PRIME HEALTHCARE SERVICES- MONROE, LLC v. INDIANA UNIVERSITY HEALTH BLOOMINGTON, INC.
ORDER granting in part and denying in part Plaintiff's 39 Motion for Reconsideration of Dismissal of Count I and SUSTAINS Plaintiff's 53 objection to Magistrate Judge's Entry on Plaintiff's Motion for Leave to Amend Complaint. Plaintiff's shall have 5 business days to file First Amended Complaint. Signed by Judge Richard L. Young on 9/29/2017. Signed by Judge Richard L. Young on 9/29/2017. (TMD)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
PRIME HEALTHCARE SERVICESMONROE, LLC doing business as
INDIANA UNIVERSITY HEALTH
BLOOMINGTON, INC. doing business as
IU HEALTH BLOOMINGTON
HOSPITAL EMERGENCY MEDICAL
TRANSPORT SERVICES; doing business
as IU HEALTH BLOOMINGTON
ENTRY ON PLAINTIFF’S MOTION TO RECONSIDER ENTRY ON
DEFENDANT’S MOTION TO DISMISS AND ON PLAINTIFF’S OBJECTION
TO ORDER ON PLAINTIFF’S MOTION FOR LEAVE TO AMEND
The City of Bloomington and Monroe County have an exclusive contract with
Defendant, IU Health Bloomington Hospital Emergency Medical Transport Services. On
January 4, 2016, Plaintiff, Prime Healthcare Services-Monroe, LLC doing business as
Monroe Hospital (“Monroe Hospital”), filed an antitrust action against Defendant,
Indiana University Health Bloomington, Inc., doing business as IU Health Bloomington
Hospital (“IU Health”), and doing business as IU Health Bloomington Hospital
Emergency Transport Services (“IU Ambulance”) (collectively “Defendant”). On
February 16, 2017, Defendant filed a Motion to Dismiss the Complaint, and on
September 30, 2017, the court granted the motion with respect to Count I with prejudice.
Plaintiff now moves the court to reconsider that ruling. Plaintiff also objects to the
Magistrate Judge’s ruling denying Plaintiff’s Motion for Leave to File Amended
Complaint. For the reasons that follow, the court GRANTS in part and DENIES in
part Plaintiff’s Motion to Reconsider, SUSTAINS Plaintiff’s Objection, and GRANTS
it leave to amend its Complaint.
Motion to Reconsider
A motion to alter or amend judgment under Rule 59(e) requires the moving party
to direct the court’s attention to either newly discovered material evidence or to a
manifest error of law or fact. Oto v. Metropolitan Life Ins. Co., 224 F.3d 601, 606 (7th
Cir. 2000); Johnny Blastoff, Inc. v. Los Angeles Rams Football Co., 188 F.3d 427, 439
(7th Cir. 1999). It is not the appropriate vehicle for “rehashing previously rejected
arguments or arguing matters that could have been heard during the pendency of the
previous motion.” Caisse Nationale de Credit Agricole v. CBI Indus., Inc., 90 F.3d 1264,
1270 (7th Cir. 1996) (citing In re Oil Spill, 794 F. Supp. 261, 267 (N.D. Ill. 1992), aff’d,
4 F.3d 997 (7th Cir. 1993)).
Plaintiff challenges the court’s finding that Defendant is immune from federal
antitrust liability under the state action doctrine. “The state action doctrine seeks to
preserve the principles of state sovereignty and federalism without disregarding the
procompetitive, free enterprise principles that compose the federal antitrust laws.
Marrese v. Interqual, Inc., 748 F.2d 373, 386 (7th Cir. 1984), abrogated on other
grounds by Hammes v. AAMCO Transmissions, Inc., 33 F.3d 774, 779 (7th Cir. 1994).
This doctrine recognizes that in circumstances where sufficient state action is present,
there is a reduced “concern that federal policy is being unnecessarily and inappropriately
subordinated to state policy.” Id. at 387. The doctrine exempts private entities like
Defendant from antitrust laws if the alleged anticompetitive activity was (1) “clearly
articulated and affirmatively expressed as state policy,” and their actions were (2)
“actively supervised by the State itself.” Id. at 386.
Under the “clear articulation” test, the state need not specifically authorize conduct
with anticompetitive effects. LaSalle Nat’l Bank of Chicago v. DuPage Cnty., 777 F.2d
377, 381 (7th Cir. 1985). The anticompetitive effects need only be a foreseeable
consequence of engaging in the authorized activity. Id. The “active supervision” test of
prong two requires “that state officials have and exercise power to review particular
anticompetitive acts of private parties and disapprove those that fail to accord with state
policy.” N. Carolina State Bd. of Dental Esam’rs v. FTC, 135 S.Ct. 1101, 1112 (2015).
