Opinion
Civil Action No. 85-F-2148.
March 26, 1986
ORDER
THIS MATTER is before the Court on defendant's motion for partial summary judgment. We have carefully considered the pleadings, briefs of the parties, attached affidavits and exhibits and the applicable law. For the reasons set forth below, the motion is GRANTED.
I.
This case results from a controversy between the plaintiff Daniel J. Hatch ("Hatch"), a doctor of podiatric medicine, and defendant hospital ("NCMC") and two private orthopedic surgeons who participated on committees which reviewed Hatch's application for surgical privileges at NCMC.
NCMC is a county hospital, established by the Weld County Board of Commissioners in 1944. Although there is some dispute as to whether NCMC is currently a county hospital or a private institution, it is clear that at the time of the actions complained of, NCMC was a county hospital. In February, 1982, Hatch applied for surgical privileges at NCMC. This application was reviewed by NCMC's Surgery Credentials Committee, of which defendant Dr. Clifford J. Rome ("Dr. Rome") was chairman. The application was also reviewed by the Executive Committee of the Medical Staff, of which defendant Dr. Richard Kemme ("Dr. Kemme") was a nonvoting member, and by the County Board of Hospital Trustees. Hatch was granted certain privileges, but not others. Plaintiff demanded and received a Fair Hearing, after which further privileges were delineated. Still unsatisfied, plaintiff appealed the decision of the Fair Hearing Committee. The appeal was denied and this lawsuit has ensued. Hatch alleges that the defendants have violated the antitrust laws and have denied him due process. The antitrust claims are the subject of this motion for summary judgment.
II.
Summary judgment is a drastic measure which must be applied with caution. Frito-Lay, Inc., v. Retail Clerks' Union Local No. 7, 629 F.2d 653, 656 (10th Cir. 1980). Nevertheless, it is appropriate in cases where there is no dispute as to material facts and the movant is entitled to judgment as a matter of law.See LeFevre v. Space Communications Co., 771 F.2d 471 (10th Cir. 1985); Charczuk v. Commissioner of Internal Revenue, 771 F.2d 1416 (10th Cir. 1985); Weir v. The Anaconda Co., 773 F.2d 1073 (10th Cir. 1985). In this instance, we are asked to decide two questions of law: Do the defendants fall within the Local Government Antitrust Act and do the defendants fall within the "State Action" doctrine. In making this determination, we accept plaintiff's factual allegations, to the extent not contradicted by affidavits, as true. Disposition of these questions of law, therefore, is appropriate on a motion for summary judgment.
III.
Defendants' first argument is that plaintiff's antitrust claims must be dismissed pursuant to the Local Government Antitrust Act of 1984, codified at 15 U.S.C. § 34-36 ("the Act"). The Act mandates that under 15 U.S.C. Section 4, 4a or 4c of the Clayton Act, no damages, interest, costs or attorney's fees may be recovered from local governments such as counties, their officials, employees, or any other person acting pursuant to local governmental direction. See 15 U.S.C. §§ 34-36. Thus, argue defendants, plaintiff's claim for violation of § 1 of the Sherman Act, 15 U.S.C. § 1, to the extent it seeks damages, interest, costs and attorney's fees, must be dismissed.Plaintiff's response to this argument is that the local government exception must be construed narrowly; that the Act does not, on its face, apply to county hospitals, and that in fact, NCMC does not come within the scope of the Act. We find this argument unpersuasive. Such a narrow reading of the statutory language would completely eviscerate the Act.
First, it is clear that NCMC is, for the purposes of this lawsuit, a county hospital. See Resolution of the Weld County Board of Commissioners, Exhibit A to defendants' motion and affidavit of Richard D. Stenner. The creation of this hospital was authorized by the state. C.R.S. § 25-3-301 to 25-3-314. The county is authorized to create a board of trustees to operate the hospital. This board has a legislative mandate to make and adopt bylaws, rules and regulations for the government of the hospital. C.R.S. § 25-3-304(1). The board must ensure that NCMC maintain proper professional standards of care. To do so, the board has established rules and regulations under which all practitioners must limit their practice to privileges granted by the board. All practioners seeking to practice at NCMC must comply with these rules and regulations. C.R.S. § 25-3-310. Moreover, the board is authorized to hire and fire the agents, employees and professional staff of NCMC. C.R.S. § 25-3-304(2). Despite this extensive statutory authorization by the state legislature under which the county, through its appointed board, controls the hospital, plaintiff argues that "the Medical Center is not the `county', and that its acts are not the acts of the county." We disagree. We are of the view that the county acts in its governmental capacity for the welfare and protection of its inhabitants when, through its board of trustees, it operates a county hospital. See Schwalb v. Connely, 116 Colo. 195, 179 P.2d 667 (1947) (recognizing immunity of city from liability in operation of general hospital it owned and operated by virtue of power delegated to it by state for welfare and protection of inhabitants). The control over NCMC is an exercise of the county's general police power for the protection of its citizens. Accordingly, we find that the acts of NCMC are acts of the county and are immune under § 35 (a). The acts of the defendant doctors are acts taken under the direction of the county and in their official capacities. Hence, they are likewise immune under § 35(a).
This result is supported by the legislative history of the Act. If the plaintiff were to recover damages under his antitrust claims, these damages would be borne by the taxpayers of Weld County. As noted by the Senate Committee on the Judiciary, "regardless of whether a local government has violated the antitrust laws, it is inappropriate to assess damages which ultimately must be borne by the taxpayers." Report of the Senate Committee on the Judiciary on the Local Government Antitrust Act, S. Rep. No. 593, 98th Cong., 2d Sess. 6-7.
