BCB Anesthesia Care, Ltd. v. Passavant Memorial Area Hospital Ass'n

36 F.3d 664
CourtCourt of Appeals for the Seventh Circuit
DecidedSeptember 27, 1994
DocketNo. 93-3166
StatusPublished
Cited by29 cases

This text of 36 F.3d 664 (BCB Anesthesia Care, Ltd. v. Passavant Memorial Area Hospital Ass'n) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
BCB Anesthesia Care, Ltd. v. Passavant Memorial Area Hospital Ass'n, 36 F.3d 664 (7th Cir. 1994).

Opinions

MORAN, District Judge.

Plaintiffs filed this complaint charging the defendants with violations of section 1 of the Sherman Act, 15 U.S.C. § 1. They alleged various pendent state claims as well. They complain that their practice as nurse anesthetists at a central Illinois hospital has been unlawfully restricted. Defendants moved to dismiss on a variety of grounds and the district court did dismiss, concluding that plaintiffs had not alleged a sufficient nexus with interstate commerce to invoke Sherman Act jurisdiction. An attempted amendment failed for the same reason and this appeal [665]*665followed. We now affirm, but on different grounds.

According to the complaint, the three individual plaintiffs are certified registered nurse anesthetists (CRNAs) and the corporate plaintiff, BCB Anesthesia Care Ltd. (BCB), is a business equally owned by the three of them. CRNAs compete with physician anesthesiologists (MDAs) and provide anesthesia services at lower cost. The defendants are The Passavant Memorial Area Hospital Association (Passavant) — the only acute care general hospital in Jacksonville, Illinois; MDA Peter Roodhouse; Clarence Lay, the hospital’s chief executive officer; and Dr. Erie Giebelhausen, a Jacksonville doctor with staff privileges at Passavant.

According to the complaint the individual plaintiffs were employed as anesthetists at the hospital prior to July 28, 1991. During the first half of that year they negotiated an agreement with Passavant, effective July 29, 1991, whereby BCB provided anesthesia services to hospital patients, and billed them directly at $35 per unit. The hospital billed separately at $11 per unit, which plaintiffs claim was a violation of the BCB contract. When the CRNAs were employees the hospital had billed at $17 per unit for a portion of such services. During that time Dr. Rood-house also provided anesthesia services as an independent contractor, with the billing done separately at $28 per unit.

During the last five months of 1991, BCB and the hospital anesthetists (apparently there were other anesthetists on staff) performed all but three anesthesia procedures at Passavant. Dr. Roodhouse, however, plaintiffs allege, billed patients and third party payers for anesthesia services he had not performed, in an effort to injure BCB. This practice caused those billed to complain about double billing and, in some instances, to fail to pay legitimate BCB bills. Dr. Roodhouse also derided BCB’s billing practices to local physicians, leading some to conclude that BCB billings were either too high or unethical. Dr. Giebelhausen had been opposed to the BCB contract even before its inception, and subsequently urged its cancellation on the ground that BCB’s billings were unethical and supported the restoration of Dr. Roodhouse as the primary anesthesiologist.

Beginning in April 1992, Dr. Roodhouse scheduled anesthesia services so as to perform the majority of those services during that month. Then, on May 20, 1992, Clarence Lay, the hospital CEO, advised plaintiffs that Passavant was terminating the BCB contract. The hospital subsequently entered into a contract with Dr. Roodhouse and raised its separate charges to $17 per unit. The individual plaintiffs were given the option of returning to employee status, even though the supervision of an MDA was not required either by law or codes of professional responsibility. Dr. Roodhouse, plaintiffs charge, acted to destroy BCB’s business and to maintain or increase his earnings. All this, they allege, was a conspiracy in restraint of trade to limit their practice, to initiate a tying agreement between Passavant and Dr. Roodhouse, to boycott the plaintiffs, and to fix prices illegally. Further, Dr. Roodhouse’s billings for services not performed violated Medicaid provisions and constituted mail fraud.

The concept of interstate commerce under the Sherman Act has had a troubled history, most recently illustrated in Summit Health, Ltd. v. Pinhas, 500 U.S. 322, 111 S.Ct. 1842, 114 L.Ed.2d 366 (1991). It has been marked by a disagreement over whether we should look to the concept of interstate commerce itself and the reach of congressional power, an expanding notion, id. at 327-29, 114 S.Ct. at 1846, or to the statutory prohibition against conspiracies that restrain interstate trade. Id. at 333-34, 114 S.Ct. at 1849. In McLain v. Real Estate Board of New Orleans, Inc., 444 U.S. 232, 100 S.Ct. 502, 62 L.Ed.2d 441 (1980), the attention turned from whether or not the restraint, if successful, would have a substantial effect on interstate commerce, to whether or not activities allegedly infected by the restraint had a not insubstantial effect on interstate commerce.

Following McLain, courts divided on the question of whether to look to the business of the enterprise or a portion of it, or to the likely impact of the proscribed conduct if successful. Summit Health, 500 U.S. at 335-36, 111 S.Ct. at 1850 (dissent). This circuit [666]*666subscribed to the latter view in Seglin v. Esau, 769 F.2d 1274, 1280 (7th Cir.1985). The difference in views was not predicated upon limitations of congressional power, however, nor could they be so predicated in light of present day concepts of that power. See e.g., United States v. Stillwell, 900 F.2d 1104 (7th Cir.1990). Indeed, in Summit Health, the Court noted but did not rely upon notions of congressional power under the Commerce Clause.

We are left then with some uncertainty as to whether interstate commerce under the Sherman Act raises jurisdictional or substantive concerns, an uncertainty noted in Seglin v. Esau, 769 F.2d at 1278. We are persuaded, however, that the allegations here, however reviewed, are sufficient to withstand a motion to dismiss based on the contention that plaintiffs fail to allege a sufficient nexus to interstate commerce.

Plaintiffs first alleged that Passavant derives substantial revenue from interstate insurance and federal Medicare and Medicaid payments, and that it purchased substantial quantities of supplies coming from other states. They further alleged that they provided services to patients and third party payers at lower cost than the charges of MDAs, with a change to MDA services resulting in higher costs for federal and third party payers. When the complaint was dismissed they sought to amend, but the district court concluded that the amendments still did not provide a sufficient nexus to interstate commerce. Those amendments alleged that Passavant and the plaintiffs treated out-of-state patients and that BOB billings were through a Minnesota agency. Thus, plaintiffs contended, the treatment of out-of-state patients was affected and the Minnesota agent was deprived of his billing revenues.

We consider the complaint as plaintiffs sought to amend it, and we conclude that they have alleged a not insubstantial effect on interstate commerce. As in Summit Health, plaintiffs have alleged that both they and the hospital serve nonresident patients and receive reimbursement through Medicare (as well as Medicaid and insurance) payments. Id. at 327-29, 114 S.Ct.

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Bluebook (online)
36 F.3d 664, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bcb-anesthesia-care-ltd-v-passavant-memorial-area-hospital-assn-ca7-1994.