Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Cal.: Napa Valley surgeon supports claims he was squeezed from market, (Apr 20, 2016)

By Greg Hammond, J.D.

A cardiac surgeon has adequately alleged that a doctor and medical center conspired to terminate his contract and squeeze him out of the market, leaving consumers with lesser quality services, fewer choices, and supracompetitive prices. In denying the medical center’s motion to dismiss, the federal district court in San Francisco concluded that the surgeon adequately alleged the details of the purported conspiracy, an intent to harm competition, and actual injury to competition (Northern California Minimally Invasive Cardiovascular Surgery, Inc. v. NorthBay Healthcare Corp., April 19, 2016, Alsup, W.).

The plaintiff surgeon claimed that—in order to keep him from divulging NorthBay Healthcare’s “substandard surgical results” and to ensure bond financing—another doctor and NorthBay engaged in a scheme to force the plaintiff out of NorthBay and to disparage his reputation to keep other hospitals from doing business with him. As a result of the purported scheme, the plaintiff claimed that the area’s only minimally invasive and robotic cardiac surgeon was forced out of the market, leaving lower quality competitors to perform more invasive surgeries and lessening consumers’ remaining choices. NorthBay moved to dismiss the complaint.

The court denied the motion to dismiss, first finding that the plaintiff alleged facts sufficient to state a plausible conspiracy claim under Section 1 of the Sherman Act. In particular, the court noted that the complaint discussed the initial conspiracy, the different prongs of the scheme, the timeline and purpose, several specific policies enacted to force the plaintiff out of the market, conversations with competitors, and specific emails from which a fact finder could plausibly infer an intent to cease referrals to the plaintiff and dampen the market.

Second, the allegations were sufficient to demonstrate that the intent of the scheme was to harm competition because the plaintiff claims the conspirators intended to squeeze him out, along with the superior product he offered—minimally invasive cardiac and vascular surgery—in order to promote their inferior product.

The court also found that the plaintiff adequately alleged antitrust injury, including allegations that his exclusion from the market led to “lesser quality services,” has “caused consumers to pay supracompetitive prices,” and “gave consumers fewer choices.” The plaintiff also alleged that the conspiracy resulted in significant anticompetitive harm to the market for cardiovascular and thoracic surgery in Napa and Solano counties in terms of quality of care, the range of services offered, the number of surgeons, and cost. He specifically pointed out that Queen of the Valley Medical Center—the only facility capable of performing the full range of minimally invasive cardiac and thoracic surgery—has been crippled.

Allegations of a relevant market consisting of Napa and Solano counties—because patients were not willing to travel outside of those counties to obtain cardiac and thoracic surgical services—were sufficient to define a plausible geographic market.

The case is No. C 15-06283 WHA.

Attorneys: Jarod Michael Bona (Bona Law PC) for Northern California Minimally Invasive Cardiovascular Surgery, Inc. Christopher S. Yates (Latham & Watkins LLP) for NorthBay Healthcare Corp., NorthBay Healthcare Group, Inc., and NorthBay Healthcare Medical Group, Inc.

Companies: Northern California Minimally Invasive Cardiovascular Surgery, Inc.; NorthBay Healthcare Corp.; NorthBay Healthcare Group, Inc.; NorthBay Healthcare Medical Group, Inc.

Cases: Antitrust CaliforniaNews