# Appendix — Robinson v. Magovern

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385009_0757%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1982
- **Citation:** 459 U.S. 971

## Text

e

No.
In To

Supreme Court of the Wnited States

October Term, 1982

JOHN N. ROBINSON,
Petitioner
vs.
GEORGE J. MAGOVERN, CARDIOTHORACIC
SURGICAL ASSOCIATES, INC., and
ALLEGHENY GENERAL HOSPITAL,

Respondents

On Writ or CERTIORARI TO THE
Unirep States District Court oF APPEALS
For Tue Tuirp Circuit at No. 81-2726

Appendix To
Petition For Writ of Certiorari

H. Yate GuTNIck
STRASSBURGER McKENNA MESSER

SHILOBOD & GUTNICK
3101 Grant Building
Pittsburgh, Pennsylvania 15219
(412) 281-5423
Counsel for Petitioner
Of Counsel:
E. J. Strassburger
Roslyn M. Litman
| —— 1 —

TABLE OF CONTENTS

Opinion of the United States District Court

for the Western District of Pennsylvania

(Cohill, J.), dated August 31, 1981 ..........6.0005. la
Judgment Order of the United States District

Court ior the Western District of Pennsylvania

(Cohill, J.), dated August 31, 1981 ..............4. 148a
Opinion of the United States District Court for

the Western District of Pennsylvania (Snyder, J.),

dated September 12, 1977... 6.6. cece cece eeenne 150a
Order of the United States Di..rict Court for

the Western District of Pennsylvania (Snyder, J.),

dated September 12, 1978 .... 6.66. cece cece eewnee 164a
Memorandum Opinion of the United States District

Court for the Western Distric\ of Pennsylvania

(Snyder, J.), dated November 6, 1978.............. 165a
Order of the United States District Court for the

Western District of Pennsylvania (Snyder, J.),

dated November 6, 1978 .. 2... 6... c cece cc ceccnees 169a
Memorandum Opinion of the United States District

Court for the Western District of Pennsylvania

(Snyder, J.), dated April 11, 1980 ................. 170a
Order of the United States District Court for the

Order of the United States District Court for the
Western District of Pennsylvania (Snyder, J.),

dated April 22, 1980... 2.0.6.6 ccccecccccceeeccces 18la
Judgment Order of the United States Court of

Appeals for the Third Circuit,

dated May 11, 1982 .........ccccsccccccccuccccee 183a

Order For Petition For Rehearing of the United States
Court of Appeals for the Third Circuit,
GE Fe Gy CUED cd cede canbe bbivc cccccoscciccs 184a

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA

JOHN N. ROBINSON,
Plaintiff,
Vv.
GEORGE J. MAGOVERN, CAR-
DIOTHORACIC SURGICAL
ASSOCIATES, INC., ALLEGHE-
NY GENERAL HOSPITAL and
HENRY G. ALLYN, JR., GAY E.
BODICK, FRED BRAND, JR.,
HENRY CHALFANT, RONALD
R. DAVENPORT, HARRY EDEL-
MAN, III, HARRY M. EPSTINE,
WILLIAM H. GENGE, W. H.
KROME GEORGE, R. BURT
GOOKIN, THOMAS C. GRA-
HAM, KENNETH C. HEWITT,
JOHN A. HUFFMAN, JR., B. F.
JONES, Ill, BERNARD H. JONES,
CARYL M. KLINE, RICHARD K.
MEANS, FRANCIS B. NIMICK,
DAVID B. OLIVER, Il; ROBERT
B. PEASE, G. HARTON SINGER,
Ill, ELIZABETH A. SMITH, W. P.
SNYDER, HI, LEONARD A.
SWANSON, W. BRUCE THO-
MAS, and PAUL H. WEYRAUCH,
individually and as Trustees of
Allegheny General Hospital,
Defendants.

OPINION
COHILL, District Judge.

Py

“
2. >
a ‘ean ae ~~

7

P

J

Civil Action
No, 77-75

2a

Table of Contents
Page
Pmtroduction . 2.2.66. c ccc ecceeeeeseeeeneeeeseeeseees 4a
1. FeO FINED s é ccccccovcvvccccticseccncossebecses 4a
Re, FREES ce cdccccdcccvccccctcsesccesssntones 4a
B. The Defendant ..........cccceccscecccceees 6a
1. Allegheny General Hospital ............. 6a
2. The Trustees ........cccccccccccccccees 8a
3. George J. Magovern, M.D. ............. 9a
4. Cardio-Thoracic Surgical Associates, Inc. . 10a
MH, «TG vc ccc ccvcccceccctecdsevdessedevevees 12a
Ill. Delivery of Open Hear Surgical Services.......... l4a
A. Diiagmosis ........ 6. cccccccceecneceeeeeeees l4a
B. Open Heart Surgery—The Procedure ......... 16a
C. Open Heart Surgery—The Major Players ..... 18a
1. The Lead Surgeon ..........0.seeeeeees 18a
2. The Hospital...........ccceccecesecees 19a
IV. Allegheny General's Competitive Strategy.......... 22a
A. Institutional Objectives .............0eeeee0s 23a
BD, DWRSRIUIRD sc dvccubssbecedccsccdctccdascdut 24a
C. Role of the Department Directors............ 26a
D. Results of the Revitalization Campaign ....... 28a
Vv. ee Robinson, M.D. ......30a

3a

Page
2. Attempt to Monopolize .............4.. Sia
3. Peay to Monopolize.............. 83a
AQTORTROME ocr sicseccncccceseseces 84a
b. Specific Intent to Monopolize....... a
Oy GORE Read 4s heck becnbadecccaccacts 103a
Se. BR EE Aa bres cba Cs ceccevecan 103a
Bs RR GE odbc ss cdncccccdvcccacce 105a
3. Hoesential Facility .....cccscccccscccces 120a
4. Unfair Acts With Intent to
Destroy Competition................ I2la
Se RUMP OE BOM iic ces disc ccccccccccccs 123a
a. Notice of Standards .............. 125a
b. Standards Reasonably Advance
Hospital's Legitimate Objectives . . 128a
c. Standards Do Not Impose
Unreasonable Restraint ......... I3la
d. Allegheny General's Conclusions
About Dr. Robinson ........... 132a
e. Consistent With Other
Personnel Decisions ............ 139a
VIII. The Legal Action: Pendent Jurisdiction Claims ....142a
A. Bwonch of Comipeet ..cccccccedcccccccccccce 142a
B. Interference With Prospective Contractual
Pa cc desvenecssadee che cccnavee 143a
C. Conspiracy in Restraint of Trade............ l44a

Conclusion Rabon vatican bdbeRecenete se debs pe cecncbiien 145a

4a

Introduction

After Allegheny General Hospital rejected Dr. John N.
Robinson's application for staff privileges in October, 1976, Dr.
Robinson filed this antitrust action against the hospital, members
of its Board of Trustees, and certain thoracic surgeons who are
members of the hospital's staff. Three years of extensive discovery
followed, punctuated by a variety of motions to compel and
motions for protective orders. The litigation culminated in a
ten-week non-jury trial that included the testimony of fifty-two
- witnesses, extensive briefing, and arguments by counsel. We now
rule in favor of all defendants on all claims. Pursuant to Federal
Rule of Civil Procedure 52, we make the following findings of fact
and conclusions of law.

1.
The Parties

A. Plaintiff

John N. Robinson, M.D., the plaintiff in this litigation, is a
\board-certified thoracic surgeon, licensed to practice medicine in
the Commonwealth of Pennsylvania. Dr. Robinson graduated
from George Washington University Medical School in 1963. He
then served an internship with the Harvard Surgical Service at
Boston City Hospital and a five-year general surgical residency at
Presbyterian Hospital, which 1s affiliated with Columbia Univer-
sity in New York City. Dr. Robinson's cardiothoracic! training
began in 1970 with a one-year residency in Texas at the Baylor
College School of Medicine in a program headed by Dr. Michael
DeBakey. In order to acquire the experience in pulmonary and
esophageal surgery that the American Board of Thoracic Surgery
requires for certification eligibility, Dr. Robinson cut short his
residency at Baylor and transferred to the Veterans Administra-
tion Hospital at Little Rock, Arkansas to train for four months
under Dr. Raymond Read. The following year, Dr. Robinson

'The thorax is the area of the body between the neck and the respiratory
diapbragm, encased by the ribs. Thoracic surgery includeds pulmonary, esopha-
geal, mediastinal and open heart surgery. Cardiovascular surgery is surgery
performed on the heart or on any of the blood vessels throughout the body.
Thus, open heart surgery is included within the terms “thoracic,” “cardiotho-
racic,” or “cardiovascular™ surgery.

‘
ate ill

Sa

served as a resident in thoracic surgery at the Texas Heart Insti-
tute, where he work

facet of thoracic surgery in their practices because each type of
procedure has its own peculiarities that must be mastered. Studies
indicate that the mortality rate of open heart patients increases as
the frequency of open heart procedures performed by a given
surgical team declines. A surgeon should perform a minimum of
three open heart procedures per week in order to maintain his
proficiency. Those doctors concentrating on open heart surgery
generally augment their surgical schedules and their incomes with
less complex thoracic or vascular procedures.

The open heart surgeon may work as a sole practitioner or as
a member of a group of cardiothoracic or cardiovascular sur-
gens. After reviewing the voluminous evidence presented at trial
on the delivery of open heart surgical care nationally and in the
Pittsburgh area, we perceive a trend toward group practice.

Without doubt, a group practice achieves certain efficien-
cies. As noted earlier, open heart surgery requires at least two
surgeons. If no qualified resident is available for a particular
operation, the group can provide the second surgeon. A group
also can more readily provide coverage during the critical postop-
erative phase. Furthermore, association with an established
group can give a young surgeon a mix of instruction and practice
that will help him to develop his skills.

In 1979, surgeons performed approximately 118,000 open
heart procedures in the United States. Experts predict a modest
growth in open heart surgery over the next few years. The glam-
our and high fees associated with open heart surgery have com-
bined to ensure that there is no shortage of open heart surgeons.
In fact, in many areas of the country, a young sole practitioner
faces a formidable task in obtaining open heart patients.

2. The Hospital

The host hospital for an open heart operation provides
equipment and support personnel to the surgeon. The nurses,
perfusionists and physicians from related fields, such as anesthe-
siology, are either employees of the hospital or independent
contractors. Often, the hospital undertakes the responsibility
of recruiting, training and supervising the nurses and/or the
perfusionists.

Although the cost of establishing and maintaining an open
heart surgical facility is high, the revenue that such a facility
generates also can be substantial. Open heari patients require
lengthy postoperative recovery periods in a specialized uait that

has sophisticated monitoring equipment and a high nurse-to-
patient ratio. As we mentioned earlier, patients admitted to

Allegheny General by CTSA in the years considered accumulated
as many patient days as did all of the patients admitted by the
Division of General Surgery.

Not all hospitals have the capability of hosting an open heart
operation, which is a tertiary level service. Hospitals in the United
States fall into one of three general categories: community, teach-
ing or regional referral, secondary teaching.’ All three types of
hospitals provide some degree of patient care, but each has a
different primary mission.

The vast majority of hospitals in the United States are com-
munity hospitals. They are essentially arenas or workshops, as it
were, supplied by the community for physicians who provide
basic health care services to local patients. In keeping with their
purpose, community hospitals usually grant staff privileges to
any licensed physician from the surrounding area who applies.
Most of these physicians are not under contract to the hospital,
but rather, they use the hospital's facilities and the hospital bills
the patients separately for this use.'* The members of the staff
perform minimal hospital committee responsibilities on a rotat-
ing basis and department heads, if they exist, frequently are
elected by their colleagues. Generally, little teaching or research
occurs in community hospitals.

For economic reasons, community hospitals cannot offer
most tertiary level services. Such services require specialized per-
sonnel and sophisticated equipment, which must be used on a
daily basis if the cost per procedure is to be held within an

‘Although hospitals properly can be classified into three groups for pur-
poses of discussion, we recognize that hospitals actually fall along a spectrum
that reflects differences in size, composition of staff, range of medical services,
educational programs and involvement in research.

'SThe hospital probably would have a few specialized personne! under
contract, such as an anesthesioiogist and a pathologist.

2la

acceptable range. Each community hospital provides coverage
for a relatively small population base. This population base
would not generate a sufficient number of tertiary level proce-
dures to keep a given tertiary care unit at anywhere near optimum
utilization. Therefore, community hospitals offer only basic med-
ical care. If a local patient needs more complex treatment, the
physician will transfer that patient to the care of a specialist at a
regional! hospital.

