of allegations claiming an antitrust conspiracy.
In Weiss v. York Hosp., 745 F.2d 786, 817 (3d Cir. 1984), cert. denied, 470 U.S. 1060, 105 S. Ct. 1777, 84 L. Ed. 2d 836 (1985), the Third Circuit held that "even where the medical staff has economic interests in competition with each other . . . the hospital cannot as a matter of law conspire with the medical staff." (emphasis added). Similarly, in Nurse Midwifery Assoc. v. Hibbett, 918 F.2d 605, 614-15 (6th Cir.), modified on rehearing, 927 F.2d 904 (6th Cir.), cert. denied sub nom. Nurse Midwifery Assoc. v. Hendersonville Community Hosp., U.S. , 112 S. Ct. 406, 116 L. Ed. 2d 355 (1991), the Sixth Circuit held that a hospital and its medical staff cannot conspire among one another since they are not competitors. Finally, the Fourth Circuit has held that a hospital is not legally capable of entering into a conspiracy with its medical staff in making peer review decisions. Oksanen v. Page Memorial Hosp., 945 F.2d 696, 703-05 (4th Cir.) (en banc), cert. denied, U.S. , 112 S. Ct. 973, 117 L. Ed. 2d 137 (1992).
However, both the Ninth and Eleventh Circuits have held that a hospital and its medical staff can enter into a conspiracy among one another. See Oltz v. St. Peter's Community Hosp., 861 F.2d 1440, 1450 (9th Cir. 1988); Bolt v. Halifax Hosp. Medical Ctr., 891 F.2d 810, 819 (11th Cir. 1988), cert. denied, 495 U.S. 924, 110 S. Ct. 1960, 109 L. Ed. 2d 322 (1990).
In considering these conflicting authorities, the court finds that the more persuasive reasoning warrants the determination that a court should not foreclose an antitrust claim of conspiracy on the basis of the professional titles of the alleged conspirators alone, but rather must analyze their roles in relation to one another in the context of the alleged antitrust violation. See McDonald, "Antitrust Conspiracies and Hospital Privileges: Keep It Simple or Keep It Stupid," 6 A.B.A. Antitrust Section's Antitrust Health Care Chron. 2-16 (1992); see also Copperweld Corp. v. Independence Corp., 467 U.S. at 772-74, 104 S. Ct. at 2742-43, 81 L. Ed. 2d 628; Okusami v. Psychiatric Inst. of Wash., Inc., 295 U.S. App. D.C. 58, 959 F.2d 1062, 1065 (D.C. Cir. 1992); Pudlo v. Adamski, 789 F. Supp. 247, 250-51 (N.D. Ill. 1992). Thus, this court must analyze both the structure and the conduct of the Hospital and its medical staff in order to determine whether they could have conspired to act in an anti-competitive fashion.
Cortland hospital has a three-part organizational structure. Its structure consists of the Board of Trustees, the Medical Staff and the Hospital Administration. Defendants' Rule 10j Statement at P 5.
The Board of Trustees is the governing body of the Hospital and has overall responsibility regarding the Hospital's operations. It also establishes general institutional policies. The Board insures that the Hospital complies with state and federal laws and regulations and is accountable for the quality of health care services rendered to its patients. See Def. Mem. at 1 (citing State Hospital Code, 10 N.Y.C.R.R. § 405.2). Ultimate decisions regarding Medical Staff membership, clinical privileges and services rendered within the institution are made by the Board of Trustees. See Def. Mem. at 3; Defendants' Rule 10j Statement at P 12.
The Medical Staff consists of both individual physicians and health care professionals. Most of the physicians on the Medical Staff are independent practitioners permitted to use the Hospital's facilities. The Medical Staff is responsible for examining and reviewing the credentials of applicants and current members of the Medical Staff, for monitoring the actions of Medical Staff members, for making recommendations to the Board of Trustees regarding the provision of medical services at the institution, and, where necessary, for recommending "corrective action" that should be taken against an individual practitioner. See id. at 3 (citing 10 N.Y.C.R.R. §§ 405.4(a)(2), (3) & (4)). The Medical Staff must account to the Board of Trustees for the quality of care rendered at the Hospital. See id. at 2 (citing 10 N.Y.C.R.R. § 405.4(a)). It has its own set of bylaws which are approved by the Board of Trustees. Thus, while it is an independent body within the framework of the Hospital structure, its existence is validated by the Board of Trustees.
