Scott D. LEVINE, M.D., Plaintiff-Appellant, v. CENTRAL FLORIDA MEDICAL AFFILIATES, INC.; Healthchoice, Inc.; Sand Lake Hospital; Orlando Regional Healthcare System, Inc. f/k/a Orlando Regional Medical Center, Defendants-Appellees.
No. 94-3145.
United States Court of Appeals, Eleventh Circuit.
Jan. 23, 1996.
David L. Evans, Thomas R. Harbert, Mateer, Harbert & Bates, P.A., Orlando, FL, for Healthchoice.
Ronald M. Schirtzer, Christopher K. Kay, Foley & Lardner, Orlando, FL, for Central Florida Medical Affiliates.
Before ANDERSON and CARNES, Circuit Judges, and OWENS*, Senior District Judge.
CARNES, Circuit Judge:
Dr. Scott Levine, the plaintiff, appeals from the district court‘s grant of summary judgment in favor of the defendants on his state and federal antitrust claims. The four defendants are Healthchoice, Inc., a preferred provider organization (“PPO“); Central Florida Medical Affiliates, Inc. (“CFMA“), a physicians’ advocacy group organized to supply physician providers to the Healthchoice PPO; Sand Lake Hospital; and Orlando Regional Healthcare System, Inc. (“ORHS“), the hospital‘s parent corporation. The incidents giving rise to the lawsuit are Dr. Levine‘s unsuccessful attempt to gain provider membership in Healthchoice and CFMA, and the temporary suspension of his staff privileges at Sand Lake Hospital. Because we conclude that there is no genuine issue of material fact about Dr. Levine‘s failing to establish any anticompetitive effect resulting from being denied membership in Healthchoice and CFMA or from his hospital suspension, and that the defendants are accordingly entitled to judgment as a matter of law, we affirm the district court‘s grant of summary judgment in their favor.
Because the case has come to us on appeal of summary judgment, we construe the facts in the light most favorable to the nonmovant, in this case Dr. Levine. Forbus v. Sears Roebuck & Co., 30 F.3d 1402, 1403 n. 1 (11th Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 906, 130 L.Ed.2d 788 (1995). The following is a summary of the facts as viewed in the light most favorable to Dr. Levine.
Dr. Scott D. Levine is an internist. In 1989, a year after completing his residency in California, Dr. Levine moved to Orlando, Florida to begin private practice. Although Dr. Levine explored opportunities to join established medical practices as a salaried employee,1 he ultimately decided to become a sole practitioner. He began his practice in the summer of 1989.
When Dr. Levine began his practice, he sought, and was granted, provisional staff privileges at the ORHS hospitals.2 ORHS is a nonprofit organization that owns and operates five Orlando area hospitals: Orlando Regional Medical Center (“ORMC“); Arnold Palmer Hospital for Children and Women; Sand Lake Hospital; St. Cloud Hospital; and South Seminole Hospital (ORHS owns only half of it). Dr. Levine primarily exercised his staff privileges at Sand Lake Hospital because it is located across the street from his office. Around October of 1990, after Dr. Levine had successfully exercised his provisional staff privileges for more than a year, ORHS granted him full active staff privileges. During 1990 and 1991, Dr. Levine also applied for, and was granted, staff privileges at several other Orlando area hospitals: the Florida Hospital system, which operates five hospitals; Glenbeigh Hospital; Charter of Orlando South Hospital; and Health Central.
When Dr. Levine acquired provisional staff privileges at Sand Lake Hospital, he agreed to have his name put on the emergency room (“ER“) call list. Each day doctors of various specialties would be “on call” in the ER, which means that if a patient came to the ER and needed to see, for example, an internist, the hospital would contact the internist whose name appeared on the call list for that day. Dr. Levine found that being on the ER call list provided an effective means of building his new practice, and so during his early years in Orlando, he asked to be placed on the list as often as possible. Many of the patients Dr. Levine treated in the ER would continue to see him as their internist after leaving the hospital. In addition, these patients would often refer Dr. Levine new patients. Dr. Levine‘s strategy proved lucrative; in 1990, his first full year of private practice, Dr. Levine‘s pre-tax net earnings were $553,176—more than twice the average earnings of Florida internists in private practice that year, according to studies conducted by the American Medical Association.
A. THE DENIAL OF HEALTHCHOICE PPO MEMBERSHIP TO DR. LEVINE
In addition to being on the ER call list, another method of building his practice that Dr. Levine explored was the possibility of becoming a physician provider of Healthchoice3 and CFMA.4 Healthchoice is a PPO, which is a form of managed health care coverage in which physicians agree to accept no more than a maximum allowable fee for services rendered to plan enrollees in exchange for a potentially higher volume of patients. CFMA is a physicians’ advocacy group that was organized to supply the Healthchoice PPO with a panel of physician providers. Dr. Levine had heard that Healthchoice was one of the largest PPOs in the Orlando area, and he believed that Healthchoice patients accounted for approximately twenty percent of some member physicians’ practices. Dr. Levine had also heard
Dr. Levine sought physician provider membership with Healthchoice several times between 1989 and 1990, but Healthchoice denied his request for membership each time, explaining that it did not need any more internists in his geographical area. Believing (incorrectly) that in order to be a member of Healthchoice, one had to be a member of CFMA, Dr. Levine also inquired about membership in CFMA. However, Dr. Levine‘s telephone call to CFMA was answered by a Healthchoice employee, and Dr. Levine was again told that it did not need any more internists in his area.