At the opposite end of the spectrum from the community
hospitals lie the major teaching hospitals, which are relatively few
in number and closely linked to, or owned outright by, universi-
ties. These hospitals serve as centers of learning, where medical
students and residents receive training and where doctors work to
increase the pool of medical knowledge through research. A
teaching hospital has a large medical staff relative to its bed
capacity. Many members of this staff are employees of the hospi-
tal with no private practice or with an arrangement by which all
patient fees exceeding a certain amount are turned over to the
hospital. The staff has extensive research and teaching responsi-
bilities, and therefore, appointments to the staff often are greatly
influenced by the candidates’ interest in these activities. Most
doctors on the staff hold university appointments, and the full-
time staff members are jointly selected and appointed by the
university and the hospital. Teaching hospitals possess highly
sophisticated equipment and operate at the front line of advanc-
ing medical science. Often they use the treatment of complex,
tertiary level cases as pedagogical devices. The excellent quality of
care and the advanced technology available at the teaching hospi-
tals attract patients needing tertiary level services from a broad
geographic area, and even occasionally from foreign countries.

In the middle of the spectrum lie the regional referral, secon-
dary teaching hospitals such as Allegheny General. These hospi-
tals are more numerous than the major tcaching hospitals, but
much less common than the community hospitals. Regional! re-
ferral hospitals often provide basic medical care to the people
living in the immediate vicinity, thus serving the function of a
community hospital for that area. In addition, however, they
have developed advanced care units in a limited number of sub-

22a

specialties. These units receive referrals from primary care physi-
cians and from the surrounding community hospitals.

A particular regicn may contain several regional referral
hospitals, each of whici: will offer advanced care units in a differ-
ent set of subspecialtie.. Thus, any one hospital will have the
capability of providing ac vanced care only in a few types of cases,
but optimally, there will be at least one hospital in the region that
can satisfy a given patient's needs.

In conjunction with its advanced care units, a regional refer-
ral hospital often will conduct clinical research and operate post-
graduate training programs. Although the hospital hires a few
physicians as full-time employees, it provides instruction to the
participants in its residency programs primarily through the
voluntary efforts of the doctors who concentrate their private
practices at the hospital. A symbiotic relationship should develop
between these private practitioners and the residents. For exam-
ple, residents in a surgical program will save time for the private
practitioner by opening and closing the patients, while the private
practitioner will instruct these residents during the course of the
operations and at regularly scheduled conferences.

Much of the responsibility for maintaining the hospital's
performance standards in patient care, teaching and research falls
on the departmental chairmen. One of the critical tasks that most
departmental chairmen perform is the evaluation of applications
for appointment to the staff. When considering such an applica-
tion, the chairman must compare the interests and abilities of the
applicant with the department's present needs in patient care,
teaching and research. He also must determine whether an addi-
tional doctor would overburden the hospital's physical facilities.

IV.

Allegheny General's Competitive Strategy
Equipped with a basic understanding of the elements
involved in the delivery of open heart surgical services to patients
in the United States, one is now prepared to examine Aliegheny
General's decision to deny staff privileges to Dr. Robinson. The
hospital contends that it made this decision after determining that
the addition of Dr. Robinson to the medical staff would not be

23a

consistent with the hospital's institutional objectives or competi-
tive strategy.
A. Institutional Objectives

Allegheny General formulated its present institutional objec-
tives and competitive strategy during 1967 and 1968 in response
to a study that the management consultant firm of Cresap,
McCormick and Paget performed at the request of the Board of
Trustees. During the early and mid 1960's, a phalanx of problems
confronted Allegheny General. These problems included an anti-
quated physical plant, a lack of parking facilities, a serious deteri-
oration in the surrounding neighborhood, an operating deficit, a
medical staff that did not hold many univer ity appointments and
did not display great loyalty toward the hospital, discontent
among hospital personnel, and the placing of three of the hospi-
tal’s residency programs on probation. Realizing that the hospital
would have to take decisive action if it was to rectify the situation,
the Trustees retained Cresap, McCormick and Paget to assist
them in charting the hospital's future course.

After making the initial decision to rebuild at the present site
rather than to relocate in the suburbs, the Trustees began a
nationwide search to find the right administrator to lead the
efforts to revitalize Allegheny General. On January |, 1968,
Allegheny General hired Lad F. Grapski as the new president of
the hospital. Mr. Grapski had extensive experience in hospital
administration and academic medicine, having served as asso-
ciate director or director of three university hospitals during the
period 1947 through 1967.

In the months following Mr. Grapski'’s appointment, he
worked with certain Trustees and members of the medical staff to
draft a statement of objectives that would give direction to the
hospital's revitalization campaign. These objectives, which the
executive committee of the Board of Trustees formally approved
on March 25, 1968, reflect the belief that secondary an_ tertiary
medical care can best be provided by an institution that also has
developed flourishing educational and research programs. “The
primary objective of Allegheny General Hospital is to protect and
improve the health of the people it services through the mainte-
nance of the scope and quality of patient care... .” Definition,

24a

Purpose and Statement of Objectives of the Allegheny Genral
Hospital, AGH Exh. 102, at 2. The leadership of Allegheny
General stated, however, that “{a] true standard of excellence in
patient care can be achieved only in those hospitals in which a
stimulating and challenging educational environment is main-
tained. Allegheny General Hospital is committed to a role in
graduate medical education for interns and residents to support
patient care.” /d. at 3. Furthermore, the leadership expressed
a firm commitment to the continued fostering and encour-
agement of research and investigation. The principal focus
for such research is presently in the basic and applied medical
and biomedical sciences. Allegheny Genera! Hospital
encourages and supports the strengthening of clinical
departmental staffs with research scientists, or the appoint-
ment of physicians who devote a portion of their profes-
sional work to research activity. Allegheny General
Hospital's commitment to the research objective is integral
to, and a part of the commitment to excellence in patient care
and education.

Id. at 4. The theory underlying this integrated approach to the
delivery of medical services is that practicing physicians who
participate in teaching or research, or who interact regularly with
such participants, will thereby keep abreast of the latest develop-
ments in the ficld, which in turn should enhance patient care.
Moreover, the obligation to teach students by example places
continuous pressure on all of the medical staff and the support
personnel to maintain high standards of patient care.

B. Marketing
When formulating the set of institutional objectives, Alle-
gheny General's icadership also had to consider the marketing of

Law Bars: Appeals For More Effective Dialogue And A New
Rule Of Reason, 7 Am. J. L. & Med. i, ii (1981) (“The classical
model of collegial physician control over health care delivery is
being replaced rapidly by a view of health care providers (institu-
tional as well as individual) as intense competitors for a limited

25a

health care dollar.”). In order to financially support research
programs, educational programs and the personnel and equip
ment necessary for tertiary level procedures, the hospital musi
attract enough patients to enable it to operate at near full capac-
ity. Other regional referral hospitals and one university hospital
in the Pittsburgh area compete with Allegheny General in the
delivery of secondary and tertiary level medical services. St.
Francis General Hospital, Mercy Hospital, The Western Pen-
nsylvania Hospital, Shadyside Hospital and Presbyterian Uni-
versity Hospital compete with Allegheny General for adult open
heart patients, and some excess capacity exists in the market.

Allegheny General's strategy for marketing secondary and
tertiary level medical services is intimately connected with its
institutional objectives. Mr. Grapski and the Trustees believe that
a reputation for excellence and innovation in medical care will
attract patients, both directly and through referrals. Prospective
patients and referring physicians will perceive an institution
whose staff provides formal instruction for young doctors as an
institution that has a commitment to excellence in the delivery of
medical services and has the talent available on the medical staff
to fulfill that commitment. Likewise, they will perceive an institu-
tion whose staff participates in medical research as an institution
that will provide its patients with care that incorporates the latest
advances in medical science.

Allegheny General contacts prospective patients and the
medical community through several channels. The hospital con-
ducts a small amount of commercial advertising. The local news
media provide the hospital with a far greater amount of publicity,
however, through their coverage of research breakthroughs,
unusual or dramatic cases and operations, and special services
that the hospital offers. Naturally, the relative success that the
iospital achieves in its research programs and in its treatment of
tertiary level patients will affect the amount of media coverage
that it receives. As we noted earlier, Allegheny General also
distributes information and research data to the medical com-
munity, encourages the members of its staff to participate in

educational programs sponsored by various medical organiza-
tions, and supports the efforts of members of its staff to write and

26a

publish scholarly works. Thus, for the past fifteen years, Alle-
gheny Genera! has anchored its marketing strategy on the propo-
sition that a regional referral hospital will attract large numbers
ee ee eee
patient care, teaching and research.

C. Role of the Department Directors

Although Mr. Grapski and the Trustees had the primary
responsibility for formulating the revitalization campaign, they
realized that, as a practical matter, they would have to place on
the shoulders of the directors of the hospital's clinical depart-
ments the primary responsibility for improving the performance
of each of the three components of the hospital's integrated
medical services delivery system.'* Therefore, the leadership
placed a high priority on the selection of multitalented, dynamic
individuals to head the hospital's major departments.'’ In order
to perform effectively, these individuals would need managerial
skills, experience in academic medicine, technical proficiency in
their respective fields and an appreciation for the role of research.

‘*Mr. Kenneth Hewitt, a long-time member of Allegheny General's Board
of Trustees, served as chairman of the committee that oversaw the reorganiza-
tion of Allegheny General in the wake of the report presented by Cresap,
McCormick and Paget. He testified at trial that the directors of the clinical
departments

are supposed to run their depart nents as executive heads. They are sup-

posed to take charge, plan and oversee the educational programs that their

department conducts. They are supposed to be sure that they are ade-
quately staffed with competent doctors, and...to run their department

.. ft the highest level of patient care possible. In other words, they have

full responsibility and accountability for what went on in their department.
Tr. 4606.

Article V1, §2 of the 197! edition of the Medical Staff Bylaws reads in part
that “{a) Director of a Department is expected to develop and maintain a strong
well-balanced Department and Staff complement, compatible with the goals
and resources of the Hospital... .” Jt. Exh. 88.

"Prior to 1968, the doctors in each department clected one of their col-
leagues to fill the position of director. The Board of Trustees changed this
practice, however, giving itself the power of appointment. Through the Board's
action, the hospital acquired the ability to recruit directors from outside the
existing staff and to ensure that the directors’ loyalty would lie primarily with the
hospital.

Poa
*

27a

On April 22, 1968, the Board of Trustees approved the
appointment of Dr. George J. Magovern, an eminent thoracic
surgeon and scholar, to the position of Director of the Dcpart-
ment of Surgery. Dr. Magovern received authority to use his own
judgment in building an integrated department that would
achieve the hospital's institutional objectives. In his capacity as
director, Dr. Magovern's duties have included establishing and
maintaining high standards of clinical care, developing and
supervising educational programs, encouraging and overseeing
research activities, and making recommendations on staff appli-
cations and reappointments.

Dr. Magovern has had to devote particular attention to
Allegheny General's residency program in thoracic surgery. The
national accrediting agency, known as the Liaison Committee for
Graduate Medical Education (“LCGME”), imposes very
demanding requirements on such residency programs. A docu-
ment entitled “Essentials of Accredited Residencies” sets forth
these requirements in general terms. AGH Exh. 104. This docu-
ment reads in part:

The teaching staff should be composed of stguiddens
and other health professionals qualified on the basis of edu-
cational background and professional accomplishment,
oriented to the requirements and responsibilities of the
teaching appointment and motivated to assign acceptable
priority to teaching duties. A well organized and well quali-
fied staff... may well be the determining factor in the devel-
opment and approval of a graduate training program... .

Members of the attending staff should be assigned by
the department head to specific responsibility as far as the
work of the services is concerned. The service of each attend-
ing physician should include an adequate number of patients
and extend over a sufficient period to elicit his full interest
and attention while on service. On the other hand the service
should not be so large as to be a burden to the attending staff
and thus result in reduced attention to the educational pro-

The staff must hold an adequate number of regular!y
scheduled clinical pathological conferences and other staff
conferences, in addition to meetings of the staff at which the
histories, clinical observations, laboratory studies, and

_ pathology of selected cases are reviewed. Scientific meetings
at which papers are presented by members of the staff or
guest speakers are considered commendable but do not serve
to meet the requirements of these scheduled conferences.

Id. at 24. The experience of Allegheny General's orthopedic
residency program served notice to the hospital of the need to
comply with these requirements. LCGME placed the orthopedic
program on probation because the residents were providing ser-
vices rather than receiving instruction. The members of the staff
who participated in the program devoted very little time to teach-
ing the residents, while using them to perform many tasks that did
not contribute to their education. Dr. Magovern has had the
responsibility of ensuring that the members of his department
display an interest in teaching the residents in thoracic surgery
and that these residents receive an educational! experience rather
than a service experience. '*

D. Results of the Revitalization Campaign

Under Mr. Grapski’s leadership, Allegheny General has built
a reputation as a vibrant and productive regional referral, secon-
dary teaching hospital. Although it offered some secondary and
tertiary level services before Mr. Grapski's arrival, the hospital
has greatly expanded such services during the past fifteen years
while deemphasizing its role in providing basic medical services.
Specifically, the hospital has developed a cardiac center and an
oncology center that provide comprehensive services for the diag-
nosis and treatment cf heart disease and cancer respectively. It

"Events at other Pittsburgh hospitals have shown that Dr. Magovern
cannot take his responsibility lightly. Within the last six years, LCGME has
withdrawn accreditation for the residency programs in thoracic surgery at St.
Francis and Shadyside Hospitals.

