DEBORAH HEART AND LUNG CENTER v. PRESBYTERIAN MEDICAL CENTER OF THE UNIVERSITY OF PENNSYLVANIA HEALTH SYSTEM et al
Filing
268
OPINION. Signed by Judge Renee Marie Bumb on 3/24/2015. (tf, )
NOT FOR PUBLICATION
[Docket Nos. 204 & 205]
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE
DEBORAH HEART AND LUNG CENTER,
Plaintiff,
Civil No. 11-1290 (RMB/KMW)
v.
OPINION
VIRTUA HEALTH INC., et al.,
Defendants.
Appearances:
Anthony Argiropoulos
Scott B. Murray
Thomas Kane
Sills Cummis & Gross, P.C.
650 College Road East
Princeton, New Jersey 08540
Attorneys for Plaintiff Deborah Heart and Lung Center
James J. Ferrelli
Philip H. Lebowitz
John E. Sindoni
Duane Morris LLP
1940 Route 70 East, Suite 200
Cherry Hill, New Jersey 08003
Attorneys for Defendant Virtua Health, Inc. and Virtua
Memorial Hospital Burlington County
Robert V. Dell’Osa
Cozen O’Connor P.C.
457 Haddonfield Road, Suite 300
Cherry Hill, New Jersey 08002
Attorneys for The Cardiology Group, P.A.
1
BUMB, UNITED STATES DISTRICT JUDGE:
This matter comes before the Court upon a two motions for
summary judgment filed by the Defendants in this matter, Virtua
Health, Inc. and Virtua Memorial Hospital Burlington County
(“Virtua”) and The Cardiology Group, P.A. (“CGPA”),
(collectively referred to as the “Defendants”).
Plaintiff
Deborah Heart and Lung Center (“Plaintiff” or “Deborah”) has
opposed both motions.
This Court heard oral argument on
September 22, 2014, and ordered the parties to submit
supplemental briefing on the issue of anticompetitive effects.
After reviewing the parties’ submissions, this Court will grant
the Defendants’ respective motions for summary judgment for the
reasons set forth below.
I.
Background
A. Relevant Facts
The record in this matter is voluminous and complex, and
the facts, both undisputed and disputed, are well known to the
parties.
Therefore, this Court will set forth only those facts
necessary for resolution of the instant motions.
As is required
on a motion for summary judgment, this Court will draw all
inferences in favor of Plaintiff as the non-moving party.
Kopec
v. Tate, 361 F.3d 772, 775 (3d Cir. 2004)(stating that where
2
there are significant factual disputes between the parties, the
facts should be construed in favor of the non-moving party).
For the reasons set forth below, resolution of the instant
motions turns entirely on whether Plaintiff has presented
sufficient evidence of anticompetitive effects.
infra at 25-44.
See discussion
Therefore, the facts recited herein will focus
on this issue, and the Court will provide a brief overview of
other facts as they relate to the alleged conspiracy underlying
this case. 1
i. The Relevant Business Entities
Plaintiff Deborah is a specialty hospital located in Browns
Mills, New Jersey.
[Virtua’s Statement of Facts (“VSOF”) and
Plaintiff’s Response (“PR”) at ¶ 1]. 2
Deborah is one of only
three hospitals in the United States that is exempt from having
to collect co-pays, deductibles, or any other out-of-pocket
expenses from patients because the federal government recognizes
1
Much of the Statement of Facts submitted by Plaintiff focuses
on establishing a “conspiracy” between Virtua and CGPA, see
e.g., PSOF at ¶¶ 39-83, and between CGPA, Virtua and Penn, see
PSOF at ¶¶ 87-113, to remove Deborah from the relevant market.
The necessary facts surrounding the agreements are set forth
herein only to the extent that the knowledge is necessary to
understand the issue of anticompetitive effects, which is
dispositive here.
2 CGPA incorporated Virtua’s response to the Plaintiff’s
Statement of Material Facts where relevant and Virtua
incorporated CGPA’s statement of material facts where relevant.
3
its special status as a charity hospital.
[PSOF at ¶ 2].
CGPA
was a cardiology practice that practiced in Burlington County at
the time relevant to this law suit. [Plaintiff’s Statement of
Fact (“PSOF”) and Virtua’s Response (“VR”) at ¶ 17].
In July
2012, Virtua purchased all of CGPA’s assets but none of its
liabilities.
[Id.].
Virtua is a multi-hospital health system
in southern New Jersey, which includes Virtua Memorial Hospital
Burlington County.
[VSOF & PR at ¶ 3].
At the relevant time
period, under applicable regulations, Virtua was not authorized
to provide cardiac surgery.
[PSOF & VR at ¶ 27].
Penn
Presbyterian Medical Center (“PPMC”) is a hospital in West
Philadelphia and is part of the University of Pennsylvania
Health System.
[PSOF & VR at ¶ 22].
PPMC is authorized to
perform cardiac surgery.
ii. ACI & PCI Procedures & Affiliation Agreements
The term “ACI procedures,” which are performed in
hospitals, refers to advanced cardiac interventional procedures
comprised of three types of services – angioplasties,
electrophysiology, and cardiac surgery.
[VSOF & PR at ¶ 6].
ACI procedures form two relevant product markets: emergency
angioplasty and non-emergency ACI procedures.
6].
[VSOF and PR at ¶
A “PCI” refers to a “Percutaneous Coronary Intervention”
4
and is a type of angioplasty. 3
Schouten, Pl.’s Ex. 140 at 3.
See Expert Report of Evan Hoffman
In Pennsylvania and New Jersey,
hospitals may only provide facilities for procedures under a
license from the state’s Department of Health.
8].
[VSOF & PR at ¶
It is undisputed that during the relevant time period
Deborah and PPMC were licensed to provide cardiac surgery
services whereas Virtua was not. [PSOF & VR at ¶ 27].
When a patient requires an ACI procedure and the physician
lacks the expertise to provide the ACI procedure or where the
hospital where the patient is seen is not licensed to provide
the service, a physician must refer the patient to a more
specialized interventional cardiologist or to a hospital where
the interventional cardiologist can perform the service.
& PR at ¶¶ 7-10].
[VSOR
Prior to the transfer, patients must consent
and the requirements of the New Jersey Patient’s Bill of Rights
must be fulfilled.
[VSOF & PR at ¶¶ 7-10]. 4
ii. Deborah & CGPA
Because none of the CGPA cardiologists performed diagnostic
invasive or interventional procedures before July 2006, patients
3
For ease of reference, this Court will refer simply to ACI
procedures throughout this Opinion as the term encompasses
angioplasties and a PCI is a type of angioplasty.
4 N.J.S.A. §26:2H-12.8.
5
in need of those procedures were referred to non-CGPA
cardiologists who performed those types of specialty procedures,
typically either to a Deborah-employed physician, or to
physicians at Cooper University Hospital.
[VSOF & PR at ¶ 15].
In 1992, Deborah approached CGPA about sending more CGPA
patients to Deborah, which led to a growing referral
relationship between Deborah and CGPA.
[Id. at ¶ 16].
At this
time, where a referral to a Deborah-employed physician was
necessary for invasive diagnostic catheterization or ACI
services and the CGPA patient was an inpatient or emergency
patient at Virtua, the referral required the CGPA patient to be
transferred from Virtua to Deborah for treatment by the Deborahemployed physician.
[Id. at ¶ 17].
By 1999, the referral relationship between CGPA and
Deborah-employed physicians had grown, and CGPA entered into
five identical individual contracts (the “Deborah Physician
Leases”) with certain interventional cardiologists employed by
Deborah, including Charles A. Dennis, M.D.
