Chapter 10.D (or 3.D) -- Antitrust Law
The FTC maintains a helpful web page on Health Care Antitrust Issues.
The Federal Trade Commission held an extensive set of hearings in 2003-2004 on Health Care Competition Law and Policy, resulting in a comprehensive report, Improving Health Care: A Dose of Competition (July 2004).
Surveying the role of antitrust law in changing health care policy over the past generation, see Carl Ameringer, The Health Care Revolution: From Monopoly to Market Power (2008). See also Thomas L. Greaney, Competition Policy and Organizational Fragmentation in Health Care. Saint Louis U. Legal Studies Research Paper No. 2009-04: “This essay traces the path of competition law in health care and explains its chicken-and-egg relationship with provider organizational arrangements. It explores a central puzzle for future health care policy: why have market forces failed to counteract organizational fragmentation? “
See generally Symposium, Antitrust and Health Care, 7 Hous. J. Health L. & Pol'y 183-410 (2007).
Chapter 10.D.1 (or 3.D.1) -- Antitrust Boycotts; Peer Review Immunity
This page has:
A Supreme Court decision involving the NFL
provides guidance on when joint ventures constitute a single enterprise
versus a "conspiracy." American Needle Inc. v. National Football League, ___ U.S. ___ (2010). The NFL had given Reebock at exclusive license for all clothing with teams' logos and trademarks. The
Court held this constitutes concerted action, subject to challenge
under Sherman Act section 1. Noting that, although the NFL was a
single entity for some
purposes, the teams are in competition when it comes to licensing their
apparel. The Court stressed that the test for a single enterprise
is one that looks at economic substance rather than legal form, that
is, where there is a "single aggregation of economic power" or
interests rather than whether “the parties involved ‘seem' like one
firm or multiple firms in any metaphysical sense.”
This case, and the notes that follow, explore two important sources of immunity from suit relating to medical staff decisions: the Health Care Quality Improvement Act, and antitrust state action immunity doctrine.
TJOFLAT, Chief Judge:
In this case, a Florida hospital, after completing a lengthy internal disciplinary process, terminated the clinical staff privileges of a staff physician. The physician sued the hospital, alleging various state and federal causes of action and seeking money damages. After an eleven-day trial, a federal jury concluded that the hospital had revoked the physician's staff privileges in violation of its bylaws and awarded the physician nearly $4.2 million in damages for breach of contract. The hospital appeals that judgment ... contend[ing it] was immune from liability in money damages under the Health Care Quality Improvement Act of 1986 ("HCQIA"), (1988 & Supp. IV 1992), and under Florida law, Fla.Stat.Ann. Sec. 395.0193(5) (West 1993). . . .
Congress enacted the Health Care Quality Improvement Act to encourage peer review activities, "to improve the quality of medical care by encouraging physicians to identify and discipline other physicians who are incompetent or who engage in unprofessional behavior." H.R.Rep. No. 903, 99th Cong., 2d Sess. . . . In furtherance of this goal, HCQIA grants limited immunity, in suits brought by disciplined physicians, from liability for money damages to those who participate in professional peer review activities. See also H.R.Rep. No. 903, at 3, reprinted in 1986 U.S.C.C.A.N. at 6385 (noting that "[e]ven though defendants may often win these lawsuits, that may not be sufficient to guarantee enthusiastic, or even minimally adequate, peer review" because "[d]octors who are sufficiently fearful of the threat of litigation will simply not do meaningful peer review"). . . .
HCQIA provides that, if a "professional review action" (as defined in the statute) meets certain due process and fairness requirements, then those participating in such a review process shall not be liable under any state or federal law for damages for the results. 42 U.S.C. Sec. 11111(a)(1). . . . (In another set of provisions, HCQIA requires health care entities to report certain specific disciplinary actions taken against a staff physician (or the acceptance of a resignation or suspension in return for not conducting investigations or disciplinary proceedings) to a national clearinghouse established to collect and disseminate information on health care providers. Then, prior to admitting a physician to its staff, a hospital must obtain that physician's records from the clearinghouse. These reporting requirements were designed to "restrict the ability of incompetent physicians to move from State to State without disclosure or discovery of the physician's previous damaging or incompetent performance.". . .)
