Petition — Wilk v. American Medical Ass'n

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Supreme Court of the Anite

OctToser Term, 1983

CHESTEK A. WILK, D.C; JAMES W. BRYDEN, D.C.;

PATRICIA B. ARTHUR, D.C.; STEVEN G. LUMSDEN,

D.C.; and MICHAEL D. PEDIGO, D.C.

Petitioners,

AMERICAN MEDICAL ASSOCIATION, AMERICAN HOS-

PITAL ASSOCIATION, AMERICAN COLLEGE OF SUR-

GEONS, AMERICAN COLLEGE OF PHYSICIANS,

JOINT COMMISSION ON ACCREDITATION OF HOSPI-

TALS, AMERICAN COLLEGE OF RADIOLOGY, AMER-

ICAN ACADEMY OF ORTHOPAEDIC SURGEONS, IL-

LINOIS STATE MEDICAL SOCIETY, H. DOYL TAY-

LOR, JOSEPH A. SABATIER, M.D., H. THOMAS BAL-

LANTINE, M.D., and JAMES H. SAMMONS, M.D.

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Geoace P. MCANDREWS

( Counsel of Record )

Tmotuy J. MALLoy

Rospert C. RYAN

ALLEGRETTI, Newrtt, WITCOFF

& McANpDaews, LTD.

125 South Wacker Drive

(312) 372-2160

Pau E. SLATER

SPERLING, SLATER & Spitz

55 West Monroe Street

" . Iinots 60603

(312) 641-3200

February 28, 1984 Attorneys for Petitioners

Pandick Midwest inc. Checago * 454-7600

(1)

IL. QUESTIONS PRESENTED FOR REVIEW

1. Whether the court of appeals erred in ruling that

respondent medical associations and their members may con-

spire to and implement a nationwide boycott of all licensed

doctors of chiropractic by all medical doctors and accredited

hospitals by the use of codes of ethics and accreditation

standards and thus prohibit defendants’ members, and hospi-

tals controlled by them, from all voluntary professional associ-

ations with chiropractors so as to “contain and eliminate” the

profession of chiropractic and, on balance, significantly injure

competition within the meaning of the Sherman Act, yet escape

liability under the Rule of Reason by justifying their conduct on

the basis of their concern for public health and welfare by

demonstrating:

(1) that they genuinely entertained concern for what they

perceive as scientific method in the care of each person

ae een ae Cn ee ee ee

relationship; (2) that this concern is

shies (3) that this dabseie han None wis ietnetie theas-

vating factor in defendants’ promulgation of Principle 3

and in the conduct intended to implement it; and (4) that

this concern for scientific method in patient care could not

have been adequately satisfied in a manner less restrictive

of competition.?

Pet. App. 34-35.

2. Whether the court of appeals erred in refusing to follow

the majority opinion of this Court in National Society of

Professional Engineers v. United States, 435 U.S. 679 (1978),

and, instead, in relying on a two judge “dissent” in that case to

announce that it was free to fundamentally “modify the Rule of

Reason test” under Section | of the Sherman Act, 15 U.S.C.

' The respondent associations have no patients—only their mem-

bers can have patients.

2 Even if, theoretically, the respondents’ actions achieved their

intended purpose of total elimination of the state licensed profession

of chiropractic consisting of more than 23,000 chiropractors.

(2)

§ 1, to allow a significant restraint of competition to be justified

by the purported good motives of professional associations

whose members compete with the victims of the anticompeti-

tive conduct. Pet. App. 33.

3. Whether the court of appeals erred in ruling that a

horizontal group boycott by medical doctors intended to elimi-

nate the competitive, state licensed health care profession of

chiropractic and exclude doctors of chiropractic from competing

against medical doctors in various health care markets, may

escape the per se rule of illegality because the perpetrators are

medical doctors who profess to be motivated by concerns for

patient care and therefore “should be viewed and treated

differently in the circumstances peculiar to a learned profes-

sion.” Pet. App. 24.

4. Whether the court of appeals erred in ruling that

evidence of the respondent medical associations’ success in

secretly “fixing” a supposedly “impartial” fact finding study by

a body of experts as part of an effort to eliminate a competitive

health care provider, which study ultimately formed the basis

for a report by the Secretary of Health, Education and Welfare

requested by Congress, was exempt from Sherman Act cov-

erage by reason of the Noerr-Pennington doctrine, Pet. App. 38-

39, notwithstanding the contrary ruling of the Court of Appeals

for the District of Columbia that “no actions which impair the

fair and impartial functioning of an administrative agency

should be able to hide behind the cloak of an antitrust

exemption.” Israel v. Baxter Laboratories, Inc., 466 F. 24 272,

278 (D.C. Cir. 1972).

TABLE OF CONTENTS

PAGE

L Questions Presented for Review l

Il. Report of Opinion Below 3

Ill. Grounds on Which Jurisdiction is Invoked..........:. 3

IV. Statutes Involved 3

V. Statement of the Case . 3

A. The Parties 4

1. Petitioners 4

Be MORI aca cscs csercsccsesstnsesorosencravenesndieed 5

B. The Boycott 5

1. Boycott of Interprofessional Association

Between Medical Doctors and Chiroprac-

ABET nastnosenqntnssnapnsinsceeseouenecesesdusnsiedsbibendebsinseocs 6

2. Boycott of Institutional Support Services

for Chiropractors 6

3. Boycott of Health Insurance for Services

of Chiropractors 7

4. Boycott of Providing X-Ray Services to

: Chiropractors or Their Patients.................. 8

% 5. Consequences of the Boycott ee ae

\ C. Interference With Fact Finding Body................. 9

D.Legal Rulings By the Court of Appeals ............. 10 ~

l. The Rule of Reason 10 _

2. The Per Se Rule il

3. Interference With Fact Finding Body

B. The Court of Appeals’ Ruling That Petinoners

Are Not Entitled To A Per Se Instruction

Upon Retrial Is In Conflict With the Deci-

sions of This Court and Other Courts of

Appeal

C.The Respondents’ Efforts to “Fix” the Fact

Finding Report of the HEW Expert Review

Panel Are Not Exempt From Antitrust Cov-

erage By the Noerr-Pennington Doctrine .......

VI. Conclusion

PAGE

TABLE OF AUTHORITIES

Cases

American Medical Ass’n v. United States, 130

F.2d 233 (D. C. Cir. 1942), aff'd, 317 U.S. 519

(1943)

Arizona v. Maricopa County Medical Soc, 457

U. S. 332 (1982)

Assoc. Gen'l Contractors of Cal., Inc. v. Cal. St.

Council of Carpenters, 103 S. Ct. 897 ( 1983) ......

Associated Press v. United States, 326 U. S. |

(1945)

Board of Regents of the University of Oklahoma v.

National Collegiate Athletic Ass'n, 707 F.2d

1147 (10th Cir. 1983), cert. granted, 104 S. Ct.

272 (1984)

California Motor Transport Co. v. Trucking Unlim-

ited, 404 U.S. 503 (1972)

Chicago Board of Trade v. United States, 246 U. S.

231 (1918)

Com-Tel, Inc. v. DuKane Corp., 669 F.2d 404 ( 6th

Cir. 1982)

Construction Aggregate Transport, Inc. v. Florida

Rock Industries, Inc., 710 F.2d 752 (1ith Cir.

1983)...

Continental Ore Co. v. Union Carbide’ & Carbon

Corp., 370 U. S. 690 ( 1962)

E. A. McQuade Tours, Inc. v. Consolidated Air

Tours Manual Comm., 467 F.2d 178 (Sth Cir.

1972), cert. denied, 409 U.S. 1109 ( 1973)..........

Fashion Originators’ Guild of America, Inc. v.

