Petition for Writ of Certiorari — Tarabishi v. McAlester Regional Hospital

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©) Supreme Court, U,

Le FT Y¥40 FILED

- 7 MAY 4 1992

OFFICE OF THE CLEk

In The

Supreme Court of the United States

October Term, 1992

M. HISHAM TARABISHI, M.D.,

Petitioner,

MCALESTER REGIONAL HOSPITAL, also known as

McAlester Regional Health Center Authority Public

Trust Status; THE MCALESTER CLINIC, INC.;

LEROY M. MILTON, M.D.; GEORGE BROWN, M.D.;

WILLIAM G. BLANCHARD, M.D.; SAMUEL E. DAKIL,

M.D.; JOHN B. COTTON, M.D. STEVEN ATWOOD,

M.D.; CHARLES K. HOLLAND, M.D.; KARL SAUER,

M.D.; HERTZL V. SCHAFF, M.D.; JOE MCCAULEY,

M.D.; and, DON SCHULLER, M.D.,

Respondents.

Petition For A Writ Of Certiorari To The United States

Court Of Appeals For The Tenth Circuit

PETITION FOR A WRIT OF CERTIORARI

JoHN A. CLARO

(Counsel of Record)

CLiaro & JOHNSTON

1000 Bank of Oklahoma Plaza

201 Robert S. Kerr Avenue

Oklahoma City, OK 73102

Telephone: (405) 235-4074

Attorney for Petitioner

April, 1992

COCKLE LAW BRIEF PRINTING CO, (800) 225-6964

OR CALL COLLECT (402) 42-2831

Re,

QUESTION PRESENTED

DOES A HOSPITAL BOARD’S CONDUCT OF A SHAM

PEER REVIEW PROCESS WHICH DAMAGES AND

DEPRIVES A COMPETING MEDICAL DOCTOR OF

PROPERTY, CONSTITUTE A PER SE VIOLATION OF

THE ANTITRUST LAWS? IF SO, DID THE COURT OF

APPEALS ERR BY CONSIDERING SUCH CONDUCT

ONLY UNDER A MODIFIED RULE OF REASON STAN-

DARD BY WHICH OTHERWISE ACTIONABLE JOINT

CONDUCT AMONG COMPETITORS IN THE MEDICAL

PROFESSION / HOSPITAL COMMUNITY (IN THE FORM

OF “PEER REVIEW WITHOUT DUE PROCESS”) IS NOT

ACCORDED THE SAME ANTITRUST CONSEQUENCE

AS JOINT ACTION BETWEEN COMPETITORS IN SIMI-

LAR GOVERNMENT MANDATED, SELF-GOVERNING

PROFESSIONS SUCH AS STOCKBROKERAGE, THE

LEGAL PROFESSION, ETC.?

PARTIES TO THE PROCEEDINGS

The Petitioner, Plaintiff-appellant and cross-appellee

below, is M. Hisham Tarabishi, M.D.

The Respondents, Defendants-appellees and cross-

appellants below, are the McAlester Clinic, Inc., an Okla-

homa professional corporation, McAlester Regional Hos-

pital, an Oklahoma public trust hospital, and Leroy M.

Milton, M.D., George Brown, M.D., William G. Blanchard,

M.D., Samuel E. Dakil, M.D., John B. Cotton, M.D., Steven

Atwood, M.D., Charles K. Holland, M.D., Karl Sauer,

M.D., Hertzl V. Schaff, M.D., Joe McCauley, M.D., Don

Schuller, M.D.

iii

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ........-------> pawastue i

PARTIES TO THIS PROCEEDINGS..........---+--. ii

TABLE OF CONTENTS..........---0ee eee eeeeeeeee iii

TABLE OF AUTHORITIES............---20++++e5e Vv

OPINIONS BELOW...........-----ee eee ee reece 1

JURISDICTION. ........--- eee e cece renee eee eeeeees 2

CONSTITUTIONAL AND STATUTORY PROVI-

SIONS INVOLVED .........-.-cccccec cece ccceces 2

STATEMENT OF THE CASE...........----+-++++5 2

REASONS FOR GRANTING THE WRIT .........-. 7

|. PETITIONERS HAVE BEEN DEPRIVED OF A

VALUABLE PROPERTY RIGHT IN VIOLATION

OF THE DUE PROCESS CLAUSE OF THE

FOURTEENTH AMENDMENT ........-------- 7

A. THE DUE PROCESS CLAUSE INSURES A

FAIR HEARING...........-eee cee ceeeeees 7

B. PROCEDURAL DUE PROCESS MUST BE

AFFORDED IN A PEER REVIEW ACTION.. 10

C. PROCEDURAL DUE PROCESS WAS

DENIED DR. TARABISHI............-++-- 16

Il. THIS CAUSE SHOULD BE REVERSED AND

IEEE onc chev ensecccccccsecesscensones 20

A. THE PER SE RULE SHOULD HAVE BEEN

APPLIED BY THE LOWER COURTS...... 20

B. PEER REVIEW PROCEEDINGS ARE NOT

EXEMPT FROM THE PER SE APPROACH.. 23

TABLE OF CONTENTS - Continued

Page

C. THIS CAUSE SHOULD BE CONSIDERED

UNDER THE RULE OF REASON......... 26

ek. SE Ss ca Sac ua cond ccehecedeeceaanen 28

I MERE BAN Rok s bawen 540555560 085SS 00 aed App. 1

Opinions and orders from the courts below. Constitu-

tional and Statutory Texts.

TABLE OF AUTHORITIES

Page

CASEs:

Arizona v. Maricopa County Medical Society, 457

ke i, rrr reyes ere rrr rrr Tey 7 24, 25

Armstrong v. Manzo, 380 U.S. 545, 552 (1965) ........- 8

Board of Regents of State Colleges v. Roth, 408 U.S.

564, 570-71 BB C1972). oo ccc cesesscuvvavatecncsses 9

Board of Trade of the City of Chicago v. United States,

266 USFS CIPI) oan cv cksccsensnctbescesseweses 26

Boddie v. Connecticut, 401 U.S. 371 (1971)............. 9

Daniels v. Williams, 474 U.S. 327, 331 ((1985).......... 8

Darling v. Charlestown Com. Mem. Hosp., 33 Ill.2d

326, 211 N.E.2d 253 (1965), cert. denied, 383 U.S.

| er rere rer rT tart 10

Denver Rockets v. All-Pro Management, 325 F.Supp.

1049, 1064-65 (C.D.Cal. 1971) .............-02-2. 25

FTC v. Indiana Federation of Dentists, 476 U.S. 447

‘1, | Se re rer ere re ror er ere or? 26, 27

Fuentes v. Shevin, 407 U.S. 67, 80-81 (1972) ........... 8

Goldfarb v. Virginia State Bar, 421 U.S. 773, 778 n. 17

(EDT 5s nvnsk vn cde pan ee sasnsseceenmareneuscayes 25

Grannis v. Ordean, 234 U.S. 385, 394 (1914)........... 7

Logan v. Zimmerman Brush Co., 455 U.S. 422, 428

CLOGR) iv dcncaseesssesandswrsaes ceaeeaeenenseeenyss 8

Mathews v. Eldrige, 424 U.S. 319, 333 (1976)..........-- 8

TABLE OF AUTHORITIES - Continued

Page

McCreery Angus Farms v. American Angus Ass‘n.,

379 F.Supp. 1008, 1018 (S.D.Ill. 1974).............. 26

Mullane v. Central Hanover Trust Co., 339 U.S. 306,

SER CRP 0 snk ct eei ce onens coe see URE Eee 7

National Society of Professional Engineers v. United

States, 435 U.S. 679, 696 (1978)............. 25, 26, 27

Northeast Georgia Radiogical Assoc. v. Tidwell, 670

F.2d SOT, SES Ghee CAR RE ses suwurssvnsaaveceaes 8

Northwest Wholesale Stationers, Inc. v. Pacific Sta-

tionary & Printing Co., 472 U.S. 284 (1985) ........ 26

Patrick v. Burget, 800 F.2d 1498, 1506 (9th Cir. 1986) .... 12

Pontius v. Children’s Hospital, 552 F.Supp. 1352

1369-70 COVER POGR. TURE «so ncines <skviviueeendeaes 22

Silver v. New York Stock Exchange, 373 U.S. 341

fe POPP ee rey 20, 21, 25, 29, 30

Suckle v. Madison General Hospital, 363 F.Supp.

LIDS (WEEE, Feed wincceus ceases eee 17

Weiss v. York Hospital, 754 F.2d 786 (3rd Cir. 1984)

cert. dented, 470 US. TOSS CIRO) «av ccviccccvensanas 22

STATUTES:

35 USA. & PR 6s vies tans ecxens neue eee eee 21

28 USA. & RES 60 cv ccussvecncceesnes aueeeeeee 2

42 USA. § TEIGE of Gap: CHRD cos cs ccededcuseeeees 13

G2 UGA. & TERR isics vncasessekinsscs ctaae eee 13

42 USA. & PREIS a ivckcevsceeeneedy see 13

42 USC. § INI. cae 13

Vii

TABLE OF AUTHORITIES - Continued

Page

Oe i ek 240 5 50 hwnd hake de we eA eee 13

Re ie OIE noe sees ebeeayet vets eeuensaseuens 16

ee es Ue WU oS nn sec cweececkesientusse ive we) 14

Be Wc BAO 6 kis ccccecsasencvcsunsss 19

gS le Sr eree rr rere ereee rrr eT yr rrr. 15

Oe Ss ee OU ncn pe nssvenn vecedania es veees 13

ge PEP TTET CET TEPe eT TT Cee 13

ee i A eee ree 10

63 Okla. Stat. Ann. § 1-1709 (West 1984)......... 10, 15

76 Okla. Stat. Ann. § 16 (West Supp. 1987).......... 10

REGULATIONS:

ge! DE | TTT re eee rere Tree Tre 11

LEGISLATION:

132 Cong. Rec. H 11590, 11591 (daily ed. Oct. 17,

1986) (Statement of Rep. Waxman)................ 15

H.R. Rep. No. 99-903, 99th Cong. 2d Sess. II

(1986), reprinted in 1986 U.S.C.C.A.N. 6384,

Shai has CUS adUbkade pede reiakee Shih cerenpe sacs 19

ARTICLES:

Chafee, The Internal Affairs of Associations Not for

Profit, 43 Harv. L. Rev. 993, 1021 (1930)........... 12

Drexel, The Antitrust Implications of the Denial of

Hospital Staff Privileges, 36 U. Miami L. Rev. 207

MPR garetts ie Pe ae a gt hm Sine see eee oe eee 12

Viii

TABLE OF AUTHORITIES - Continued

Grad, The Antitrust Laws and Professional Discipline

in Medicine, 1978 Duke L.J. 443, 469-70.........

Hanson & Stromberg, Hospital Liability for Negli-

gence, 21 Tigetings &.j. 1 (i969) .... 22.62 06008.

Joint Commission on Accreditation of Healthcare

Organizations, Accreditation Manual for Hospi-

SG RE 5G iSudteennau cue ciebedcseeueeess

Jorstad, Note, The Legal Liability of Medical Peer

Review Participants for Revocation of Hospital Staff

Privileges, 28 Drake L. Rev. 692 (1978-9)........

Lang, Medical Staff Peer Review: A Strategy for

Motivation and Performance, 80 (Am. Hosp.

FO as ols endothe ena owen cs oa has

“Medicare: A Strategy for Quality Assurance,” 119

Ce reer ror Ce rr rrr ee

Morter, Comment, The Health Care Quality Improve-

ment Act of 1986: Will Physicians Find Peer Review

More Inviting? 74 Va. L. Rev. 1115 (1988).......

Nodzenski, Where is the Quality in the Health Care

quality Improvement Act of 1986? 22 Loy. U. Chi.

lik ee os cca eee CR RANA balay Aneesh

Note, Physician Staff Privilege Cases: Antitrust Lia-

bility and the Health Care Quality Improvement

Act, 29 Wm. & Mary L. Rev. 609 (1988)........

Peer Review Immunity Task Group of the Ameri-

can Academy of Hospital Attorneys, Immunity

for Peer Review Participants in Hospitals, (Am.

POSE eee TT EEL COTE CETT

Roberts, Coale & Redman, A History of the Joint

Commission on Accreditation of Hospitals, 258

J.A.M.A. 936, 939 (1987) ....... ccc cc ceeeeeeuees

In The

Supreme Court of the United States

October Term, 1992

M. HISHAM TARABISHI, M.D.,

Petitioner,

MCALESTER REGIONAL HOSPITAL, et al.,

Respondents.

Petition For A Writ Of Certiorari To The United States

Court Of Appeals For The Tenth Circuit

PETITION FOR A WRIT OF CERTIORARI

OPINIONS BELOW

The January 24, 1992, Denial of Rehearing by the

Court of Appeals for the Tenth Circuit is unreported and

appears in the Appendix at A-1. The December 10, 1991

Judgment of the Court of Appeals is reported at 951 F.2d

1558 (10th Cir. 1991), and is reprinted in the Appendix at

A-2. The May 4, 1989, Findings of Fact and Conclusions

of Law of the District Court for the Eastern District of

Oklahoma is unreported and reprinted in the Appendix

at A-16.

aati ia amie

JURISDICTION

The order of the Court of Appeals for the Tenth

Circuit affirming the opinion of the District Court of the

Eastern District of Oklahoma was entered on December

10, 1991. A timely petition for rehearing was denied on

January 24, 1992. The jurisdiction of this Court is invoked

under 28 U.S.C. sec. 1254(1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

The Fourteenth Article of Amendment to the Consti-

tution of the United States of America is set out in the

Appendix at A-76. The Sherman Act, 15 U.S.C. sec. 1 and

2 are reprinted in the Appendix at A-77. The Health Care

Quality Improvement Act of 1986, 42 U.S.C. sec. 11101 et

seq. are set out in the Appendix at A-78.

STATEMENT OF THE CASE

In December of 1987, Dr. Tarabishi, an ear, nose and

throat physician, and his professional corporation, M.

Hisham Tarabishi, Inc., initiated this case in the United

States District Court for the Eastern District of Oklahoma.

Tarabishi alleged that the respondents, McAlester

Regional Hospital (“MRH”), McAlester Clinic (“the

Clinic”) and the individual respondents (doctors who

were members of the Clinic and members of the staff at

the Hospital in various specialties) had violated sections

1 and 2 of the Sherman Act, 15 U.S.C. Sec. 1 and 2, and

the antitrust and trade regulation laws of Oklahoma.

In 1979, Tarabishi began to work at defendant Clinic

and was granted full staff privileges by MRH. In 1980, he

left the Clinic and started his own medical practice, and

became President of the Medical Society of Pittsburgh

County, Oklahoma.

In 1978, MRH was the only existing hospital in

McAlester, Oklahoma, formed by the merger of two pre-

existing hospitals. Its position as sole hospital and pro-

vider of surgical services remained unchallenged until

1982, when Tarabishi attempted to establish an outpatient

ambulatory surgical center (called TMD) to lower the cost

of health care. Tarabishi hired two accountants and a

health care industry consultant to conduct feasibility

studies for such a center, who concluded that an outpa-

tient ambulatory surgical center was needed in McAlester

and that Tarabishi possessed the capability of operating

such a facility.

In March of 1983, when he filed a Certificate of Need

Application as required by Oklahoma law, Tarabishi

requested that MRH maintain a “position of neutrality”

relative to his application. Instead of neutrality, however,

the MRH Board discussed the creation of its own outpa-

tient ambulatory surgery service, and in May of 1983

announced that MRH would respond to the Oklahoma

Health Planning Commission that the TMD Center “will

duplicate the hospital’s surgical services.”

On May 12, 19, and 25, 1983, the Oklahoma Health

Planning Commission held hearings on the Tarabishi

application. MRH, which appeared through its Adminis-

trator, Comptroller and other officers, objected to the

financial impact on MRH if the Clinic were established.

Representatives testified that the TMD Center “would

take away the paying, ‘cream of the crop,’ patients and

leave MRH with the ‘low pay, no pay patients’.” Okla-

homa health care planners granted Tarabishi a license to

operate such an independent surgery center, despite the

vigorous objections of MRH.

After the announcement of his intention to open the

surgical center, and after Tarabishi spoke out about the

need to reduce high medical costs, MRH and its doctors

subjected Tarabishi to a series of “peer review” proceed-

ings, which ultimately cost him a loss of all privileges at

MRH. Tarabishi’s loss of privileges commenced the very

week he officially opened his competing outpatient surgi-

cal center. Before Tarabishi expressed his opinion of high

medical costs and announced his intentions to open TMD,

no complaints had ever been brought against him by

MRH. In fact, Tarabishi was, until that time, the most

active surgeon on the MRH staff.

The complaints by MRH began in April, 1983, imme-

diately after the filing of Tarabishi’s Certificate of Need

Application for his competing outpatient surgical facility.

The “complaints” were premised on charges such as Tar-

abishi’s “illegible” handwriting and his failure to attend

certain Library Committee meetings. After the Certificate

of Need for the TMD facility was granted, MRH notified

Dr. Tarabishi that it intended to commence “corrective

action” proceedings against him for a “therapeutic error”

which had occurred four months earlier. In June and July

of 1983, various hearing review and appellate committees

or boards at MRH investigated Tarabishi. On July 17,

1984, eight days after Tarabishi’s surgical center opened

for business MRH revoked all of Tarabishi’s staff privi-

leges.

The loss of MRH privileges caused the Center to

collapse. To continue his practice in McAlester, Tarabishi

nea,

needed access to MRH’s operating room, emergency

room, and other facilities and TMD was required to have

access to MRH emergency care facilities vy the Oklahoma

Health Planning Commission. The collapse of the Center

eliminated the first independent outpatient surgery facil-

ity in that region of Oklahoma. The facility would have

been a force in lowering surgical prices and reducing

unnecessary health services.

From October 17, 1988 through December 16, 1988,

Tarabishi’s case was tried to the Court. The Court entered

Findings of Fact and Conclusions of Law, and held

against Plaintiff on the following theories: individual

monopolization of surgical health care services by the

Hospital in violation of 15 U.S.C. sec. 2; individual

monopolization by the Clinic; monopolization and

attempt to monopolize non-surgical and office health care

services by the Clinic; conspiracy to monopolize by all

defendants; conspiracy in restraint of trade by all defen-

dants.

Although the District Court dismissed all the anti-

trust charges against respondents, and refused to apply

the per se standard to the peer review conduct of this case,

it found that procedural due process had not been

accorded Tarabishi, commenting that it:

was shocked to discover that a physician’s

career can be - and in this instance has been -

destroyed through patently improper proceed-

ings. Peer review, as it is presently practiced, is

fundamentally flawed. Appendix, at A-56.