During his first few years of practice, Dr. Levine pursued provider memberships in three other Orlando area PPOs—Health Advantage, Alta, and Aetna. He joined the Health Advantage PPO because it was part of the group health coverage he had purchased for himself and his office staff. When his own health coverage administrators switched to the Alta PPO, Dr. Levine then joined Alta as well. Dr. Levine also applied to become a physician provider of Aetna at the request of a patient, but Aetna denied his application for the same reason that Healthchoice had—Aetna already had enough internists in Dr. Levine‘s area. Although Dr. Levine received numerous solicitations from other area PPOs inviting him to become a physician provider, he turned down each of those offers.
In January of 1991, Dr. Levine‘s practice was so busy that he placed an advertisement in a medical journal to hire a physician as a salaried employee. However, because of events that transpired at Sand Lake Hospital that same month, Dr. Levine decided not to hire another physician for his practice.
B. THE SUSPENSION OF DR. LEVINE‘S STAFF PRIVILEGES AT SAND LAKE HOSPITAL
In January of 1991, Cathy Canniff-Gilliam, the Executive Director of Sand Lake Hospital, removed Dr. Levine from the ER call list. A few days later, the executive committee of Sand Lake Hospital voted to suspend Dr. Levine‘s remaining staff privileges pending investigation of various patient care concerns.5 The executive committee reported these concerns to the ORHS credentials committee, which then assembled an investigative committee to review the incidents giving rise to those concerns. After interviewing Dr. Levine and reviewing his patients’ charts, the investigative committee reported its findings to the credentials committee. The credentials committee reviewed the report and recommended to the Sand Lake Hospital executive committee that it place Dr. Levine on probation for six months and that it proctor his performance of certain procedures several times each. The executive committee decided to increase the probationary period to one year, but other than that, it adopted the credentials committee‘s recommendations. Dr. Levine appealed the executive committee‘s decision, and in June of 1991, ORHS appointed a hearing panel to review the executive committee‘s decision. The panel affirmed the executive committee‘s decision to impose probationary conditions upon Dr. Levine.
Subject to his new probationary status, Dr. Levine regained admitting privileges in May of 1991, and ER call privileges in the fall of 1991, although he chose to wait until mid-December to resume being on ER call. Dr. Levine still has not met the procedure proctoring requirements necessary to regain full staff privileges, because he has chosen to admit his patients to Florida Hospital, which is the largest hospital system in Orlando, and as a result he has not performed the procedures that were to be proctored at Sand Lake Hospital.
During the time that his staff privileges were suspended at Sand Lake Hospital,6 Dr. Levine maintained staff privileges at Glenbeigh Hospital, Charter Hospital, Health Central Hospital, and Florida Hospital (which includes five campuses). However, he has chosen not to exercise his staff privileges at Glenbeigh and Charter, purportedly due to the time he has spent pursuing this lawsuit.
II. PROCEDURAL HISTORY
In March of 1993 Dr. Levine filed a complaint in the United States District Court for the Middle District of Florida against CFMA, Healthchoice, Sand Lake Hospital, and ORHS, alleging violations of sections 1 and 2 of the Sherman Act,
In June of 1994, after extensive discovery, each defendant filed a motion for summary judgment as to the state and federal antitrust claims. The district court granted the defendants’ motions, and, declining to exercise its supplemental jurisdiction, the court dismissed the remaining state law claims without prejudice. Dr. Levine now appeals the district court‘s grant of summary judgment.
III. DISCUSSION
In granting the defendants’ motions for summary judgment, the district court held that Dr. Levine lacked standing to prosecute his antitrust claims, and in the alternative that his claims lacked merit. As to Dr. Levine‘s section 1 and 2 claims against Healthchoice and CFMA for denying him membership, and his section 2 claim against ORHS and Sand Lake Hospital for their part in the alleged conspiracy to monopolize, the district court held he lacked standing because he was not an efficient enforcer of the antitrust laws, and in the alternative, that those claims were without merit because he had failed to prove the defendants’ market power. As to Dr. Levine‘s section 1 claim against ORHS and Sand Lake Hospital for suspending his staff privileges, the district court held that he lacked standing because he had failed to establish that his suspension resulted in any antitrust injury, and in the alternative, that the claims lacked merit because of Dr. Levine‘s failure to show any anticompetitive effect arising out of his suspension.
When a court concludes that no violation has occurred, it has no occasion to consider standing.... An increasing number of courts, unfortunately, deny standing when they really mean that no violation has occurred. In particular, the antitrust injury element of standing demands that the plaintiff‘s alleged injury result from the threat to competition that underlies the alleged violation. A court seeing no threat to competition in a rule-of-reason case may then deny that the plaintiff has suffered antitrust injury and dismiss the suit for lack of standing. Such a ruling would be erroneous, for the absence of any threat to competition means that no violation has occurred and that even suit by the government—which enjoys automatic standing—must be dismissed.
2 Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 360f, at 202-03 (rev. ed. 1995) (footnotes omitted). This approach is consistent with our precedents. We have ruled on the merits of an antitrust claim without ever deciding whether the plaintiff had antitrust standing. E.g., Aladdin Oil Co. v. Texaco, Inc., 603 F.2d 1107, 1109 n. 2 (5th Cir.1979) (assuming standing and affirming grant of summary judgment for defendants because plaintiff failed to establish antitrust violations); Hardwick v. Nu-Way Oil Co., 589 F.2d 806, 807 n. 3 (5th Cir.) (same), cert. denied, 444 U.S. 836, 100 S.Ct. 70, 62 L.Ed.2d 46 (1979); see also Todorov v. DCH Healthcare Auth., 921 F.2d 1438, 1446-47 (11th Cir.1991) (reaching the merits of an antitrust claim even though the plaintiff lacked standing to bring the claim).
