Antitrust Law Daily Wrap Up, ANTITRUST—D.S.D.: Individuals’ antitrust claims over medical clinic’s denial of treatment proceed, (Aug 18, 2016)

By Michael Menzhuber, J.D., LL.M.

A individual was allowed to amend her complaint, which alleged that she and others were denied medical care after they filed lawsuits stemming from a privileging decision which allowed a felon to perform unnecessary surgeries on patients, by the federal district court in Sioux Falls, South Dakota. The court determined that the plaintiff sufficiently alleged: (1) an anticompetitive act under the Sherman Act; (2) that she had standing to bring the antitrust action; (3) a conspiracy involving the medical clinic, a doctor, and the hospital which made the hiring decisions that led to the lawsuit; and (4) a tying arrangement involving the medical specialist market and the medical malpractice market (Howes v. Yankton Medical Clinic, P.C., August 17, 2016, Schreier, K.).

Dr. Michael Pietila, a pulmonologist employed by Yankton Medical Clinic (YMC) and a member of Avera Sacred Heart Hospital’s executive board which makes privileging decision for the hospital, and other physicians were sued in an action stemming from a privileging decision allowing Dr. Alan Soosan, a felon using an alias, to perform unnecessary surgeries on patients. In response to the lawsuit, YMC, which was the only convenient location for many patients who required specialized care in Yankton County, terminated future medical care of any patients who had filed suit against YMC or any of its providers.

Connie Howesfiled an action against YMC and Dr. Pietila after her husband was refused follow-up appointments for his sleep apnea condition and, according to Howes, later died as a result of the lack of access to treatment. Howes alleged that: (1) the refusal by YMC and Dr. Pietila to treat her husband was an intimidation tactic in response to their affidavits in the Soosan lawsuits; and (2) YMC had a monopoly power on pulmonary services in the Yankton area and used that power to intimidate Howe, her late husband, and other patients.

After Howes filed her complaint, the defendants moved to dismiss her unlawful tying and monopolization claims. Howes then moved to amend her complaint to add other parties impacted by the defendants’ conduct, substantiate her allegations in the original complaint, and add a new cause of action for corporate interference with the doctor/patient relationship. The defendants opposed the motion to amend.

Motion to amend. In granting Howe’s motion to amend, the court determined that: (1) the other parties that Howe sought to add were denied care after suing YMC; (2) the death of Howe’s husband arose out of the denial of care; and (3) the denial of care occurred due to YMC’s monopoly power. Consequently, Howe’s husband’s death and the new plaintiffs’ injuries arose out of the same transaction and shared common questions of law and fact.

Interstate commerce. As an initial matter, the court noted that an anticompetitive act under the Sherman Act must either occur in the flow of interstate commerce or substantially affect interstate commerce. The court determined that Howes alleged a substantial effect on interstate commerce because: (1) four of the six plaintiffs that she sought to add were Nebraska citizens; (2) YMC accepted federal funding through Medicare; and (3) out-of-state patients and federal funding were specific aspects of interstate commerce.

Antitrust standing and injury. The plaintiffs had antitrust standing because they had alleged that YMC used its monopoly power to deny them care so it could gain an improper advantage in the Soosan litigation, according to the court. Additionally, the damages were concrete and directly related to the restraint, so the plaintiffs had standing to bring their claim.

Conspiracy. The plaintiffs alleged that YMC, Dr. Pietila, and unnamed co-conspirators conspired to deny them medical care. Although YMC and Dr. Pietila could not conspire because Dr. Pietila worked for YMC, YMC claimed no control over the hiring decisions at Avera that led to the Soosan lawsuits. Consequently, the court determined that the amended complaint adequately alleged a conspiracy between YMC, Dr. Pietila, and Avera as an unnamed co-conspirator.

Tying arrangement. Finally, the amended complaint adequately alleged the elements of a tying arrangement because the plaintiffs: (1) adequately pled the interstate commerce element; (2) that two distinct elements (the medical specialist market and the medical malpractice market) were tied; and (3) the plaintiffs had to refrain from one element (filing medical malpractice suits) in order to receive another (specialist care), the court concluded.

The case is No. 4:15-CV-04177-KES.

Attorneys: Michael D. Bornitz (Cutler Law Firm, LLP) for Connie Howes. Mark W. Haigh (Evans Haigh & Hinton LLP) for Yankton Medical Clinic, PC.

Companies: Yankton Medical Clinic, PC

Cases: Antitrust SouthDakotaNews