1

United States Court of Appeals,

Fifth Circuit.

No. 95-60186.

James P. MARTIN, Plaintiff-Appellee, Cross-Appellant,

v.

MEMORIAL HOSPITAL AT GULFPORT, Wray Anderson, Mitchell Salloum,

Edward Reid, and Myrtis Franke, Defendants-Appellants, CrossAppellees.

July 10, 1996.

Appeals from the United States District Court for the Southern

District of Mississippi.

Before POLITZ, Chief Judge, and DEMOSS and DENNIS, Circuit Judges.

DENNIS, Circuit Judge:

The principal question presented by this case is whether a

hospital, owned and operated by a municipality and a state

subdivision hospital district, and the hospital's board of

trustees, are immune from an antitrust claim under the Parker v.

Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943) state action

doctrine.

A nephrologist brought this antitrust action against the

hospital and its board seeking to enjoin the enforcement of the

hospital's contract with the medical supervisor (also a

nephrologist) of its End Stage Renal Disease facility (ESRD). The

contract grants the medical supervisor authority to plan, organize,

conduct and direct the professional ESRD services and to provide

and maintain complete physician care of ESRD patients personally or

through his designated representative. Subsequently the hospital

adopted a resolution formally interpreting the contract to mean
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that only the medical supervisor or his medical practice associate

working under the direction and control of the medical supervisor,

for whom the supervisor accepts full responsibility, has the right

to perform chronic dialysis in the ESRD. Because the plaintiff

nephrologist is not associated with the medical supervisor in

practice, the hospital's enforcement of the contract and its

resolution prevents the nephrologist from personally performing

chronic renal dialysis for his patients in the hospital's ESRD.

The district court denied the hospital and the board a summary

judgment declaring them to be immune from the federal antitrust

claim, and they appealed. We reverse and remand for the entry of

a summary judgment dismissing the federal antitrust action. We

have jurisdiction of the appeal under the collateral order doctrine

because the district court's ruling conclusively determines the

disputed question, resolves an important issue completely separate

from the merits of the action, and is effectively unreviewable on

appeal from a final judgment. The state action doctrine immunizes

the enforcement of the municipal-state subdivision hospital's

exclusive contract with its ESRD supervisor because suppression of

competition was the foreseeable result of the state statutes which

(1) authorize only a health care provider having obtained a

certificate of need to establish an ESRD, and (2) empower the

hospital to contract with any individual for the providing of

services by or to the hospital regarding any facet of the operation

of the hospital or any division or department thereof, or any

related activity, and to terminate such contract when deemed in the
3

best interests of the hospital.

1. Facts and Procedural History

The parties by itemizations and responses stipulated to the

facts for purposes of the motion for summary judgment. End Stage

Renal Disease (ESRD) units are kidney dialysis units in which

chronic renal dialysis is performed. Mississippi law prohibits the

establishment, expansion, or relocation of an ESRD unless a

Certificate of Need is first obtained from the state department of

health. The Memorial Hospital at Gulfport obtained certificates of

need for several ESRD facilities including the one involved in this

case. The hospital began the operation of its ESRD units in 1981.

Subsequently, the hospital entered into an exclusive medical

director contract with Dr. Douglas Lanier whereby only Dr. Lanier

or his designated representative had the right to perform chronic

dialysis in the hospital's ESRD units. In 1986, the hospital and

Dr. Lanier recruited Dr. James Martin to come to Gulfport to

practice with Dr. Lanier as his associate. Dr. Martin was granted

full medical staff privileges including the authority to perform

chronic dialysis in the hospital's ESRD units. In November 1988,

Dr. Martin and Dr. Lanier encountered some differences and

terminated their relationship. Dr. Martin began practicing

separately from Dr. Lanier. Afterwards, Dr. Martin did not attempt

to perform chronic dialysis at the hospital's ESRD unit until March

1989 when he sought to admit a patient for chronic dialysis. The

hospital refused to allow him to perform the chronic dialysis

basing its action on the exclusive contract with Dr. Lanier. Dr.
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Martin wrote to the hospital asserting that he had a right to treat