We review a district court‘s grant of summary judgment de novo. Flores v. Carnival Cruise Lines, 47 F.3d 1120, 1122 (11th Cir.1995). Viewing the facts in the light most favorable to the nonmovant, we must determine whether there exists a genuine issue of material fact or whether the movant is entitled to judgment as a matter of law. Tisdale v. United States, 62 F.3d 1367, 1370 (11th Cir.1995).
A. THE SECTION 1 CLAIMS
Section 1 of the Sherman Act provides that “[e]very 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 declared to be illegal.”
However, not every agreement that restrains competition will violate the Sherman Act. The Supreme Court long ago determined that section 1 prohibits only those agreements that unreasonably restrain competition, Standard Oil Co. v. United States, 221 U.S. 1, 58-64, 31 S.Ct. 502, 515-17, 55 L.Ed. 619 (1911), thus, the unreasonableness of the agreement is the second element of a section 1 claim. In identifying which agreements unreasonably restrain competition, the Supreme Court has held that certain kinds of agreements are unreasonable per se, such as agreements among direct competitors to fix prices or to restrict output. E.g., United
1. The Section 1 Claim Against Healthchoice and CFMA
A more detailed description of how the Healthchoice PPO and CFMA operate is necessary to a discussion of the merits of Dr. Levine‘s claims against those two defendants.
a) How Healthchoice and CFMA Operate
Healthchoice markets to healthcare payors a panel of select healthcare providers—which includes physicians, hospitals, pharmacies, and durable medical equipment companies. The payors consist of employers, insurance companies, third party administrators, or governmental agencies. Healthchoice maintains a limited panel of providers who have agreed to accept no more than a maximum allowable fee for services rendered or products furnished to Healthchoice enrollees. These maximum fees may or may not be lower than the provider‘s ordinary charges. In addition, the providers agree to be subject to Healthchoice‘s utilization review and quality control program. Providers are willing to accept these terms because Healthchoice membership may increase their number of patients.
Healthchoice individually negotiates with each payor to arrive at a schedule of fees that the payor is willing to pay for various medical products and services. Healthchoice
presents each prospective payor with its schedule of fees, and the payor is then free to negotiate with Healthchoice for lower fees. Several steps are involved in computing Healthchoice‘s schedule of fees. Every medical product and service is identified according to a standardized “Current Procedural Terminology” code (“CPT code“). Healthchoice assigns to each CPT code, of which there are approximately 9,000, a unit value that it adapts from information provided by Medicare. The unit value is a reflection of the approximate cost of resources required for each procedure or product. Healthchoice then assigns a monetary conversion factor to each major medical specialty, e.g., medicine has one conversion factor, and radiology has another; these conversion factors are collectively called the “Master Payor Rate Schedule.” The Healthchoice fee schedule is computed by multiplying the conversion factors on the Master Payor Rate Schedule by the unit values assigned to the CPT codes. The resulting schedule of fees, once accepted by the payor, are the maximum that the payor will reimburse a provider for each product or service. Thus, when a payor receives a bill from a provider, it pays the provider the lesser of either the actual charges submitted by the provider, or the maximum allowable fee as reflected in the Healthchoice fee schedule.
Healthchoice does not consult its various providers when it compiles the unit values or the conversion factors. The Healthchoice board of directors has eight members, four of whom are CFMA physicians, but when that board approves the Master Payor Rate Schedule, those four physician board members are not allowed to participate. In its contract with a provider, Healthchoice includes the conversion factors, but it does not include the unit values. Thus, the provider does not know the exact fees that Healthchoice has negotiated with the payors. Instead, the contract with each provider includes only an example of how a fee would be calculated for one of the more commonly used CPT codes. Should a provider request more information about the fee schedule, Healthchoice will give the provider a few more illustrations. The provider is always
A Healthchoice enrollee is free to use non-Healthchoice providers; however, the enrollee‘s payor may require the enrollee to pay a higher deductible, and may require the enrollee to pay for any provider charges over the payor‘s maximum allowable reimbursement. The payors individually design the terms of these benefit packages—Healthchoice itself does not create financial incentives for any enrollees who choose to use non-Healthchoice providers.
The main source of Healthchoice‘s physician providers is CFMA, which was organized to supply Healthchoice with a panel of physician providers. Four members of CFMA sit on the board of directors of Healthchoice. However, Healthchoice does not contract only with CFMA for physician providers; many of Healthchoice‘s physician providers are not members of CFMA. Healthchoice providers, whether or not members of CFMA, are allowed to participate in other PPOs, and most of them do participate in several different PPOs.
For a short period of time after Healthchoice began doing business, it accepted applications from any provider who wanted to apply. Thereafter, Healthchoice decided to limit the size of its panel, and so it adopted a need-based system for determining how many providers of various specialties to include on its panel. Healthchoice stopped accepting applications from physicians in those specialties that were already adequately represented on the provider panel. This need-based system is administered by the Healthchoice staff; providers do not participate in determining how many providers are needed on the Healthchoice panel. The Healthchoice staff also handles all inquiries regarding provider panel membership opportunities, without discussing those inquiries with the board of directors.
Healthchoice considers numerous factors in deciding how many providers to have on its panel, including: (1) the number of enrollees in the plan; (2) the geographic location of enrollees and providers; (3) the physicians’ specialties; (4) the administrative costs of managing providers; (5) the special needs of particular payors; and (6) the availability of access to existing members, i.e., how long a patient has to wait to get an appointment with a Healthchoice provider. Although Healthchoice‘s general policy is to add new providers only when the need arises, if an existing Healthchoice provider adds a physician to his group practice, that new physician is automatically eligible to become a Healthchoice provider, subject to the new physician‘s meeting Healthchoice‘s credentialling standards. The purpose of the exception to the need-based system is to avoid the administrative difficulties associated with cross-coverage: because physicians in a group practice cover for one another when they take time off, Healthchoice determined that it would be more cost effective to exercise its utilization review and quality control over the whole practice group.
