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Novak v. Hospital

United States District Court, W.D. Pennsylvania

September 30, 2014

VICTOR F. NOVAK II, M.D., F.A.C.S, Plaintiff,
SOMERSET HOSPITAL, et. al., Defendants.



Plaintiff Victor F. Novak, II, M.D., F.A.C.S., is a board-certified general surgeon who practiced at Somerset Hospital ("Somerset Hospital" or the "Hospital") from 1993 until November 2005 when his privileges were terminated. Following his loss of privileges, Plaintiff filed this civil action against the Hospital, Michael J. Farrell ("Farrell"), M. Javad Saadat, M.D. ("Saadat"), and Peter T. Go., M.D. ("Go"). Plaintiff's First Amended Complaint (ECF No. 49), the operative pleading in this case, asserts federal antitrust claims as well as state law claims for tortious interference with contractual relations and breach of contract.[1] Presently pending before the Court is Defendants' renewed motion for summary judgment (ECF No. 162). For the reasons that follow, Defendants' motion will be granted in part and denied in part. The motion will be granted as to Plaintiff's antitrust claims and Plaintiff's state law claims will be dismissed pursuant to 28 U.S.C. § 1367(c) for want of subject matter jurisdiction and without prejudice to plaintiff refiling those claims in state court as authorized by 42 Pa. C. S. § 5103(b).

I. Factual and Procedural Background[2]

A. The Parties, Somerset Hospital, and Conemaugh Hospital

Plaintiff is a general surgeon whose principal place of business in located in Somerset, Pennsylvania. (ECF No. 177 ¶ 1.) He joined Somerset Hospital's medical staff in 1993 after completing his medical training at Conemaugh Memorial Hospital (now Conemaugh Memorial Medical Center, hereinafter, "Conemaugh"). (Id. ¶2.) He has practiced as an independent general surgeon in Somerset and Cambria Counties since that time, with an office in Somerset Borough. (Docket No. 182, ¶ 110.) In 1995, Plaintiff was certified by the American Board of Surgery as a general surgeon, and he maintains that certification. (Id. ¶ 112.)

Defendant Farrell was, at all times relevant to this litigation, the CEO of Somerset Hospital. (ECF No. 177 ¶4.) Defendant Saadat is a gastroenterologist on the Hospital's medical staff and, at all relevant times, served as president of the Hospital's medical staff as well as chairman of its Medical Executive Committee ("MEC"). (Id. ¶¶ 5, 7.) Saadat performed endoscopy services that Plaintiff also performed. (Id. ¶ 9.) Defendant Go is a general surgeon on the Hospital's medical staff and, at all relevant times, was a member of its MEC. (Id. ¶¶ 6, 8.) Go's surgical practice overlapped to some degree with Plaintiff's, although Plaintiff performed certain procedures that Go did not perform. (Id. ¶10.) Unlike Plaintiff, Go is not board certified in general surgery. (ECF No. 182, ¶ 136.)

Somerset Hospital, located at 225 South Center Avenue in the Borough of Somerset, is a non-profit corporation and is designated as a "Sole Community Hospital" under Medicare regulations, 42 C.F.R. §412.92(a). (ECF No. 163, ¶ 16; ECF No. 182, ¶ 120.) In relevant part, the regulations designate a facility as a "Sole Community Hospital" if it is more than 35 miles from other like hospitals or if it is located in a rural area and, because of distance, posted speed limits, and predictable weather conditions, the travel time between the hospital and the nearest like hospital is at least 45 minutes. 42 C.F.R. §412.92(a)(3). The closest hospitals to Somerset Hospital are: Meyersdale Hospital, located in Meyersdale, Pennsylvania, which is approximately 31 minutes from Somerset; Windber Hospital, which is approximately 41 minutes from Somerset; and Conemaugh, which is between 39 and 45 minutes from Somerset. (ECF No. 177, ¶ 12; ECF No. 182, ¶122.)

Since 1998, Plaintiff has been a member of Conemaugh's active medical staff and has held full surgical privileges there. (ECF No. 177 ¶11.) During the seven years that he held privileges at both Somerset Hospital and Conemaugh, Plaintiff performed surgeries at both facilities based on convenience, patient preferences, and the relative capabilities of both hospitals. (Id. ¶ 13.) At some point prior to the termination of his privileges at Somerset Hospital, a moratorium was placed on bariatric surgeries due to concerns over Plaintiff's and another surgeon's pre-operative treatment of patients. (Id. ¶14.) When this occurred, Plaintiff moved his bariatric surgeries to Conemaugh. (Id.)

