The opinion of the court was delivered by: COHILL
Plaintiff Corrado M. Baglio, M.D. is the former director of the pathology laboratory at Aliquippa Hospital, located in the city of Aliquippa, Beaver County, Pennsylvania. His termination from that position has spawned eight years of litigation in both the state and federal courts. In the action presently before this Court, Dr. Baglio has alleged antitrust violations under the Sherman Antitrust Act, 15 U.S.C. § 1, and the Clayton Antitrust Act, 15 U.S.C. § 3, as well as violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1962 (c) and (d). The precise nature of these claims will be addressed below. The defendants in this action are 37 corporations and individuals, including hospital employees, board members, administrators, and physicians.
The defendants have aligned themselves into four groups, and each has filed a motion for summary judgment with accompanying brief. Defendants The Medical Center of Beaver ("TMC"), DECA Labs, Medical Center Enterprises ("MCE"), John Baska, M.D., Edward Heinle, M.D., and Robert Hersh (the "Medical Center Defendants") have filed a motion for summary judgment docketed at Doc. 117. The motion filed by Steven Brodsky, M.D.; Dante DiMarzio, D.O.; Joseph Klag, D.O.; John Notaro, M.D.; Kuldeep Sehgal, M.D.; Narayan Shetty, M.D.; Jose Sia, M.D.; Amarjeet Singh, M.D.; William Slemenda, M.D.; Patrick Sturm, M.D.; Nicholas Tapyrik, M.D.; Pradip Teredesai, M.D.; Harold Thomas, M.D.; Michael Zernich, M.D., Stephen Zernich, Jr., M.D.; and Wallace Zernich, M.D. (the "Physician Defendants") is docketed at Doc. 108. A third group of defendants includes Camillo A. Bonomi, Julia Brush, Emlyn Charles, Frank DeLisi, Charles Delman, William B. Donatelli, George Ehringer, Donald Fox, Gino Piroli, Howard W. VanScoy, Jr., Richard Wood, Woodlawn Health Resources, Inc., Woodlawn Technologies, Inc., and Marian Zinkham (the "Administrative Defendants"). The individuals in this group either were (and in some instances may remain) on the Board of Directors of Woodlawn Health Resources or Woodlawn Technologies, or were administrators at Aliquippa Hospital at all relevant times. Their motion for summary judgment is docketed at Doc. 106. The final defendant to this action, Med-Check Laboratories, Inc. ("Med-Chek"), has moved for summary judgment in Doc. 115. Plaintiff has filed a three-volume response, as well as affidavits and a memorandum of law addressing these four motions for summary judgment. Defendants, in turn, have replied. Voluminous discovery has been filed with this Court.
Dr. Baglio has also filed a motion for partial summary judgment and a motion in limine (Doc. 112), to which the defendants have submitted responses.
For the reasons set forth below, we will grant the motions for summary judgment filed by each of the defendant groups, and grant summary judgment for all defendants to this action on all claims, RICO and antitrust, raised in the complaint. In addition, we will deny plaintiff's motion for partial summary judgment and his motion in limine.
Essentially, the factual background to this dispute is as follows. Aliquippa Hospital is an acute care facility located in Beaver County. Dr. Baglio was the Laboratory Director of the Aliquippa Hospital Pathology Laboratory. Prior to 1987, his employment contract with the hospital provided that it would "remain in full force and effect until terminated by either party giving to the other ninety (90) days notice in writing of the intention to do so." In March of 1987, defendant Howard VanScoy, acting as President and CEO of Aliquippa Hospital, informed Dr. Baglio that his employment would be terminated in ninety days. Plaintiff was further informed that a new contract could be negotiated. Following several weeks of angry letters and meetings, Dr. Baglio signed a new employment contract with the hospital on June 30. The only change from his former contract was in Paragraph 14, which stated:
The complaint alleges that this new thirty day provision was part of a conspiracy to eliminate him as Director of Pathology. Compl. at 16.
The complaint alleges that two related conspiracies to terminate his employment emerged from a complicated series of developments at Aliquippa Hospital and The Medical Center. The mid-1980s, during which Dr. Baglio's employment contract was renegotiated, were undeniably a time of difficulty and reorganization for both of the medical facilities in this action as they each faced growing competition from private, for-profit clinical laboratories. TMC, formed through the merger of a number of smaller hospitals in Beaver County, was a 470-bed facility providing inpatient as well as outpatient services for residents of Ohio, West Virginia, and Pennsylvania. During the 1980s, TMC made several efforts to tap into the for-profit health care market. In 1985, TMC formed the Hospital Physicians Joint Venture ("HPJV") to explore and develop joint venture arrangements. TMC also developed several for-profit corporate entities, including Medical Center Enterprises, Inc., DECA Services, Inc., and DECA Labs, Inc. In one for-profit arrangement, DECA Labs rented office space to individual physicians, who in turn had their employees draw blood. The clinical work on these samples was performed by DECA Labs. One of these phlebotomy facilities, Diagnostic Medical Services, Inc. ("DMS"), was a corporate partnership of four Aliquippa Hospital employees, who are four of the defendants here: Notaro, Shetty, Sia and Thomas.