Healthchoice asks its providers to refer Healthchoice patients to other Healthchoice providers whenever feasible. If a provider continually refers Healthchoice patients to non-Healthchoice physicians without justification, Healthchoice may remove that provider from the panel. This provision helps assure that Healthchoice and the payors can manage the costs of healthcare. Because non-Healthchoice physicians are not subject to Healthchoice‘s utilization review system, the payors have no effective means of determining whether the care rendered by a non-Healthchoice physician is necessary or cost efficient.
As of the date that discovery was complete in this case, Healthchoice had approximately 68,000 covered lives in the Orlando area, which had a population of more than 1.1 million.12 There were approximate-
b) The Merits of the Section 1 Claim Against Healthchoice and CFMA
Dr. Levine alleges that Healthchoice, CFMA, and their member physicians have conspired to unreasonably restrain competition in violation of section 1 of the Sherman Act by maintaining a closed panel of provider physicians, by creating a financial disincentive for enrollees who want to use non-Healthchoice physicians, and by prohibiting Healthchoice physicians from referring enrollees to non-Healthchoice physicians. Dr. Levine argues that these features restrict the availability of physician services to Healthchoice enrollees, lead to price stabilization in the market for physician services, and render excluded physicians incapable of competing for Healthchoice patients. Dr. Levine primarily characterizes the activities of the defendants as a group boycott, or a concerted refusal to deal, however, he occasionally refers to the defendants’ activities as illegal price fixing. We will first discuss his contention that the defendants have illegally fixed prices, and then his contention that they have engaged in a concerted refusal to deal.
i) The Alleged Agreement to Fix Prices
Although Dr. Levine did not specifically argue to this Court that the defendants illegally fixed prices, i.e., provider fees, there are portions of his brief where he appears to assume the existence of such an agreement. That assumption is contrary to the uncontroverted evidence in the record, which establishes that there was no agreement between Healthchoice, CFMA, and their member physicians to fix provider fees. Healthchoice negotiates the provider reimbursement schedule directly with payors, not with providers. Healthchoice does not consult any physician providers when it compiles the CPT code unit values or the Master Payor Rate Schedule, and physician members of the Healthchoice board of directors are excluded from the reimbursement schedule proposal and approval process. Providers must either accept not more than the maximum reimbursement negotiated by Healthchoice with the payors and not charge the patient for any difference between their fee and the reimbursement, or else opt out of the plan. The result is that the providers’ actual fees are not set. The only figure that is set is the maximum allowable fee that they will be reimbursed by Healthchoice. Nothing prevents the physician from dropping his fees even further in order to compete should he choose to do so.
This method of negotiating fees, in which the payors decide the maximum amount they are willing to reimburse providers for medical services and providers decide whether they are willing to accept that limitation on the reimbursement they receive, is a kind of “price fixing,” but it is a kind that the antitrust laws do not prohibit. See, e.g., Kartell v. Blue Shield, 749 F.2d 922, 923-26 (1st Cir.1984) (Breyer, J.), cert. denied, 471 U.S. 1029, 105 S.Ct. 2040, 85 L.Ed.2d 322 (1985); Pennsylvania Dental Ass‘n v. Medical Serv. Ass‘n, 745 F.2d 248, 256-57 (3d Cir.1984), cert. denied, 471 U.S. 1016, 105 S.Ct. 2021, 85 L.Ed.2d 303 (1985); Medical Arts Pharmacy v. Blue Cross & Blue Shield, 675 F.2d 502, 504-06 (2d Cir.1982); see also 8 Phillip E. Areeda, Antitrust Law ¶ 1622b (1989). Because there is no genuine issue of material fact regarding the existence of an agreement among Healthchoice, CFMA, or its member doctors to fix provider fees, and because the defendants are entitled to judgment as a matter of law, Dr. Levine‘s section 1 claim against these defendants, to the extent that it alleges illegal price fixing, fails.
Our decision that Healthchoice‘s method of negotiating with payors the fees it pays providers does not violate the Sherman Act as a matter of law is supported by the Department of Justice and the Federal Trade Commission‘s recently issued “Statements of Enforcement Policy and Analytical Principles Relating to Health Care and Antitrust” (“DOJ Enforcement Policy” or “the policy“), available in,
ii) The Alleged Concerted Refusal to Deal
Although there is no genuine issue of material fact regarding the existence of an agreement to fix prices, Dr. Levine submitted evidence sufficient to establish a genuine issue of material fact regarding the existence of a concerted refusal to deal, i.e., agreements among Healthchoice, CFMA, and their member providers to restrict the size of the provider panel, and to discourage providers from referring Healthchoice enrollees to non-Healthchoice physicians. Thus, for purposes of defeating summary judgment against him, Dr. Levine has established the first element of his section 1 claim to the extent that it
alleges a concerted refusal to deal. The question remains whether the agreements in question are an unreasonable restraint on competition as required to establish the second element of a section 1 claim.