The Hospital Administration is the third component of the Hospital's organizational structure. It is currently headed by defendant Robert Lovell, the Chief Executive Officer. He is appointed by the Board of Trustees and is responsible thereto for the day-to-day operations of the facility. See Def. Mem. at 2 (citing 10 N.Y.C.R.R. §§ 405.2(d) & 405.3).
In light of this organizational structure, it appears to the court that Cortland hospital, the Medical Staff and the Board of Trustees are all components that comprise a single entity. Thus, whether this decision was actually made by certain members of the medical staff, Cortland hospital's Board of Trustees, and/or the hospital's administration is irrelevant -- these entities comprise only one organization -- the Hospital. Thus, irrespective of any anti-competitive purpose or impact that such a decision may have had on the plaintiff herein, such conduct is not actionable under section 1 of the Sherman Act because the decision was "unilateral" and therefore not the product of a conspiracy between two separate groups. See, e.g., Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. at 761, 104 S. Ct. at 1469, 79 L. Ed. 2d 775.
Thus, on the facts before it, this court concludes that the Hospital, its Medical Staff and its members are not separate entities and are therefore not legally capable of entering into a conspiracy in violation of the Sherman Act.
(b) Alleged conspiracy between the defendants, Dr. King and his medical group.
The plaintiff also contends that Dr. King and his group were co-conspirators regarding the awarding of the anesthesiologist contract to the King Group, and that the Hospital and/or its Medical Staff conspired with Dr. King and his group to oust plaintiff from his position at the Hospital. See Plaintiff's Memorandum of Law in Opposition at 21-29.
Plaintiff makes two general assertions regarding this aspect of his antitrust claim: (i) Dr. King and the defendants conspired to award the exclusive contract to the King Group and not to him; and (ii) Dr. King and the defendants conspired to preclude him membership in the King Group. Balaklaw bases these allegations on the fact that the Hospital and Dr. King entered into the exclusive contract with King's Group -- a group in which Balaklaw was denied membership -- and a letter written by the Hospital's President and the Chairman of the Board of Trustees which approved of the exclusive contract with the King Group.
Dr. King is an individual separate and apart from the Hospital's infrastructure and, as an anesthesiologist, is plainly a competitor of the plaintiff. However, the evidence proffered by the plaintiff does not tend to exclude the possibility that the defendants and/or Dr. King acted independently by either entering into the exclusive contract at the outset or denying the plaintiff membership in his group. Rather, the testimony heard by this court at the preliminary injunction hearing indicates that the defendants had a legitimate, business reason for entering into the subject contract. The King Group agreed to provide "second call" services for the Hospital -- services which were not provided under the agreement that existed between the Hospital and plaintiff's group. Moreover, the plaintiff was reputedly not permitted to join the King Group due to a conflict which exists between the plaintiff and various other members of the King Group, particularly the two certified registered nurse anesthetists, both of whom had previously been associated with the plaintiff. See Defendants' Exhibit 14 at 75. Thus, the facts before the court indicate that the conduct of the defendants was as consistent with permissible competition as with an illegal conspiracy. See Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. at 764, 104 S. Ct. at 1471, 79 L. Ed. 2d 775; see also Cooper v. Forsyth County Hosp. Auth., Inc., 789 F.2d 278 (4th Cir.), cert. denied, 479 U.S. 972, 107 S. Ct. 474, 93 L. Ed. 2d 418 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. at 588, 106 S. Ct. at 1357, 89 L. Ed. 2d 538; H.L. Hayden Co. of N.Y., Inc. v. Siemens Medical Systems, Inc., 879 F.2d at 1006.
(c) Plaintiff's claim of conscious parallelism.
Finally, plaintiff claims that the defendants, Dr. King and the King Group engaged in "conscious parallelism" in violating the alleged rights of the plaintiff.