patients in the chronic ESRD unit. On June 26, 1989, the board of

trustees of the hospital reevaluated whether Dr. Lanier's contract

should remain exclusive and passed a resolution that reaffirmed the

exclusive medical director contract, interpreting the contract to

mean that only a physician in practice with and under the

supervision and control of Dr. Lanier could perform chronic

dialysis in the ESRD unit. In November f 1990, Dr. Martin's

medical staff privileges were renewed with the exception of his

right to personally perform chronic dialysis in the ESRD units,

which the hospital denied based on the exclusive contract with Dr.

Martin. Dr. Martin retained the authority to admit patients to the

hospital and perform acute ESRD services on them as in-patients,

but he must permit the medical supervisor or his associate-designee

to perform chronic ESRD services for them as out-patients. The

Memorial Hospital at Gulfport is a community hospital existing

under Miss.Code Ann. § 41-13-10 et seq., and is jointly owned by

the City of Gulfport and the Gulfport-West Harrison County Hospital

District, a subdivision of the State of Mississippi. See Enroth v.

Memorial Hospital at Gulfport, 566 So.2d 202, 206 (Miss.1990).

In 1990, Dr. Martin filed suit in the district court alleging

that the hospital and its board had violated federal antitrust

laws, violated his constitutional due process rights, interfered

with his contractual relationships with his patients, and violated

the state antitrust laws. The hospital and its board moved for

summary judgment on all claims. The district court granted the
5

defendants' motions in part and denied them in part. The

hospital's motion for summary judgment was granted only to the

extent of dismissing plaintiff's claims for damages under the

general prohibition against recovery of damages for antitrust

violations from any local government. 15 USCS § 35. The

hospital's motion for summary judgment was denied as to all other

claims for relief by plaintiff. The motion for summary judgment by

the individual hospital board members was denied insofar as the

plaintiff's claims for injunctive relief, attorneys fees and court

costs under the federal anti-trust laws. As to all other claims

for relief asserted by the plaintiff, the motion for summary

judgment dismissing these claims against the individual hospital

board members was granted.

The hospital and its board appealed from the district court's

denial of summary judgment that they are entitled to state action

immunity from suit or liability under the federal anti-trust laws.

Dr. Martin filed a motion to dismiss the appeal for lack of

jurisdiction on the grounds that the district court's ruling was

interlocutory and not a final judgment. The appellants contend,

however, that the ruling is appealable under the collateral order

doctrine. Accordingly, the principal issues for our appellate

review are (1) whether the district court's ruling that rejected

the defendants' claim of state action immunity is appealable under

the collateral order doctrine; and, if so, (2) whether the

hospital and its board members are entitled to state action

immunity from the plaintiff's federal anti-trust claim.
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2. Jurisdiction

The district court's refusal to grant defendants' motions for

summary judgment vindicating their entitlement to state action

immunity is appealable under the collateral order doctrine. The

district court's ruling meets all of the requisites of an

appealable collateral order, viz., that it (a) is "effectively

unreviewable" on appeal after trial; (b) conclusively determines

the disputed question; and (c) resolves an important issue

completely separate from the merits of the action. Coopers &

Lybrand v. Livesay, 437 U.S. 463, 98 S.Ct. 2454, 57 L.Ed.2d 351

(1978); Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541,

69 S.Ct. 1221, 93 L.Ed. 1528 (1949); Rauscher Pierce Refsnes, Inc.

v. Birenbaum, 860 F.2d 169 (5th Cir.1988).

Title 28 U.S.C. § 1291 provides for appeal from "final

decisions of the district courts." Appeal is thereby precluded

"from any decision which is tentative, informal or incomplete," as

well as from any "fully consummated decisions, where they are but

steps towards final judgment in which they will merge." Puerto

Rico Aqueduct and Sewer Authority v. Metcalf & Eddy, Inc., 506 U.S.

