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KORSHIN v. BENEDICTINE HOSP.

February 2, 1999

JONATHAN D. KORSHIN, M.D., PLAINTIFF,
v.
BENEDICTINE HOSPITAL, KINGSTON HOSPITAL, NORTHERN DUTCHESS HOSPITAL, CROSS RIVER HEALTHCARE, INC., AND CROSS RIVER ANESTHESIOLOGISTS, P.C., DEFENDANTS.



The opinion of the court was delivered by: McAVOY, Chief Judge.

MEMORANDUM — DECISION & ORDER

This is an antitrust case brought by an anesthesiologist against various hospitals and a group of anesthesiologists. Plaintiff Jonathan Korshin, M.D. ("Korshin") claims violations of section 1 of the Sherman Act, 15 U.S.C. § 1 and section 4 of the Clayton Act, 15 U.S.C. § 15.*fn1 Korshin alleges that Benedictine Hospital ("Benedictine"), Kingston Hospital, and Northern Dutchess Hospital ("Northen Dutchess") (collectively the "Hospitals"), in anticipation of a merger, entered into exclusive agreements with Defendant Cross River Anesthesiologists, P.C. ("CRA") of which he was not a member and, therefore, he is unable to practice medicine in the regional market. Korshin alleges that the exclusive agreements with CRA constitute a group boycott and unreasonable restraint of trade that prevents him from rendering anesthesiology services in the relevant market area. The defendants now move to dismiss the Complaint pursuant to FED.R.CIV.P. 12(b)(6) on the grounds that: (1) Korshin has failed to adequately allege antitrust injury, and (2) Korshin violated the doctrine of primary jurisdiction.

I. BACKGROUND

The following facts are taken from the Complaint which, for purposes of a motion pursuant to Rule 12(b)(6), must be accepted as true. See Bernheim v. Litt, 79 F.3d 318, 321 (1996).

Effective January 1, 1995, Korshin was appointed as a member of the courtesy medical staff in the Department of Anesthesia at Benedictine (the "Department"). Korshin was reappointed as a member of the active medical staff with privileges for anesthesiology and pain management as of April 1, 1996.

On August 16, 1996, the Benedictine Board of Directors (the "Board") adopted an exclusivity policy (the "Policy") which provided that all anesthesiology services be provided by anesthesiologists and certified registered nurse anesthetists ("CRNA") employed or engaged by Benedictine. The Policy contained a "grandfather clause" that permitted physicians, such as Korshin, who had staff privileges at Benedictine prior to the adoption of the Policy to provide services on elective cases when a specific request for that anesthesiologist was made by the surgeon performing the procedure.

Sometime in 1996 or early 1997, the date of which is unclear, the Hospitals entered into merger negotiations. In June 1997, prior to merger, the Hospitals agreed that they would all obtain anesthesiology services exclusively from CRA, which was already providing services at Northern Dutchess.*fn2 In accordance with this agreement, by June 5, 1997, Benedictine selected CRA as the exclusive provider of anesthesiology services, effective September 1, 1997. CRA was instructed to meet with each member of the Department, including Korshin, to discuss potential employment opportunities with CRA. Korshin alleges that he sought to become an employee of CRA, "but was unable to do so." Compl., ¶ 34. Benedictine notified Korshin that it was terminating any and all contract and agreements, written or oral, effective September 1, 1997.

By memorandum dated June 17, 1997 the Board advised all physicians in the Department that the Policy was under review and that the Board was considering amending or deleting the grandfather clause. A meeting was scheduled for June 19, 1997 to discuss the proposed changes to the Policy.

In September 1997, the Board adopted a resolution that eliminated the grandfather clause to the Policy and selected CRA as the exclusive provider of anesthesiology services effective October 1, 1997. The resolution further provided that any anesthesiologist and CRNA currently on the medical staff and not part of the exclusive group would retain membership on the medical staff and clinical privileges, but would no longer be able to exercise clinical privileges within the Department.

As indicated in the Board's resolution (a copy of which is annexed to the Complaint at Exhibit "D"), Benedictine's decision to remove the grandfather clause and award an exclusive contract to CRA was based upon concerns that the grandfather clause impeded the institutional objectives of the hospital. The Board had concerns about quality of care in the Department and, thus, retained an outside expert to perform an analysis of the structure of the Department.*fn3 In accordance with the conclusions of the consultant and the concerns raised within the Department, the Board provided the following reasons for its decision to remove the grandfather exception and enter into an exclusive agreement for the provision of anesthesiology services:

  1. A non-exclusive practice situation leads to
  competition among anesthesiology providers for
  patients with widely differing potentials for
  reimbursement, leads to internal strife within the
  Department, is detrimental to practice and has the
  potential to adversely impact quality of care.
  2. A single group arrangement eliminates the issue of
  economics among the individual Anesthesiologists
  because all losses and gains of the group are shared.
  Thus, a single group arrangement facilitates
  assignment of Anesthesiologists to particular cases
  based on the best interests of the patient without
  regard to economic concerns.
  3. A single group arrangement will promote
  consistency of service, day to day operation of the
  operating suite, quality control and safety of
  patients; promote effective selection and utilization
  of equipment within the Department; facilitate
  continuous availability of anesthesiology services;
  more clearly assign responsibility for the
  administration, supervision and training of
  Department personnel; and promote efficient and
  economical operation of the Department and
  cooperation among members of the Department and
  Medical Staff Members who use the operating suite.
  4. Creating a unified structure will facilitate
  development of diverse practice skills among the
  Anesthesiologists, thereby increasing the group's
  capacity to develop programs of quality to focus on
  special areas of importance and to be flexible ...

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