Conemaugh, located approximately 32.5 miles from Somerset Hospital (ECF No. 177, Pl's Resp. to ¶ 16), is a regional hospital which draws patients primarily from Cambria and Somerset, but also draws substantial numbers from Bedford and Blair Counties. (Id. ¶ 20.) In fact, Conemaugh promotes itself as servicing patients in an eleven county area through its network of community hospitals, physician offices, and specialty services. (Id. ¶ 21.) Conemaugh's network of hospitals includes Meyersdale, located in the southern part of Somerset County. (Id. ¶23.) According to Google Maps, Conemaugh and Meyersdale are 41.6 miles apart on U.S. Route 219, which passes through Somerset. (Id. ¶24.)

In 2012, Conemaugh added another primary care physician office to its network by purchasing the practice of Ann Smith, M.D., a family practitioner who, at the time of the purchase, had been serving as president of Somerset Hospital's medical staff. (ECF No. 177, ¶22; Farrell Suppl. Aff. ¶4, ECF No. 164.) Former patients of Dr. Smith are now being served by physicians who are employed by Conemaugh. (Farrell Suppl. Aff. ¶4.) Conemaugh has also added a cardiology practice located in Somerset and has sought zoning approval for a diagnostic center to be located less than a mile from Somerset Hospital. (ECF No. 177, ¶ 22.)

Conemaugh is a much larger and more comprehensive facility than Somerset Hospital. (ECF No. 177, ¶¶ 15, 16.) For example, Conemaugh has an open heart surgery program, while Somerset Hospital does not. (ECF No. 177, ¶ 38.) In 2006 and 2007, over 27, 000 surgeries were performed at Conemaugh, while some 7, 184 surgeries were performed at Somerset Hospital. (Id. ¶ 17.) During this same time period, 13, 440 endoscopies were performed at Conemaugh, while 2, 738 were performed at Somerset Hospital. (Id. ¶ 18.) For the period 2006-2007, Conemaugh's net patient revenue was $305 million, compared to Somerset Hospital's net patient revenue of $61 million. (Id. ¶19.)

Conemaugh runs advertisements in the Somerset newspaper on a nearly daily basis, including ads for Conemaugh Valley Surgeons, a group of ten general surgeons employed by Conemaugh. (ECF No. 177, ¶¶ 25, 26.) Conemaugh also advertises on billboards in and around Somerset and on the Johnstown television station serving the Somerset area. (Id. ¶¶ 27, 29.) In addition, Conemaugh is listed in the Somerset telephone directory along with numerous other hospitals offering general surgery services, such as Meyersdale, Windber, Western Maryland Health System in Cumberland, Maryland, and the UPMC hospitals located in Pittsburgh. (Id. ¶ 28.)

According to patient flow data reported by hospitals to the Pennsylvania Health Care Cost Containment Council (the "Council"), 21.6% of patients in what the Council defined as Somerset Hospital's primary service area went to Conemaugh in 2005 for inpatient general surgery services. (ECF No. 177 ¶ 30.) This same data shows that 22.36% of patients living in what the Council defines as Somerset Hospital's primary service area went to "other" hospitals for inpatient surgery, including hospitals in Greensburg, Pittsburgh and Cumberland, Maryland. Thus, nearly 44% of patients in the defined area obtained inpatient general surgery services at hospitals other than Somerset Hospital. (Id. ¶ 31.)

Defendant Farrell defines the primary service area of Somerset Hospital to include the seventeen zip codes located within a 10 mile radius of the Hospital. (ECF No. 177 ¶ 32.) In this "17-zip-code-area" from which Somerset Hospital draws 90% of its patients, more than 32% of these patients are admitted to Conemaugh, Meyersdale, and Windber. (Id. ¶ 33.)