Before we can determine whether the Healthchoice and CFMA agreements are an unreasonable restraint on competition, we must first decide whether to analyze them under the per se rule or the rule of reason. “[A] restraint may be adjudged unreasonable either because it fits within a class of restraints that has been held to be ‘per se’ unreasonable, or because it violates what has come to be known as the ‘Rule of Reason.‘” F.T.C. v. Indiana Fed‘n of Dentists, 476 U.S. 447, 457-58, 106 S.Ct. 2009, 2017, 90 L.Ed.2d 445 (1986). “The presumption in cases brought under section 1 of the Sherman Act is that the rule-of-reason standard applies.” Seagood Trading Corp. v. Jerrico, Inc., 924 F.2d 1555, 1567 (11th Cir.1991). We apply the per se rule “only when history and analysis have shown that in sufficiently similar circumstances the rule of reason unequivocally results in a finding of liability,” Consultants & Designers, Inc. v. Butler Serv. Group, Inc., 720 F.2d 1553, 1562 (11th Cir.1983), i.e., when the conduct involved “always or almost always tend[s] to restrict competition and decrease output.” Broadcast Music, Inc., 441 U.S. at 19-20, 99 S.Ct. at 1562. We will not apply the per se rule “to restraints of trade that are of ambiguous effect.” Consultants & Designers, 720 F.2d at 1562; see also Indiana Fed‘n of Dentists, 476 U.S. at 458-59, 106 S.Ct. at 2018 (declining “to extend per se analysis to restraints imposed in the context of business relationships where the economic impact of certain practices is not immediately obvious“); National Soc‘y of Professional Eng‘rs v. United
Dr. Levine characterizes the agreement to limit the size of the provider panel and to discourage provider members from referring Healthchoice patients to non-Healthchoice physicians as a group boycott and urges this Court to apply the per se rule. But this Court has stated that “[t]he attachment of the group boycott label does not necessarily require as a consequence an application of the per se approach.” Consultants & Designers, 720 F.2d at 1561 (citation and quotation marks omitted) (alteration in original). “The labeling of a restraint as a group boycott does not eliminate the necessity of determining whether it is a ‘naked restraint of trade with no purpose except stifling competition.‘” Id. (quoting White Motor Co. v. United States, 372 U.S. 253, 263, 83 S.Ct. 696, 702, 9 L.Ed.2d 738 (1963)). In F.T.C. v. Indiana Federation of Dentists, the Supreme Court described the kind of the boycotts subject to the per se rule:
476 U.S. at 458, 106 S.Ct. at 2018 (emphasis added) (citation omitted).Although this Court has in the past stated that group boycotts are unlawful per se, we decline to resolve this case by forcing the [defendant‘s] policy into the “boycott” pigeonhole and invoking the per se rule. As we observed last Term in Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284, 105 S.Ct. 2613, 86 L.Ed.2d 202 (1985), the category of restraints classed as group boycotts is not to be expanded indiscriminately, and the per se approach has generally been limited to cases in which firms with market power boycott suppliers or customers in order to discourage them from doing business with a competitor ....
Dr. Levine bases his concerted refusal to deal claim on Healthchoice‘s denial of his repeated attempts to apply for membership, and its rule discouraging panel members from referring patients to physicians outside the network. This case does not involve the kind of group boycott that warrants application of the per se rule, i.e., it is not a “naked restraint of trade with no purpose except stifling competition.” Consultants & Designers, 720 F.2d at 1562. We will analyze the facts of this case under the rule of reason, instead of the per se approach, for two reasons. First, we are persuaded that because Dr. Levine has not proven that Healthchoice and CFMA have market power,14 the Supreme Court‘s decision in Indiana Federation of Dentists, a pertinent part of which is quoted above, precludes us from applying the per se rule to these facts.
Second, the DOJ Enforcement Policy supports our decision to apply the rule of reason instead of the per se rule. The policy states that “[b]ecause multiprovider networks are relatively new to the health care industry, the Agencies do not yet have sufficient experience evaluating them to issue a formal statement of antitrust enforcement policy.” DOJ Enforcement Policy, available in,
The DOJ Enforcement Policy also provides guidance on how to analyze the multiprovider network practice of excluding particular providers:
Most multiprovider networks will contract with some, but not all, providers in an area. Such selective contracting may be a method through which networks limit their provider panels in an effort to achieve quality and cost containment goals and enhance their ability to compete against other networks. One reason often advanced for selective contracting is to ensure that the network can direct a sufficient patient volume to its providers to justify price concessions or adherence to strict quality controls by the providers. Where a geographic market can support several multiprovider networks, there are not likely to be significant competitive
problems associated with the exclusion of particular providers by particular networks.
A rule of reason analysis usually is applied in judging the legality of excluding providers from a multiprovider network. The focus of the analysis is not on whether a particular provider has been harmed by the exclusion, but rather whether the exclusion reduces competition among providers in the market and thereby harms consumers. Therefore, exclusion may present competitive concerns if providers are unable to compete effectively without access to the network, and competition is thereby harmed. The Agencies also recognize, however, that there may be procompetitive reasons associated with the exclusion, such as the provider‘s competence or ability and willingness to meet the network‘s cost-containment goals. In addition, in certain circumstances network membership restrictions may be procompetitive by giving non-member providers the incentive to form other networks in order to compete more effectively with the network.
DOJ Enforcement Policy at *42. We find no fault with that analysis, and consistent with it we conclude that the rule of reason applies to Dr. Levine‘s section 1 claim against Healthchoice and CFMA.
Under the rule of reason, the “test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition.” Chicago Bd. of Trade v. United States, 246 U.S. 231, 238, 38 S.Ct. 242, 244, 62 L.Ed. 683 (1918). Rule of reason analysis requires the plaintiff to prove (1) an anticompetitive effect of the defendant‘s conduct on the relevant market, and (2) that the conduct has no procompetitive benefit or justification. E.g., Consultants & Designers, 720 F.2d at 1562.