Aliquippa Hospital, too, underwent a number of structural changes during these years, as the hospital administration and a number of physicians explored joint venture possibilities that would affect various hospital services and departments. In the spring of 1985, defendant Howard W. VanScoy, Jr. became executive director of the hospital. Under his leadership, the hospital underwent a corporate reorganization. Woodlawn Technologies, Inc. was established as a for-profit holding company, with subsidiaries that included nonprofit corporations Aliquippa Hospital and Woodlawn Health Resources, Inc. Various committees of hospital physicians, administrators and board members met to discuss joint ventures. For example, joint venture schemes were implemented with respect to cardiac catheterization, CT scan services, physical therapy services, and mobile lithotripsy.
One such project involved the pathology lab. Aliquippa's ability to succeed in the increasingly competitive market for medical services was hampered by the age of its laboratory and equipment. The laboratory was not computerized; there were no online connections between the laboratory and various areas of the hospital, or between the laboratory and external physicians' offices. The laboratory's fees for outpatient services were high. In addition, the laboratory did not have a courier service in place to collect specimens from physicians' offices and transport them to the lab. Minutes of meetings of the hospital's board of directors show that a joint venture involving the pathology lab was considered as early as the fall of 1985.
During the summer and fall of 1987, VanScoy and defendant Frank DeLisi met and communicated with representatives of Med-Chek Laboratories, Inc. regarding a laboratory management structure that the hospital wished to develop. They also discussed a conceptual proposal for a joint venture of the laboratory. Med-Chek provided clinical laboratory services and management services to hospitals and physicians. During the same period, Aliquippa Hospital discussed joint-venturing the lab with at least two other concerns, International Clinical Laboratories and Roche Biomedical Laboratories, Inc.
After his employment was terminated, Dr. Baglio did not renew his license to practice medicine. He made initial inquiries at the office of the coroner, in Pittsburgh, and at the University of Pittsburgh. However, when these queries were unsuccessful, he did not seek employment elsewhere.
In July of 1988, VanScoy informed Aliquippa Hospital employees that the hospital and Woodlawn Health Resources had signed a Memorandum of Understanding with Med-Chek Laboratories, and that a joint venture was being planned for the development of a pathology laboratory. According to the Draft Prospectus, two labs were proposed: an on-site lab in the hospital would perform a limited number of tests, and a lab off-campus would handle the rest of the hospital's lab work, physician work from both investor and non-investor physicians, and work from outside sources such as nursing homes. Investment was open to all licensed physicians Med-Chek was to be responsible for the management of both labs.
From December of 1988 to April of 1989, Med-Chek managed the hospital laboratory under a management agreement.
The joint venture was never actualized. Jean M. Andre succeeded VanScoy as President and CEO of Aliquippa Hospital, and did not favor the project. Andre did not believe that the joint venture was in the hospital's best financial interest. By letter dated March 31, 1989, the agreement with Med-Chek was terminated.
In 1987, Dr. Baglio filed an action in the Allegheny County Court of Common Pleas against may of these same defendants. That complaint included allegations against Aliquippa Hospital for unlawful termination of his employment; against many of the Physician Defendants for defamation and "false light," and for conspiracy to interfere with his employment contract; against the hospital and defendants VanScoy and Charles for conspiracy, defamation and false light; and against Med-Chek for conspiracy. That action is still pending before the Honorable R. Stanton Wettick, Jr. at the Court of Common Pleas.
During the discovery phase of that litigation, plaintiff's counsel filed an interrogatory requesting that defendants Aliquippa Hospital, Woodlawn Technologies, Inc. and Woodlawn Health Resources, Inc. state the reason for the decision to terminate plaintiff's employment contract and the objective to be served by that termination. Dr. Baglio refers to this as the "state court admission." Defendants gave the following response:
Interrogatory 14(c) - A decision was made to terminate Plaintiff's Agreement with Aliquippa Hospital because the Hospital had made a decision to pursue a joint venture laboratory arrangement. The objective to be served was to increase profitability.
Plaintiff subsequently filed this action.
