the complaint.
According to Brader's complaint, Magovern had no factual basis to
support his accusations. Nonetheless, shortly thereafter, when
the issue of Brader's advancement from provisional to regular
staff status at Allegheny General arose, it was opposed by
Magovern. Solely as a result of Magovern's opinion and based on
this single issue, Diamond told Brader that he should look
elsewhere for employment, that he would not support him for staff
membership, that his prior support for Brader had jeopardized his
"political" career at Allegheny General, and that Brader could
not practice medicine at Allegheny General if he was not employed
with ASA.
Sometime after this conversation, Diamond conducted an
informal quality assurance study of (presumably Brader's)
ruptured abdominal aortic aneurysm (AAA) procedures, which Brader
contends was not performed in accordance with Allegheny General's
medical staff bylaws. In May 1990 after the study was completed,
at a meeting between Brader, Diamond and representatives of
3
Allegheny General, Diamond tried to suspend Brader, allegedly in
violation of the bylaws and for no reasonable basis related to
the quality of plaintiff's performance.
Later in May, at a meeting of Brader, Magovern and
Diamond, Brader agreed to an independent review of his surgical
record on AAA procedures. Magovern selected Dr. John Ochsner to
conduct it. Brader alleges that Ochsner was a personal friend of
Magovern. According to Brader, Diamond, Magovern and Allegheny
General submitted inadequate and misleading information to
Ochsner for his review. In addition, Brader contends that he was
prevented from having an informal conference with Ochsner in
violation of the medical staff bylaws.
Ochsner concluded, as a result of the inadequate and
misleading information, that Brader's mortality experience was
not surprising or unexpected but recommended that his performance
of ruptured AAA procedures should be supervised due to excessive
morbidity. In October 1990 Magovern summarily suspended Brader's
privileges to perform AAA procedures at the hospital without any
factual basis. Later that month, Brader's application for
advancement to attending staff status at Allegheny General was
denied on the recommendations of Diamond and Magovern, and in
part at Magovern's recommendation all of Brader's clinical
privileges at the hospital were suspended. App. at 58.
Brader appealed all of these adverse actions in
accordance with the medical staff bylaws. On October 9, 1991, a
hearing panel recommended that the suspension of Brader's
ruptured and elective AAA privileges be lifted, but on October
4
25, 1992 a hearing panel recommended that the decision not to
advance Brader to attending staff status be sustained, and
concluded that Brader's challenge to the suspension of his
clinical privileges was moot. App. at 59. According to Brader's
complaint, the decision not to advance him to attending staff
status violated the medical staff bylaws because it was based on
hearsay and he had no opportunity to confront the witnesses
against him. App. at 60.
Brader appealed the adverse October 25, 1992 decision
to an Appellate Review Panel, which on January 7, 1993 affirmed
the recommendation not to advance Brader but concluded that there
was no evidence to warrant the continuation of the suspension of
Brader's clinical privileges. On February 26, 1993, however, the
Allegheny General Board of Directors, allegedly in violation of
the medical staff bylaws, reimposed the suspension of Brader's
AAA procedures at the hospital.
Brader tried to obtain staff privileges at other
hospitals in Allegheny County and Washington County, but he was
unable to do so due to his suspension from Allegheny General.
Brader contends that defendants' actions have prevented him from
practicing medicine in any location within the market area served
by the defendants and forced him to relocate his practice to
North Carolina.
On November 18, 1993, Brader filed a three-count
complaint against defendants alleging claims for violations of
sections 1 and 2 of the Sherman Act as well as a claim for breach
of contract arising from the alleged violations of the medical
5
staff bylaws. Shortly thereafter, Brader filed an Amended
Complaint in order to correct the spelling of Magovern's name.
Defendants moved to dismiss Brader's Amended Complaint
arguing that the complaint failed to allege facts sufficient to
support the conclusion that Brader had suffered an "antitrust
injury" so as to confer standing and that the complaint failed to
allege various facts, such as the existence of a conspiracy and
the relevant market power of the defendants, to support Brader's
claims under the Sherman Act. The defendants also sought to
dismiss Brader's claim of breach of contract because the
complaint failed to allege which sections of the medical staff
bylaws, if any, had been breached, and failed to allege facts
sufficient to show that any of the alleged infractions were not
merely de minimus violations. Finally, defendants argued that
they were immune from suit with respect to all of Brader's claims
under the Health Care Quality Improvement Act (HCQIA), 42 U.S.C.