B. The August 2005 Surgeries

On July 1, 2005, the U.S. Food and Drug Administration announced the recall of certain implantable cardiac defibrillator ("ICD") devices manufactured by Guidant Corporation. (ECF No. 177, ¶ 41.) As a result of the recall, two patients requested that Plaintiff perform surgeries to replace the battery generators on the recalled ICDs with non-recalled ICD generators. (Id.) Regulations promulgated by the Pennsylvania Department of Health stated that implantation of ICD devices may only be performed at hospitals with an open heart surgery program. See 28 Pa. Code §138.18(b). (ECF No. 177, ¶ 40.) Because Somerset Hospital did not have an open heart surgery program, it was not authorized at the time to implant or change ICD devices. (ECF No. 177, ¶ 38.)

Plaintiff had privileges to implant and change pacemakers at Somerset Hospital. (ECF No. 177, ¶39.) Although Plaintiff did not have privileges to implant or change ICD devices, he states that he believed he had privileges, as well as the competency, to replace the battery generators of ICD devices, which he characterizes as a simple procedure performed by general surgeons. ( Id., Pl.'s Resp. to ¶ 39.)

On August 9 and 15, 2005, Plaintiff performed surgeries to replace the battery generators on the recalled ICDs for the two patients. In scheduling these surgeries, Plaintiff identified the August 9, 2005 procedure as a pacemaker generator change. (ECF No. 177, ¶ 44.) When the patient was in the surgical holding area, Hospital staff realized that Plaintiff intended to replace the battery generators on the recalled ICDs. (Id. ¶ 45.) Upon realizing Plaintiff's intent, Sandy Mamula, the Director of Ambulatory/Surgical Services, contacted Dr. Jonathan Kates, the Chairman of the Hospital's Credential Committee, who told her to go ahead with the surgery. ( Id., ¶ 46.) Plaintiff was unaware of Dr. Kates' approval at the time that he performed the August 9, 2005 surgery. ( Id., ¶ 47.)

C. The Hospital's Investigation and Due Process Proceedings

After these incidents came to Defendant Farrell's attention, he appointed a task force to gather the facts related to the two surgeries. (ECF No. 177, ¶ 48.) Initially, Farrell and three other administrators began to investigate the surgeries. This administrative team consisted of Farrell, Mamula, Craig Saylor (a hospital administrator), and Ron Park (the Hospital's CFO), none of whom were physicians or members of the Hospital's medical staff. (ECF No. 182, ¶¶ 162-64.) Plaintiff was not informed in writing of the administrative group's activities regarding the surgeries. (Id. ¶ 165.)

The administrators were eventually joined by Defendant Saadat (then President of the Medical Staff), Dr. Armstrong (the Chief of Surgery), and Dr. Chaudhuri (Director of the Cardiology Lab) to form part of a collective task force (the "Task Force"). (ECF No 177, ¶ 48.) This Task Force gathered information about the surgical incidents and met with Plaintiff on August 31, 2005. (Id. ¶ 49.) Farrell subsequently sent a letter to Saadat, who was also then Chairman of the Medical Executive Committee (the "MEC" or "Committee").

In this correspondence dated September 6, 2005, Farrell remarked that the "fact finding phase of this issue is complete" and the Task Force was "forwarding the matter to the Medical Executive Committee for their review of the matter." (Pl.'s Ex. F, ECF No. 175-6.) The correspondence further stated:
In research of the Medical Staff Bylaws and on advice of legal counsel, I would offer the following as an appropriate process. The MEC should turn this matter over to the Chairman of the Department of Surgery. Dr. Armstrong should then contact Dr. Novak and ask if Dr. Novak has any additional information he wants to provide to Dr. Armstrong, over and above what was presented to the Task Force. Dr. Armstrong may also want to review the two medical records, interview Sandy Mamula or other operating room personnel and may want to also interview the Guidant and St. Jude representatives.
Dr. Armstrong, when satisfied he has a full understanding of the matter, would return the matter to the MEC. Dr. Armstrong needs to assure the MEC he has a complete understanding of the matter and information available to him.
Dr. Armstrong should advise the MEC if he believes there is any deviation from the expected standard of care provided to the two patients. If Dr. Armstrong believes there is a deviation from the expected standard of care, he should make known to the MEC the severity of the matter.
The MEC would be responsible to determine if corrective action is necessary and warranted. I would refer you to section 7.1.4 of the Medical Staff Bylaws that describes the MEC corrective action alternatives. I would add there are specific timelines provided in section 7.1 of the Medical Staff Bylaws.