Questions have been raised about the effect on competition caused by the
involvement of LCGME in the accreditation of medical education programs.
See Kissam, Applying Antitrust Law to Medical Credentialing, 7 Am. J.L. &
Med. 1, 2 n.2, 26-27 (1981).

29a

also has devoted substantial efforts to the establishment of a
trauma center and a sports medicine clinic. In conjunction with
this shift in emphasis, the hospital constructed additional operat-
ing rooms and diagnostic and treatment rooms during a renova-
tion of the physical plant.

Allegheny General has improved the quality of its medical
staff significantly. It has recruited several eminent physicians to
serve as directors of various departments. For example, the
Trustees appointed Dr. Claude Joyner, a cardiologist, as Director
of the Department of Medicine. Prior to joining Allegheny Gen-
eral, Dr. Joyner pioneered the use of sound waves to diagnose
heart disease at the University of Pennsylvania School of Medi-
cine. In addition to serving Allegheny General as a department
director, Dr. Joyner has accepted a position on the faculty at the
University of Pittsburgh School of Medicine. Approximately
eighty other members of Allegheny General's present staff like-
wise hold faculty appointments at the University of Pittsburgh's
School of Medicine or School of Dentistry. The availability of
such a large number of doctors with experience in academic
medicine has contributed to the success of Allegheny General's
residency programs, all of which now are fully accredited.
Moreover, the hospital has experienced considerable success in
its research activities. The staff has made many contributions to
medical science, most notably in the diagnosis and treatment of
heart disease.

Mr. Grapski and the Trustees also have attended to the
hospital's physical needs. In addition to renovating the present
hospital building, Allegheny General constructed a parking ga-
rage and a professional office building. A new main hospital
building is scheduled for completion this year.

The many efforts to upgrade the hospital's integrated medi-
cal services delivery system have been well received by both the
general population and the medical community. As a result of
substantially achieving its institutional objectives, Allegheny
General has attracted large numbers of patients from a wide
geographic area. The hospital's total revenues (receipts and con-
tributions) exceed its costs.

Ae

The Department oi Surgery, and particularly its Division of
Thoracic Surgery, has played an important role in the resurgence
of Allegheny General. Through the efforts of Dr. Magovern, the
department has maintained the accreditation of the general
surgery and thoracic surgery residency programs, has greatly
expanded its research activities, and has developed a reputation
for providing secondary and tertiary level patients with high
quality, innovative care. The achi. vements of the Department of
Surgery have attracted a large volume of patients to Allegheny
General and have won national recognition for Dr. Magovern.

Vv

The Application of John N. Robinson, M.D.

Allegheny General's institutional objectives and competitive
strategy influence the hospital's evaluation of applications for
staff privileges. Dr. Robinson initiated his effort to obtain staff
privileges at Allegheny General in February, 1975, after Dr. Kian
Kooros, an invasive cardiologist on the staffs of Allegheny Gen-
era! and North Hills Passavant Hospitals, told Dr. Robinson that
he would make referrals to Dr. Robinson for open heart surgery
that was to be performed at Allegheny General if Dr. Robinson
could acquire staff privileges. A member of Allegheny General's
Board of Trustees, whom Dr. Robinson met socially, also had
encouraged him to apply for staff privileges.

With the intention of obtaining an application form, Dr.
Robinson visited the administrative office of Allegheny General.
A woman in that office asked Dr. Robinson whether he was
joining an established group at the hospital. He replied that he
would be applying as a solo practitioner. The woman did not give
Dr. Robinson ai application form, but rather, told him that the
hospital would mail a form to him. The following day, the woman
telephoned Dr. Robinson to inform him that the Director of the
Department of Surgery, Dr. Magovern, would have to interview
him before the hospital would provide him with an application
forn:. In compliance with that instruction, Dr. Robinson mailed a
copy of his curriculum vitae to Dr. Magovern and obtained an
appointment to see him.

3la

A. The Interview

Dr. Robinson met with Dr. Magovern for approximately
one-half hour on April 4, 1975 at the latter's office. The two men
offered differing accounts of that meeting in their testimony.
Harmonizing the testimony and resolving questions of credibil-
ity, we find that the interview began with Dr. Robinson stating
that an Allegheny General Trustee and Dr. Kooros had suggested
that he make application to the hospital for staff privileges. Dr.
Magovern responded that Dr. Robinson had excellent creden-
tials.

Dr. Robinson then summarized his experience with Dr.
Giacobine and explained the circumstances that led to the disso-
lution of their association. '? During the course of his remarks, Dr.
Robinson conveyed a negative attitude about St. Francis’ tho-
racic surgery residency program, referred to certain foreign resi-
dents at St. Francis as “camel drivers,” implied that a former
Allegheny General resident was a homosexual, and criticized Dr.
Giacobine's unwillingness to inform patients that Dr. Robinson
would perform their surgery. Dr. Magovern replied that he
understood Dr. Robinson's interest in establishing his own iden-
tity as a surgeon. The two men next discussed the surplus of
thoracic surgeons in the United States. As a partial solution to the
problem, Dr. Magovern suggested that American hospitals
accept only those foreign residents who intend to return to their
native lands after their training.

The conversation eventually turned to the Department of
Surgery at Allegheny General. Dr. Magovern stated that Alleghe-
ny General was suffering from a shortage of operating rooms; he
did not mention that construction of new operating rooms was
expected to begin that fall. Dr. Magovern also explained the
importance of the thoracic surgery residency program to Alleghe-
ny General, and he emphasized the difficulties invoived in main-
taining accreditation for a non-university residency program. In
that regard, he expressed the view that Allegaeny General should
grant staff privileges in its Division of Thoracic Surgery only to
those doctors who have the qualifications to obtain a faculty
appoir.tment at the University of Pittsburgh School of Medicine.

"Dr. Robinson had left Dr. Giacobine’s service in December, 1974.

32a

Dr. Magovern noted that Dr. Burkholder, who was to ioin CTSA
after completing bis residency at Presbyterian University Hospi-
tal, had a good chance of obtaining a faculty appointmeat. Dr.
Robinson told Dr. Magovern that he had spoken with Dr. Henry
Bahnson at the University of Pittsburgh about a faculty appoint-
ment, but that he believed that he could not now obtain such an
appointment. At the conclusion of the interview, Dr. Magovern
pointed the way to the office where Dr. Robinson could pick up
an application form.

Dr. Magovern testified that, based on the interview, he was
not impressed with Dr. Robinson. Discovering that Dr. Robin-
son did not have an outgoing personality, Dr. Magovern had
some difficulty in carrying on a conversation with him. Dr.
Robinson did not volunteer information and gave abrupt answers
to several of Dr. Magovern's questions. Dr. Magovern was sur-
prised by Dr. Robinson's negative attitude toward the St. Francis
residency program. He felt that a young thoracic surgeon should
welcome the opportunity to practice at a hospital that has a
residency program and should work to improve it. Dr. Robin-
son's attitude raised a question in Dr. Magovern's mind as to
whether or not Dr. Robinson was interested in teaching. Dr.
Magovern also was very concerned about Dr. Robinson's refer-
ence to certain foreign residents as “camel drivers” because Alle-
gheny General had residents from Middle Eastern countries. Dr.
Magovern did not want a physician on the staff who might have
trouble working with some of the residents. Furthermore, Dr.
Robinson's curriculum vitae did not reflect an interest in
research. He told Dr. Magovern that he had not participated in
significant research because St. Francis did not have a laboratory.
Finally, Dr. Magovern was irritated by Dr. Robinson's sugges-
tion that a former Allegheny General resident was a homosexual.
Dr. Magovern had trained that resident and had written letters of
recommendation on his behalf. He did not believe that the accu-
sation was true, and in any case, he felt that it was an inappro-
priate comment.

Disturbed by the interview with Dr. Robinson, Dr. Magov-
ern telephoned Dr. Giacobine to ask about Dr. Robinson and
about the former resident, who was related to Dr. Giacobine by

33a

marriage. Dr. Magovern’s negative impressions of Dr. Robinson
were reenforced by his conversation with Dr. Giacobine. He also
learned that Dr. Robinson was suing Dr. Giacobine over certain
aspects of the dissolution of their association.

Although Dr. Robinson described the interview as
“friendly,” he left it with the belief that Dr. Magovern, in effect,
had rejected his request for staff privileges. AGH Exh. 1, at 190;
Tr. 178-79. Therefore, he did not bother to obtain an application
form following the interview. Angered by what he considered to
be an infringement on his right to practice medicine, Dr. Robin-
son complained to the Allegheny County Medical Society about
the “closed shop” at Allegheny General. Tr. 180-81. After speak-
ing with the president of the medical society and with the society's
attorney, Dr. Robinson retained private counsel in the person of
Roslyn M. Litman, Esquire.

B. Submission of the Application

Following the Magovern-Robinson meeting on April 4,
1975, no one at Allegheny General heard from Dr. Robinson for
almost five months, that is, until August 27, 1975, when the
hospital received a letter from Mrs. Litman, Dr. Robinson's
attorney. That letter read in full as follows:

August 26, 1975

Allegheny General Hospital

320 East North Avenue

Pittsburgh, Pennsylvania 15212

Attention: Chief Administrative Officer

Gentlemen:

This office has been retained by Dr. John N. Robinson who

has advised us that his several attempts to be favorably

considered for admission to your surgical staff have been
frustrated by the personnel of your hospital. After I learned
of Dr. Robinson's credentials, | was frankly surprised that an
appointment of Dr. Robinson to your staff had not been
made. The information I have received on this case leads to
the conc.asion that your failure to process my client's appli-
cation to a just conclusion in accordance with the various
of hospitals like yours has caused our client serious damage.

34a

I would be grateful if you would advise me as soon as

possible the reasons for your failure to justly process Dr.

Robinson's re , or! to join your surgical staff. If your actions

are supported by by-laws or other governing rules of the

hospital, please submit a copy of these documents to me. |
would appreciate, as well, your sending a copy of your
written rules and regulations covering applications for staff
membership, methods of processing applications, proce-
dures related to submission and processing of applications
and particularly your defined criteria for staff membership.
I will be happy to meet with a representative of your hospital
to further discuss the problem presented by what has
occurred since Dr. Robinson first attempted to file an appli-
cation for membership on your staff. Since Dr. Robinson's
extensive damages to date are continuing, | submit that it is
necessary that the problem be resolved with minimal delay.

If, of course, I do not receive an indication from you of a

desire to resolve this problem within the next 15 days, | will

have no further choice but to institute appropriate legal
proceedings for the benefit of Dr. Robinson.

Very truly yours,

(Signed)

ROSLYN M. LITMAN

RML:esf

cc: Dr. George J. Magovern
Jt. Exh. 1-B.

The hospital administration immediately notified in-house
counsel of the contents of Mrs. Litman's letter, and counsel
thereafter participated in processing Dr. Robinson's application.
Lad Grapski, the president of Allegheny General, investigated the .
assertions contained in the Litman letter and determined that Dr.
Robinson never had submitted an application for staff privileges.

On September 16, 1975, after an exchange of correspon-
dence with Mrs. Litman, Allegheny General mailed to Dr. Robin-
son an application form and a copy of the Medical Staff Bylaws.
Dr. Robinson completed the application form, attached a copy of
his curriculum vitae, and returned the form to Allegheny General
on September 29, 1975.

35a

Mr. Grapski gave copies of Dr. Robinson's application to
Dr. Magovern and to Dr. John Feist, who was the chairman of
the hospital’s credentials committee, Article III, section 3(c) of
the Medical Staff Bylaws places on the director of the relevant
department the duty of preparing a report and recommendation,
which are submitted for consideration by the credentials commit-
tee. Jt. Exh. 88. Article III, section 3(b) of those same bylaws
provides that the credentials committee “shall investigate the
personal character and professional! ethics of the applicant, and
shall evaluate his professional competence to exercise the privi-
leges he requests, or to undertake the professional responsibility
he seeks, and shall verify, through references given by the appli-
cant and other sources available to it, that he meets and has
established all the necessary qualifications set forth in these by-
laws.” Id.

In support of the work of the credentials committee, Mr.
Grapski requested Boston City Hospital and the Veterans
Administration Hospital at Little Rock, Arkansas to confirm
that Dr. Robinson had received a portion of his training at those
institutions. He also requested letters of recommendation from
McKeesport Hospital, North Hills Passavant Hospital, Western
Pennsyivania Hospital and St. Francis Hospital, which Dr.
Robinson had listed on his application as “Present Affiliations,”
and from Drs. Denton Cooley, Edward Longabaugh and
Michael Levis, whom Dr. Robinson had listed on his application
as “References.”