The statute attempts to balance the chilling effect of litigation on peer review with concerns for protecting physicians improperly subjected to disciplinary action; accordingly, Congress granted immunity from monetary damages to participants in properly conducted peer review proceedings while preserving causes of action for injunctive or declaratory relief for aggrieved physicians. Section 11111(a)(1) expressly excludes from its coverage [civil rights] suits brought under 42 U.S.C. Sec. 1983 or Title VII of the Civil Rights Act of 1964, but it clearly does apply to antitrust claims. . . . Because the statutory scheme is somewhat convoluted, we discuss the immunity provisions in detail....
The standards that professional review actions must satisfy to entitle the participants to such protection are enumerated in section 11112(a) as follows:
For purposes of the protection set forth in section 11111(a) of this title, a professional review action must be taken-- (1) in the reasonable belief that the action was in the furtherance of quality health care, (2) after a reasonable effort to obtain the facts of the matter, (3) after adequate notice and hearing procedures are afforded to the physician involved or after such other procedures as are fair to the physician under the circumstances, and (4) in the reasonable belief that the action was warranted by the facts known . . . .
Importantly, HCQIA also creates a rebuttable presumption of immunity: "A professional review action shall be presumed to have met the preceding standards . . . unless the presumption is rebutted by a preponderance of the evidence."
Section 11112(b) of HCQIA then enumerates the minimum, or "safe harbor" procedures that will, in every case, satisfy the adequate notice and hearing requirement of section 11112(a)(3). . . . We discuss this checklist in more detail infra. . . . Congress was careful to explain, however, that "[a] professional review body's failure to meet the conditions described in this subsection shall not, in itself, constitute failure to meet the standards of subsection (a)(3) of this section." The legislative history of section 11112(a) indicates that the statute's reasonableness requirements were intended to create an objective standard of performance, rather than a subjective good faith standard. . . .
A review of the facts of this case reveal that HCQIA's limitations on monetary liability dictate the outcome of this appeal. . . . [Dr. Bryan] is generally acknowledged to be an excellent surgeon, often undertaking long, detailed vascular procedures that other physicians in the field avoid. Bryan also has a reputation for being a volcanic-tempered perfectionist, a difficult man with whom to work, and a person who regularly viewed it as his obligation to criticize staff members at Holmes [Hospital] for perceived incompetence or inefficiency. Hospital employees, however, often viewed Bryan's "constructive criticism" as verbal--or even physical--abuse. Because the Holmes board of directors found Bryan's behavior inappropriate and unprofessional, it terminated his medical staff privileges in November 1990. The means by which Holmes accomplished this termination is the subject of the dispute in this case. . . .
[P]rior to his termination, Bryan was the subject of more than fifty written incident reports involving unprofessional or disruptive behavior, usually complaints regarding Bryan's abusive treatment of nurses, technicians, and even fellow physicians. Some insight into the origins of this behavior came from Bryan himself during his testimony at trial. Shortly after completing his residency, Bryan obtained staff privileges at a Veterans Administration hospital in Miami. There, he explained, he soon learned that the hospital could not fire incompetent nurses and other technicians easily; the most effective way to avoid working with nurses he viewed as incompetent or inefficient, he discovered, was to insult them until they refused to participate in operations involving his patients. . . .
At first, the Hospital and the medical staff attempted to deal with Bryan's behavior informally. . . . The incidents continued unabated, however, over the next three years, and Hospital officials gradually began to take a more active approach in dealing with the problem. . . . On October 19, 1989 . . . the board advised Bryan by letter that his abusive behavior could no longer be tolerated and that any further incidents of unprofessional behavior would result in the permanent revocation of his staff privileges. . . .
Despite the board's warning, Bryan was involved in four additional incidents in the first five months of 1990; these four incidents led directly to the termination of Bryan's medical staff privileges. . . . After considering these latest incidents in light of Bryan's history of disruptive behavior and the hospital's varied attempts to correct such behavior . . . the executive committee recommended that Bryan's staff privileges be permanently revoked.
Once again, Bryan requested that a peer review hearing panel be appointed. Chaired by Dr. Joseph Chanda, the panel consisted of seven physicians, none of whom were vascular surgeons. . . . Bryan challenged the initial composition of the panel, alleging bias on the part of Dr. William Broussard, who advised Bryan to seek counseling for his interpersonal problems in 1982. Bryan also contended that the panel should be composed solely of surgeons. In response to Bryan's objections, [Dr.] Mills selected a new panel member to replace Broussard but did not remove the non-surgeons who had previously been named. . . .
