The opinion
United States Court of Appeals,
Fifth Circuit.
No. 95-60186.
James P. MARTIN, Plaintiff-Appellee, Cross-Appellant,
v.
MEMORIAL HOSPITAL AT GULFPORT, Wray Anderson, Mitchell Salloum,
Edward Reid, and Myrtis Franke, Defendants-Appellants, Cross-
Appellees.
July 10, 1996.
Appeals from the United States District Court for the Southern
District of Mississippi.
Before POLITZ, Chief Judge, and DEMOSS and DENNIS, Circuit Judges.
DENNIS, Circuit Judge:
The principal question presented by this case is whether a
hospital, owned and operated by a municipality and a state
subdivision hospital district, and the hospital's board of
trustees, are immune from an antitrust claim under the Parker v.
Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943) state action
doctrine.
A nephrologist brought this antitrust action against the
hospital and its board seeking to enjoin the enforcement of the
hospital's contract with the medical supervisor (also a
nephrologist) of its End Stage Renal Disease facility (ESRD). The
contract grants the medical supervisor authority to plan, organize,
conduct and direct the professional ESRD services and to provide
and maintain complete physician care of ESRD patients personally or
through his designated representative. Subsequently the hospital
adopted a resolution formally interpreting the contract to mean
1
that only the medical supervisor or his medical practice associate
working under the direction and control of the medical supervisor,
for whom the supervisor accepts full responsibility, has the right
to perform chronic dialysis in the ESRD. Because the plaintiff
nephrologist is not associated with the medical supervisor in
practice, the hospital's enforcement of the contract and its
resolution prevents the nephrologist from personally performing
chronic renal dialysis for his patients in the hospital's ESRD.
The district court denied the hospital and the board a summary
judgment declaring them to be immune from the federal antitrust
claim, and they appealed. We reverse and remand for the entry of
a summary judgment dismissing the federal antitrust action. We
have jurisdiction of the appeal under the collateral order doctrine
because the district court's ruling conclusively determines the
disputed question, resolves an important issue completely separate
from the merits of the action, and is effectively unreviewable on
appeal from a final judgment. The state action doctrine immunizes
the enforcement of the municipal-state subdivision hospital's
exclusive contract with its ESRD supervisor because suppression of
competition was the foreseeable result of the state statutes which
(1) authorize only a health care provider having obtained a
certificate of need to establish an ESRD, and (2) empower the
hospital to contract with any individual for the providing of
services by or to the hospital regarding any facet of the operation
of the hospital or any division or department thereof, or any
related activity, and to terminate such contract when deemed in the
2
best interests of the hospital.
1. Facts and Procedural History
The parties by itemizations and responses stipulated to the
facts for purposes of the motion for summary judgment. End Stage
Renal Disease (ESRD) units are kidney dialysis units in which
chronic renal dialysis is performed. Mississippi law prohibits the
establishment, expansion, or relocation of an ESRD unless a
Certificate of Need is first obtained from the state department of
health. The Memorial Hospital at Gulfport obtained certificates of
need for several ESRD facilities including the one involved in this
case. The hospital began the operation of its ESRD units in 1981.
Subsequently, the hospital entered into an exclusive medical
director contract with Dr. Douglas Lanier whereby only Dr. Lanier
or his designated representative had the right to perform chronic
dialysis in the hospital's ESRD units. In 1986, the hospital and
Dr. Lanier recruited Dr. James Martin to come to Gulfport to
practice with Dr. Lanier as his associate. Dr. Martin was granted
full medical staff privileges including the authority to perform
chronic dialysis in the hospital's ESRD units. In November 1988,
Dr. Martin and Dr. Lanier encountered some differences and
terminated their relationship. Dr. Martin began practicing
separately from Dr. Lanier. Afterwards, Dr. Martin did not attempt
to perform chronic dialysis at the hospital's ESRD unit until March
1989 when he sought to admit a patient for chronic dialysis. The
hospital refused to allow him to perform the chronic dialysis
basing its action on the exclusive contract with Dr. Lanier. Dr.
3
Martin wrote to the hospital asserting that he had a right to treat
patients in the chronic ESRD unit. On June 26, 1989, the board of
trustees of the hospital reevaluated whether Dr. Lanier's contract
should remain exclusive and passed a resolution that reaffirmed the
exclusive medical director contract, interpreting the contract to
mean that only a physician in practice with and under the
supervision and control of Dr. Lanier could perform chronic
dialysis in the ESRD unit. In November f 1990, Dr. Martin's
medical staff privileges were renewed with the exception of his
right to personally perform chronic dialysis in the ESRD units,
which the hospital denied based on the exclusive contract with Dr.
