set staffing policies and regulates the practice of specialties, including cardiovascular surgery.
For example, in 1983 Hamot placed a moratorium on granting new cardiovascular surgical privileges. The moratorium, however, was not inflexible. At various times, Hamot's Board lifted the moratorium to permit the recruitment of new cardiovascular surgeons. As discussed in more detail below, Dr. Hanson was the beneficiary of such action on several occasions.
Additionally, in August 1983, Hamot's Board authorized the formation of a committee to investigate issues relating to cardiovascular surgery at the hospital. As a result of the committee's work, in April 1984 the Board adopted a number of rules regulating cardiovascular surgery. The Board passed a "First Surgical Assistant Rule" ("FSAR"). Under the FSAR, two board certified cardiovascular surgeons were required to participate in every open heart surgery, one as the primary surgeon and the other as a first assistant. The stated purpose of the FSAR was to ensure the presence of two qualified surgeons during every procedure. This rule was in effect during the events giving rise to this case but was later abandoned when it came under criticism for, among other things, an inefficient use of surgeons' time.
The Board also established an open heart surgery volume requirement. Under the volume requirement, cardiac surgeons were required to perform at least one hundred open heart surgeries per year, twenty-five of which must be as the primary surgeon, in order to maintain their privileges. The stated purpose of the volume requirement was to ensure that surgeons participated in enough procedures to maintain their technical proficiency. The rule was supported by contemporary studies linking volume and lower mortality rates. See Pontius v. Children's Hospital, 552 F. Supp. 1352 (W.D. Pa. 1982).
In October 1986, Hamot instituted its "Hamot-Centered Physicians Program" ("HCPP"). The stated purpose of the HCPP was to promote quality and uniformity of care. Under the program, physicians were offered various benefits in exchange for focusing their practice at Hamot. (Plaintiffs' Appendix of Exhibits (hereinafter "Pls.' Ex.") 2 at pp. 7-8). According to the program's "principles of agreement," these benefits included investment opportunities, practice management support, discount malpractice insurance and consideration of a "franchise" agreement whereby Hamot agrees not to grant privileges to competing physicians.
The History of Plaintiffs' Practice at Hamot
Dr. Hanson began performing open heart surgeries at Hamot with his partner, Dr. Bruce Farrell, in 1982 after having practiced at St. Vincent Medical Center in Erie since 1971. At that time, the Clinic was the only cardiovascular surgery group at Hamot. According to Dr. Hanson, he joined Hamot's staff because two Medicor cardiologists, Dr. Charles Furr and Dr. Donald Zone, had expressed concern over the Clinic's mortality rate and wanted an alternative group of cardiovascular surgeons to whom to refer their patients.
Drs. Hanson and Farrell quickly established a successful practice at Hamot. Their group routinely received referrals from several Medicor cardiologists and their practice grew. In 1982, Drs. Hanson and Farrell performed 50 open heart surgeries at Hamot. In 1983 they performed 96 open heart surgeries. In 1984, Hamot lifted its moratorium on credentialling new cardiovascular surgeons so that Drs. Hanson and Farrell could recruit a third surgeon, Dr. Richard Cunningham, to join their practice. With the addition of Dr. Cunningham, the team's practice continued to grow. In 1984, the group performed 123 open heart surgeries at Hamot.
Dr. Hanson's group was reduced to two surgeons in early 1985 when Dr. Farrell died. The group's volume declined. In 1985 and 1986, the group performed 112 and 101 open heart surgeries respectively. In 1987, Hamot again lifted its moratorium on granting new cardiovascular privileges so that Drs. Hanson and Cunningham could recruit Dr. John Forman. Dr. Forman joined the team in late 1987.
In 1988, the group's volume increased to 119 open heart surgeries.
However, despite Dr. Hanson's group's collective volume, Dr. Hanson individually was not meeting Hamot's volume requirement.
On December 12, 1988, Hamot notified Dr. Hanson of its concern about his ability to satisfy the criteria and that his future activity would be scrutinized.
The following year marked the beginning of a precipitous decline in the number of open heart surgeries performed by Dr. Hanson's group at Hamot. Drs. Cunningham and Forman resigned and left Erie, leaving Dr. Hanson alone in practice. Dr. Hanson's practice suffered because he was left without a partner who could, provide consistent assistance. In response, Hamot again lifted its moratorium on granting new cardiovascular surgical privileges so that Dr. Hanson could recruit a new partner. Dr. Hanson first recruited Dr. Thomas Comer. For a variety of reasons, Dr. Comer did not fare well at Hamot and left after only four months. Dr. Hanson then recruited Dr. Kerth.