Finally, plaintiff argues that even if his damages claim is barred, injunctive relief and attorney's fees under section 16 of the Clayton Act are still available. Plaintiff is correct that injunctive relief is not barred by the Act. Whether attorney's fees would be available is a question we need not decide, however, as we find that plaintiff's antitrust claims are barred by the state action doctrine.
IV.
In Parker v. Brown, 317 U.S. 341 (1943), the Supreme Court held that the Sherman Act was not intended to prohibit states from imposing restraints on competition. The doctrine of "state action" has most recently been addressed by the Supreme Court in the companion cases of Town of Hallie v. City of Eau Claire, ___ U.S. ___, 105 S. Ct. 1713 (1985) and Southern Motor Carriers Rate Conference v. U.S., ___ U.S. ___, 105 S. Ct. 1721 (1985).
In Hallie, the Supreme Court held that a municipality is entitled to the protection of the state action exemption from the antitrust laws if it engages in the challenged activity pursuant to a clearly expressed state policy. Unlike private parties, the municipality need not be supervised by the state in order to qualify for state action immunity, Id. at 1720-1721; Southern Motor Carriers, 105 S. Ct. at 1727, n. 20. Accordingly, we must determine whether the defendants' actions were authorized by the state pursuant to state policy to displace competition with regulation or monopoly public service. Hallie, at 1715. This cannot be a formalistic inquiry. The legislature need not have expressly stated in a statute or its legislative history that it intends for the delegated action to have anticompetitive effects in order to pass the "clear articulation" test. Id. at 1719. Rather, it is sufficient if a foreseeable result of the legislation is anticompetitive conduct. Id. at 1719.
For example, in Hallie, the City of Eau Claire was authorized by state statute to construct sewerage systems. Moreover, state statute provided that the City could be required to construct the system so that other cities, towns and areas could connect with the system. With regard to unincorporated areas, however, the city could refuse to allow connection if the territory refused to become annexed to the city. The Supreme Court held that these statutes evidenced a clearly articulated and affirmatively expressed state policy to displace competition with regulation since
the statutes clearly contemplate that a city may engage in anticompetitive conduct. Such conduct is a foreseeable result of empowering the city to refuse to serve unannexed areas.
* * *
. . . it is sufficient that the statutes authorized the city to provide sewage services and also to determine the areas to be served. We think it is clear that anticompetitive effects logically would result from this broad authority to regulate.Hallie, at 1718.
A number of pre-Hallie cases are also helpful in this analysis. For instance, this circuit has found that a city which owned and operated an airport was immune from an antitrust action under the state action doctrine. Pueblo Aircraft Service, Inc., v. City of Pueblo, 679 F.2d 805 (10th Cir. 1982). In Pueblo, the Colorado legislature had declared that operation of the airport was a "public governmental function". Given this legislative declaration, the court upheld the dismissal of plaintiff's antitrust claims against the city.
The Seventh Circuit's opinion in Marrese v. Interqual, Inc., 748 F.2d 373 (7th Cir. 1984) is particularly pertinent to the inquiry of whether there is a clearly articulated policy of anticompetitive conduct. In Marrese, an orthopedic surgeon in a solely owned corporation brought action under the Sherman Act against a hospital and its board of directors in their individual capacities, and against members of the hospital committee which recommended revocation of his clinical privileges at the hospital. The Seventh Circuit affirmed the District Court's dismissal of the antitrust claims, holding that the defendants were exempt from liability under the state action doctrine. The basis of this decision was the fact that the defendants were operating under a complex state statutory scheme which mandated a peer review process, provided the reviewers with immunity from civil liability for good-faith determinations, and which provided the investigated practitioner with due process safeguards.
Finally, plaintiff relies on Jiricko v. Coffeyville Memorial Hospital Medical Center, Case No. 84-1775-K (D. Kan. Oct. 10, 1985). In Jiricko, the court held that a defendant board of trustees of a city-owned hospital could not take advantage of the state action doctrine. It based its opinion on the fact that the Kansas statutory structure did not expressly declare the operation of the hospital to be a public governmental function. (Emphasis in opinion). We find that such a requirement is contrary to the teachings of Hallie and Southern Carriers. As such, this Court does not find Jiricko persuasive.
Examining the Colorado statutory scheme relevant to this case, we find that it evidences a clearly articulated and affirmatively expressed state policy to displace competition with regulation in the area of providing medical care to the public. Similar to the legislative declaration in Pueblo, the legislature has declared with respect to health care that "(i)t is the policy of this state to encourage discipline and control of the practice of health care rendered by physicians by committees made up of physicians licensed to practice in this state." C.R.S. § 12-43.5-101(1).
As in Marrese, the defendants were operating pursuant to a complex statutory scheme which provides for peer review, immunity from civil liability for the reviewers and due process guarantees for the reviewed practitioner. And as in Hallie, the state has authorized the County to provide health care and also to determine who would be providing such services. It is clear that anticompetitive effects logically could result from this broad authority to regulate. Such effects are a foreseeable result of allowing the county, through its agents, to determine who was qualified to provide health care services. The pervasive regulation of the health care industry by the state necessarily has anticompetitive effects. These effects, however, are the inevitable result of the state's exercise of its police power for the welfare and protection of its citizens. Accordingly, NCMC and the defendant doctors, who were acting in their official capacities for the county, are immune under the state action doctrine.
ORDER
It is ORDERED that plaintiff's First Claim for Relief be DISMISSED with prejudice.