January 12, 2004Client Alert

Courts Reject Antitrust Challenges to Hospital Exclusive Provider Contracts

Hospital-based physicians, such as radiologists, anesthesiologists and emergency room physicians, who are excluded from practice at a hospital when that hospital enters into an exclusive contract with a physician group often look to the courts for relief. In these cases, physicians have claimed that antitrust law provides them with a right to practice at the hospital despite the exclusive contract. Such claims have been rejected by the courts. BCB Anesthesia Care v. Passavant Memorial Area Hospital, 36 F.3d at 664, 667-68 (7th Cir. 1994) (listing overwhelming number of cases that have rejected challenges to exclusive contracts on antitrust grounds).

A physician is not a proper party to bring a claim of antitrust violation; he or she merely seeks recovery of an alleged loss of personal income. Antitrust law serves to protect important public policy considerations concerning the structure of the marketplace; it does not serve to provide a mechanism to recover for personal injury. The class of allegedly injured parties who can bring an antitrust claim as limited. See e.g. Greater Rockford Energy & Technology Corp. v. Shell Oil Co., 998 F.2d 391, 395 (7th Circuit 1992) (antitrust actions are limited to those who are in the best position to vindicate the antitrust policy concern).

Physicians generally do not have standing to assert antitrust claims because they are not efficient enforcers of the antitrust laws. Only those who suffer a direct antitrust injury - - hospital patients and their payors - - have standing to bring such claims. Hospital "patients, their insurers or the government, all of whom are interested in ensuring that consumers pay a competitive price" are the ones to bring an antitrust claim. Mid-Michigan Radiology Associates P.C. v. Central Michigan Community Hospital, 1995 WL 239360 at 5 (E.D. Mich. 1995) (no standing for doctor excluded from the market) (quoting and relying upon Todorov v. DCH Healthcare Authority, 921 F.2d 1438, 1455 (11th Cir. 1991); Kurshin v. Benedictional Hospital, 34 F. Supp. 2d 133, 140 (N.D.N.Y. 1999) (same) (citing Addis v. Holy Cross Health System Corp., 1995 WL 914278 at *8 (N.D. Ind. 1995) and Rooney v. Medical Center Hospital of Chillicothe, 1994 WL 854372 *6 (S.D. OH 1994)).

Antitrust claims by physicians also have been rejected because they have not suffered any "antitrust injury." The exclusion of a particular doctor from a hospital does not constitute an antitrust injury; the replacement of one doctor with another doctor does not adversely change the competitive circumstances in the claimed market. Antitrust laws were enacted for "the protection of competition, and not competitors" and harm to individual doctors does not constitute a violation of the antitrust laws. Integraph Corp. v. Intel Corp., 195 F.3d 1346, 1356 (Fed. Cir. 1999) (citing Mr. Furniture Warehouse, Inc. v. Barclays Am./Commercial Inc., 919 F.2d 1517, 1522 (11th Cir. 1990); Independent Milk Producers Co-op v. Stoffel, 102 Wis. 2d 1,7-8, 298 N.W.2d 102 (Ct. App. 1980) (to be unlawful, the restraint must have a significant impact on competition in the relevant market). For example, Coffey v. Healthtrust, Inc., 955 F. 2d 1388 (10th Cir. 1992) addressed a situation where a radiologist worked for a medical group that had an exclusive contract with the local hospital, but later resigned from the group and sought to contract with the hospital individually. When his approach was rebuffed, the doctor sued, seeking to void the exclusive contract by claiming that it violated antitrust laws. The Tenth Circuit rejected his claim and held that there was no antitrust injury because patients receiving medical services before the doctor left the group still were receiving medical services after he was denied access to the hospital.

Other courts that have addressed the issue of a doctor excluded from the hospital because of an exclusive medical provider contract have reached the same conclusion: that the doctor's alleged injury is not an antitrust injury and the doctor therefore cannot state a valid antitrust claim. See e.g. Bakalaw v. Lovell, 14 F.3d 793 (2d Cir. 1994) (even if anesthesiologist was excluded from practice because of an exclusive contract, there is no antitrust injury from the consumer's point of view since the consumers, before and after implementation of the exclusive contract, still received medical services; only the name of the medical service providers changed); Kurshin, 34 F. Supp. 2d at 139 (no antitrust injury resulting from exclusive contract at hospital since only the providers changed); Davies v. Genesis Medical Center, 994 F. Supp. 1078, 1093 (same) (listing cases where doctors who were excluded from practicing at hospitals could not allege antitrust injury); Mid-Michigan Radiology, 1995 WL 239360 at *4 (same); Howerton v. Grace Hospital, Inc., 1995 WL 787529 #7 (W.D. N.C. 1995) (same); Salaman v. Our Lady of Victory Hospital, 1999 WL 955513 (W.D. N.Y. 1999) (same).

While physicians continue to file lawsuits seeking to have the courts overturn decisions by hospitals to enter into a exclusive provider contracts, the courts for the most part have upheld the decisions of hospital administration to enter in such contracts. Hospitals are given wide deference by the courts to handle their administrative affairs.

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