139, 142-143, 113 S.Ct. 684, 687, 121 L.Ed.2d 605 (1993) (quoting

Cohen v. Beneficial Industrial Loan Corp., 337 U.S. at 546, 69

S.Ct. at 1225 (1949)). Nevertheless a judgment that is not the

complete and final judgment in a case will be immediately

appealable if it:

falls in that small class which finally determine claims of

right separable from, and collateral to, rights asserted in

the action, too important to be denied review and too

independent of the cause itself to require that appellate
7

consideration be deferred until the whole case is adjudicated.

Id. Thus, in Cohen, the Court held that appeal could be taken from

a district court order denying the defendant's motion to compel the

plaintiffs in a shareholder derivative suit to post a bond. The

Court found the order appealable because it "did not make any step

toward final disposition of the merits of the case and [would] not

be merged in final judgment" and because, after final judgment, it

would "be too late effectively to review the present order, and the

rights conferred by the [bond] statute, if it is applicable, will

have been lost." Puerto Rico Aqueduct, 506 U.S. at 143, 113 S.Ct.

at 687.

The Court has held that orders denying individual officials'

claims of absolute and qualified immunity, see Nixon v. Fitzgerald,

457 U.S. 731, 102 S.Ct. 2690, 73 L.Ed.2d 349 (1982); Mitchell v.

Forsyth, 472 U.S. 511, 105 S.Ct. 2806, 86 L.Ed.2d 411 (1985) and

Eleventh Amendment immunity, Puerto Rico Aqueduct, 506 U.S. 139,

113 S.Ct. 684, 121 L.Ed.2d 605 (1993), are among those that fall

within the ambit of Cohen. In Mitchell, the Attorney General of

the United States appealed from a district court order denying his

motion to dismiss on grounds of qualified immunity. The court of

appeals held that the order was not appealable and remanded the

case for trial. The Supreme Court reversed, holding that the order

denying qualified immunity was collateral order immediately

appealable under Cohen. The Court found that, absent immediate

appeal, the central benefits of qualified immunity—avoiding the

costs and general consequences of subjecting public officials to
8

the risks of discovery and trial—would be forfeited, much as the

benefit of the bond requirement would have been forfeited in Cohen.

"The entitlement is an immunity from suit rather than a mere

defense to liability; and like an absolute immunity, it is

effectively lost if a case is erroneously permitted to go to

trial." Mitchell, 472 U.S. at 526, 105 S.Ct. at 2815.

The Court in Puerto Rico Aqueduct, supra, held that the same

rationale applies to claims of Eleventh Amendment immunity made by

states and state entities possessing a claim to share in that

immunity. Id. 506 U.S. at 144, 113 S.Ct. at 687. Under the terms

of the Amendment, "[t]he Judicial power of the United States shall

not be construed to extend to any suit in law or equity, commenced

or prosecuted against one of the United States by Citizens of

another State....". U.S. Const. amend. XI. This withdrawal of

jurisdiction effectively confers an immunity from suit. Id.

We conclude that Parker v. Brown state action immunity shares

the essential element of absolute, qualified and Eleventh Amendment

immunities—"an entitlement not to stand trial under certain

circumstances." Mitchell v. Forsyth, 472 U.S. at 525, 105 S.Ct. at

2815. The Court in Parker v. Brown found "nothing in the language

of the Sherman Act or in its history which suggests that its

purpose was to restrain a state or its officers or agents from

activities directed by its legislature." Parker v. Brown, 317 U.S.

at 350-351, 63 S.Ct. at 313. Accordingly, the Court concluded:

In a dual system of government in which, under the

Constitution, the states are sovereign, save only as Congress

may constitutionally subtract from their authority, an

unexpressed purpose to nullify a state's control over its
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officers and agents is not lightly to be attributed to

Congress.

The Sherman Act makes no mention of the state as such,

and gives no hint that it was intended to restrain state

action or official action directed by a state.