Dr. Kerth had started his career at Pacific Medical Center ("PMC") in San Francisco, where he practiced from 1962 to 1980. Dr. Kerth stated that while at PMC he performed over 100 surgeries per year and had published over ninety papers on open heart surgery. In 1980, Dr. Kerth left the United States to practice at King Faisal Specialist Hospital in Saudi Arabia. He did not perform any open heart surgeries while in Saudi Arabia. In 1983, Dr. Kerth returned to the United States and unsuccessfully tried to obtain privileges in Nebraska and at PMC. Ultimately, in late 1987, Dr. Kerth obtained limited privileges at Phoenix Baptist, Scottsdale Memorial and Good Samaritan hospitals in Arizona as part of a fellowship in cardiovascular surgery where he underwent re-training in open heart surgery. He worked in Arizona until contacted by Dr. Hanson.
After he was contacted by Dr. Hanson, Dr. Kerth visited Erie. He met with the Medicor cardiologists as part of his trip to Erie. According to Dr. Kerth, with the exception of Drs. Underhill and Sharma who told him they referred only to the Clinic, each Medicor cardiologists with whom he met was positive about his arrival at Hamot and created the expectation he would receive substantial referrals. (Kerth Dep. 125, 137, 475.) The arrival of Dr. Kerth in late 1989, however, did not increase the number of referrals to Dr. Hanson's group.
In December 1989, Hamot again notified Dr. Hanson of its concern about his continuing failure to meet the volume requirement.
Instead of terminating Dr. Hanson's privileges, Hamot informed Dr. Hanson he would need to perform at least 50 open heart surgeries in the first six months of 1990 or his privileges would lapse. Dr. Hanson did not receive enough referrals to meet this requirement and his privileges were terminated in July 1990.
The termination of Dr. Hanson's privileges left Dr. Kerth without a partner and his open heart surgery practice ground to a virtual halt.
In January 1991, at the request of Dr. Hanson and Dr. James Pepicello, Hamot's then Chief of Surgery, Hamot's Board replaced the volume requirement with a quality assurance program. The Board then reinstated Dr. Hanson's privileges, subject to the new criteria. While this arrangement enabled Dr. Hanson to begin operating again, it did not resolve the underlying lack of referrals to his group. In fact, throughout 1991 the number of referrals to Dr. Hanson's group further declined. In 1991, Drs. Hanson and Kerth performed only 13 open heart surgeries at Hamot.
In mid 1992, Hamot notified Drs. Hanson and Kerth that their surgery volume had become so low that it was no longer possible to conduct a statistically meaningful evaluation of the quality of care they were providing. The Board voted to reinstate the volume requirement. Dr. Hanson's privileges were revoked in mid 1992. Dr. Kerth's privileges were revoked in the following year.
The instant civil action followed. Plaintiffs filed a six count complaint on August 11, 1995.
In Counts I, II and III, Plaintiffs allege the Defendants violated section 1 of the Sherman Act, 15 U.S.C. § 1, by conspiring to (1) boycott, (2) reciprocally deal and (3) exclusively deal in open heart surgery referrals. In Count IV, Plaintiffs claim the Clinic Defendants violated section 2 of the Sherman Act, 15 U.S.C. § 2, by attempting to monopolize the market for open heart surgery in Erie. In Counts V and VI, Plaintiffs allege pendant state law antitrust and tortious interference with prospective business relations claims based on the same conduct allegedly giving rise to the Sherman Act violations.
II. STANDARD OF REVIEW
A movant is entitled to summary judgment if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to summary judgment as a matter of law." Fed.R.Civ.P. 56(c). This rule allows parties to demonstrate prior to trial that opposing claims "have no factual basis." Celotex Corp. v. Catrett, 477 U.S. 317, 327, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). The inquiry here is "whether there is any need for a trial -- whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may be reasonably resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986).
The moving party has the initial burden of demonstrating that no genuine issue of material fact exists. Celotex, 477 U.S. at 323. Thereafter, the burden shifts to the non-moving party to demonstrate that there is a genuine issue for trial. Fed.R.Civ.P. 56(e); Celotex, 477 U.S. at 324. All inferences to be drawn from the underlying facts must be viewed in the light most favorable to the non-moving party. United States v. Diebold, Inc., 369 U.S. 654, 655, 8 L. Ed. 2d 176, 82 S. Ct. 993 (1962).
1. The Section 1 Claims
Counts I, II and III of Plaintiffs' complaint are premised on section 1 of the Sherman Act which provides:
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.