The Chanda panel held four sessions of hearings; Bryan was represented by counsel at the proceedings, and he had both the opportunity to cross-examine the witnesses offered by the medical staff and to present witnesses and documentary evidence on his own behalf. A court reporter recorded the testimony at all of the hearing sessions. Two panel members were absent from at least part of the hearings, but Chanda testified at trial that the panel as a whole reviewed the testimony orally at the end of each session and during deliberations and that summarized what had transpired for the absent members. . . .
[T]he panel recommended that Bryan's clinical privileges be suspended for two years. After considering the Chanda panel's report, the executive committee stood by its recommendation that Bryan's staff privileges be revoked. Bryan appealed the executive committee's recommendation to the board of the directors; pursuant to the bylaws, the board appointed a board review panel, which also recommended revocation of Bryan's clinical privileges. The full board then considered the three recommendations . . . [and] unanimously voted to terminate Bryan's cliical privileges at Holmes. . . .
Bryan filed a complaint on behalf of himself and his professional association against the Hospital, the individual members of its board of directors, members of the medical staff executive committee, and two nurses. The complaint included federal and state antitrust claims as well as state law claims for defamation, negligent supervision of the peer review process (against only the individual members of the board of directors), and breach of contract for failing to follow the medical staff bylaws during the disciplinary process (against the Hospital). The complaint also included the following various ancillary claims: (1) constitutional and civil rights claims under 42 U.S.C. Sec. 1983 (1988); (2) federal contractual claims arising out of the Hospital's participation in the Medicare program; and (3) claims of "interference with prospective economic advantage" and intentional infliction of emotional distress. . . . The central allegation in the complaint was that the defendants, "individually and in concert, acted in bad faith and with intentional fraud, resulting in the destruction of Dr. Bryan's medical practice."
At trial, as before the Chanda panel, Bryan presented testimony from various expert witnesses explaining that Bryan's actions were proper and did not adversely affect patient care; nothing in the record, they testified, would justify the revocation of Bryan's clinical privileges. . . . Bryan also presented the testimony of witnesses who found fault with the Hospital's peer review procedures, particularly that a transcript of the Chanda panel hearings was not prepared for the Board's use and that the Chanda hearing officer had become too inquisitorial in his questioning. . . . At the close of Bryan's case, the district court . . . concluded . . . that the evidence supported Bryan's claims for breach of contract against the Hospital, and denied the Hospital's motion for a directed verdict because material issues of fact remained concerning the federal and state peer review immunity statutes. The court also found that the evidence supported Bryan's antitrust claims against the Hospital and accordingly submitted those claims to the jury. . . .
Congress clearly intended HCQIA to permit defendants in suits arising out of peer review disciplinary decisions to file motions to resolve the issues concerning immunity from monetary liability as early as possible in the litigation process. . . . Several courts have resolved the issue of HCQIA immunity from damages liability on summary judgment. See, e.g., Austin v. McNamara, 979 F.2d 728, 734-35 (9th Cir. 1991). . . . [I]f the standards of Rule 56 cannot be satisfied . . . the defense of qualified immunity should be decided by the court and should not be submitted for decision by the jury. . . .
If there are disputed subsidiary issues of fact concerning HCQIA immunity, such as whether the disciplined physician was given adequate notice of the charges and the appropriate opportunity to be heard, the court may ask the jury to resolve the subsidiary factual questions by responding to special interrogatories. Under no circumstances should the ultimate question of whether the defendant is immune from monetary liability under HCQIA be submitted to the jury. . . .
As the Ninth Circuit has explained, the rebuttable presumption of HCQIA . . . creates an unusual summary judgment standard that can best be expressed as follows: "Might a reasonable jury, viewing the facts in the best light for [the plaintiff], conclude that he has shown, by a preponderance of the evidence, that the defendants' actions are outside the scope of Sec. 11112(a)?" Austin, 979 F.2d at 734. If not, the court should grant the defendant's motion. In a sense, the presumption language in HCQIA means that the plaintiff bears the burden of proving that the peer review process was not reasonable. . . .
