Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—Mont. Sup. Ct.: Radiology group’s suit against hospital for staff privileges termination reinstated, (Sep 2, 2015)

By Linda O’Brien, J.D., LL.M.

A trial court erred in dismissing as untimely a radiology group’s unfair trade practices claims against the sole community hospital in Helena, Montana for terminating the physicians’ medical staff privileges, the Montana Supreme Court has ruled. The trial court’s order, dismissing the complaint, was reversed and remanded (Montana Interventional and Diagnostic Radiology Specialists, PLLC v. St. Peter’s Hospital, September 1, 2015, Cotter, P.).

Physicians Dennis Palmer, Randy Sibbitt, and Hassan Massouh formed Montana Interventional and Diagnostic Radiology Specialists, PLLC (MIDRS) to provide diagnostic radiology services. Prior to 2006, St. Peter’s Hospital, the only acute care community hospital in Helena, Montana, had an “open” radiology department, where the hospital’s medical staff granted privileges to qualified non-employee radiologists to interpret images generated at the hospital. In 2006, the hospital and MIDRS entered into a three-year contract under which MIDRS would provide its services exclusively to the hospital.

After the contract expired, St. Peter’s selected a different radiology provider. At the same time, the hospital revoked the MIDRS physicians’ medical staff privileges due to an alleged failure to abide by Mammography Quality Standards Act standards. In 2011, MIDRS physicians again applied for staff privileges but were informed that the hospital had “closed” its radiology department and the department would only be staffed by hospital personnel.

In August 2012, MIDRS filed suit against the hospital, alleging an unreasonable restraint of trade in violation of the Montana Unfair Trade Practices Act (UTPA). The trial court granted the hospital’s motion for judgment on the pleadings and dismissed the complaint on the grounds that the complaint as untimely. The plaintiffs appealed.

The appellate court found that the trial court erred in dismissing the complaint as time barred. In its order of dismissal, the trial court determined that the denial of staff privileges in 2009 that MIDRS alleged in its complaint was the cause of its harm. Thus, the applicable two-year statute of limitations had expired before the conduct forming the basis of MIDRS’ claims had occurred, the trial court reasoned. MIDRS responded that its claims were premised on the hospital’s action to close its radiology department in July 2011 and the complaint was timely under the statute of limitations.

The UTPA prohibits unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce. MIDRS contended that the closing of the hospital’s radiology department created an unlawful restraint of trade by empowering the hospital to control the quantity, quality, and cost of radiology services in Helena and drove up prices for patients, prevented competition, and created a monopoly.

The appellate court noted that a court must assume that all of the well-pleaded allegations in the opposing party’s pleadings were true when considering a motion for judgment on the pleading and such motion was appropriate only where all material allegations of fact were uncontroverted. Thus, based on the assumption that MIDRS’ well pleaded allegations were true, the accrual of MIDRS’ claims could not be determined from the pleadings alone and further development of the record was necessary, the court concluded.

The case is No. 14-0724.

Attorneys: David R. Paoli (Paoli Kutzman, P.C.) and Timothy B. Strauch (Strauch Law Firm PLLC) for Montana Interventional and Diagnostic Radiology Specialists, PLLC, Dennis Palmer, Randy Sibbitt, and Hassan Massouh. Robert J. Phillips and Mitch J. Vap (Phillips Haffey P.C.) for St. Peter’s Hospital.

Companies: Montana Interventional and Diagnostic Radiology Specialists, PLLC; St. Peter’s Hospital

Cases: StateUnfairTradePractices MontanaNews