C. The Magovern Report

Upon learning that Dr. Robinson had submitted an applica-
tion for staff privileges, Dr. Magovern again telephoned Dr.
Giacobine. When he told Dr. Giacobine that Allegheny General
had received the application through the office of an attorney, Dr.
Giacobine, referring to the lawsuit that Dr. Robinson had filed
against him, responded: “Join the crowd.” Tr. 4967.

Dr. Magovern also wrote letters to Dr. Denton Cooley and
Dr. Grady Hallman, both surgeons at the Texas Heart Institute
whom Dr. Magovern knew. The plaintiff contends that these
letters were an attempt by Dr. Magovern to generate negative
recommendations. We disagree. Although Dr. Magovern did

36a

dilineate in his letters the reasons that made him inclined to
recommend denial of Dr. Robinson's application, he also asked
both men to provide him with any positive information about Dr.
Robinson that might cast a different light on the application. For
example, in the letter to Dr. Hallman, Dr. Magovern wrote:
Since I felt I knew you well enough to at least inquire of
your feelings, as he rotated through your service, I would like
to hear from you. My feeling would be that unless he had
such superb credentials that the above difficulty in getting
along with people would be overcome by this, I would be less
than pleased if he joined the staff. Basically what I'm saying if
i have become ovei prejudice [sic] by this, | would like to
know. If you think he is really a good fellow, then we can
certainly try to look at the other side of the story.

Jt. Exh. 10. Dr. Magovern never received a response from either
Dr. Cooley or Dr. Hallman.

On October 13, 1975, Dr. Magovern submitted his depart-
ment director’s report on the Robinson application. The report
recommended that the hospital reject the application. It set forth
the following seven reasons in support of this recommendation:

1) a shortage of operating room space and time existed;

2) Dr. Robinson is on the staffs of seven other hospitals, so

it is doubtful that he would have time to contribute to a
teaching program at an eighth institution;

3) Dr. Robinson's former associate, Dr. Giacobine, did

not give a favorable recommendation;

4) Dr. Robinson has not published any papers since leav-

ing medica! school;

5) the University of Pittsburgh School of Medicine has

refused to appoint Dr. Robinson to the faculty;

6) Dr. Robinson has displayed a willingness to resort to

legal action; and

Dr. Magovern was mistaken when he stated that the University of Pitts-
burgh had refused to appoint Dr. Robinson to its faculty. Dr. Robinson had
expressed his interest in obtaining a faculty appointment to Dr. Dahnson, and
felt discouraged, but he never formally applied for such an appointment and
never was rejected.

37a

7) Dr. Magovern did not initiate or encourage Dr. Robin-
son's application.
Jt. Exh. 1-S.

D. The Credentials Committee

The six-member credentials committee?! received an unusu-
ally large volume of information about Dr. Robinson between
October 13, 1975, the day on which Dr. Magovern submitted his
department director's report, and March 4, 1976, the day on
which the committee met to consider Dr. Robinson's application.
All four hospitals that Dr. Robinson had listed on his application
form as “Present Affiliations” responded promptly to Mr. Grap-
ski's request for information. Dr. John Gaisford, chief of the
Division of Surgery at West Penn Hospital, replied that he was
unable to evaluate the applicant because Dr. Robinson had not
performed any surgery at West Penn since joining the staff. Jt.
Exh. |-DD. Mr. Robert Bigge, the executive director of McKees-
port Hospital, wrote that “I have had no occasion to question his
ethics or his morals and have heard nothing derogatory about
him. His fellow surgeons respect his work and tell me that he
shows good judgment and skill in the operating room.” Jt. Exh.
1-CC. Dr. Harry Feather, medical director of St. Francis Hospi-
tal, informed Allegheny Genera! that

I did not know Dr. Robinson before he joined our staff.
Since that time I have found him to be completely ethical and
his character to be above reproach. He is not too “outgoing”
but gets along well with the staff and nursing personnel. He is
a competent surgeon and I can recommend him to you.
Jt. Exh, 1-EE. Mr. Alexander McAliley, the executive director of
North Hills Passavant Hospital, responded succinctly, stating
that “I have enjoyed a business acquaintance with Dr. Robinson
and feel that he would be an outstanding addition to any hospital
staff...." Jt. Exh. 1-FF.

A letter of recommendation from Dr. Edward Longabaugh
supplemented Mr. McAliley's evaluation of Dr. Robinson's work
at North Hills Passavant. Dr. Longabaugh’s letter read in part:

"The committee was composed of Drs. John Feist, radiology, Richard
Deitrick, gynocology, Don Fisher, cardiology, David Hayeslip, pathology,
Gerald Pifer, orthopedic surgery, and Arthur Murphy, general surgery.

hea

38a

He has been, but briefly, a member of our staff, yet our
impression of Dr. Robinson is highly favorable and I am
pleased to recommend him to you.

I feel personally unqualified to judge his competence in
Cardiovascular Surgery, except to affirm that his work has
been exceptable [sic], in so far as one can judge from the
records. I have assigned him only occasionally in the operat-
ing room, but in so far as this brief exposure permits evalua-
tion, | regard his technique as excellent.

I've found no reason tc question his moral character or
the ethics of his practice. | would like to add that he has been
exceptionally helpful to the physicians of the North Hills
Passa vant Hospital in answering consultations, in caring for
emergency patients, at any and all hours, and he has been
cooperative in carrying out his staff assignments.

He has been a most welcome addition to our staff, and |
feel that if he is granted privileges in Cardiovascular Surgery
at Allegheny General Hospital, an admirable continuity of
care may be offered the North Hills patient with cardiopul-
monary problems.

Jt. Exh. 1-AA. A second physician on the staff of North Hills
Passavant, Dr. Michael Levis, also submitted a letter of recom-
mendation on Dr. Robinson's behalf. Dr. Levis, who at that time
was the president of the Allegheny County Medical Society,
wrote that
[i}t has been my privilege to know Dr. Robinson for approxi-
mately six months. During this time | have found him to be
an extremely dedicated, conscientious, and capable thoracic
surgeon. He has had excellent training and in my brief
acquaintance with him has demonstrated outstanding quali-
ties as a clinician.

Jt. Exh. 1-V.

Several doctors who had participated in Dr. Robinson's
training likewise responded to Allegheny General's request for
information.”? Dr. William McDermott, who had supervised Dr.

"Dr. Feist supplemented the inquiries that Mr Grapski had made by
mailing requests for information to Drs. Stanley Crawford, Michael De Bakey,
Howard Baron and James Giacobine on January |6, 1976.

39a

Robinson's internship at Boston City Hospital from July 1963 to
June, 1964, wrote that Dr. Robinson “showed competence as a
physician, was of unquestioned high moral character and had
good relationships with his colleagues and patients.” Jt. Exh.
1-HH. Two surgeons from the Baylor College of Medicine, Dr.
Stanley Crawford and Dr. Michael De Bakey, submitted letters to
the credentials committee. Dr. Crawford's letter read in part:

1 found him to be a tall, attractive person with good
professional bearing. He was well informed medically and
his technica! skill was quite satisfactory. He got along well
with all the people here and I think he made a good reputa-
tion.

Jt. Exh. 1-PP. Dr. DeBakey informed the committee that Dr.

Robinson
entered our Cardiovascular Fellowship Program on Sep-
tember 14, 1970, with the original intent of remaining in this
program through June 30, 1971. In this position he func-
tioned in the equivalent capacity of a Junior Resident in
Thoracic Surgery. However, Dr. Robinson found it neces-
sary to terminate his appointment on March |, 1971, to
accept an appointment as a Thoracic Surgery Resident in
Little Rock, Arkansas. During the short time he was with us
his performance was considered most satisfactory, and his
knowledge and technica! ability were above average. How-
ever, it is somewhat difficult to make definitive statements in
this regard, but only because of the shortness of the period of
time Dr. Robinson was in our program. Therefore, | would
suggest that you obtain a more definitive evaluation by those
responsible for his thoracic and cardiovascular surgical
residency after he left our program.

Jt. Exh. 1-SS. At the Veterans Administration Hospital in Little

Rock, Arkansas, Dr. Robinson worked for four months under

the supervision of Dr. Raymond Read, the chief of surgical

services. Dr. Read wrote to the committee that he thinks
very highly of Dr. Robinson. He is an ex-Marine who fought
in Korea. He is an excellent cardiovascular surgeon, is con-
scientious, takes care of his patients very well and gets along
with his peers, and to the best of my knowledge has excellent

da

moral and ethical standards. I think he would be a consider-
able asset to your staff and | would recommend whole-
heartedly that he be appointed.
Jt. Exh. 1-U. Dr. Robinson completed his training at the Texas
Heart Institute under the supervision of Dr. Denton Cooley.
After two requests from Mr. Grapski and one request from Dr.
Magovern for information about Dr. Robinson, Dr. Cooley sent
the following response to Mr. Grapski:
[Dr. Robinson] served as a Resident in Thoracic Surgery for
the period July 1, 1971 to July 1, 1972 at the Texas Heart
Institute of St. Luke’s and Texas Children’s Hospital. He
performed his duties well, and we believe that he is an
accomplished and capable cardiovascular ar 4 thoracic sur-
geon.
Dr. Robinson can be a rather stern, rigid person in his
dealings with others, but this does not necessarily indicate a
serious personality handicap. | believe that he shows promise
of success in his chosen specialty.
Since I have not been in contact with Dr. Robinson since his
departure from Houston, may | suggest that you get a refer-
ence from Dr. James Giacobine of Pittsburg. [sic] Dr. Giaco-
bine and Dr. Robinson were associated in practice.
1 would appreciate any consideration given to him.
Jt. Exh. 1-RR.
The committee already had written to Dr. Giacobine to inquire
about his experience with Dr. Robinson. Dr. Giacobine’s reply
read in part:

1 am sure his curriculum vitae is a fair assessment of his
professional training. In successfully passing the examina-
tion of the Board of Thoracic and Cardiovascular Surgery,
he has achieved the minimum requirement of our specialty.
Absence of special qualification or achievement, I am sure,
are also evident in his staff application.

Several years ago, when I requested a recommendation
from Doctor Denton Cooley, of Houston, Texas, his letter
among other things, indicated Doctor Robinson's inability

4la

to accept criticism. | have since assessed this as being a

masterful understatement of Doctor Robinson's problem.
Jt. Exh. 1-TT.

In all, the credentials committee requested and received
letters from twelve physicians or hospitals concerning Dr. Robin-
son. Only Dr. Howard Baron of the New York University Medi-
cal Center failed to respond to Allegheny General's inquiry. Few
applicants at Allegheny General are the subject of such a thor-
ough investigation; normally the credentials committee requests
information from only three or four sources.

While the credentials committee was waiting for responses to
certain of its inquiries, Dr. Magovern spoke with Dr. Feist on
several occasions about the Robinson application.”> During a
conversation that occurred in early February, 1976, Dr. Magov-
ern told Dr. Feist that Dr. Robinson recently had exchanged
blows with a Dr. Joseph DeCapua in the catheterization labora-
tory at St. Francis Hospital. This incident, which Dr. Robinson
has described as “embarrassing,” became widely known in the
Pittsburgh medical community. AGH Exh. |, at 207-08. Some
members of the credentials committee attempted to learn more
about the incident through informal inquiries, but they failed to
obtain a verified account before making their recommendation
on Dr. Robinson's application. The committee did not ask Dr.
Robinson to explain the circumstances surrounding the alterca-
tion.

Dr. Magovern submitted a letter to the credentials commit-
tee on January 20, 1976, in which he gave further explanations for
some of the points that he had made in his department director's
report. This letter read in part:

What I would like to stress is the overall approach to
obtaining a position on the Allegheny General Hospital
Staff, which is essentially “if nothing negative is submitted
then one is therefore applicable [sic] for admission to our

2}Dr. Magovern and Dr. Feist are personal friends who sometimes socialize
together and who often confer on professional matters.

™*Dr. Robinson later testified that Dr. DeCapua initiated the confrontation
and threw the first punch. Neither of the combatants filed charges and St.
Francis did not take any disciplinary action.

42a

staff”. I feel in reviewing anyone's application, we should
look for the plus features as well and it is that aspect of his
particular application which does bother me.

Dr. Robinson has not contributed a paper to the litera-
ture despite his extensive training in the past eleven years. He
has not secured an appointment to the faculty at the Univer-
sity of Pittsburgh despite the fact he has been practicing in
Pittsburgh for sometime... .1 can see no extremely positive
features in terms of what he has contributed even to the local
community which would particularly qualify him to be a
member of a teaching faculty at any institution which is
involved in a residency training program. Indeed the one
program in which he was a member has been discontinued.

...1 feel we have every right to maintain the highest
standards which are possible, and | think | have attempted to
do this. Two of the men who had been appointed since I have
directed ‘xe Departme xt, Dr. Liebler and Dr. Burkholder,
have been able to achieve University appointments and both
have demonstrated their ability to contribute to the litera-
ture. The Thoracic Surgery Department as a whole has
contributed 15 papers to the literature in the past year.