F. T. C., 312 U.S. 457 (1941)

PAGES

16,

11, 22, 26

12, 27, 29

10, 17

24,

Goldfarb v. Virginia State Bar, 421 U. S. 773

(1975)

Harman v. Valley National Bank, 339 F.2d 564

(9th Cir. 1964)

Havoco of America, Lid. v. Sheil Oil Co., 626 F.2d

549 (7th Cir. 1980)

In re American Medical Ass’n, 94 F. T. C. 701, 937

Antitrust & Trade Reg. Rep. E-1, E-9 (1979),

aff'd sub nom, American Medical Ass'n, v.

F. T. C., 638 F.2d 443 (2d Cir. 1980), aff'd, 445

U. S. 676 (1982)

Israel v. Baxter Laboratories, Inc., 446 F.2d 272

(D. C. Cir. 1972)

Joseph E. Seagrams & Sons, Inc. v. Hawaiian Oke

& Liquors, Lid., 416 F.2d 71 (9th Cir. 1969),

cert. denied, 396 U.S. 1062 (1970)

Klors’, Inc. v. Broadway-Hale Stores, 359 U.S. 207

(1959)

Larry V. Muko, Inc. v. Southwestern Pa. Bidg. and

Construction Trades Council, 670 F.2d 421 (3rd

Cir. 1982), cert. denied, 456 U.S. 1005 ( 1983)...

Marrese v. American Academy of Orthopaedic Sur-

geons, 706 F.2d 1488 (7th Cir. 1983) (opinion

vacated July 19, 1983)

Marrese v. American Academy of Orthopaedic Sur-

geons, Nos. 81-2671, 83-8046 (7th Cir. eet

3, 1984)

National Society of Professional Engineers v.

United States, 435 U.S. 679 (1978) ......cccccccesseee

PAGES

20, 2 l

19, 20

2, 12,27

22, 25

11, 25 '

1, 10, 15, or

16, 17, *

18, 19." Soe

20, 21,

Northern Pac. Ry. Co. v. United States, 356 U.S. 1

(1958)

Paramount Famous Lasky Corp. v. United States,

282 U.S. 30 (1930)

Rangen, Inc. v. Sterling Nelson & Sons, 351 F.2d

851 (9th Cir. 1965)

Smith v. Pro-Football, Inc., 593 F.2d 1173 (D. C.

Cir. 1978)

Spray-Rite Service Corp. v. Monsanto Co., 684

F.2d 1226 (7th Cir. 1982), cert. granted, 103

S. Ct. 1249 ( 1983).. a

Standard Oil Co. v. United States, 221 U.S. 1

(1911)

Standard Sanitary Mfg. Co. v. United States, 226

U. S. 20 (1912)

United States v. General Motors Corp., 384 US.

127 (1966)

United States v. Joint Traffic Ass’n, 171 U.S. 505

(1898)

United States v. Trans-Missouri Freight Ass’n, 166

Ps MR BUNT B Kiecocnscshitsincsoetilbeteniacastnepeatiaiien cestinne

United States v. Trenton Potteries Co., 273 US.

392 (1927)

United States Trotting Ass’n v. Chicago Mindi

Ass'n, Inc., 665 F.2d 781 (7th Cir. 1981) ............

Virginia Academy of Clinical Psychologists v. Blue

Shield of Virginia, 624 F.2d 476 ( 4th Cir. 1980),

cert, denied, 450 U.S. 916 (1981)

Walker Process Equipment, Inc. v. Food Machinery

& Chemical Corp., 382 U.S. 172 (1965)...

Worthen Bank & Trust Co. v. National Bank-

americard, Inc., 485 F.2d 119 (8th Cir. 1973),

cert. denied, 415 U.S. 918 (1974)

PAGES

11, 22, 23

23, 24

15, 16

22,27

11, 23, 25

28, 29

Statutes

15 U.S.C. $1

1S U.S.C. $2

15 U.S.C. § 15

15 U.S. C. § 26

28 U.S. C. § 1254(1)

28 U.S.C. § 2101(c)

28 U.S. C. § 1337

Other Authorities

Havighurst, The Antitrust Laws, the Federal Trade

Commission, and Cost Containment, 56 Bul. of

N. Y. Acad. of Med. 169, 187-88 ( 1980).............

I. W. Lazarus, E. Levine, and L. Levin, Com-

petition Among Health Care Providers pp. 1158-

$9 ( February, 1981)

Jost, The Joint Commission on Accreditation of

Hospitals: Private Regulation of Health Care

and the Public Interest, 24 B. C. L. Rev. 835

(1983)

R. Bork, The Antitrust Paradox 347 ( 1978)...........

PAGES

www ww WS Ww

14, 15

Il. REPORT OF OPINION BELOW

The Opinion of the United States Court of Appeals for the

Seventh Circuit is reported at 719 F.2d 207 (7th Cir. 1983). A

Supplemental Order of seven pages, issued on October 25,

1983, is unreported but appears in Petitioners’ Appendix ( “Pet.

App.”) attached hereto.

Ill. GROUNDS ON WHICH

JURISDICTION IS INVOKED

This Court has jurisdiction. under 28 U.S.C. section

1254(1) and 28 U.S.C. section 2101(c). The Judgment of the

United States District Court for the Northern District of Illinois

based on a jury verdict was entered on January 30, 1981. Pet.

App. 56-57. The court of appeals’ Judgment and Opinion were

entered on September 19, 1983, Pet. App. 1-49, with a

Supplemental Opinion and Order being entered on October 25,

1983, Pet. App. 50-54. All Petitions for Rehearing with

Suggestions for Rehearing en banc were denied by the court of

appeals on December |, 1983. Pet. App. 55.

IV. STATUTES INVOLVED

The Sherman Act and Clayton Act statutes involved are

printed in Pet. App. 79-82.

V. STATEMENT OF THE CASE

Petitioners, five doctors of chiropractic, brought this action

under sections | and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2,

and sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15, 26,

as amended, to challenge a nationwide horizontal group boy-

cott by respondents and their members designed to “contain”

and “eliminate” the entire profession of chiropractic. See Pet.

App. 75.

Jurisdiction was grounded on 28 U.S.C. section 1337. On

January 30, 1981, following an eight week trial, a jury returned

a verdict in favor of respondents. On September 19, 1983, the

judgment entered on the verdict was reversed and the case

remanded for a new trial by the United States Court of Appeals

for the Seventh Circuit, Pet. App. 1-47, which cited improper

jury instructions and the improper admission of prejudicial

evidence.

The court of appeals, in reversing, held that upon retrial;

(1) that the Rule of Reason which this Court has adhered to

for over sixty years should be modified? to allow defendants to

justify a significant injury to competition on the basis of genuine

concern for patient care; (2) that no per se instruction should be

given because the case involves canons of medical ethics and

defendants’ purported “patient care motive”; and (3) that

defendants’ sub rosa efforts to distort and fix an allegedly

unbiased report by the Secretary of HEW, which was requested

by Congress, was exempt from Sherman Act coverage under

the Noerr-Pennington doctrine “if the defendants undertook

such efforts to influence governmental bodies with a sincere

purpose to obtain the governmental actions they sought.” Pet.

App. 39.

These rulings are directly at variance with controlling

precedent of this Court and with rulings of other circuit courts

of appeal.

A. The Parties

1. Petitioners

Petitioners Wilk, Bryden, Arthur, Lumsden, and Pedigo

are doctors of chiropractic duly licensed to practice that profes-

sion by the States of Illinois, Missouri, Colorado, Michigan, and

California respectively. Chiropractors are health care profes-

sionals who compete against medical doctors in the treatment

of certain physical disorders. As the court of appeals s'ted:

Chiropractic is a health care service. Its primary

services if such treatment and use was permitted.

