Saint Alphonsus Medical Center - Nampa et al v St Luke's Health System Ltd

Filing 238

MEMORANDUM DECISION AND ORDER granting in part and denying in part 156 Motion in Limine. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (st)

UNITED STATES DISTRICT COURT
IN THE DISTRICT OF IDAHO
SAINT ALPHONSUS MEDICAL CENTER NAMPA, INC., TREASURE VALLEY
HOSPITAL LIMITED PARTNERSHIP,
Case No. 1:12-CV-00560-BLW (Lead
SAINT ALPHONSUS HEALTH SYSTEM,
Case)
INC., AND SAINT ALPHONSUS
REGIONAL MEDICAL CENTER, INC.
MEMORANDUM DECISION
AND ORDER
Plaintiffs,
v.
ST. LUKE’S HEALTH SYSTEM, LTD.
Defendant.
FEDERAL TRADE COMMISSION; STATE
OF IDAHO

Case No. 1:13-CV-00116-BLW

Plaintiffs,
v.
ST. LUKE’S HEALTH SYSTEM, LTD.;
SALTZER MEDICAL GROUP, P.A.
Defendants.

INTRODUCTION
The Court has before it a motion in limine to exclude evidence of St. Al’s efforts
to affiliate with Saltzer. The motion is fully briefed and at issue. The Court will grant the
motion in part, as explained below.

Memorandum Decision & Order – Page 1

ANALYSIS
St. Al’s seeks to exclude any evidence regarding its efforts to affiliate with Saltzer,
arguing that the evidence is irrelevant. The plaintiffs list 13 trial exhibits and ask the
Court to exclude them, and any related testimony, from evidence.
The main purpose of this evidence – although not the sole purpose – is to excuse
St. Luke’s conduct on the ground that St. Al’s was trying to do the same thing. That is a
classic “unclean hands” defense, and the Supreme Court has rejected that defense in
antitrust cases. Perma Life Mufflers Inc. v. International Parts Corp., 392 U.S. 134
(1968). Thus, St. Luke’s evidence is irrelevant if its purpose is to show St. Al’s had
unclean hands.
Defendants argue, however, that they “do not intend to offer evidence of proposed
affiliations between plaintiffs and Saltzer in support of a potential ‘unclean hands’ or in
pari delicto defense.” See Defendants’ Brief (Dkt. No. 177) at p.2. Yet later in their
brief, defendants argue the evidence is relevant to show that St Al’s “never expressed any
concern” over the fact that its attempted acquisition of Saltzer would give St. Al’s a
market concentration “far more problematic competitively than St. Luke’s transaction
with Saltzer.” Id. at p. 4. And in another section of their brief, defendants argue that St.
Al’s offer (that relied on provider-based billing) is relevant to show that St. Al’s “did not
regard provider-based billing as an indication of unlawful market power at the time that it
sought to affiliate with Saltzer.” Id. at p. 7.

Memorandum Decision & Order – Page 2

Both of these arguments are attempts to raise an unclean hands defense – attempts
to excuse St Luke’s conduct by pointing out that St Al’s tried to do the same thing.
Because that defense is unavailable, the evidence is irrelevant, and St. Al’s motion to
exclude must be granted to this extent.
Evidence of St. Al’s pursuit of Saltzer is relevant only if it is tied to a legitimate
defense or directly rebuts an assertion made by St. Al’s. St. Luke’s has properly raised
the defense that the combination will result in efficiencies that will overwhelm any
anticompetitive effects. Evidence relevant to this defense would include (1) St. Al’s
analysis that certain terms of its proposal (similar to those of St. Luke’s) would result in
efficiencies; and (2) Saltzer’s conclusion that St. Luke’s proposal offered more
efficiencies than St Al’s proposal. To the extent that the 13 exhibits at issue here contain
such evidence – and St. Luke’s asserts that they do – the evidence would be relevant to a
legitimate defense.
The St. Al’s offer for Saltzer may also be relevant to the issue of fair market value
(FMV). St Al’s argues that St. Luke’s paid a premium above FMV to capture market
power and obtain more referrals. If a foundation is laid that St. Al’s offer for Saltzer is a
valid comparable, evidence of that offer may have some relevance to the FMV issue.
St Luke’s also argues that some of the exhibits St. Al’s seeks to exclude contain
evidence that Saltzer physicians had a strained relationship with St. Al’s. St Luke’s
argues that “[t]hese documents will provide support for defendants’ position that any
diminution in referrals to [St. Al’s] is not a result of the affiliation between St. Luke’s and
Saltzer, but rather caused by the already acrimonious relationship between Saltzer and
Memorandum Decision & Order – Page 3

[St. Al’s].” See Defendant’s Brief (Dkt. No. 177) at p. 6. The acrimony has independent
relevance, and does not justify delving into St Al’s pursuit of Saltzer, unless there is some
direct connection between the acrimony and St. Al’s pursuit.
Finally, the Court agrees that some limited discussion of St. Al’s pursuit of Saltzer
may be necessary for St. Luke’s to tell the full account of its purchase of Saltzer. But the
Court will be careful to sustain any objection if the account gets too detailed.
The Court cannot rule on every aspect of the 13 exhibits identified by plaintiffs. It
is enough to establish these guidelines and then rule on objections as they arise.
ORDER
In accordance with the Memorandum Decision set forth above,
NOW THEREFORE IT IS HEREBY ORDERED that the motion to exclude
plaintiffs’’ efforts to affiliate with Saltzer (docket no.156) is GRANTED IN PART AND
DENIED IN PART. It is granted to the extent it seeks to exclude any evidence related to
an unclean hands defense or not tied either to a legitimate defense or a direct rebuttal. It
is denied to the extent it seeks to exclude (1) St. Al’s analysis that certain terms of its
proposal (similar to those of St. Luke’s) would result in efficiencies; (2) Saltzer’s analysis
that St. Luke’s proposal offered more efficiencies than St Al’s proposal; (3) Evidence that
St. Al’s offer is a valid comparable and relates to the fair market value issue; and (4) a
brief discussion of St. Al’s efforts to acquire Saltzer to tell the full account of St. Luke’s
purchase.

Memorandum Decision & Order – Page 4

DATED: September 30, 2013

_________________________
B. Lynn Winmill
Chief Judge
United States District Court

Memorandum Decision & Order – Page 5