[Id. at ¶ 18].
At
the time CGPA entered into the Deborah Physician Leases, CGPA
physicians primarily treated their patients at CGPA’s own
offices and at Virtua.
[Id. at ¶ 22].
Although treated by
Deborah-employed physicians, those patients remained patients of
6
CGPA, and CGPA billed insurers and the patient for the services
provided by the Deborah-employed physicians. [Id. at ¶ 21].
At the time of the 2002 Deborah Physician Leases between
CGPA and Dr. Dennis, Dr. Dennis was the Chair of Deborah’s
Department of Cardiovascular Diseases, and had been employed at
Deborah as an interventional cardiologist since 1991.
25].
[Id. at ¶
While still a Deborah employee in 2003, Dr. Dennis applied
for and was granted medical staff privileges to perform low-risk
catheterizations at Virtua, and Dr. Dennis became Virtua’s first
Cardiac Catheterization Laboratory Director, with Deborah’s
knowledge and consent.
[Id. at ¶ 28].
On January 1, 2005, while the 2002 Deborah Physician Leases
were in effect, CGPA entered into a Cardiology Services
Agreement with Virtua (the “CSA”) under which CGPA agreed to
“provide all cardiac services to all patients in the
Cardiovascular Department of the Hospital [Virtua]” on an
exclusive basis . . . .”
[Id. at ¶ 31].
The purpose of the CSA
was “to promote control, cost, quality and efficiency of service
in the performance of cardiac services” at Virtua, and its terms
addressed CGPA’s administrative and coverage obligations as the
exclusive provider for cardiology services at Virtua.
32].
[Id. at ¶
In each year that the CSA was in effect, patients were
transferred from Virtua to Deborah for procedures to be
7
performed at Deborah, as follows: 2005, 627 patients; 2006, 652
patients; 2007, 392 patients; 2008, 157 patients; 2009, 169
patients; and between January 1, 2010 and July 15, 2010, 60
patients.
[Id. at ¶ 37].
In 2006, Virtua became licensed by
the New Jersey Department of Health and Senior Services to
operate as a full-service adult diagnostic cardiac
catheterization facility; the facility became operational in
2007.
[Id. at ¶ 38].
iv. Dr. Dennis and His Suspension
Dr. Dennis was employed by Deborah from 1991 to 2006; he
announced his resignation on February 21, 2006, providing notice
of his intention to resign from Deborah effective June 30, 2006,
in order to join CGPA and become a CGPA employee.
41].
[Id. at ¶
With Dr. Dennis employed by CGPA, it became unnecessary
for CGPA to continue to lease Deborah-employed physicians to
treat their patients in need of interventional services, so the
Deborah Physician Leases were terminated in July 2006.
¶ 46].
[Id. at
From July 2006 through February 2007, Dr. Dennis
continued to perform angioplasties at Deborah.
[Id. at ¶ 47].
Deborah alleges that as early as February 2006, Virtua
executives were in contact with Dr. Dennis in an attempt to
recruit him to help build Virtua’s Cardiac Institute so that
Virtua could obtain a cardiac surgery license.
8
Deborah further
contends that Virtua was part of a conspiracy with CGPA to force
Deborah into either a merger or complete shutdown.
[PSOF at ¶¶
78-82]. 5
While the reasons precipitating his suspension are hotly
disputed by the parties, it is undisputed that on February 20,
2007, Deborah suspended Dr. Dennis’ privileges to perform
interventional procedures at Deborah.
[PSOF at ¶ 62].
This
suspension caused an immediate rift between Deborah and CGPA.
On the very same day as the suspension, Diane Hinkel, CGPA’s
administrator, wrote to Deborah and explained that CGPA would
not sign the terms of a new Deborah-CGPA arrangement (called the
“Deborah-EP Physician Lease”) due to Deborah’s suspension of Dr.
Dennis’s privileges.
[VSOF & PR at ¶ 53].
Deborah attempted to
persuade CGPA to sign the Deborah-EP Physician Lease, but CGPA
declined.
[Id. at ¶ 54].
Dr. Fish, a CGPA physician at that
time, expressed CGPA’s view that Deborah’s suspension of Dr.
Dennis’s privileges was a “totally unfair” and “unjustified”
“black mark” on Dr. Dennis’ record, and stating that CGPA’s
5
The factual record contains evidence in support of this point.
See, e.g., Pl.’s Ex. 14 (October 2006 email from Dr. Dennis to
Virtua Vice President, Matt Zuino, discussing a “white knight”
strategy wherein Virtua could gain Deborah’s cardiac surgery
services); Pl.’s Ex. 31 (email from Dr. O’Neil to CGPA Executive
Committee stating, “One of [Deborah’s] accountants said he gives
them 2 years before [its] doors close. We could speed that up
when we no longer do [percutaneous transluminal coronary
angioplasties] at [Deborah].”).
9
physicians were united that Dr. Dennis “must be immediately
granted unconditional interventional privileges at Deborah” for
the relationship to continue.
[Id. at ¶ 55].
Dr. Dennis was
understood by Deborah to be the “bridge between the CGPA and
Deborah.”
[Id. at ¶ 63].
Contrary to CGPA’s “demands,” Deborah
ultimately terminated Dr. Dennis’ interventional privileges
entirely.
[Id. at ¶ 58].
v. CGPA & PPMC
Following the suspension of Dr. Dennis’ privileges, CGPA
physicians began to refer their patients who could not be
treated by CGPA physicians to Penn Cardiology physicians.
& PR at ¶ 72].
[VSOF
Because Penn Cardiology physicians were employed
by Penn, they routinely transferred patients to Penn hospitals,
including, most frequently, PPMC.
[Id.]
In November 2007, CGPA
and Penn Cardiology formalized their relationship via what is
referred to as the “Penn Cardiology Physician Lease.”
75].
[Id. at ¶
In January and February of 2008, CGPA also entered into an
Occupancy Agreement, Affiliation Agreement and a Cardiology
Working Group Participation Agreement with University of
Pennsylvania Health System and/or its affiliates, (collectively
referred to as the “Affiliation Agreement”). 6
6
[Id. at ¶¶ 76-77].
It is undisputed that Penn reached a settlement agreement with
the United States to resolve alleged claims of violations of the
Stark Act and Anti-Kickback Act as a result of its contractual
10
The Penn Cardiology Physician Lease provided for CGPA to
pay an annual leasing fee to Penn Cardiology, in return for
which Penn Cardiology leased interventional cardiologists to
CGPA on a part-time basis to treat CGPA patients in need of
diagnostic cardiac catheterization and interventional cardiac
procedures that CGPA physicians could not provide.
[Id. at ¶
78].
The Penn Cardiology Physician Lease also provided that
“[a]ll Services shall be performed at a hospital designated by
[CGPA]” and that the Penn Cardiology physicians would “take all
reasonable steps to ensure that any Physician providing Services
[under the agreement] shall obtain or maintain medical staff
privileges at the Hospital at which the Services are to be
performed.”
[Id. at ¶ 80].
When procedures could not be
performed by Penn Cardiology physicians at Virtua, the Penn
Cardiology physicians provided those services at PPMC.
[Id. at
¶ 82].
Deborah contends that Penn wanted a commitment for a “100%
referral” of patients from CGPA.
[PSOF at ¶ 90]. Plaintiff
further avers, as is critical to its antitrust claims here, that
“although the Affiliation Agreement that was being negotiated
was ostensibly a contract between CGPA and Penn, there is no
relationships with CGPA. [Pl.’s Ex. 65].