Martin. Dr. Martin retained the authority to admit patients to the
hospital and perform acute ESRD services on them as in-patients,
but he must permit the medical supervisor or his associate-designee
to perform chronic ESRD services for them as out-patients. The
Memorial Hospital at Gulfport is a community hospital existing
under Miss.Code Ann. § 41-13-10 et seq., and is jointly owned by
the City of Gulfport and the Gulfport-West Harrison County Hospital
District, a subdivision of the State of Mississippi. See Enroth v.
Memorial Hospital at Gulfport, 566 So.2d 202, 206 (Miss.1990).
In 1990, Dr. Martin filed suit in the district court alleging
that the hospital and its board had violated federal antitrust
laws, violated his constitutional due process rights, interfered
with his contractual relationships with his patients, and violated
the state antitrust laws. The hospital and its board moved for
summary judgment on all claims. The district court granted the
4
defendants' motions in part and denied them in part. The
hospital's motion for summary judgment was granted only to the
extent of dismissing plaintiff's claims for damages under the
general prohibition against recovery of damages for antitrust
violations from any local government. 15 USCS § 35. The
hospital's motion for summary judgment was denied as to all other
claims for relief by plaintiff. The motion for summary judgment by
the individual hospital board members was denied insofar as the
plaintiff's claims for injunctive relief, attorneys fees and court
costs under the federal anti-trust laws. As to all other claims
for relief asserted by the plaintiff, the motion for summary
judgment dismissing these claims against the individual hospital
board members was granted.
The hospital and its board appealed from the district court's
denial of summary judgment that they are entitled to state action
immunity from suit or liability under the federal anti-trust laws.
Dr. Martin filed a motion to dismiss the appeal for lack of
jurisdiction on the grounds that the district court's ruling was
interlocutory and not a final judgment. The appellants contend,
however, that the ruling is appealable under the collateral order
doctrine. Accordingly, the principal issues for our appellate
review are (1) whether the district court's ruling that rejected
the defendants' claim of state action immunity is appealable under
the collateral order doctrine; and, if so, (2) whether the
hospital and its board members are entitled to state action
immunity from the plaintiff's federal anti-trust claim.
5
2. Jurisdiction
The district court's refusal to grant defendants' motions for
summary judgment vindicating their entitlement to state action
immunity is appealable under the collateral order doctrine. The
district court's ruling meets all of the requisites of an
appealable collateral order, viz., that it (a) is "effectively
unreviewable" on appeal after trial; (b) conclusively determines
the disputed question; and (c) resolves an important issue
completely separate from the merits of the action. Coopers &
Lybrand v. Livesay, 437 U.S. 463, 98 S.Ct. 2454, 57 L.Ed.2d 351
(1978); Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541,
69 S.Ct. 1221, 93 L.Ed. 1528 (1949); Rauscher Pierce Refsnes, Inc.
v. Birenbaum, 860 F.2d 169 (5th Cir.1988).
Title 28 U.S.C. § 1291 provides for appeal from "final
decisions of the district courts." Appeal is thereby precluded
"from any decision which is tentative, informal or incomplete," as
well as from any "fully consummated decisions, where they are but
steps towards final judgment in which they will merge." Puerto
Rico Aqueduct and Sewer Authority v. Metcalf & Eddy, Inc., 506 U.S.
139, 142-143, 113 S.Ct. 684, 687, 121 L.Ed.2d 605 (1993) (quoting
Cohen v. Beneficial Industrial Loan Corp., 337 U.S. at 546, 69
S.Ct. at 1225 (1949)). Nevertheless a judgment that is not the
complete and final judgment in a case will be immediately
appealable if it:
falls in that small class which finally determine claims of
right separable from, and collateral to, rights asserted in
the action, too important to be denied review and too
independent of the cause itself to require that appellate
6
consideration be deferred until the whole case is adjudicated.
