Bolt v. Halifax Hospital Medical Center

980 F.2d 1381

• Court: Court of Appeals for the Eleventh Circuit
• Decided: January 7, 1993
• Docket: No. 91-3562
• Status: Published

Opinions

COX, Circuit Judge:

Halifax Hospital Medical Center (HHMC) appeals the district court’s denial of its motion for summary judgment, arguing that it is immune to antitrust liability under the state-action immunity doctrine. For the reasons stated below, we vacate and remand.

FACTS AND PROCEDURAL HISTORY¹

In 1979, Dr. Richard A. Bolt applied for, and was granted, staff privileges at three Daytona Beach, Florida area hospitals. Two of the hospitals, Daytona Community Hospital and Ormond Beach Memorial Hospital, are private. The third, HHMC, is a hospital created and funded by a special taxing district of the State of Florida. See 1979 Fla.Laws 577. Bolt was granted temporary or probationary staff privileges for two years at each hospital. In 1981, he applied for reappointment at all three hospitals. The peer review committee at each hospital considered Bolt’s application, and each committee recommended that his application be denied based upon his unprofessional conduct during the previous two-year appointment. Bolt was denied reappointment by each hospital.

Following the hospitals’ decisions, Bolt filed a complaint in federal court asserting federal antitrust claims, federal constitutional claims, federal contract claims, and several pendent state law claims. With respect to his antitrust claims, Bolt alleged that the defendants had conspired to deny his reappointment in restraint of trade and to monopolize the practice of medicine and surgery, in violation of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 1px solid var(--green-border)">2. Specifically, Bolt alleged the existence of three different conspiracies: (1) between the Daytona Community Hospital and the members of its medical staff serving on the hospital’s peer review committee; (2) between HHMC and the members of its medical staff taking part in the peer review decision there; and (3) among HHMC, Day-tona Community Hospital, Ormond Beach Memorial Hospital, the members of their medical staffs, and the Volusia County Medical Society.²

At trial, following the presentation of the Plaintiff’s case, the district court granted the Defendants’ motions for directed verdict on the Sherman Act claims and dismissed without prejudice the pendent state law claims. Bolt v. Halifax Hosp. Medical Center, No. 82-122-ORL-CIV-18 (M.D.Fla. Mar. 21, 1984). The district court held that Bolt failed to introduce evidence of an unlawful contract, combination, or conspiracy under the Sherman Act. Bolt appealed, contending that the district court had erred in excluding certain expert witness testimony. In our first panel opinion in this case, we held that the hospitals and their medical staffs were private parties acting pursuant to a clearly articulated state policy and were being actively supervised by the State. Thus, we held, they were exempt from federal antitrust liability under the state-action immunity doctrine first articulated in Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), as interpreted in Patrick v. Burget, 486 U.S. 94, 108 S.Ct. 1658, 100 L.Ed.2d 83 (1988). See Bolt v. Halifax Hosp. Medical Center, 851 F.2d 1273, 1284 (11th Cir.1988) {Bolt I). Specifically, we found that Florida’s regulatory scheme provides for judicial review of hospital peer review board decisions if those decisions are sufficiently probing to constitute “active state supervision” under Parker and Patrick. See Bolt I, 851 F.2d at 1281-84. This earlier decision, however, was vacated and the case was heard en banc. Bolt v. Halifax Hosp. Medical Center, 861 F.2d 1233 (11th Cir.1988). During en banc oral argument, the hospitals and their medical staffs formally withdrew their claim of immunity under the Parker state-action doctrine. Accordingly, the en banc court did not decide the immunity question and remanded to the panel with an instruction to reconsider the case in light of the hospital’s and medical staff’s waiver of state-action immunity. Bolt v. Halifax Hosp. Medical Center, 874 F.2d 755 (11th Cir.1989) (en banc) (Bolt II).