(Id.) Copies of the letter were sent to the other members of the Task Force, including Dr. Armstrong. (Id.)[3]

The MEC subsequently held meetings on September 14 and 21, October, 12, and November 2, 2005. (ECF No. 177, ¶ 51.) The minutes of the MEC's September 14 meeting reflect that Dr. Armstrong had been asked to review the pertinent patients' medical records prior to the meeting. (Pl.'s Ex. H, ECF No. 175-8.) Dr. Armstrong reported to the MEC at its September 14, 2005 meeting that, in his opinion, Plaintiff failed to meet the standard of care, exercised poor judgment and poor reporting and should at least receive a written reprimand. (ECF No. 177, ¶ 52.)[4]

At the MEC's September 21, 2005 meeting, Saadat and Go expressed their opinions that Plaintiff had exercised poor judgment. (ECF No. 177, ¶54.) Every other member of the MEC in attendance shared this view as well. (Id. ¶ 55.) During the meeting, the MEC discussed several other prior incidents involving Plaintiff, including its need to place a moratorium on Plaintiff's and another surgeon's performance of vertical banded gastroplasty procedures, Plaintiff's history of sexual misconduct with one of his patients, reviews of Plaintiff's performance of vascular surgeries, and Plaintiff's refusal to perform surgery on a patient who did not have insurance coverage. The Committee agreed that these past incidents should be included in the decision making process. (Id. ¶ 56.)

At its October 12, 2005 meeting, the MEC met with Edward Weisgerber, Esq., one of the Hospital's attorneys. (ECF No. 177, ¶ 57.) During this meeting, Dr. Armstrong expressed the Committee's unanimous view that the two ICD-related surgeries were the result of poor medical judgment. After consulting with Weisgerber, the MEC invited Plaintiff to present his side of the story. (Id.)

Plaintiff and his attorney met with the MEC on November 2, 2005. (ECF No. 177, ¶ 58.) Prior to the meeting, the MEC provided to Plaintiff a series of written questions for him to address. (Id. ¶59.)

After receiving Plaintiff's input, the MEC issued a confidential memorandum on November 7, 2005, to the Hospital's Board of Directors. (ECF No. 177, ¶60.) The MEC found that, while the incident concerning the ICD surgeries would not, in and of itself warrant revocation of Plaintiff's staff privileges, the calculus changed when the incident was considered in light of Plaintiff's historical pattern of operating without an awareness or appreciation of the potential consequences of his actions. (Pl.'s Ex. D, ECF No. 175-4.) The MEC emphasized that the incidents involving the ICDs were serious matters, that these episodes were consistent with prior incidents in which Plaintiff had exercised poor judgment, and that no other physician currently on staff had required as much time and attention from the medical staff as Plaintiff. (ECF No. 177, ¶ 61; Pl.'s Ex. D, ECF No.175-4.) The MEC expressed particular concern about Plaintiff because he continued to deny problems with judgment, which suggested to the MEC that there would likely be other incidents of misjudgment in the future. (Id.) The Committee also expressed concerns over its inability to formulate remedial measures that would assure that misjudgments of the sort experienced thus far would be caught early on and corrected. (Id.) The MEC indicated that it considered imposing a proctoring requirement but did not do so because, in its view, a proctoring arrangement was impractical and not well-suited to address the underlying concern. (Pl.'s Ex. D at p. 6, ECF No. 175-4.) Rather than provide the Board with a specific sanction such as suspension or revocation, the MEC deferred the ultimate remedy to the Board, stating that the Board was better positioned to apply a more global policy judgment by evaluating the incident in light of Plaintiff's past performances, his pattern of misjudgments, and the Board's willingness to devote further resources to the resolution of matters that were likely to reoccur in one fashion or another. (Pl.'s Ex. D at p. 6-7, ECF No. 175-4.) Defendant Go abstained from voting at the MEC's meeting. (Pl.'s Ex. D at 8.)

The Hospital's Board met on November 14 and 21, 2005 to consider the MEC's findings. (ECF No. 177, ¶65.) Go did not attend any Board meetings. (Id. ¶ 67.) Saadat attended the November 14 meeting, along with Weisgerber and Daniel Rullo, Esq., who is serving as one of Defendants' attorneys in this litigation. (Id. ¶66.) Also present at the November 14 meeting was Leonard Ganz, M.D., a cardiologist, who participated by audio conference. (Id.) Dr. Armstrong, who was a member of the Board, presented the MEC Report to the Board. (Id. ¶ 68.) At this meeting, eight members of the medical staff asked to be heard; they were not permitted to speak but were advised that they would have an opportunity to present their concerns when the Board reconvened on November 21, 2005. (Id. ¶ 69.)