The court found the anticompetitive impact in the emergency medical services
market was foreseeable and endorsed by the state. Plaintiff challenges the court’s
analysis on several grounds. First, Plaintiff argues it was not required to “plead around”
Defendant’s affirmative defense of state-action immunity. Plaintiff alleged, however,
that the Indiana Administrative Code authorizes an ambulance service provider, through
its medical director, to establish protocols for patient transportation, and that IU
Ambulance acted to implement those provisions. (Compl. ¶¶ 19-25). It is, therefore,
appropriate to consider state action immunity at the pleading stage “because it provides
an exemption from Federal antitrust laws and, if applicable, allows for dismissal of the
complaint.” Marrese v. Interqual, Inc., 748 F.2d 373, 384 (7th Cir. 1984) (emphasis in
original), abrogated on other grounds by Hammes v. AAMCO Transmissions, Inc., 33
F.3d 774, 779 (7th Cir. 1994)).
Second, Plaintiff argues the court considered the wrong “market.” Plaintiff
advocated for the emergency medical services market. The court found the appropriate
market for the state action analysis was the emergency transportation market because the
alleged exclusionary conduct—the decision to deliver patients to IU Health instead of
Plaintiff—occurred within the transportation market and not the services market. The
court’s ruling is supported by Plaintiff’s Complaint. (See Compl. ¶ 56) (“Despite and
contrary to the protocols for emergency medical transportation, both as established by
law and as dictated by the applicable standard of care, IU Ambulance and its predecessor
have continuously and consistently delivered the vast majority of emergency medical
transportation patients to whom they have provided services to IU Hospital and its
predecessor Bloomington Hospital for the provision of emergency medical services”).
Third, Plaintiff challenges the court’s finding that the anticompetitive effect in the
emergency medical services market was sufficiently foreseeable. In the court’s Entry, it
noted that Indiana Code § 16-31-5-1 authorized the emergency transportation service
contract between the City of Bloomington, Monroe County, and Defendant. In addition,
the court noted that the Indiana legislature created the Emergency Management
Commission (“EMS”), which, in turn, established a “regulatory plan to ensure that
injured patients in the pre-hospital setting are transported to the most appropriate facility
within the Indiana trauma system.” 836 Ind. Admin. Code 1-2.1-1. As applied to the
facts of this case, the plan provided that IU Ambulance had the authority to develop its
own protocols to determine the nearest appropriate hospital. See id. 1-2.1-4(b). The
provider protocols, prepared by the provider’s medical director, (here, a physician
employed by Defendant), detail the trauma field triage and transport destination
procedures to be used by the provider. See id. 1-2.1-3(5). Pursuant to Indiana Code §
16-31-2-11 and 836 Ind. Admin. Code 1-2.1-4, the EMS Commission has the authority to
review not only the provider developed procedures, but also the provider’s execution of
its duties to ensure it is in accordance with those procedures. Given that the legislature
authorized providers to develop their own procedures and created a state supervisory
process to review both the providers’ procedures and the providers’ conduct to carry out
that procedure, the court finds the anticompetitive effect in the Bloomington/Monroe
County emergency medical services market was foreseeable. See LaSalle Nat. Bank, 777
F.2d at 381 (citing Town of Hallie v. City of Eau Claire, 105 S. Ct. 1713, 1718-19 (1985)
(“Town of Hallie does not require that the legislature expressly authorize conduct with a
subjective anticompetitive purpose. Rather, it is only necessary that the legislature
authorize the objective conduct (here cooperative zoning decisions) that foreseeably
results in the anticompetitive effect.”)). Accordingly, the court finds its “clear
articulation” analysis was not in error.
Lastly, Plaintiff argues the court erred in finding the “active supervision” prong
was satisfied. Plaintiff asserts that Indiana statutory and administrative rules governing
the relationship of the Emergency Medical Services Commission and IU Ambulance
confirm that the State does not “actively supervise” IU Ambulance’s conduct. In other
words, the State does not exercise ultimate control over IU Ambulance’s conduct because
it gives this control to IU Ambulance itself.
Under Seventh Circuit precedent, active supervision can be present when the
activity at issue is not directly carried out by the state, but is instead carried out by others
pursuant to state authorization. Marrese, 748 F.2d at 388-89 (hospital’s peer review
committee exempted by state action doctrine because, in relevant part, the Indiana
Medical Licensing Board, created by Indiana legislature, reviews communications,
records, and determinations of the peer committee). See also North Carolina State Bd. of
Dental Examiners v. F.T.C., 135 S. Ct. 1101 (2015) (internal citations omitted) (“Active
supervision need not entail day-to-day involvement in an agency’s operations or
micromanagement of its every decision. Rather, the question is whether the State’s
review mechanisms provide “realistic assurance” that a nonsovereign actor’s
anticompetitive conduct “promotes state policy, rather than merely the party’s individual
interests.”). But for active supervision to be present, state officials must “exercise the
power to review particular anticompetitive acts of private parties and disapprove those
that fail to accord with state policy.” N. Carolina State Bd. of Dental Esam’rs, 135 S.Ct.
at 1112. Upon review of the record that was before the court at the time it ruled, the
court finds it did not err.