Upon remand to the panel, HHMC argued that it was a state agency under Parker and thus immune from antitrust liability, or alternatively, that it was a municipality immune from antitrust liability under the Supreme Court’s opinion in Town of Hallie v. City of Eau Claire, 471 U.S. 34, 105 S.Ct. 1713, 85 L.Ed.2d 24 (1985). See Bolt v. Halifax Hosp. Medical Center, 891 F.2d 810 (11th Cir.), cert. denied, 495 U.S. 924, 110 S.Ct. 1960, 109 L.Ed.2d 322 (1990). (Bolt III).3- In Bolt III, this court rejected HHMC’s “state agency” argument holding that HHMC was not a state agency acting as a sovereign. Bolt III, 891 F.2d at 823-24. We did find, however, that the powers granted by the Florida legislature to HHMC in its enabling legislation were virtually identical to those of a municipality in many important respects. Thus, we held that HHMC should be treated as a municipality and its actions tested under Town of Hallie. Id. at 824-25. Nevertheless, we concluded that HHMC was not immune to antitrust liability because Bolt had alleged that HHMC conspired with the members of its peer review board to deny him staff privileges. Id.

In April 1991, the Supreme Court issued its opinion in City of Columbia v. Omni Outdoor Advertising, Inc., — U.S.-, 111 S.Ct. 1344, 113 L.Ed.2d 382 (1991). In that case, the Court held that there was no conspiracy exception to the state-action immunity doctrine. In light of City of Columbia, HHMC filed a motion for summary judgment. The district court denied HHMC’s motion, finding that Bolt III did not rely on a conspiracy exception to deny HHMC state-action immunity, but instead relied on a straightforward application of Town of Hallie for its decision. HHMC appeals the district court’s order. For the following reasons we vacate and remand.

ISSUE ON APPEAL

Whether the district court erred in denying HHMC’s motion for summary judgment in light of the Supreme Court’s decision in City of Columbia v. Omni Outdoor Advertising, Inc., — U.S.-, 111 S.Ct. 1344, 113 L.Ed.2d 382 (1991).

CONTENTIONS OF THE PARTIES

Bolt contends that the law-of-the-case doctrine precludes any further review of this issue because a panel of this court in Bolt III has already resolved this issue in his favor. Bolt argues that this court’s decision in Bolt III was based not on a conspiracy exception to the state-action doctrine, but on a straightforward application of the Supreme Court’s analysis in Town of Hallie. Therefore, the Supreme Court’s recent pronouncement in City of Columbia did not overrule Bolt III, and summary judgment in favor of HHMC is not warranted.

HHMC argues that the Supreme Court’s decision in City of Columbia entitles it to summary judgment in this case. It argues that the decision in Bolt III is grounded on the finding that the hospital and its medical staff conspired to deny Bolt staff privileges upon a bad-faith pretext. Under City of Columbia, HHMC contends, the subjective motives of its board in denying Bolt’s application are irrelevant. Thus, City of Columbia implicitly overruled Bolt III and entitles HHMC to summary judgment on the basis of state-action immunity.

STANDARD OF REVIEW

Because the question of immunity is strictly one of law, this court must make a de novo determination of whether the district court erred in denying summary judgment. Griesel v. Hamlin, 963 F.2d 338, 341 (11th Cir.1992); Morrison v. Washington County, Ala., 700 F.2d 678, 682 (11th Cir.), cert. denied, 464 U.S. 864, 104 S.Ct. 195, 78 L.Ed.2d 171 (1983). Summary judgment will be granted when the moving party succeeds in showing that there exists no genuine issue of material fact when all the evidence is viewed in the light most favorable to the nonmovant. Sweat v. Miller Brewing Co., 708 F.2d 655, 656 (11th Cir.1983).

DISCUSSION

A. The State-Action Immunity Doctrine

The state-action immunity doctrine is rooted in the Supreme Court’s decision in Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943). In Parker, the Supreme Court considered whether the Sherman Act prohibits anticompetitive conduct by a state. The petitioner sought to enjoin the California Director of Agriculture from enforcing a program adopted pursuant to the California Agricultural Prorate Act, which restricted the marketing of privately produced raisins. The statute was intended to restrict competition among agricultural producers in the state in order to stabilize prices and prevent economic waste. Relying on the principles of federalism and state sovereignty, the Court refused to find that the Sherman Act was “intended to restrain state action or official action directed by a state.” 317 U.S. at 351, 63 S.Ct. at 313. Rather, the Court held, “its purpose was to suppress combinations to restrain competition and attempts to monopolize by individuals and corporations_” Id. The Court concluded that the Sherman Act did not prohibit anticompetitive restraints prescribed by the states “as an act of government.” Id. at 352, 63 S.Ct. at 314.