In order to prove an anticompetitive effect on the market, the plaintiff may either prove that the defendants’ behavior had an “actual detrimental effect” on competition, or that the behavior had “the potential for genuine adverse effects on competition.” In order to prove the latter, the plaintiff must
define the relevant market and establish that the defendants possessed power in that market. Indiana Fed‘n of Dentists, 476 U.S. at 460-61, 106 S.Ct. at 2019; Capital Imaging Assoc., P.C. v. Mohawk Valley Medical Assoc., Inc., 996 F.2d 537, 546 (2d Cir.) (“[W]here the plaintiff is unable to demonstrate ... actual effects, it must at least establish that defendants possess the requisite market power so that their arrangement has the potential for genuine adverse effects on competition.” (citation and quotation marks omitted)), cert. denied, --- U.S. ----, 114 S.Ct. 388, 126 L.Ed.2d 337 (1993). We analyze the concerted refusal to deal in this case first for actual detrimental effect on competition, and then for potential adverse effect.
Dr. Levine contends that he has shown actual detrimental effects, i.e., that the defendants intended to, and did, restrict competition. But Dr. Levine has failed to support with any evidence his conclusory assertion that the defendants’ behavior actually had the effect of restricting competition. Indeed, the evidence in the record suggests the contrary. Although Healthchoice and CFMA denied him membership, Dr. Levine had no trouble establishing a booming practice. Dr. Levine opened a solo practice in 1989 with one patient, and in a little more than a year his practice was so busy that he began advertising to hire another physician. Dr. Levine acknowledges his extraordinary success—which earned him more than half a million dollars in his first full year of practice and nearly three quarters of a million dollars his second year—but he argues that had he been allowed to join Healthchoice, he would have been able to “score a touchdown.” The antitrust laws are intended to protect competition, not competitors, see Brown Shoe Co. v. United States, 370 U.S. 294, 344, 82 S.Ct. 1502, 1534, 8 L.Ed.2d 510 (1962); Todorov, 921 F.2d at 1450, and we will not depart from that purpose in order to improve Dr. Levine‘s income standings in the physician league or help him win the Super Bowl of remuneration.
Dr. Levine also contends that he has shown actual detrimental effects on competition by showing that Healthchoice‘s closed
In the face of his failure to show an actual detrimental effect on competition, Dr. Levine argues that he still need not prove market power if he shows that the defendants intended to restrict competition. The rule of reason analysis is concerned with the actual or likely effects of defendants’ behavior, not with the intent behind that behavior. See U.S. Healthcare, Inc. v. Healthsource, Inc., 986 F.2d 589, 596 (1st Cir.1993) (stating that “effects are ... the central concern of the antitrust laws,” and that motivation is but “a clue“). Thus even if Dr. Levine had established that the defendants intended to restrict competition—which he has not—proof of such intent would not relieve him of the necessity of either proving the defendants’ market power or proving an actual detrimental effect on competition, and we have already decided that he has failed to
create a genuine issue of material fact as to actual detrimental effect.
In view of that, Dr. Levine‘s claim may only succeed under our section 1 rule of reason analysis if he proves that the defendants’ acts had “the potential for genuine adverse effects on competition.” To do this, Dr. Levine must define the relevant product and geographic markets and prove that the defendants had sufficient market power to affect competition. See Indiana Fed‘n of Dentists, 476 U.S. at 460-61, 106 S.Ct. at 2019. Dr. Levine contends that the relevant product market should be the provision of internist services to Healthchoice patients, which he characterizes as an “aftermarket,” relying on Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992), and that the relevant geographic market is the Orlando area. He argues that the product market he has defined is separate from the market for all other physician services in the Orlando area. We disagree.
“To define a market is to identify the producers that provide customers of a defendant firm (or firms) with alternative sources for the defendant‘s product or services.” 2A Phillip E. Areeda et al., Antitrust Law ¶ 530a, at 150 (1995) (footnote omitted); see also Eastman Kodak, 504 U.S. at 481, 112 S.Ct. at 2090. The “market is composed of products that have reasonable interchangeability.” United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 404, 76 S.Ct. 994, 1012, 100 L.Ed. 1264 (1956); see also United States Anchor Mfg., Inc. v. Rule Indus., Inc., 7 F.3d 986, 995 (11th Cir.1993), cert. denied, --- U.S. ----, 114 S.Ct. 2710, 129 L.Ed.2d 837 (1994). Therefore, in order to provide an accurate market definition in this case, Dr. Levine must identify the physician services that Healthchoice enrollees would deem to be reasonably interchangeable with the services provided by Healthchoice providers. It is undisputed that Healthchoice enrollees are free to choose non-Healthchoice physicians, and that Healthchoice payors will cover at least some portion of the non-Healthchoice physician‘s fee. Dr.
Dr. Levine has failed to present evidence showing how much more, if any, Healthchoice enrollees must pay to visit a non-Healthchoice physician. In fact, Dr. Levine admits that he has treated two Healthchoice enrollees in his practice, and that for one of those patients he waived the payor‘s copayment requirement so that the patient did not have an additional out-of-pocket expense.16 Moreover, Dr. Levine has offered no evidence to show that the cost to the enrollee of switching to another healthcare plan would be prohibitively expensive. Although Dr. Levine‘s expert assumed that Healthchoice enrollees are locked in to the Healthchoice plan, he admitted that he had seen no evidence that the enrollees’ choice of plan had been so restricted. To the contrary, the evidence in the record establishes that the largest Healthchoice payor offers its enrollees several choices for healthcare coverage, and that those enrollees are allowed to switch plans. There is nothing to indicate that the other Healthchoice payors offer their enrollees any less choice. Thus, we hold that Dr. Levine‘s narrow definition of the relevant product market does not satisfy his burden of presenting prima facie evidence of the relevant market.17 See L.A. Draper & Son v. Wheelabrator-Frye, Inc., 735 F.2d 414, 422 (11th Cir.1984) (“An antitrust plaintiff ... makes out a prima facie case under the rule of reason only upon proof of a well-defined relevant market upon which the chal-
lenged anticompetitive actions would have substantial impact.” (citation and quotation marks omitted)); see also Bathke v. Casey‘s Gen. Stores, Inc., 64 F.3d 340, 345 (8th Cir.1995); Pastore v. Bell Tel. Co., 24 F.3d 508, 512 (3d Cir.1994).