The district court specifically found:

The detailed examination in this case of the

peer review proceedings involving Dr. Tarabishi

leads the court to the conclusion that the pro-

ceedings would not pass muster even under the

deferential standard described above [i.e., in the

Health Care Quality Improvement Act]. In many

instances, their was not “a reasonable effort to

obtain the facts of the matter” or to provide

adequate notice. The record is repleat with

examples. * * * The deficiencies in these peer

review proceedings go far beyond a failure to

observe “procedural niceties,” as defendants

seek to characterize them. Tainting the entire

process was the personal animus of many of the

defendants towards Dr. Tarabishi. In one breath,

a defendant doctor in this trial would testify

that he virtually despised Dr. Tarabishi; in the

next, he would testify that he could be and was

“fair and impartial” while sitting in judgment.

These assertions of objectivity are, quite simply,

not credible. * * * The court cannot by any

rational definition of the term “approve” the

peer review proceedings under review.

Appendix, at A, 71-72.

The Court of Appeals for the Tenth Circuit affirmed

the judgment of the District Court on antitrust grounds,

holding that there was insufficient evidence to prove the

asserted markets, and no evidence regarding the Hospi-

tal’s or Clinic’s power to control prices. Specifically the

Court of Appeals rejected “plaintiffs’ argument that

defendants’ legitimate and protected conduct in opposing

Dr. Tarabishi in the Certificate of Need application pro-

ceedings furnishes the requisite specific intent to monop-

olize,” citing the Noerr/Pennington doctrine. App. at A-28.

The Tenth Circuit agreed with the District Court that

Plaintiffs’ conspiracy claim was invalid, under Rule of

Reason approach. The conspiracy claim was based on the

peer review process, and the Court refused to apply the

per se analysis because peer review was involved, com-

menting that “defendants in this case terminated Dr. Tar-

abishi’s staff privileges at least ostensibly because of a

lack of professional competence or unprofessional con-

duct ...” App. at A-29, n. 18. Given that they had to

meet the standards of the Rule of Reason approach, said

the Court, plaintiffs “once again simply failed to establish

the required impact upon competition.” App. at A-31,

emphasis in original.

The Court also denied Plaintiffs’ Petition for a

Rehearing, which argued that a per se standard should

have been used because of the flagrant lack of due pro-

cess involved in the peer review proceedings. The Court

had all but ignored the specific findings of the District

Court on this subject - appearing to conclude (in a foot-

note) that “public policy” precluded such a review of the

peer review process. App. at A-23 - A-24. By inference,

the Court found that appropriately conducted profes-

sional or industry self-regulatory proceedings had been

accorded Tarabishi. App. at A-71 - A-72.

REASONS FOR GRANTING THE WRIT

I. PETITIONERS HAVE BEEN DEPRIVED OF A

VALUABLE PROPERTY RIGHT IN VIOLATION OF

THE DUE PROCESS CLAUSE OF THE FOUR-

TEENTH AMENDMENT.

A. THE DUE PROCESS CLAUSE INSURES A FAIR

HEARING.

This Court has held that “ ‘the fundamental requisite

of due process is the opportunity to be heard.’ ” Mullane

v. Central Hanover Trust Co., 339 U.S. 306, 314 (1950),

quoting Grannis v. Ordean, 234 U.S. 385, 394 (1914). The

hearing opportunity mandated by the Clause is one that

“must be granted at a meaningful time and in a meaning-

ful manner.” Armstrong v. Manzo, 380 U.S. 545, 552 (1965).

This hearing insures that citizens are protected from arbi-

trary action by government. Fuentes v. Shevin, 407 U.S 67,

80-81 (1972); Daniels v. Williams, 474 U.S. 327, 331 (1985)

(and cases cited therein).

This Court has enunciated a two-part test for the

application of the Due Process Clause: whether there is a

protected interest, and what process is due, before there

may be a deprivation of that protected interest. Logan v.

Zimmerman Brush Co., 455 U.S. 422, 428 (1982).

First, the Due Process Clause applies to Petitioners’

action. Physicians have a constitutionally protected prop-

erty interest in medical staff privileges. “[MJedical staff

privileges embody such a valuable property interest that

notice and hearing should be held prior to its termination

or withdrawal, absent some extraordinary situation

where a valid government or medical interest is at stake.”

Northeast Georgia Radiological Assoc. v. Tidwell, 670 F.2d

507, 511 (Sth Cir. 1982). This Court has repeatedly held

that such causes of action as Petitioners’ are species of

property within the meaning of the Due Process Clause.

E.g., Logan, 455 U.S. at 428. “[S]ome form of hearing is

required before an individual is finally deprived of a

property interest,” Mathews v. Eldridge, 424 U.S. 319, 333

(1976). Thus, “[t]he Court traditionally has held that the

Due Process Clause protects civil litigants who seek

recourse in the courts, either as defendants .. . or as

plaintiffs attempting to redress grievances.” Logan, supra,

at 429. Petitioners are attempting to have their claims

heard, and are entitled to the protections of the Due

Process Clause.

Second, because the Due Process Clause applies to

the Petitioners’ claims, they must be afforded a meaning-

ful hearing. Although private versus governmental inter-

ests may be weighed in determining the timing and

nature of the hearing, the opportunity for a hearing does

not depend on a balance and must be granted. Board of

Regents of State Colleges v. Roth, 408 U.S. 564, 570-71 n. 8

(1972).

The peer review proceedings must be judged under

the rule announced in Boddie v. Connecticut, 401 U.S. 371

(1971). Although the standard of scrutiny (strict or inter-

mediate) was not precisely prescribed, Justice Harlan,

writing for the Court, said, “that absent a countervailing

state interest of overriding significance, persons forced to

settle their claims through the judicial process must be

given a meaningful opportunity to be heard.” Boddie, 401

U.S. at 377. Justice Harlan then equated the meaningful

opportunity to be heard with other fundamental rights

such as “religious freedom, free speech or assembly.”

Boddie, 401 U.S. at 379. Finally, the Court held that

although Connecticut’s reasons for its law (that indigents

must pay a divorce filing fee) were rational, they were

insufficient to override the interest of persons who

needed access to the courts to have their rights settled.

Boddie, 401 U.S. at 381-82. Clearly, some form of height-

ened scrutiny is appropriate when examining laws that

bar access to earning a livelihood in one’s chosen profes-

sion.

B. PROCEDURAL DUE PROCESS MUST BE

AFFORDED IN A PEER REVIEW ACTION.

1. The concept of Peer Review

Peer review is the right and duty of physicians to

review the work of other physicians, and in doing so, to

weed out those whose actions are inimical to patient

welfare. Peer review is based on the ethical duties of

physicians as professionals. The knowledge of the stan-

dard of care afforded a patient must be used to serve the

interests of the patient affected and those of the larger

community as well. Medicare: A Strategy for Quality Assur-

ance, 119 (Lohr, ed. 1990).

Peer review is also required by the States; state hos-

pital licensure statutes require a medical staff to engage

in peer review.'! Also, most states have statutes granting

immunity from suit to peer review participants, generally

qualified by a requirement that good faith or reasonable-

ness govern in reviewiag colleagues’ work. See, e.g.,

Okla. Stat. Ann. Tit. 63, sec. 1-1709 (West Supp. 1984), Tit.

76, sec. 16 (West Supp. 1987); Ill. Rev. Stat. (1991) ch. 91,

sec. 26; Jorstad, Note, The Legal Liability of Medical Peer

1 The duty to engage in peer review is underscored by

common law, since a hospital can be held liable for patient

injuries resulting from physician malpractice where the hospi-

tal was negligent in allowing the questionable physician to

remain on the staff. See, Darling v. Charlestown Com. Mem.

Hosp., 33 Ill. 2d 326, 211 N.E.2d 253 (1965), cert. denied, 383

U.S. 946 (1966); Hanson & Stromberg, Hospital Liability for

Negligence, 21 Hastings L.J. 1 (1969); Peer Review Immunity

Task Group of the American Academy of Hospital Attorneys,

Immunity for Peer Review Participants in Hospitals, (Am. Hosp.

Ass’n 1989); Nodzenski, Where is the Quality in the Health Care

Quality Improvement Act of 1986? 22 Loy. U. Chi. L. J. 361 (1991).

Review Participants for Revocation of Hospital Staff Privi-

leges, 28 Drake L. Rev. 692 (1978-9).

Peer review is also mandated federally and privately.

Payment for Medicare is possible only in hospitals whose

medical staffs have an effective review process, under

Medicare “Conditions of Participation.” 42 C.F.R. Part 482

(1986). The Joint Commission on Accreditation of Health-

care Organizations also requires “monitoring and evalua-

tion” of patient care, for accreditation whether the

hospital is public or private.2 Thus, hospital bylaws

invariably provide for peer review, specify options for

corrective action and delineate the physician’s right to

appeal such actions.

Despite the critical nature of the procedures

employed in evaluating the care rendered, the standards

are broadly drawn, usually phrased as “physician failure

to follow professional standards.” Lang, Medical Staff Peer

Review: A Strategy for Motivation and Performance, 80 (Am.

Hosp. Assoc. 1990). These vague standards are applied to

deny or withdraw privileges from a staff physician, with

enormous impact. Exclusion of a physician from one

2 Joint Commission on Accreditation of Healthcare Orga-

nizations, Accreditation Manual for Hospitals, (1990). The

JCAHO is a private accreditation organization, governed by a

board composed of commissioners from the American College

of Physicians, the American College of Surgeons, the American

Dental Association, the American Medical Association and the

American Hospital Association. See, Roberts, Coale & Redman,

A History of the Joint Commission on Accreditation of Hospitals,

258 J.A.M.A. 936, 939 (1987); Note, Physician Staff Privilege

Cases: Antitrust Liability and the Health Care Quality Improvement

Act, 29 Wm. & Mary L. Rev. 609 (1988).

hospital frequently leads to exclusion from others.? Exclu-

sion by one hospital can lead to disciplinary investigation

by local medical boards and difficulties in obtaining mal-

practice insurance anywhere the physician may attempt

to relocate. Thus, frequently the excluded physician is

confronted with a virtual prohibition against practicing

medicine in the entire United States. In the instant case,

Dr. Tarabishi has been unable to engage in surgical prac-

tice anywhere in the United States — even as a volunteer

for the U.S. Army - as a result of the peer review decision

in question herein.

2. Limitations on Peer Review: HCQIA

Heeding this Court’s warning that “peer review”

could be abused for improper ends, to further “anticom-

petitive activity” of private parties,4 Congress became

concerned about potential anti-competitive motives

underlying peer review actions, and about the difficulty

of obtaining a fair hearing. Congress enacted the Health

Care Quality Improvement Act (HCQIA) in response to

3 See Grad, The Antitrust Laws and Professional Discipline in

Medicine, 1978 Duke L.J. 443, 469-70; Drexel, The Antitrust

Implications of the Denial of Hospitai Staff Privileges, 36 U. Miami

L. Rev. 207 (1982); Chafee, The Internal Affairs of Associations

Not for Profit, 43 Harv. L. Rev. 993, 1021 (1930).

4 In Patrick v. Burget, 800 F.2d 1498, 1506 (9th Cir. 1986),

the Ninth Circuit specifically found that “the evidence, viewed

in the light most favorable to Patrick, reveals shabby, unprin-

cipled and unprofessional conduct on the part of the defen-

dants,” but held that “bad faith” on the part of the reviewers

was irrelevant, given its reasoning that peer review activities

of physicians in Oregon fall within the “state action” exemp-

tion.

what Congress described as the “need to provide incen-

tive and protection for physicians engaging in effective

professional peer review” against antitrust lawsuits

brought by physicians facing disciplinary action.°

Congress specifically recognized the importance of

providing an atmosphere for a fair hearing in peer review

activities by providing immunity from damages under fed-

eral and state law for qualifying review bodies and indi-

viduals associated with, or assisting, the professional

review action. 42 U.S.C. sec. 11111(a)(1).© That immunity,

however, is expressly conditioned” on ensuring that the

professional review actions comply with due process

standards, as set forth in 42 U.S.C. sec. 11112:

For purposes of the protection set forth in section

11111(a) of this Title, a professional review action must be

taken:

(1) In the reasonable belief that the action

was in the furtherance of quality health care,

(2) After a reasonable effort to obtain the

facts of the matter,

(3) After adequate notice and hearing pro-

cedures are afforded to the physician involved

5 42 U.S.C. sec. 11101 et seq. (1986); See, Morter, Comment,

The Health Care Quality Improvement Act of 1986: Will Physicians

Find Peer Review More Inviting? 74 Va. L. Rev. 1115 (1988).

6 There is no immunity for damages that may be awarded

under federal or state civil rights laws. See 42 U.S.C. sec. 2000e

et seq., 42 U.S.C. sec. 1981 et seq. There is no immunity from

damages claimed by the United States or the Attorney General

of a State. 42 U.S.C. sec. 11111.

7 See, Peer Review Immunity Task Group of American

Academy of Hospital Attorneys Immunity for Peer Review Par-

ticipants in Hospitals, (Am. Hosp. Assoc. 1989).

or after such other procedures as are fair to the

physician under the circumstances, and

(4) In the reasonable belief that the action

was warranted by the facts known after such

reasonable effort to obtain facts and after meet-

ing the requirement of paragraph (3).

The Act specifies what constitutes adequate notice

and hearing in section 11112(b):

(1) The physician has been given notice of

the proposed action and the reasons therefor,

with the right to request a hearing within not

less than thirty days of receipt of the notice and

a summary of hearing rights;

(2) If a hearing is requested, the notice of

the hearing must include the hearing date,

which must be not less than thirty days after the

date of the notice, the place, the time and a list

of the witnesses expected to testify;

(3) If a hearing is conducted, the hearing

must be held before a person or persons not in

direct economic competition with the physician.

It can be before either a mutually agreeable

arbitrator, a hearing officer appointed by the

entity, or before a panel of individuals. At the

hearing the physician has the right to represen-

tation by an attorney or any other person, to

have a record made, to call, examine and cross

examine witnesses, to present evidence deter-

mined to be relevant by the hearing officer,

regardless of its admissibility in a court of law,

and to submit a written statement at the close of

the hearing.

The Act further specifies that failure of the professional

review body to meet the conditions described in 11112(b)

“shall not, of itself, constitute failure to meet the stan-

dards of subsection (a)(3),” which sets forth the require-

ment of “adequate notice and hearing procedures.”

3. The Due Process Standards of HCQIA

Should Be Applied To This Case.

The District Court below noted that whide the

HCQIA was only applicable to peer review actions com-

menced on or after November 14, 1986, and hence did not

directly apply to the Tarabishi peer review proceedings,

the criteria in the Act should be considered as those

“which, logically, a reviewing court might ultimately con-

sider.” App. at A-70.

Legislative history indicates that the HCQIA’s stan-

dards for due process were not intended to diminish the

due process right of physicians. 132 Cong. Rec. H 11590,

11591 (daily ed. Oct. 17, 1986) (statement of Rep. Wax-

man). Moreover, the HCQIA’s criteria for a fair pro-

cedure mirror those set forth in the Joint Commission on

Accreditation of Hospitals (JCAH) guidelines. Joint

8 Nor do the standards of the HCQIA preempt or override

“any State law providing incentives, immunities or protection

for those engaged in a professional review action that is in

addition to or greater than that provided by this part.” 42

U.S.C. sec. 11115. The Oklahoma statute dealing with peer

review, sec. 1-1709 of the Public Health Code, provides:

Physicians and others appointed to hospital utiliza-

tion review committees for the purpose of determin-

ing the optimum use of hospital services shall be

immune from liability with respect to decisions

made as to such utilization and actions thereunder

so long as such physicians or others act in good

faith; provided, however, that nothing in this section

shall be construed to relieve any patient’s personal

physician of any liability which he may have in

connection with the treatment of such patient. Okla.

Stat. Ann. Tit. 63, sec. 1-1709 (West, 1984).

Commission on Accreditation of Healthcare Organiza-

tions, Accreditation Manual for Hospitals, (1987).

C. PROCEDURAL DUE PROCESS WAS DENIED

DR. TARABISHI

Dr. Tarabishi was not afforded procedural due pro-

cess protections in the peer review proceedings. The Dis-

trict Court specifically found, after a “detailed

examination . . . of the peer review proceedings,” that

they “would not pass muster, even under the deferential

standard described above” [referring to the HCQIA stan-

dards]. App. at A-71. The District Court added: “In many

instances, there was not ‘a reasonable effort to obtain the

facts of the matter’ or to provide adequate notice. The

record is replete with examples.” App. at A-71. The Dis-

trict Court specifically found that the peer review actions

were not taken “[i]n the reasonable belief that the action

was in the furtherance of quality health care,” and thus

failed to meet the first requirement of HCQIA. Nor did

they meet the second criterion of sec. 11112(a), namely

that action must be taken only “after a reasonable effort to

obtain the facts of the matter.” The third criterion was

ignored, since the hearing procedures were not fair to Dr.

Tarabishi under the circumstances. App. at A-72.9

®° The Act does not preclude immediate suspensions or

restrictions of clinical subject where the failure to act may

result in an “imminent danger” to the health of any individual.

While the Act is silent as to who is to determine whether such

failure to act may result in “imminent danger,” there was no

intimation or discussion by the District Court or the Court of

Appeals suggesting that an emergency existed. The evidence is

to the contrary, since some of the alleged bases for revocation

were actions that had occurred a year and a half before the

actual revocation.

1. Failure to provide adequate notice and hear-

ing

Under HCQIA, and the mandate of procedural due

process, a physician against whom a professional review

action is proposed should be notified of the proposal of

such an action, the reasons for the action, and of his right

to a hearing. Further, the physician must be given at least

30 days’ notice to prepare for the hearing and a list of

individuals who will testify.

The courts have held that failure to provide adequate

notice to an affected physician before withdrawal of his

privileges can constitute a due process violation. Suckle v.

Madison General Hospital, 363 F.Supp. 1196 (W.D. Wis.

1973) (physician seeking reappointment given only a few

minutes notice of his opportunity to meet with the com-

mittee which recommended his non-appointment; court

found this was insufficient notice).

Here, the trial court explicitly found that Tarabishi

was not given adequate notice of the hearing to be held,

nor was he given the right to testify. The trial court took

MRH and the other defendants to task for their failure to

give adequate notice of a hearing and right to reply. Thus,

it points out that “the Committee states that Dr. Tarabishi

was invited to appear but ‘declined to answer questions.’

It is clear from page 216 that Dr. Tarabishi had only been

provided with Dr. Boyer’s letters ten minutes before the

hearing began. Other instances could be cited. The defi-

ciencies in these peer review proceedings go far beyond a failure

to observe ‘procedural niceties,’ as defendants seek to charac-

terize them.” [Emphasis supplied]. App. at A-71.

2. Failure to make a reasonable effort to obtain

the facts of the matter

The District Court specifically noted that the Respon-

dents here failed to interview key witnesses despite

serious allegations against Dr. Tarabishi. The witnesses

were not personally interviewed regarding the Darby

case. The Committee merely read reports.