11
doubt that Virtua was an unnamed party to the agreement and
directly participated in its negotiation.”
[PSOF at ¶ 93]. 7
Plaintiff alleges that Penn and Virtua officials met during this
time period and exchanged promises about what procedures would
be sent from Virtua to PPMC.
[Id. at ¶ 96].
Relatedly, Section
1.1. of the Affiliation Agreement provides, in relevant part,
that “the Clinical Practices of the University of Pennsylvania.
. . will be the exclusive provider of cardiac catheterization
services to [CGPA’s] patients.”
[PSOF at ¶ 100].
Again, the
crux of Plaintiff’s allegations is that there was a conspiracy
to cut Deborah out of the market that involved Virtua, CGPA and
Penn.
vi. Geographic Markets & Alleged Anticompetitive Effects
It is undisputed that the relevant markets for ACI
procedures in this case, as are as follows:
•
•
Non-emergency ACI procedures: Burlington, Camden, Mercer,
Monmouth, and Ocean Counties, and parts of Philadelphia;
Emergency PCI services: Burlington, Monmouth, and Ocean
Counties.
[VSOF & PR at ¶ 96].
Following the inception of the alleged conspiracy, there
was a powerful shift in transfers away from Deborah – i.e.,
7
Plaintiff has pointed to record evidence in support of its
point. See, e.g., Pl.’s Ex. 57 (email discussing “leakage” of
patients from Virtua to Deborah).
12
“prior to 2007 the ratio of transfers from Virtua to either
Deborah or Penn Presbyterian was roughly 85% Deborah to 15%
Penn. After the suspension of Dr. Dennis’s privileges, the ratio
flipped, such that by January 2008 when the Penn Affiliation
Agreement was signed the ratio was roughly 30% Deborah to 70%
Penn.”
[PSOF at ¶ 256].
As a result of the alleged conspiracy, Plaintiff avers that
“patients who were pipelined to Penn suffered higher out-ofpocket costs, lower quality and diminished choice.”
265, Pl.’s Supp. Br. at 1.
See Doc.
As part of its conspiracy
allegations, Plaintiff further states that Virtua and CGPA “had
a policy of not informing patients of their option of
transferring to Deborah instead of [PPMC],” and such failure to
inform patients that they could be transferred to Deborah
violates the New Jersey Patient’s Bill of Rights.
138-148]. 8
[See PSOF ¶¶
Moreover, Plaintiff contends that this failure to
inform negatively impacted patient choice.
For example,
Plaintiff states that:
there is abundant evidence that even when patients stated a
preference to go to Deborah, they were bullied and lied to
in order to block the transfer. More than twenty patients
and/or family members have given sworn testimony in this
case telling horrifying stories of rank mistreatment and
8
There is no private cause of action for violations of the New
Jersey Patient Bill of Rights. See Castro v. NYT Television, 370
N.J. Super. 282, 291 (N.J. App. Div. 2004).
13
bullying at the hands of Virtua physicians, Virtua nurses,
and CGPA physicians.
[PSOF at ¶ 149].
Plaintiff’s Statement of Facts provides detail
on the individual accounts of the twenty-plus patients cited and
their experiences, which, Plaintiff contends, demonstrate that
the doctrine of informed consent and the New Jersey Patients’
Bill of Rights were violated.
[PSOF at ¶¶ 151-225.] 9
With respect to quality, Deborah and PPMC produced “doorto-balloon times,” referring to the time lapse between a heart
attack and the insertion of a catheter to the artery (a.k.a.
“the balloon”) to clear blockage.
[PSOF at ¶ 248].
Shorter
door to balloon times are preferable as “minutes are crucial
[and] time is muscle.”
[Id. at ¶ 250].
Plaintiff alleges that
the data demonstrates that Deborah beat PPMC’s door-to-balloon
times by, on average, eight minutes.
[Id.]
Thus, Plaintiff
contends that one of the anticompetitive effects of the alleged
conspiracy is that the patients experience inferior quality
9
Plaintiff adds that it was unable to come forward with evidence
of additional patients as state court discovery is not yet
compete. It further contends that “anticompetitive effects were
felt by all 3,100 patients pipelined to Penn.” Doc. No. 265,
Pl.’s Supp. Br. at 1, n. 2. For purposes of this motion, this
Court will draw the inference in favor of Plaintiff that many
more patients were “pipelined” to Penn beyond the 20-plus cited
in the Plaintiff’s Statement of Fact.
14
because of PPMC’s higher door-to-balloon times.
Pl.’s Supp. Br.
at 1.
Finally, Plaintiff sets forth that “pipelined” patients
“suffered higher out-of-pocket costs.”
The only factual
allegation in Plaintiff’s Statement of Facts with respect to
this point is “all patients treated at Deborah pay less out-ofpocket costs than patients treated at Penn——even when the
patients have the same insurances and undergo the same medical
procedures.”
[PSOF at ¶ 23].
It is undisputed that Deborah’s market share in the
relevant markets as identified by Plaintiff was largely
unchanged from 2006 to 2007: for ACI services, Deborah’s 2007
market share was approximately 10 percent, based on data
reported by Deborah and other hospitals to the State, and
Deborah’s 2007 market share for emergency PCI services was less
than 9 percent.
[VSOF & PR at ¶ 106].
Plaintiff admitted that
“[e]ven if Deborah were to be driven out of the market
altogether, which did not occur, there would have been no
significant reduction in competition in any relevant market.”
[Id. at ¶ 106]. 10
10
At oral argument, Plaintiff clarified that it believed this
statement to be a reference to market foreclosure, which is not
at issue here. Sept. 22, Tr. at 73-74.
15
B. Procedural History
Plaintiff’s Complaint originally contained two claims: 1)
that the Defendants conspired with one another in violation of
Section 1 of the Sherman Act to exclude Plaintiff from the
market for certain advanced cardiac interventional procedures,
thereby restricting consumers’ choice of providers for these
procedures, and forcing consumers to pay higher prices; and 2)
that these efforts were part of an overlapping conspiracy by the
Defendants, in violation of Section 2 of the Sherman Act.
During the pendency of this litigation, Plaintiff also has been
simultaneously prosecuting a state court case again against the
Defendants asserting common law claims for tortious interference
and unfair competition.
See Deborah Heart and Lung Center v.
Virtua Health, Inc. et al., No. BUR-L-1487-09.
That litigation
is ongoing.
In a prior Opinion [Docket No. 56], this Court dismissed
Plaintiff’s Section 2 count for failure to state a claim, but
permitted the Section 1 claim to proceed.
In permitting that
claim to proceed, this Court found that Plaintiff had
sufficiently alleged anticompetitive effects within the relevant
product and geographic markets.
This Court also found that,
because Plaintiff was alleging that it could demonstrate
anticompetitive effects, it did not need to demonstrate market
16
foreclosure.
II.
Docket No. 56 at 18-19.
Standard of Review
Summary judgment shall be granted if “the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed. R.
Civ. P. 56(a). A fact is “material” if it will “affect the
outcome of the suit under the governing law . . . .” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is
“genuine” if it could lead a “reasonable jury [to] return a
verdict for the nonmoving party.”
Id.
When deciding the existence of a genuine dispute of
material fact, a court’s role is not to weigh the evidence; all
reasonable “inferences, doubts, and issues of credibility should
be resolved against the moving party.”
Meyer v. Riegel Prods.
Corp., 720 F.2d 303, 307 n.2 (3d Cir. 1983). However, a mere
“scintilla of evidence,” without more, will not give rise to a
genuine dispute for trial.