We must examine the record in this case to determine whether Bryan satisfied his burden of producing evidence that would allow a reasonable jury to conclude that the Hospital's peer review disciplinary process failed to meet the standards of HCQIA. . . .
The term "professional review action" is defined [as]:
[A]n action or recommendation of a professional review body which is taken or made in the conduct of professional review activity, which is based on the competence or professional conduct of an individual physician (which conduct affects or could affect adversely the health or welfare of a patient or patients), and which affects (or may affect) adversely the clinical privileges . . . of the physician.
42 U.S.C. Sec. 11151(9). While its meaning is generally apparent, the statute does provide the following definition of "professional review activity":
[A]n activity of a health care entity with respect to an individual physician--(A) to determine whether the physician may have clinical privileges with respect to, or membership in, the entity, (B) to determine the scope or conditions of such privileges or membership, or (C) to change or modify such privileges or membership.
42 U.S.C. Sec. 11151(10). . . .
. . . . A "professional review body" is defined as "a health care entity and the governing body or any committee of a health care entity which conducts professional review activity, and includes any committee of the medical staff of such an entity when assisting the governing body in a professional review activity." Furthermore, the term "health care entity" includes "a hospital that is licensed to provide health care services by the State in which it is located," [as well as "a health maintenance organization, [a] group medical practice, . . . or a professional society (or committee thereof) of physicians or other licensed health care practitioners that follows a formal peer review process for the purpose of furthering quality health care (as determined under regulations of the Secretary)"]. The Holmes decisionmakers in Bryan's case fall within those categories. . . .
As stated above, a professional review action must satisfy the four standards of section 11112(a) in order to qualify for the immunity protections of section 11111(a). . . . First, a review of the record makes clear that the decision to terminate Bryan's clinical privileges at Holmes was taken "in the reasonable belief that the action was in the furtherance of quality health care.". . . At trial, Bryan asserted that the members of the board of directors and the executive committee were primarily motivated by personal animosity and not by concern for patient care. He introduced no evidence, however, that such hostility determined the outcome of the peer review process. Moreover, Bryan's "assertions of hostility do not support his position [that the Hospital is not entitled to the HCQIA's protections] because they are irrelevant to the reasonableness standards of Sec. 11112(a). The test is an objective one, so bad faith is immaterial. The real issue is the sufficiency of the basis for the [Hospital's] actions." Austin, 979 F.2d at 734....
Second, a review of the record reveals that the Holmes board of directors took its action "after a reasonable effort to obtain the facts of the matter." . . .
Third, Bryan's staff privileges were revoked only "after adequate notice and hearing procedures [were] afforded to the physician involved or after such other procedures as [were] fair to the physician under the circumstances." As noted above, section 11112(b) sets forth the "safe harbor" conditions that a health care entity must meet regarding adequate notice and hearing. . . . As the summary of the facts of the case . . . reflects, each of these procedural requirements of section 11112(b) was satisfied. Documents introduced at trial indicate that the Hospital complied with the notice requirements and that the hearings were held in a timely fashion and in accordance with the Hospital's bylaws. Bryan was afforded full rights of representation, cross-examination, and confrontation.
Bryan's principal argument is that the board of directors did not have a transcript of the Chanda panel hearings when it rendered its decision. Yet HCQIA, like the Holmes bylaws, requires only that the Hospital ensure that a record of the proceedings be made; Bryan had the responsibility to request a complete transcript if he thought the board should have one, and he did not.
It should be noted that section 11112(b) specifically provides that the failure of a review body to meet the enumerated conditions does not, per se, constitute a failure to meet the standards of section 11112(a)(3). Indeed, "[i]f other procedures are followed, but are not precisely of the character spelled out in [section 11112(b)], the test of 'adequacy' may still be met under other prevailing law." H.R.Rep. No. 903, at 10. Moreover, Bryan made no contemporaneous objections to the manner in which the hearing procedures were conducted; section 11112(b) explicitly provides that compliance with its terms is not required if the physician voluntarily waives them. On the record of this case, we conclude that no reasonable jury could conclude that the Hospital had not afforded Bryan the adequate procedures.