In fact, many of these allegations had arisen and been

dropped, long before Tarabishi’s clinic had been dis-

cussed. The “Darby” incident involved an aileged over-

dose of lidocaine on January 30, 1983, and was referred to

various peer review committees, which, as of July 22,

1983, recommended no further action. On January 24,

1984, however, a “second investigation” of the Darby

matter was opened, and between January and July of that

year an investigatory committee, the Executive Commit-

tee, and the Review Committee issued reports and on

July 18, 1984, “the governing body made its decision of

revocation . . . Dr. Tarabishi’s privileges were revoked.”

App. at A-52.

Despite the supposedly serious nature of the Darby

incident, it took MRH more than 1-1/2 years from the

incident and a “second investigation” to suspend Tar-

abishi’s privileges - all, as the trial court pointed out,

without interviewing the key witnesses.

Similarly, in the “Amber Weaver matter,” where

another MRH doctor reported that Tarabishi “had not

seen and examined Amber Weaver prior to the time of

surgery”, App. at A-54, the trial court noted that the

committee never bothered to talk to the patient’s mother,

but again relied on reports. App. at A-71.

In the “Ketcherside incident,” Tarabishi as a member

of the Surgery Committee asked the Executive Committee

to form an ad hoc committee, but the response of the

Surgery Committee was to “vote unanimously to remove

Tarabishi from the committee or suspend him until he

‘prove[d] himself innocent’ of charges” - a shift in the

usual burden of proof and presumption of innocence.

App. at A-52-A-53. Again, the trial court found that

“although Mrs. Ketcherside contradicted Dr. McCauley’s

account, she was not directly talked with by the Commit-

tee.” App. at A-71.

3. Failure to hold hearing before an impartial

hearing officer

Under the HCQIA, the hearing must be held before a

hearing officer or other appointed individuals who are

not economic competitors.!° The physicians and others

conducting the “peer review” in Tarabishi failed to com-

ply with the requirement that peer review be conducted

“before an arbiter mutually acceptable to the physician

and the health care entity.” 42 U.S.C. sec.

11112(b)(3)(A)(1).

10 The legislative history indicates that the Committee

placed a high priority on ensuring “that reviews of physicians

pertain only to quality of care,” and that even in small hospi-

tals or in rural areas, “the Committee expects the professional

review body to make every reasonable effort to find appropri-

ate officers or members of the panel, even if this requires bring-

ing in reviewers from out of town or using physicians of a different

specialty.” [Emphasis supplied]. H.R. Rep. No. 99-903, 99th

Cong., 2d Sess. 11 (1986), reprinted in 1986 U.S.C.C.A.N. 6384,

6393.

As the District Court summarized it:

“Tainting the entire process was the personal

animus of many of the defendants toward Dr.

Tarabishi. In one breath, a defendant doctor in

this trial would testify that he virtually despised

Dr. Tarabishi; in the next, he would testify that

he could be and was ‘fair and impartial’ while

sitting in judgment. These assertions of objec-

tivity are, quite simply, not credible. It was

made clear to the Court that many of the defen-

dant doctors would have taken Dr. Boyer’s

word over Dr. Tarabishi’s in any circumstance.

The Court cannot, by any rational definition of the

term, ‘approve’ the peer review proceedings under

review.”

[Emphasis supplied]. App. at A-71-A-72.

Il. THIS CAUSE SHOULD BE REVERSED AND

REMANDED.

A. THE PER SE RULE SHOULD HAVE BEEN

APPLIED BY THE LOWER COURTS.

In Silver v. New York Stock Exchange, 373 U.S. 341

(1963), the Court recognized the necessity of complying

with the “fair hearing” requirement where an industry is

given the right to engage in self-regulation. In Silver,

broker-dealers in non-listed securities, acting under the

direction of the New York Stock Exchange, refused to

authorize private line connections between their officers

and that of plaintiff Silver, although those connections

were mandatory in order to enable Silver to transact

business. The Court held that the action was a per se

violation of the antitrust laws, despite the lack of any

evidence that exclusion of Silver would injure competi-

tion market-wide. While the Securities Exchange Act of

1934, 15 U.S.C. sec. 78(b), had conferred a limited anti-

trust exemption in accordance with the Exchange’s self-

regulatory duties, that exemption was held to extend no

further than necessary to make the 1934 Act “work, and

even then only to the minimum extent necessary.” Silver,

373 U.S. at 357.

The Court began its analysis by assuming that the

removal of Silver’s wires “by collective action of the

Exchange and its members would, had it occurred in a

context free from other federal regulation, constitute a per

se violation of sec. 1 of the Sherman Act.” Silver, at 357. In

the Silver situation, the Court held that the Exchange had

exceeded this limit because it had given the plaintiff no

notice of the reasons for its action, and no opportunity for

a hearing at which to explain or refute the charges against

him. The Court gave two reasons for this procedural

requirement: the need to keep anti-competitive motives

from controlling self-regulatory decisions, and the need

to provide any reviewing court or other body with evi-

dence of the purposes and motives of those self-regula-

tory decisions. 373 U.S. at 361, 363.

The Court specifically stated: “Our decision . . . holds

that . . . [the] statute affords no justification for anti-

competitive collective action taken without according fair

procedures.” 373 U.S. at 364. Nor was the Court inter-

ested in the justifications that the Exchange attempted to

offer, finding that “nothing absent a partial or complete

statutory exemption could justify a conventional boy-

cott.” Silver, at 365.

Procedural safeguards are a prerequisite to the val-

idity of self-regulatory refusals to deal, and that principle

was recognized in Silver. That principle was codified by

Congress in the 1986 Health Care Quality Improvement

Act, which mandates procedural protection for those

physicians denied privileges by peer review proceedings.

Here, there was simply no excuse not to afford peti-

tioners “fair procedure.” The alleged incidents leading to

the revocation of Tarabishi’s privileges occurred over a

period of one and one-half years; no harm to the public

requiring “emergency” revocation was even hinted.

Both the District Court and Court of Appeals chose to

rely on dictum in one Third Circuit case and its progeny

for the holding that a per se boycott analysis can never

apply to a hospital staff privilege case where the hospital

defends based on lack of professional ability. App. at

A-69, A-23-A-24. In the case of Weiss v. York Hospital, 745

F.2d 786 (3rd Cir. 1984) cert. denied, 470 U.S. 1060 (1985),

the Third Circuit in fact applied the per se rule and held

that a hospital and individual physicians had engaged in

a policy of unfair, unequal and unreasonable procedures

in reviewing applications of osteopaths to hospital staff

privileges.

In Weiss, the plaintiff, an osteopath who was denied

staff privileges at York hospital, filed suit both individu-

ally and as class representative. The jury found that the

defendants had engaged in a policy of discrimination

against the plaintiff and other osteopaths. The Third Cir-

cuit concluded that the hospital’s restrictive policy with

respect to hospital staff privileges was sufficiently close

to a traditional boycott, and thus the boycott characteriz-

ation was appropriate. 745 F.2d at 820. The Hospital

offered no “public service or ethical norm” rationale for

the discriminatory treatment of osteopaths.

The District Court below also relied on Pontius v.

Children’s Hosp., 552 F.Supp. 1352, 1369-70 (WD Penn

1987) (refusing to apply normal per se boycott rules,

derived from what the Court called the “normal commer-

cial sphere,” to peer review activities). In its review, the

lower Court appeared to rely upon “public policy” as a

justification for this same ultimate conclusion.

The lower courts’ failure to apply a per se analysis

merely because hospital peer review decisions are

involved is:

(1) contrary to Supreme Court precedent;

(2) contrary to the intent of Congress

expressed in HCQIA; and

(3) violates procedural due process.

B. PEER REVIEW PROCEEDINGS ARE NOT

EXEMPT FROM THE PER SE APPROACH.

In its most elemental sense, plaintiff’s suit accused

defendants of conspiring by use of sham peer review

proceedings to deprive Dr. Tarabishi of the use of the

McAlester Regional Hospital, an essential facility to his

practice as a surgeon, with full knowledge that his ability

to compete with them would thereafter be destroyed. In

its limited discussion of the peer review procedure, the

Court below not only appeared to “exempt” peer review

from per se analysis, but arguably, to exempt peer review

proceedings from the application of the antitrust laws

themselves on a “public policy basis.” In footnote 14 of its

opinion (Appendix 22) the Court cited its previous deci-

sion in McKenzie v. Mercy Hospital, for the proposition

that “for public policy reasons, the essential facilities

doctrine is inapplicable to hospital staff privileges deci-

sions.” It stated:

“{T]his Court is in full agreement with the con-

sistent decisions of other courts not to apply the

essential facilities doctrine to exclusive service

contracts by hospitals * * * To the extent that the

plaintiffs argue the defendants conspired to

deny them access to an essential facility in viola-

tion of Section 1, we would hold as this Court

did in McKenzie v. Mercy Hospital of that plain-

tiffs were not denied an essential facility. * * * As

for Dr. Tarabishi himself, his argument that he

was denied an essential facility proves too

much, for it amounts to an argument that a

hospital can never deny a physician staff privi-

leges, because restricting the practice of that

physician always, in some sense, reduces com-

petition.” Footnote 14, Appendix A 23-24.

The foregoing is flawed, we submit, because

nowhere, to our knowledge, has Congress articulated

such a “public policy.” Furthermore, one might logically

inquire why, if “public policy” already precluded applica-

tion of strict antitrust standards to peer review decisions,

would Congress have granted immunity from the anti-

trust laws in the Health Care Quality Improvement Act,

to those doctors following the due process provisions of

the Act in the conduct of peer review? There is no private

cause of action provided, for the violation of the Act,

leaving an injured person with whatever remedies are

provided for elsewhere in the law. The most obvious

remedy for the type of injury occasioned by an illegal

boycott is found in the antitrust laws. Obviously, we

believe no such “public policy exemption” from the

application of the antitrust laws exists for abuses of the

self-regulating peer review procedures in the medical

profession.

This Court has never used a more lenient standard

when applying the antitrust laws to the professions,

despite comments regarding the “public service and ethi-

cal norms” intrinsic to the professions. See, Arizona v.

eR ON ie i Rte We

5 ot OCR abel go eG 1g Mee, ocski basing wlaee

Maricopa County Medical Society, 457 U.S. 332 (1982); Gold-

farb v. Virginia State Bar, 421 U.S. 773, 788 n. 17 (1975);

National Society of Professional Engineers v. United States,

435 U. S. 679, 696 (1978).

This Court has explicitly stated that the novelty of a

maximum fee system and the lower courts’ lack of experi-

ence in the medical antitrust area were not adequate

reasons to apply the rule of reason when price-fixing was

involved. Arizona v. Maricopa County Medical Society, 457

U.S. 332 (1982), found a violation of Section 1 of the

Sherman Act when “competing physicians” set, by major-

ity vote, “the maximum fees that they claim in full pay-

ment for health services provided to policyholders of

specific insurance plans.” 457 U.S. at 345. The Court in

Maricopa noted that “[t]he price fixing agreements in this

case .. . are not premised on public service or ethical

norms.”

The test is not whether the industry involved hap-

pens to be the medical one, but whether the test laid

down in Silver to permit the application of rule of reason

have been met. Later courts have interpreted Silver as

allowing the application of the rule of reason to concerted

refusals to deal only if:

(1) there is a legislative mandate for self-

regulation or otherwise;

(2) the action is intended to (a) accomplish

an end consistent with the policy justifying self-

regulation, (b) is reasonably related to that goal,

and (c) is no more exclusive than necessary, and

(3) the [defendant] provides procedural

safeguards which assure that the restrain is not

arbitrary and which furnishes a basis for judicial

review.” Denver Rockets v. All-Pro Management,

325 F. Supp. 1049, 1064-65 (C.D.Cal. 1971);

McCreery Angus Farms v. American Angus Ass‘n,

379 F. Supp. 1008, 1018 (S.D. Ill. 1974).1

C. THIS CAUSE SHOULD BE CONSIDERED

UNDER THE RULE OF REASON.

Should this Court find that a per se analysis is unsuit-

able here, the Rule of Reason approach to the treatment

accorded Dr. Tarabishi here by Defendants should be

applied. There is sufficient evidence to find an unreason-

able restraint of trade under the doctrine of Board of Trade

of the City of Chicago v. United States, 246 U.S. 231 (1918).

The question in Board of Trade is “whether the restraint

imposed is such as merely regulates and perhaps thereby

promotes competition or whether it is such as may sup-

press or even destroy competition.” 246 U.S. at 238.

In the past, this Court has evaluated challenged

restraints by weighing the anticompetitive character of

the restraint against the purported procompetitive effect.

FTC v. Indiana Federation of Dentists, 476 U.S. 447 (1986);

National Society of Professional Engineers v. United States,

435 U.S. 679 (1978); Northwest Wholesale Stationers, Inc. v.

Pacific Stationery & Printing Co., 472 U.S. 284 (1985).

Tarabishi has alleged an agreement among the defen-

dants, who are all direct competitors, to eliminate any

ear, nose and throat specialty competition for the defen-

dant Clinic by terminating Tarabishi’s hospital privileges,

eliminating the only outpatient surgery competition of

11 In McCreery, a boycott of cattle breeders was held per se

invalid because excluded breeders were not given advance

notice that the association was reviewing their actions, ade-

quate opportunity to respond to the charges against them or an

opportunity to confront their accuser. 379 F.Supp. at 1018.

MRH, and preserving the status quo of stabilized and

artificially high prices for medical services.

As in Indiana Federation of Dentists, the anticompeti-

tive character of the restraint defendants have imposed

here is obvious. Through the guise of “peer review”

proceedings, defendants engaged in conduct which effec-

tively “limit[ed] consumer choice by impeding the ‘ordi-

nary give and take of the market place’”; Indiana

Federation of Dentists, 476 U.S. at 447, 458-59, quoting from

National Society of Professional Engineers v. United States,

435 U.S. at 692. The Court below, instead of applying the

“obvious injury to competition” test called for by the

holding in Indiana Dentists, instead approved the District

Court’s finding of a lack of proof of injury to competition,

even though the appeals court, itself, observed elsewhere

in its opinion that a hospital’s use of the peer review

process to eliminate a physician “always, in some sense,

reduces competition.” Footnote 14, App. A-23 - A-24.

Here, it eliminated the only competition.

The Court of Appeals gave defendants more than the

benefit of the doubt by ruling that the termination of Dr.

Tarabishi’s privileges had “ostensibly” been based on “a

lack of professional competence or unprofessional con-

duct.” App. at A-29, n. 18. That finding is inconsistent

with the finding of the District Court that the peer review

actions against Dr. Tarabishi were a sham, not taken “in

the reasonable belief that the action was in the fur-

therance of quality health care,” but rather to further the

Respondents’ own economic motives.

III. CONCLUSION

There are important reasons for which the Supreme

Court should grant this Petition for a Writ of Certiorari.

Principal among those is the need for this Court to estab-

lish a uniform standard to deal with those elements of the

medical profession who are engaged in the peer review

process, and who chose, for whatever reason, not to fol-

low the due process standards set forth in the Health

Care Quality Improvement Act - and thereby fail to fall

within its antitrust immunity provisions. Under such cir-

cumstances, what is the antitrust standard to be applied

to admittedly joint conduct among professional medical

competitors? Does the undefined “public policy” hinted

at by the Court below preclude application of established

antitrust standards to those peer review proceedings

which, quite literally, shred due process? Under what

authority? Are medical doctors different for antitrust

immunity purposes, than are trade unions when they

operate outside the scope of the antitrust immunity

afforded them under the National Labor Relations Act,

and thereby violate the antitrust laws? Is there a particu-

lar reason for which medical doctors, engaged in joint

action peer review, should be treated differently, for pur-

poses of antitrust immunity, than state government enti-

ties when they act outside the scope of state action

immunity to violate the antitrust laws? In those instances,

public policy does not preclude suit, and the full applica-

tion of established antitrust standards, against State Gov-

ernment and Trade Unions.

What is the consequence of a group decision to vio-

late the due process provisions of the HCQIA? Are stan-

dard antitrust remedies precluded? On a “public policy”

basis as suggested by the Court of Appeals? If the per se

analysis is to be abandoned, and this Court’s teaching in

Silver and its progeny is to be disregarded for the medical

profession, it would best serve the public interest for such

new standard to be enunciated by this Court.

The anticompetitive conduct in the case at bar com-

menced when Dr. Tarabishi, speaking as the newly elected

president of the Pittsburg County Medical Society, com-

plained in a newspaper interview about the high cost of

medical services which prevailed in the McAlester area,

and suggested a need in the community for some type of

competing facility. That competing facility was ultimately

built. Unfortunately, long before the trial of this case

concluded, its competitive influence had been eliminated,

and the people of McAlester were once again relegated to

a “one doctor, one hospital” process.

There may not ever be a better case, factually, from

which this Court can determine the antitrust conse-

quences flcwing from a decision by a group of medical

doctors to subvert the peer review process for the pur-

pose of eliminating a competitor - here, the only other

competitor in the area. This Court, and no other, should

decide what consequences flow from a violation of Sec-

tion 1 under factual circumstances where the immunity

provisions of the HCQIA do not provide immunity from

the application of the antitrust laws. We believe this

Court should reaffirm the application of the per se stan-

dard called for in Silver, to abuses of the self-regulating

aspect of the medical profession.

For all of the foregoing reasons Petitioner respect-

fully requests this Court to grant the Petition for a Writ of

Certiorari and reverse the decision of the Court of

Appeals for the Tenth Circuit.

Respectfully submitted,

JoHN ANTHONY CLARO

Attorney for Petitioner,

M. Hisham Tarabishi, M.D.

JOHN ANTHONY CLARO

CLaro & JOHNSTON

Bank of Oklahoma Plaza

201 Robert S. Kerr Avenue

Oklahoma City, OK 73102

(405) 235-4074

APPENDIX

App. 1

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

M. HISHAM TARABISHI,

Plaintiff-Appellant,

MCALESTER REGIONAL HOSPITAL,

also known as McAlester Regional

Health Center Authority Public Trust

Status; THE MCALESTER CLINIC,

INC.; LEROY M. MILTON, M.D.;

GEORGE BROWN, M.D.; WILLIAM G.

BLANCHARD; SAMUEL E. DAKIL,

M.D.; JOHN B. COTTON, M.D.;

STEVEN ATWOOD, M.D.; CHARLES

K. HOLLAND, M.D.; KARL SAUER,

M.D.; HERTZL V. SCHAFF, M.D.; JOE

MCCAULEY, M.D., and; DON

SCHULLER, M.D.,

Defendants-Appellees.

No. 89-7056

a ee ee ee

ORDER

Filed January 24, 1992

Before ANDERSON, BALDOCK, Circuit Judges, SAM,

District Judge.

This matter comes on for consideration of appellant's

petition for rehearing filed in the captioned cause.

