Antitrust Law Daily Wrap Up, ANTITRUST—S.D. Miss.: Medical center’s conspiracy, RICO claims against hospital, ambulance service fail, (Jan 23, 2014)

By Jeffrey May, J.D.

Claims that a Mississippi county hospital and an ambulance service conspired to divert patients from a complaining medical center have been rejected by the federal district court in Hattiesburg, Mississippi. Following the completion of discovery, the defending hospital and ambulance service were entitled to summary judgment in their favor on the complaining medical center’s claims under the antitrust laws and the Racketeer Influenced and Corrupt Organizations (RICO) Act (Wesley Health System, LLC v. Forrest County Board of Supervisors, January 22, 2014, Starrett, K.).

The Sherman Act, Section 1 claim of the complaining medical center—Wesley Health System, LLC—could not proceed because defendant Forrest General was incapable of conspiring with defendant AAA Ambulance Service (AAA). Forrest General controlled AAA, and they did not constitute two separate, independent decisionmakers for purposes of Section 1.

AAA was owned by Forrest General, the City of Hattiesburg, and Forrest County. It was created by the Board of Trustees of the Forrest County General Hospital to “provide ambulance service to the citizens … of the City of Hattiesburg, Mississippi and of the County of Forrest, State of Mississippi,” and to “own, operate and maintain a public ambulance service facility controls it … as an integral part of the governmental function of the Board of Trustees.” In addition, AAA’s key personnel were employees of Forrest General.

Wesley argued that AAA and Forrest General were separate and distinct corporate entities. However, corporate formalities were meaningless in determining whether two parties were capable of conspiring under Section 1, the court explained.

Further, testimony provided by AAA employees regarding their understanding of the relationship between AAA and Forrest General was not sufficient to create a genuine factual dispute over Forrest General’s control of AAA. It was either inadmissible hearsay or speculation or irrelevant to the issue of actual control.

RICO claims. To establish that the defendants engaged in a “pattern of racketeering activity,” Wesley had to show that they committed at least two acts of racketeering activity. Wesley argued that defendants committed at least two acts of kidnapping by inveiglement. To “inveigle” meant to accomplish a kidnapping by use of enticement, trickery, or deceit, the court explained.

Although Wesley identified six specific patients that were purportedly kidnapped, it failed to demonstrate that AAA kidnapped at least two of these six patients. Because AAA had lawful authority to transport the patients to Forrest General, there was no evidence of inveiglement or intent to confine them against their will, and the defendants’ motion for summary judgment was granted as to Wesley’s RICO claim.

This is Case No. 2:12-cv-00059-KS-MTP.

Attorneys: Kathryn R. Gilchrist (Adams and Reese, LLP) for Wesley Health System, LLC. James K. Dukes (Law Office of James K. Dukes) and William N. Reed (Baker, Donelson, Bearman, Caldwell & Berkowitz, PC) for Forrest County Board of Supervisors. Michael J. Tarleton (UNGARINO & ECKERT, LLC) and Michael B. Wallace (WISE, CARTER, CHILD & CARAWAY) for AAA Ambulance Service.

Companies: Wesley Health System, LLC; Forrest County Board of Supervisors; AAA Ambulance Service

Cases: Antitrust RICO MississippiNews