Even if Dr. Levine had adequately defined the relevant market, he has presented no evidence to prove the defendants’ market power. Absent evidence that the defendants had sufficient market power to affect competition, Dr. Levine‘s section 1 claim must fail. Therefore, because Dr. Levine has not established either that the defendants’ behavior had an “actual detrimental effect” on competition or “the potential for genuine adverse effects on competition,” Indiana Fed‘n of Dentists, 476 U.S. at 460-61, 106 S.Ct. at 2019, we hold that the district court properly dismissed Dr. Levine‘s section 1 claim against Healthchoice and CFMA.18
2. The Section 1 Claim Against ORHS and Sand Lake Hospital
Dr. Levine claims that ORHS, Sand Lake Hospital, and other unnamed co-conspirators on the Sand Lake Hospital medical staff violated section 1 of the Sherman Act by conspiring to suspend his staff privileges without good cause, and that this activity constituted a concerted refusal to deal resulting in an unreasonable restraint of trade. As Dr. Levine conceded at oral argument, the per se rule does not apply to the defendants’ decision to suspend his staff privileges. As with Dr. Levine‘s section 1 claim against Healthchoice and CFMA, we will apply the rule of reason to his section 1 claim against ORHS and Sand Lake Hospital.
We need not decide whether Dr. Levine has offered sufficient proof of a conspiracy to restrain trade between ORHS, Sand
The only evidence Dr. Levine offers to show that his suspension had an actual detrimental effect on competition is that one of his patients came to the Sand Lake Hospital ER during his suspension and was unable to use Dr. Levine‘s services. The practical effect of this incident is no different than if Dr. Levine‘s patient had been taken to the ER at a hospital where he had never even applied for staff privileges—the patient would be unable to see Dr. Levine at that location at that particular time. However, had the patient gone or been taken to Florida Hospital (which has five locations), where Dr. Levine did have staff privileges, she would have been able to use Dr. Levine‘s services. We are convinced that a patient‘s inability to see Dr. Levine in the Sand Lake Hospital ER when she asked for him does not rise to the level of an actual detrimental effect on competition. Cf. Lie v. St. Joseph Hosp., 964 F.2d 567, 569-70 (6th Cir.1992) (holding that plaintiff doctor‘s proof that hospital staff suspension resulted in his having a lower income did not rise to level of actual detrimental effects on competition); Tarabishi v. McAlester Regional Hosp., 951 F.2d 1558, 1569 n. 15 (10th Cir.1991) (holding that plaintiff‘s staff privileges suspension was not an actual detrimental effect on competition because it did not result in restriction of choice to consumers or in a reduction of competition), cert. denied, 505 U.S. 1206, 112 S.Ct. 2996, 120 L.Ed.2d 872 (1992). Thus Dr. Levine‘s only remaining recourse for establishing his section 1 claim is to demonstrate the potential for detrimental effects on competition, and to do that he must establish that the defendants had sufficient market power to affect competition. Indiana Fed‘n of Dentists, 476 U.S. at 460-61, 106 S.Ct. at 2019.
Dr. Levine maintains, however, that he need not prove the defendants’ market
power, and for that proposition he relies on Summit Health, Ltd. v. Pinhas, 500 U.S. 322, 111 S.Ct. 1842, 114 L.Ed.2d 366 (1991), Boczar v. Manatee Hosp. & Health Sys., Inc., 993 F.2d 1514 (11th Cir.), reh‘g denied, 11 F.3d 169 (11th Cir.1993), and Bolt v. Halifax Hosp. Medical Ctr., 891 F.2d 810 (11th Cir.), cert. denied, 495 U.S. 924, 110 S.Ct. 1960, 109 L.Ed.2d 322 (1990). None of those decisions supports Dr. Levine‘s position.
The sole issue to be decided in Pinhas was whether a hospital‘s exclusion of a physician from its medical staff could satisfy the “effect on interstate commerce” jurisdictional requirement. 500 U.S. at 324, 111 S.Ct. at 1844. Dr. Levine quotes the following language from Justice Scalia‘s dissent in Pinhas to support his argument: “Since group boycotts are per se violations ... [the plaintiff] need not prove an effect on competition in the Los Angeles area to prevail....” Id. at 337, 111 S.Ct. at 1851. However, this is no more than a restatement of the basic analysis under the per se rule. Because Dr. Levine has already conceded that the per se rule does not apply to his claim against the hospital, the language from Justice Scalia‘s dissent does not help him. Moreover, Dr. Levine ignores Justice Scalia‘s final position in his dissent, which is that the Sherman Act should not even apply to the hospital‘s actions because the hospital suspension did not affect interstate commerce. Id. at 341-43, 111 S.Ct. at 1853-54.