Anderson, 477 U.S. at 252. Further,
a court does not have to adopt the version of facts asserted by
the nonmoving party if those facts are “utterly discredited by
the record [so] that no reasonable jury” could believe them.
Scott v. Harris, 550 U.S. 373, 380 (2007). In the face of such
evidence, summary judgment is still appropriate “where the
17
record . . . could not lead a rational trier of fact to find for
the nonmoving party . . . .”
Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986).
The movant “always bears the initial responsibility of
informing the district court of the basis for its motion, and
identifying those portions of ‘the pleadings, depositions,
answers to interrogatories, and admissions on file, together
with the affidavits, if any,’ which it believes demonstrate the
absence of a genuine issue of material fact.” Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986) (quoting Fed. R. Civ. P.
56(c)). Then, “when a properly supported motion for summary
judgment [has been] made, the adverse party ‘must set forth
specific facts showing that there is a genuine issue for
trial.’” Anderson, 477 U.S. at 250 (quoting Fed. R. Civ. P.
56(e)). The non-movant’s burden is rigorous: it “must point to
concrete evidence in the record”; mere allegations, conclusions,
conjecture, and speculation will not defeat summary judgment.
Orsatti v. N.J. State Police, 71 F.3d 480, 484 (3d Cir. 1995);
Jackson v. Danberg, 594 F.3d 210, 227 (3d Cir. 2010) (citing
Acumed LLC v. Advanced Surgical Servs., Inc., 561 F.3d 199, 228
(3d Cir. 2009)) (“[S]peculation and conjecture may not defeat
summary judgment.”).
18
III. Analysis
As set forth above, the only remaining claim in this matter
is Plaintiff’s claim pursuant to Section 1 of the Sherman Act,
which provides:
Every 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 hereby
declared to be illegal.
15 U.S.C. § 1 (1994).
To establish a violation of Section 1, a
plaintiff must prove: “(1) concerted action by the defendants;
(2) that produced anti-competitive effects within the relevant
product and geographic markets; (3) that the concerted actions
were illegal; and (4) that it was injured as a proximate result
of the concerted action.” Gordon v. Lewistown Hosp., 423 F.3d
184, 207 (3d Cir. 2005); Angelico v. Lehigh Valley Hosp., 184 F.
3d 268, 275 (3d Cir. 1999); Black Box Corp. v. Avaya, Inc., No.
07-6161, 2008 WL 4117844, at *7 (D.N.J. Aug. 29, 2008).
For the
reasons set forth below, resolution of the instant motions turns
on the second prong of the test, and the Plaintiff’s failure to
present sufficient evidence of anticompetitive effect warrants
summary judgment in favor of the Defendants. 11
11
Because Plaintiff cannot demonstrate the requisite
anticompetitive effects, it is not necessary for this Court to
address the other prongs of the test. See Tunis Bros. Co., v.
Ford Motor Co., 952 F.2d 715, 722 (3d Cir. 1991)(declining to
address other prongs where plaintiff did not demonstrate
19
A. Quick Look v. Rule of Reason
As an initial matter, this Court must first resolve the
appropriate analytical framework to apply to the purported
evidence of anticompetitive effects – i.e., the “quick look” or
traditional “rule of reason” analysis.
Plaintiff contends that
it has set forth sufficient evidence to prove anticompetitive
effects under either standard, but argues that this Court should
apply the quick look standard.
Pl.’s Opp. Br. at 34.
The quick look analysis is an intermediate standard applied
“where per se 12 condemnation is inappropriate, but where no
elaborate industry analysis is required to demonstrate the
anticompetitive character of an inherently suspect restraint.”
United States v. Brown Univ., 5 F.3d 658, 669 (3d Cir. 1993)
(internal quotations and citations omitted).
As stated by the
Third Circuit, “the quick look approach may be applied only when
an observer with even a rudimentary understanding of economics
could conclude that the arrangement in question would have an
anticompetitive effect on customers and markets.”
Gordon, 423
F. 3d at 210 (citing California Dental Ass’n v. FTC, 526 U.S.
756 (1999)).
In applying this standard, “competitive harm is
adequate anticompetitive effects).
12 The per se rule applies to “plainly anticompetitive agreements
or practices.” United States v. Brown Univ., 5 F.3d 658, 669 (3d
Cir. 1993). The Plaintiff does not contend that the per se rule
applies here.
20
presumed and the defendant must set forth some justification for
the restraints.”
Id.
In support of its argument that the quick look standard
should be applied, Plaintiff contends that “[d]iscovery has
yielded myriad facts which show that the conspiracy in which
Virtua, CGPA and Penn engaged in is inherently suspect and has
no legitimate competitive justification.”
Pl.’s Opp. Br. at 36.
In response, the Defendants argue that there is no horizontal
restraint present as the agreements at issue exist between
Virtua and CGPA and Penn and CGPA, who are not market
competitors.
In addition, Defendants point to their expert’s
report, which found that 98% of the relevant markets were not
impacted by the alleged restraint and that “such a de minimis
restraint could have no impact on the market, either
anticompetitive or procompetitive.”
Defs.’ Reply Br. at 17.
Courts have applied the “quick look” analysis “in cases
involving agreements not to compete in terms of price or output
among members of professional associations,” FTC v. Indiana
Fed’n of Dentists, 476 U.S. 447, 459 (1986), or cases “where the
plaintiff has shown that the defendant has engaged in practices
similar to those subject to per se treatment.”
In re K-Dur
Antitrust Litig., 686 F.3d 197, 209 (3d Cir. 2012).
More
recently, the Third Circuit has noted that in order to succeed
21
under either a per se or quick look approach, a plaintiff must
show “the existence of a horizontal agreement, that is, an
agreement between ‘competitors at the same market level.’”
In
re Insurance Brokerage Antitrust Litigation, 618 F. 3d 300, 318
(3d Cir 2010)(quoting In re Pharmacy Benefits Managers Antitrust
Litig., 582 F.3d 432, 436 n.5 (3d Cir. 2009)).
Overall, as
stated by the Supreme Court, the “quick look analysis carries
the day when the great likelihood of anticompetitive effects can
easily be ascertained.”
Cal. Dental Ass’n v. FTC, 526 U.S. 756,
770 (1999).
Even if this Court views the alleged restraint as viewed by
Plaintiff—i.e., a horizontal agreement between Virtua, CGPA and
Penn—for the reasons set forth in more detail below, this Court
is unable to find that the anticompetitive effects can be so
easily ascertained as to militate in favor of the quick look
analysis.
See Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358,
1367 (3d Cir. 1996)(declining to apply quick look analysis where
plaintiff stated that the “restraint’s negative effect on
competition is manifest given the abundance of record evidence
showing . . . decreasing output and increasing process . . . [,]
because plaintiff “failed. . .
with facts.”).
to substantiate its assertion
Therefore, this Court finds it appropriate to
apply the rule of reason analysis, “[t]he usual standard applied
22
to determine whether a challenged practice unreasonably
restrains trade[.]”
In re Insurance Brokerage Antitrust
Litigation, 618 F. 3d at 315.
In applying this standard, this
Court is mindful that “[r]egardless of the standard used, the
purpose of the inquiry is always to assess the effect of the
conduct on competition[.]”
Deutscher Tennis Bund v. ATP Tour,
Inc., 610 F.3d 820, 831 (3d Cir. 2010).
Even if this Court were to begin with a quick look analysis
as urged by the Plaintiff, a rule of reason analysis would,
nevertheless, become applicable.