§§ 11101-11152. Brader sought leave to amend the complaint, and
submitted a proposed Second Amended Complaint, and defendants
renewed their motion to dismiss, relying upon the same grounds
raised in the earlier motion.
By order dated September 14, 1994, the district court
dismissed the Amended Complaint, granted Brader leave to amend,
ordered the Second Amended Complaint to be filed, and granted
defendants' motion to dismiss the Second Amended Complaint. In
its accompanying opinion, the district court stated that the
Second Amended Complaint contained sufficient allegations
regarding a conspiracy and defendants' market power, but "failed
6
to adequately plead that there was an unlawful purpose for the
defendants' conduct or that there was an actual anticompetitive
effect as a result of plaintiff being denied staff privileges."
App. at 13. The district court dismissed Brader's claims under
both section 1 and section 2 of the Sherman Act on the ground
that the complaint "does not suggest that [the defendants']
action did, or could have, effected [sic] interstate commerce in
an anticompetitive manner." App. at 13. The court also
dismissed Brader's breach of contract claim, holding that the
Second Amended Complaint contained sufficient specific
allegations of the bylaw sections allegedly breached by the
defendants, but that it failed to allege facts sufficient to
support a causal link between those alleged breaches and the
injuries suffered by Brader. The district court's opinion did
not address the defendants' claim of immunity to Brader's suit
under HCQIA.
Brader now appeals the district court's dismissal of
his Second Amended Complaint. This court has jurisdiction of
Brader's appeal pursuant to 28 U.S.C. § 1291. We have plenary
review over a district court's grant of a motion to dismiss.
Malia v. General Elec. Co., 23 F.3d 828, 830 (3d Cir.), cert.
denied, 115 S. Ct. 377 (1994). In conducting our review, we
accept as true all facts alleged in the complaint and all
reasonable inferences that can be drawn therefrom. Id.
II.
Discussion
A.
7
Brader first contends that the district court erred in
concluding that his complaint failed to allege the requisite
nexus between the defendants' activities and interstate commerce
to support his antitrust claims. There is no dispute that both
of Brader's antitrust claims require a showing that the
defendants' actions affect interstate commerce. Section 1 of the
Sherman Act provides that "[e]very contract, combination . . .,
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. § 1 (emphasis added). 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 misdemeanor . . . ." 15 U.S.C. § 2 (emphasis added).
Moreover, the parties agree that for the purposes of the
interstate commerce requirement, there is no distinction between
section 1 and section 2 of the Sherman Act. See Weiss v. York
Hosp., 745 F.2d 786, 825 n.67 (3d Cir. 1984), cert. denied, 470
U.S. 1060 (1985).
Although the "interstate commerce requirement" of the
Sherman Act is often referred to as "jurisdictional," the Supreme
Court has held that there is no practical distinction between the
"jurisdictional" interstate commerce inquiry and consideration of
whether a complaint pleads an effect on interstate commerce
sufficient to state a claim for relief under the Sherman Act. In
Hospital Bldg. Co. v. Trustees of Rex Hosp., 425 U.S. 738, 742 &
8
n.1 (1976), the Court stated that an analysis of challenges to
antitrust claims based on the interstate commerce element under
either Federal Rule of Civil Procedure 12(b)(1) or 12(b)(6) leads
to the same result. Similarly, in Weiss we noted that "[the]
interstate impact requirement has been construed as an element of
both jurisdiction and the substantive offense under the Sherman
Act," and that "[t]he inquiry is the same for both elements." 745
F.2d at 824 n.67 (citations omitted); see also Note, Sherman Act
"Jurisdiction" in Hospital Staff Exclusion Cases, 132 U. Pa. L.
Rev. 121, 126-29 (1983).