Id. 317 U.S. at 351, 63 S.Ct. at 313. While the Eleventh Amendment

effectively confers an immunity from suit by a withdrawal of

jurisdiction, Puerto Rico Aqueduct, 506 U.S. at 143, 113 S.Ct. at

687, the Sherman Act does so by not undertaking to prohibit a

sovereign state from imposing an anticompetitive restraint as an

act of government. See Parker v. Brown, 317 U.S. at 352, 63 S.Ct.

at 314. One of the primary justifications of state action immunity

is the same as that of Eleventh Amendment immunity—"to prevent the

indignity of subjecting a State to the coercive process of judicial

tribunals at the instance of private parties," Puerto Rico

Aqueduct, 506 U.S. at 146, 113 S.Ct. at 689, and to "ensur[e] that

the States' dignitary interests can be fully vindicated." Id.

A second major conception animating all of the immunity

doctrines is that "where an official's duties legitimately require

action in which clearly established rights are not implicated, the

public interest may be better served by action taken "with

independence and without fear of consequences.' " Harlow v.

Fitzgerald, 457 U.S. 800, 819, 102 S.Ct. 2727, 2738, 73 L.Ed.2d 396

(1982) (quoting Pierson v. Ray, 386 U.S. 547, 554, 87 S.Ct. 1213,

1217, 18 L.Ed.2d 288 (1967)). The "consequences" with which the

court was concerned in Harlow were not limited to liability for

money damages; they also included the general costs of subjecting

officials to the risks of trial—distraction of officials from their
10

governmental duties, inhibition of discretionary action, and

deterrence of able people from public service. Mitchell, 472 U.S.

at 526, 105 S.Ct. at 2815; Harlow, 457 U.S. at 816, 102 S.Ct. at

2737. "Indeed, Harlow emphasizes that even such pretrial matters

as discovery are to be avoided if possible, as "[i]nquiries of this

kind can be peculiarly disruptive of effective government.' "

Mitchell, 472 U.S. at 526, 105 S.Ct. at 2815 (quoting Harlow, 457

U.S. at 817, 102 S.Ct. at 2737).

With these concerns in mind, the Harlow Court refashioned the

qualified immunity doctrine in such a way as to permit the

resolution of many insubstantial claims on summary judgment and to

avoid subjecting government officials either to the costs of trial

or to the burdens of broad-reaching discovery in cases where the

legal norms the officials are alleged to have violated were not

clearly established at the time. The entitlement is an immunity

from suit rather than a mere defense to liability; and like an

absolute immunity, it is effectively lost if a case is erroneously

permitted to go to trial. Mitchell, 472 U.S. at 527, 105 S.Ct. at

2815. Accordingly, the reasoning that underlies the immediate

appealability of an order denying absolute, qualified or Eleventh

Amendment immunity indicates that the denial of state action

immunity should be similarly appealable: in each case, the

district court's decision is effectively unreviewable on appeal

from a final judgment. See Praxair, Inc. v. Florida Power & Light

Co., 64 F.3d 609, (11th Cir.1995), cert. denied, --- U.S. ----, 116

S.Ct. 1678, 134 L.Ed.2d 781 (1996); Commuter Transportation
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Systems, Inc. v. Hillsborough County, 801 F.2d 1286, 1289 (11th

Cir.1986); see also Askew v. DCH Regional Health Care Authority,

995 F.2d 1033, 1036 (11th Cir.), cert. denied, --- U.S. ----, 114

S.Ct. 603, 126 L.Ed.2d 568 (1993); Segni v. Commercial Office of

Spain, 816 F.2d 344, 345 (7th Cir.1987):

Where the right asserted by way of defense to a lawsuit is (or

includes) a right not to bear the burden of the suit itself,

regardless of outcome, the denial of that right, as by denying

a motion to dismiss the suit, is appealable immediately by

virtue of the collateral order doctrine. An appeal after

judgment would come too late to protect the right. It is on

the basis of this reasoning that the rejection of a

double-jeopardy defense, the rejection of a defense of a

public official's qualified immunity from suit, and the

rejection of a witness's absolute immunity from suit, are

appealable immediately. See Abney v. United States, 431 U.S.

651, 97 S.Ct. 2034, 52 L.Ed.2d 651 (1977); Mitchell v.