App. 2

Upon consideration whereof, the petition for rehear-

ing is denied.

Entered for the Court

ROBERT L. HOECKER, Clerk

By: /s/ Patrick Fisher

Patrick Fisher

Chief Deputy Clerk

App. 3

M. Hisham TARABISHI, M.D., and M. Hisham

Tarabishi, Inc., individually and doing busi-

ness as TMD Out-Patient Medical Center and

Tarabishi Medical Center, Plaintiffs-Appel-

lants, Cross-Appellees,

Vv.

McALESTER REGIONAL HOSPITAL, also

known as McAlester Regional Health Center

Authority Public Trust Status; the McAlester

Clinic, Inc.; Leroy M. Milton, M.D.; George

Brown, M.D.; William G. Blanchard; Samuel E.

Dakil, M.D.; John B. Cotton, M.D.; Steven

Atwood, M.D.; Charles K. Holland, M.D.; Karl

Sauer, M.D.; Hertzl V. Schaff, M.D.; Joe

McCauley, M.D.; and Don Schuller, M.D.,

Defendants-Appellees, Cross-Appellants.

Nos. 89-7056, 89-7063.

United States Court of Appeals,

Tenth Circuit.

Dec. 10, 1991.

Physician brought antitrust action against hospital,

clinic and other physicians arising out of termination of

his medical staff privileges at hospital. Defendants pre-

vailed on all claims except immunity claim, following

trial in the United States District Court for the Eastern

District of Oklahoma, H. Dale Cook, J., and appeal and

cross appeal were taken. The Court of Appeals, Stephen

H. Anderson, Circuit Judge, held that: (1) Oklahoma pub-

lic trust hospital was not a special function governmental

unit for purposes of antitrust immunity under the Local

Government Antitrust Act of 1984; (2) failure to prove

that hospital had evidenced monopoly power in its pric-

ing was fatal to monopolization claims against hospital;

App. 4

(3) for purposes of claims of monopolization and attempt

to monopolize against clinic, physician failed to prove

relevant markets or clinic’s ability to exclude competition

and control price; and (4) physician failed to prove claims

of conspiracy to monopolize and conspiracy in restraint

of trade.

Affirmed.

Frank Gregory, Tulsa, Okl. (James C. Lang, Kevin C.

Leitch, and G. Steven Stidham of Sneed, Lang, Adams,

Hamilton & Barnett, Tulsa, Okl., with him on the briefs),

for plaintiffs-appellants, cross-appellees.

George F. Short of Short, Barnes, Wiggins, Margo &

Alder, Oklahoma City, Okl., for defendant-appellee,

cross-appellant McAlester Regional Medical Hosp.

Douglas J. Colton of Verner, Liipfert, Bernhard,

McPherson & Hand, Chartered, Washington, D.C. (Kevin

Driskill and Cynthia L. Sparling of Short, Barnes, Wig-

gins, Margo & Alder, Oklahoma City, Okl, Joe Stamper of

Stamper, Otis & Burrage, Antlers, Okl., for defendant-

appellee, cross-appellant McAlester Regional Medical

Hosp., Joseph F. Glass and Leigh Reaves of Thomas,

Glass, Atkinson, Haskins, Nellis & Boudreaux, Tulsa,

Okl., for defendants-appellees, cross-appellants McAles-

ter Clinic and individuals, with them on the briefs), for

defendants-appellees, cross-appellants.

Before ANDERSON, BALDOCK, Circuit Judges, and

SAM,” District Judge.

*Honorable David Sam, United States District Court for the

District of Utah, sitting by designation.

SSS Or Pa ee ae

App. 5

STEPHEN H. ANDERSON, Circuit Judge.

Plaintiffs-appellants and cross-appellees, Dr. M. His-

ham Tarabishi, M.D., and M. Hisham Tarabishi, Inc.,

appeal an adverse judgment following a nine-week trial

to the court on plaintiffs’ antitrust claims arising out of

the termination of Dr. Tarabishi’s medical staff privileges

at defendant McAlester Regional Hospital. We affirm.

BACKGROUND

Dr. Tarabishi is an ear, nose and throat doctor who

practiced medicine in McAlester, Oklahoma from 1979 to

1985. M. Hisham Tarabishi, Inc. was an Oklahoma profes-

sional corporation whose sole shareholder was Dr. Tar-

abishi. Defendant McAlester Clinic, Inc. is an Oklahoma

professional corporation composed at the time relevant to

this case of approximately 17 or 18 shareholder physi-

cians with a wide range of medical specialties. Defendant

Hospital is a 200-bed facility located in McAlester, Okla-

homa. It was established as a public trust hospital under

Okla.Stat. tit. 60, §§ 176-180. Its beneficiary is the City of

McAlester. It is the only hospital in McAlester, formed by

the merger of two preexisting hospitals. Other individual

defendants are physicians, most of whom were members

of the Clinic at the time relevant to this case, and a few of

whom were not.! All had staff privileges at the Hospital.

1 The individual defendants are as follows, with their area

of medicai specialty as indicated: Leroy Milton, M.D. (internal

medicine); George Brown, M.D. (general surgery); William

Blanchard, M.D. (general surgery); Samuel Dakil, M.D. (ear,

(Continued on following page)

App. 6

Dr. Tarabishi joined the Clinic in 1979. Prior to that,

he had practiced in Marshfield, Wisconsin, after complet-

ing his medical training at several different locations. He

was granted full staff privileges at the Hospital when he

began practice with the Clinic. After six months, differ-

ences apparently developed between Dr. Tarabishi and

the Clinic concerning aspects of his employment, com-

pensation and pension. The Clinic decided to terminate

his employment, which it formally did in January, 1980.

Dr. Tarabishi thereupon opened his own medical practice

consisting of some general surgery, some ear, nose and

throat surgery, and an office medical practice. His prac-

tice was, by all accounts, successful.

In 1982, Dr. Tarabishi explored the possibility of

establishing an outpatient surgical clinic, to be called the

TMD Center, which would have been the first such clinic

in McAlester. He commissioned a feasibility study to

examine whether such a clinic was needed. The study

indicated the planned outpatient surgical clinic would be

economically feasible.

(Continued from previous page)

nose and throat); John Cotton, M.D. (family practice); Steven

Atwood, M.D. (internal medicine/emergency medicine);

Charles Holland, M.D. (internal medicine); Karl Sauer, M.D.

(general surgery); Joe McCauley, M.D. (family practice); and

Don Schuller, M.D. (radiology). Defendants Milton, Brown,

Blanchard, Dakil, Cotton, Atwood and Holland were members

of the Clinic. Additionally, Milton and Holland were both

members of the Hospital’s Board of Trustees during the time

relevant to this case. In May 1984, Milton became “Chief of

Staff” at the Hospital. Defendants Sauer, Schaff, McCauley and

Schuller were not affiliated with the Clinic. Plaintiffs named as

non-defendant co-conspirators four other doctors who practice

at the Hospital.

App. 7

In accordance with applicable Oklahoma law, Dr. Tar-

abishi prepared a Certificate of Need application so that

his planned new facility would be appropriately licensed

by the Oklahoma Health Planning Commission. He

retained a health care industry consultant, Mr. Jerry Col-

clazier, to assist him in preparing the Certificate of Need

application. In connection with that application, Mr. Col-

clazier conducted his own investigation of the need for an

outpatient surgical clinic of the sort Dr. Tarabishi envi-

sioned, as well as of Dr. Tarabishi’s qualifications. After

concluding that such a clinic was needed, and that Dr.

Tarabishi had the capability of establishing and operating

one, he prepared the Certificate of Need application,

which was completed and filed on March 14, 1983.

In connection with the Certificate of Need applica-

tion, Dr. Tarabishi sought from the Hospital a statement

of neutrality regarding the application. The Hospital

never adopted any such position of neutrality. It did,

however, inform Dr. Tarabishi twice that its position was

that it had no interest in the medical practice of a physi-

cian conducted in his own office.

At a February 1983 meeting of its Board of Trustees,

the Hospital decided to open its own outpatient surgical

department, to be opened on April 1, 1983. The minutes

of a May 1983 meeting of the Hospital Board reflect that

the Board then determined to oppose Dr. Tarabishi’s Cer-

tificate of Need application, on the ground that the pro-

posed facility would duplicate the hospital’s surgical

services. Among those speaking against his application at

hearings before the Oklahoma Health Planning Commis-

sion were Ed Majors, the Administrator of the Hospital,

Gary Brock, at that time the Assistant Administrator, Tom

App. 8

Giandrone, the Comptroller, and Dr. Leroy Milton, then a

shareholder of the clinic and a member of the Board of

Trustees of the Hospital. Hospital Administrator Ed

Majors argued that the proposed facility “would hurt

MRH [the hospital] financially, by costing the Hospital

substantial sums, including approximately $387,500 dur-

ing the first year, $432,800 the second year and $472,000

the third year of TMD’s operations.” District Court Find-

ings of Fact and Conclusions of Law at 13 (citing Plain-

tiffs’ Ex. 25(a) at 5). The Certificate of Need was in fact

granted in June 1983.

Meanwhile, the Hospital, as planned, opened up its

own outpatient ambulatory surgical department in April,

1983, accompanied by an increased advertising campaign

featuring, in part, the new department. During this same

time frame — i.e. from April to June of 1983 — the Hospital

initiated several investigations into incidents involving

alleged patient and case mismanagement and other

improper or inappropriate behavior by Dr. Tarabishi.

These resulted in investigations by various committees

and boards between June 1983 and July 1984.

On May 24, 1984, the Hospital revoked Dr. Tar-

abishi’s surgical and emergency room privileges, which

meant that Dr. Tarabishi could no longer treat his patients

in the Hospital’s emergency room, nor could he perform

surgery at the Hospital. The Hospital revoked all of Dr.

Tarabishi’s staff privileges on July 17, 1984, with the

result that he could no longer use Hospital facilities for

any purpose.

The TMD Center was finally completed in July, 1984.

The Center commenced operation on July 9, 1984 and

itn atta lise ae

App. 9

continued to operate until August 31, 1985, at which time

it ceased operation and Dr. Tarabishi stopped practicing

medicine in McAlester. Apparently, Dr. Tarabishi has

since tried to resume his practice in Pennsylvania, but has

been unable to obtain hospital privileges, due, in part, to

the revocation of his privileges in McAlester by the Hos-

pital.

The reasons for TMD’s failure are disputed. Defen-

dants assert that its economic structure was flawed from

the beginning. Plaintiffs assert that it was the revocation

of Dr. Tarabishi’s staff privileges which caused the fail-

ure. As the district court found, a condition for the Okla-

homa Planning Commission’s grant of a license to the

TMD Center was that TMD have access to the Hospital's

emergency care facilities. This was because the Center

was not equipped to deal with complex medical or surgi-

cal problems. Patients at the Center therefore needed

access to the Hospital’s facilities in the event that a com-

plication or emergency developed. While Dr. Tarabishi

had full medical staff privileges at the Hospital, the TMD

Center complied with that condition. Upon the revocation

of Dr. Tarabishi’s Hospital staff privileges, TMD failed to

be in compliance with that condition. However, in

November 1984, Dr. Tarabishi and the Hospital entered

into a “transfer agreement” pursuant to which TMD

patients could be admitted to the Hospital if an emer-

gency developed. Dr. Tarabishi could not, however, con-

tinue himself to treat patients after they were transferred

to the Hospital. In any event, Dr. Tarabishi closed the

TMD Center in August, 1985.

Dr. Tarabishi then brought this action, alleging a host

of antitrust violations by defendants. Among defendants’

App. 10

affirmative defenses was immunity from the antitrust

laws under the “state action” doctrine of Parker v. Brown,

317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), and subse-

quent cases, and under the Local Government Antitrust

Act of 1984, 15 U.S.C. §§ 34-36.2 After a nine-week trial to

the court, defendants prevailed on all claims but their

immunity claim. Plaintiffs timely appealed and defen-

dants cross-appealed on the immunity issue.®

2 Defendants do not appear in this appeal to argue they

are entitled to state action immunity.

3 There is a pending motion to dismiss the cross-appeal for

failure to file it timely. The facts relating to this motion are as

follows: Under Fed.R.App.P. 4(a)(3) the notice of cross-appeal

was due on June 19, 1989. In fact, it was filed on June 20. Upon

learning that it had been filed late, defendants /cross-appel-

lants filed a motion for extension of time in which to file the

notice. Included was an affidavit from defendants’ counsel,

which stated that the notice had been mailed to Muskogee,

Oklahoma from Tulsa, Oklahoma on June 16, and that in coun-

sel’s experience mail between those two cities took at most two

days. Defendants also relied upon Fed.R.App.P. 4(a)(5), assert-

ing that their late filing was due to “excusable neglect.” Plain-

tiffs/cross-appellees filed a response arguing that the

“excusable neglect” standard had not been met in this case and

defendants filed a reply. The district court granted defendants’

motion for an extension of time, applying it nunc pro tunc to the

notice of appeal filed June 20. We review that conclusion only

for a clear abuse of discretion. See Harris Truck Lines, Inc. v.

Cherry Meat Packers, Inc., 371 U.S. 215, 83 S.Ct. 283, 9 L.Ed.2d

261 (1962); Romero v. Peterson, 930 F.2d 1502, 1505 (10th Cir.

1991).

Plaintiff/cross-appellees first argue that the district court

applied the wrong standard by inquiring whether defendants

(Continued on following page)

App. 11

DISCUSSION

We first consider the Hospital’s and individual

defendants’ claim that the district court erred in finding

they were not immune from the application of the anti-

trust laws under the Local Government Antitrust Act of

1984 (“LGAA”), 15 U.S.C. §§ 34-36.

The LGAA provides that “[n]o damages, interest on

damages, costs, or attorney fees may be recovered under

§ 15, § 15(a) or § 15(c) of this Title from any local govern-

ment, or official or employee thereof acting in an official

capacity.” 15 U.S.C. § 35(aj. “Local government” is

defined to include “a school district, sanitary district, or

any other special function governmental unit established

by State law.” 15 U.S.C. § 34(1)(B). The Hospital claims

(Continued from previous page)

demonstrated “good cause” rather than “excusable neglect.”

We disagree. An examination of the district court’s order

makes it clear that the court applied the “excusable neglect”

rather than the “good cause” standard.

More importantly, the motion to dismiss requires us to

decide whether the district court properly found excusable

neglect in the circumstances of this case. Noting the broad

discretion granted the district court in making that determina-

tion, we deny the motion to dismiss the cross-appeal. In deny-

ing the motion, however, we remind the parties that we would

still consider the issue raised in the cross-appeal - whether

defendants had any immunity from the application of the

antitrust laws — because defendants may raise any ground for

upholding the favorable judgment they received below. See In

re Robinson, 921 F.2d 252, 253 (10th Cir.1990); Koch v. City of

Hutchinson, 847 F.2d 1436, 1441 n. 14 (10th Cir.) (en banc), cert.

denied, 488 U.S. 909, 109 S.Ct. 262, 102 L.Ed.2d 250 (1988).

App. 12

immunity as a “special function governmental unit” and

the individual doctors as employees or agents of that

unit. The district court denied motions by the Hospital

and the doctors for summary judgment on plaintiffs’

claims for damages, concluding that, although it was a

public trust hospital, the Hospital was not a “special

function governmental unit” under the LGAA. It reiter-

ated that conclusion in its final Findings of Fact and

Conclusions of Law. We affirm.

The LGAA was enacted to give greater immunity to

local governments. It was a legislative response to “an

increasing number of antitrust suits, and threatened suits,

that could undermine a local government’s ability to

govern in the public interest.” H.R.Rep. No. 965, 98th

Cong., 2d Sess. 2, reprinted in 1984 U.S.Code Cong. &

Admin. News 4602, 4603; see also Sandcrest Outpatient

Servs., P.A. v. Cumberland County Hosp. Sys., Inc., 853 F.2d

1139, 1142 (4th Cir.1988). As indicated, the Act speci-

fically provides that school districts and sanitary districts

are special function governmental units entitled to immu-

nity. The legislative history of the Act suggests others:

planning districts, water districts, sewer districts, irriga-

tion districts, drainage districts, road districts, and mos-

quito control districts. Id. at 4620-21.4 Hospitals, whether

public trust hospitals or otherwise, are not specifically

mentioned. Several courts have noted, however, that the

4 The list of other types of units entitled to immunity

actually comes from the House Report on the predecessor bill

to the Act, which had defined “local government” as a “city,

county, parish, town, township, village, school district, sani-

tary district, or any other general or special purpose political

subdivision of one or more States.”

App. 13

Act is to be construed broadly. See Palm Springs Medical

Clinic, Inc. v. Dessert Hosp., 628 F. Supp. 454 (C.D.Cal.

1986) (the court noted that “[t]he language of the 1984

Act is inclusive and not exclusive, defining a ‘local gov-

ernment’ as ‘a school district, sanitary district, or any

other special function governmental unit established by State

law in one or more States.’ ” Id. at 456 n. 2; see also Capital

Freight Servs., Inc. v. Trailer Marine Transp. Corp., 704

F.Supp. 1190, 1198 (S.D.N.Y.1989) (“the language and leg-

islative history of the LGAA is explicitly inclusive, not

exclusive.”). Further, we agree with the observation of the

court in Capital Freight Servs., that Congress “rejected the

commercial-governmental distinction, adopting a defini-

tion for eligibility for immunity based on status as a

governmental instrumentality and effect on taxpayers

rather than purpose.” Id. at 1199.

Defendants assert that our recent decision in Buckley

Constr., Inc. v. Shawnee Civic & Cultural Dev. Auth., 933

F.2d 853 (10th Cir.1991), establishes the Hospital’s immu-

nity under the LGAA. Defendants further assert that the

purpose of the LGAA was to permit local government

entities to go about their business free of the threat of

large antitrust damage awards, and that an award against

the Hospital would obviously hurt McAlester. Finally,

they rely upon a handful of cases holding that, under the

laws of different states, certain hospitals were held to be

special function governmental units.5 Defendants assert

> See Sweeney v. Athens Regional Medical Ctr., 705 F.Supp.

1556, 1561-62 (M.D.Ga. 1989); Griffith v. Health Care Auth. of the

City of Huntsville, 705 F.Supp. 1489, 1501 (N.D.Ala.1989); Wicker

v. Union County General Hosp., 673 F.Supp. 177, 186 (N.D.Miss.

1987); Palm Springs Medical Clinic, Inc. v. Desert Hosp., 628

F.Supp. 454, 456-57 (C.D. Cal. 1986).

App. 14

that these facts bring the Hospital within the definition of

a special function governmental unit for purposes of the

LGAA.