Where the quick look analysis
is applied, “condemnation is proper only after assessing and
rejecting the logic of proffered procompetitive justifications.”
Deutscher, 610 F. 3d at 832.
In applying the quick look
standard, “[i]f, after examining the competing claims of antiand procompetitive effects, it remains plausible that the net
effect is procompetitive or that there is no effect on
competition, then ‘[t]he obvious anticompetitive effect that
triggers abbreviated analysis has not been shown.’”
Id.
(emphasis added).
After reviewing the evidence propounded by the Defendants
in support of their contention that the alleged restraint is
neutral, i.e., “[has] no impact on the market either
anticompetitive or procompetitive,” Defs.’ Reply Br. at 17, this
23
Court finds that it remains plausible that there is no effect on
competition by the alleged restraint.
See Declaration of
Gregory Vistnes, Virtua App. at 285 (“Deborah’s loss of CGPA’s
ACI services referrals did not reduce competition in any
relevant market, but was instead a manifestation of ongoing
competition.”); Expert Report of Gregory Vistnes, Virtua App. at
440 (“there is no evidence of anticompetitive effects in any
relevant antitrust market – either direct or indirect.”). 13
In
finding that it remains plausible that there is no impact on
competition, this Court must continue its analysis and apply the
rule of reason, even if it were to begin with a quick look
framework.
Id. at 833 (noting that rule of reason analysis
applies once the quick look presumption disappears).
B. Rule of Reason Analysis
The rule of reason test “requires that a factfinder look at
the totality of the circumstances in order to determine whether
a business combination constitutes an unreasonable restraint of
trade.”
Gordon, 423 F.3d at 210.
Moreover, under this
standard, the plaintiff “bears the burden of showing that the
13
See Pl.’s Ex. 112, Vistnes Deposition: 82:13-24 (noting, in
response to various hypotheticals posed by Plaintiff’s counsel
that “the economic analysis that I’ve conducted remains
fundamentally the same in all of the situations that you are
hypothesizing about. That economic analysis leads me to
conclude that there was no harm to competition.”).
24
alleged contract produced an adverse, anticompetitive effect
within the relevant geographic market.” Id.
As stated in this
Court’s prior Opinion, [Docket No. 56], a plaintiff may
demonstrate that concerted action produced adverse,
anticompetitive effects within the relevant product and
geographic markets in two ways: (1) through direct evidence of
actual anticompetitive effects; or (2) through proof of the
defendant’s market power, which acts as a proxy for
anticompetitive effect.
Deutscher, 610 F.3d at 830.
While, in both cases, a plaintiff must make some showing of
a relevant market, where a plaintiff demonstrates direct
evidence of actual anticompetitive effects, the plaintiff’s
burden is diminished and it must only demonstrate “the rough
contours of a relevant market.”
In re Compensation of
Managerial Professional and Technical Employees Antitrust
Litig., No. 02-CV-2924, 2008 WL 3887619, at *7 (D.N.J. Aug. 20,
2008)(quotation omitted).
In this matter, Plaintiff has made
clear that it is seeking to demonstrate direct evidence of
actual anticompetitive effects.
As stated by several courts in
this Circuit, however, “proof that the concerted action actually
caused anticompetitive effects is often impossible to sustain. .
. .”
668).
Gordon, 423 F. 3d at 210 (citing Brown Univ., 5 F. 3d at
As set forth above, the Defendants do not contest the
25
relevant markets as identified by Plaintiff’s expert, Evan
Hoffman Schouten.
These markets include:
• Emergency Angioplasties: Burlington, Monmouth and
Ocean Counties.
• Non-emergent/Elective ACI Procedures: Burlington,
Camden, Mercer, Monmouth, and Ocean counties, as well
as parts of Philadelphia.
[VSOR & PR at ¶ 96].
This Court will, therefore, utilize the
markets as defined by the Plaintiff for purposes of the
anticompetitive effects analysis, and refers to both sets of
procedures generally as “ACI Procedures.”
Actual anticompetitive effects can be shown through reduced
output, increased prices, decreased quality, and loss of
consumer choice.
Tunis Bros. Co., Inc. v. Ford Motor Co., 952
F.2d 715, 728 (3d Cir. 1991)(“An antitrust plaintiff must prove
that challenged conduct affected the prices, quantity or quality
of goods or services”)(quotation and citation omitted).
Both
Defendants have moved for summary judgment arguing that
Plaintiff has failed to present evidence sufficient to create a
genuine dispute of material fact that the alleged concerted
action produced such anticompetitive effects within the relevant
product and/or geographic markets. 14
14
Virtua also moves for summary judgment arguing that Plaintiff
has failed to present sufficient direct or circumstantial
evidence of concerted action. Because this Court finds that
there is no genuine dispute of fact with respect to
26
The Defendants advance the following arguments in support
of their conclusion that Plaintiff has failed to provide direct
evidence of actual anticompetitive effects in the relevant
markets as a whole: 15
•
•
•
•
Plaintiff’s expert offered no testimony demonstrating
that prices have increased or that output or quality
has decreased in the relevant market. Doc. No. 204 at
3.
There is no evidence that Deborah was prevented from
competing in the relevant markets as evidenced by
CGPA’s small market share. Doc. 205 at 23.
Deborah has only demonstrated harm to itself as an
individual competitor, which is insufficient to
satisfy the required anticompetitive effects element.
Id. at 25.
Even if certain patients paid higher co-pays or
deductibles or were deprived of their choice to be
transferred to Deborah, those individuals’ experience
do not establish the harm to competition in the
relevant markets. Id. at 29.
In its opposition papers, Plaintiff begins its argument by
asserting what this Court determined at the motion to dismiss
stage – i.e., that Plaintiff does not have to prove market power
where it can present direct evidence of actual anticompetitive
effects.
Pl.’s Opp. Br. at 40-45.
Again, this Court agrees
that the demonstration of actual anticompetitive effects on the
market as a whole obviates the need to demonstrate market power.
anticompetitive effects, it need not reach this argument. Tunis
Bros. Co., Inc., 952 F.2d at 722.
15 See discussion infra at 27-41 regarding applicability of the
“market as a whole” language.
27
[Docket No. 56 at 19, n.8].
After this Court’s ruling on the
Motion to Dismiss, the parties engaged in extensive discovery
regarding Deborah’s claim that it had evidence of actual
anticompetitive effects on the market as a whole.
Defendants
contend that discovery failed to reveal any competent evidence
of actual anticompetitive effects.
See e.g., Virtua’s Br. at 22
(stating that Plaintiff’s expert offers no opinions on “whether
or how CGPA’s switch to Penn Cardiology injured competition in
the relevant markets she has defined[.]”).
In their joint reply brief, the Defendants further argue
that Plaintiff’s evidence is limited to only one hospital –
Deborah - and its loss of a portion of the referrals from the
twelve physicians practicing as CGPA, whose market share among
cardiologists in the relevant markets is less than 8%.
Reply, Doc. 232 at 1-2.
a matter of law.
Defs.’
This evidence alone is insufficient as
In addition, Defendants argue that “Deborah
has presented absolutely no evidence about the pricing, output
or quality of ACI procedures in the [m]arkets as a whole.”
at 3.
Id.
Finally, Defendants contend that Plaintiff had not even
attempted to introduce evidence of market-wide harm and, instead
seeks to rely on claims that CGPA patients, who fail to
represent the remaining 92% of the relevant market, “did not
experience ‘Deborah’s superior patient satisfaction scores and
28
door-to-door balloon times,’ and ‘paid higher out-of-pocket
costs.’” Defs.’ Reply at 9 (quoting Pl’s Opp. at 9).