In his complaint, Dr. Baglio contends that the actions taken by the defendants violated the federal antitrust laws and the RICO statute, and that these allegedly illegal actions either resulted in the termination of his employment with Aliquippa Hospital or that his employment was terminated in order to somehow facilitate these allegedly illegal schemes.
The narrow issues before us are whether plaintiff's antitrust and RICO claims can survive summary judgment. The reasons for the termination of plaintiff's employment are not properly before us; that issue is presently being litigated in state court and does not concern us here.
II. Summary Judgment Standard
Summary judgment is appropriate only when the pleadings, depositions, answers to interrogatories, and admissions on file fail to demonstrate a genuine issue of material fact so that the moving party is therefore entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). In other words, summary judgment may be granted only if there exists no genuine issue of material fact that would permit a reasonable jury to find for the nonmoving party. Anderson v. Liberty Lobby Inc., 477 U.S. 242, 250, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986).
The moving party may meet its burden on summary judgment by showing that the nonmoving party's evidence is insufficient to carry the burden of persuasion at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). The nonmoving party must then go beyond the pleadings and, by affidavits, depositions, answers to interrogatories, and admissions on file, designate facts showing that a genuine issue of material fact remains for trial. Id. at 324. The nonmoving party must establish the existence of every element necessary to its case, on which it bears the burden of proof. Miller v. Indiana Hospital, 843 F.2d 139, 143 (3d Cir. 1988). "Facts that could alter the outcome are 'material', and disputes are 'genuine' if evidence exists from which a rational person could conclude that the position of the person with the burden of proof on the disputed issue is correct." Horowitz v. Kemper Life Assurance Co., 57 F.3d 300, 302 n.1 (3d Cir. 1995).
In reviewing the record on a motion for summary judgment, the evidence of the nonmovant must be believed, and the court must give the nonmoving party the benefit of all reasonable inferences. Sempier v. Johnson & Higgins, 45 F.3d 724, 727 (3d Cir.), cert. denied, 132 L. Ed. 2d 854, 115 S. Ct. 2611 (1995).
We have original jurisdiction pursuant to 28 U.S.C. § 1337 over any civil action arising under an Act of Congress protecting trade and commerce against restraints and monopolies. We have original jurisdiction under 18 U.S.C. § 1964 over any civil action or proceeding brought under the Racketeer Influenced and Corrupt Organizations Act.
A. Antitrust Claims Against Various Defendants
Plaintiff's antitrust claims, alleging violations of § 1 of the Sherman Antitrust Act, 15 U.S.C. § 15 (1994) and § 3 of the Clayton Antitrust Act, are found in Counts I through IV of the complaint. Count I alleges that all defendants conspired to boycott or attempt to boycott the plaintiff as a provider of pathology services. Count II claims conspiracy in restraint of trade under Section I against all defendants. Count III alleges that by conspiring to limit plaintiff's access to the Allegheny Hospital pathology laboratory, the Physician Defendants and the Administrative Defendants violated the Essential Facilities Doctrine under Section 1. And Count IV contains allegations that both the Administrative and Physician Defendants controlled patient admissions and pathology services at Aliquippa Hospital, thus violating the tying provisions of Section I and of Section 3 of the Clayton Act.
Section 1 of the Sherman Act provides that:
Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.
To establish a Section 1 violation, a plaintiff must prove (1) concerted action by the defendants; (2) that such action produced anticompetitive effects within the relevant product and geographic markets; (3) that the concerted actions were illegal; and (4) that plaintiff was injured as a proximate result of the concerted action. Petruzzi's IGA Supermarkets, Inc. v. Darling-Delaware Co., 998 F.2d 1224, 1229 (3d Cir., cert. denied sub nom. Moyer Packing Co. v. Petruzzi's IGA Supermarkets, Inc., 510 U.S. 994, 114 S. Ct. 554, 126 L. Ed. 2d 455 (1993). Although many actions may restrain trade to some extent, whether an action violates Section 1 depends upon whether the restraint is unreasonable. Miller v. Indiana Hosp., 814 F. Supp. 1254, 1259 (W.D. Pa.), aff'd. 975 F.2d 1550 (3d Cir. 1992), cert. denied, 507 U.S. 952, 122 L. Ed. 2d 744, 113 S. Ct. 1366 (1993), citing Board of Trade of City of Chicago v. United States, 246 U.S. 231, 238, 62 L. Ed. 683, 38 S. Ct. 242 (1918).
Defendants have each moved for summary judgment on plaintiff's antitrust claims, and we will address their primary arguments in turn. However, before turning to Dr. Baglio's substantive antitrust claims, we must ...