Pet. App. 6 ( footnote omitted ).

“We hold that the district court and we are free to

modify the

pred age saline tort wl ge er tan ey obo SY |

ethics for the medical profession. . . .” Pet. App.

More than 23,000 chiropractors are licensed in the U.S.

and chiropractors practice in all fifty states. There were

approximately 130,000,000 patient visits to chiropractors in

1979 and between 800 and 850 million dollars were spent for

chiropractic services. Approximately $30,000,000 in Federal

Medicare payments were made for chiropractic services be-

tween July 1977 and September 1978.

2. Respondents

Respondents are the American Medical Association, a

national professional association for medical physicians

(“AMA”); the American College of Surgeons, a national

professional association for surgeons (“ACS”); the American

College of Physicians, a national professional association for

internists (“ACP”); the American Academy of Orthopaedic

Surgeons, a national professional association for orthopaedic

surgeons (“AAOS”); the American College of Radiology, a

national professional association for radiologists (“ACR”); the

Illinois constituent body of the AMA (“ISMS”), the American

Hospital Association, a national trade association for hospitals

(“AHA”); the Joint Commission on Accreditation of Hospitals

(“JCAH"), a national, privately owned and sponsored hospital

accreditation body, the sponsors of which are, and the commis-

sioners of which are appointed by, respondents AMA, AHA,

ACS, and ACP. The four individual respondents were directly

involved in formulating and implementing a nation-wide AMA

program, joined in by the other respondents, which had as its

“prime mission ... first, the containment of chiropractic and

ultimately, the elimination of chiropractic.” Pet. App. 6.

B. The Boycott

The court of appeals’ Opinion of September 19, 1983, Pet.

App. 4-12, and the Supplemental Order of October 25, 1983,

Pet. App. 52-53, set forth the means by which each of the

respondents participated in the plan, conceived by the AMA, to

isolate doctors of chiropractic from all interprofessional and

interinstitutional cooperation and contact. Many of the re-

spondents’ overt acts were publicly observable, while others

were sub rosa or covert.* But all were designed to eliminate

chiropractors from the health care markets in which they

compete against medical doctors. Set forth below are the

principal devices used by respondents to boycott chiropractors.

1. Boycott of Interprofessional Association Between Medi-

cal Doctors and Chiropractors

There are no laws barring professional cooperation or

licensed doctors of chiropractic acting within the scope of their

respective licenses. The AMA, however, formally declared that

chiropractic was an “unscientific” discipline and that it was

unethical for a medical physician who wished to professionally

deal with chiropractors to do so. As a consequence, all

professional cooperation or association between medical physi-

cians and doctors of chiropractic such as consultations, referrals,

care of patients, teaching at chiropractic colleges, taking x-rays

for chiropractors, and doing lab work for chiropractors were

forbidden. The court of appeals stated that the AMA

coordinating committee for the boycott sent “letters warning

medical boards and associations that professional cooperation

and association between chiropractors and physicians were

unethical and attempting to discourage colleges, universities,

and faculty members from cooperating with chiropractic

schools.” Pet. App. 7-8.

2% Boycott of Institutional Support Services for Chiro-

practors

Respondents AMA, ACP, ACS and AHA, the sponsors of

respondent Joint Commission On Accreditation of Hospitals

(“JCAH”"), utilized the JCAH as a vehicle to bar chiropractors

from access to hospitals and hospital support services. The

court of appeals summarized this evidence by stating:

4 For example: “The [AMA] committee has not submitted such

a report [earlier) because it believes that to make public some of its

JCAH staff members replied to letters from hospitals on

chiropractors by asserting that a hospital permitting

chiropractors to use its services, such as laboratory testing

and x-rays, would endanger its status as an accredited

institution, even if a state passed a law requiring hospitals

to allow chiropractors to be staff members.

Pet. App. 8-9. As a result any hospital which permitted a

chiropractor to be on its staff or even provided him with x-ray

or lab services jeopardized its commercially invaluable accredi-

tation.

In addition, the court of appeals stated:

[There were no laws in effect during the time relevant to

this lawsuit that prohibited chiropractors from furnishing

care in hospitals under the supervision of a medical staff

member, nor were there laws preventing hospitals from

providing x-rays or laboratory services to chiropractors or

preventing hospital x-ray departments or radiologists from

making x-ray films or copies of x-rays available to

chiropractors at the request of their patients.

Pet. App. 6. Nonetheless, at the request of the AMA committee

that organized the boycott, the general counsel’s office of the

AMA published in the Journal of the American Medical

Association a “legal opinion” entitled “The Right and Duty of

Hospitals to Exclude Chiropractors.” See Pet. App. 9.

3. Boycott of Health Insurance for Services of Chiroprac-

tors ad

The boycott included working with national insurance

companies, such’ as Blue Shield and the Health Insurance

Association of America (“HIAA”), a national trade association

of insurance companies, to discourage or impede insurance

coverage for services provided by chiropractors. For example,

as set forth in the AMA boycott coordinating committee

documents:

d. CHIROPRACTIC COVERAGE UNDER BLUE

SHIELD—[AMA\] Staff will continue to maintain liaiso:

with the National Association of Blue Shield Plans in

regard to chiropractic attempts to gain coverage under

Blue Shield. ( NOTE: A productive meeting was held with

representatives of Blue Shield on this point. They are

actively considering various methods of excluding chiro-

practors from Blue Shield coverage. )

Plaintiffs’ Exhibit (“PX”) 273 (emphasis added). In

subsequent Blue Shield documents there appears, “Resistance

to chiropractic payment may be indicated by the fact that fewer

{Blue Shield] Plans make payment than the laws require.” PX

429, p. 2 (emphasis added).

4. Boycott of Providing X-Ray Services to Chiropractors or

Their Patients

The American College of Radiology, in conjunction with

its general participation with the AMA boycott, declared it to

be unethical for radiologists to submit already existing x-ray

films of a patient or other medical records to a chiropractor or

even to the patient to be conveyed to a chiropractor. As a result

a patient who had already been x-rayed by a medical doctor

had to either submit to additional x-rays or refrain from seeking

chiropractic care.

5. Consequences of the Boycott

The court of appeals ruled that there was evidence that:

Through such mechanisms, individual physicians were

discouraged from cooperating with chiropractors in:

patient treatment, because referrals were inhibited by

defendants’ activities, research, and educational activities,

tors in interpreting electrocardiograms. Requests by indi-

An attorney for the Judicial Council of the American

Medical Association, in writing to the member who had

suggested easing the AMA’s ban on cooperation with

chiropractors, stated, “The facts are that chiropractic has not

grown in number under existing policy, whereas there is every

evidence to believe that it would grow if AMA policy decisions

were relaxed.” PX 253, Pet. App. 65.

C. Interference With Fact Finding Body

In 1967 Congress asked the Secretary of the Department of

Health, Education and Welfare to have an unbaised study

conducted to determine the need for including coverage for

chiropractic services under the Medicare Act. PX 239, Pet.

App. 72. Petitioners presented evidence that respondent AMA

secretly subverted this Report by working with medical physi-

cian members of HEW and of the Expert Review Panel to

develop conclusions negative to chiropractic even before the

study commenced. As a result, more than five months before

the study was begun, an AMA member who was a consultant to

HEW was able to report complete acceptance by an HEW

consultant group “of the concept of preparing the decision on

the basis of lack of scientific merit.” PX 1414, Pet. App. 69.

Because of sensitivity to discovery by Congress, the AMA

informed the AMA member that was a consultant to HEW that

the “AMA hand must not show” in the chiropractic study. PX

220.