Plaintiffs respond that Oklahoma law controls the —

question here, and thus the interpretation of the status of

a hospital under the laws of other states is immaterial.

further, the mere fact that a judgment against the Hospi-

tal would hurt McAlester does not mean that the Hospital

is a special function governmental unit with antitrust

immunity. Finally, plaintiffs rely upon the fact that under

the provisions of the Governmental Tort Claims Act,

Okla.Stat. tit. 51, §§ 151, et seq., then in effect, public

trusts operating hospitals were specifically excluded from

the definition of “political subdivision” under that Act. In

1987, however, the Governmental Tort Claims Act was

amended to specifically include public trusts operating

hospitals within the definition of political subdivisions.

Defendants’ reliance on Buckley Construction is mis-

placed. In Buckley, the plaintiff, a disappointed low bid-

der on a construction contract, alleged that one of the

defendants, Shawnee Civic & Cultural Development

Authority, had violated the antitrust laws in its award of

the contract to the second lowest bidder on the project.

While the Authority was indeed a public trust created

pursuant to the same Oklahoma statutes which created

the Hospital in this case,® its challenged conduct was

public functions under 60 Okla.Stat. §§ 176-180. The City of

McAlester owns the land upon which the Hospital is located

and leases it to the Hospital. Its trustees are public officers,

(Continued on following page)

ee ttle se AR oe C8 als Tih etttal. itt Bhat wa

6b Sh A RD te ODE

ears Le PNB nol 5 EME NLA Ms alo tte

App. 15

undertaken pursuant to provisions of the Oklahoma Pub-

lic Competitive Bidding Act, Okla.Stat. tit. 61, §§ 101-136.

Those provisions were the ones relevant to the question

of state action immunity under Parker v. Brown, 317 U.S.

341, 342, 63 S.Ct. 307, 87 L.Ed. 315 (1943), and subsequent

(Continued from previous page)

appointed by the mayor of McAlester, and they must take the

oath of office required of elected public officials. 60 Okla.Stat.

§ 178(A). Meetings of the trustees are subject to the open

meeting laws like other public boards and commissions. /d. at

§ 178(C). The Declaration of Trust which created the Hospital

stated that the Hospital was created for the benefit of the city

of McAlester and that the purpose of the trust was to provide

hospital and public health services to the residents of McAles-

ter. Defendants’ Ex. 155D, Addendum of Appellees/Cross-

Appellants at Tab D. However, as the district court noted, a

public trust in Oklahoma is a separate legal entity from its

beneficiary. See State v. Garrison, 348 P.2d 859, 863 (Okla. 1959).

Hospital employees are not city employees. Further, as the

district court also noted, 60 Okla.Stat. § 179 makes it clear that

any judgment against the Hospital would be satisfied out of

the trust estate, and the beneficiary (the city of McAlester)

would not be liable.

Defendants also argue that in Dr. Tarabishi’s section 1983

action against the Hospital and its trustees arising out of the

same facts, this court held that the Hospital and its trustees

were acting under color of state law for section 1983 purposes.

Tarabishi v. McAlester Regional Hosp., 827 F.2d 648, 652 (10th Cir.

1987). That determination is not, however, dispositive of

whether the actions of the Hospital and its trustees are entitled

to immunity as those of a special function governmental unit

and its officials or employees. Cf. Ezpeleta v. Sisters of Mercy

Health Corp., 800 F.2d 119, 122 (7th Cir.1986) (per curiam) (even

though antitrust claim is barred by state action doctrine, sec-

tion 1983 claim is unavailable because there is no state action

in decision to terminate physician’s staff privileges).

App. 16

cases.” Thus, the fact that this court in Buckley found the

actions of a public trust in awarding a construction con-

tract pursuant to applicable competitive bidding statutes

immune under the state action doctrine says nothing

about whether a public trust hospital should be immune

under the LGAA.

Further, the cases from other jurisdictions upon

which defendants rely are distinguishable. In Sandcrest

Outpatient Servs., P.A. v. Cumberland County Hosp. Sys.,

Inc., 853 F.2d 1139 (4th Cir.1988), involving a county

hospital owned and operated by a nonprofit corporation

created as an agency and instrumentality of the county,

the plaintiff did not appeal! the district court’s conclusion

that the nonprofit corporation which owned and operated

the hospital was a governmental unit under the LGAA.

Thus, the appellate court simply assumed that to be the

case. Palm Springs Medical Clinic, Inc. v. Desert Hosp., 628

F.Supp. 454 (C.D.Cal.1986), upon which defendants place

great reliance, involved a hospital district created pur-

suant to California Health & Safety Code §§ 32000, et seq.

After extensively examining the legislative history of the

LGAA, the court concluded that the hospital district was

immune.® In Sweeney v. Athens Regional Medical Ctr., 705

F.Supp. 1556 (M.D.Ga. 1989), the court held, without

’ Immunity under the LGAA was apparently not an issue

in Buckley.

8 We note that recently, however, the Ninth Circuit has

ruled that a hospital district is not immune under the state

action doctrine, without specifically discussing immunity

under the LGAA. Lancaster Comm. Hosp. v. Antelope Valley Hosp.

Dist., 940 F.2d 397 (9th Cir.1991).

App. 17

specific analysis but simply “[a]fter considering the rele-

vant statutory authority,” that a public hospital authority

organized under the Georgia Hospital Authorities Law

was a local government unit under the LGAA.® Id. at

1562. Similarly, a district court in Griffith v. Health Care

Auth., 705 F.Supp. 1489, 1501 (N.D.Ala.1989) held that a

health care authority was a “local government” under the

LGAA."° Finally, in Wicker v. Union County Gen. Hosp., 673

F.Supp. 177 (N.D.Miss.1987), a public hospital owned and

operated by a county was held to be a governmental

: agency.'! None of these cases directly answers the ques-

tion of whether a hospital operated as a public trust for

furtherance of public functions with a city as its benefici- -

ary should be considered a special function governmental

unit. Cf. Zapata Gulf Marine v. P.R. Maritime Shipping

Auth., 682 FSupp. 1345, 1351 (E.D.La.1988) (court held

ls le es ial

: ® Under the applicable Georgia law, the authority “oper-

: ates as a not-for-profit public corporation and is ‘deemed to

exercise public and essential governmental functions and shall

have all the powers necessary or convenient to carry out and

effectuate the purposes and provisions of [the Hospital

Authorities Law].’” Sweeney, 705 F.Supp. at 1561 (quoting

Ga.Code Ann. §§ 31-7-75, 77 (1985)).

i 10 The health care authority was established pursuant to

| the Health Care Authorities Act of 1982, Ala.Code

§§ 22-21-310, et seq., which provided, inter alia, that such

authorities “act[ ] as an agency or instrumentality of its

authorizing subdivisions and as a political subdivision of the

state.” Ala.Code § 22-21-318(c)(2).

1! The court held -“the Hospital and its board [of trustees]

are themselves governmental agencies. The trustees on the

board are appointed to limited terms by elected representatives

of the people.” Wicker, 673 F.Supp. at 186.

ba DP UE Sainte Ht A Se usb.

App. 18

that Puerto Rico Maritime Shipping Authority was spe-

cial function governmental unit because statute creating

it described it as a “governmental instrumentality of the

Commonwealth of Puerto Rico,” funds to cover an anti-

trust damage award against the Authority would come

ultimately from the taxpayers, the creation and operation

of the Authority “was necessitated by the inability of the

private sector to meet the public’s needs,” and because

the statute creating the Authority provided that the exer-

cise of its powers “constitutes an essential governmental

function.”); Trustees of A.J. Bremen Realty Trust v. City of

Boston, 1985-1 Trade Cas. (CCH) ] 66,520, 1985 WL 6083

(D.Mass.1985) (court held Massachusetts Port Authority

was a special function governmental unit because created

as a public instrumentality and because the exercise of its

powers were deemed to be an “essential governmental

function.”); Northeast Jet Ctr., Ltd. v. Lehigh-Northhampton

Airport Auth., 767 F.Supp. 672, 680 (E.D.Penn. 1991) (air-

port authority is special function governmental unit).

After carefully examining the relevant statutes and

case law, we hold that the district court correctly deter-

mined that the Hospital is not a special function govern-

mental unit. No single factor is determinative. Rather,

two considerations guide our decision.

First, we agree with the district court that a signifi-

cant consideration is where liability for an antitrust dam-

age award will actually fall, in light of the LGAA’s

obvious concern to limit the imposition of treble damage

awards on taxpayers. In this case, the city of McAlester is

the beneficiary of the public trust, and as such is clearly

not liable for any damage award made against the trust.

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bab tain

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mile 0 iat tt Mit i asd Cat tL i ae Rate iO ahd DR ti EPP hte! 0 i net: as hase

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App. 19

Thus, the LGAA’s concern about imposing unfair burdens

on the taxpayers is not implicated.

Second, inasmuch as the question of the character of

a local entity under the LGAA is a question of state law,

we find it persuasive that around the time of the chal-

lenged conduct, the Oklahoma legislature clearly viewed

public trust hospitals as entities different from political

subdivisions. Indeed, under the provisions of the Govern-

mental Tort Claims Act, Okla.Stat. tit. 51, § 152, immunity

was granted to the “state, its political subdivi-

sions, . . . whether performing governmental or propri-

etary functions. .. . ” “Political subdivision” was

thereafter defined as including a “municipality,” a

“school district,” a “county,” and “a public trust where a

city, town school district or county is a beneficiary, pro-

vided, that for the purposes of this act, a public trust shall

not include any hospital operating under a trust author-

ity.” Id. at 152(8). This clear exclusion suggests that the

Oklahoma legislature at the time did not view public trust

hospitals as entities comparable to municipalities, school

district, or counties. While the Tort Claims Act’s clear

inclusion of public trust hospitals under its definition of

political subdivisions since 1987 might suggest a different

result today, we believe the former provisions indicate a

conscious characterization of a public trust hospital

under state law at the time relevant to this case.

Having affirmed the conclusion that defendants

enjoy no immunity from damage claims under the LGAA,

we turn to the merits of this case.

Plaintiffs alleged the following antitrust violations:

(1) monopolization of surgical health care services by the

App. 20

Hospital; (2) monopolization of and attempt to monopol-

ize non-surgical and office health care services by the

Clinic; (3) conspiracy to monopolize by all defendants;

and (4) conspiracy in restraint of trade by all defendants.

The district court rejected all those claims.

1. Monopolization by Hospital.

Plaintiffs allege the Hospital monopolized the surgi-

cal health services market.!? Apparently, as a part of this

ciaim, plaintiffs assert that the Hospital violated the

“essential facilities” doctrine by means of the revocation

of Dr. Tarabishi’s staff privileges, thereby denying him

access to the Hospital’s facilities which he argues are

crucial to his practice.

The elements of monopolization under Sec-

tion 2 are “the possession of monopoly power in

the relevant market” and “the willful acquisition

Or maintenance of that power as distinguished

from growth or development as a consequence

of a superior product, business acumen, or his-

toric accident.”

Reazin v. Blue Cross and Blue Shield, 899 F.2d 951, 973 (10th

Cir.), cert. denied, __ U.S. __, 110 S.Ct. 3241, 111 L.Ed.2d

752 (1990) (quoting Bright v. Moss Ambulance Serv., 824

F.2d 819, 823 (10th Cir. 1987) (quoting United States v.

Grinnell Corp., 384 U.S. 563, 570-71, 86 S.Ct. 1698, 1703-04,

12 In their complaint and Amended Complaint, plaintiffs

appeared to charge the Hospital with attempted monopoliza-

tion as well. The district court did not address such a claim in

its Findings of Fact and Conclusions of Law, and plaintiffs do

not appear to pursue it in their appellate briefs.

A ert Te Gin elt) Ate hws

a AE IEA tot Palin I NL we

App. 21

16 L.Ed.2d 778 (1966))). In this circuit, proof of monopoly

power requires a showing of both power to control prices

and power to exclude competition. Reazin, 899 F.2d at 967;

Bright, 824 F.2d at 824; Shoppin’ Bag of Pueblo, Inc. v. Dillon

Cos., 783 F.2d 159, 163 (10th Cir.1986). Determination of

the existence of monopoly power requires proof of rele-

vant product and geographic markets.

The district court found error with plaintiffs’ proof of

markets. More specifically, the court found there was

insufficient evidence to prove the asserted markets. These

are factual findings subject to the clearly erroneous stan-

dard of review. Westman Comm'n Co. v. Hobart Int'l, Inc.,

796 F.2d 1216, 1220 (10th Cir.1986), cert. denied, 486 U.S.

1005, 108 S.Ct. 1728, 100 L.Ed.2d 192 (1988). Plaintiffs’

expert, Dr. Joe Jadlow, testified that the relevant product

market for the Hospital was the business of supplying

surgical health care services. The relevant geographic

market was defined as the area within a 30-mile radius of

McAlester. The district court noted the following prob-

lems with the geographic market:

First, the geographic radius was derived from

an examination of MRH [Hospital] discharge

records, and a finding that 84% of its discharged

patients lived within thirty miles of McAlester.

As was pointed out on cross-examination, plain-

tiffs’ expert did not take into account whether

patients who lived within the 30-mile radius

went elsewhere than MRH for surgical health

care services. The “time factor” which might

keep patients close to home was not quantified.

District Court Findings of Fact and Conclusions of Law at

25. The district court also criticized Dr. Jadlow’s use of a

App. 22

bed count to measure the Hospital’s market share in the

market of surgical health care services.}%

More fundamentally, the district court noted that

plaintiffs simply failed to present any evidence about the

Hospital’s power to control prices, a critical element of

proof of monopoly power in this circuit. Reazin, 899 F.2d

at 967; Shoppin’ Bag of Pueblo, 783 F.2d at 163. Indeed, as

plaintiffs’ expert, Dr. Jadlow, conceded, he had not exam-

ined whether the Hospital had evidenced monopoly

power in its pricing. R. Vol. VI at’ 243, 249-50. Such a

proof failure is fatal to plaintiffs’ monopolization claims

against the Hospital. Thus, we affirm the district court’s

conclusion that “a showing of monopoly power [by the

Hospital] has not been made.” District Court Findings of

Fact and Conclusions of Law at 27. Plaintiffs’ section 2

claims against the Hospital therefore fail.'4

13 The district court stated “[t]he mere words of the plain-

tiffs’ market definition denote more than the provision of a

hospital bed.” District court findings of Fact and Conclusions

of Law at 25. The district court also concluded that Dr. Tar-

abishi, as a provider of surgery or surgical services to his

patients, was neither a competing provider now a consumer of

“surgical health care services.” Similarly, the court concluded

that TMD was neither a competitor nor a consumer in the

market of surgical health care services, because TMD did not

have beds, the measure by which the Hospital’s market share

in the surgical health care services market was determined.

14 As indicated, plaintiffs argue mightily that the “essen-

tial facilities” doctrine was violated in this case. This court

explored that doctrine in McKenzie v. Mercy Hosp. of Indepen-

dence, 854 F.2d 365, 369 (10th Cir.1988):

(Continued on following page)

App. 23

2. Monopolization and Attempt to Monopolize by Clinic.

Whe DSH deal 5 PAL otis

To establish monopolization by the Clinic, plaintiffs

must, as indicated, prove monopoly power. In their

(Continued from previous page)

Though the Supreme Court first employed the

essential facilities doctrine to condemn the conduct

of multiple defendants under Section 1 of the Sher-

man Act, the doctrine has since been applied in cases

brought under Section 2 and in which only a single

entity controls the necessary facility.

a om om

More recently, the federal courts of appeals have

adopted standards to determine whether a monopoi-

ist’s refusal to deal constitutes a violation of the

essential facility doctrine under Section 2. In MCI

Communications Corp. v. American Tel. and Tel. Co., 708

F.2d 1081, 1132-33 (7th Cir.), cert. denied, 464 U.S. 891

[104 S.Ct. 234, 78 L.Ed.2d 226] (1983), the court heid

that to establish liability under the doctrine, the

plaintiff must show: “(1) control of the essential

facility by a monopolist; (2) a competitor’s inability

practically or reasonably to duplicate the facility; (3)

the denial of the use of the essential facility to a

competitor; and (4) the feasibility of providing the

facility.”

Id. at 369 (citations omitted). This court went on to note,

however, that a district court had “declared that for public

policy reasons, ‘the essential facilities doctrine is inapplicable

to hospital staff privileges decisions.’ ” Id. at 371 n. 12 (quoting

Pontius v. Children’s Hosp., 552 F.Supp. 1352, 1370

(W.D.Pa.1982)). See also Castelli v. Meadville Medical Ctr., 702

F.Supp. 1201, 1209 (W.D.Pa. 1988), aff'd, 872 F.2d 411 (3d

Cir.1989) (“This court is in full agreement with the consistent

decisions of other courts not to apply the essential facilities

(Continued on following page)

App. 24

attempt to prove such power, plaintiffs’ expert, Dr. Jad-

low, defined the relevant product market as the business

of supplying non-surgical and office surgery health care

services. As with the Hospital, he defined the relevant

geographic market as the area within a 30-mile radius of

McAlester. He further opined that the Clinic had a 66%

share of that market, based on the following analysis:

(Continued from previous page)

doctrine to exclusive service contracts by hospitals.”). The

McKenzie court did not address that issue because it concluded

that, even if the doctrine were to apply, the plaintiff had failed

to show that he was denied access to an essential facility.

Were we to apply the doctrine to this denial of staff privi-

leges case, we would hold that it fails as a section two claim

because plaintiffs failed to establish that the Hospital or any

other defendant is a monopolist. To the extent plaintiffs argue

the defendants conspired to deny them access to an essential

facility in violation of section one, we would hold as this court

did in McKenzie, that plaintiffs were not denied an essential

facility.

If we analyze the two plaintiffs separately, plaintiffs’ fail-

ure to prove an essential facility becomes clearer. Plaintiffs

themselves assert that it was the TMD Center which was the

alleged primary competitive threat to defendants. For the TMD

Center, however, Dr. Tarabishi's access to Hospital facilities was

not essential, because in November 1984 the TMD Center and

the Hospital entered into a transfer agreement pursuant to

which TMD patients had access to the Hospital. As for Dr.

Tarabishi himself, his argument that he was denied an essential

facility proves too much, for it amounts to an argument that a

hospital can never deny a physician staff privileges, because

restricting the practice of that physician always, in some sense,

reduces competition. Yet Dr. Tarabishi has not proved that

restricting his own access to the Hospital, apart from the TMD

Center, diminished competition in a meaningful antitrust

sense.

a a ee eT ae

App. 25

And | did this by looking to see what were the

specialties of the physicians at the McAlester

Clinic. I included those specialties in looking at

the total number of physicians in the McAlester

community, and | looked to see what proportion

of that total group physicians the McAlester

Clinic accounted for.