Moreover, the Supreme Court has held that the reach of
the Sherman Act is as broad as Congress's power under the
Commerce Clause. McLain v. Real Estate Bd. of New Orleans, 444
U.S. 232, 241-42 (1980); see also Hospital Bldg. Co., 425 U.S. at
743 n.2; United States v. Frankfort Distilleries, Inc., 324 U.S.
293, 298 (1945). Thus, the interstate commerce requirement of
the Sherman Act may be satisfied by demonstrating that
defendant's activities either are in interstate commerce or
affect interstate commerce. McLain, 444 U.S. at 242.
In Summit Health, Ltd. v. Pinhas, 500 U.S. 322 (1991),
the Supreme Court addressed the interstate commerce requirement
of the Sherman Act with respect to the attempted exclusion of a
physician from a particular geographic market. Pinhas, an
ophthalmologist, alleged that a hospital, its corporate owner and
its medical staff conspired in violation of section 1 of the
Sherman Act to prevent him from providing ophthalmological
services in the Los Angeles market by, inter alia, initiating
9
peer review proceedings against him, summarily suspending and
terminating his medical staff privileges, and threatening to
distribute an adverse report about him to all hospitals in the
market area. Id. at 324, 326-27.
The defendants moved to dismiss the complaint,
contending that there was no "factual nexus between the restraint
on this one surgeon's practice and interstate commerce." Id. at
330. The Supreme Court rejected this argument, stating that the
alleged conspiracy, if successful, would cause "a reduction in
the provision of ophthalmological services in the Los Angeles
market." Id. at 331. The Court reasoned that the "competitive
significance of [the single physician's] exclusion from the
market must be measured, not just by a particularized evaluation
of his own practice, but rather, by a general evaluation of the
impact of the restraint on other participants and potential
participants in the market from which he has been excluded." Id.
at 332. The Court concluded that the complaint satisfied the
interstate commerce requirement of the Sherman Act. Id. at 333.
Brader argues that the facts of this case are
essentially identical to the facts of Summit Health. In a
graphic side-by-side column analysis in his brief, Brader
demonstrates that like Pinhas in Summit Health he has alleged
that the defendants conspired to suspend his medical privileges
through a biased and unfair peer review process. In addition, as
in Summit Health, the alleged effect of the defendants' actions
was to deny Brader access to the relevant geographic market, as
the hospital's dissemination of the report of his suspension has
10
allegedly prevented him from obtaining another position, causing
a reduction in the provision of medical services to the
Pittsburgh market. Brader then argues that the district court's
conclusion that his complaint failed to allege a sufficient
effect on interstate commerce is fundamentally inconsistent with
Summit Health.
The district court attempted to distinguish Summit
Health on the ground that the dispute in that case arose from the
physician's objection to the hospital's costly requirement that
eye surgeons absorb the cost of an assistant surgeon during
surgical procedures. See Summit Health, 500 U.S. at 326. The
district court reasoned that this case involved no similar
"systemic anticompetitive effect on interstate commerce," and
that because Brader alleges no "market-wide" harm, Summit Health
was inapplicable.
The Summit Health opinion is somewhat unclear on
whether the interstate commerce nexus was satisfied merely by the
defendants' attempt to exclude the plaintiff from the relevant
market, or by the fact that the attempted exclusion was coupled
with an allegation regarding the defendants' "insist[ence] upon
adhering to an unnecessarily costly procedure." Summit Health,
500 U.S. at 332. However, our decision in Fuentes v. South Hills
Cardiology, 946 F.2d 196 (3d Cir. 1991), resolved this ambiguity
by holding that the mere exclusion of a single physician from a
market is sufficient. In Fuentes, a plaintiff physician brought
a Sherman Act claim against a hospital and medical group due to
the termination of the physician's medical privileges. Fuentes,
11
946 F.2d at 197. When the plaintiff could not obtain another
position within or outside of Pennsylvania, he alleged that the
defendants were acting in concert to effect an interstate boycott
of his services. Id. at 198. There is no suggestion in the
Fuentes opinion that Fuentes alleged that the defendants were
engaged in anti-competitive pricing practices similar to those
alleged in Summit Health; the only alleged anti-competitive
effect referred to in Fuentes was the exclusion of the plaintiff
physician from the relevant market. Notably, the termination in
Fuentes, like the termination in this case, apparently arose over
"a disagreement concerning patient care." Id. at 197.