Another AMA member who was on the Expert Review

Panel secretly informed the AMA which panelists were “soft”

on chiropractic, PX 1579, and then the AMA secretly contacted

those panelists “to coach” them. PX 482, Pet. App. 70. The

panelists were told that

the American Medical Association has stated that it is

unethical for a physician to refer a patient to these

[chiropractors] and likewise could be expected to voice

strong opposition [to inclusion of chiropractors under

Medicare]. Even if such a proposal became law, its

implementation would require mass and open defection on

;

the part of medical doctors from the policies of its own

association. (PX 702A, p. 12).

When Congress asked HEW to respond to a charge that

the resulting negative Report had been “fixed” by secret AMA

involvement, the individuals at HEW that had worked with the

AMA informed Congress that the advisory group had neither

heard nor considered “material from any group other than

those being studied... .” PX 239, p. 5, Pet. App. 73. This was

transparently false. As a result of the negative Report of the

supposedly impartial Panel, Congress delayed including

chiropractic services in Medicare for five more years. More-

over, the negative Report itself became a basic AMA public

relations document used in justifying and convincing others to

join the national, private boycott of chiropractors. E.g., PX

1397.

D. Legal Rulings By the Court of Appeals

1. The Rule of Reason

The court of appeals acknowledged that in National

Society of Professional Engineers v. United States, 435 VU. S.

679, 691 (1978), this Court relied on Chicago Board of Trade v.

United States, 246 U.S. 231 (1918), for the proposition that for

60 years it has “adhered to the position that the inquiry

mandated by the Rule of Reason is whether the challenged

agreement is one that promoted competition or one that

suppresses competition.” Pet. App. 24. Nevertheless, relying on

a two judge “dissent” authored by Justice Blackman in Profes-

sional Engineers, the court of appeals held that it was “free to

modify the Rule of Reason test in a case involving a certain

kind of question of ethics for the medical profession. . . .” Pet.

App. 33. Accordingly, the court of appeals held that the Rule

of Reason would not necessarily be violated even if petitioners

met the age old test that competition was on balance sup-

pressed by the boycott. Rather, the court of appeals held that

even a significant injury to competition could be justified if

respondents “meet their burden” of proving that they were

motivated by a genuine concern for patient care. Pet. App. 35.

The court of appeals candidly admitted that it was weighing

public policy goals other than competition as part of the Rule of

Reason analysis. The court stated, at Pet. App. 34:

A value independent of the values attributed to unre-

strained competition must enter the equation. The 1eason-

ableness of any resulting restraint on competition musi be

determined by a reconciliation of values of differing kinds.

Because Congress has for so long assigned such pro-

nounced value to freedom of competition and the Supreme

Court has for so long applied the rule of reason so as

virtually to exclude other values (except, for example, the

value of activity protected by the first amendment), the

adaptation of the rule of reason in the Principle 3 setting

should impose a heavy burden on those who would justify

conduct having significant anticompetitive effect.

2. The Per Se Rule

The court of appeals recognized that as recently as Arizona

v. Maricopa County Medical Soc, 457 VU. S. 332, 349-51

(1982), this Court had approvingly quoted from Northern Pac.

Ry. Co. v. United States, 356 U. S. 1, 5 (1958), “Among the

practices which the courts have heretofore deemed to be

unlawful in and of themselves are price-fixing, division of

markets, group boycotts, and tying arrangements.” Pet. App. 22

(emphasis added). The court of appeals, nevertheless, set out a

new limitation on per se rules holding, as a matter of first

impression,® that only price fixing or boycotts to enforce price

fixing constitute per se offenses. Specifically the court held “that

boycotts are illegal per se only if used to enforce agreements

that are themselves illegal per se—for example, price-fixing

5 The Court relied on two cases. Pet. App. 23. One United States

Trotting Ass'n v. Chicago Downs Ass'n, Inc., 665 F. 2d 781, 787-90

(7th Cir. 1981), does not even remotely support the court's holding.

The other case, Marrese v. American Academy of Orthopaedic Sur-

geons, 706 F. 2d 1488, 1495 ( 7th Cir. 1983) (opinion vacated July 19,

1983), had been vacated by the grant of a Petition for rehearing en

banc prior to the rendering of the appellate decision herein.

noes & he gt s b Js as

- - 7 q ft ~~ & 5 > ‘y i, \. ‘

i ie ewes ae ee ce ee

agreements.” Pet. App. 23. The court of appeals here found

that:

The evidence was that the compulsion to be exerted upon

medical doctors, hospitals, x-ray facilities, and laboratories

through the conspiracy, if the jury found there was such

intended compulsion, was to engage in the boycott itself,

and not to exert, through boycott, compulsion upon any

one to do or to refrain from doing anything else.

Pet. App. 23. In addition, the court of appeals created a new

and unprecedented rule of law by concluding that “because of

evidence of the ‘patient care motive’ ” for the boycott, petition-

ers are not entitled to a per se instruction. Pet. App. 23.

3. Interference With Fact Finding Body—Appliication of the

Noerr- Pennington Doctrine

Finally, the court of appeals decided that respondents are

insulated from any antitrust consequences for “fixing” the

HEW appointed Expert Review Panel or its Report if the

respondents were “sincere” in seeking the government actions

they sought. Pet. App. 39-40. Petitioners had objected that the

instruction was erroneous in view of the ruling of the Court of

Appeals for the District of Columbia in Israel v. Baxter

Laboratories, Inc., 466 F. 2d 272, 278 (D. C. Cir. 1972), that:

“No actions which impair the fair and impartial functioning of

an administrative agency should be able to hide behind the

cloak of an antitrust exemption.”® See Petitioners’ Proposed

Instruction 55, Pet. App. 61. Nevertheless, notwithstanding

substantial evidence of a “fix,” the court of appeals approved a

Noerr-Pennington instruction, A44, Pet. App. 59, that reads:

I charge you that none of these activities directed

toward influencing legislators or other public officials may

be considered by you as a violation of the antitrust laws,

provided you believe the defendants undertook such ef-

*The Israel case closely tracks the language of this Court in

California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508,

513 ( 1972): “There are many other forms of illegal and reprehensible

practice which may corrupt the administrative or judicial processes

and which may result in antitrust violations.”

forts to influence governmental bodies with a sincere

purpose to obtain the governmental actions that they

sought.

Under the circumstances, the instruction clearly grants

antitrust insulation to those who sincerely defraud or fix

government study panels or Expert Review Panels and then

subsequently use the ill-gotten product in furtherance of a

national private boycott.

VI. DISCUSSION

A. The Court of Appeals’ Modification of the Rule of Reason

Is in Direct Conflict With the Decisions of This Court and

Other Courts of Appeal

The court of appeals acknowledged that it'was departing

from the “single standard” under the Rule of Reason that has

been followed by this Court for over 60 years. In a special

accommodation to certain health care trade associations and

the medical profession the court ruled, Pet. App. 32, 34-35:

We hold that the district court and we are free to modify

the rule of reason test in a case involving a certain kind of

sae of ethics for the medical profession. . .

i value independent of the values attributed to

unrestrained competition must enter the equation. The

reasonableness of any resulting restraint on competition

must be determined by a reconciliation of values of

differing kinds. Because Congress has for so long assigned

such pronounced value to freedom of competition and the

Supreme Court has for so long applied the rule of reason so

as virtually to exclude other values. . ., the adaption of the

rule of reason in the Principle 3 setting should impose a

heavy burden on those who would justify conduct having

significant anticompetitive effect. H

The jury should be instructed in appropriate language

to the following effect: The burden of persuasion is on the

plaintiffs to show that the effect of Principle 3 and the i

implementing conduct has been to restrict competition a

rather than to promote it. If the plaintiffs have met this

burden, the burden of persuasion is on the defendants to Ki

show: (1) that they genuinely entertained a concern for

what they perceive as scientific method in the care of each

person with whom they have entered into a doctor-patient

relationship; (2) that this concern is objectively reason-

able; (3) that this concern has been the dominant motivat-

ing factor in defendants’ promulgation of Principle 3 and

in the conduct intended to implement it; and (4) that this

concern for scientific method in patient care could not have

been adequately satisfied in a manner less restrictive of

competition.