On a related note, Plaintiff argues it has newly discovered evidence from the EMS
Commission related to IU Ambulance’s service and patient deliveries. This information,
Plaintiff submits, reflects that certain assumptions advanced by Defendant in its motion
to dismiss briefing were false. For example, Plaintiff represents that information
provided to the EMS Commission by IU Health, pursuant to 836 Ind. Admin. Code 1-15(b), establishes that approximately one-fourth of all runs are missing two critical data
points, “destination” and reason for choosing the destination from April 20, 2013 to the
present. (Proposed Am. Compl. ¶ 75).
Defendant asserts that the discovery Plaintiff relies on is not newly discovered
evidence for purposes of Federal Rules of Civil Procedure 59(e) and 60(b) because it was
“previously available” through ordinary diligence. At this juncture, the court need not
decide that question because, for purposes of Plaintiff’s Motion to Reconsider, the larger
issue is the court’s decision to dismiss Count I with prejudice.
In Runnion ex rel. Runnion v. Girl Scouts of Greater Chicago, 786 F.3d 510, 520
(7th Cir. 2015), the court observed that “a plaintiff whose original complaint has been
dismissed under Rule 12(b)(6) should be given at least one opportunity to try to amend
her complaint.” When the court dismissed Count I with prejudice, Plaintiff no longer had
the opportunity to amend its Complaint pursuant to Rule 15. Accordingly, the court erred
in granting Defendant’s Motion to Dismiss Count I with prejudice. The September 30,
2016, Entry is hereby amended to show Count I dismissed without prejudice. Plaintiff’s
Motion to Reconsider is GRANTED to that extent, but DENIED in all other respects.
Objection to Magistrate Judge’s Entry on Plaintiff’s Motion for Leave to
As noted above, the court granted Defendant’s Motion to Dismiss Count I of the
Complaint on September 30, 2016, finding that the Defendant was exempt from federal
antitrust liability under the state action doctrine. On October 28, 2017, Plaintiff filed its
Motion for Leave to Amend Complaint, seeking to allege additional facts relating to the
lack of active supervision by the EMS Commission. Because Plaintiff’s Motion for
Leave to Amend was filed months after the deadline set forth in the court’s Scheduling
Order (June 6, 2016), the court found Plaintiff did not show good cause under Rule
16(b)(4) to amend the pleadings. Arrigo v. Link, 836 F.3d 787, 797 (7th Cir. 2016) (“‘To
amend a pleading after the expiration of the trial court’s scheduling order deadline to
amend pleadings, the moving party must show ‘good cause.’”) (quoting CMFG Life Ins.
Co. v. RBS Secs., Inc., 799 F.3d 729, 749 (7th Cir. 2015)). Plaintiff objects to the
Magistrate Judge’s ruling on grounds that her ruling was clearly erroneous or contrary to
Based upon a declaration from defense counsel, the Magistrate Judge concluded
that Plaintiff received the information on which its “new” allegations are based in March,
April, and, at the latest, May 24, 2016. Therefore, she found Plaintiff could have sought
leave to amend its Complaint long before the court’s September 30 ruling on Defendant’s
Motion to Dismiss. But the Magistrate Judge failed to adequately consider the breadth of
documents Defendant produced between May 23, 2016 and July 8, 2016—a dataset of
45,000 separate ambulance run files and 11,813 pages of documents. The amendment
deadline (June 6, 2016) passed during the course of this production.
The primary consideration in a good cause determination under Rule 16(b) is the
diligence of the party seeking amendment. Alioto v. Town of Lisbon, 651 F.3d 715, 720
(7th Cir. 2011). Given the timing of this discovery, and its significant size, the court
finds it was not unreasonable for Plaintiff to file its motion for leave to amend when it
did. The court therefore SUSTAINS Plaintiff’s Objection and permits it leave to file its
First Amended Complaint.
For the above-mentioned reasons, the court GRANTS in part and DENIES in part
Plaintiff’s Motion to Reconsider Dismissal of Count I of Plaintiff’s Complaint (Filing
No. 39). Specifically, the court GRANTS the Motion to the extent that the dismissal
should have been without prejudice, but DENIES the Motion in all other respects. And
the court SUSTAINS Plaintiff’s Objection to Magistrate Judge’s Entry on Plaintiff’s
Motion for Leave to Amend Complaint (Docket No. 53). Plaintiff has five (5) business
days from the date of this Entry to file its First Amended Complaint.
SO ORDERED this 29th day of September 2017.
Distributed Electronically to Registered Counsel of Record
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