Despite the lack of broader allegations regarding the
defendants' anticompetitive motive, we inferred from Fuentes'
allegations that he was excluded from practicing in the relevant
market and that out-of-state patients who travelled to Pittsburgh
would be deprived of Fuentes' services. Id. at 200. Thus, the
plaintiff in Fuentes had alleged a sufficient effect on
interstate commerce to support his Sherman Act claim. Id. at
201.
The Fuentes opinion forecloses the district court's
restrictive reading of Summit Health and controls the "interstate
commerce" issue in this case. Brader, like Fuentes, has alleged
that the defendants wrongfully terminated his staff privileges at
Allegheny General and that such denial limited his ability to
serve patients in the relevant market. At the complaint stage no
more is required, as defendants conceded at oral argument. Under
12
Fuentes, this allegation is sufficient to satisfy the "interstate
commerce requirement" of the Sherman Act.
B.
Defendants next contend that we may affirm the
dismissal on any ground presented to the district court, see
Langer v. Monarch Life Ins. Co., 966 F.2d 786, 807-08 (3d Cir.
1992), and that we may do so here because Brader failed to plead
facts sufficient to support the conclusion that he suffered an
"antitrust injury." They state that while the district court may
have erroneously used the "interstate commerce" label, in effect
it concluded that no antitrust injury was pled because Brader's
complaint did not allege that defendants' actions had any
measurable impact on any market.1
Defendants' argument proceeds along the following
steps: Brader's right to maintain a private cause of action for
damages flows from section 4 of the Clayton Act, which provides
for suits by "any person who shall be injured in his business or
property by reason of anything forbidden in the antitrust laws
. . . ." 15 U.S.C. § 15(a). This requires proof that the
plaintiff suffered an "antitrust injury" before recovering
1
Judge Alito would not reach the question addressed in part IIB
of this opinion. He does not think that the district court's
decision was based on the question of antitrust injury. Thus, in
his view, part IIB addresses a possible alternative ground for
affirmance and, as a discretionary matter, he would not reach
that question now. The question is a difficult one --compare
part IIB with BCB Anesthesia Care v. Passavant Memorial Area
Hosp., 36 F.3d 664, 669 (7th Cir. 1994); Lie v. St. Joseph Hosp.,
964 F.2d 567, 570 (6th Cir. 1992) -- and he thinks that it would
be preferable for the question to be decided in the first
instance by the district court.
13
damages for that violation. See Atlantic Richfield Co. v. USA
Petroleum Co, 495 U.S. 328, 339 (1990); Brunswick Corp. v. Pueblo
Bowl-o-Mat, Inc., 429 U.S. 477, 489 (1977). According to
defendants, this "antitrust injury" rule requires that Brader
plead facts to support the inference that defendants caused an
injury to competition, which in turn injured Brader. Defendants
contend that this requirement is far more stringent than the mere
"jurisdictional" requirement of the interstate commerce test, and
that therefore Summit Health and Fuentes do not resolve the issue
in this case.
Defendants' argument, even if not implausible, appears
to be flatly inconsistent with Fuentes. There too we considered
whether the complaint of a physician whose hospital privileges
were allegedly terminated at the request of physicians with whom
he had been associated stated a claim for relief under the
Sherman Act. Fuentes had alleged that "the defendants acted in
concert to deny Fuentes, a provider of cardiological services,
access to the Pittsburgh cardiological market," and that "by
eliminating him as a competitor, the boycott successfully reduced
competition for the defendants' cardiological services." Fuentes,
946 F.2d at 202. Accepting as true Fuentes' allegations and all
reasonable inferences therefrom we concluded that these
allegations were sufficient to survive a motion to dismiss, as
"such an exclusion constitutes an unlawful restraint of trade."
Id.; see also Boczar v. Manatee Hosps. & Health Sys., Inc., 993
F.2d 1514, 1519 (11th Cir. 1993) (hospital's actions in
14
suspending the plaintiff's privileges "had the effect of
restraining trade").