In sum, it
is the Defendants’ view that, in addition to failing to show
market power and/or market foreclosure, Plaintiff has not
presented any evidence demonstrating that there have been price
increases, output reductions, or quality diminishment in the
relevant markets as a whole.
The Court agrees.
Initially, in reviewing the Plaintiff’s opposition papers,
this Court found that Plaintiff had failed to address the issue
of actual anticompetitive effects, the very issue this Court
found survived Defendants’ motion to dismiss. 16
This Court held
a hearing on this issue on September 22, 2014.
At the hearing,
it became apparent that the parties diverged on a central legal
point that would need to be resolved by this Court: Plaintiff
contends that it must only demonstrate “more than de minimis
anti-competitive effects,” Pl.’s Supp. Br., Doc. 25 at 1,
16
It is not enough to survive summary judgment to simply state
that this Court found, at the motion to dismiss stage, that
Plaintiff had adequately pled direct evidence of anticompetitive
effects. Pleading and proof are distinct and summary judgment
is the time Plaintiff is called on to put forth their
evidentiary proof. In re IKON Office Solutions, Inc., 277 F.3d
658, 666 (3d Cir. 2002)(“a party will not be able to withstand a
motion for summary judgment merely by making allegations;
rather, the party opposing the motion must go beyond its
pleading and designate specific facts by use of affidavits,
depositions, admissions, or answers to interrogatories showing
there is a genuine issue for trial.”).
29
whereas the Defendants assert that “any attempt by Deborah to
demonstrate direct evidence of anticompetitive effects of a
restraint must provide such evidence as to the market as a
whole, not just an effect on Deborah or the patients of [CGPA].”
Defs’ Supp. Br., Doc. 264 at 1-2 (emphasis added).
Because
resolution of this issue would ultimately impact this Court’s
decision, the Court directed the parties to submit supplemental
briefs addressing this issue.
At oral argument and in their supplemental submission, the
Defendants argued that the case law supports their conclusion
that Plaintiff must demonstrate that the alleged agreement at
issue injured competition in the markets “as a whole.”
Defendants contend that the evidence introduced by Plaintiff
fails to show that there was any anticompetitive effect on the
market as a whole.
For example, as stated in the declaration of
Virtua’s expert, Gregory Vistnes, harm to individual patient
choice or having to incur a higher co-pay at another hospital
“is not attributable to a reduction in competition in any
relevant market.”
Vistnes Decl., Virtua App. at 284.
In response to the Defendants’ position that failure to
demonstrate harm on the market as a whole is fatal, Plaintiff
contends that “[t]he canard is that the anticompetitive effects
have to be market wide.
That unto itself is erroneous.
30
There
is no support for that in the case law.”
Arg. Tr. 56:22-24.
Sept. 22, 2014, Oral
Plaintiff instead argues that its burden
with respect to presenting evidence of anticompetitive effects
is to simply demonstrate that the effects are “more than de
minimis.”
Plaintiff argues that the support for this
proposition appears in Tunis Bros. Co. v. Ford Motor Co., 952
F.2d 715 (3d Cir. 1991), discussed further infra, wherein the
plaintiffs failed to demonstrate sufficient anticompetitive
effects, not because they failed to demonstrate an injury on a
market-wide basis, but because plaintiff had failed to
demonstrate more than a de minimis injury.
at 59: 10-12.
Sept. 22, 2014 Tr.
Plaintiff avers that, unlike the plaintiff in
Tunis, it can demonstrate more than a de miminis injury because
its patients who were “pipelined to Penn suffered higher-out-ofpocket costs, lower quality and diminished choice.”
Br. at 1.
Pl.’s Supp.
Importantly, Plaintiff does not point to any evidence
that it has presented to this Court demonstrating
anticompetitive effects as to the market as a whole.
Instead,
as set forth in its Statement of Facts, Plaintiff only presents
evidence that Deborah or some patients of the CGPA were impacted
as the relevant anticompetitive effects of the alleged
conspiracy.
See Doc. 265, Pl.’s Supp. Br. at 1.
31
This Court has reviewed the case law of this Circuit, other
Circuits, and the cases cited by the parties, and it finds that,
contrary to the Plaintiff’s assertions at oral argument and in
its submissions, the Third Circuit expressly requires a
plaintiff to demonstrate that alleged anticompetitive effects
impact the market at issue as a whole, as clearly set forth in
Eichorn v. AT&T Corp., 248 F. 3d 131 (3d Cir. 2001).
In
Eichorn, the Circuit discusses this requirement in two sections
of its opinion: 1) as discussed by Plaintiff at oral argument,
during its discussion of antitrust standing, and, 2) most
critically as it applies to the instant case, in its analysis of
the alleged anticompetitive activity under the rule of reason
standard.
In its standing discussion, the Court states:
It is well established that an antitrust injury reflects an
anti-competitive effect on the competitive market. . . . We
have consistently held that an individual plaintiff
personally aggrieved by an alleged anti-competitive
agreement has not suffered an antitrust injury unless the
activity has a wider impact on the competitive market.
Eichorn, 248 F. 3d at 140.
Then, when discussing purported
anticompetitive effects under the rule of reason analysis, the
Court, again, notes “[t]he antitrust laws were not designed to
protect every uncompetitive activity, but rather only those
activities that have anti-competitive effects on the market as a
whole.”
Id. at 148 (emphasis added)(citing Broad Music, Inc.,
32
v. Columbia Broadcasting Sys., 441 U.S. 1, 23 (1979)(“Not all
arrangements among actual or potential competitors that have an
impact on price are per se violations of the Sherman Act or even
unreasonable restraints.”)).
Thus, it is clear that under Third
Circuit jurisprudence, anticompetitive effects must be shown to
impact the market as a whole. 17
This is not, as Plaintiff urges,
merely a requirement that the Plaintiff demonstrates only more
than a de minimis market impact; that impact must extend to the
whole defined market.
The Supreme Court’s decision in Jefferson Parish v. Hyde,
466 U.S. 2 (1984) is instructive.
The Jefferson Parish case
involved an arrangement wherein East Jefferson hospital was
party to a contract providing that all anesthesiological
services required by the hospital’s patients would be performed
by Roux & Associates, a single group of anesthesiologists.
at 5.
Id.
After finding that the agreement did not create a per se
violation of the Sherman Act, the Court engaged in “an inquiry
into the actual effect of the exclusive contract on competition
among anesthesiologists.”
Id. at 29. Ultimately, the Court
found that there was no antitrust violation, stating “there has
17
Notably, and tellingly, the Plaintiff fails entirely to
address the language of Eichorn in its supplemental briefing to
this Court on this very issue.
33
been no showing that the market as a whole has been affected at
all by the contract.”
(Id. at 31)(emphasis added).
While Plaintiff attempts to distinguish Jefferson Parish
because it is a case involving a “tying” arrangement, such
efforts are unsuccessful; the relevant portions on the analysis
in Jefferson Parish are not undermined by the fact that the
instant case does not involve tying.
Instead, the Court’s
analysis of whether the contract between Roux and East Jefferson
hospital unreasonably restrained competition is directly
relevant here – i.e., the Court found “there is no evidence that
any patient who was sophisticated enough to know the difference
between two anesthesiologists was not also able to go to a
hospital that would provide him with the anesthesiologist of his
choice.”
Id. at 30.
In so finding, the Court noted that there
was “no showing that the market as a whole has been affected at
all by the contract.”
