The opinion of the court was delivered by: DITTER
This anti-trust action for treble damages alleges that the owners of nursing home facilities have conspired to fix prices charged for the care of indigents.
Presently before the court are the defendants' motions to dismiss for lack of subject matter jurisdiction and failure to state a claim under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).
For the reasons which follow, these motions must be denied.
Taking as true the allegations of the complaint and all reasonable inferences deducible therefrom, Curtis v. Everette, 489 F.2d 516, 518 (3d Cir. 1973), cert. denied 416 U.S. 995, 94 S. Ct. 2409, 40 L. Ed. 2d 774 (1974), the operative facts may be briefly stated. Under ordinary circumstances, a skilled nursing facility participating in the Pennsylvania Medical Assistance Program (hereafter Medicaid), 42 U.S.C. §§ 1396 et seq.; 62 P.S. §§ 441.1 et seq., enters into a contract with the Pennsylvania Department of Public Welfare, executing a "Skilled Nursing Home Care Agreement." This agreement obligates the facility to provide skilled nursing care to eligible medical assistance patients in return for which the facility receives reimbursement presently set at $20. per patient per day from the welfare department. At some unknown date prior to June 26, 1975, defendants began a series of discussions which culminated in a conspiracy to 1) have the rate of reimbursement raised to $27.25 per day; 2) boycott and refuse to accept any new Medicaid patients until this rate was increased, this boycott to begin on August 1, 1975; and 3) further coerce the Commonwealth to increase the rate by threatening to terminate their provider agreements with the state. The culmination of this conspiracy occurred on June 26, 1975, when a HCFAP press release was issued, detailing the above-described action the defendants would undertake and its objectives (Complaint, paragraphs 32, 35; Exhibit II). In furtherance of this conspiracy, defendants refused to admit plaintiff DeGregorio, although he had been approved by the Medicaid program as eligible for skilled care and each of the homes had beds available for male patients. Mr. DeGregorio's sole source of income was and still is a monthly Social Security check of approximately $130. Plaintiff Gouedy was subjected to a similar concerted refusal of admission, although she also had been declared eligible for skilled care. Mrs. Gouedy's sole source of income also was a monthly Social Security check for $168.50.
Defendants' objections to the complaint are many, but basically they can be broken down into two main categories: standing and the sufficiency of the allegations of effect on interstate commerce. I shall consider them separately.
The threshold requirement of standing is statutory in antitrust cases.
An antitrust plaintiff has standing if he alleges a violation of the antitrust laws, demonstrates that he has suffered injury to his business or property, and shows that his injury was incurred "by reason of" the other party's illegal activities. These requirements are imposed because Congress did not intend, by enacting Section 4 of the Clayton Act, to "provide a remedy in damages for all injuries that might conceivably be traced to an antitrust violation." Hawaii v. Standard Oil Co., 405 U.S. 251, 263 n. 14, 92 S. Ct. 885, 891, 31 L. Ed. 2d 184 (1972). Rather, treble damage relief has been confined, at least in the Third Circuit, "to those individuals whose protection is the fundamental purpose of the antitrust laws." Cromar Co. v. Nuclear Materials and Equipment Corp., 543 F.2d 501, 505 (3d Cir. 1976), quoting In Re Multidistrict Vehicle Air Pollution M.D.L. No. 31, 481 F.2d 122, 125 (9th Cir.), cert. denied sub. nom. Morgan v. Automobile Mfgrs. Assn., 414 U.S. 1045, 94 S. Ct. 551, 38 L. Ed. 2d 336 (1973).
At the outset, it is apparent that plaintiffs have sufficiently alleged a violation of the antitrust laws. Group boycotts, concerted refusals by competitors to deal with others, long have been held unreasonable or illegal per se under the federal antitrust laws, and beyond justification. Klor's, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 79 S. Ct. 705, 3 L. Ed. 2d 741 (1959); Northern Pacific R. Co. v. United States, 356 U.S. 1, 78 S. Ct. 514, 2 L. Ed. 2d 545 (1958).