Brader's Second Amended Complaint alleges that the
defendants' activities "prevent[ed] the Plaintiff and others from
engaging in the practice of general vascular trauma surgery in
the relevant market, and . . . prevent[ed] other hospitals in the
relevant market from employing or granting medical staff
privileges to the Plaintiff for the purpose of competing with
defendants." App. at 64. This conduct, Brader alleges, has
"prevent[ed] competition in the relevant product market within
the relevant geographic market." App. at 64. Under Fuentes,
these allegations are sufficient to state a claim for an
antitrust injury.
We are not in a position to predict whether Brader will
ultimately be able to sustain his burden of proof on this issue
since Brader has not yet had an opportunity to obtain evidence.
After Summit Health, the adequacy of a physician's contentions
regarding the effect on competition is typically resolved after
discovery, either on summary judgment or after trial. See, e.g.,
Lie v. St. Joseph Hosp., 964 F.2d 567, 570 (6th Cir. 1992)
(affirming summary judgment where physician failed to show "an
injury to competition in the form of increased cost or reduced
supply of services or harm to the consumer"); Tarabashi v.
McAlester Regional Hosp., 951 F.2d 1558, 1571 (10th Cir. 1991)
(affirming judgment against physician after trial in part because
physician "failed to establish the required impact upon
competition") (emphasis in original), cert. denied, 112 S. Ct.
15
2996 (1992); Oksanen v. Page Memorial Hosp., 945 F.2d 696 (4th
Cir. 1991) (in banc) (affirming summary judgment for hospital and
medical staff after physician had "received adequate discovery on
the key issues" on his claim of antitrust violations arising from
alleged misuse of peer review process), cert. denied, 502 U.S.
1074 (1992).
Even the antitrust cases cited by defendants that do
not involve physicians suggest that the existence of an
"antitrust injury" is not typically resolved through motions to
dismiss. See, e.g., Atlantic Richfield Co., 495 U.S. at 346
(finding plaintiff had "failed to demonstrate that it has
suffered any antitrust injury" at summary judgment stage); Town
Sound & Custom Tops, Inc. v. Chrysler Motors Corp., 959 F.2d 468,
495 (3d Cir.) (in banc) (addressing "antitrust injury" issue in
summary judgment context), cert. denied, 113 S. Ct. 196 (1992);
Tunis Bros. Co. v. Ford Motor Co., 952 F.2d 715, 727-28 (3d Cir.
1991) (resolving "antitrust injury" issue on appeal of denial of
motion for judgment notwithstanding the verdict), cert. denied,
112 S. Ct. 3034 (1992).
We recognize that one court of appeals has upheld the
dismissal for failure to state a claim in an antitrust complaint
filed by nurse anesthetists alleging a conspiracy between a
hospital and physicians to terminate plaintiffs' contract for
services. See BCB Anesthesia Care, Ltd. v. Passavant Memorial
Area Hosp. Ass'n, 36 F.3d 664, 668-69 (7th Cir. 1994). The
district court based the dismissal on plaintiffs' failure to
allege a sufficient nexus with interstate commerce, a rationale
16
that the appellate court did not accept. Instead, the court of
appeals, in a divided opinion, upheld dismissal of the complaint
stating that "[a] staffing decision does not itself constitute an
antitrust injury," id. at 669, notwithstanding that the hospital
was the only acute care general hospital within twenty-five
miles, which substantially limited plaintiffs' options. Id. at
668. The court recognized that the substitution of medical
physician anesthetists might cause "the prices the hospital
charges [to] be somewhat higher now than they were." Id. The
BCB majority even acknowledged that the antitrust injury issue is
one that is typically reserved for summary judgment. Id. As the
dissent in BCB noted, it is difficult to reconcile the majority's
conclusion with Summit Health. Id. at 669 (Cudahy, dissenting).
The BCB majority stressed the inconvenience to the
courts of proceeding beyond the pleading stage and noted the
"hundreds or thousands of pages" of decisions in antitrust cases
decided after discovery in which the plaintiff physicians have
ultimately been unsuccessful. Id. at 667. We believe that such
impatience with the notice pleading embodied in the Federal Rules
is foreclosed by the Supreme Court's decision in Leatherman v.