Finally, there is no question that the board decided to terminate Bryan "in the reasonable belief that the action was warranted by the facts known." . . . Bryan concedes that the incidents that led to his termination actually occurred; his only argument is that they did not justify the severe sanction he received. HCQIA clearly grants broad discretion to hospital boards with regard to staff privileges decisions. Accordingly, as in all procedural due process cases, the role of federal courts "on review of such actions is not to substitute our judgment for that of the hospital's governing board or to reweigh the evidence regarding the renewal or termination of medical staff privileges." Shahawy v. Harrison, 875 F.2d 1529, 1533 (11th Cir.1989). . . . "[T]he intent of [the HCQIA] was not to disturb, but to reinforce, the preexisting reluctance of courts to substitute their judgment on the merits for that of health care professionals and of the governing bodies of hospitals in an area within their expertise." Mahmoodian v. United Hosp. Ctr., Inc., 185 W.Va. 59, 404 S.E.2d 750, 756 (1991).
Given that all of the section 11112(a) standards were satisfied, we conclude that the Hospital was entitled to the immunity from damages liability granted by HCQIA in Sec. 11111(a). . . Bryan has not appealed the district court's refusal to grant injunctive relief. . . .
1. Limitations of the Federal Statute. Precisely which peer review actions does the federal immunity cover? A helpful guide is to check (carefully) how many of the preceding and following cases in this section it would preclude. Realize, for instance, that by virtue of the definition of professional review action, "actions against a class of physicians do not fall within the purview of this legislation." House Report No. 99-903, p. 21. Observe also that the statute applies only to actions against physicians, not against other licensed medical professionals. Finally, observe that the statute applies only to peer review actions based on quality or competence factors, not to those based on economic or administrative concerns. The statute's application to non-hospital entities such as HMOs, PPOs, and IPAs is unresolved pending regulations that have not yet been issued. The statute indicates they are covered by the immunity but only if individual physicians are selected (or deselected) following formalized criteria and processes based on quality/competence grounds.
How effective do you think the federal immunity is in encouraging vigorous peer review for those entities and decisions that it does cover, considering the showing that must be made to enjoy the immunity? Do the qualifications for immunity differ materially from the scrutiny imposed by common law judicial review? Are the immunity standards more exacting than common law? It appears that the statute's main effect is to shift the burden of proof and remove from the jury the merits of whether the hospital's decision was substantively and procedurally fair, allowing these issues to be decided at the summary judgment stage under a highly deferential standard of review. The Act also contains a fee shifting provision that allows the court to order the plaintiff to pay the defendants' costs of litigation. See Smith v. Ricks, 31 F.3d 1478 (9th Cir. 1994) (upholding award of over $300,000 in fees and costs).
Does summary judgment appear appropriate where there is a genuine issue of whether an ulterior, anticompetitive motive affected the decision? Should that kind of question be submitted to the jury? What if a hospital does not follow the elaborate hearing procedures or the careful insulation from conflict of interest that occurred here? See Poliner v. Texas Health Systems, 537. F.3d 368 (5th Cir. 2008) (after 10 years of litigation, overturning a $33 million verdict against a hospital, finding that it had acted in good faith and so deserved immunity); Brader v. Allegheny Gen. Hosp., 64 F.3d 869 (3rd. Cir. 1995) (reversing dismissal of complaint on immunity grounds because full judicial review is especially important "now that the provision of health services is becoming increasingly concentrated and the opportunities for physicians more limited"); Islami v. Covenant Med. Ctr., 822 F. Supp. 1361 (N.D. Iowa 1992) (because the doctor's economic competitors were not excluded from the review process, "the jury [must] answer the question of whether the procedures . . . were fair given the entire factual circumstances; . . . the decision on immunity is hopelessly intertwined with a decision on the merits of the contract claim"); Brown v. Presbyterian Healthcare Servs., 101 F.3d 1324 (10th Cir. 1996) (jury was entitled to find lack of fair hearing where the hospital's inquiry focused too narrowly on only two patient records); Clark v. Columbia/HCA, 25 P.3d 315 (Nev. 2001) (reversing grant of summary judgment and finding no immunity as a matter of law because of evidence hospital was retaliating against physician for "whistleblowing"). Cf. Decker v. IHC Hosps., 982 F.2d 433 (10th Cir. 1992) (denial of summary judgment is not immediately appealable because Act does not guarantee freedom from trial, only protection from