At the November 21 meeting, the Board heard from several physicians who presented concerns on behalf of Plaintiff. (ECF No. 177, ¶ 70.) Following more than four hours of discussion, the Board adopted a "Resolution" revoking Plaintiff's clinical privileges and staff appointment and invoking a summary suspension of Plaintiff's clinical privileges in the event Plaintiff appealed the Board's decision. (Farrell Dep. Ex. 12, ECF No. 82-4; Pl.'s Ex. BBB, ECF No. 175-53.)

The Resolution indicated that:

The Board is taking these actions because it believes that it is in the best interest of patient care to do so. The Board has received and discussed the report of the Medical Staff Executive Committee (MEC) describing the committee's concerns relating to the replacement of ICD generators in two patients. It has also received the input of a well known and respected electrophysiologist (who is not on the staff of the Hospital). The MEC has concluded that Dr. Novak demonstrated poor judgment and performed at a level that is beneath the acceptable standard of care in each of these cases by (i) performing a procedure for which he is not credentialed, (ii) not consulting a cardiologist, and/or (iii) not testing the devices post-insertion or actively arranging for follow up testing by a qualified cardiologist. Moreover, the Board is concerned that the documentation of these events is, at best, sloppily inaccurate and at worst, deliberately inaccurate (in an effort to disguise the nature of the procedure).
The Board has also reflected upon an underlying theme in the MEC's report which is that Dr. Novak has demonstrated a pattern of poor judgment in behavior and medical judgment, particularly as it relates to understanding the limits of a general surgeon in a non-urban community hospital. This observation is matched by the Hospital's prior experiences with Dr. Novak relating to gastric banding, peripheral vascular therapies, use of urokinese, refusal to take call for unreferred patients, the discharge of a patient for economic reasons, the insertion of a pacemaker against the recommendation of a board certified cardiologist, and an improper patient relationship episode. The Board is particularly troubled that to this day Dr. Novak appears not to recognize that he did anything wrong in connection with any of these serious incidents. The apparent sincerity of Dr. Novak's belief that his medical judgment is sound makes the Board more, not less, concerned that he will continue to stray beyond the proper bounds of his privileges and his competencies.
The Board has considered other remedial measures, such as proctoring, pre-surgical review, and limiting his privileges to a list of specifically identified procedures. It is the Board's conclusion that these mechanisms are impractical. Moreover, armed with the sense of Dr. Novak's tendencies and pattern of judgment, the Hospital is unwilling to accept a liability risk attributable to either the inadvertent failure or the circumvention of these remedial measures. Nor is the Board inclined at this time to commit its financial and human resources to implementing and enforcing a monitoring protocol.
Finally, the Board believes that the recruitment of general surgeons is impaired by the presence of a physician who is under special surveillance and who has proven to be a difficult colleague (e.g. refusing to cover, refusing to assume required call coverages).

(ECF No. 82-4 at 12-13.) The Resolution acknowledged that the Board's decision to revoke Plaintiff's privileges constituted an "adverse recommendation" under the Bylaws, triggering Plaintiff's rights under the Fair Hearing Plan, and it directed management to provide Plaintiff written notification of its determination on November 22, 2005. (Id. at 13.) Farrell notified Plaintiff by letter dated November 23, 2005. (ECF No. 177, ¶ 73.)

Pursuant to §7.2.2 of the Bylaws, the MEC was required to review Plaintiff's summary suspension of privileges within seven days. While the MEC was not empowered to overturn the Board's decision, it was authorized under the Bylaws to "recommend modification, continuation or termination of the terms of the summary suspension." (Bylaws, Art. 7.2.2; ECF No. 177, ¶ 74.)

The MEC met on November 30, 2005 to review the Board's summary suspension of privileges. (ECF No. 177, ¶ 75.) At this meeting, the MEC voted 6 to 4 not to support the Board's resolution, with Go again abstaining from any vote. (Id. ¶¶ 75-76.)

On December 16, 2005, Plaintiff invoked his right to a hearing relative to the Board's action. (ECF No. 177, ¶ 77.) In response, the Hospital issued a letter to Plaintiff ...

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