The Parker doctrine is directly applicable only to the anticompetitive actions of the States. It does not apply directly to municipalities or other political subdivisions, because these subdivisions “are not themselves sovereign; they do not receive all the federal deference of the States that create them.” See City of Lafayette, La. v. La. Power & Light Co., 435 U.S. 389, 412, 98 S.Ct. 1123, 1136, 55 L.Ed.2d 364 (1978). Political subdivisions, including municipalities, however, can obtain protection under the state-action immunity doctrine if they can “demonstrate that their anticompetitive activities were authorized by the State ‘pursuant to state policy to displace competition with regulation or monopoly public service.’ ” Town of Hallie v. City of Eau Claire, 471 U.S. 34, 38-39, 105 S.Ct. 1713, 1716, 85 L.Ed.2d 24 (1985) (quoting Lafayette, 435 U.S. at 413, 98 S.Ct. at 1137).

In Town of Hallie, the Petitioners were unincorporated townships adjacent to the City of Eau Claire, Wisconsin. The Townships brought suit against Eau Claire as potential competitors of the City in the collection and .transportation of sewage. The Townships claimed that Eau Claire had acquired a monopoly in the provision of sewage treatment services in the area and had used this monopoly to gain unlawful control over the provision of sewage collection and transportation services, in violation of the Sherman Act. The Supreme Court held that the City of Eau Claire was protected from antitrust liability by the state-action immunity doctrine. In so holding, the Court found that the City qualified for the immunity because it was engaged “in the challenged activity pursuant to a clearly expressed state policy.” 471 U.S. at 40, 105 S.Ct. at 1717.

To show the existence of a state policy displacing competition, the municipality is not required “to point to a specific, detailed legislative authorization.” Id. at 39, 105 S.Ct. at 1716 (quoting Lafayette, 435 U.S. at 415, 98 S.Ct. at 1138). “Rather, Lafayette suggested, without deciding the issue, that it would be sufficient to obtain Parker immunity for . a municipality to show that it acted pursuant to a ‘clearly articulated and affirmatively expressed ... state policy’_” Id. (quoting Lafayette, 435 U.S. at 410, 98 S.Ct. at 1135).⁴ .

In order to determine whether the Wisconsin statutes at issue in Town of Hallie evidenced a “clearly articulated” state policy to displace competition in the provision of sewage services, the Court considered the language of the legislation. The relevant statutes not only authorized cities in Wisconsin to construct, add to, or repair sewage systems, but also empowered them to delineate the areas to be served and authorized them to refuse service beyond the areas so delineated. The Court held that although the legislation did not expressly mention anticompetitive conduct, such conduct was “a foreseeable result of empowering the City to refuse to serve unannexed areas.” 471 U.S. at 42, 105 S.Ct. at 1718. The Court further held that the statutory provisions showed that the legislature contemplated the kind of action complained of and that this was enough to satisfy the “clear articulation” requirement of the state-action immunity doctrine. Id. at 44, 105 S.Ct. at 1719.

In summary, although municipalities cannot benefit directly from the Parker defense, they may take advantage of the state-action immunity by showing that they are acting pursuant to a clearly articulated state policy to displace competition in favor of regulation. Further, the “clear articulation” test can be satisfied by showing that the legislation, pursuant to which the municipality is acting, contemplates or foresees anticompetitive conduct as a result.

B. Bolt III

In Bolt III, this court found that the similarities between HHMC’s enabling legislation and Florida’s legislation dealing with general municipality powers were such that HHMC qualified as a municipality for the purpose of testing its actions under Town of Hallie. Bolt III, 891 F.2d at 825. Applying the principles of Town of Hallie, as discussed above, this court stated that:

one could correctly say that when Florida’s legislature authorized peer review in licensed medical facilities, see Fla.Stat. § 395.011(5), (6) (1987), it could foresee that HHMC would rely on recommendations made by a physician’s peers and refuse to deal with (i.e. boycott) that physician. Thus, by granting HHMC the virtually unreviewable power to hire (or not hire) “agents and employees as may be advisable,” the Florida legislature clearly articulated a policy to displace competition, at least to the extent that an HHMC decision not to hire a physician can be considered a boycott.

