Legal Issues
Nephrologist Sues for An Alleged Antitrust ViolationAnn W. Latner, JD
September 13, 2010
Dr. V, 52, was a nephrologist with a thriving practice in Middletown, a mid-sized community in the Southwest. For years, patients had been traveling to his office for dialysis and other outpatient nephrology services. Many of Dr. V's patients were Native Americans from the Ute tribe living on a reservation near Smalltown, an hour's drive from Middletown. These patients had to make this trip three times a week to get their dialysis treatments. Smalltown had no nephrology practice and Smalltown Hospital did not have a nephrologist on staff. Dr. V had consulting privileges at the hospital and occasionally took phone inquiries from doctors there, but he had not used the hospital to treat patients for almost 10 years.
For the past seven years, Dr. V had been barraged with requests to provide nephrology services in Smalltown. The incidence of diabetes in that area was extremely high, especially among the Ute tribe. The tribe, the town rotary club, and Smalltown Hospital had made concerted efforts to encourage Dr. V to set up a practice in town to serve the community. Dr. V made it clear that he was not interested. He liked where he was. He did not want to make the drive to Smalltown even if it was only a few times a week.
When the Smalltown Hospital and Ute tribe realized that they were not going to be able to entice Dr. V to provide services in the town, they began interviewing other physicians. Eventually they hired a young nephrologist, Dr. M. To convince Dr. M to start a practice there, the hospital hired him in a salaried position and permitted him to serve as director of an independently owned outpatient dialysis center in town. Under the bylaws of Smalltown Hospital, the employment of Dr. M automatically terminated Dr. V's consulting privileges at the hospital. According to the bylaws, the purpose of a consulting physician was to fill gaps in practice areas not covered by hospital staff. Once Dr. M came aboard, Dr. V was not needed as a consultant. He did, however, remain a member of the hospital's courtesy staff, which allowed him to consult and write orders with the permission of an attending physician.
Dr. V was incensed when he found out. He quickly filed an application with Smalltown Hospital to become a member of the hospital's active staff, on a par with Dr. M and competing for the same business. While the hospital's bylaws had no restrictions against having two physicians with the same expertise, the rules did specify that active staff members must live within 30 minutes of the hospital to be available for emergencies. Dr. V did not live within 30 minutes, and put down a nearby office space address instead. When this gambit failed, Dr. V told the administrators that he had leased a house near Smalltown, but when the administrators checked, it turned out to be a plot of vacant land.
The Smalltown Hospital administrators decided to preempt any further applications by Dr. V by designating the hospital nephrology practice as the sole provider of nephrology services to the hospital. Administrators were concerned that were Dr. V to set up a practice, it would reduce Dr. M's patients such that he might consider leaving for a better job. Hospital administrators had no faith that Dr. V would continue to practice in Smalltown once he had eliminated his competition.
Dr. V was furious when he learned of the hospital's decision. He immediately consulted with an attorney and filed an antitrust lawsuit against the hospital alleging that its decision to exclude him and other nephrologists from admitting patients amounted to the unlawful monopolization of the market for nephrology physician services in the Smalltown area. The district court granted summary judgment in favor of the hospital, and Dr. V appealed. The appeals court held that Smalltown Hospital's refusal to deal with Dr. V did not constitute anticompetitive conduct within the meaning of the antitrust statute. The court held that as a general rule, a business has no antitrust duty to deal with its rivals, and is free to choose with whom it will work. The court went on to say that having made a substantial investment in developing its own nephrology practice—having even tried to secure Dr. V's services for that practice—Smalltown Hospital is entitled to recoup its investment without sharing its facilities with a competitor. The appeals court agreed with the lower court, and found in favor of the hospital.
Legal Background
Antitrust is a bit of a misnomer and would better be termed “competition law.” The purpose of the original antitrust act was to oppose the combination of entities that could potentially harm competition (for example, monopolies or cartels). The purpose is to protect competition, not to protect competitors (as Dr. V was hoping). In this case, Dr. V was not blocked from practicing medicine or even opening a dialysis center in Smalltown were he to choose to do so. The hospital however, had a right to decide that it did not want to hire other nephrologists because it already had one. No monopoly existed here, and the hospital was free to do what was best for it and its patients.
Protecting Yourself
Dr. V had numerous opportunities to take the position at the Smalltown Hospital or to accept the town's encouragement and set up an outpatient nephrology practice in town. For his own reasons, however, he decided not want to. Unfortunately, Dr. V's concerns were solely for himself. He did not want to make his practice more accessible for his patients until he was faced with competition. Dr. V had no interest in working in Smalltown until the hospital hired another nephrologist. Had he considered the needs of his patients, he would have accepted the offer from the hospital and set up a practice in town rather than file a lawsuit to get back a job he had never wanted.
From the September 2010 Issue of Renal And Urology News
http://www.renalandurologynews.com/nephrologist-sues-for-an-alleged-antitrust-violation/article/178778/
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