Id. Thus, in Cohen, the Court held that appeal could be taken from
a district court order denying the defendant's motion to compel the
plaintiffs in a shareholder derivative suit to post a bond. The
Court found the order appealable because it "did not make any step
toward final disposition of the merits of the case and [would] not
be merged in final judgment" and because, after final judgment, it
would "be too late effectively to review the present order, and the
rights conferred by the [bond] statute, if it is applicable, will
have been lost." Puerto Rico Aqueduct, 506 U.S. at 143, 113 S.Ct.
at 687.
The Court has held that orders denying individual officials'
claims of absolute and qualified immunity, see Nixon v. Fitzgerald,
457 U.S. 731, 102 S.Ct. 2690, 73 L.Ed.2d 349 (1982); Mitchell v.
Forsyth, 472 U.S. 511, 105 S.Ct. 2806, 86 L.Ed.2d 411 (1985) and
Eleventh Amendment immunity, Puerto Rico Aqueduct, 506 U.S. 139,
113 S.Ct. 684, 121 L.Ed.2d 605 (1993), are among those that fall
within the ambit of Cohen. In Mitchell, the Attorney General of
the United States appealed from a district court order denying his
motion to dismiss on grounds of qualified immunity. The court of
appeals held that the order was not appealable and remanded the
case for trial. The Supreme Court reversed, holding that the order
denying qualified immunity was collateral order immediately
appealable under Cohen. The Court found that, absent immediate
appeal, the central benefits of qualified immunity—avoiding the
costs and general consequences of subjecting public officials to
7
the risks of discovery and trial—would be forfeited, much as the
benefit of the bond requirement would have been forfeited in Cohen.
"The entitlement is an immunity from suit rather than a mere
defense to liability; and like an absolute immunity, it is
effectively lost if a case is erroneously permitted to go to
trial." Mitchell, 472 U.S. at 526, 105 S.Ct. at 2815.
The Court in Puerto Rico Aqueduct, supra, held that the same
rationale applies to claims of Eleventh Amendment immunity made by
states and state entities possessing a claim to share in that
immunity. Id. 506 U.S. at 144, 113 S.Ct. at 687. Under the terms
of the Amendment, "[t]he Judicial power of the United States shall
not be construed to extend to any suit in law or equity, commenced
or prosecuted against one of the United States by Citizens of
another State....". U.S. Const. amend. XI. This withdrawal of
jurisdiction effectively confers an immunity from suit. Id.
We conclude that Parker v. Brown state action immunity shares
the essential element of absolute, qualified and Eleventh Amendment
immunities—"an entitlement not to stand trial under certain
circumstances." Mitchell v. Forsyth, 472 U.S. at 525, 105 S.Ct. at
2815. The Court in Parker v. Brown found "nothing in the language
of the Sherman Act or in its history which suggests that its
purpose was to restrain a state or its officers or agents from
activities directed by its legislature." Parker v. Brown, 317 U.S.
at 350-351, 63 S.Ct. at 313. Accordingly, the Court concluded:
In a dual system of government in which, under the
Constitution, the states are sovereign, save only as Congress
may constitutionally subtract from their authority, an
unexpressed purpose to nullify a state's control over its
8
officers and agents is not lightly to be attributed to
Congress.
The Sherman Act makes no mention of the state as such,
and gives no hint that it was intended to restrain state
action or official action directed by a state.
Id. 317 U.S. at 351, 63 S.Ct. at 313. While the Eleventh Amendment
effectively confers an immunity from suit by a withdrawal of
jurisdiction, Puerto Rico Aqueduct, 506 U.S. at 143, 113 S.Ct. at
687, the Sherman Act does so by not undertaking to prohibit a
sovereign state from imposing an anticompetitive restraint as an
act of government. See Parker v. Brown, 317 U.S. at 352, 63 S.Ct.
at 314. One of the primary justifications of state action immunity
is the same as that of Eleventh Amendment immunity—"to prevent the
indignity of subjecting a State to the coercive process of judicial
tribunals at the instance of private parties," Puerto Rico
Aqueduct, 506 U.S. at 146, 113 S.Ct. at 689, and to "ensur[e] that
the States' dignitary interests can be fully vindicated." Id.
A second major conception animating all of the immunity
doctrines is that "where an official's duties legitimately require
action in which clearly established rights are not implicated, the
public interest may be better served by action taken "with
independence and without fear of consequences.' " Harlow v.