damages). But see Brader v. Allegheny Gen. Hosp., ___ F.3d ___ (3rd. Cir. 1999) (awarding summary judgment on immunity claim despite minor flaws in the peer review proceedings and allegations of bad faith motivations); Parsons v. Sanchez, 46 F.3d 1143 (9th Cir. 1995) (allegations of personal bias and animosity do not rebut presumption of immunity); Alexander v. Memphis Individual Practice Ass'n, 870 S.W.2d 278 (Tenn. 1994) (same, under state immunity statute, for physician excluded from IPA); Cooper v. Delaware Vly. Med. Ctr., 654 A.2d 547 (Pa. 1995) (vague allegations of malice not sufficient to avoid summary judgment under state immunity statute); Cardwell v. Rockford Mem. Hosp. Ass'n, 555 N.E.2d 6 (Ill. 1990) (finding absolute immunity under state statute protecting hospital even if conduct was "willful and wanton"); Singh v. Blue Cross and Blue Shield, ___ F. Supp. ___ (D. Mass. 2001) (awarding summary judgment to an HMO even though the evidence showed mixed economic and quality reasons for excluding physician). See generally Charity Scott, Medical Peer Review, Antitrust, and the Effect of Statutory Reform, 50 Md. L. Rev. 316 (1991) ("the Act appears to immunize only conduct that would not be actionable under the antitrust laws in the first place. . . . Remarkably, of the few . . . cases that courts have said were proper for jury resolution, only a handful could even in theory have qualified for immunity."); Wm. Curran, Medical Peer Review of Physician Competence and Performance: Legal Immunity and the Antitrust Laws, 316 New Eng. J. Med. 597, 598 (1987) ("the shield for physicians now contains a plethora of gaping holes through which many a guided missile can reach its human target"); Clark Havighurst, Professional Peer Review and the Antitrust Laws, 36 Case West. L. Rev. 1117, 1161 (1986) ("the new act does more to complicate than to simplify litigation"); Jack Bierig & Robert Portman, The Health Care Quality Improvement Act of 1986, 32 St.Louis U.L.J. 977 (1989).
2. State Confidentiality Statutes. In addition to the federal immunity statute, virtually every state has a confidentiality statute that makes the proceedings of peer review committees inadmissible in certain legal actions. As summarized in Chapter 4, these peer review confidentiality statutes apply primarily to malpractice actions claiming negligence on the part of the reviewed physician and to malpractice actions against the hospital claiming negligent peer review. These statutes usually do not, however, apply to the physician's own action against the hospital, since the parties themselves usually want to introduce the records in order to litigate the propriety of what occurred in the proceedings. Possibly, a court might recognize an evidentiary privilege nevertheless to exclude such evidence in order to protect quality improvement activities. In one casee, however, a federal court refused this invitation in a case where the physician alleged racial discrimination motives, finding that the public policy in favor of ferreting out discrimination outweighs the competing policies in favor hospitals protecting peer review committee deliberations. Virmani v. Novant Health Inc., 259 F.3d 284 (N.C. 2001). For critical commentary, see 80 N.C.L.Rev. 1860 (2002).
Several states have also passed immunity statutes similar to the federal HCQIA. See David Leonard, Codifying a Privilege for Self-Critical Analysis, 25 Harv. J. Leg. 113, 119 (1988) (collecting citations). An empirical study concluded that these state confidentiality and immunity statutes have no effect on the number of adverse peer review actions taken by hospitals. Susan O. Scheutzow, State Medical Peer Review: High Cost but no Benefit-Is it Time for a Change?, 25 Am J. L. & Med. 7 (1999). Arguing that peer review privilege and immunity statutes confer excessive protection, see Eleanor Kinney, Hospital Peer Review of Physicians: Does Statutory Immunity Increase Risk of Unwarranted Professional Injury? 13 Michigan St. J. L. Med. 57 (2009).
3. State Action Immunity. Another potential defense in medical staff disputes, one that is applicable only under the federal antitrust laws, is known as "state action immunity." In Parker v. Brown, 317 U.S. 341 (1943), the Supreme Court held that the antitrust laws do not apply to activity engaged in or required by the states. For instance, it would be spurious to charge a state Board of Medical Examiners with an antitrust violation for revoking a physician's license. For slightly different reasons, peer review and other activities (such as merger and acquisition) by public hospitals are also immune from antitrust suit. FTC v. Hospital Bd. Directors of Lee County, 38 F.3d 1184 (11th Cir. 1994); Cohn v. Bond, 953 F.2d 154 (4th Cir. 1991); contra Lancaster Community Hosp. v. Antelope Valley Hosp., 940 F.2d 397 (9th Cir. 1991) (state-conferred corporate power to engage in generic transactions or activities is not the same as legislative anticipation of specific anticompetitive consequences). See generally Dean Harris, State Action Immunity from Antitrust Law for Public Hospitals: The Hidden Time Bomb for Health Care Reform, 44 U. Kan. L. Rev. 459 (1996).