Tarrant County Narcotics Intelligence & Coordination Unit, 113 S.
Ct. 1160, 1163 (1993) (rejecting a "heightened pleading standard"
in a case arising under 42 U.S.C. § 1983), and is an issue to be
addressed, if needed, by Congress. We decline to adopt the BCB
majority approach here.
Defendants' argument that Brader is a "poor champion of
consumers" is essentially the same argument. They take the quote
17
from a case decided after discovery in which we upheld the
judgment because of the plaintiff's failure to show that its loss
of sales was sufficiently related to the anticompetitive activity
alleged. See Alberta Gas Chems. Ltd. v. E.I. du Pont de Nemours
& Co., 826 F.2d 1235, 1239 (3d Cir. 1987)(quoting Ball Memorial
Hosp. v. Mutual Hosp. Ins., Inc., 784 F.2d 1325, 1334 (7th Cir.
1986)), cert. denied, 486 U.S. 1059 (1988). They also rely on
Todorov v. DCH Healthcare Auth., 921 F.2d 1438, 1454 (11th Cir.
1991), which affirmed summary judgment against the plaintiff
physician who had not even argued that his exclusion from the
market hurt competition and increased prices for consumers, but
instead sought an injunction so that he could join a virtual
monopoly and share in the physicians' supercompetitive profits.
In contrast, the type of injury alleged by Brader (the loss of
income due to an inability to practice in the relevant market
area) is directly related to the illegal activity in which the
defendant allegedly engaged: a conspiracy to exclude Brader from
the relevant market.
Under Summit Health and Fuentes, Brader's pleading
requirement on this issue is satisfied by his allegation that the
defendants unreasonably restricted his ability to practice in the
Pittsburgh area and thereby "successfully reduced competition"
for the defendants' services. See Fuentes, 946 F.2d at 202. We
therefore reject defendants' argument regarding the adequacy of
Brader's pleading of an "antitrust injury" and decline to affirm
the dismissal of his claim on this ground at this stage of the
litigation.
18
C.
Defendants contend that we should affirm the decision
of the district court on the alternative ground that the Second
Amended Complaint fails to contain sufficient allegations
regarding the defendants' market power. Market power may be
relevant in some Sherman Act section 1 claims but it is an
essential factor to be considered in all Sherman Act section 2
claims. Neither the parties nor the district court make the
distinctions necessary to analyze those two sections, and we are
unwilling to affirm on this ground in the absence of any
consideration by the district court. We briefly set forth the
distinctions, as the issue will inevitably arise on remand.
Under section 2 of the Sherman Act, Brader must show,
at a minimum, that defendants have "a dangerous probability of
achieving monopoly power" in the relevant market. Spectrum
Sports, Inc. v. McQuillan, 113 S. Ct. 884, 890-91 (1993); see
also Pastore v. Bell Telephone Co., 24 F.3d 508, 512 (3d Cir.
1994). Although disposition of that question is typically one
that is not resolved at the pleading stage unless it is clear on
the face of the complaint that the "dangerous probability"
standard cannot be met as a matter of law, the complaint should
allege viable relevant markets. Brader's complaint is not
specific as to either the product market or the relevant
geographic market. In his count alleging violation of section 2,
he refers to the product market as "the practice of certain
specialized vascular and trauma surgery and cardio-thoracic
surgery at [Allegheny General]." App. at 66. Elsewhere the
19
complaint states that "the geographic extent of [the market from
which he was excluded] is co-existent with the area from which
the defendants attract their patients which will be further
defined through discovery." App. at 63. It appears that Brader
suggests two geographic markets, one confined to the hospital and
the other encompassing a portion of the tri-state area.
