Antitrust Law Daily Wrap Up, ANTITRUST—3d Cir.: Physician fails to show antitrust injury in wrongful termination suit against hospital, (Aug 21, 2015)

By Linda O’Brien, J.D., LL.M.

In an action by a surgeon against a hospital and several hospital board members for conspiring to terminate his staff privileges, the surgeon failed to sufficiently define the relevant product and geographic markets as to demonstrate an actionable antitrust injury, the U.S. Court of Appeals in Philadelphia has ruled. Thus, the district court’s grant of summary judgment in favor of the hospital was affirmed (Novak v. Somerset Hospital, August 20, 2015, Greenaway, J.).

Victor Novak is a general surgeon located in Somerset, Pennsylvania. He held staff privileges at Somerset Hospital since 1993, as well as at Conemaugh Hospital since 1998. Somerset Hospital is a community hospital and is a less comprehensive facility than Conemaugh Hospital.

In August 2005, Novak performed two surgeries without proper authority and, based on those transgressions, Somerset Hospital terminated Novak’s privileges. Novak filed suit against Somerset Hospital and various hospital board members, alleging violations of Sections 1 and 2 of the Sherman Act. Novak asserted that the board members conspired to terminate his privileges and illegally restrained patient choice for general surgical services for Somerset. Finding that Novak failed to establish antitrust injury, the district court granted summary judgment in favor of the defendants. Novak appealed.

The district court properly found that Novak did not show that he was shut out of the relevant market or that patient choice was restrained for surgical services at Somerset. According to the appellate court, the relevant product market is comprised of “commodities reasonably interchangeable by consumers for the same purposes.” Novak argued that he was prevented from providing general and gastrointestinal (GI) surgery services to patients he served while at Somerset Hospital. He also contended that tertiary care hospitals, such as Conemaugh, were not the same product market as Somerset, since Conemaugh offers more comprehensive services than Somerset Hospital. In rejecting his contention, the appellate court determined Novak’s product market definition provided no rational basis for distinguishing between general/GI surgical services at Somerset Hospital and general/GI surgical services in larger facilities like Conemaugh.

Furthermore, Novak failed to define the relevant geographic market as to show an actionable antitrust injury. The appellate court noted that, according to Novak’s expert, more than 32 percent of patients from Somerset Hospital’s primary service area were admitted to Conemaugh and two other hospitals. Thus, Novak’s attempt to define the relevant geographic market as only Somerset Hospital was inconsistent with the record. Novak’s contention that the board members terminated his privileges because his treatment of patients at Conemaugh reduced income to Somerset was also rejected because potential patients seeking surgical services would rationally look at both Somerset and Conemaugh hospitals, Accordingly, Novak’s definition of the relevant geographic market was legally insufficient.

The case is No. 14-4354.

Attorneys: Richard J. Cromer (Leech, Tishman, Fuscaldo & Lampl) for Victor F. Novak, II, MD. David R. Johnson (Thomson, Rhodes & Cowie) for Somerset Hospital.

Companies: Somerset Hospital

Cases: Antitrust DelawareNews NewJerseyNews PennsylvaniaNews