Forsyth, 472 U.S. 511, 524-30, 105 S.Ct. 2806, 2814-18, 86

L.Ed.2d 411 (1985); San Filippo v. U.S. Trust Co. of New

York, Inc., 737 F.2d 246, 254 (2d Cir.1984).

But see Huron Valley Hospital v. City of Pontiac, 792 F.2d 563 (6th

Cir.), cert. denied, 479 U.S. 885, 107 S.Ct. 278, 93 L.Ed.2d 254

(1986) (Contains contrary, less persuasive dicta but is inapposite

because the requirement that the immunity claim be completely

separate from the merits of the original claim was not met).

An appealable interlocutory decision must satisfy two

additional criteria: it must conclusively determine the disputed

question and that question must involve a claim of right separable

from, and collateral to, rights asserted in the action. Mitchell,

472 U.S. at 527, 105 S.Ct. at 2816. The denial of a state or state

entity's motion for dismissal or summary judgment on the ground of

state action immunity easily meets these requirements: (i) denials

of states' and state entities' claims to state action immunity
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clearly purport to be conclusive determinations that they have no

right not to be sued under federal antitrust laws for actions by

the state or its officers or agents directed by its legislature;

and (ii) a claim of such state action immunity is conceptually

distinct from the merits of the plaintiff's claim that he has been

damaged by the defendants' alleged violation of the federal

antitrust laws. An appellate court reviewing the denial of the

state or state entity's claim of immunity need not consider the

correctness of the plaintiff's version of the facts, nor even

determine whether the plaintiff's allegations actually state a

claim. In a case involving alleged anticompetitive acts by a

state's municipality or subdivision, all it need determine is a

question of law: whether the state entity acted pursuant to a

clearly articulated and affirmatively expressed state policy.

Accordingly, we hold that a district court's denial of a claim

of state action immunity, to the extent that it turns on whether a

municipality or subdivision acted pursuant to a clearly articulated

and affirmatively expressed state policy, is an appealable "final

decision" within the meaning of 28 U.S.C. § 1291 notwithstanding

the absence of a final judgment.

3. The Parker v. Brown State Action Doctrine

In Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315

(1943), the Supreme Court held that Congress did not intend for the

antitrust laws to apply to states acting in their capacities as

sovereigns. In subsequent cases, the Court extended the state

action doctrine to cover, under certain circumstances, acts by
13

private parties that stem from state power or authority, California

Retail Liquor Dealers Association v. Midcal Aluminum, Inc., 445

U.S. 97, 100 S.Ct. 937, 63 L.Ed.2d 233 (1980), as well as acts by

political subdivisions, cities and counties. Town of Hallie v.

City of Eau Claire, 471 U.S. 34, 105 S.Ct. 1713, 85 L.Ed.2d 24

(1985). Congress endorsed and expanded the state action doctrine

by the Local Government Antitrust Act of 1984, which protects

municipalities against antitrust damage claims. 15 USCS § 35; 16E

Julian O. von Kalinowski, Business Organizations-Antitrust Laws and

Trade Regulations § 40.01 (1996), (hereafter von Kalinowski).

The Supreme Court in Parker v. Brown, found the Sherman Act

inapplicable to actions by a state because "[t]here is no

suggestion of a purpose to restrain state action in the Act's

legislative history." Parker v. Brown, 317 U.S. at 351, 63 S.Ct.

at 313. To the contrary, the Act was found to be intended only to

prohibit anticompetitive conduct by "business combinations." Id.

317 U.S. at 351, 63 S.Ct. at 313. Justice Stone's opinion in

Parker makes clear that the decision regarding the reach of the

antitrust laws was predicated on principles of federalism and state

sovereignty stemming from the Supremacy Clause of the Constitution.

von Kalinowski, § 40.02[1] at 40-6. The Court concluded that "[i]n

a dual system of government, an unexpressed intent to nullify a

state's control over its officers and agents is not lightly to be

attributed to Congress." Parker, 317 U.S. at 351, 63 S.Ct. at 313.

A.