Fitzgerald, 457 U.S. 800, 819, 102 S.Ct. 2727, 2738, 73 L.Ed.2d 396
(1982) (quoting Pierson v. Ray, 386 U.S. 547, 554, 87 S.Ct. 1213,
1217, 18 L.Ed.2d 288 (1967)). The "consequences" with which the
court was concerned in Harlow were not limited to liability for
money damages; they also included the general costs of subjecting
officials to the risks of trial—distraction of officials from their
9
governmental duties, inhibition of discretionary action, and
deterrence of able people from public service. Mitchell, 472 U.S.
at 526, 105 S.Ct. at 2815; Harlow, 457 U.S. at 816, 102 S.Ct. at
2737. "Indeed, Harlow emphasizes that even such pretrial matters
as discovery are to be avoided if possible, as "[i]nquiries of this
kind can be peculiarly disruptive of effective government.' "
Mitchell, 472 U.S. at 526, 105 S.Ct. at 2815 (quoting Harlow, 457
U.S. at 817, 102 S.Ct. at 2737).
With these concerns in mind, the Harlow Court refashioned the
qualified immunity doctrine in such a way as to permit the
resolution of many insubstantial claims on summary judgment and to
avoid subjecting government officials either to the costs of trial
or to the burdens of broad-reaching discovery in cases where the
legal norms the officials are alleged to have violated were not
clearly established at the time. The entitlement is an immunity
from suit rather than a mere defense to liability; and like an
absolute immunity, it is effectively lost if a case is erroneously
permitted to go to trial. Mitchell, 472 U.S. at 527, 105 S.Ct. at
2815. Accordingly, the reasoning that underlies the immediate
appealability of an order denying absolute, qualified or Eleventh
Amendment immunity indicates that the denial of state action
immunity should be similarly appealable: in each case, the
district court's decision is effectively unreviewable on appeal
from a final judgment. See Praxair, Inc. v. Florida Power & Light
Co., 64 F.3d 609, (11th Cir.1995), cert. denied, --- U.S. ----, 116
S.Ct. 1678, 134 L.Ed.2d 781 (1996); Commuter Transportation
10
Systems, Inc. v. Hillsborough County, 801 F.2d 1286, 1289 (11th
Cir.1986); see also Askew v. DCH Regional Health Care Authority,
995 F.2d 1033, 1036 (11th Cir.), cert. denied, --- U.S. ----, 114
S.Ct. 603, 126 L.Ed.2d 568 (1993); Segni v. Commercial Office of
Spain, 816 F.2d 344, 345 (7th Cir.1987):
Where the right asserted by way of defense to a lawsuit is (or
includes) a right not to bear the burden of the suit itself,
regardless of outcome, the denial of that right, as by denying
a motion to dismiss the suit, is appealable immediately by
virtue of the collateral order doctrine. An appeal after
judgment would come too late to protect the right. It is on
the basis of this reasoning that the rejection of a
double-jeopardy defense, the rejection of a defense of a
public official's qualified immunity from suit, and the
rejection of a witness's absolute immunity from suit, are
appealable immediately. See Abney v. United States, 431 U.S.
651, 97 S.Ct. 2034, 52 L.Ed.2d 651 (1977); Mitchell v.
Forsyth, 472 U.S. 511, 524-30, 105 S.Ct. 2806, 2814-18, 86
L.Ed.2d 411 (1985); San Filippo v. U.S. Trust Co. of New
York, Inc., 737 F.2d 246, 254 (2d Cir.1984).
But see Huron Valley Hospital v. City of Pontiac, 792 F.2d 563 (6th
Cir.), cert. denied, 479 U.S. 885, 107 S.Ct. 278, 93 L.Ed.2d 254
(1986) (Contains contrary, less persuasive dicta but is inapposite
because the requirement that the immunity claim be completely
separate from the merits of the original claim was not met).
An appealable interlocutory decision must satisfy two
additional criteria: it must conclusively determine the disputed
question and that question must involve a claim of right separable
from, and collateral to, rights asserted in the action. Mitchell,
472 U.S. at 527, 105 S.Ct. at 2816. The denial of a state or state
entity's motion for dismissal or summary judgment on the ground of
state action immunity easily meets these requirements: (i) denials
of states' and state entities' claims to state action immunity
11
clearly purport to be conclusive determinations that they have no
right not to be sued under federal antitrust laws for actions by
the state or its officers or agents directed by its legislature;
and (ii) a claim of such state action immunity is conceptually
distinct from the merits of the plaintiff's claim that he has been
damaged by the defendants' alleged violation of the federal
antitrust laws. An appellate court reviewing the denial of the
state or state entity's claim of immunity need not consider the
correctness of the plaintiff's version of the facts, nor even
determine whether the plaintiff's allegations actually state a
claim. In a case involving alleged anticompetitive acts by a
state's municipality or subdivision, all it need determine is a
question of law: whether the state entity acted pursuant to a
clearly articulated and affirmatively expressed state policy.