.. Only if the defendants ... meet their burden, as

described, does their conduct escape condemnation as

unreasonable. (Emphasis added. )

In making its modification of the Rule of Reason the court

of appeals gave respondents a new antitrust defense never

sanctioned by Congress or by this or any other court’? and

directly counter to this Court's previous rulings.

7 In a Report prepared for the F. T. C. is found the following:

A few lower courts, doubting the premise that competition would

be desirable, have been reluctant to give full effect to the law’s

implications in the health care sector. But legal experts suggest it may

be only a matter of time before it is made clear that judges are not to

decide whether competition is good or bad or works well enough to be

encouraged but only whether it has been unreasonably impaired. If

that occurs, the result would be that the medical profession would be

barred from engaging in ccortain conduct which traditionally has been

undertaken by the profession.

Many of the professional activities that are open to legal

challenge may represent sincere efforts to raise standards and protect

the public and may not have been designed or specifically intended to

suppress competition or enhance anyone's market power. Professor

Havighurst has discussed the somewhat delicate juxtaposition of

professional and antitrust values which are raised in such circum-

stances:

..+ [ A) assertion that the antitrust laws have been violated

does not always call into question the motives of the people

involved or attribute to them a conspiratorial intent to suppress

competition and to enrich themselves at the consumer’s expense.

The point may simply be that particular concerted actions,

(footnote continued on following page)

In Professional Engineers, the defendants attempted to

justify anticompetitive canons of ethics on the basis that they

were necessary to protect public health and safety. This Court

made it clear that such a defense ( accorded respondents in this

case) could only be obtained from Congress:

The early cases also foreclose the argument that

because of the special characteristics of a particular in-

dustry, monopolistic arrangements will better promote

trade and commerce than competition. United States v.

Trans-Missouri Freight Assn., 166 U.S. 290, 17 S.Ct. 540,

41 L.Ed. 1007; United States v. Joint Traffic Assn., 171

U.S. 505, 573-577, 19 S.Ct. 25, 33-34, 43 L.Ed. 259. Thar

kind of argument is properly addressed to Congress and may

justify an exemption from the statute for specific industries,

but it is not permitted by the Rule of Reason. As the Court

observed in Standard Oil Co, v. United States, 221 US., at

65, 31 S.Ct., at 517, ‘restraints of trade within the purview

of the statute... [can]not be taken out of that category by

indulging in general reasoning as to the expediency or

nonexpediency of having made the contracts, or the wis-

(footnote continued from previous page)

however well motivated they may have been, are inconsistent

with the competitive norm. On this basis alone, they may be

declared unlawful. This means that the antitrust laws may be

successfully invoked against traditional practices and institutions

of the medical profession without impugning the motives either

of the profession as a whole or of the dedicated professionals

who have sought to improve the profession s performance. That

society now seeks a better mode of social control over this

industry and invokes the antitrust laws to achieve it requires no

apology by either the enforcement agencies or the profession

whose traditional practices are questioned. Perhaps these obser-

vations will help physicians view antitrust enforcement less as an

attack on their profession's integrity than as an attempt to invoke

the neutral principles of the free enterprise system as a better

answer to real problems than ... regulatory solutions would be.

I, W. Lazarus, E. Levine, and L. Levin, Competition Among Health

Care Providers pp. 1158-59 (February, 1981) (footnotes omitted )

(quoting Havighurst, The Antitrust Laws, the Federal Trade Commis-

sion, and Cost Containment, 56 Bul. of N.Y. Acad. of Med. 169, 187-

88 ( 1980)).

dom or want of wisdom of the statute which prohibited

their being made.’

435 U. S. at 689-90 (footnotes omitted, insertion in original,

emphasis added ).®

This Court, in Professional Engineers, made it clear that,

“[t)he test prescribed in Standard Oil is whether the challenged

contracts or acts ‘were unreasonably restrictive of competitive

conditions.’ ” 435 U. S. at 690. “[{T]he inquiry is confined to a

consideration of impact on competitive conditions.” Jd. (em-

phasis added).

In making its dramatic departure from the Rule of Reason,

that only exists in the decision below, the Seventh Circuit ruled

that instead of looking only to whether competition was

restrained, one must include, within the Rule of Reason

analysis, values independent of competition. The court stated,

“A value independent of the values attributed to unrestrained

competition must enter the equation. The reasonableness of

any resulting restraint on competition must be determined by a

reconciliation of values of differing kinds.” Pet. App. 34.

® The Court of Appeals for the District of Columbia in American

Medical Ass'n v. United States, 130 F.2d 233, 248 (D.C. Cir. 1942),

ile

ally

neltit

: eRe:

€

The court of appeals has thus launched into the morass of

having a judge or jury make policy determinations that have

traditionally been made by legislatures or expert regulatory

agencies. See, U.S. v. Trenton Potteries, 273 U.S. 392 (1927).

The sortie into forbidden territory directly contradicts the

ruling in Professional Engineers, 435 U.S. at 688, 691-92:

Contrary to its name, the Rule does not open the field of

antitrust inquiry to any argument in favor of a challenged

restraint that may fall within the realm of reason. Instead,

it focuses directly on the challenged restraint’s impact on

competitive conditions.

In this respect the Rule of Reason has remained

faithful to its origins. From Mr. Justice Brandeis’ opinion

for the Court in Chicago Board of Trade to the Cours

opinion written by Mr. Justice Powell in Continental T.V.,

Inc., the Court has adhered to the position that the inquiry

mandated by the Rule of Reason is whether the challenged

agreement is one that promotes competition or one that

suppresses competition. “The true test of legality is whether

the restraint imposed is such as merely regulates and

perhaps thereby promotes competition or whethar it is such

as may suppress or even destroy competition.’ 246 U.S., at

238, 38 S.Ct., at 243, quoted in 433 U.S., at 49 n. 15, 197

S.Ct., at 2557.

... [T]he purpose of the analysis is to form a judg-

ment about the competitive significance of the restraint; it

is not to decide whether a policy favoring competition is in

The “independent value” that the Seventh Circuit included

within the Rule of Reason analysis was labeled “patient care

motive.” Pet. App. 33. Accordingly, the court recommended ss

Poe ee en

should be instructed in appropriate ee

effect: The burden of persuasion is

eee ey

— ee See Pee eee NN ee ay ee

plaintiffs to show that the effect of Principle 3 and the ‘

implementing conduct has been to restrict competition

rather than to promote it. If the plaintiffs have met this

burden, the burden of persuasion is on the defendants to

show: (1) that they genuinely entertained a concern for

what they perceive as scientific method in the care of each

person with whom they have entered into a doctor-patient

relationship; (2) that this concern is objectively reason-

able; (3) that this concern has been the dominant moti-

vating factor in defendants’ promulgation of Principle 3

and in the conduct intended to implement it; and (4) that

this concern for scientific method in patient care could not

have been adequately satisfied in a manner less restrictive

of competition.