We do not decide whether under these circumstances
Allegheny General is an appropriate geographic market, but we
note that every court that has addressed this issue has held or
suggested that, absent an allegation that the hospital is the
only one serving a particular area or offers a unique set of
services, a physician may not limit the relevant geographic
market to a single hospital. See, e.g., Collins v. Associated
Pathologists, Ltd., 844 F.2d 473, 480 n.5 (7th Cir.) (physician
was "slicing the geographic market much too thin" in limiting
market to one hospital), cert. denied, 488 U.S. 852 (1988);
Seidenstein v. National Medical Enterprises, Inc., 769 F.2d 1100,
1106 (5th Cir. 1985) (no evidence that the hospital "is
recognized as a separate and distinct market, or that unique
services or facilities existed there"); Dos Santos v. Columbus-
Cuneo-Cabrini Medical Ctr., 684 F.2d 1346, 1353 (7th Cir. 1982)
(noting that "we have reason to doubt whether the relevant market
can be sliced so small as to embrace only a single hospital");
Flegel v. Christian Hosp. Northeast-Northwest, 804 F. Supp. 1165,
1174 (E.D. Mo. 1992) (limiting the relevant geographic market to
one hospital lacked any "reasonable legal or factual basis"),
aff'd, 4 F.3d 682 (8th Cir. 1993); Drs. Steuer & Latham P.A. v.
20
National Medical Enterprises, Inc., 672 F. Supp. 1489, 1514
(D.S.C. 1987), aff'd, 846 F.2d 70 (4th Cir. 1988); Friedman v.
Delaware County Memorial Hosp., 672 F. Supp. 171, 195 (E.D. Pa.
1987), aff'd, 849 F.2d 600 (3d Cir. 1988).
On the other hand, there is some suggestion in the
complaint and in the briefs that Allegheny General may offer
unique trauma and vascular surgery services in the broader
geographic tri-state area served by Allegheny General. We leave
for the district court whether the complaint makes a colorable
claim that the defendants have "a dangerous probability of
achieving monopoly power" over the relevant product in that area.
In contrast, under section 1 of the Sherman Act the
defendants' "market power" is relevant only to the extent that it
is a factor in the determination of the reasonableness of the
restraint. See e.g., Oksanen, 945 F.2d at 709. Defendants have
not presented any case holding that the precise scope of that
"market power" must be specifically pled in the complaint to
support the type of section 1 claim at issue here. Neither
Summit Health nor Fuentes so suggested. Therefore, we decline to
accept defendants' suggestion that we affirm on this alternative
ground.
D.
Brader alleged a breach of contract claim asserting a
series of violations by the defendants of the medical staff
bylaws. The district court dismissed this claim on the ground
that the complaint failed to allege a connection between the
alleged breaches and the losses suffered by Brader. In
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particular, the district court found that Ochsner's independent
review of Brader's record superseded the alleged breach committed
by Diamond in conducting the informal quality assurance review,
that Diamond's unsuccessful attempts to suspend Brader
unilaterally could not have caused Brader any damage, and that
Brader had relocated to North Carolina before the reimposition of
his suspension by the hospital in February 1993, and therefore
the reimposed suspension could not have caused his losses.
Brader argues that the district court erred in assuming
that he would have been suspended regardless of any breach of the
bylaws and that he has not suffered any economic damages as a
result. These conclusions, Brader reasons, are factual and
should not be the basis of a dismissal order under Rule 12(b)(6).
The parties agree that, under Pennsylvania law, the
Allegheny General medical staff by-laws constitute an enforceable
contract between a hospital and members of its medical staff. See
Miller v. Indiana Hosp., 419 A.2d 1191, 1193 (Pa. Super. Ct.
1980). In order to state a claim for damages arising from a
breach of contract, a plaintiff must also plead damages resulting
from the alleged breach. See General State Auth. v. Coleman
Cable & Wire Co., 365 A.2d 1347, 1349 (Pa. Commw. Ct. 1976). This
is a natural extension of the general rule that damages for
breach of contract are not recoverable unless there is a "causal
relationship between the breach and the loss." See Robinson
Protective Alarm Co. v. Bolger & Picker, 516 A.2d 299, 303 n.9
(Pa. 1986).
22
Brader's complaint adequately alleges the requisite
causal connection. The complaint alleges that the defendants'
breach of the bylaws caused him to suffer damages such as the
loss of income that he would have had at Allegheny General, loss
of personal and professional reputation, emotional distress,
expenses for a new job search and the costs of appeals. We
cannot assume that if Brader had been given the benefit of the
protections of the bylaws and been able, for example, to confront
the witnesses against him, he would not have been able to
successfully demonstrate the inadequacies of the case against
him. In fact, he did convince the Appellate Review Panel that
there was no evidence to warrant the continued suspension of his
clinical privileges.