Trade associations must necessarily regulate the conduct of their members, but regulations or rules which require the members to refuse to deal should be upheld only if they are reasonable and not directed at specific individuals. Radiant Burners, Inc. v. Peoples Gas, Light & Coke Co., 364 U.S. 656, 81 S. Ct. 365, 5 L. Ed. 2d 358 (1961). Here, defendants' policies were directed, by their very nature, against plaintiffs.
Therefore, plaintiffs have alleged an antitrust violation, and if they can demonstrate individual injury sustained by reason of the violation, they may maintain this suit.
a. Daniel DeGregorio's Allegations of Injury Under Section 1
Mr. DeGregorio first alleges that he suffered a cognizable injury to his business in that defendants' act denied him the opportunity to be restored to employability. From early on, it has been recognized that the language "business interest" should be given a broad interpretation to accomplish the Act's objectives, Quinonez v. Nat. Assn. of Securities Dealers, Inc., 540 F.2d 824, 829 (5th Cir. 1976), that it "denotes the employment or occupation in which a person is engaged to procure a living." Roseland v. Phister Mfg. Co., 125 F.2d 417, 419 (7th Cir. 1942). One who has lost the opportunity to perform work as the result of an antitrust violation has stated an injury to his business or property and is entitled to recovery, Nichols v. Spencer International Press, Inc., 371 F.2d 332, 334 (7th Cir. 1967), and salaries or commissions lost as a result of antitrust practices are recoverable as well. Vandervelde v. Put and Call Brokers and Dealers Ass'n, 344 F. Supp. 118 (S.D. N.Y. 1972). However, this does not mean that everyone can bring an action because he was denied the opportunity to enter a business. Numerous courts have rejected the idea that there need be an actual on going business to obtain standing, see, e.g. Triangle Conduit & Cable Co. v. Nat. Electric Products Corp., 152 F.2d 398, 400 (3d Cir. 1945); N.W. Controls, Inc. v. Outboard Marine Corp., 333 F. Supp. 493, 507 (D. Del. 1971); Delaware Valley Marine Supply Co. v. American Tobacco Co., 184 F. Supp. 440, 443-4 (E.D. Pa. 1960), aff'd 297 F.2d 199 (3d Cir. 1961), cert. denied 369 U.S. 839, 82 S. Ct. 867, 7 L. Ed. 2d 843 (1962), but they have required at the very least that plaintiff demonstrate the intention and preparedness to enter the business. A simple hope or expectation to enter a business is insufficient.
Plaintiff DeGregorio has failed to allege that he is prepared to enter a business.
He argues that it would be superfluous and unjust to require him to show preparedness to be employed, because it is precisely plaintiff's preparedness to be employed that has been deprived by defendants' activities. I find this argument to be unacceptable. It is nothing more than a bootstrap attempt to alleviate the necessity of demonstrating that he has suffered some economic injury. Were I to follow this line of reasoning, then anyone denied skilled nursing care, no matter if that person was incapable of ever working again, could contend that he could possibly have been restored to employability and thus has suffered injury. The antitrust laws were not enacted to protect this type of person. Plaintiff has failed to demonstrate that the deprivation of such an elusive opportunity constitutes an injury to his business, and therefore he has no standing to sue on this basis.
Mr. DeGregorio's second assertion of injury to his business or property is that he was denied the benefit of two income exemptions to which he would have otherwise been entitled as a Medicaid patient had he been admitted to a skilled nursing care facility. I find this argument persuasive, and accordingly hold that he has standing to pursue his antitrust action on this ground.
By way of brief background: the Medicaid Program, Title XIX of the Social Security Act, 42 U.S.C. §§ 1396-1396g, is a cooperative program, whereby participating states reimburse qualified "providers" of services which also choose to participate. The Act requires that the participating states make services available to all individuals receiving cash assistance under one of the federally-aided public welfare programs.
These individuals are termed "categorically needy". 45 C.F.R. § 248.1(a)(1). In addition, the Act authorizes states to elect to make medical assistance available to individuals whose income and resources exceed the amount allowed to qualify them for cash assistance, but which are insufficient ...