However, the respondent medical trade associations have

no patients. Thus it is difficult to understand how respondent

associations could have a patient care motive for “each person

with whom they have entered into a doctor-patient relation-

ship.” Pet. App. 34. The only possible reason for incorporating

private views on patient care into trade association ethics

standards is to bring “others” into conformity—thus presump-

tively admitting that all medical physicians did not share or

practice the private point of view. If they did there would be no

reason for the ethics restraint or boycott enforced by the

More important, however, the Seventh Circuit’s “patient

care motive” instructions are contrary to controlling precedent

and constitute nothing short of a “health, welfare and safety”

defense traveling under an alias. In Professional Engineers the

defendant sought to justify a restraint on competition caused by

its canons of ethics on the basis of public health and safety. B

This Court held the proferred defense “rests on a fundamental ra

misunderstanding of the Rule of Reason” and stated that the

attempt to pass muster under the Rule of Reason “on the basis &

of the potential threat that competition poses to the public ’

safety and ethics of its profession is nothing less than a frontal -

assault on the basic policy of the Sherman Act.” 435 U. S. at

681, 695. This Court continued, id., at 695-96.

The fact that engineers are often involved in large-

scale projects significantly affecting the public safety does

not alter our analysis. Exceptions to the Sherman Act for

potentially dangerous goods and services would be tan-

tamount to a repeal of the statute. In our complex economy

the number of items that may cause serious harm is almost

endless—automobiles, drugs, foods, aircraft components,

heavy equipment, and countless others, cause serious harm

to individuals or to the public at large if defectively made.

The judiciary cannot indirectly protect the public against this

harm by conferring monopoly privileges on the manufac-

turers. (Emphasis added. )

In Virginia Academy of Clinical Psychologists v. Blue Shield

of Virginia, 624 F. 2d 476, 484 (4th Cir. 1980), cert. denied,

450 U.S. 916 (1981), the district court had held that a medical

boycott was justified, in part, because it “enhanced the super-

visory process” between M.D.’s and psychologists. The Fourth

Circuit reversed, 624 F. 2d at 485, stating:

Forwarned by the decision in National Society of

Professional Engineers, supra, that it is not the function of

a group of professionals to decide that competition is not

beneficial in their line of work, we are not inclined to

condone anticompetitive conduct upon an incantation of

‘good medical practice.’

Even more explicitly, in Jn re American Medical Ass'n, 94

F. T. C. 701, 937 Antitrust & Trade Reg. Rep. E-1, E-9 (1979),

aff'd sub nom, American Medical Ass’n v. F. T.C., 638 F. 2d 443

(2d Cir. 1980), aff'd, 455 U. S. 676 (1982), where certain of

the AMA’s ethical canons were challenged, it was stated, on the

authority of Professional Engineers, that, “[e]thical restraints

can be justified under the rule of reason, therefore, only if they

promote competition, rather than merely other social goals, and

if they are not overly broad.” See also, Havoco of America, Ltd.

v. Shell Oil Co., 626 F. 2d 549, 554 (7th Cir. 1980) (“The Rule

[of Reason] does not exempt restraints which may be argued

to be reasonable or expedient but rather focuses on the

reasonableness of the affect of the challenged restraint on

competition”).

Hence, the instant appeals court decision is at logger-heads

with decisions of this Court and other courts that have ruled on

the issue.

The Seventh Circuit also erroneously relied on and

adopted Justice Blackman’s® “concurring” opinion in Profes-

sional Engineers. Pet. App. 33. This minority opinion, on its

face, was actually a dissent on the critical issue and clearly

departs from the controlling majority opinion:

I join Parts I and III of the Court’s opinion and concur

in the judgment. J do not join Part II because I would not,

at least for the moment, reach as far as the Court appears

to me to do in intimating, ante, at 1367, and no. 22, that

any ethical rule with an overall anticompetitive effect

promulgated by a professional society is forbidden under the

Sherman Act.

My skepticism about going further in this case by

shaping the Rule of Reason to such a narrow last as does

the majority, arises from the fact that there may be ethical

rules which have a more than de minimis anticompetitive

effect and yet are important in a profession’s proper

ordering. (Emphasis added. )

Professional Engineers, 435 U.S. at 699-700.

This obvious dissent on the basic,issue at hand in Profes-

sional Engineers emphatically underscores the absoluteness of

the majority decision and thus the error of the Seventh Circuit

in following the minority opinion.

The Seventh Circuit’s reliance on footnote 17 of this

Court’s decision in Goldfarb v. Virginia State Bar, 421 U. S.

773, 787 n. 17 (1975), is equally flawed. In that footnote this

Court stated, “The public service aspect, and other features of

* Joined by Justice Rehnquist.

the professions, may require that a particular practice, which

could properly be viewed as a violation of the Sherman Act in

another context, be treated differently.”

It is an enormous leap from the general statement to a

complete reformulation of the Rule of Reason. In any event, in

Professional Engineers, the Court rejected the notion that the

Goldfarb footnote allowed health and safety factors to be

weighed as part of a Rule of Reason analysis:

{T]he cautionary footnote in Goldfarb, 421 U. S., at 788-

789, n. 17, 95'S. Ct. at 2013, quoted supra, cannot be read

as fashioning a broad exemption under the Rule of Reason

for learned professions. We adhere to the view expressed

in Goldfarb that, by their nature, professional services may

differ significantly from other business services, and ac-

cordingly, the nature of the competition in such services

may vary. Ethical norms may serve to regulate and promote

this competition, and thus fall within the Rule of Reason.

Professional Engineers, 435 U. S. at 696 (emphasis added).

The meaning of this passage is clear. If professional canons of

ethics on balance promote competition they are lawful. If they

on balance injure competition, they are unlawful.

It is clear that the Seventh Circuit succumbed to the urge to

create judicial exceptions to the Sherman Act that this Court

has ruled are reserved to the legislature. Certainly the

undesirability of allowing one state licensed health care profes-

sion to “eliminate” or “exclude” another, without recourse to

the legislature, should give pause to allowing the Seventh

Circuit to overrule the well reasoned decisions of this and other

courts.

B. The Court of Appeals Ruling That Petitioners Are Not

Entitled to a Per Se Instruction Upon Retrial Is in

Conflict With the Decisions of This Court and Other

Courts of Appeal

This Court has frequently held that certain types of

agreements are so “pernicious” within the meaning of the

Sherman Act as to be declared unreasonable as a matter of law

or illegal per se. In those cases, proof of an unreasonable affect

of agreements which are per se illegal. Klors’, Inc. v. Broadway-

Hale Stores, Inc., 359 U. S. 207 (1959); Fashion Originators

Guild of America, Inc, v. F.T.C., 312 U.S. 457 (1941); United

States v. General Motors Corp., 384 U.S. 127 (1966); Associ-

ated Press v. United States, 326 U.S. | (1945).

Recently, in Arizona v. Maricopa County Medical Socy,

457 U. S. 332, 102 S. Ct. 2466, 2473 n. 15 (1982), the Court

stated, “Among the practices which the Courts have heretofore

deemed to be unlawful in and of themselves are price fixing,

division of markets, group boycotts and tying arrangements.

Northern Pac. R. Co. v. U.S., 356 U. S. 1, 5 [(1958)].”"%

(Emphasis added. )

In Maricopa County, the Court also dispelled the notion

that per se rules could not be applied to the medical profession

in the same manner as to other industries. The defendants

argued that per se rules did not govern that case “because the

agreements at issue ... are among members of a profession

{and] are in an industry with which the judiciary has little

antitrust experience.” Maricopa County, 102 S. Ct. at 2472. The

Court answered, id, at 2476-77:

activity was again reiterated in Assoc. Gen I Contractors of Cal, Inc. v.

Cal. Si. Council of Carpenters, U.S. 103 S. Cr. 897, 903-

04 (1983) (“Coercive activity that prevents its victims from making

free choices between market alternatives is inherently destructive of

competitive conditions and may be condemned even without proof of

its actual market effect”).

Finally, the argument that the per se oe ee

fied for every industry that has not been subject to signifi-

cant antitrust litigation ignores the rationale for per se rules,

which in part is to avoid ‘the necessity for an incredibly

complicated and prolonged economic investigation into the

entire history of the industry involved, as well as related

industries, in an effort to determine at large whether a

particular restraint has been unreasonable—an inquiry so

often wholly fruitless when undertaken.’ Northern Pac. R.