It is my firm conviction that given the responsibility that
I have in maintaining the Department and its training pro-
gram that people must demonstrate that they have done
more than completed their training. In Dr. Robinson's case
he certainly has had ample opportunity to do this. The
attitude which I am trying to acquire in the people who
would become affiliated with the Department is one of an
inquisitive, didactic approach to the patient in addition to
demonstrating their clinical skills and since we are one of
approximately four improved [sic] residencies in the State of
Pennsylvania, I think it is imperative that we look for the
positive aspects as well as “the lack of negative features” in
those people applying for a position on the staff. In addition
I am a member of the Residency Evaluation Committee of
the Directors of Thoracic Surgery Association and I feel if I
can't maintain standards in my own Institution that I would
have to bring this problem to the Board of Thoracic Surgery
for their disposition of the status of our program.

43a

Jt. Exh. 1-00.25 Dr. Feist placed Dr. Magovern's letter in Dr.
Robinson's official application folder.

On March 4, 1976, five of the members of the credentials
committee met to consider Dr. Robinson's application for staff
privileges.2* Each of the members had had an opportunity to
examine Dr. Robinson's application folder prior to the meeting.
During the hour-long discussion, the committee reviewed all of
the letters that Allegheny General had received concerning Dr.
Robinson. They discounted the favorable letiers from Dr. Longa-
baugh, Dr. Levis, Dr. Read and Dr. Crawford because these men
had known Dr. Robinson for a relatively short period of time. In
addition, the eleven year hiatus between Dr. Robinson's intern-
ship at Boston City Hospital and his application to Allegheny
General cause4 the committee to discount Dr. McDermott's
favorable letter. The committee read Dr. Cooley's letter as less
than enthusiastic?’ and Dr. DeBakey’s reply as evasive and sur-
prisingly brief.

Although the letters from McKeesport, St. Francis and
North Hills Passavant Hospitals all complimented Dr. Robinson
and supported his application, they raised concern among the
members of the committee that Dr. Robinson already was on the
staffs of too many hospitals.“ Recognizing that an open heart
patient can experience serious complications during the twenty-
four hours following the operation, the committee felt that Dr.

Counsel for the plaintiff has characterized the fina) sentence in Dr.
Magovern's letter as a threat to terminate the thoracic surgery residency pro-
gram if Allegheny Genera! granted staff privileges to Dr. Robinson. We disagree
with this characterization. Reading this sentence in context and keeping in mind
the department director's role in achieving Allegheny General's institutional
objectives, we believe that Dr. Magovern simply was advising Allegheny Gen-
eral that the appointment to the staff of surgeons who are not qualified to teach
could jeopardize the accreditation of the residency program. Dr. Fisher, who
was a member of the credentials committee, testified that he did not read the
final sentence as a threat. Tr. 6046-47.

*Dr. Hayeslip did not attend the meeting.

2”Dr. Robinson has admitted that he was disappointed with the contents of
Dr. Cooley’: letter. AGH Exh. |, at 234.

®Dr. Robinson's curriculum vitae also listed staff appointments at Pitts-
burgh, South Side and St. John's Hospitals.

44a

Robinson could not provide adequate coverage for his patients at
Allegheny Generai while also performing surgery and fulfilling
staff commitments at several other hospitals. Moreover, they
doubted that Dr. Robinson could contribute to the teaching
program and to staff committees at Allegheny General if he
maintained active affiliations with other institutions.

The committee gave the greatest weight to the letter from Dr.
Giacobine, who had the longest and most recent experience with
Dr. Robinson. Dr. Giacobine, a well-known and respected
member of the Pittsburgh medical community, had informed the
committee that Dr. Robinson had good, but not exceptional,
credentials and that Dr. Robinson had 2 serious personality
problem. The committee noted that addition)

45a

tee. Third, the committee had independent corroboration for Dr.
Magovern'’s conclusions: Dr. Robinson's curriculum vitae
informed the committee that he was affiliated with seven hospi-
tals and that he had not written a research paper since medical
school; the two surgeons on the committee verified that Alle-
gheny General had a shortage of operating rooms; and at least
four sources of information indicated that Dr. Robinson might be
a disruptive force.

Based on the disappointing letters of recommendation, the
strong opposition of the department director, and the concern
that Dr. Robinson already was overextended, the credentials
committee voted unanimously to recommend that Allegheny
General deny Dr. Robinson's application for staff privileges. The
members of the committee gave their chairman, Dr. Feist, the
responsibility of conveying their recommendation to Dr. Law-
rence Brent, who was the chairman of the executive committee of
the medical staff. On March 9, 1976, Dr. Feist wrote the following
confidential letter to Dr. Brent:

During its regular monthly meeting of March 4, the Creden-

tials Committee [considered] the application of John N.

Robinson, M.D., to the Associate Attending Staff in Cardio-

thoracic Surgery. Although his records indicate that he has

fulfilled the minimum training requirements, the Committee
voted unanimously to recommend denial of this application.

In order to maintain confidentiality and minimize adverse

publicity, it was decided to omit from the official minutes a

listing of the reasons for rejection, and, instead, to transmit

this material to you by letter.

The Credentials Committee's recommendation is based on

the following findings and considerations:

1. Dr. Robinson already holds active Staff appointments
in his specialty in 7 other area hospitals. This would
inevitably fragment his professional efforts and pre-
clude the prompt availability and devotion of the requi-
site time and effort necessary to render continuous care
and supervision to his own patients. Moreover, it would
be physically impossible to fulfill all the Staff responsi-
bilities inherent in such a critical specialty, were he also
to be appointed here.

doa

2. George J. Magovern, M.D., Director of the Depart-
ment of Surgery, recommends denial of this application
because of:

(a) Insufficient operating time and space to expand
cardiothoracic surgery beyond its present volume;

(b) Saturation of the Cardiothoracic Surgery resi-
dency staff by the current patient load;

(c) Lack of evidence that Dr. Robinson has either the
ability or the interest to make a substantial positive
contribution to the daily conduct or continued
approval of the residency program, or to the estab-
lished high standard of quality of the clinical ser-
vice in Cardiothoracic Surgery, or to the
educational commitments of the institution at
large, and

(d) Inability to qualify for a faculty appointment at the
University of Pittsburgh School of Medicine.

3. There is substantial doubt that the applicant meets the
personal qualifications to function harmoniously and
constructively in our institution, because:

(a) The written references to his character by physi-
cians in his own specialty and his training precep-
tors are in part evasive or ambiguous, in part
clearly indicative of a serious personality defect
and inability to get along well with his colleagues;

‘ (b) The only clearly positive recommendations origi-
nate from physicians who have only brief and
superficial acquaintance with the applicant; and

(c) A recent episode of assault and battery upon a
fellow physician on the premises of St. Francis
Hospital has been reported to the Committee.

Jt. Exh. 1-UU.
E. The Rejection of the Application

The executive committee of the medical staff develops clini-

cal standards, monitors and coordinates the work of the hospi-
tal’s various departments, advises the president of Allegheny

47a

General on matters of hospital policy and reviews the recommen-
dations of the medical staff's many committees. Article III, §3(d)
of the Medica! Staff Bylaws provides that “[u]pon receipt of the
report of the Credentials Committee, the Executive Committee of
the Medical Staff at its next regular meeting, shall consider the
report and recommend to the Medical Staff through the Presi-
dent of the Medical Staff, that the application be accepted,
deferred, or rejected.” Jt. Exh. 88. The executive committee has
fourteen voting members, consisting of the three elected officers
of the medical staff, the directors of five of the hospital's depart-
ments, five members elected from the ranks of the senior attend-
ing and associate attending staffs, and the president of the
hospital. /d., Article VII, §1(a)(1). In 1976, Dr. Magovern was
CTSA's only representative on the executive committee.

On March 15, 1976, the executive committee met to con-
sider, inter alia, the credentials committee's report on Dr. Robin-
son's application. Nine voting members were present, including
two doctors who also served on the credentials committee.” Dr.
Magovern did not attend the meeting.

The members of the committee discussed Dr. Robinson's
application at length, in the process reviewing the letters of
recommendation, Dr. Robinson's curriculum vitae, the depart-
ment director's report and Dr. Feist’s letter to Dr. Brent. Mr.
Grapski also informed the committee of one recent development.
In connection with Dr. Feist’s reference to the altercation
between Dr. Robinson and Dr. DeCapua, Mr. Grapski reported
that, in response to his telephone inquiry, Sister Adele Meiser, the
executive director of St. Francis Hospital, neither had confirmed
nor denied that the incident occurred. At the conclusion of the
discussion, the committee voted unanimously to recommend that
Allegheny General reject Dr. Robinson's application for staff
privileges.

Three members of the committee testified at trial. Mr.
Grapski stated that he voted to adopt the recommendation of the
credentials committee for two reasons. First, he had great confi-

"The voting members in attendance were Drs. Arthur Murphy, Frank
Begg, M. Remsen Behrer, George Brodmerkel, Robert Hartsock, Claude
Joyner, Laibe Kessler, Gerald Pifer and Mr. Grapski. Jt. Exh. 4.

48a

dence in the ability of the credentials committee to judge iin
applicant’s qualifications. Second, Mr. Grapski had serious
doubts about Dr. Robinson's ability to function harmoniously in
the stressful environment of the practice of cardiothoracic
surgery. This concern had its origin in the letters of recommenda-
tion, the altercation at St. Francis, and the applicant's use of an
attorney to obtain an application form.

Dr. Laibe Kessler, a neurosurgeon, testified that the letters of
recommendation raised a red flag for him. Over the years, Dr.
Kessler had found that such letters usually went overboard in
their praise of an applicant. He characterized the letters received
from those who had trained Dr. Robinson, however, as halting
and evasive. Tr. 6688, 6691. Moreover, he noted that the favor-
able letters came from individuals who had not worked closely
with Dr. Robinson. Two other factors also contributed to Dr.
Kessler’s negative vote. First, he did not believe that the applicant
could provide adequate coverage for his patients and contribute
to the residency program at Allegheny General while performing
surgery at two or three other hospitals and consulting at still more
hospitals. Although he looked for some indication that Dr.
Robinson intended to concentrate his practice at Allegheny Gen-
eral, Dr. Kessler ultimately concluded that Dr. Robinson did not
have such an intention. Second, Dr. Kessler did not want any
physi ian on the staff who would resort to physical violence.

Dr. Frank Begg, a cardiologist, testified that two considera-
tions persuaded him to cast a negative vote. Speaking from a
position of familiarity with the field, Dr. Begg first stated that he
did not believe that an open heart surgeon could provide high
quality patient care, contribute to a residency program and per-
form research unless that surgeon concentrated his practice at one
hospital. Dr. Begg noted that Dr. Robinson held multiple statf
appointments and had not represented that he would make
Alleghcay General the focus of his practice. The second consider-
ation underlying Dr. Begg’s vote was the presence in the file of
“some unflattering recommendations.” Tr. 4498.

Following the unanimous vote of the committee, Mr.
Grapski informed Dr. Robinson by letter that “the Executive
Committee of the Medical Staff recommended denial of your

49a

application. If you wish a hearing as provided in Article 3, Section
6 of the Medical Staff Bylaws, you must submit a written request
for same within ten days of receipt of this notice.” Jt. Exh. 1-VV.
Subsequently, Mrs. Litman did request that the executive com-
mittee conduct a hearing on her client's application. Jt. Exh.
1-Ww.

Article III, section 6(a) of the Medical Staff Bylaws provides

in part that
[iJn the event of such a hearing, the application, together
with the report and recommendation of the Credentials
Committee for denial shall form the basis upon which the
Executive Committee may receive evidence bearing on the
applicant's qualifications for appointment to tue Medical
- Staff. The Credentials Committee shall present evidence in
support of its findings and recommendations, and the appli-
cant shall present evidence in support of his qualifications.
The recommendation of the Executive Committee of the
Medical Staff following this hearing shall be sent to the
Board of Trustees and a copy of it sent to the applicant by
certified or registered mail by the Office of the President of

the Hospital.

Jt. Exh. 88. Dr. Robinson knew from his reading of the Medical
Staff Bylaws that he would have the burden at the hearing of
allaying the concerns expressed by the credentials committee and
of establishing his good character and professional competence.
Id., Article II1, §3(b). In anticipation of the hearing, Allegheny
General supplied Mrs. Litman with a copy of Dr. Robinson's
application form, a copy of all letters of reference that Alicgheny
General received concerning Dr. Robinson, and a copy of the
report and recommendation of the credentials committee. Jt.

Exh. 1-YY.

The executive committee convened on June 21, 1976 to
conduct the hearing on Dr. Robinson's application. By agree-
ment of counsel, John J. McClean, Jr., Esquire, a former judge of
the Court of Common Pleas of Allegheny County, presided at the
hearing. David B. Fawcett, Jr., Esquire, represented the creden-
tials committee and Mrs. Litman appeared on behalf of Dr.
Robinson. Three witnesses presented testimony.