Dr. Levine‘s reliance on Bolt is no more persuasive. He interprets Bolt to stand for the proposition that, in his words, “there was no requirement to prove [market definition or market share] when there is evidence of anticompetitive intent.” Dr. Levine‘s interpretation of Bolt misses the point that our focus in that opinion was only on the first element of the section 1 claim—whether there was sufficient evidence of a contract, combination, or conspiracy to submit to the jury. 891 F.2d at 818, 829. We held that as to some of the defendants, there was sufficient evidence of a conspiracy to go to the jury, and thus remanded the case to the district court. All discussion of intent in Bolt was in the context of its value as circumstantial evidence of the existence of an agree-
His reliance on Boczar is equally misplaced. In Boczar, we reviewed the district court‘s grant of a post-verdict motion for judgment as a matter of law in favor of the defendants based on its finding that there was insufficient evidence of a conspiracy. We reversed the district court and held that the plaintiff had presented sufficient evidence to support the jury‘s verdict. 993 F.2d at 1519. As to the anticompetitive effect element of the plaintiff‘s case, we simply observed—without discussing the evidence that had been presented at trial—that the defendants’ actions had “effectively ended [the plaintiff‘s] ability to compete and to practice ... and burdened her ability to compete generally.” Id. That was nothing more than a fact-specific observation that the plaintiff in Boczar had proven anticompetitive effect. By contrast, the record in this case establishes beyond legitimate dispute that Dr. Levine‘s ability to compete and practice have flourished. Nothing in Boczar supports his position that he need not prove the defendants’ market power.
In order to prevail in a rule of reason case, absent a demonstrated adverse effect on competition, a plaintiff must define the market and prove that the defendants had sufficient market power to adversely affect competition. See Indiana Fed‘n of Dentists, 476 U.S. at 460-61, 106 S.Ct. at 2019. Because he has offered no evidence defining the relevant product or geographic market, and because he has not established ORHS‘s or Sand
Lake Hospital‘s market power, the district court properly granted summary judgment to the defendant on this section 1 claim.
B. THE SECTION 2 CLAIMS
In Count 2 of his complaint Dr. Levine claimed that CFMA monopolized, attempted to monopolize, and conspired with Healthchoice, ORHS, and Sand Lake Hospital to monopolize the market for physician medical services to Healthchoice enrollees in the Orlando area in violation of section 2 of the Sherman Act.19 “The offense of monopoly under § 2 of the Sherman Act has two elements: (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.” United States v. Grinnell Corp., 384 U.S. 563, 570-71, 86 S.Ct. 1698, 1704, 16 L.Ed.2d 778 (1966); see also T. Harris Young & Assoc., Inc. v. Marquette Elec., Inc., 931 F.2d 816, 823 (11th Cir.), cert. denied, 502 U.S. 1013, 112 S.Ct. 658, 116 L.Ed.2d 749 (1991); Austin v. Blue Cross & Blue Shield, 903 F.2d 1385, 1391 (11th Cir.1990). “Monopoly power under § 2 requires, of course, something greater than market power under § 1.” Eastman Kodak, 504 U.S. at 480, 112 S.Ct. at 2090.
To establish a violation of section 2 for attempted monopolization, “a plaintiff must show (1) an intent to bring about a monopoly and (2) a dangerous probability of success.” Norton Tire Co. v. Tire Kingdom Co., 858 F.2d 1533, 1535 (11th Cir.1988).
To have a dangerous probability of successfully monopolizing a market the defendant must be close to achieving monopoly power. Monopoly power is “the power to raise prices to supra-competitive levels or ... the power to exclude competition in the relevant market either by restricting entry of new competitors or by driving existing competitors out of the market.”
Although Dr. Levine‘s complaint is somewhat ambiguous, it appears that he is alleging all three types of claims—monopolization, attempted monopolization, and conspiracy to monopolize—only against CFMA. Healthchoice, ORHS, and Sand Lake Hospital are each alleged only to have conspired to monopolize the relevant market. Even assuming that Dr. Levine is alleging that all four defendants are liable for all three section 2 claims, the defendants are entitled to summary judgment as a matter of law.
Proof of monopoly power in the relevant market is the first element of a monopolization claim, and proof that there is a dangerous probability of the defendant successfully attaining monopoly power is the second element of an attempted monopolization claim. Dr. Levine‘s failure to adequately define the relevant market, and his failure to prove that the defendants possessed or were close to possessing monopoly power in that market, are fatal to his section 2 claims for monopolization and for attempted monopolization. Moreover, as to his claim for conspiracy to monopolize, Dr. Levine has presented no evidence that the defendants possessed a specific intent to monopolize, which is the first element of a conspiracy to monopolize claim, when they denied him membership or when they suspended his staff privileges. Because Dr. Levine has failed to establish a genuine issue of material fact as to necessary elements of these section 2 claims, we affirm the district court‘s grant of summary judgment in favor of the defendants as to these claims.20
IV. CONCLUSION
The district court‘s grant of summary judgment in favor of the defendants is AFFIRMED.
STRICKLAND v. STATE
Florida District Court of Appeal
1538
V. Other issues
Strickland contends that the evidence of intent was insufficient to meet standards of Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560 (1979), and that the jury instruction on manslaughter unconstitutionally shifted the burden of proof. These are without merit and require no discussion. Even if the warrantless search of the motel room was illegal the issue might have been raised in state court, and, in any event, the evidence found (.38 cartridges and the slip showing purchase of the gun) was merely corroborative.
AFFIRMED.
Notes
457 U.S. at 352-53, 102 S.Ct. at 2477-78, 73 L.Ed.2d 48 (1982) (footnote omitted).[A] binding assurance of complete insurance coverage—as well as most of the respondents’ potential for lower insurance premiums—can be obtained only if the insurer and the doctor agree in advance on the maximum fee that the doctor will accept as full payment for a particular service. Even if a fee schedule is therefore desirable, it is not necessary that the doctors do the price fixing.... [I]nsurers are capable not only of fixing maximum reimbursable prices but also of obtaining binding agreements with providers guaranteeing the insured full reimbursement of a participating provider‘s fee.