Co. v. United States, supra, 356 U.S., at 5, 78 S., Ct. at 518.

Petitioners do not contend that all boycotts are per se

illegal. Petitioners’ position has always been that it is classical

horizontal group boycotts intended to eliminate from the

market non-group members (i.e., chiropractors) that qualify

for per se illegality. That position is in keeping with the

decisions of this Court, the decisions of other circuit courts of

appeal, and even the prior pronouncements of the Seventh

Circuit."' In United States Trotting Ass’n v. Chicago Downs

Ass'n, Inc., 665 F. 2d 781, 788 (7th Cir. 1981) (en banc), the

court stated:

As Smith v. Pro-Football, Inc., 593 F.2d 1173, 1178 (D.C.

Cir. 1978), notes, the common attribute of per se illegal

boycotts is a ‘concerted attempt by a group of competitors

"1 See, Jost, The Joint Commission On Accreditation of Hospitals:

Private Regulation of Health Care and the Public Interest, 24 B. C. L.

Rev. 835, 908 (1983) (“Moreover, JCAH standards require a form of

hospital medical staff organization that is itself exclusionary. Taking ~-

into account these coercive elements, per s¢ analysis might be

appropriate both for analyzing the effects of JCAH on the competitors

of its physician constituency and the competitors of its hospital

constituency.” )

at one level to protect itself from competition from non-

group members who seek to compete at that level."'?

This formulation of boycotts that are properly per se illegal

has beer accepted by virtually every other circuit court of

appeals that has considered the issue. See, e.g., Larry V. Muko,

Inc. v. Southwestern Pa. Bldg. and Construction Trades Council,

670 F. 2d 421, 429-31 (3rd Cir. 1982), cert. denied, 456 U. S.

1005 (1983); E. A. McQuade Tours, Inc. v. Consolidated Air

Tours Manual Comm., 467 F. 2d 178, 186-87 (Sth Cir. 1972),

cert. denied, 409 U. S. 1109 (1973); Com-Tel, Inc. v. DuKane

Corp., 669 F. 2d 404, 408-09, 412 (6th Cir. 1982); Worthen

Bank & Trust Co. v. National Bankamericard Inc., 485 F. 2d

119, 124-25, 127 (8th Cir. 1973), cert. denied, 415 U. S. 918

(1974); Joseph E. Seagram & Sons, Inc. v. Hawaiian Oke &

Liquors, Lid., 416 F. 2d 71, 76-80 (9th Cir. 1969), cert. denied,

346 U. S. 1062 (1970); Board of Regents of the University of

Oklahoma v. National Collegiate Athletic Ass'n, 707 F. 2d 1147,

1160 (10th Cir. 1983), cert. granted, 104 S. Ct. 272 (1984);

Construction Aggregate Transport, Inc. v. Florida Rock In-

dustries, Inc., 710 F. 2d 752, 772-75, 778-79 ( Lith Cir. 1983).

Petitioners introduced evidence that they competed with

members of the boycotting group and that the intent of the

boycott was to eliminate all chiropractors from the market.

Petitioners are thus clearly entitled to a per se instruction.

Despite the foregoing, the Seventh Circuit erroneously

ruled that respondents’ conduct could not be per se illegal

because, inter alia, boycotts are per se illegal only if they are

used to enforce agreements which are themselves per se illegal

"2 In the cited case, Smith v. Pro-Football, 593 F. 2d at 1178, the

District of Columbia Circuit Court of Appeals stated, “The classic

‘group boycott’ is a concerted attempt by a group of competitors at

one level to protect themselves from competition from non-group

members .... it is the purpose to exclude competition that has

characterized the Supreme Court decisions invoking the group boycott

per se rule. (Emphasis added, footnotes omitted.) Accord, Spray-Rite

Service Corp. v. Monsanto Company, 684 F. 2d 1226, 1236 (7th Cir. .

1982), cert. granted, 103 S. Ct. 1249 ( 1983).

—such as price fixing. Pet. App. 23. For this remarkable

proposition, the court relied only on Marrese v. American

Academy of Orthopaedic Surgeons, 706 F. 2d 1488, 1495 (7th

Cir. 1983).'8 Rehearing en banc was granted in Marrese,

however, and the cited opinion was, therefore, vacated before

the Seventh Circuit issued its Opinion in this case.'* Moreover,

a rule requiring double illegality—a boycott is per se illegal only

if used io enforce a per se illegal agreement—is illogical, the

epitome of redundancy, and contrary to all prior law.

The Seventh Circuit also held that because the boycott was —

not meant to compel certain economic conduct toward con-

sumers that no per se rule was applicable. Pet. App. 23.

Petitioners are aware of no case which has so held, and the

statement is flatly contrary to the landmark group doycott case

Klors’, Inc. v. Broadway-Hale Stores, Inc., 359 U. S. 207, 210-14

(1959). In that case, a group of manufacturers conspired with

a retailer to boycott another reiailer. There was not even an

allegation of an intent to affect how any retailer dealt with

consumers. Yet, the boycott was held to be per se illegal.

Klor’s, 359 U.S. at 210-14. See also, Fashion Originators Guild

of America, Inc. v. F.T.C., 312 U. S. 457, 463-68 (1941).

Finally, the Seventh Circuit erroneously ruled that the

respondents’ conduct escaped per se condemnation due to the

evidence of a possible “patient care motive.” This disguised

“health, welfare and safety” defense is simply contrary to all

13 Judge Doyle also cited United States Trotting Association for

this proposition as had the court in Marrese. There is simply no such

holding in the United States Trotting Association opinion.

4 A plurality opinion of the Seventh Circuit has subsequently

redecided Marrese and once again held that only boycotts intended to

enforce agreements which are themselves illegal in and of them-

selves—such as price fixing—are per se illegal. Marrese v. American

Academy of Orthopaedic Surgeons, Nos. 81-2671, 83-8046 (7th Cir.,

January 3, 1984). If that contention is correct, then only price fixing

and conduct intended to enforce price fixing remains per se illegal.

The holdings of this Court that certain boycotts are per se illegal

would be dead letter law.

estab!*shed law. Further, should it become law, it is inconceiv-

able .at any group of competitors, e.g.:

orthopaedic surgeons v. podiatrists

medical physicians v. osteopathic physicians

medical physicians Vv. nurse practitioners

opthamologists Vv. Optometrists

psychiatrists v. psychologists

physiatrists v. chiropractors

orthopaedic surgeons v. chiropractors

orthopedists v. chiropractors

radiologists v. chiropractors

medical physicians v. chiropractors

who were caught in a classical horizontal group boycott, would

ever testify to other than a “patient care” motive for having

engaged in the boycott activity. The legislative authority to

determine who shall be allowed to practice and the legislative

prerogative to best provide for the public health, welfare and

safety, would be submerged as juries responded to the “power”

and “prestige” of the privileged, older professions. For that

reason, the courts have held that a motive to protect public

health and safety does not alter the antitrust analysis and will

not do so unless the legislature so provides.

In neither Professional Engineers nor Maricopa County did

arguments of good motives save the defendants from per se

illegality. Moreover, the Supreme Court stated in Paramount

Famous Lasky Corp. v. United States, 282 U.S. 30, 44 (1930):

The prohibitions of the statute cannot ‘be evaded by good

motives. The law is its own measure of right and wrong, of

what it permits, or forbids, and the judgment of the courts

cannot be set up against it in a supposed accommodation

of its policy with the good intention of parties, and, it may

be, of some good results.’ Standard Sanitary Mfg. Co. v.

United States, 226 U.S. 20, 49 [(1912)].