Id. at 31.
There is no indication that
the Court’s analysis on this point is relevant in tying cases
only.
Instead, the statement follows the Court’s discussion of
whether the arrangement at issue had an unreasonable impact on
purchasers with respect to price, quality or supply and/or
demand.
The same line of reasoning applies in the instant case,
and other courts engaging in a similar analysis have made the
same determination with respect to the required scope of
34
anticompetitive effects.
See, e.g., Capital Imaging Assoc., v.
Mohawk Valley Med. Assoc., 996 F.2d 537, 543 (2d Cir.
1993)(“Under [the rule of reason] test plaintiff bears the
initial burden of showing that the challenged action has had an
actual adverse effect on competition as a whole in the relevant
market; to prove it has been harmed as an individual competitor
will not suffice. Insisting on proof of harm to the whole market
fulfills the broad purpose of the antitrust law that was enacted
to ensure competition in general, not narrowly focused to
protect individual competitors.”)(emphasis in original) 18; Med
Alert Ambulance, Inc., v. Atlantic Health System, Inc., No. 041615, 2007 U.S. Dist. LEXIS 57083, at *29 (D.N.J. Aug. 6,
2007)(“Under the rule of reason theory, the plaintiff must
establish that the challenged action had an actual adverse
18
Notably, Plaintiff cites to this case in its supplemental
brief but fails to discuss the “to the whole market” language.
In addition, Plaintiff contends that the Second Circuit does not
require proof of a market-wide impact, citing Eiberger v. Sony
Corp., 622 F.2d 1068 (2d Cir. 1980), a case that pre-dates not
only Capital Imaging (by 13 years), but also the Supreme Court’s
decision in Jefferson Parish, 466 U.S. at 31-32 (finding no
Section 1 violation where “there has been no showing that the
market as a whole has been affected at all . . . .”)(emphasis
added). In addition, the Second Circuit in K.M.B. Warehouse
Distribs. v. Walker Mfg. Co., 61 F.3d 123, 127 (2d Cir. 1995)
quotes Capital Imaging and its language with respect to
demonstrating an adverse impact on the market “as a whole.”
35
effect on competition as a whole in the relevant
market.”)(emphasis added)(internal quotations omitted).
Other sources previously quoted by this Court refer to the
need to demonstrate injury to the market as a whole.
For
example, Jonathan Jacobson, former member of the Congressional
Antitrust Modernization Commission, persuasively writes: “In all
cases, the relevant question is . . . whether there has been an
adverse effect on price, output, quality, choice, or innovation
in the market as a whole.” Jonathan M. Jacobson, Exclusive
Dealing, “Foreclosure,” And Consumer Harm, 70 ANTITRUST L.J.
311, 362 (2002)(emphasis added).
In addition to the persuasive authority discussed above,
this Court’s decision is bolstered by other reasoning.
For
example, the need for Plaintiff’s expert to define the rough
contours of the market begs a critical question: Why does a
plaintiff need to define a market if, ultimately, that plaintiff
need not be concerned with the impact on that market overall?
It is unclear how the undisputed need for a plaintiff to define
the rough contours of the market fits into Plaintiff’s espoused
theory that its burden with respect to anticompetitive effects
only requires a demonstration of more than de minimis effects,
even if those effects only impact one competitor and a portion
36
of its customers. 19
Under Plaintiff’s theory, it appears that no
market definition is even necessary.
The Court disagrees.
Moreover, language from cases cited to this Court by
Plaintiff as authoritative further undermine the Plaintiff’s
position.
For example, in Angelico v. Lehigh Valley Hospital,
Inc., 184 F. 3d 268, 276 (3d. Cir. 1999), the Court notes that a
plaintiff can prove actual anticompetitive effects via an
“increase in price or deterioration in quality and goods and
services.”
Id.
The Court goes on to note “[d]ue to the
difficulty of isolating the market effects of the challenged
conduct, however, such proof is often impossible to make.”
Id.;
see also, Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358, 1367
(3d Cir. 1996)(same).
Again, if the burden were simply that a
plaintiff must prove only a more than de minimis impact, a
standard clearly more easily satisfied than the burden to show
impact on the market as a whole, the case law would not refer to
such proof as “often impossible to make.”
Plaintiff provides no
explanation.
19
As aptly stated by counsel for Virtua at oral argument,
“Deborah went to the trouble of getting an expert to posit the
rough contours of the market but there is no mention whatsoever
of that market in Deborah’s brief in opposition to summary
judgment.” Sept. 22, 2014 Hearing Tr. at 32:7-10.
37
In its supplemental brief and/or during oral argument, 20 the
Plaintiff relied heavily on three cases: Tunis Bros. Co. v. Ford
Motor Co., 952 F.2d 715 (3d Cir. 1991); Oltz v. Saint Peter's
Community Hosp., 861 F.2d 1440 (9th Cir. 1988); and, Rome
Ambulatory Surgical Ctr. v. Rome Mem. Hosp., 349 F. Supp. 2d 389
(N.D.N.Y. 2004). 21
Plaintiff’s central argument is that the
Court in Tunis did not require harm to the market as a whole.
Instead, the plaintiff’s burden was only “to show more than a de
minimis restraint.”
Sept. 22, 2014 Tr. at 59:10-12.
While the
Court in Tunis did note that “plaintiffs have a burden to show
20
See Sept. 22, 2014 Tr. 50:15-18.
Plaintiff’s counsel, in discussing the applicability of cases
like Rome, Oltz, Tunis, and KMB Warehouse to its situation
stated:
21
If you are saying that the injury to competition was that
consumers were harmed because they lost access to you, you
know, because for one reason or another you, the plaintiff,
[is] not an option for consumers anymore, then you have to
show that you gave consumers something that everybody else
in the market isn't giving them.
Sept. 22, 2014 Oral Arg. Tr. 50:10-15. This Court fails to
understand Plaintiff’s appeal to these cases to the extent
Plaintiff admitted that there was nothing special or different
that Deborah offered.
THE COURT: Are you saying that there is something special
or different about Deborah that takes it out of the normal
antitrust cases?
MR. KANE: No, that's not what I'm saying, your Honor.
Sept. 22, 2014 Oral Arg. Tr. 49:18-22.
38
more than a de minimus restraint,” the Plaintiff here cannot
divorce this language from the language that follows in that
same opinion: “The Sherman Act was designed to prohibit
significant restraints of trade rather than to proscribe all
unseemly business practices; and the plaintiffs must have
demonstrated some harm to the competitive landscape from
[defendant’s] termination of the [plaintiff’s] franchise.”
Tunis, 952 F.2d at 728 (internal quotations and citations
omitted).
In addition, the very definitions of the relevant
markets were at issue in Tunis, and the Court overturned the
jury’s finding as to the relevant product and geographic markets
based on the evidence presented.
Id. at 725-727.
In the
instant case, there is no dispute as to the relevant markets.
Finally, the ultimate outcome of Tunis supports this Court’s
finding - i.e., a plaintiff’s Sherman Act claim must fail where
that plaintiff does not present evidence demonstrating that
prices, quantity or quality for goods or services has been
affected by the defendant’s conduct.
Id. at 728.
Plaintiff’s reliance on Oltz v. Saint Peter's Community
Hosp., 861 F.2d 1440 (9th Cir. 1988), is similarly misplaced.
As Plaintiff’s counsel candidly acknowledged during oral
argument, the contours of the market at issue in Oltz differed
dramatically as the defendant in Oltz enjoyed a 84% market share
39
of general surgical services in Helena, Montana, one of the
relevant markets for purposes of that court’s analysis.