Accordingly, we hold that a district court's denial of a claim
of state action immunity, to the extent that it turns on whether a
municipality or subdivision acted pursuant to a clearly articulated
and affirmatively expressed state policy, is an appealable "final
decision" within the meaning of 28 U.S.C. § 1291 notwithstanding
the absence of a final judgment.
3. The Parker v. Brown State Action Doctrine
In Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315
(1943), the Supreme Court held that Congress did not intend for the
antitrust laws to apply to states acting in their capacities as
sovereigns. In subsequent cases, the Court extended the state
action doctrine to cover, under certain circumstances, acts by
12
private parties that stem from state power or authority, California
Retail Liquor Dealers Association v. Midcal Aluminum, Inc., 445
U.S. 97, 100 S.Ct. 937, 63 L.Ed.2d 233 (1980), as well as acts by
political subdivisions, cities and counties. Town of Hallie v.
City of Eau Claire, 471 U.S. 34, 105 S.Ct. 1713, 85 L.Ed.2d 24
(1985). Congress endorsed and expanded the state action doctrine
by the Local Government Antitrust Act of 1984, which protects
municipalities against antitrust damage claims. 15 USCS § 35; 16E
Julian O. von Kalinowski, Business Organizations-Antitrust Laws and
Trade Regulations § 40.01 (1996), (hereafter von Kalinowski).
The Supreme Court in Parker v. Brown, found the Sherman Act
inapplicable to actions by a state because "[t]here is no
suggestion of a purpose to restrain state action in the Act's
legislative history." Parker v. Brown, 317 U.S. at 351, 63 S.Ct.
at 313. To the contrary, the Act was found to be intended only to
prohibit anticompetitive conduct by "business combinations." Id.
317 U.S. at 351, 63 S.Ct. at 313. Justice Stone's opinion in
Parker makes clear that the decision regarding the reach of the
antitrust laws was predicated on principles of federalism and state
sovereignty stemming from the Supremacy Clause of the Constitution.
von Kalinowski, § 40.02[1] at 40-6. The Court concluded that "[i]n
a dual system of government, an unexpressed intent to nullify a
state's control over its officers and agents is not lightly to be
attributed to Congress." Parker, 317 U.S. at 351, 63 S.Ct. at 313.
A.
Application of the Parker Doctrine to Actions by Municipalities
and Other Political Subdivisions
13
In Town of Hallie v. City of Eau Claire, 471 U.S. 34, 105
S.Ct. 1713, 85 L.Ed.2d 24 (1985), the Supreme Court clarified the
application of the Parker doctrine to actions by municipalities and
other political subdivisions. Municipalities are not automatically
immune under Parker, because they are not sovereign. Town of
Hallie, 471 U.S. at 38, 105 S.Ct. at 1716. See also City of
Lafayette v. Louisiana Power and Light Co., 435 U.S. 389, 412, 98
S.Ct. 1123, 1136, 55 L.Ed.2d 364 (1978). But a municipality or
subdivision of the state is immune when it acts pursuant to a
clearly articulated and affirmatively expressed state policy. Town
of Hallie, 471 U.S. at 45-46, 105 S.Ct. at 1720. Furthermore, the
active state supervision prerequisite to a private party's immunity
should not be imposed in cases in which the actor is a
municipality. Town of Hallie, 471 U.S. at 47, 105 S.Ct. at 1720.
The court explained:
[T]he requirement of active state supervision serves
essentially an evidentiary function: it is one way of
ensuring that the actor is engaged in the challenged conduct
pursuant to state policy.... Where a private party is
engaging in the anticompetitive activity, there is real danger
that he is acting to further his own interests, rather than
the governmental interests of the State. Where the actor is
a municipality, there is little or no danger that it is
involved in a private price-fixing arrangement.
Town of Hallie, 471 U.S. at 46-47, 105 S.Ct. at 1720.