Bolt III, 891 F.2d at 825.

To this point in Bolt III our court had engaged in a straightforward application of Town of Hallie and concluded that the anticompetitive conduct was a foreseeable result of HHMC’s enabling legislation. We went further, however, and held that:

[w]hile the Florida legislature must have foreseen that HHMC would engage in anticompetitive conduct based on recommendations of the physician’s peers, nothing indicates that the legislature should have foreseen the type of anti-competitive conduct alleged in this case. Dr. Bolt has alleged that HHMC not only relied on the peer review committee’s recommendations but also conspired with that committee to deny his privileges on pretextual grounds. If HHMC did conspire, as Dr. Bolt alleges, its conduct constitutes anticompetitive conduct that is not a foreseeable result of HHMC’s enabling legislation and that is, in fact, prohibited by the requirement that HHMC act in a manner consistent with “the public good,” 1979 Fla. laws ch. 79-577, § 5.

Id. We concluded by holding that even when a state policy displaces unrestrained competition, a municipality that “enters into an unauthorized conspiracy to restrain competition may not claim the protection of Town of Hallie.” Id. HHMC contends that this court relied on a conspiracy exception to hold that the hospital was not protected by the state-action immunity doctrine of Parker and Town of Haltte. Thus, it argues, Bolt III was effectively overruled by the Supreme Court’s opinion in City of Columbia v. Omni Outdoor Advertising, Inc., — U.S. -, 111 S.Ct. 1344, 113 L.Ed.2d 382 (1991). We agree. Whether HHMC had conspired to deny Bolt’s privileges upon a pretext or whether the “conspiracy” was unauthorized because it was not done in furtherance of the “public good” are precisely the types of inquiries the Supreme Court rejected in City of Columbia.

C. City of Columbia

In City of Columbia, Omni Outdoor Advertising, Inc. (Omni) brought suit against Columbia Outdoor Advertising, Inc. (COA) and the City of Columbia (City) for alleged violations of the Sherman Act. Omni alleged that it was injured by a city ordinance which restricted the construction and placement of billboards in the City. Omni maintained that the City and COA conspired to bring about the passage of the ordinance in order to restrain and suppress competition in the marketing of outdoor advertising space in interstate commerce and that the City and COA succeeded in monopolizing the relevant market to the detriment of competition, in violation of the Sherman Act. After a jury returned a verdict in favor of Omni, the district court granted the City a judgment notwithstanding the verdict on the ground that it was entitled to immunity from antitrust liability under Parker. Omni appealed.

On appeal, the Fourth Circuit, relying on language from Parker, held that the immunity did not apply where the political entity is involved as a conspirator with private parties to restrain trade. Omni Outdoor Advertising, Inc. v. Columbia Outdoor Advertising, Inc., 891 F.2d 1127, 1134 (4th Cir.1989). The Supreme Court rejected the Fourth Circuit’s analysis, as well as arguments similar to those we relied upon in Bolt III. After reiterating that a municipality’s restriction of competition may be an authorized implementation of state policy, and thus, accorded Parker immunity, the Court examined the meaning of the word “authority” as used in the Parker analysis. As an example, the Court stated that “it could be contended .:. that the city’s regulation in the present case was not ‘authorized’ by S.C.Code § 5-23-10 (1976), ... if it was not, as the statute requires, adopted ‘for the purpose of promoting health, safety, morals or the general welfare of the community.’ ” City of Columbia, —. U.S. at-, 111 S.Ct. at 1349. Rejecting this mechanical and undiscriminating interpretation of the word “authority,” the Court stated that in order to prevent Parker from undermining the concepts of federalism and state sovereignty it was designed to protect, it was necessary to adopt a broader view of authority than is used to determine the legality of a municipality’s actions under state law. Id. at —, . Ill S.Ct. at 1350. The Court held that two types of authority were required under Parker: (1) the authority to regulate in the area in question; and (2) the authority to suppress competition. Id. In City of Columbia, the authority to regulate came from the City’s zoning power over the size, location, and placement of billboards. Id. The authority to suppress competition requirement was met because the suppression of competition was held to be a foreseeable result of what the state authorized. Id.