The state action defense potentially exists with respect to physician discipline even at private hospitals if state law mandates and "actively supervises" the private peer review process. This contention was the subject of Patrick v. Burget, 486 U.S. 94 (1988), which involved a doctor who was forced to resign from the staff of the only hospital in town in retaliation for refusing to join the group practice that composed a majority of the medical staff. The Ninth Circuit relied on the Parker v. Brown state action exemption in overturning a damage award of more than $ 2 million that had sent shock waves through the medical establishment. (It was this verdict that prompted Congress to enact the HCQIA immunity.) However, the Supreme Court reversed and reinstated the verdict, holding that private hospital credentialing decisions in Oregon are not sufficiently supervised by the state to bring them within the protection of this defense. The Court observed that Oregon so far has not recognized a common law right to judicial review of the substance of private hospitals' credentialing decisions.
Although Patrick was initially read as closing the door to state action exemption in medical staff disputes, it left open the slight possibility that this defense might be available in another state whose common law differs. However, it does not appear that even a Greisman common law theory of judicial review would meet the Court's objection that "[the courts do no] more than to make sure that some sort of reasonable procedure was afforded and that there was evidence from which it could be found that plaintiff's conduct posed a threat to patient care." So far, subsequent federal decisions have been in accord with this reading of Patrick. Pinhas v. Summit Health Ltd., 880 F.2d 1108 (9th Cir., 1989) (the "limited form of [judicial] review [in California] is similar to the standards applied by the Oregon courts that the Supreme Court found insufficient to constitute active supervision"), aff'd on other grounds, 500 U.S. 322 (1991); Shahawy v. Harrison, 875 F.2d 1529 (11th Cir. 1989) (same, for Florida). Courts are also unimpressed that a state licensing scheme might require peer review since a state agency does not review the merits of hospitals' decisions. Miller v. Indiana Hops., 930 F.2d 334 (3d Cir. 1991).
4. Immunity via State Certification. State action immunity from antitrust suits has been reinvigorated in a number of states that have created procedures intended specifically to meet the "active supervision" requirement missing in private peer review. These states have implemented a state governmental review process leading to a "certificate of public advantage" in which private parties submit certain risky ventures that they want blessed with antitrust immunity. This state review process is designed to meet the active supervision requirements set forth in FTC v. Ticor Title Ins. Co., 504 U.S. 621, 112 S. Ct. 2169 (1992). For the most part, however, these statutes do not apply to peer review decisions. Instead, they are directed to joint ventures and mergers, like those discussed in Chapter 11, in which hospitals and other providers seek to cooperate in order to achieve efficiencies and avoid costly duplication of facilities. See generally James Blumstein, Health Care Reform and Competing Visions of Medical Care: Antitrust and State Provider Cooperation Legislation, 79 Cornell L. Rev. 1459 (1994); Fred Hellinger, Antitrust Enforcement in the Healthcare Industry: The Expanding Scope of State Activity, 33 Health Serv. Res. 1477 (1998).
5. Physician Unions. Physicians are pushing harder to receive the exemption from antitrust scrutiny that unions enjoy, in order to engage in more forceful bargaining with insurers without achieving full integration. The difficulty they face is that union status is available only to employees, not independent contractors. Nevertheless, in Texas, the AMA succeeded in its attempt to achieve the same result, only through antitrust exemption for "state action," discussed above. In 1999, Texas adopted legislation that allows up to 10 percent of physicians in a market to negotiate jointly with any HMO that has substantial market power, subject to the supervision of the state's attorney general. It remains to be seen whether this law contains sufficient "active supervision" to achieve full protection under federal antitrust law's state action exemption. See generally Fred Hellinger & Gary Young, An Analysis of Physician Antitrust Exemption Legislation: Adjusting the Balance of Power, 286 JAMA 83 (2001).
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