R. Vol. V at 24. The district court again noted the follow-

ing problems with Dr. Jadlow’s market determinations:

While defining the geographic market as a 30-

mile radius, plaintiffs’ expert focused only on

doctors within McAlester itself. he did not con-

sider doctors within the radius who did not

practice in McAlester. A recurring theme in his

testimony was that he focused solely upon the

Clinic and the City of McAlester. Dentists who

perform root canal work, for example, while

appearing to fall within the language of plain-

tiffs’ product market definition, were excluded

solely because plaintiffs’ expert did not believe

such surgery was done at the Clinic. Regarding

the proposed geographic market, plaintiffs’

expert at one point characterized it as an

approximation. However, it is clear that the

actual geographic area studied was the City of

McAlester itself. In sum, both as to product

market and geographic market, the procedure of

plaintiffs’ expert varied from the actual pro-

posed markets.

District Court Findings of Fact and Conclusions of Law at

27-28. We cannot say that these findings are clearly erro-

neous. 1!5

15 Plaintiffs make a multi-pronged attack on the district

court’s conclusions with respect to market definition. It is

(Continued on following page)

App. 26

Further, again as with the monopolization claim

against the Hospital, plaintiffs presented no evidence of

the Clinic’s ability to exclude competition and to control

price.'© Absent such proof, we are compelled to conclude

(Continued from previous page)

difficult to respond to all aspects of this attack, because many

of them are obscure. Suffice it to say that we bear in mind that

it is plaintiffs’ burden to prove relevant markets. Thus, plain-

tiffs’ attack on defendants for “fail[ing] to show why medical

care consumers from Pittsburgh County may sometimes travel

to other locations” is beside the point. Further, proof of mar-

kets is required so that adverse impact on competition can be

evaluated. Thus, plaintiffs’ markets must bear some relation to

plaintiffs’ theory of harm to competition. Plaintiffs in this case

have failed in that respect.

Plaintiffs belatedly attempt to remedy their failure to plead

and prove relevant markets by citing FTC v. Indiana Fed'n of

Dentists, 476 U.S. 447, 106 S.Ct. 2009, 90 L.Ed.2d 445 (1986),

where the Supreme Court stated, ” ‘proof of actual detrimental

effects, such as a reduction of output’ can obviate the need for

an inquiry into market power, which is but a ‘surrogate for

detrimental effects.’ ” Id. at 460-61, 106 S.Ct. at 2018-19 (quot-

ing Areeda & Turner, Antitrust Law, { 1511 (1986)); see also Bhan

v. NME Hosp., Inc., 929 F.2d 1404, 1413 n. 10 (9th Cir. 1991);

Reazin v. Blue Cross & Blue Shield, 899 F.2d 951, 968 n. 24 (10th

Cir.), cert. denied, __ U.S. __, 110 S.Ct. 3241, 111 L.Ed.2d 752

(1990). What plaintiffs fail to realize, however, is that the

“proof of actual detrimental effects” requires more than the

simple allegation that the closure of TMD and the cessation of

Dr. Tarabishi’s practice reduced competition. As we have

explained previously, what plaintiffs have never shown is that

consumer choices were in fact reduced or impaired by the

denial of staff privileges to Dr. Tarabishi. See n. 14, supra.

16 Indeed, as defendants point out, what evidence there

was on this point suggests the opposite conclusion. At the

(Continued on following page)

aia cians

i hk mec

ee eee Es an

App. 27

that plaintiffs’ monopolization claim against the Clinic

must fail.

Plaintiffs also charged the Clinic with attempted

monopolization. The elements of that section two viola-

tion are:

(1) relevant market (including geographic mar-

ket and relevant product market) in which the

alleged attempt occurred; (2) dangerous proba-

bility of success in monopolizing the relevant

market; (3) specific intent to monopolize; and (4)

conduct in furtherance of such an attempt.

Colorado Interstate Gas Co. v. Natural Gas Pipeline Co., 885

F.2d 683, 693 (10th Cir.1989), cert. denied, __ U.S. __, 111

S.Ct. 441, 112 L.Ed.2d 424 (1990); Shoppin’ Bag of Pueblo,

783 F.2d at 161. Further “to satisfy the dangerous proba-

bility of success element of an attempt claim, the plaintiff

must show that there was a dangerous probability the

defendant would achieve monopoly status as the result of

the predatory conduct alleged by the plaintiff.” Colorado

Interstate Gas Co., 885 F.2d at 693. This is typically done

by examining the defendant’s market share in the rele-

vant market. Id.

The district court, relying on its previous conclusion

that plaintiffs failed to prove adequately the relevant

(Continued from previous page)

same time Dr. Tarabishi left the Clinic, another doctor also left

and set up an independent practice as an internist/cardiologist

in competition with the Clinic. His independent practice was

very successful.

App. 28

markets, held that the first two factors were not estab-

lished. We agree.

We further agree with the district court’s alternative

conclusion that the third factor - a specific intent to

monopolize - was not established. While the evidence in

this case may certainly have shown animosity towards

Dr. Tarabishi, we must affirm the district court’s conclu-

sion that it failed to show a specific intent to monopolize.

In so holding, we reject plaintiffs’ argument that

defendants’ legitimate and protected conduct!” in oppo-

sing Dr. Tarabishi in the Certificate of Need application

proceedings furnishes the requisite specific intent to

monopolize.

3. Conspiracy to Monopolize.

Plaintiffs charged all defendants with various con-

spiracies to monopolize, in violation of section two. More

specifically, plaintiffs argue there were three conspiracies:

one between the Hospital and the Clinic; one between the

Hospital and the physicians; and one between the indi-

-vidual physicians. The elements of such a claim are:

(1) .. .a combination or conspiracy to monopol-

ize; (2)... overt acts done in furtherance of the

combination or conspiracy; (3) . . . a specific

’

7 Plaintiffs do not seriously dispute that defendants

activities in the Certificate of Need application hearings were

protected under the Noerr/Pennington doctrine. See United Mine

Workers v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d

626 (1965); Eastern R.R: Presidents Conference v. Noerr Motor

Freight, Inc., 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961).

Das Atay a as tie «ty

OI ARO EE eh NE RS RE ASR NI AEN 10 EN Lat EL AIS att et

Bete d ttl ORR thn hs a Mh te OO PRES hes

OB ded CPs nstind

App. 29

intent to monopolize; and (4) . . . an appreciable

effect upon commerce.

Dreiling v. Peugeot Motors of Am., Inc., 850 F.2d 1373, 1382

(10th Cir.1988); see also Bacchus Indus., Inc. v. Arvin Indus.,

939 F.2d 887, 895 (10th Cir.1991). The district court held

for defendants on this claim, noting again plaintiffs’ fail-

ure to prove a specific intent to monopolize as well as

their failure to establish a conspiracy. We affirm with

respect to the lack of evidence of specific intent. The issue

of conspiracy in this case is, as the district court acknow!l-

edged, more difficult. Because it is crucial to plaintiffs’

section one claim, we discuss it in that context.

4. Conspiracy in Restraint of Trade.

Plaintiffs allege that defendants engaged in a con-

spiracy to boycott plaintiffs and in a conspiracy to stabi-

lize prices, all, obviously, in restraint of trade. They claim

that each of these conspiracies is a per se violation of

section one. Aliernatively, they charge that they violate

section one under the rule of reason.

While noting that a group boycott has been held to be

a per se violation of section one, the district court declined

to apply the per se analysis to the claimed boycott in this

case.18 We agree with that determination.

18 In doing so, the court relied on Weiss v. York Hosp., 745

F.2d 786 (3d Cir.1984), cert. denied, 470 U.S. 1060, 105 S.Ct. 1777,

84 L.Ed.2d 836 (1985), in which the court applied the per se rule

to a contention that a hospital’s refusal to grant staff privileges

to osteopathic physicians constituted a boycott or concerted

refusal to deal. The Weiss court noted, however, that:

(Continued on following page)

App. 30

A plaintiff seeking application of the per se rule

must present a threshold case that the chal-

lenged activity falls into a category likely to

have predominantly anti-competitive effects.

The mere allegation of a concerted refusal to

deal does not suffice because not all concerted

refusals to deal are predominantly anticompeti-

tive.

Northwest Wholesale Stationers, Inc. v. Pacific Stationary

Printing Co., 472 U.S. 284, 298, 105 S.Ct. 2613, 2621, 86

L.Ed.2d 202 (1985); see also Bhan v. NME Hosps., Inc., 929

F.2d 1404, 1412 (9th Cir.1991) (“the per se rule should be

invoked for a group boycott when the challenged activity

would almost always tend to be predominantly anticom-

petitive”). Denying staff privileges to a physician through

peer review on the basis that the physician’s conduct is

unprofessional and inappropriate is not an activity

(Continued from previous page)

The Medical Staff is, however, entitled to

exclude individual doctors, including osteopaths, on

the basis of their lack of professional competence or

unprofessional conduct. If York’s policy toward

D.O.’s could be viewed as a form of industry self-

regulation of this type, the rule of reason, rather than

a per se rule, would be applicable.

Id. at 820 (citations omitted); see also Miller v. Indiana Hosp., 843

F.2d 139, 144 n. 6 (3d Cir.) (“in a hospital staff privilege case in

which the hospital defends on lack of professional ability, the

rule of reasons test would apply”), cert. denied, 488 U.S. 870,

109 S.Ct. 178, 102 L.Ed.2d 147 (1988). Because defendants in

this case terminated Dr. Tarabishi’s staff privileges at least

obstensibly because of a lack of professional competence or

unprofessional conduct, we agree with the district court that

Weiss does not dictate the use of per se analysis.

citadel

Bit Mila eS AP att, Some coed BART

er ola nan

App. 31

“likely to have predominantly anticompetitive effects”

such that per se treatment is necessary.!9

The district court went on to apply the rule of reason

analysis. In doing so, the court correctly noted that the

first question is whether plaintiffs proved there was joint

action sufficient to satisfy the requirement that there be a

contract, combination or conspiracy. See McKenzie v.

Mercy Hosp. of Independence, 854 F.2d 365, 367 (10th

Cir.1988). In this case, the court specifically found that

there was “no evidence, apart from the peer review pro-

cess, that a conspiracy existed.” District Court Findings

of Fact and Conclusions of Law at 33. After noting that

existing precedents do not completely answer the ques-

tion of whether peer review by itself provides the requi-

site joint action or whether a hospital can conspire with

its medical staff, the court held that, even assuming

arguendo that joint action was established, plaintiffs once

again simply failed to establish the required impact upon

competition. Plaintiffs’ failure to prove adequately the rel-

evant markets within the which competition was

allegedly affected, and their failure to prove that Dr.

Tarabishi’s inability to sue the facilities at the Hospital

affected competition, as opposed to Dr. Tarabishi himself

as a competitor, doomed plaintiffs’ section one claims to

19 The district court similarly rejected per se treatment of

plaintiffs’ conspiracy to stabilize prices claim. We affirm, and

we further affirm the district court’s conclusion that there was

“no evidence of such a price stabilization conspiracy, whether

directly or through the effect of the peer review proceedings.”

District Court Findings of Fact and Conclusions of Law at 40.

App. 32

failure.2° We affirm. While plaintiffs might wish us to

assume or infer an impact on competition based on the

denial of Dr. Tarabishi’s staff privileges, and the failure of

his TMD center the reality is that it is plaintiffs’ burden to

prove such an impact, and plaintiffs simply failed to do so

herein.

CONCLUSION

For the foregoing reasons, the judgment of the dis-

trict court dismissing plaintiffs’ claims is AFFIRMED.

20 The district court noted that “the only impact upon

competition, as distinguished from plaintiffs, is based upon the

speculation that TMD would ultimately become a hospital. The

Court finds this speculation to be tenuous.” District Court

Findings of Fact and Conclusions of Law at 39. While it is true

that there was an area — the provision of out-patient surgery -

in which the Hospital arguably did compete with TMD, plain-

tiffs never quantified the impact on competition in that market.

App. 33

IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF OKLAHOMA

M. HISHAM TARABISHI, M.D.,

and M. HISHAM TARABISHI,

INC.,

Plaintiffs, No. 87-652-C

VS.

)

McALESTER REGIONAL )

HOSPITAL, a/k/a McALESTER ?

REGIONAL HEALTH CENTER ?

AUTHORITY PUBLIC TRUST )

STATUS; McALESTER CLINIC, ?

INC.; LEROY M. MILTON, M.D. ?

GEORGE BROWN, M_D.: )

WILLIAM G. BLANCHARD, )

M.D.; SAMUEL E. DAKIL, M_D.: ?

JOHN B. COTTON, M_LD.: )

STEVEN ATWOOD, M.D.: )

CHARLES K. HOLLAND, M.D.; ?

KARL SAUER, M.D.; HERTZL V. )

SCHAFF, M.D.; JOE.McCAULEY, ?

M.D.; and DON SCHULLER, _—)

M.D., )

)

Defendants.

FINDINGS OF FACT

AND

CONCLUSIONS OF LAW

The above-styled action was brought for alleged vio-

lations of federal and state antitrust laws. This case was

tried to the Court, and evidence was presented from

October 17, 1988 through December 16, 1988. Closing

arguments were held on January 20, 1989.

App. 34

After considering the pleadings, the testimony and

exhibits admitted at trial, all of the briefs and arguments

presented by counsel fcr the parties, and being fully

advised in the premises, the Court enters the following

Findings of Fact, Conclusions of Law and Judgment in

accordance with Rule 52, F.R.Cv.P., as follows:

FINDINGS OF FACT

Jurisdiction and Venue

1. This Court has jurisdiction over the subject mat-

ter of this case pursuant to 15 U.S.C. § 15 and § 26.

2. Each of the defendants resides and transacts, or

has transacted, business within this District. Venue is

appropriate under 28 U.S.C. § 1391(b).

3. The Court finds that the activities of plaintiffs

and of defendants giving rise to this litigation, as more

fully set forth below, are or were in or affecting interstate

commerce sufficiently to confer jurisdiction on this Court

under 15 U.S.C. § 15. Specifically, plaintiffs have estab-

lished that moneys for the services that plaintiffs and

defendants have provided have flowed in interstate com-

merce; and that goods and supplies actually purchased

by plaintiffs and defendants and that would have been

purchased by plaintiffs had they remained in business in

McAlester, Oklahoma, travelled in interstate commerce.

4. This Court has jurisdiction over plaintiffs’ state

law claims under the doctrine of pendent jurisdiction.

Rl ta ohn Pod Rae inte

App. 35

The Parties

5. Plaintiff M. Hisham Tarabishi, M.D. (Tarabishi) is

a medical doctor, and a naturalized American citizen.

Tarabishi is an otorhinolaryngologist, more commonly

known as an “Ear, Nose and Throat” (ENT) specialist. In

or about the fall of 1979, Tarabishi obtained “Board Certi-

fication” in his specialty.

6. Plaintiff M. Hisham Tarabishi, Inc., also known as

“TMD Out-Patient Medical Center” and “Tarabishi Medi-

cal Center” (TMD) is the professional corporation

through which Tarabishi has conducted business as a

physician, and through which he sought to operate TMD,

an Outpatient surgical clinic in McAlester, Oklahoma.

7. Defendant, McAlester Regional Hospital, a/k/a

McAlester Regional Center Public Trust Status (the Hos-

pital or MRH) is a 200 bed Oklahoma public trust hospital

located in McAlester, Oklahoma, and created under 60

O.S. § 176-180 by the City of McAlester. The Hospital in

its current facility was created in 1978 after the consolida-

tion of two pre-existing hospitals in McAlester (Pittsburg

County, Okla.) into one modern hospital. The City owns

the lands upon which the Hospital sits and merely leases

them to the Hospital’s governing body.

8. The Hospital was originally constructed with

funds from various sources, including $1.5 million from

issuance of general obligation bonds by the City of

McAlester, and other funds from public and private

sources. The Hospital exists as a Public Trust under Okla-

homa law, whose beneficiary is the City of McAlester.

App. 36

9. McAlester Clinic, Inc. (the Clinic) is an Oklahoma

professional corporation now comprised of approx-

imately 20 physicians as well as other employees. During

the events here primarily at issue, in 1983 and 1984, the

Clinic employed approximately 17 or 18 physicians, most

of whom were “partners” or equity owners in the profes-

sional corporation. The Clinic physicians represent a

spectrum of medical specialties, including general or fam-

ily practice, internal medicine, general surgery, pedi-

atrics, radiology, and ENT.

10. Defendants Leroy M. Milton, M.D. (Milton)

(internal medicine); George Brown, M.D. (Brown) (gen-

eral surgery); William G. Blanchard, M.D. (Blanchard)

(general surgery); Samuel E. Dakil, M.D. (Dakil) (ent);

John B. Cotton, M.D. (Cotton) (family practice); Steven

Atwood, M.D. (Atwood) (internal medicince/emergency

medicine); and Charles K. Holland, M.D. (Holland) (inter-

nal medicine) are or were at the relevant times members

of the Clinic with the indicated areas of specialty practice.

Milton was at all relevant times a member of the MRH

Board of Trustees, as was Holland at least in the period

1982-1984. In or about May, 1984, Milton became the

“Chief of Staff” at the Hospital, which is the chief admin-

istrative office for physicians having privileges at the

Hospital. The Chief of Staff is elected by other members

of the Hospital medical staff to a one year term that runs

approximately from May of one year through April of the

following year. The Chief of Staff is responsible for

appointing members of various “ad hoc” and standing

committees of the Hospital medical staff, and is invested

with a variety of administrative duties.

ho 0 AREA ILE OOO hig lS

App. 37

11. Defendants Karl Sauer, M.D. (Sauer) (orthopedic

surgery); Hertzl V. Schaff, M.D. (Schaff) (general sur-

gery); Joe McCauley, M.D. (McCauley) (family practice);

and Don Schuller, M.D. (Schuller) (radiology) are physi-

cians who have also had medical staff privileges at MRH

at all relevant times, but are not members of or affiliated

with the Clinic. Sauer, Schaff, and McCauley practice

individually, and Schuller is a member of a small group

unaffiliated with the Clinic.

12. Plaintiffs have named as co-conspirators but not

as defendants several other physicians who have also

practiced at MRH. These include Michael Boyer, M.D.

(Boyer) (anesthesiology); James Dunagin, M.D. (Dunagin)

(ophthalmologic surgery): Merlyn Bellamy, M.D.

(Bellamy) (pathology); and Thurman Schuller, M.D. (T.

Schuller) (pediatrics). Dunagin has not had any affiliation

with the Clinic. Dunagin served as Chief of Staff at MRH

from May, 1983 to April, 1984. Bellamy has had no affilia-

tion with the Clinic. T. Schuller has been a member of the

Clinic, and at least in the late 1970’s and early 1980's he

served as the internal “chief of staff” at the Clinic.

The Early Years

13. Dr. Tarabishi received his initial medical educa-

tion at Alexandria University in Alexandria, Egypt where

he graduated in 1966 as a Doctor of Medicine. From 1966

to 1969 Dr. Tarabishi completed a one year internship and

a two year residency in ENT at the University Hospital at

the University of Alexadria and became board certified in

ENT in Egypt in 1969.