Accord, Fashion Originators’ Guild of America, Inc. v. F.T.C.,

312 U. S. 457, 467-68 (1941) (boycott held per se illegal

despite defendants’ claim that the conduct was to protect

manufacturers, laborers and consumers from “devastating

evils”).

Respondents’ proferred “good motives” cannot save them

from per se illegality. If they engaged in a group boycott which

was intended to eliminate or exclude horizontal competitors of

some of the group from any market, the agreement is per se

unlawful. Upon retrial, petitioners are entitled to an instruction

on per se illegality.

C. The Respondents’ Efforts to “Fix” the Fact Finding

Report of the HEW Expert Review Panel Are Not Exempt

From Antitrust Coverage By the Noerr-Pennington Doct-

rine

There can be little doubt that a conspiracy by competitors

to exclude a rival through abuse of regulatory and judicial

processes “is inconsistent with free-market principles embodied

in the Sherman Act. . . .” United States v. General Motors Corp.,

384 U. S. 127, 146 (1966). Such “[p]redation by abuse of

governmental procedures,” R. Bork, The Antitrust Paradox 347

(1978), can never benefit competition and transfers from

public to private hands the power to limit competition. Fashion

Originators’ Guild of America, Inc. v. F.T.C., 312 U.S. 457, 465

(1941).

With the health care industry accounting for 10.5% of the

nation’s gross national product, or approximately $322 billion,

it is particularly sensitive to fraudulent misuse or abuse of

expert investigative bodies whose reports are needed by the

Executive and Legislative Branches of Government.

The Court of Appeals for the District of Columbia recog-

nized the inherent anticompetitive nature of actions thar under-

mine fact finding determinations. “No actions which impair the

fair and impartial functioning of an administrative agency

should be able to hide behind the cloak of an antitrust

exemption.” /srael v. Baxter Laboratories, Inc., 466 F. 2d 272,

278 (D. C. Cir. 1972).

This Court severely circumscribed Noerr-Pennington in

California Motor Transport Co. v. Trucking Unlimited, 404

U. S. $10, 512-13 (1972) (emphasis added ):

Yet unethical conduct in the setting of the adjudica-

tory process often results in sanctions. Perjury of witnesses

is one example. Use of a patent obtained by fraud to

exclude a competitor from the market may involve a

violation of the antitrust laws, as we held in Walker

Process Equipment, Inc. v. Food Machinery & Chemical

Corp., 382 U.S. 172, 175-177, 86 S.Ct. 347, 349-350, 15

L.Ed.2d 247. Conspiracy with a licensing authority to

eliminate a competitor may also result in an antitrust

transgression. Continental Ore Co. v. Union Carbide &

Carbon Corp., 370 U.S. 690, 707, 82 S.Ct. 1404, 1414, 8

L.Ed.2d 777; Harman v. Vailey National Bank, 339 F.2d

564 (CA‘) 1964). Similarly, bribery of a public purchasing

agent may constitute a violacion of § 2(c) of the Clayton

Act, as amended by the Robinson-Patman Act. Rangen,

Inc. v. Sterling Nelson & Sons, 351 F.2d 851 (CA9 1965).

There are many other forms of illegal and reprehensible

practice which may corrupt the administrative or judicial

processes and which may result in antitrust violations.

Misrepresentations, condoned in the political arena, are

not immunized when used in the adjudicatory process.

Opponents before agencies or courts often think poorly of

the other’s tactics, motions, or defenses and may reaciily

call them baseless. One claim, which a court or agency

may think baseless, may go unnoticed; but a pattern of

baseless, repetitive claims may emerge which /eads the

fSactfinder to conclude that the administrative and judicial

processes have been abused. That may be a difficult line to

discern and draw. But once it is drawn, the case is

established that abuse of those processes produced an illegal

result, viz., effectively barring respondents from access to the

agencies and courts. Insofar as the administrative or

judicial processes are involved, actions of that kind cannot

acquire immunity by seeking refuge under the umbrella of

‘political expression.’

Notwithstanding substantial evidence (see supra pp. 9-10)

of respondents’ “fix” of an Expert Review Panel Report that

served as the basis for the HEW Secretary’s Report to Congress

on the “need” for inclusion of chiropractic services in Medicare,

the court of appeals believed that this aberrant conduct was

excused by the Noerr-Pennington doctrine. Pet. App. 38-39.

The court opined that the respondents’ actions were excused if

“the defendants undertook such efforts to influence govern-

mental bodies with a sincere purpose to obtain the govern-

mental actions that they sought.” Pet. App. 39.15

From this instruction, buttressed by the supplemental

instruction quoted below in footnote 15, it is obvious that the

“factfinder” referred to in California Motor Transport is met by

an absolute bar to consideration of fraud or inequitable conduct

that perverted the Fact Finding Body and prevented mean-

ingful access to that group or to HEW which was dependent on

the “corrupted” Report.

Certainly there can be no insulation from antitrust account-

ability for fraud practiced on an expert review panel or agency

merely because the perpetrators are sincere in trying to defraud

the agency, legislature or other governmental body. For

example, certainly those who defraud the Patent Office to

obtain a patent monopoly are “sincere” in their efforts to obtain

the patent but are not insulated from antitrust consequences for

their actions. Walker Process, 382 U.S. 172 (discussed in the

quote from California Motor Transport, supra, p. 27.)

Such fraud and inequitable conduct in this case effectively

barred petitioners and their agents from access to the Fact

Finding Body or governmental department involved. “Insofar

as the administrative or judicial processes are involved, action

of that kind cannot acquire immunity by seeking refuge under

the umbrella of ‘political expression.’ " California Motor Trans-

port Co. v. Trucking Unlimited, 404 U.S. 508, 513 (1972).

‘8 The total inappropriateness of this instruction is underscored

when read in conjunction with instruction A45 ( Respondents’ uu)

also given by the trial court:

Regardless of the means which may have been employed by any

of these defendants to influence state or federal legislation or to

advocate their position to government agencies or officials, it is

not a violation «.f the antitrust laws if the defendants employing

these means actually wanted the government agency or official to

take action which might adversely affect or injure chiropractors.

Pet. App. 60 (emphasis added ). It should be obvious that the appeals

court has totally misconstrued California Motor Transport.

The court of appeals’ ruling is simply unsuitable for the

insidious, covert actions of respondents in undermining peti-

tioners’ access to the Fact Finding Body, HEW, and the

Congress.

VII. CONCLUSION

The appeals court opinions grant quasi-governmental au-

thority to unelected medical professional societies and trade

associations to conspire’® to restrain competition with state

licensed chiropractors operating within the scope of their state

licenses and to exclude chiropractors from otherwise legal

markets where competition would normally take place.

The opinions set forth rules of law that are in direct conflict

with prior decisions of this Court and with other circuits.

The Petition For Writ of Certiorari should be granted.

Respectfully submitted,

Georce P. MCANDREWS

(Counsel of Record )

TimoTuy J. MALLOY

Rosert C. RYAN

ALLEGRETTI, Newitt, WITCOFF

& McANprews, LTD.

125 South Wacker Drive

Chicago, Illinois 60606

(312) O92. 2160

Paut E. SLATER

SPERLING, SLATER & Spitz

55 West ne eee

hicago, Illinois 6060

(312) 641-3200

February 28, 1984 Attorneys for Petitioners

18 Said the court of appeals, Pet. App. 51:

Based on the pleadings, on all the motions which had previously been

filed (including motions for summary judgment), and on ‘everything

that the court has considered in this case,’ the district court determined

that there was evidence that there had been ‘a conspiracy among all of

the defendants,’ and that this evidence was sufficient to permit use

against all of the defendants of statements made by any of them in

furtherance of the conspiracy.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.