Perfusion Services of Baxter Healthcare Corp. v. Foster

711 So. 2d 695, 1998 La. LEXIS 1092, 1998 WL 252462
Supreme Court of Louisiana·Decided May 19, 1998·No. No. 98-CA-0056·Published·Cited by 1 cases

Opinion

11VICTORY, Justice.*

This matter comes to us on direct appeal from a trial court’s finding that La. R.S. 51:916(B)(1)(2)(3) is unconstitutional insofar as it prohibits receipt of compensation for the “use” of products or equipment used in the performance of clinical perfusion services and its granting of a preliminary injunction prohibiting the enforcement of the statute insofar as it prohibits the receipt of compensation for such use. In addition, although the trial court found the statute to be constitutional in all other respects, we will consider whether the trial court was correct in granting a preliminary injunction of one year prohibiting the enforcement of the constitutional portions of the statute.

laFACTS AND PROCEDURAL HISTORY

The 1997 Legislature passed Act 986 which enacted La. R.S. 51:9161 regarding perfusion equipment and services.2 The Act became effective on August 17, 1997 with the stated purpose of prohibiting clinical perfu-sionists, or the companies that employ them, from receiving compensation for “the sale of clinical perfusion products” to medical institutions where they also provide clinical perfusion services or, if the perfusionist works for a physician, where that physician has surgical or medical privileges. These prohibitions are found in La. R.S. 51:916(B)(1)(2) and (3)(a). Another stated purpose of the Act is to prohibit companies that sell clinical perfusion products from providing contract perfusion ^services at the medical institutions that purchase their products. This prohibition is found in La. R.S. 51:916(B)(3)(b).

Perfusion Services of Baxter Healthcare Corporation (“Perfusion Services”), a corporation offering perfusion services, equipment and supplies on a turnkey basis to a number of Louisiana hospitals on a contract basis, and Paul Webb (“Webb”), a clinical perfu-sionist who contracted with Perfusion Services to provide perfusion services to various hospitals and healthcare providers, filed suit seeking a temporary restraining order, preliminary injunction and permanent injunction prohibiting the enforcement of Act 986 and a declaratory judgment of unconstitutionally. Perfusion Services has contracts with various hospitals to provide them with clinical perfu-sionists, as well as the clinical perfusion equipment and supplies, on an exclusive basis.

Plaintiffs argued to the trial court, inter alia, that the broad language of the Act makes it illegal for a clinical perfusionist to receive any compensation relating to the “use” of perfusion equipment, which has the effect of making all perfusion services illegal unless performed gratuitously. The State [697] argued that the Act was simply intended to prevent clinical perfusionist from selling clinical perfusion products to the same medical institutions where they also provided clinical perfusion services, just as Perfusion Services was doing.

After a hearing, the trial court apparently agreed with the plaintiffs and granted a “preliminary injunction in favor of plaintiffs against the enforcement of Act 986 insofar as the Act in La. R.S. 51:916B(1)(2)(3) prohibits receipt of compensation for the “use” of products or equipment used in the performance of clinical perfusion services.” The court’s reasoning was as follows:

pThe Court finds the legislation is “over-broad” and violates LSA-Constitution Art. I, Sec. 23. In reaching this conclusion the Court employs the analysis listed in Rousselle vs. Plaquemines Parish School Board, 633 So.2d 1235 (La.1994), footnote 10.
The Court finds based on evidence presented that the state law would in fact impair contractual relationships; further, the court determines that impairment of private contractual rights is of constitutional dimension. Block vs. Reliance Ins. Co., 433 So.2d 1040 (La.1983), Yamaha Motor Corp. vs. Bonfanti, 589 So.2d 573[575] (La.App. 1st Cir.1991). None of the parties to the private contracts could have anticipated that the Legislature would prohibit clinical perfusionists from “using” products or equipment used in providing clinical perfusionist services. The Court finds that the services provided by the clinical perfusionists are vital to the health, safety and welfare of the people of Louisiana. Act 986 in proscribing the “use” of products and equipment used in performance of clinical perfusion services paints with too broad a stroke and fails to meet the legislative intent stated in the preamble. In all other respects, Act 986 is valid and enforceable.

Thus, the court’s narrow holding was evidently limited to the provision of the provision of the Act which prohibited compensation “from the ... use of products or equipment.” Interpreting this to mean that perfusionists could not be compensated for “using” perfusionist equipment, and thus could not be paid wages for performing perfusionist services, the court found only the “use” language to be unconstitutionally overbroad and in violation of the Contracts Clause. Apparently, the court found the “anti-tying” aspects of the Act to be constitutional.

Plaintiffs requested a rehearing and argued that they needed time to orderly disengage from the contracts they already had with various hospitals. The State filed a supplemental memorandum stating that the “remaining issue is whether Act 986 ‘impairs Baxter’s contracts with hospitals in this state.”

After rehearing, the court reaffirmed its prior ruling that the Act was unconstitutional insofar as it prohibits receipt of compensation for the “use” of ^products and equipment, but that the Act was in all other respects constitutional. However, the court further stated:

and finding that because plaintiffs ask for orderly disengagement of existing contracts, and that while the legislature had a rational basis for enacting the law, because of the special nature of the contracts of providing specialized health care to people in dire need of medical care, it would be impractical and unwise to immediately disengage from these contracts.

The court then granted plaintiffs a preliminary injunction enjoining the enforcement of Act 986 for a period of one year to provide for the orderly disengagement of contracts.

The State filed this appeal, claiming that the trial court erred (1) in declaring a portion of Act 986 unconstitutional and thus unenforceable, and (2) in preliminarily enjoining enforcement of a constitutional statute for a period of one year.

DISCUSSION

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Perfusion Services of Baxter Healthcare Corp. v. Foster, 711 So. 2d 695, 1998 La. LEXIS 1092, 1998 WL 252462 (La. 1998).

711 So. 2d 695 (Perfusion Services of Baxter Healthcare Corp. v. Foster) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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