The Hallie Court also "fully considered ... how clearly a
state policy must be articulated for a municipality to be able to
establish that its anticompetitive activity constitutes state
action." Town of Hallie, 471 U.S. at 40, 105 S.Ct. at 1717. If
the city acts pursuant to a clearly articulated state statutory
14
scheme, it is irrelevant that the statutes make no express mention
of anticompetitive conduct. It is sufficient that these statutes
demonstrate that the state legislature clearly contemplated
anticompetitive conduct in the provision of governmental services.
Town of Hallie, 471 U.S. at 40, 105 S.Ct. 1717; see von Kalinowski
§ 40.03[z] at 40-45. The Court explained:
The statutes clearly contemplate that a city may engage in
anticompetitive conduct [by acquiring a monopoly over the
provision of sewage treatment services and by tying the
provision of those services to the provision of sewage
collection and transportation services.] Such conduct is a
foreseeable result of empowering the City to refuse to serve
unannexed areas. It is not necessary ... for the state
legislature to have stated explicitly that it expected the
city to engage in conduct that would have anticompetitive
effects.
Town of Hallie, 471 U.S. at 42, 105 S.Ct. at 1718. Also, the Court
explicitly ruled that a municipality need not show that it was
compelled to engage in anticompetitive activity in order to be
immune. Town of Hallie, 471 U.S. at 45-46, 105 S.Ct. at 1719-1720;
von Kalinowski, Id. "This is so because where the actor is a
municipality, acting pursuant to a clearly articulated state
policy, compulsion is simply unnecessary as an evidentiary matter
to prove that the challenged practice constitutes state action."
Town of Hallie, 471 U.S. at 45-46, 105 S.Ct. 1720.
The Supreme Court in City of Columbia v. Omni Outdoor
Advertising, Inc., 499 U.S. 365, 111 S.Ct. 1344, 113 L.Ed.2d 382
(1991) elaborated on the Hallie "clear articulation" standard. The
Omni court said:
We have rejected the contention that [the clear articulation]
requirement can be met only if the delegating statute
explicitly permits displacement of competition. It is enough,
15
we have held, if the suppression of competition, is the
"foreseeable result" of what the state authorized.
Omni, 499 U.S. at 372-373, 111 S.Ct. at 1350. The Court found that
the zoning regulation challenged in Omni "amply" satisfied this
standard because the "very purpose of zoning regulation is to
displace unfettered business freedom in a manner that regularly has
the effect of preventing normal acts of competition." 499 U.S. at
373, 111 S.Ct. at 1350; see von Kalinowski, § 40.03[z] at 40-45.
Lower courts have applied Town of Hallie standards not only to
municipalities but also to counties and other public entities and
offices. See von Kalinowski § 40.03[2] at 40-46, 40-47 and 40-48
and authorities cited therein. Eg., Independent Taxicab Drivers'
Employees v. Greater Houston Transportation Co., 760 F.2d 607 (5th
Cir.) (city was immune for having granted taxi-cab company
exclusive right to provide airport's taxicab transportation where
statute granted city regulatory power over taxi-cab industry and
separate statute specifically authorized municipality to grant
contracts for services at airports), cert. denied sub nom. Arrow
Northwest Inc. v. Greater Houston Transp. Co., 474 U.S. 903, 106
S.Ct. 231, 88 L.Ed.2d 230 (1985).
B.
Application of Parker v. Brown State Action Doctrine to the
Actions of the Memorial Hospital at Gulfport, Jointly Owned by a
Municipality and Subdivision of the State
Applying the Hallie and Omni precepts to the present case, we
conclude that the Memorial Hospital at Gulfport is immune under the
Parker v. Brown state action doctrine from claims that it violated
the federal antitrust laws by entering an exclusive contract with
16
Dr. Lanier granting him the sole authority as Director or through
his designee to operate the hospital's ESRD.