50a

Dr. Feist testified first, explaining how the credentials com-
mittee reached its decision. Dr. Magovern then recounted his
initial meeting with Dr. Robinson and reviewed the reasons for
his opposition to the appointment of Dr. Robinson to the medical
staff.

The applicant took the stand as the final witness. Through
questioning by Mrs. Litman, Dr. Robinson first presented a
detailed account of his medical training. He then discussed his
two and one-half year association with Dr. Giacobine and
explained the circumstances that led to its termination. Dr.
Robinson told the committee that “a long-term relationship was
just impossible with the man” because Dr. Giacobine “interjected
severe family problems into the practice” and would not permit
Dr. Robinson to tell patients that he would be performing their
surgery. AGH Exh. I, at 182-83.

Dr. Robinson next attempted to rebut Dr. Magovern’s tes-
timony concerning their meeting of April 4, 1975. Directly con-
tradicting Dr. Magovern, Dr. Robinson stated that he had not
mentioned Dr. Giacobine’s relative during the interview and
definitely had not commented on that individual's sexual prefer-
ences. Moreover, Dr. Robinson testified that Dr. Magovern had
told him that a faculty appointment at the University of Pitts-
burgh Medical School was a prerequisite to obtaining staff privi-
leges at Allegheny General.

In an effort to establish that he had an interest in teaching,
Dr. Robinson informed the committee that he had participated in
the instruction of residents while serving as the chief surgical
resident at Columbia Presbyterian Hospital. He also told the
committee that Creighton University Medical School had offered
him the position of professor of surgery and chief of cardiac and
thoracic surgery upon his leaving the Texas Heart Institute.
Finally, Dr. Robinson testified that hi: “taught the residents
operating” at St. Francis Hospital. AGE' Exh. 1, at 182.

Recognizing that the committee wa: concerned about his
multiple staff appointments, Dr. Robinsot. assured the commit-
tee that “I'm not overworked and I fulfill al my obligations.” /d.
at 194. Noting that he originally had joined tive staffs of the seven
hospitals listed on his curriculum vitae at Dr. Giacobine’s direc-

Sla

tion, Dr. Robinson testified that he visited South Side Hospital
only once a week, that he had performed only one operation at St.
John's Hospital, that he had not visited Pittsburgh Hospital for at
least a year, and that he never had admitted a patient to West
Penn Hospital. In 1976, Dr. Robinson concentrated his practice
at St. Francis Hospital, McKeesport Hospital and North Hills
Passavant Hospital. At no point during his testimony did Dr.
Robinson state that he intended to make Allegheny General the
focus of his practice.

Finally, Dr. Robinson discussed the altercation involving
Dr. DeCapua. Although conceding that he was not proud about
his participation in the altercation, he emphasized that Dr. DeCa-
pua had thrown the first punch and later had apologized to Dr.
Robinson for his behavior.

During cross-examination, Mr. Fawcett elicited several sig-
nificant admissions. First, Dr. Robinson stated that he had writ-
ten the only paper of his professional career during medical
school on a subject that is unrelated to cardiothoracic surgery.
Second, Dr. Robinson confirmed that he had initiated legal
action against Dr. Giacobine after the termination of their associ-
ation. Third, when asked whether he had talked to anyone at
McKeesport Hospital about Dr. Giacobine’s relative, Dr. Robin-
son responded as follows: “Well, they ask you why you are
coming or why you left.” AGH Exh. I, at 225. Fourth, Dr.
Robinson testified that he “may have” referred to residents at St.
Francis as “came! drivers” during his interview with Dr. Magov-
ern. /d. Fifth, another hospital, Suburban General Hospital in
Bellevue, Pennsylvania, recently approved Dr. Robinson's appii-
cation for staff privileges. Finally, Dr. Robinson stated that the
letter of recommendation that Dr. Cooley submitted to Alle-
ghey General disappointed him and hurt his feelings. /d. at 234.

During the course of the hearing, Mrs. Litman offered into
evidence five letters of recommendation that were not available at
the time that the credentials committee considered Dr. Robin-
son's application. The majority of these letters were solicited by
the applicant directly. Dr. Thomas Madigan, the chairman of the

Department of Surgery at St. Francis Hospital, addressed the
following letter to the executive committee:

52a

I would like to recommend the appointment of Dr. John N.
Robinson in Cardiac and Thoracic Surgery.

I have known Dr. Robinson for the past ten years. He is well
trained, bas an excellent surgical background, makes a real
effort to teach the residents, and he gets along well with his
fellow physicians.

Jt. Exh. 3¢. Dr. Henry Madoff, a thoracic surgeon on the staff of

McKeesport Hospital, addressed a letter to Mrs. Litman, stating

in part that
Dr. Robinson has shown technical competence and knowl-
edge of his field. He has been diligent in his responsibility to
patients, residents and attending staff of the McKeesport
Hospital. His ability to get along with members of the staff
has been proven by his development of a good referral
practice at McKeesport and other area hospitals, since start-
ing on his own.

Jt. Exh. 34. Dr. Frank Bondi, the chairman of the Department of

Surgery at McKeesport Hospital, informed Allegheny General

that
Dr. Robinson has gradually increased his practice at
McKeesport Hospital and on many occasions | have had an
opportunity to observe him in the operating room and to
watch some of his cases on the wards of the hospital. He has
always demonstrated to me excellent judgment and in the
operating room excellent ability and technique. He has been
a very frequent participant in our educational programs and
attends most of our scientific meetings here at the hospital.

Jt. Exh. 33. Dr. Arthur Beall, a professor of surgery at the Baylor
College of Medicine, wrote that “Dr. Robinson satisfactorily
performed all the duties assigned to him and was considered to be
an excellent technical surgeon with mature judgement.” Jt. Exh.
38. Finally, Dr. Grady Haliman, a central figure at the Texas
Heart Institute, addressed the following letter to the credentials
committee:

I knew Dr. Jchn Robinson well and was in frequent contact

with him during his years of training in thoracic and cardio-

vascular surgery here at the Texas Heart institute of St.

53a

Luke’s Episcopal and Texas Children’s Hospitals. | believe

that Dr. Robinson is highly intelligent and wel! motivated.

He is of high moral character and possesses good surgical

technique. I admired John's honesty and candor. He did not

hesitate to speak his mind and give his opinion even if it
differed from that of his seniors on the staff.

I believe that Dr. Robinson has a good future in cardiovascu-

lar surgery and would appreciate your favorable considera-

tion of his application.
Jt. Exh. 27.

After the presentation of the evidence, the executive commit-
tee discussed the merits of Dr. Robinson's application for
approximately one hour and then voted unanimously to endorse
the committee's original decision to recommend denial of the
application. Dr. Magevern and the members of the credentials
committee did not participate in either the discussion or the
subsequent vote. The voting members of the executive committee
who testified at trial stated that the testimony and the exhibits
presented at the hearing did not allay their primary concerns: Dr.
Robinson did not represent to the committee that he intended to
concentrate his practice at Allegheny General and several unre-
butted pieces of information indicated that Dr. Robinson might
not function harmoniously with the medica! staff, the residents
and the support personnel.

At the June 28, 1976 meeting of the executive committee of
the Board of Trustees, Dr. Brent, in his capacity as the chairman
of the executive committee of the medical staff, reported that the
latter committee had afforded Dr. Robinson a formal hearing on
his application for staff privileges and that it unanimously recom-
mended that the Board of Trustees deny the application. The
chairman of the Board of Trustees appointed a special committee
comprised of two trustees, Mr. Kenneth Hewitt and Mr. Harry
Epstine, to review the Robinson file for the purpose of determin-
ing whether Allegheny General had followed proper procedures
in processing the application and whether the executive commit-
tee of the medical staff had reached the correct conclusion.

S4a

Mr. Hewitt?! and Mr. Epstine independently read the tran-
script of Dr. Robinson's hearing and the many letters of recom-
mendation that Allegheny General had received concerning Dr.
Robinson. The two gentlemen then discussed the file at length,
ultimately concluding that Dr. Robinson had received a fair
hearing, that the conduct of the hearing fully complied with the
requirements of the corporate bylaws, and that they saw no
reason to disagree with the recommendation of the executive
committee of the medical staff. After the special committee
reported its findings on September 27, 1976, the executive com-
mittee of the Board of Trustees passed a resolution recommend-
ing that the Board of Trustees reject Dr. Robinson's application
for staff privileges.

The full Board of Trustees convened on October 25, 1976 for
its fourth quarterly meeting. Mr. Grapski gave an oral report on
the Robinson application, summarizing what had transpired at
each level of review. After a discussion of the matter, the Board of
Trustees passed the following resolution:

RESOLVED, That the action of the Executive Committee

of the Medica! Staff taken with respect to the application for

staff appointment of John N. Robinson, M.D. is approved
and that said appointment is hereby rejected.
Jt. Exh. 7.
VL.

The Legal Action: Jurisdiction And Relevant Market
A. Subject Matter Jurisdiction

Dr. Robinson responded to Allegheny General's decision to
deny his application for staff privileges by filing this action for
injunctive relief and damages based on federal antitrust and
pendent state law claims. As a threshold matter, the defendants

"Mr. Hewitt had known Dr. Robinson's parents in Washington, D.C.
while Mr. Hewitt was serving in the Unined States Navy. At that time, John
Robinson was a young boy. After Dr. Robinson moved to Pitisburgh to join Dr.
Giacobine's service, he and his wife had dinner twice with Mr. and Mrs. Hewitt.
During one of those dinners, Mr. Hewitt suggested to Dr. Robinson that he
consider applying for staff privileges at Allegheny General. Based on this
background, we assume that Mr. Hewitt was particularly conscientious in his
examination of the matter.

5Sa

argue that this Court lacks jurisdiction over the subject matter of
Dr. Robinson's lawsuit. They contend that their alleged unlawful
conduct did not substantially affect interstate commerce, and
therefore, that Congress’ power to regulate interstate commerce
through the antitrust laws cannot extend to encompass their
alleged conduct. If this Court lacks jurisdiction over the plaintiff's
antitrust claims, his pendent state law claims lose their bridge to
federal court.

We believe that the plaintiff did satisfy the jurisdictional
element of the Sherman Act by establishing that the defendant's
activities had a substantia! effect on interstate commerce. See
Hospital Building Co. v. Trustees of Rex Hospital, 425 U.S. 738,
743-44 (1976); Doctors, Inc. v. Blue Cross of Greater Philadel-
phia, 490 F.2d 48, 50-Si (3d Cir. 1973). Virtually all of the
supplies, drugs and equipment used by Allegheny General and the
CTSA surgeons during open heart procedures are purchased
from manufacturers outside the Commonwealth of Pennsylva-
nia. The cost of single-use products expended in open heart
surgery ranges from $300 to $3,500 per procedure.*? Moreover,
Allegheny General and CTSA receive a substantial portion of
their revenue from non-Pennsylvania sources. The hospital
obtains one-third of its revenue from federally funded Medicare
reimbursements. It also receives several million dollars in Medi-
caid funds, half of which originate from the federal government,
and payments from Blue Cross and commercial insurance com-
panies located outside the Commonwealth. CTSA likewise
receives payments from these sources. Finally, Allegheny Gener-
al’s Division of Thoracic Surgery attracts a significant number of
patients from Ohio, West Virginia and Maryland.

The plaintiff alleges that the defendants combined to exclude
him from participation in a specialty within the medical profes-
sion that has significant links with interstate commerce. We hold
that these links establish a sufficient nexus between the activities

In the United States in 1979, open heart surgery consumed between
$120,000,000 and $1 30,000,000 worth of products that were either implanted in
the patients or disposed of after use in the operating room. Single-use products
inciude oxygenators, tubing, filters, priming solutions (for the heart/lung
machine), sutures, catheters and artificial valves.

Séa

of the defendants and interstate commerce to support the applica-
tion of the federal antitrust laws to the alleged restraint of trade by
Allegheny General and by certain surgeons on the hospitai’s staff.
See McLain v. Real Estate Board of New Orleans, Inc., 444 U.S

232 (1980) (plaintiffs satisfied jurisdictional element of Sherman
Act by demonstrating that defendants’ brokerage activity had a
substantial effect on interstate commerce; plaintiffs need not
make particularized showing of effect on interstate commerce
caused by the alleged unlawful activity); Hospital Building Co. v.
Trustees of Rex Hospital, 425 U.S. 738 (1976) (plaintiff satisfied
jurisdictional element of Sherman Act by alleging that it pur-
chases a large percentage of its medical supplies from out-of-state
manufacturers; it attracts a significant number of patients from
out-of-state; it obtains a substantial portion of its revenue from
out-of-state sources; and it plans to finance the construction of a
new facility through the use of out-of-state lenders).