App. 38

14. Dr. Tarabishi came to the United States in Febru-

ary, 1970. He worked at part time non-physician medical

jobs while studying for the Equivalency Exam for Foreign

Medical Graduates (ECFMG) which he passed in Decem-

ber 1970. Also during this time, Dr. Tarabishi’s wife,

Farida, herself an Egyptian born, educated and trained

doctor, came to the United States and set out to become

United States qualified.

15. After both had passed the ECFMG, Dr. Tarabishi

and his wife moved to Pittsburgh, ‘Pennsylvania where

each of them commenced medical internship training. Dr.

Tarabishi performed a general rotating internship at St.

Margaret Memorial Hospital from July 1971 until June

1972. Thereupon, he commenced his residency training

and completed a 12 month general surgery residency at

St. Margaret Memorial Hospital from July 1972 until June

1973. Thereafter, from July 1973 until June 1974, Dr. Tar-

abishi completed an additional one year of residency in

ENT at the Eye and Ear Hospital at the University of

Pittsburgh. A conflict developed in the fall of 1973

between Dr. Tarabishi and his “supervisor” Dr. Myers,

allegedly because Dr. Myers did not want Arab doctors in

the program in the wake of the 1973 Arab-Israeli war. In

any event, litigation by Tarabishi against Dr. Myers and

the Hospital ensued, resulting in a settlement.

16. In 1975, Dr. Tarabishi became a United States

citizen. The same year, Tarabishi transferred to the ENT

residency program at the University of Utah and com-

pleted his training in or about 1977. He turned to adver-

tisements in progressional journals to seek job

opportunities, and accepted a position as an ENT surgeon

with the Marshfield Clinic in Marshfield, Wisconsin thus

Nt RE PL tte TET Wh

App. 39

availing himself of an established patient base with which

to establish his practice. He remained in the employ of

the Marshfield Clinic from July 1977 to May 1979, and

thereafter sought to relocate to a warmer climate and a

less isolated location. After again referring to profes-

sional periodicals, Tarabishi contacted the Clinic, in

McAlester, Oklahoma. The Clinic had been seeking a

second ENT to join its existing ENT specialist, Dr. Sam

Dakil, for some time.

17. Following preliminary discussions and meet-

ings, Tarabishi was offered and accepted employment

with the Clinic pursuant to a written contract. He started

to work at the Clinic in May, 1979. Contemporaneously

with commencing his employment at the Clinic, Dr. Tar-

abishi was granted full staff privileges at the defendant

Hospital. By November or December, 1979, differences

had developed between Dr. Tarabishi and the Clinic over

provisions relating to employment, compensation and

pension vesting. Upon learning that Dr. Tarabishi was

looking at other office space, the Clinic decided upon and

announced his termination from employment.

18. Ata Clinic special staff meeting, on December 7,

1979, attended by defendant Doctors Holland, Milton,

Dakil, Cotton, Brown and Blanchard, the minutes reflect:

Doctor Thurman Schuller, Chief-of-Staff, stated

that he felt it was important for the Staff to

adopt a position on the doctors leaving the

Clinic, to wit: Doctors Abdolkarim Khora-

sanchian and M. Hisham Tarabishi. Doctor

Schuller requested that the Staff adopt a posi-

tion that it was impossible for the McAlester

Clinic to do business with Doctors Tarabishi and

App. 40

Khorasanchian since the philosophies of the

Clinic and these two doctors were incompatible.

(Plaintiff’s Exhibit! 101).

19. Dr. Tarabishi’s employment at the Clinic ceased

in January, 1980. After leaving the Clinic, Dr. Tarabishi

opened his own medical practice, such practice consisting

of some general surgery, an office medical practice and

otolaryngological surgery. In 1982, Dr. Tarabishi was

elected President of the Medical Society of Pittsburg

County, Oklahoma.

Dr. Tarabishi’s Outpatient Surgical Facility

20. During an interview of Dr. Tarabishi by a repor-

ter for the local McAlester newspaper in February, 1982,

Tarabishi spoke out against the high cost of medical

services, the hardship such high costs create, and the

damage done to the economy. In this and other similar

public statements, Dr. Tarabishi placed part of the blame

on the medical profession itself, and the failure of the

medical profession to utilize innovative cost savings tech-

niques which could lead to a substantial reduction in the

cost of medical care. (p.ex.1).

21. In 1982, Dr. Tarabishi formulated a plan to

establish the TMD Center, to be located in McAlester. In

connection with such plans, Dr. Tarabishi caused an eval-

uation to be made of the economic feasibility of the

establishment of such a medical center. An initial fea-

sibility study was conducted by two certified public

1 hereafter “p.ex.”

App. 41

accountants retained for this purpose by Dr. Tarabishi.

Subsequently, additional feasibility studies were con-

ducted in connection with an application for financing for

the TMD Center. Based upon the analyses by these

accountants, it was determined that Dr. Tarabishi’s

planned center would be economically practicable and

feasible.

22. Under the laws of the State of Oklahoma, it is

necessary to obtain approval of various State agencies

which, during the time period in question, regulated the

establishment and/or expansion of some medical facili-

ties within this State. The procedure by which this was

done was called a licensing and “Certificate of Need”

procedure. The agency passing on applications for Certif-

icates of Need, and the granting of the licenses to such

facilities in Oklahoma was the Oklahoma Health Plan-

ning Commission.

23. In late 1982, Dr. Tarabishi hired a respected

health care industry consultant, Mr. Jerry Colclazier, to

assist in preparation of his Certificate of Need Applica-

tion. In the course of evaluating such undertaking, and

subsequently carrying it out, Mr. Colclazier conducted an

independent investigation of the need for, and desir-

ability of, Dr. Tarabishi’s outpatient ambulatory surgical

center; and further conducted an inquiry concerning Dr.

Tarabishi himself, including interviews with various per-

sons associated with defendant MRH. Based upon these

inquiries, Mr. Colclazier concluded that an outpatient

ambulatory surgical center of the sort envisioned by Dr.

Tarabishi was needed in McAlester, and that Dr. Tarabishi

possessed the capability of establishing and operating

such a facility. Accordingly, Mr. Colclazier decided to

App. 42

represent Dr. Tarabishi in the Certificate of Need proceed-

ings before the Oklahoma Health Planning Commission,

and began to prepare the written Certificate of Need

Application. Such Application was finalized and filed on

March 14, 1983. (p.ex.24).

24. Consistent with the advice of Mr. Colclazier, Dr.

Tarabishi attempted to get a commitment from MRH to

maintain a “position of neutrality” in relation to his Cer-

tificate of Need Application. Upon receiving Dr. Tar-

abishi’s request, the MRH Board appointed a three (3)

man ad hoc committee to investigate. The ad hoc commit-

tee was comprised of the defendant Dr. C. K. Holland,

Chuck McBee and John Alexander (Dr. Tarabishi’s former

accountant.) The committee met with Dr. Tarabishi and

questioned him regarding his plans for TMD. Specific

inquiry was made regarding Dr. Tarabishi’s financial

plans and projections. The ad hoc committee also

inquired about the nature and type of medical procedures

and@practice planned by Dr. Tarabishi for the TMD Cen-

ter.

25. Thereafter, in or about October 1982, MRH

informed Dr. Tarabishi that its position regarding the

proposed TMD was that it had no interest in the medical

practice of a physician conducted in his own office. How-

ever, MRH would not comply with Dr. Tarabishi’s request

for a “position of neutrality” for use in the Certificate of

Need Application process.

26. In January 1983, Dr. Tarabishi wrote a letter to

the MRH Board, specifically addressed to Chairman John

Alexander, once again requesting that MRH formally

WeBiesaccenenands ont Mead:

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App. 43

state a “position of neutrality” with regard to the pro-

posed TMD Center and to his to-be-filed Application for

Certificate of Need. To this renewed request the MRH

Board stated that its position was “the same as it was in

October 1982, at which time a letter was sent io Dr.

Tarabishi stating that surgical procedures conducted

within the confines of individual physician offices are

outside the authority’s purview” (p.ex.81 - January 5,

1983 minutes).

27. As reflected by the minutes of its board of direc-

tors, in February 1983, MRH, through its board, discussed

for the first time, creation of its own outpatient ambula-

tory surgery service. (p.ex.81 - February 2, 1983 minute,

page 2). MRH board minutes in March, 1983, reflect that

“renovations are underway” for completion of an outpa-

tient ambulatory surgery department. The “new” depart-

ment was to be ready for business by April 1, 1983.

28. In May 1983, as reflected by the minutes of the

MRH board, Administrator Ed Majors “announced” to

the board that “unless the Board directs otherwise” MRH

would respond to the Oklahoma Health Planning Com-

mission that the TMD Center “will duplicate the hospi-

tal’s surgical services.” The minutes reflect that to Mr.

Majors’ announcement “[t]here were no other com-

ments.” (p.ex.81 — May 4, 1983 minutes, page 1).

29. Dr. Tarabishi was not informed of MRH’s

change in position toward the TMD Center until the

morning of the first hearing on his application in Okla-

homa City when five individuals from the McAlester

medical community appeared in opposition. In fact,

before the first hearing one Gary Brock, MRH Assistant

App. 44

Administrator, expressly stated to Dr. Tarabishi that MRH

would not oppose the Certificate of Need Application.

30. Prior to the hearings before the Oklahoma

Health Planning Commissions, there were no further dis-

cussions by the Hospital board relating to opposing, or

not opposing, Dr. Tarabishi’s Certificate of Need Applica-

tion. However, Ed Majors, Administrator of MRH, Gary

Brock, then Assistant Administrator, Tom Giandrone,

Comptroller, and Dr. Leroy I. Milton, then a shareholder

of the defendant Clinic and Member of the Board of

Trustees of MRH, appeared in Oklahoma City and

opposed Dr. Tarabishi’s Application.

31. The hearings before the Oklahoma Health Plan-

ning Commission in Oklahoma City on Dr. Tarabishi’s

Application for Certificate of Need were held on May 12,

19, and 25, 1983.

32. On April 29, 1983, Dr. Tarabishi received from

MRH, a letter signed by the defendant J. W. McCauley,

which notified such plaintiff that the Executive Commit-

tee of the medical staff of MRH had been reviewing his

medical records for illegibility. The letter warned that “a

sampling of your records will be reviewed in one month.

If the records are still not legible, then the Executive

Committee will take further steps at that time regarding

suspension of medical staff privileges for incomplete

records.” (p.ex.38).

33. On May 3, 1983, Dr. Tarabishi received from

MRH, signed by the defendant Don H. Schuller, a letter

notifying him that the Executive Committee of the medi-

cal staff of MRH had reviewed his attendance at MRH

Library Committee meetings. The letter stated that Dr.

App. 45

Tarabishi’s failure to meet certain attendance require-

ments “shall be grounds for corrective action leading to

revocation of medical staff membership . . . ” (p.ex.40).

34. On May 17, 1938, an MRH “standing commit-

tee”, the Pharmacy & Therapeutic’s Committee, chaired

by Dr. LeRoy M. Milton, (an attendee at the May 12, 1983

TMD Certificate of Need hearing) recommended that Dr.

Tarabishi’s clinical privileges at MRH be reduced, based

upon an allegation that Dr. Tarabishi had been involved

in a “potentially life-threatening therapeutic error.” The

alleged therapeutic error had occurred four (4) months

earlier (p.ex.56(g)).

35. On June 6, 1983, after the granting of the TMD

Certificate of Need, Dr. Tarabishi was notified that MRH

intended to commence “corrective action” proceedings to

investigate the “Darby” case, involving the dosage of

lidocaine, the “alleged therapeutic error.” (p.ex.56(i)).

36. At each hearing before the Oklahoma Health

Planning Agencies held on Dr. Tarabishi’s Certificate of

Need Application the aforesaid representatives from the

McAlester area medical community appeared and vigor-

ously opposed the application. In opposing the establish-

ment of the TMD Center, hospital administrator %d

Majors claimed that it would hurt MRH financially, by

costing the Hospital substantial sums, including approx-

imately $387,500 during the first year, $432,800 the sec-

ond year and $472,000 the third year of TMD’s

operations. (p.ex.25(a) at page 5).

37. Dr. Tarabishi specifically stated to the Oklahoma

Health Systems Agency during the application hearing

App. 46

that he had plans for five additional physicians to utilize

the proposed facility. (p.ex.25(b), page 10).

38. Mr. Majors of MRH stated to the Oklahoma

Health Systems Agency that if five physicians practice at

the proposed outpatient facility “the problems (financial

impact) will be five times greater.” (p.ex.25(b) page 10).

39. At the hearings before the Oklahoma Health

Systems Agency Mr. Majors stated that “if the trend to

pull services from hospitals continues, the hospitals will

be financially doomed and costs will soar.” (p.ex.25(b) at

page 10).

40. MRH believed, and its administrator, Ed Majors,

testified that the TMD Center would take away the pay-

ing, “cream of the crop”, patients and leave MRH with

the “low pay, no pay patients”.

41. While opposing the Certificate of Need Applica-

tion on the ground that an outpatient ambulatory surgical

facility was not needed in McAlester, MRH itself estab-

lished and opened its out-patient ambulatory surgical

facility in April, 1983. -

42. Also, at or near the time that it became known

to defendants that Dr. Tarabishi was moving forward

with his plans, MRH initiated new promotion and public

relations endeavors. These included developing advertis-

ing which was run in the McAlester newspapers and the

preparation of a new “slide show”, highlighting the new

outpatient ambulatory surgical center. (p.ex.81).

43. Beginning in July, 1981 and continuing until

April, 1982, Dr. Tarabishi purchased real property located

App. 47

in downtown McAlester to be the site for the TMD Cen-

ter. The property consisted of three lots, two of which

contained buildings which Dr. Tarabishi had hoped to be

able to remodel and use as part of the TMD Center.

However, the existing structures were not feasible reno-

vation projects, for engineering reasons, and the build-

ings had to be demolished. Two of the lots were

purchased by Dr. Tarabishi with cash he had on hand.

After site preparation and demolition, Dr. Tarabishi had

spent approximately $160,000 on these two lots. The addi-

tional third lot was purchased for $200,000 with bor-

rowed funds after financing for the TMD project was

finally in place.

44. Dr. Tarabishi first applied to the First National

Bank of McAlester for a loan in the amount of $1,000,000

to finance construction of the TMD Center. At the time of

the filing of such application, the President of the First

National Bank was one Clark Bass. Mr. Bass had been

instrumental in the establishment of MRH and had for

years served on its Board of Trustees. There was inconsis-

tent testimony as to whether any commitment from this

bank was ever made.

45. In the spring of 1983, Dr. Tarabishi applied to

another McAlester bank, the American Bank of Com-

merce. With the assistance of a guarantee by the United

States Small Business Administration, a commitment was

obtained from such Bank for a loan in the amount of

$1,000,000 which was Subsequently revised upward to

$1,250,000 as construction on the TMD Center progressed.

The Bank required and obtained a real estate mortgage on

all three of Dr. Tarabishi’s lots, including those two (2)

App. 48

lots that Dr. Tarabishi owned and which were previously

unencumbered.

46. Construction of the building for TMD Center

began in July, 1983; and the construction was completed

one year later. The total cost of construction, including

the cost of real estate and site preparation, was approx-

imately $1,050,000.

47. In addition to the cost of construction of the

facility, there were costs of equipping and furnishing the

same. Total costs of equipping and furnishing the facility

were approximately $200,000. Dr. Tarabishi paid these

monies from his own funds.

48. The TMD Center opened and began operations

on July 9, 1984. TMD was operated by M. Hisham Tar-

abishi, Inc. The facility itself was owned by Dr. Tarabishi,

individually, and was leased to the professional corpora-

tion. It continued in operation until August 31, 1985, at

which time it ceased operations and plaintiff’s medica]

practice in McAlester was terminated.

Plaintiff has attempted to restore his medical practice

in Pennsylvania, but has been unable to obtain hospital

privileges. The revocation by MRH has directly contrib-

uted co this failure.

49. The TMD Center was not equipped to deal with

medical/surgical matters of a complex nature. Access to

the facilities of MRH was needed in the event that com-

plications developed during procedures at the TMD Cen-

ter. TMD did not have the facilities, equipment or staff for

emergency situations so that Dr. Tarabishi required access

to the MRH emergency room also.

App. 49

50. Dr. Tarabishi’s surgical and emergency room

hospital privileges were summarily revoked effective

May 24, 1984. Thereafter, he could no longer respond to

medical emergencies at MRH for his patients and could

no longer perform surgery at MRH.

51. On July 17, 1984, MRH revoked all staff privi-

leges of Dr. Tarabishi so that he could no longer use its

facilities for any purposes. On at least one occasion, Dr.

Tarabishi’s patient was told that Dr. Tarabishi could not

even appear at MRH to confer with or console a patient,

even as a friend.

52. Asa condition for licensing the TMD Center, the

Oklahoma Health Planning Commission required that

TMD have access to the MRH emergency care hospital

facilities. This condition could be met as long as the

physician operator of the facility had full medical staff

privileges at the emergency care hospital.

53. Upon revocation of Dr. Tarabishi’s MRH staff

privileges, and thereafter, the TMD Center failed to meet

the Oklahoma Health Planning Commission requirement

set forth above.

54. In November, 1984, MRH entered into what was

termed a “transfer agreement” with Dr. Tarabishi and his

facility. The effect of such “transfer agreement” was to

allow patients from plaintiffs’ facility to be admitted to

MRH in the event of an emergency so requiring. How-

ever, the “transfer agreement” did not permit Dr. Tar-

abishi to continue to treat patients after such admission.

55. Dr. Tarabishi informed each of his patients con-

sidering surgery at TMD about the limitations on his

App. 50

treatment and care in the event of surgical emergencies

requiring transfer to MRH.

56. Pursuant to the by-laws of MRH, its staff com-

prised and served on certain “standing committees”

including, among others, the Executive Committee, Phar-

macy and Therapeutic Committee, Medical Committee,

Emergency Room Committee, ICU Committee, Surgical

Committee, By-laws Committee and Library Committee.

57. Several of the “standing committees” at MRH

were influential and powerful in regard to establishing

medical staff policy, patient and medical procedure

review, staffing and personnel matters, and physician

peer review. These standing committees could direct the

medical chief-of-staff to initiate investigations against a

physician staff member for purposes of discipline, reduc-

tion of staff privileges, or removal from the MRH staff.

The Pharmacy & Therapeutic Committee in November

1983, made disciplinary recommendations regarding Dr.

Tarabishi to the MRH chief-of-staff.

58. On May 1, of each year, new appointments were

made to the medical staff “standing committees”, chiefs

of service, and chief-of-staff.

59. Following Tarabishi’s announcement of his

intentions to establish an outpatient surgical facility, the

clinic physicians increased their percentage and domina-

tions of key MRH “standing committees”. (p.ex.78 & 88).

60. The Clinic physicians held key positions of

authority on all important MRH “standing committees”.