The Memorial Hospital at Gulfport is a subdivision of the
state or municipal corporation thereof within the meaning and
contemplation of Miss.Code Ann. §§ 41-12-10 et seq. (1972 and
supplements). Enroth v. Memorial Hospital at Gulfport, 566 So.2d
202, 205 (Miss.1990). Consequently, to bring itself under the
aegis of the Parker v. Brown immunity doctrine the hospital need
prove only that it acted pursuant to a clearly articulated and
affirmatively expressed state policy. The hospital may satisfy
this requirement by showing a statutory scheme that demonstrates
that the state legislature clearly contemplated the challenged
anticompetitive conduct or that suppression of competition was the
foreseeable result of what the state authorized. It is not
necessary for the state legislature to have compelled or explicitly
permitted the hospital to enter exclusive contracts having
anticompetitive effects, Independent Taxicab Drivers', 760 F.2d at
610; it is enough if such suppression of competition was the
"foreseeable result" of what the state authorized. Omni Outdoor
Advertising, 499 U.S. at 372-373, 111 S.Ct. at 1350; Town of
Hallie, 471 U.S. at 42, 45-46, 105 S.Ct. 1718-1720.
The Mississippi statutes demonstrate that the state
legislature clearly contemplated anticompetitive conduct by (1)
authorizing a hospital to enter an exclusive contract with a single
individual to operate any aspect, division or department of its
operations, including its ESRD facility, and (2) requiring a
17
hospital to obtain a certificate of need, based on criteria such as
population base and projected caseload, prior to establishing a
health facility, including an ESRD facility. See Mississippi State
Dept. of Health v. Golden Triangle Regional Medical Center, 603
So.2d 854 (Miss.1992) (certificate of need to establish cardiac
catheterization services).
The Miss.Code Annotated § 41-13-35(5)(g) (1972) authorizes the
board of trustees of a community hospital to contract with any
individual for the providing of services by or to the community
hospital regarding any facet of the operation of the hospital or
any division or department thereof, or any related activity, and to
terminate said contracts when deemed in the best interests of the
community hospital.1 The Mississippi Health Care Certificate of
Need Law of 1979 prohibits the construction, development,
establishment or relocation of a health care facility without
obtaining the required certificate of need. Miss.Code Ann. § 41-7-
1
§ 41-13-35, in part provides:
(5) The power of the board of trustees shall
specifically include, but not be limited to, the following
authority:
(g) To contract by way of lease ... or otherwise, with
any agency, department or other office of government or any
individual, partnership, corporation, owner, other board of
trustees, or other health care facility, for the providing
of property, equipment or services by or to the community
hospital or other entity or regarding any facet of the
construction, management, funding or operation of the
community hospital or any department or division thereof, or
any related activity, including without limitation, shared
management expertise or employee insurance and retirement
programs, and to terminate said contracts when deemed in the
best interest of the community hospital.
18
191(1)(a) & (b) (1979). A certificate of need shall not be granted
or issued unless the proposal has been reviewed for consistency
with the specifications and criteria established by the State
Department of Health and substantially complies with the projection
of need as reported in the state health plan in effect at the time
the application for the proposal was submitted. § 41-7-193. A
"Certificate of Need" means a written order of the State Department
of Health setting forth the affirmative finding that a proposed
health facility, including an ESRD facility, sufficiently satisfies
the plans, standards and criteria prescribed for such service or
other project by Section 41-7-171 et seq., and by rules and
regulations promulgated thereunder by the State Department of
Health. Id. at § 41-7-173(b). "End stage renal disease (ESRD)
facilities" means kidney disease treatment centers, which include
freestanding hemodialysis units and limited care facilities. Id.
at § 41-7-173(h)(v). "Health care facility" includes, inter alia,
end stage renal disease (ESRD) facilities. Id. at § 41-7-173(h).
The Hallie-Omni standards are amply met here. The very
purpose of a hospital's exclusive contract with a physician to
supervise a special unit and perform its critical functions is to
obtain the doctor's dedicated services by displacing unfettered
professional medical freedom in a manner that prevents normal acts
of competition, particularly on the part of other physicians
qualified to supervise and operate such a unit. Likewise, a
certificate of need law restricting the establishment of new health
facilities including ESRD facilities necessarily protects existing
19
facilities against competition from newcomers. Certificate of need
programs are federally funded, state-administered regulatory
mechanisms providing for review and approval by health planning
agencies of capital expenditures and service capacity expansion by
hospitals and other health care facilities. Their primary purpose
is to discourage unnecessary investment in health care facilities
and to channel investment so as to preserve and improve the quality
of institutional health care. See James B. Simpson, Full Circle:
The Return of Certificate of Need Regulation of Health Facilities
to State Control, 19 Ind.L.Rev. 1025, 1028-1033 (1986).