B. Relevant Market

Before a court can evaluate the merits of a plaintiff's antitrust
claims, it first must identify the market that the defendants’
alleged unlawful conduct affects. This relevant market usually
has two dimensions—product and geographic. Professor Law-
rence Sullivan presented the following illustration of the concept
of relevant market:

To define a market in product and geographic terms is to say
that if prices were appreciably raised or volume appreciably
curtailed for the produc: within a given area, while demand
held constant, supply from other sources could not be

expected to enter promptly enough and in large enough
amounts to restore the old price or volume. If sufficient

supply would promptly enter from other geographic areas,
then the “defined market” is not wide enough in geographic
terms; if sufficient supply would promptly enter in the form
of products made by other producers which had not been
included in the product market as defined, then the market
would not be wide enough in defined product terms. A
“relevant market,” then, is the narrowest market which is
wide enough so that products from adjacent areas or from
other producers in the same area cannot compete on sub-
stantial parity with those included in the market.

a

57a

L. Sullivan, Handbook of the Law of Antitrust §12, at 41 (1977)
{hereinafter referred to as “Sullivan”. This traditional descrip-
tion of relevant market applies to the present case with one
modification. As we observed earlier, the third-party payor sys-
tem generally insulates the cor umer-patients from price consid-
erations; this sharply contrasts with the commercial world, in
which price often is the determinative factor for the buyer. When
purchasing medical services, most consumer-patients look for a
high quality of care rather than for a low price. The change in the
buyers’ focus does not impair the applicability of Professor Sulli-
van's illustration to the medical services industry, however,
because quality of care can substitute without difficulty for price
as the primary competitive variable. Cf, SmithKline Corp. v. Eli
Lilly & Co., 575 F.2d 1056, 1063-64 (3d Cir. 1978) (demand for
various antibiotics with overlapping capabilities not sensitive to
price; physicians prescribe particular antibiotic on basis of its
range of effectiveness and its level of toxicity). Patients and
referring physicians respond to the quality of care variable when
selecting medical services just as they would respond to the price
variable when purchasing table salt.
1. The Product Market

A properly defined product market should encompass all
products—both items that are presently available and potential
entrants—that have a significant, positive cross-elasticity of
demand. See Times-Picayune Publishing Co. v. United States,
345 U.S. 594, 612 n. 31 (1953); SmithKline Corp. v. Eli Lilly &
Co., 575 F.2d 1056, 1063 (3d Cir. 1978). In other words, a relevant
product market includes all producis that consumers perceive as
reasonable substitutes for each other. See United States v. E. 1. du
Pont de Nemors & Co., 351 U.S. 377, 394-95 (1956); Columbia
Metal Culvert Company, Inc. v. Kaiser Aluminum & Chemical
Corp., 579 F.2d 20, 26-30 (3d Cir. 1978).

The plaintiff contends that the appropriat: product market
in the present case is “adult open heart surgery,” which the parties
define as surgery requiring the use of cardio-pulmonary by-pass
equipment. We agree that the relevant product market is adult
open heart surgery because no substitute for the product exists
and because high entry barriers prevent most surgeons from
becoming suppliers of open heart procedures.

Only a small percentage of patients who suffer from cardio-
vascular defects or diseases undergo cardiac catheterization, and
ony 25% to 30% of these are identified as candidates for open
heart surgery. Recognizing the operation's risk and expense,
physicians usually recommend open heart surgery only as a last
resort for patients who do not respond to other treatment. A
candidate for open heart surgery has no real choice.

An open heart operation can be supplied ony by an expe-
rienced cardiothoracic surgeon working in cooperation with a
team of support personnel in a hospital's specially equipped
operating room. The lead surgeon is a highly trained specialist
who has completed medical school, an internship, four years of
general surgical training, a two-year residency program in cardio-
thoracic surgery and additional training while in private practice
with experienced surgeons. The support team includes one or two
less experienced cardiothoracic surge ns or resider ‘s, an anesthe-
siologist, scrub nurses, circulating n:\;ses and perfusionists. This
team uses sophisticated equipment that the hospital provides,
such as the heart /lung machine, monitoring devices and a postop-
erative intensive care unit. Open heart surgeons and their support
teams must perform a minimum of three operations per week in
order to maintain their proficiency and to minimize mortality
rates. Lateral entry by a doctor into the market from most other
surgical fields is not possible.

Adult open heart surgery is a distinct market from pediatric
open heart surgery (involving persons under seventeen years of
age). Pediatric open heart surgery usually is for the correction of
congenital heart defects, whereas most adult open heart surgery
results from acquired defects. A surgeon who operates on child-
ren must develop skills that are somewhat different from those
that the surgeon who operates on adults must develop, and
pediatric surgery also requires specialized facilities and equip-
ment. The vast majority of pediatric open heart procedures in
Pittsburgh are performed at Children’s Hospital; no pediatric
vpen heart surgery is performed at Allegheny General.

2. The Geographic Market

A court attempting to define the relevant geographic market

in an antitrust case must identify the area of effective competition

that the defendant encounters when it offers the designated prod-
uct for sale. See Tampa Electric Co. v. Nashville Coal Co., 365
U.S. 320, 331-33 (1961). The area of effective competition is the
territory within whica the buyer has, or in the absence of unlawful
market power would have, the ability to seek alternatives if the
supplier was to change one of the competitive variables to the
disadvantage of consumers. See United States v.

National Bank, 374 U.S. 321, 359-61 (1963); Weeks Dredging &
Contracting, Inc. v. American Dredging Co., 451 F. Supp. 468,
490-92 (E.D. Pa. 1978). As a corollary, the relevant geographic
market is the territory within which the defendant can operate
without encountering other suppliers who have the ability to
compete on substantial parity. See United States v. Aluminum
Company of America, 148 F.2d 416, 430-31 (2d Cir. 1945); Power
Replacements Corp. v. Air Preheater Company, Inc., 356 F.
Supp. 872, 896-97 (E.D. Pa. 1973); United States v. Kimberly-
Clark Corp., 264 F. Supp. 439, 455-59, 464 (N.D. Cal. 1967). A
defendant has market power if it can exclude competition from a
particular territory, thus permitting it to change the competitive
variables of its product without thereby causing other suppliers to
enter the market. See Sullivan §19, at 67. Practical commercia!
realities govern when defining the relevant geographic market.
Brown Shoe Co., Inc. v. United States, 370 U.S. 294, 336 (1962).

Courts, when appropriate, will recognize geographic sub-
markets for the purpose of evaluating the merits of antitrust
claims. See id. at 336-39; Erie Sand and Grave! Company v.
Federal Trade Commission, 291 F.2d 279, 283 (3d Cir. 1961). A
submarket exists if a supplier, who competes at parity with other
suppliers over most of a broad geographic area, can mainiain 4
significant competitive advantage against all other suppliers
within a small section of that broad geographic area. See Case-
Swayne Co., Inc. v. Sunkist Growers, Inc., 369 F.2d 449, 456-58
(9th Cir. 1966), rev'd on other grounds, 389 U.S. 384 (1967)
(applicability of Capper-Volstead Act). Common examples of
factors that can resut in a local competitive advantage include
high transportation costs for bulky items, unilateral advertising
directed at a specific community, or the elimination of retailing
costs through the estabiishment of a factory outlet store.

The plaintiff urges this “ourt to recognize both a broad
geographic market and a relev~ «t geographic submarket for adui.
open heart surgery. According ¢ > the plaintiff's economic expert,
Peter Max, the broad geographic narket should encompass the
counties of Allegheny, Armstrong, Beaver, Butler, Cambria,
Clarion, Elk, Fayette, Forest, Indiana, Jefferson, Washington
and Westmoreland in Pennsyvania, Brooke and Hancock in West
Virginia, and Jefferson in Ohio. Mr. Max found both supply and
demand side evidence to support this defin’ .on of the broad
geographic market. On the supply side, the six open heart hospi-
tals in Pittsburgh obtained 89% of their open heai. pi ‘ents from
these sixteen counties in 1976. On the demand side, a high percen-
tage of the residents of these sixteen counties who underwent
open heart surgery in 1976 had their operations performed at one
of the six open heart hospitals in Pittsburgh.

For the purpose of evaluating the plaintiff's antitrust claims,
however, Mr. Max urged the Court to focus on a geographic
submarket composed of Beaver County and the northwestern
section of Allegheny County. The plaintiff alleges that Allegheny
General and CTSA possess unlawful market power in this geo-
graphic submarket over the delivery of adult open /:eart surgical
services and that the defendants have excluded the pl«intiff from
performing open heart surgery on patients from this submarket.

In an effort to substantiate the existence oi a viable sub-
market, Mr. Max first noted during his testimony that the Alle-
gheny County Health Department subdivides the county into five
districts to “better provide health services and to bring the Health
Department closer to the people.” Tr. 2503. The Health Depart-
ment labels its districts “southeast,” “northeast,” “central,”
“northwest” and “southwest.” Allegheny General is the only open
heart hospital located in the northwest district, and 55.5% of the
open heart procedures that were performed in 1976 at the six
Pittsburgh hospitals on residents of that district were performed
at Allegheny General. By contrast, only 9.4% of the residents of
the southeast district who underwent open heart surgery in 1976
at one of the Pittsburgh hospitals had their operations performed
at Allegheny General.

6la

Like the Health Department, Allegheny General also subdi-
vides Allegheny County for planning purposes. The hospital has
identified four sectors: east, south, northwest and local. The local
sector encompasses the Northside area of Pittsburgh, where
Allegheny General is located. Mr. Max found further support for
the existence of a submarket when he focused on Allegheny
General's open heart petients who reside in each of these four
subdivisions of Allegheny County. Two hundred and forty-seven
residents of the northwestern and local sectors underwent open
heart surgery in 1976 at one of the six Pittsburgh hospitals;
surgeons at Allegheny General performed 44.1% of these proce-
dures. Allegheny General obtained only a 10.3% share, however,
of the open heart patients from the eastern sector of Allegheny
County who underwent surgery at one of the six hospitals in 1976.

Mr. Max expressed the view that Allegheny General's ability
to attract a large percentage of the open heart patients who reside
in northwestern Allegheny County indicates that Allegheny Gen-
eral has market power in northwestern Allegheny County, and
therefore, that northwestern Allegheny County should be a com-
ponent in the submarket that the Court will use to evaluate Dr.
Robinson's claims. Employing the same analysis, Mr. Max
recommended that the Court exclude eastern and southern
Allegheny County from the relevant submarket because Alle-
gheny General has failed to demonstrate an ability to attract a
substantial percentage of the open heart patients who reside in
those areas.

In addition to northwestern Allegheny County, Mr. Max
would inciude Beaver County in the relevant submarket. The
Office of Management and Budget, a federal agency, identifies
standard metropolitan statistical areas for the purpose of collect-
ing and publishing statistical information. The agency establishes
these areas by grouping counties that have close economic and
social links with a particular urban center. The Pittsburgh stand-
ard metropolitan statistical area includes the Pennsylvania coun-
ties of Allegheny, Beaver, Washington and Westmoreland.
_ Surgeons at Allegheny General performed 70.7% of the open
heart operations done at all of the open heart hospitais in Pitts-
burgh on residents of Beaver County in 1976. In that same year,

62a

Allegheny General had a 34.4% share among the six Pittsburgh
hospitals of the open heart procedures that were performed on
residents of Washington County and a 20.8% share of the open
heart procedures that were performed on residents of Westmore-
land County. Based on Allegheny General's predominance in
providing open heart surgical services to the residents of Beaver
County, Mr. Max concluded that the Court should include
Beaver County in the relevant submarket. Although a sizable
perceutage of open heart patients from Washington and West-
moreland Counties underwent surgery at Allegheny General, Mr.
Max did not believe that the submarket should include those
counties.

Mr. Max proposed two slightly different submarkets. The
first proposed submarket encompasses Beaver County and the
Allegheny County Health Department's northwest district. Dur-
ing 1976, two hundred and forty-seve1) residents from this area
underwent open heart surgery at the six Pittsburgh hospitals.
Surgeons at Allegheny General performed one hundred and fifty-
one of these operations, which is 61.1% of the total. Allegheny
General outdrew its nearest competitor, St. Francis, by four to
one. The second proposed submarket contains Beaver County
and Allegheny General's northwestern and local sectors. During
1976, three hundred and thirty-nine residents from this area
underwent open heart surgery at the six Pittsburgh hospitals.
Surgeons at Allegheny General performed one hundred and
seventy-four of these operations, which is 51.3% of the total. The
nearest competitor attracted less than one-third as many patients
as Allegheny General. The plaintiff asserts that Allegheny Gen-
eral held a monopoly position in either submarket in 1976.