The Supreme Court identified two sentences from Parker which might be mistakenly relied upon in support of the “conspiracy” exception adopted by the Fourth Circuit: (1) “[W]e have no question of the state or its municipality becoming a participant in a private agreement or combination by others for restraint of trade.... ” Id. at-, 111 S.Ct. at 1351 (quoting Parker, 317 U.S. at 351-52, 63 S.Ct. at 314) (emphasis in original). (2) “The state in adopting and enforcing the prorate program made no contract or agreement and entered into no conspiracy in restraint of trade or to establish monopoly but, as sovereign, imposed the restraint as an act of government which the Sherman Act did not undertake to prohibit.” Id. at-, 111 S.Ct. at 1351 (quoting Parker, 317 U.S. at 352, 63 S.Ct. at 314) (emphasis in original). The City of Columbia Court stated that these sentences merely clarify that the Parker immunity does not apply where the State acts not in a regulatory capacity but as a commercial participant in the relevant market. Id. at -, 111 S.Ct. at 1351. These sentences are not to be read, the Supreme Court held, to imply that governmental regulatory action may be deemed private when taken pursuant to a “conspiracy” with private persons, if “conspiracy” is defined merely as an agreement to undertake the action in question. This argument was rejected as impractical because agreements between public officials and private citizens are inevitable and desirable and “such an exception would virtually swallow up the Parker rule” because all anticompetitive results would be subject to a conspiracy charge. Id. at-, 111 S.Ct. at 1351.

The Court also rejected Omni’s argument that the “conspiracy” exception be narrowly applied to situations where “corruption” was involved, with “corruption” defined as the abandonment of public responsibilities to private interests, bad-faith decisions, or selfish or corrupt motives. The Court declined to adopt this argument, holding that it would be impractical to narrow the conspiracy exception along these lines because very few government actions are immune from charges that they are not in the public interest. Id. at-, 111 S.Ct. at 1352. This type of judicial assessment of the public interest after the fact, the Court held, would compromise the ability of the states to regulate their own commerce. Id. Further, the Court rejected federal judicial inquiry into the state officials’ intent in undertaking the challenged action. Such an inquiry, the Court stated, “would require the sort of deconstruction of the governmental process and probing of the official ‘intent’ that we have consistently sought to avoid.” Id. In conclusion the Court held:

we reaffirm our rejection of any interpretation of the Sherman Act that would allow plaintiffs to look behind the actions of state sovereigns to base their claims on “perceived conspiracies to restrain trade.” We reiterate that, with the possible market participant exception, any action that qualifies as state action is “ipso facto ... exempt from the operation of the antitrust laws.”

Id. at -, 111 S.Ct. at 1353 (citations omitted).

In Bolt III, after finding that HHMC was a municipality and that anticompetitive conduct was a foreseeable result of its enabling legislation, this court found that the type of anticompetitive conduct alleged by Bolt was not a foreseeable result of HHMC’s enabling legislation. Specifically, Bolt alleged that HHMC had conspired with Bolt’s peers to deny him staff privileges at the hospital on pretextual grounds. We held that HHMC’s participation in this conspiracy, if proved, was prohibited by its enabling legislation which required HHMC to act in a manner consistent with “the public good.” The inquiry into whether the reasons for HHMC’s denial of staff privileges were pretextual would require probing into the “official intent” of HHMC, an inquiry expressly denounced by the Supreme Court. Id. at -, 111 S.Ct. at 1352. Also, the determination of whether HHMC’s actions were unauthorized because they were inconsistent with “the public good” would require an ex post facto judicial assessment of whether HHMC’s actions were, in fact, against the public interest. This type of inquiry has also been rejected by the Supreme Court as inconsistent with the concepts of federalism and state sovereignty that Parker was intended to protect.