The hospital's allegedly anticompetitive conduct could have
been reasonably anticipated by the Mississippi Legislature when it
gave the hospital the power to enter a contract with an individual
physician to operate any aspect, division or department of its
operations. The state's certificate of need program necessarily
displaces unfettered competition of physicians operating health
facilities and restricts the entry of medical facilities and
services to those administratively found to be medically necessary
and affordable. Having concluded that the allegedly
anticompetitive results were foreseeable under the state action
doctrine, we reverse the district court's holding that the state
action doctrine fails to immunize the hospital's actions in
entering an exclusive contract for the operation of its ESRD unit.
4. The District Court's Decision
The district court concluded that the hospital and its board
were not entitled to state action immunity because the displacement
20
or suppression of competition was not a foreseeable result of the
state statutory scheme. We do not agree with the district court's
interpretation of the state statutes. As we explained earlier in
this opinion, § 41-13-35(g) of the Mississippi Code does not merely
provide general authority for the hospital to enter contracts. The
statute clearly, affirmatively and articulately empowers the
hospital to contract with any individual for the providing of
services by or to the hospital regarding any facet of the operation
of the hospital or any division or department thereof, or any
related activity. It is clearly a foreseeable result of what the
statute authorizes that a hospital would enter an exclusive
contract with an individual physician to supervise and perform the
critical functions of its ESRD units. The very purpose of the
statutory authorization is to enable the hospital to displace
unfettered competition among physicians in the performance of
critical operations such as chronic dialysis in ESRD units so as to
promote efficiency of health care provision, reduce the hospital's
supervisory burden, and control its exposure to liability.
Similarly, the certificate of need law, § 41-7-171 et seq.,
restricts the establishment and operation of ESRDs and necessarily
protects existing units against some competition from newcomers.
The Supreme Court has "rejected the contention that this
requirement [the clear articulation of a state policy to authorize
anticompetitive conduct] can be met only if the delegating statute
explicitly permits the displacement of competition ... It is enough
... if suppression of competition is the "foreseeable result' of
21
what the statute authorizes...." City of Columbia v. Omni Outdoor
Advertising, Inc., 499 U.S. 365, 372-373, 111 S.Ct. 1344, 1349-
1350, 113 L.Ed.2d 382 (1991); Independent Taxicab Drivers', 760
F.2d at 610. That condition is amply met here.
5. Disposition of Other Issues
The hospital contests the trial court's refusal to dismiss
plaintiff Dr. Martin's claims for damages under 42 U.S.C. § 1983,
for deprivation of Martin's constitutionally protected property and
liberty rights, for damages under state antitrust laws and
interference with existing and prospective business relations
claims. We lack jurisdiction to reach the merits of that appeal.
Although the collateral order doctrine allows review of the
district court's denial of state action immunity to the defendants
against the federal antitrust claims, that allowance does not
confer "pendent appellate jurisdiction" over the other issues.
Although in Swint v. Chambers County Commission, --- U.S. ----, 115
S.Ct. 1203, 131 L.Ed.2d 60 (1995), the Court implied that in rare
circumstances pendent appellate jurisdiction may be proper—if
issues were "inextricably intertwined" or where "review of the
former was necessary to ensure meaningful review of the latter",
id. at ----, 115 S.Ct. at 1208—defendants have not advanced reasons
for review more compelling than those rejected by the Court in
Swint. See also Woods v. Smith, 60 F.3d 1161 (5th Cir.1995), cert.
denied sub nom. Palermo v. Woods, --- U.S. ----, 116 S.Ct. 800, 133
L.Ed.2d 747 (1996); Silver Star Enterprises, Inc. v. M/V
Saramacca, 19 F.3d 1008 (5th Cir.1994).
22
Dr. Martin filed a cross-appeal contending that the district
court erred in deciding that the Local Government Antitrust Act
shields the individual board members with absolute immunity from
federal antitrust damages; the individual board member defendants
are entitled to summary judgment under qualified immunity as to the
constitutional due process claims of the plaintiff; and the
individual board member defendants are entitled to qualified
immunity as to the plaintiff's state claims. For the same reasons
expressed above, we have no jurisdiction to consider the court's
interlocutory orders.
Conclusion
The judgment denying summary judgment on the grounds of Parker
v. Brown state action immunity to the hospital and its individual
board members is REVERSED and the case is REMANDED to the district
court for the entry of such a summary judgment. The other appeals
and cross-appeals are DISMISSED for lack of appellate jurisdiction.
* * * * * *
* * * * * *
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