In the context of an antitrust violation, the doctrine of "conscious parallelism" provides that when two or more competitors act separately but in a parallel fashion, the court can conclude that they acted in a concerted manner. Todorov v. DCH Healthcare Auth., 921 F.2d at 1456 & n.30. In order to establish such a cause of action, a party must typically prove the existence of certain factors, known as "plus factors," which indicate that the allegedly wrongful conduct of the defendants was conscious, rather than the result of independent business decisions of the parties. See id.; Theatre Enters. v. Paramount Film Distrib. Corp., 346 U.S. 537, 74 S. Ct. 257, 98 L. Ed. 273 (1954). Plus factors have been found where the alleged action was contrary to the self-interest of any actor who engaged in the action alone. See Matsushita Elec. Indust. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S. Ct. 1348, 89 L. Ed. 2d 538. A plus factor has also been found were a plaintiff has proven a high level of inter-firm communications between allegedly culpable parties. See Apex Oil Co. v. Di Mauro, 822 F.2d 246, 254 (2d Cir.), cert. denied, 484 U.S. 977, 108 S. Ct. 489, 98 L. Ed. 2d 487 (1987). However, the mere presence of one or more of these "plus factors" does not necessarily mandate the conclusion that there was an illegal conspiracy between the parties, for a court may still conclude, based upon the evidence before it, that the defendants acted independently of one another, and not in violation of the antitrust laws. See Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. at 764, 104 S. Ct. at 1470, 79 L. Ed. 2d 775.
Balaklaw contends that the mere fact that the exclusive contract was executed by the parties herein establishes this conspiracy. Plaintiff argues that the Hospital lacked legitimate business reasons for offering financial subsidies to Dr. King and his group. He also claims that the meetings between Dr. King and members of the Hospital's Board of Directors demonstrated a high level of inter-firm communications between these parties which violated the antitrust laws.
However, since the Hospital and the King Group are not competitors, plaintiff may not prevail on his claim alleging conscious parallelism, which requires uniform business conduct on the part of competitors. Todorov v. DCH Healthcare Auth., 921 F.2d at 1456 ("conscious parallelism is uniform business conduct by competitors that permits a court to infer the existence of a conspiracy between these competitors" (citing Interstate Circuit, Inc. v. United States, 306 U.S. 208, 221, 59 S. Ct. 467, 472, 83 L. Ed. 610 (1939).
Based upon the foregoing, this Court finds that the plaintiff has failed to establish sufficient evidence of a "contract, combination or conspiracy" on the part of the defendants.
2. Unreasonable restraint of trade.
Even if the plaintiff had demonstrated that there was a conspiracy which violated the antitrust laws, he would still be required to demonstrate that the purpose or effect of the alleged conspiracy constituted an unreasonable restraint of trade resulting in his antitrust injury. See Capital Imaging Assoc., P.C. v. Mohawk Valley Medical Assoc., Inc., 791 F.Supp at 964 (citing Oreck Corp. v. Whirlpool Corp., 579 F.2d 126, 133 (2d Cir.), cert. denied, 454 U.S. 1083, 102 S. Ct. 639, 70 L. Ed. 2d 618 (1981)). The Supreme Court has fashioned two tests for courts to utilize in determining whether a restraint on competition is "unreasonable " and therefore violative of the antitrust laws: (A) the per se test of illegality; and (B) the "rule of reason" test. See Arizona v. Maricopa County Medical Soc., 457 U.S. 332, 342-44, 102 S. Ct. 2466, 2472-73, 73 L. Ed. 2d 48 (1982).
When utilizing the per se test of illegality, the court must analyze the nature of the agreement in order to determine whether it always impacts the market in an anti-competitive manner and has no pro-competitive effect whatsoever. Broadcast Music, Inc. v. Columbia Broadcasting Sys., Inc., 441 U.S. 1, 19-20, 99 S. Ct. 1551, 1562-63, 60 L. Ed. 2d 1 (1979). Under this analysis, a plaintiff may prevail even if he fails to prove market power on the part of the defendants. FTC v. Superior Trial Lawyers Ass'n, 493 U.S. 411, 432-36, 110 S. Ct. 768, 780-81, 107 L. Ed. 2d 851 (1990). A plaintiff who seeks application of the per se analysis must demonstrate that the challenged activity will likely have predominantly anti-competitive effects. Id.
With respect to the rule of reason test, in Chicago Bd. of Trade v. United States, 246 U.S. 231, 38 S. Ct. 242, 62 L. Ed. 683, (1918), Justice Brandeis provided the classic discussion regarding this test. He noted that:
The court must ordinarily consider the facts peculiar to the business to which the restraint is applied; its condition before and after the restraint was imposed; the nature of the restraint and its effect, actual or probable. The history of the restraint, the evil believed to exist, the reason for adopting the particular remedy, the purpose or end sought to be attained, are all relevant facts. This is not because a good intention will save an otherwise objectionable regulation or the reverse; but because knowledge of intent may help the court to interpret facts and to predict consequences.