Although this court did not explicitly adopt a conspiracy exception to state-action immunity in Bolt III, the underlying reasoning for our conclusion was based on the same reasoning rejected by the Supreme Court in City of Columbia. The basic progression of our reasoning in Bolt III was as follows: Although HHMC is authorized to regulate the provision of medical care in its facility and although suppression of competition is a foreseeable result of that regulation, HHMC is not authorized to conspire with its peer review committee to deny privileges upon a pretext or to act in a manner inconsistent with the public good. Consequently, HHMC is not immune to these types of charges.

However, anytime that HHMC denies staff privileges, it would be open to such “conspiracy” charges, rendering the state-action immunity meaningless. Further, as stated above, the determination of whether HHMC’s reasons for denying staff privileges are a pretext or whether its actions are inconsistent with the public good would require an encroachment into state sovereignty that Parker was intended to prevent. . Because City of Columbia rejected the reasoning relied on by this court in Bolt III, we find that HHMC is entitled to summary judgment with respect to Bolt’s allegations that it conspired with its peer review committee in violation of the Sherman Act.

CONCLUSION

For the reasons stated, we VACATE the district court’s order and REMAND to the district court for further proceedings not inconsistent with this opinion.⁵

VACATED and REMANDED.

1 . The facts of this case are discussed extensively in our last panel opinion, Bolt v. Halifax Hosp. Medical Center, 891 F.2d 810 (11th Cir.), cert. denied, 495 U.S. 924, 110 S.Ct. 1960, 109 L.Ed.2d 322 (1990). The following summary includes only those facts necessary for this appeal.

2 . The only conspiracy discussed by the district court and the only one we discuss in this opinion is the alleged conspiracy between HHMC and the members of its peer review committee.

3 . These arguments are to be distinguished from the argument waived by all the hospitals at en banc oral argument, namely, that they were private parties acting pursuant to a clearly articulated state policy and that they were actively supervised by the State. Bolt v. Halifax Hosp. Medical Center, 891 F.2d 810, 823 n. 22 (11th Cir.1990) (citing Bolt 1, 851 F.2d at 1281-84). In its brief on rehearing en banc, HHMC modified its state-action immunity argument and raised these two new alternative arguments. Bolt HI, 891 F.2d at 823 n. 22. Therefore, the state agency and municipality arguments were considered by the panel on remand.

4 . Lafayette also suggested that to qualify for Parker immunity the municipality was required to be “actively supervised" by the State. In Town of Hallie, the Supreme Court rejected this suggestion. The Court reasoned that this requirement, which is applied when private parties are involved, is "necessary-to prevent a State from circumventing the Sherman Act's proscriptions by casting ... a gauzy cloak of state involvement over what is essentially a private price-fixing arrangement.” Town of Hallie, 471 U.S. at 46-47, 105 S.Ct. at 1720 (internal quotation marks & citations omitted). The dangers present when a private party is acting, however, are not present when a municipality is acting. The Court held, therefore, that "[o]nce it is clear that state authorization exists, there is no need to require the State to supervise actively the municipality’s execution of what is a properly delegated function." Id.

5 . Prior to filing his brief on appeal, Bolt filed a motion to dismiss this appeal for lack of jurisdiction. In support of this motion, Bolt argued that the denial of a motion for summary judgment was not immediately appealable as a final order and that, in light of this court’s previous opinion in Bolt III, the law-of-the-case doctrine precluded review of HHMC’s claim to state-action immunity.

We conclude that we have jurisdiction of this appeal pursuant to the collateral order doctrine. See Commuter Transp. Sys., Inc. v. Hillsborough County Aviation Auth., 801 F.2d 1286, 1289-90 (11th Cir.1986) (order denying motion for summary judgment grounded on Parker immunity is immediately appealable as a collateral order). Also, Bolt’s reliance on the law-of-the-case doctrine is without merit because an exception to that doctrine applies where, as here, controlling authority has made contrary law applicable to the issue previously decided. Heathcoat v. Potts, 905 F.2d 367, 371 (11th Cir.1990). Accordingly, his motion to dismiss is DENIED.