1442.
Id. at
Notably, the Court in Oltz distinguished Jefferson
Parish, finding that, in that case, “[t]he defendant was only
one hospital of several in a large metropolitan area[,]”
Id. at
1447, while the hospital in Oltz undisputedly dominated the
relevant market.
Finally, the plaintiff in Oltz was able to
demonstrate that “the price of anesthesia services and the
incomes of the MD anesthesiologists rose dramatically because of
the challenged restraint.”
Id.
Again, Deborah has set forth no
evidence here that the price of ACI services rose dramatically
because of the alleged restraint in this case.
Finally, this Court finds Rome Ambulatory Surgical Ctr. v.
Rome Mem. Hosp., 349 F. Supp. 2d 389 (N.D.N.Y. 2004),
distinguishable.
In Rome, the plaintiff, a freestanding
ambulatory surgical facility, was forced to leave the market
entirely as a result of the defendants’ alleged conduct.
In
addition, the plaintiff was able to demonstrate that commercial
payers paid 35% lower rates during its tenure.
Id. at 409.
Again, in the instant case, Deborah continues to operate as a
choice for patients in the relevant markets and it has
demonstrated no increase in prices in the market as a whole in
contrast to the facts in Rome.
40
With the need for demonstrating effects on the market as a
whole in mind, this Court finds that summary judgment is
appropriate.
Plaintiff has not offered any fact or expert
evidence of anticompetitive effects on the market as a whole as
defined by its own expert.
Instead, Plaintiff’s evidence is
limited to impacts it alone felt along with a subset of patients
of CGPA who were sent to Virtua over Deborah.
Plaintiff offers no factual evidence regarding the
specifics of the price increases other than to offer that
patients who were treated at facilities other than Deborah would
have higher out-of-pocket costs.
[PSOF at ¶ 23 (“all patients
treated at Deborah pay less out-of-pocket costs than patients
treated at Penn——even when the patients have the same insurances
and undergo the same medical procedures.”)].
Even assuming that
Plaintiff is correct, there is no evidence in front of this
Court demonstrating that costs for ACI procedures in the
relevant markets rose on the whole as a result of the alleged
conspiracy and a reduction in competition.
See e.g., Expert
Report of Gregory Vistnes (“Vistnes Report”), Virtua App. at 480
(“I am aware of no such claims or evidence that prices are
higher than what one would predict in an alternative scenario in
which CGPA continued to refer most of its ACI patients to
Deborah.”).
Again, Plaintiff is only able to point out that
41
patients who were treated at facilities other than Deborah would
have higher out of pocket costs than at other hospitals.
Certainly, however, this was the case both before and after the
institution of the alleged conspiracy due to Deborah’s charity
hospital status.
With respect to quality, Plaintiff’s only factual support
for its contention is that PPMC had higher door-to-balloon times
than Deborah.
Again, this evidence only deals with CGPA
patients who wanted to be sent to Deborah; there is no evidence
presented by Plaintiff demonstrating that the quality of ACI
procedures in the relevant markets as a whole was impacted by
the agreements – i.e., that as a result of the alleged
conspiracy, patients at other hospitals or of other practices
experienced higher door-to-balloon times.
In short, Plaintiff
has presented no evidence demonstrating that the quality of ACI
procedures in the relevant markets as a whole was impacted by
the alleged conspiracy.
Finally, with respect to patient choice, this Court will
assume for purposes of this motion that many more patients than
the 20-plus patients specifically cited in the Plaintiff’s
Statement of Facts were “pipelined” to PPMC from Virtua.
That
said, the fact remains that this alleged restriction on choice
involved less than 2% of the market for ACI procedures and there
42
is no evidence that patients who wanted to go to hospitals other
than Deborah were impacted.
insufficient.
Again, this evidence alone is
See Jefferson Parish, 466 U.S. at 30 (finding,
where there was an exclusive contract between a hospital and one
firm of anesthesiologists, that “there is no evidence that any
patient who was sophisticated enough to know the difference
between two anesthesiologists was not also able to go to a
hospital that would provide him with the anesthesiologist of his
choice.”).
In K.M.B. Warehouse Distribs. v. Walker Mfg. Co., 61 F. 3d
123, 128 (2d Cir. 1995), K.M.B., an auto parts distributor,
contended that Walker, an auto parts manufacturer, and its
distributors, violated Section 1 of the Sherman Act.
Walker,
facing pressure from other distributors who were competitors of
K.M.B., refused to supply its products to K.M.B.
The Court, in
determining whether K.M.B. had demonstrated “an actual adverse
effect on competition as a whole in the relevant market[,]”
found that K.M.B. could not show that the impact on intrabrand
competition was “anything but de minimis.”
Id. at 128.
The
Court went on to find that
KMB's proof on this point consists almost entirely of
affidavits from twelve of its current customers stating
that they prefer both Walker products and KMB's superior
service. Such isolated statements of preference are not a
sufficient "empirical demonstration concerning the
43
[adverse] effect of the [defendants'] arrangement on price
or quality," Jefferson Parish Hosp. Dist. No. 2 v. Hyde,
466 U.S. 2, 30 n.49 . . . (1984), to state a § 1 claim. See
id. at 30 (finding inadequate evidence of an actual adverse
effect on competition even though "the evidence indicates
that some surgeons and patients preferred respondent's
[anesthesiology] services").
Id.
The analysis employed in K.M.B. is instructive here with
respect to whether Plaintiff has demonstrated anticompetitive
effects.
Again, this Court finds that reference to a subset of
CGPA patients who preferred Deborah is insufficient.
III. Conclusion
“It is axiomatic that ‘the antitrust laws
. . . were
enacted for the protection of competition, not competitors.’”
Tunis Bros. Co., 952 F.2d at 727 (quoting Brunswick Corp. v.
Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 488 (1977)(emphasis in
original)(internal quotations omitted).
The Plaintiff has
brought a claim for an antitrust violation and this Court must
remain mindful of the underlying purposes of the antitrust laws,
which “were not designed to protect every uncompetitive
activity, but rather only those activities that have anticompetitive effects on the market as a whole.”
F.3d at 148.
Eichorn, 248
Ultimately, Plaintiff has failed to demonstrate
that the alleged agreements created an anticompetitive effect on
the market as a whole.
Instead, drawing all reasonable
44
inferences in favor of the Plaintiff, its evidence demonstrates
that, at most, there has been harm to Plaintiff and a portion of
its customers.
See K.M.B. Warehouse, 61 F.3d at 128 (finding no
evidence of adverse effects where plaintiff “failed to come
forward with any evidence that defendants’ actions adversely
affected service, quality or price market-wide.”).
Indeed,
Plaintiff has pursued a remedy for such harm in the pending
parallel state court proceeding.
In sum, Plaintiff’s detailed inventory of evidence related
to an alleged conspiracy between Virtua, CGPA, and Penn does not
create a genuine dispute of fact as to whether there has been a
sufficient demonstration of anticompetitive effects.
This
failure to show an impact of the alleged conspiracy on the
market as a whole is fatal to Plaintiff’s Section 1 claim under
the Sherman Act.
See Eichorn, 248 F.3d at 148.
Thus, while
Plaintiff may be able to pursue a remedy in state court, its
remedy does not lie in federal court for an antitrust violation.
For the reasons stated above, Defendants’ respective motions for
summary judgment are granted.
An appropriate Order will issue
this date.
s/Renée Marie Bumb
RENEE MARIE BUMB
United States District Judge
Date: March 24, 2015
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