CTSA concentrates its practice at Allegheny General,
although its surgeons perform a few operations at Presbyterian
University Hospital. In 1976, members of CTSA accounted for
nearly all of the open heart procedures that were performed at
Allegheny General. Dr. Magovern and other CTSA surgeons
performed 61.5% of the total number of open heart operations
that were performed at the six Pittsburgh hospitals on residents of
Beaver County and the Health Department's northwest district.
Likewise, members of CTSA performed 51.9% of the total

63a

number of open heart operations that were performed at the six
hospitals on residents of Beaver County and Allegheny General's
northwestern and local sectors. Therefore, the proposed geogra-
phic submarket for Dr. Magovern and CTSA is identical to the
proposed geographic submarket for Allegheny General. The
plaintiff alleges that CTSA held a monopoly position in that
submarket in 1976.

The defendants, through their economic expert, also con-
tend that the Court should recognize a broad geographic market
and a relevant submarket for adult open heart surgery, but these
markets differ from the plaintiff's proposal. Paul Cook, the
defendant's economic expert, testified that the broad market
should include the entire nation and that the relevant submarket
should encompass the sixteen counties in Pennsylvania, West
Virginia and Ohio that the plaintiff proposes as the broad geogra-
phic market. Mr. Cook rejected the proposition that Beaver
County and the northwestern portion of Allegheny County com-
prise the relevant submarket for this case.

In support of a national definition for the broad geographic
market, Mr. Cook expressed the opinion that open heart candi-
dates, faced with an extremely delicate operation and financed by
a third-pary payor, will travel to any location in the United States
in order to obtain the highest quality of care. Therefore, he
reasoned, the open heart hospitals in Pittsburgh must meet
national standards of care established by such institutions as the
Texas Heart Institute, Johns Hopkins Medical Center and the
Mayo Clinic if they wish to attract patients from even Allegheny
County. Should referring doctors and open heart candidates in
Western Pennsylvania perceive a significant decline in the quality
of care that the Pittsburgh hospitals offer, Mr. Cook predicted
that the primary care physicians would refer their patients to
surgeons in other areas of the country.

Although Mr. Cook believes that a national market exists
for adult open heart surgery, he also has identified a sixteen-
county submarket that is serviced by surgeons who operate at the
six open heart hospitals in Pittsburgh. A distinct submarket
exists, according to Mr. Cook, because primary care physicians
now refer a high percentage of the open heart candidates who

64a

reside in these sixteen counties to Pittsburgh surgeons and
because the six Pittsburgh hospitals obtain most of their open
heart patients from these counties. Many of the referral patterns
have become ingrained over time as the doctors developed profes-
sional and personal relationships. If the quality of care offered by
Pittsburgh surgeons and hospitals deteriorated, the referral pat-
tern would dissolve at different rates depending on the strength of
the particular relationship. Mr. Cook believes that the natural
reluctance to sever a relationship that has been satisfactory for an
extended period whould cause the shift from Pittsburgh suppliers
to outside suppliers to occur gradually rather than in the form of a
sudden stampede. This impediment to the prompt substitution of
suppliers creates the submark~t, in the opinion of Mr. Cook.

We cannot accept the existence of a national market or a
two-county submarket for adult open heart surgery. Rather, we
find that the relevant geographic market for the purpose of
evaluating Dr. Robinson's antitrust claims is the sixteen-county
area that the plaintiff proposes as the broad market and that the
defendants propose as the submarket.

Although the existence of a national market for adult open
heart surgical services makes sense in terms of traditiona! eco-
nomic theory, practical realities indicate that it rests on two
erroneous assumptions. First, Mr. Cook erred when he estimated
the magnitude of any future deterioration in the quality of care
that might occur at Pittsburgh open heart hospitals. He stated
that if the quality of care offered by Pittsburgh-based suppliers
deteriorated, the open heart candidates would seek surgical servi-
ces outside the region. After examining the structure of the supply
side of the market, we cannot accept the proposition that the
quality of care could uniformly deteriorate at all six Pittsburgh
hospitals. The -ardiothoracic surgeons and the hospitals in the
P.ttsburgh area vtrive to provide the best care for their patients.
Although some surgeons and hospitals may be more successful
than others in providing high quality care, we have seen no
evidence, and do not believe, that az, would purposely cut
corners or reduce the quality of care in order to increase profit.
Moreover, the pride that the surgeons take in their work moti-
vates them to maintain national standards of care by keeping

6Sa

abreast of the latest technical advancements in the field. There-
fore, a decline in the level of care that one surgeon or hospital
provides would have no effect on the level of care that another
surgeon or hospital provides. Any one of a large number of
catalysts, including the advanced age of a surgeon, personal
problems or a low frequency of operations, can result ina decline
in the quality of care; but at any one time, most surgeons and
hospitals in Pittsburgh are able to provide high quality care. We
cannot imagine that a large percentage of the open heart candi-
dates and their primary care physicians would ever perceive the
quality of care available in Pittsburgh as uniformly substandard,
and therefore feel compelled to look outside of the region for a
cardiothoracic surgeon.*.

The second erroneous assumption that underlies Mr. Cook's
argument for recognition of a nationa! market is that open heart
candidates are completely mobile and are willing to travel any-
where in the United States for their operations. Although patients
do want quality care and although the third-party payor system
shields the patients from the cost of the medical services, most
patients do not want to be separated from their families while
enduring the delicate operation and the extended period of recup-
eration. Therefore, they must either identify a local supplier who
can provide high quality care or they must absorb travel and
lodging expenses for family members who accompany them to
distant hospitals. In light of our conclusion above that open heart

The decision by some current open heart candidates from Western Penn-
sylvania to have their operations performed at hospitals with nationa’ reputa-
tions, such as the Texas Heart Institute, does not undermine our conclusion and
does not support the existence of a national market. There always are a certain
number of persons who feel more comfortable at a hospital that has a nat! aal
reputation even though they could obtain comparable care closer to home. +...
Dr. Robinson stated, “cardiac surgery. . .is a high risk surgery. People are very
emotional about it.... They want reassurance and so they want to go to an
established man with a well-known reputation. .. .” Tr. 841. Also, there always
are a certain number of referring physicians wh. personally know or who have
acquired great professiona! respect for a surgeon at one of the national heart
institutes, and therefore, they refer their patients to these out-of-state surgeons
and hospitals. We believe that the p=rcentage of open heart candidates who
travel to the nationally known hospitals would remain relatively constant over
time 4 sd would not respond to changes that occur within the Pictsburgh-based
market.

candidates and their primary care physicians always should be
able to locate suppliers in Western Pennsylvania who can provide
high quality care, we believe that few patients would choose to
incur the additional expense and inconvenience associated with
leaving the region. Therefore, we will not consider a national
market when evaluating the merits of Dr. Robinson's antitrust
claims.

We also conclude that the facts established during the pre-
sentation of this case do not support the existence of a submarket
that spans only two counties. The plaintiff's argument in favor of
a two-county submarket has two main points. First, several
organizations have decided that it is appropriate for their pur-
poses to subdivide and/or to group certain counties in Western
Pennsylvania. Second, a high percentage of the residents from the
proposed submarket who undergo open heart surgery have their
operations performed at one of the six Pittsburgh hospitals, and
of the residents who select a Pittsburgh hospital, over half select
Allegheny General and CTSA. Therefore, according to the plain-
tiff, the Court should group Beaver County and northwestern
Allegheny County because Allegheny General has obtained a
large market share of the open heart procedures performed on
patients {rom that area. We find serious defects in both parts of
the plaintiff's argument.

The decisions by the Allegheny County Health Department
and Allegheny General to subdivide Allegheny County for the
purpose of facilitating the planning and the delivery of general
health and medical care have little probative value when evaluat-
ing the propriety of subdividing Allegheny County for the pur-
pose of determining Allegheny General's market power over the
delivery of adult open heart surgical services. Allegheny General,
as its name suggests, supplies a full range of medical services to
the community, but the scope of the community that it supplies
varies according to the particular type of medical service provided
in a given situation. For exaraple, Allegheny General provides
emergency treatment primari'y to residents from the North Side
area of Pittsburgh, but its sports medicine clinic draws patients
from all of Southwestern Pennsylvania. The community that
Allegheny General supplies expands as the service in ques*ion

67a

its geographic maximum in the delivery of tertiary care because
most community hospitals could not economically and safely™*
provide such care. Thus, each type of medical service has a
particular geographic market. Cf United States v. Philadelphia
National Bank, 374 U.S. 321, 360-61 (1963) (Court, determining
relevant geographic market, recognizes that some banking servi-
ces are more loca! in nature than others and that each customer
has distinct economic scale that affects customer's ability to
conduct its banking over a distance). Subdivisions of a county
that relate to the delivery of general health and medical services
are not appropriate guidelines for a court to use when determin-
ing a relevant geographic market for the delivery of adult open

Likewise, the lines drawn by the Office of Management and
Budget to designate the Pittsburgh standard metropolitan statis-
tical area have no correlation to the appropriate boundaries of a
relevant geograpbic market for adult open heart surgery. Tertiary
care coverage by a regional referral hospital may well extend
beyond the zone of an urban center's general economic and social
impact. The relevance of the Pittsburgh standard metropolitan
statistical area to the present case is further undermined by the
plaintiff's decisiun to include in his proposed submarket only two
of the four counties that compose the statistical area. Frankly, we
do not understand why the plaintiff mentioned the Pittsburgh
standard metropolitan statistical area if he was going to select
from the four counties only those that yield the most favorable
statistics.

A more logical reason for recognizing a two-county sub-
market originated in the testimony of Alexander McAliley, the
Executive Director of North Hills Passavant Hospital, who de-
scribed Allegheny General's role in the Northwest Allegheny
Hospital Corporation (“NAHC”). Nine hospitals, seven general
hospitals and two specialty hospitals, formed NAHC for the

Medical teams that perform complex and delicate procedures, such as
open heart surgery, must perform a minimum number of procedures a week in
order to maintain their proficiency. A community hospital could not generate
the necessary volume of cases.

purpose of increasing the efficiency of each of the member hospi-
tals by consolidating services where possible. According to Mr.
McAliley, NAHC’s service area encompasses the northern and
northwestern sections of Allegheny County, the southeastern
section of Beaver County, and the southern section of Butler
County. Within this service area, Allegheny Geneva! is the ony
hospital that offers a broad range of tertiary care. Mr. McAliley
testified that the hospitals within NAHC attempt to support each
other by referring patients to the member hospital that is best
equipped to provide the type of care that the particular patient
requires. The plaint’ff asks us to draw the inference that Alle-
gheny General and CTSA have monopoly power within NAHC’s
service area because the member hospitals refer open heart
patients to Allegheny General. Based upon this inference, he
contends that we should recognize a relatively small submarket
within Allegheny General's total area of coverage.

We note first that NAHC's service area is not identical with
the plaintiff's proposed submarket. The member hospitals serve
southern Butler County, which the plaintiff has not included in
the proposed submarket, and the proposed submarket contains
all of Beaver County even though the member hospitals only
provide coverage for the southeastern portion of that county.
Furthermore, NAHC has not affirmatively addressed the delivery
of open heart surgical services. Mr. McAliley testified that the
member hospitals have established a consolidated laundry service
and have developed plans for the delivery of services in the areas
of alcohol and drug abuse, rehabilitation, pediatrics and obstet-
rics, but that they have not made a specific stuuy of open heart
surgery.

In addition to the two minor discrepancies just discussed, the
plaintiff's position is fatally flawed because it rests on an errone-
ous premise. Mr. McAliley’s testimony did not establish that
NAHC provides Allegheny General and CTSA with an effective
monopoly over open heart procedures for patients who reside in
NAHC's service area. The witness stated that the member hospi-
tals want to support each other and that they attempt to persuade
the doctors on their respective staffs to refer patients to doctors
on the staffs of other member hospitals. He freely admitted on

cross-examination, however, that “[yJou do not tell a doctor
where he takes his patient. You can lead him and suggest, but you
do not tell him.” Tr. 1435. Exercising the independence that they
possess, some physicians on the staffs of member hospitals do
refer open heart patients to cardiothoracic surgeons who do not
have staff privileges at Allegheny General. When asked by
defense counsel to explain why physicians at member hospitals
would choose to refer patients to hospitals other than Allegheny
General, Mr. McAliley listed the following reasons:
[T]hey may not have a persona! contact with the person-
nel that would be doing the coronary surgery.
They may have personality differences of opinion.
They may have preferences of skills that they have
grown familiar with at other facilities.

They send where they feel most comfortable in refer-

ring.
Tr. 1437-38

When defining the relevant geographic market in an cati-
trust action, we must focus on the area of effective competition.
Mr. McAliley’s testimony provided two important items of infor-
mation about the area of effective competition for adult open
heart surgery in Southwestern Pennsylvania. First, doctors on the
staffs of NAHC member hospitals have the freedom to refer open
heart patients to surgeons who perform their operations at hospi-
tals other than Allegheny General. Second, some doctors on the
staffs of member hospitals exercise their freedom*to refer open
heart patients to surgeons outside the NAHC system. We infer
from this information that some referring physicians in north-
western Allegheny County, southeast

[Text truncated at 120,000 characters. The full text is on the page linked above.]

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385009_0757%3A2. Public record. Not legal advice.