The district court apparently assumed that, absent the
alleged breaches, Brader still would have lost his position at
Allegheny General. Its discussion on this issue is cursory, but
if the court based its conclusion on the results of Ochsner's
allegedly independent review, the court failed to take into
account that Brader has pled that Ochsner's review also failed to
comply with the bylaws.
We therefore will reverse the district court's
dismissal of Brader's breach of contract claims. The allegations
in the complaint allege a sufficient causal nexus between the
alleged breaches and the damages suffered by Brader to support a
cause of action under Pennsylvania law.
E.
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Finally, defendants contend that this court should
affirm the district court's order of dismissal due to Brader's
failure to allege properly that defendants are not immune from
suit under the Health Care Quality Improvement Act (HCQIA), 42
U.S.C. §§ 11101-11151. The HCQIA provides that parties to a
professional review body shall not be liable for damages where
the actions are taken "(1) in the reasonable belief that the
action was in the furtherance of quality health care, (2) after a
reasonable effort to obtain the facts of the matter, (3) after
adequate notice and hearing procedures are afforded to the
physician involved or after such procedures as are fair to the
physician under the circumstances, and (4) in the reasonable
belief that the action was warranted by the facts known after
such reasonable effort to obtain facts and after meeting the
requirements of paragraph (3)." 42 U.S.C. §§ 11111(a)(1),
11112(a).
Under the HCQIA, professional review actions are
presumed to meet the required standard unless that presumption is
"rebutted by a preponderance of the evidence." 42 U.S.C.
§11112(a). This provision necessarily implies that plaintiffs
bear the burden of proving noncompliance with these standards.
See Bryan v. James E. Holmes Regional Medical Ctr., 33 F.3d 1318,
1333 (11th Cir. 1994) (reviewing district court's denial of
defendants' motion for judgment as a matter of law on the issue
of HCQIA immunity), cert. denied, 115 S. Ct. 1363 (1995). It
also implies some opportunity to discover relevant evidence. See
Smith v. Ricks, 31 F.3d 1478, 1485 (9th Cir. 1994) (suggesting
24
that the "reasonableness" requirements of HCQIA may be addressed
through a motion for summary judgment), cert. denied, 115 S. Ct.
1400 (1995).
On appeal, defendants focus on the adequacy of Brader's
pleadings regarding defendants' HCQIA immunity, arguing that the
complaint's recitation of the language of HCQIA is insufficient
to support an absence of HCQIA immunity. However, Brader made
extensive allegations regarding alleged improprieties by
physicians participating in Allegheny General's peer review
process. If Brader's allegations, such as the alleged failure to
provide Brader with fair hearing procedures, are true, the
defendants would not be entitled to HCQIA immunity. We therefore
decline to affirm the district court's dismissal of Brader's
claims on the alternative grounds of HCQIA immunity.
We understand that the HCQIA was enacted at least in
part to protect hospitals and other care providers from the type
of frivolous suit complaining about staffing decisions that
concerned the court in BCB. Moreover, we also are concerned that
health care providers may be deterred by the expense of
litigation from promptly terminating the privileges of physicians
and other employees who the hospital believes are not competent
to discharge the life and death decisions for which they have
responsibility. On the other hand, these considerations cannot
justify the judiciary in pretermitting consideration of the
application of the antitrust laws to the health care field,
particularly now that the provision of health services is
becoming increasingly concentrated and the opportunities for
25
physicians more limited. Once the plaintiff has alleged that the
defendants have failed to satisfy the requirements of HCQIA
immunity, we can only rely on the Federal Rules of Civil
Procedure, particularly the obligations of parties and attorneys
under Rule 11, to stem the tide of lawsuits subsequently held to
be without factual or legal foundation.
III.
Conclusion
For the foregoing reasons, we will reverse the district
court's dismissal of Brader's claims and remand for proceedings
consistent with this opinion.
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