Antitrust Law Daily Wrap Up, ANTITRUST—DIda: Anesthesiologist Failed to Allege Antitrust Injury from Medical Center’s Role in His Forced Resignation, (Apr 2, 2013)

By Tobias J. Gillett, J.D., LL.M.

An anesthesiologist failed to state federal and Idaho antitrust claims against a medical center following his forced resignation from the center’s anesthesiology provider, allegedly at the center’s behest, because he did not sufficiently allege an antitrust injury from the medical center’s conduct, the federal district court in Boise has ruled (Zoellner v. St. Luke’s Regional Medical Center, Ltd., March 31, 2013, Lodge, E.).

Dr. Patrick Zoellner was an anesthesiologist employed by Anesthesia Associates of Boise, the exclusive provider of anesthesiology services at St. Luke’s Regional Medical Center, Ltd. Zoellner alleged that St. Luke’s coerced Anesthesia Associates into forcing him to resign by threatening not to renew Anesthesia Associates’ contract unless they did so.

He claimed that his termination was due to his opposition to St. Luke’s allegedly unsafe surgery scheduling practices, and that he had to accept the resignation or face being “blackballed,” thus losing references and referrals for other work. He alleged that St. Luke’s conduct resulted in a “market-wide decline in the quality of surgical care provided by St. Luke’s,” due to his resignation’s “chilling effect” on other anesthesiologists, and “increased costs when St. Luke’s constructed another surgical room.”

Zoellner filed suit against St. Luke’s, asserting claims for federal and state antitrust violations, intentional interference with contract, and intentional interference with prospective economic advantage. On June 19, 2012, the court granted St. Luke’s motion to dismiss as to the federal and state antitrust claims, but granted him leave to amend. On July 10, 2012, Zoellner filed an amended complaint. St. Luke’s filed a second motion to dismiss.

Zoellner alleged that St. Luke’s had conspired with Anesthesia Associates to “monopolize the provision of hospital surgical services and the provision of anesthesiology services within a significant portion of the Boise market. He also alleged that St. Luke’s had engaged in conduct constituting “(1) a conspiracy with Anesthesia Associates to foreclose him from the market of anesthesiology providers through an unreasonable vertical restraint on trade restricting competition and diminishing the quality of hospital surgical services; (2) an illegal boycott; and (3) an illegal tying arrangement.”

The court concluded that Zoellner had failed to allege plausible antitrust claims. The court explained that a federal antitrust claim requires a showing of an antitrust injury, and that federal case law established unreasonable restraints of commerce under Idaho law. An antitrust injury is one in which the plaintiff sustains the injury in a way “the antitrust laws were designed to prevent,” and the plaintiff must be either a consumer or a competitor of the defendant in the restrained market.

The court determined that Zoellner had not presented a plausible economic theory for his antitrust violations. Patients did not seek out particular anesthesiologists; rather, he was one of many anesthesiologists assigned to surgeries scheduled by other doctors. Zoellner had not shown that his resignation had any impact on competition in the relevant market.

Moreover, Zoellner’s theory that prices to consumers would increase as a result of his resignation ran counter to the theory that St. Luke’s was attempting to increase its market share. “Basic economic principles” suggested that reduced prices would lead to increased market share, not increased prices. St. Luke’s construction of another surgical room would be more likely to increase competition than decrease it.

The court also rejected his group boycott claim. Zoellner had not alleged that he attempted to find work in the Boise area or that St. Luke’s took any action to stop him from practicing elsewhere in Boise. Although “injury to competitors may be probative of harm to competition,” Zoellner had not alleged that St. Luke’s prevented him “from providing his services at a lower price or that his resignation was intended to boycott anesthesiologist services from being provided to patients.”

Zoellner had alleged an injury to himself, as a competitor, but had not alleged an injury to competition. His allegations that quality had declined did not “equate to a reduction in competition,” because he “did not plausibly allege a market-wide decline in the quality of services.”

Therefore, the court dismissed his federal and Idaho antitrust claims. The court also dismissed his claim for intentional interference with contract, but declined to dismiss his claim for intentional interference with prospective economic advantage.

The case is No. 1:11-cv-00382-EJL.

Attorneys: Daniel E. Williams (Thomas Williams & Park LLP) for Patrick A. Zoellner, M.D. Elijah Martin Watkins (Stoel Rives LLP) for St. Luke's Regional Medical Center, Ltd.

Companies: St. Luke’s Regional Medical Center, Ltd.

Cases: Antitrust IdahoNews