By May of 1984, and for many periods of time preceding

App. 51

that, the physician chief of each medical service within

MRH was from the Clinic.

61. After May 25, 1983, the date upon which the

Oklahoma Health Planning Commission granted the Cer-

tificates of Need for TMD, Dr. Tarabishi was made the

subject of several MRH “corrective action” charges which

led to “disciplinary investigations”. Prior to that date Dr.

Tarabishi had never been subjected to disciplinary

charges.

62. From June 1983 until July 17, 1984, Dr. Tarabishi

was charged and investigated by various ad hoc, hearing

review and appellate committees or boards at MRH. The

incidents and subsequent proceedings will now be

described.

The Darby Incident

63. The “Darby” Incident occurred on January 30,

1983. (The Incident Report is Defendants’ Exhibit? 68-40).

It involved an alleged overdose of lidocaine. On April 27,

1983, the Pharmacy and Therapeutics Committee met and

resolved to ask for Dr. Tarabishi’s response to the inci-

dent. (d.ex.68-41). A memo was sent to Tarabishi.

(d.ex.68-42). On May 17, 1983, the P and T Committee

referred the matter to the executive Committee with the

recommendation that Tarabishi’s clinical privileges be

reduced, and specifically that Tarabishi not be permitted

to administer any cardiac drugs. (d.ex.68-43). The Execu-

tive Committee appointed an ad hoc committee. On June

2 hereafter “d.ex.”

App. 52

13, 1983, the ad hoc committee informed Tarabishi that

the dosage given was excessive. (d.ex.68-44). No further

action was taken. On July 21, 1983, the Emergency Room

Committee recommended no further action be taken.

(d.ex.68-45). The Executive Committee accepted this rec-

ommendation on July 22, 1983. (d.ex.68-54).

A “second investigation” into the Darby matter was

announced on January 14, 1984, along with other matters.

(p.ex.60d). On January 18, 1984, an ad hoc committee held

a hearing. (p.ex.60f). The committee requested a written

response (p.ex.60e), but did not receive one (p.ex.60g).

The committee issued its report, adverse to Tarabishi.

(p.ex.60h). The Executive Committee made a decision

favoring revocation. (p.ex.60y). A Review Committee met

on April 7 and 26, 1984. (p.ex.65 & 67). On May 3, 1984,

that committee issued its report. (p.ex.600). The Executive

Committee affirmed the Review Committee. (p.ex.61(p)).

The governing body made its decision of revocation.

(p.ex.68 & 69). On July 18, 1984, Dr. Tarabishi’s privileges

were revoked. (p.ex.70). -

The Ketcherside Incident

64. The Ketcherside incident began on September

15, 1983, when Dr. Tarabishi, a member of the Surgery

Committee, made a recommendation to the attention of

the Executive Committee that an ad hoc committee be

formed. (d.ex.68-57). The Surgical Committee acknowl-

edged his request (d.ex.68-58), and reviewed the case

(d.ex.68-59). On November 11, 1983, the Surgical Com-

mittee voted unanimously to remove Tarabishi from the

committee or suspend him until he “prove[d] himself

App. 53

innocent” of charges of breach of confidentiality.

(d.ex.68-62) (d.ex.68-64). A letter of Suspension was sent

(d.ex.68-65). On December 6, 1983, the ad hoc committee

found Tarabishi guilty of unethical and disruptive behav-

ior, and stated it would report same to the Executive

Committee (d.ex.68-68). On January 4, 1984, the Executive

Committee laced Tarabishi on one-year probationary

status. (d.ex.68-72). Tarabishi appealed. An ad hoc hear-

ing voted 2-1 in Tarabishi’s favor. (d.ex.68-79). On March

12, 1984, the Executive Committee reprimanded Tar-

abishi. (d.ex.68-83). Tarabishi again appealed (d.ex.68-84),

and on May 2, 1984, the decision was affirmed.

(d.ex.68-89).

The Jacobs Incident

65. The Jason Jacobs incident concerns an eight-

year-old asthmatic hospitalized for a tonsillectomy. His

surgery was scheduled for May 21, 1984.

After the incident, Tarabishi was sent a letter from

Dr. George Brown summarily suspending Tarabishi’s

Emergency Room/Operating Room privileges.

(p-ex.71(p)). An ad hoc committee was formed, which

issued its report on June 21, 1984, holding that the sum-

mary suspension should remain in effect until fina] dispo-

sition by the governing board. (p.ex.71(cc)). The

Executive Committee approved the ad hoc committee

report on June 22, 1984. (p.ex.71(ee)).

App. 54

The Parks and Weaver Incidents

66. The Stephanie Parks incident involved a written

report by Dr. Boyer that Dr. Tarabishi had inadequately

evaluated a patient for surgery. (p.ex.61(a)).

The Amber Weaver incident involved a written

report by Boyer that Tarabishi had not seen and examined

Amber Weaver prior to the time of surgery. (p.ex.61(b)).

The Chief of Staff, Dr. Dunagin, Sent Tarabishi a

letter alleging “serious new charges”. (p.ex.61(c)). On

February 28, 1984, the ad hoc committee met and recom-

mended disciplinary action. (p.ex.61(g)). The Executive

Committee concurred in the findings on March 1, 1984.

(p.ex.61(i)).

The Price Incident

67. The Gary Price incident occurred on December

18, 1983. (d.ex.68-93). A fourteen-year-old boy received a

gunshot wound to the face and Dr. Tarabishi placed him

in the Emergency Room. Dr. Boyer wrote the Hospital

that he believed that the actions of Dr. Tarabishi were not

warranted by the patient’s condition. An ad hoc commit-

tee was formed. (p.ex.60d). The committee, consisting of

Dr. Don Schuller, Dr. Sauer, and Dr. Brown, ultimately

concluded that Dr. Tarabishi was guilty of “inappropriate

assessment and management of emergency cases.”

(p.ex.60h). On February 23, 1984, the Executive Commit-

tee recommended revocation of Dr. Tarabishi’s medica!

staff privileges, (d.ex.68-144), based upon the Price inci-

dent, among others.

App. 55

The McCabe Incident

68. The Brandon McCabe incident occurred on

December 20, 1983. (d.ex.68-92). Dr. Tarabishi wrote his

own incident report. (d.ex.68-94). An ad hoc committee

was assigned, which investigated both this incident and

the Price incident.

The Jackson Incident

69. In a letter to Dr. Dunagin dated December 26,

1983, Dr. Tarabishi wrote that Dr. Boyer “failed to prop-

erly evaluate the patient pre-operatively to clear him fora

general anesthesia —- which cost the patient his life.”

(d.ex.68-94). In the ad hoc meeting of January 18, 1984,

regarding the McCabe and Price cases, Dr. Tarabishi was

asked about the statement in his letter and Dr. Tarabishi

supplied the patient’s name as Mr. Jackson. The commit-

tee rendered findings adverse to Dr. Tarabishi.

(d.ex.68-127).

Ultimate Revocation

70. On February 3, 1984 an ad hoc committee issued

its report. The committee took account of I. the McCabe

case, II. the Price case, III. Dr. Tarabishi’s accusation

against Dr. Boyer of traumatic intubation, IV. the Jackson

case, V. the Darby case, and VI. the Ketcherside case. It

also discussed the illegibility of Dr. Tarabishi’s handwrit-

ing. (d.ex.68-127). On February 23, 1984, the executive

committee recommended the revocation of Dr. Tarabishi’s

medical staff privileges.

App. 56

On May 3, 1984, the Hearing Appeals Committee

issued its report on the “seven charges” against Dr. Tar-

abishi. (d.ex.68-169). On May 8, 1984, the executive com-

mittee recommended that Dr. Tarabishi’s staff privileges

be revoked (d.ex. 68-170). On July 18, 1984, Dr. Tarabishi

was notified that his appeal was denied. (d.ex.68-178).

71. To the extent that these Findings of Fact consti-

tute Conclusions of Law, they shall be so considered.

CONCLUSIONS OF LAW

At the Court’s request, the plaintiffs submitted a

summary of their proposed theories of recovery. The

Court will address each theory in turn.

Individual Monopolization by Defendant Hospital

Plaintiffs contend that defendant MRH individually

monopolized its market, in violation of 15 U.S.C. § 2. It

has been held that

[t]he elements of monopolization under Section

2 are “the possession of monopoly power in the

relevant market” and “the willful acquisition or

maintenance of that power as distinguished

from growth or development as a consequence

of a superior product, business acumen, or his-

toric accident.”

Bright v. Moss Ambulance Service, Inc.,

824 F.2d 819, 823 (10th Cir. 1987).

Monopoly power is defined as the ability to control prices

and exclude competition. Both elements must be demon-

strated to establish the existence of monopoly power. /d.

ms Le.

App. 57

at 824. Before it can be determined whether monopoly

power exists, the plaintiff must define the relevant geo-

graphic and product market. Feldman v. Jackson Memorial

Hosp., 571 F.Supp. 1000, 1010 (S.D.Fla. 1983), aff'd mem.,

752 F.2d 647 (11th Cir.), cert. denied, 472 U.S. 1029 (1985).

Determining the relevant product market necessities an

examination of which commodities [in the case at bar,

services] are reasonably interchangeable by consumers

for the same purposes. Westman Comm. Co. v. Hobart Int'l,

Inc., 796 F.2d 1216, 1221 (10th Cir. 1986), cert. denied, 108

S.Ct. 1728 (1988). The geographic market is the narrowest

market which is wide enough so that products [services]

from adjacent areas cannot compete on substantial parity

with those included in the market. Id. at 1222. One com-

mentator has perhaps more clearly stated that “[t]he rele-

vant geographic market is that area in which patients can

realistically obtain the relevant services, the geographic

area in which the provider markets the relevant services,

or both.” Enders, Federal Antitrust Issues Involved in the

Denial of Medical Staff Privileges, 17 Loy.U.Chi.L.J. 331, 360

(1986). Plaintiffs’ expert defined the relevant market for

MRH as the business of supplying surgical health care

services [product market] within a thirty-mile radius of

McAlester, Oklahoma [geographic market]. See Transcript

of testimony of Joe Jadlow at page 22, LL.6-9 [hereafter

Jadlow Tr.]. He further found that, according to bed

count, MRH had about 75 percent of market. (Jadlow Tr.

at 23, LL.4-5). He stated that he found evidence that MRH

had monopoly power. (Jadlow Tr. at 22, L.22). Plaintiffs

contend that MRH’s monopoly power was demonstrated

by (1) its exclusion of plaintiffs from the market, and (2)

App. 58

its market share of over 75%. (Plaintiffs’ Proposed Find-

ings of Fact and Conclusions of Law at { 105).

The Court finds several problems with the market

thus defined. First, the geographic radius was derived

from an examination of MRH discharge records and a

finding that 84% of its discharged patients lived within

thirty miles of McAlester. (Jadlow Tr. at 13, LL.17-25). As

was pointed out on cross-examination, plaintiffs’ expert

did not take into account whether patients who lived

within the 30-mile radius went elsewhere than MRH for

surgical health care services. (Jadlow Tr. at 115, L.18). The

“time factor” which might keep patients close to home

was not quantified. Further, it appears extremely doubt-

ful that “bed count” is an appropriate measure of market

share in the market of “surgical health care services.” The

mere words of the plaintiffs’ market definition denote

more than the provision of a hospital bed. Even at this

late date, it is not clear whether plaintiffs contend that

both of them or only one of them was harmed by the

alleged monopoly. The Court will first view Dr. Tarabishi

as the aggrieved party. Dr. Tarabishi, as distinguished

from TMD, provided surgery or surgical services to his

patients. If words have meaning, these terms describing

the product produced by a surgeon, and the term “surgi-

cal health care services” involve distinct products. In

White v. Rockingham Radiologists, Ltd., 820 F.2d 98 (4th Cri.

1987), the court stated that one who is neither a provider

nor a consumer of a service may not prevail on a claim of

monopoly with regard to that service. Id. at 104. The same

conclusion applies to Dr. Tarabishi in the case at bar. In

Feldman, supra, the plaintiff-podiatrist defined the rele-

vant product market as “surgical services”. The district

OG, Eee

App. 59

court rejected this definition. “Since hospitals cannot per-

form surgery (they sell health care facilities), there could

not be a viable monopoly claim in this action against the

hospitals. They and [plaintiff] were not competitors, nor

could they be.” 571 F.Supp. at 1010 n.15.

As for TMD, that facility did not have beds. (Jadlow

Tr. at 193 L.2). While some TMD patients might have used

beds in MRH, this fact would not transform TMD into a

consumer within the market. Therefore, the Court con-

cludes that TMD’s claim under this theory also fails. Most

fundamentally, the Tenth Circuit requires proof of both

ability to exclude competition and to control prices. Plain-

tiffs’ expert conceded that he had not examined whether

MRH had evidenced monopoly power in its pricing. (Jad-

low Tr. at 243 LL.6-11). Therefore, a showing of monopoly

power has not been made. For ail of these reasons, the

Court must conclude that plaintiffs failed to prove their

claim of individual monopolization against defendant

MRH.

Individual Monopolization by Clinic

Plaintiffs allege individual monopolization on the

part of defendant Clinic. The elements of the offense have

been previously stated. See Brights, 824 F.2d at 823. Plain-

tiffs’ expert defined the relevant market for the Clinic as

the business of supplying nonsurgical and office surgery

health care services within a thirty-mile radius of

McAlester. (Jadlow Tr. at 22, LL.12-15). He stated that the

Clinic had a 66% share in that market. (Viadlow Tr. at 138,

L.23). He described his determination of market share as

follows:

App. 60

And | did this by looking to see what were the

specialties of the physicians at the McAlester

Clinic. I included those specialties in looking at

the total number of physicians in the McAlester

community, and | looked to see what proportion

of that total group physicians the McAlester

Clinic accounted for.

Jadlow Tr. at 24, LL.8-12 (emphasis added)

See also Jadlow Tr. at 143, LL.11-19. While defining the

geographic market as a 30-mile radius, plaintiffs’ expert

focused only on doctors within McAlester itself. He did

not consider doctors within the radius who did not prac-

tice in McAlester. (Jadlow Tr. at 144, LL.7-18). A recurring

theme in his testimony was that he focused solely upon

the Clinic and the City of McAlester. (Jadlow Tr. at 149,

LL.9-10; 153, L.25-154, LL.1-6; 156, LL.16-20). Dentists

who perform root canal work, for example, while appear-

ing to fall within the language of plaintiffs’ product mar-

ket definition, were excluded solely because plaintiffs’

expert did not believe such surgery was done at the

Clinic. (Jadlow Tr. at 147, LL.8-9 and LL.22-24). Regarding

the proposed geographic market, plaintiffs’ expert at one

point characterized it as an approximation. (Jadlow Tr. at

158, L.21). However, it is clear that the actual geographic

area studied was the City of McAlester itself. In sum,

both as to product market and geographic market, the

procedure of plaintiffs’ expert varied from the actual

proposed markets. Relevant markets were not properly

defined. Also, no showing was made of the ability of the

Clinic to exclude competition and to control prices. The

Court concludes that this claim also fails.

App. 61

Attempted monopolization by defendant clinic

Plaintiffs also contend that the clinic is guilty of an

attempted monopolization in violation of 15 U.S.C. § 2.

Proof of this offense requires the establishment of four

factors:

1) a relevant market in which the alleged

attempt occurred; 2) a dangerous probability of

success in monopolizing the relevant market: 3)

a specific intent to monopolize; and 4) conduct

in furtherance of such an attempt.

Lease Lights, Inc. v. Pub.Serv.Co., 849

F.2d 1330, 1335 (10th Cir. 1988).

The Court has already described the inadequate mar-

ket definition in the case. Thus, the Court concludes that

plaintiffs failed to establish the first two elements. Even if

they were established, however, plaintiffs presented no

evidence of specific intent to monopolize on the Clinic’s

part. The Court is aware that specific intent need not be

expressed; it may be inferred from past conduct, from

Statements, from contemporaneous documents, or even

from the potentiality of monopoly power. 3 Von

Kalinowksi, Antitrust Laws and Trade Regulation, §9.01[4]

(1989). While plaintiffs argue that such intent may be

found in that one is presumed to intend the probable

consequences of his acts, this Court believes that such an

argument comports more with a finding of general intent.

This is insufficient regarding attempted monopolization.

See Times-Picayune Publ. Co. v. United States, 345 U.S. 594,

626 (1953).

App. 62

Conspiracy to Monopolize

The plaintiffs urge against all defendants a conspir-

acy to monopolize in violation of 15 U.S.C. §2. To succeed

on such a claim,

(1) The plaintiff must demonstrate a combina-

tion or conspiracy to monopolize; (2) there must

be overt acts done in furtherance of the combi-

nation or conspiracy; (3) the defendants must

have a specific intent to monopolize; and (4) the

combination or conspiracy musf have an appre-

ciable effect upon commerce.

Drilling v. Peugeot Motors of America,

Inc., 850 F.2d 1373, 1382 (10th Cir. 1988).

The Court discusses the issue of conspiracy infra.

However, even if a finding of conspiracy could be made

in this case, again there was no evidence of specific intent

to monopolize. The Court rules for the defendants on this

claim.

Violation of the Essential Facilities Doctrine

Plaintiff alleges that defendant MRH violated the

essential facilities doctrine through its revocation of Dr.

Tarabishi’s privileges. Plaintiffs’ argument is that since

Dr. Tarabishi was competing with a portion of the facili-

ties and services of MRH through the TMD Surgery Cen-

ter and needed access to the other, more complex,

facilities of such defendant in order to continue the oper-

ation of the TMD Center, the Hospital acted to expel

plaintiffs’ competition by withholding access to the more

complex facilities.

App. 63

In McKenzie v. Mercy Hosp., 854 F.2d 365, 369 (10th

Cir. 1988), the court quoted with approval the following

elements of the doctrine:

(1) control of the essential facility by a monopol-

ist; (2) a competitor’s inability Practically or

reasonably to duplicate the facility; (3) the

denial of the use of the essential facility to a

competitor; and (4) the feasibility of providing

the facility.

The McKenzie court found that the plaintiff did not estab-

lish that Mercy Hospital controlled facilities essential to

his medical practice. Therefore, it did not explore the

other factors. In a footnote, the court said that it was

leaving open the question whether, for public policy rea-

sons, the essential facilities doctrine Should ever apply to

hospital staff Privileges decisions. Id. at 371 n.12.

As noted, one essential element for application of the

doctrine is control of the facility by a monopolist. The

Court has already explained why it has concluded that

plaintiff failed to Prove that MRH has monopoly power.

A relevant market must be proven, even when plaintiff is

relying on the essential facilities theory. Consul. Ltd. v,

Transco Energy Co., 805 F.2d 490 (4th Cir. 1986). cert.

denied, 107 S.Ct. 2182 (1987). A court may recognize sub-

markets under certain circumstances. S

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