Application of the Parker Doctrine to Actions by Municipalities

and Other Political Subdivisions
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In Town of Hallie v. City of Eau Claire, 471 U.S. 34, 105

S.Ct. 1713, 85 L.Ed.2d 24 (1985), the Supreme Court clarified the

application of the Parker doctrine to actions by municipalities and

other political subdivisions. Municipalities are not automatically

immune under Parker, because they are not sovereign. Town of

Hallie, 471 U.S. at 38, 105 S.Ct. at 1716. See also City of

Lafayette v. Louisiana Power and Light Co., 435 U.S. 389, 412, 98

S.Ct. 1123, 1136, 55 L.Ed.2d 364 (1978). But a municipality or

subdivision of the state is immune when it acts pursuant to a

clearly articulated and affirmatively expressed state policy. Town

of Hallie, 471 U.S. at 45-46, 105 S.Ct. at 1720. Furthermore, the

active state supervision prerequisite to a private party's immunity

should not be imposed in cases in which the actor is a

municipality. Town of Hallie, 471 U.S. at 47, 105 S.Ct. at 1720.

The court explained:

[T]he requirement of active state supervision serves

essentially an evidentiary function: it is one way of

ensuring that the actor is engaged in the challenged conduct

pursuant to state policy.... Where a private party is

engaging in the anticompetitive activity, there is real danger

that he is acting to further his own interests, rather than

the governmental interests of the State. Where the actor is

a municipality, there is little or no danger that it is

involved in a private price-fixing arrangement.

Town of Hallie, 471 U.S. at 46-47, 105 S.Ct. at 1720.

The Hallie Court also "fully considered ... how clearly a

state policy must be articulated for a municipality to be able to

establish that its anticompetitive activity constitutes state

action." Town of Hallie, 471 U.S. at 40, 105 S.Ct. at 1717. If

the city acts pursuant to a clearly articulated state statutory
15

scheme, it is irrelevant that the statutes make no express mention

of anticompetitive conduct. It is sufficient that these statutes

demonstrate that the state legislature clearly contemplated

anticompetitive conduct in the provision of governmental services.

Town of Hallie, 471 U.S. at 40, 105 S.Ct. 1717; see von Kalinowski

§ 40.03[z] at 40-45. The Court explained:

The statutes clearly contemplate that a city may engage in

anticompetitive conduct [by acquiring a monopoly over the

provision of sewage treatment services and by tying the

provision of those services to the provision of sewage

collection and transportation services.] Such conduct is a

foreseeable result of empowering the City to refuse to serve

unannexed areas. It is not necessary ... for the state

legislature to have stated explicitly that it expected the

city to engage in conduct that would have anticompetitive

effects.

Town of Hallie, 471 U.S. at 42, 105 S.Ct. at 1718. Also, the Court

explicitly ruled that a municipality need not show that it was

compelled to engage in anticompetitive activity in order to be

immune. Town of Hallie, 471 U.S. at 45-46, 105 S.Ct. at 1719-1720;

von Kalinowski, Id. "This is so because where the actor is a

municipality, acting pursuant to a clearly articulated state

policy, compulsion is simply unnecessary as an evidentiary matter

to prove that the challenged practice constitutes state action."

Town of Hallie, 471 U.S. at 45-46, 105 S.Ct. 1720.

The Supreme Court in City of Columbia v. Omni Outdoor

Advertising, Inc., 499 U.S. 365, 111 S.Ct. 1344, 113 L.Ed.2d 382

(1991) elaborated on the Hallie "clear articulation" standard. The

Omni court said:

We have rejected the contention that [the clear articulation]

requirement can be met only if the delegating statute

explicitly permits displacement of competition. It is enough,
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we have held, if the suppression of competition, is the

"foreseeable result" of what the state authorized.

Omni, 499 U.S. at 372-373, 111 S.Ct. at 1350. The Court found that

the zoning regulation challenged in Omni "amply" satisfied this

standard because the "very purpose of zoning regulation is to

displace unfettered business freedom in a manner that regularly has

the effect of preventing normal acts of competition." 499 U.S. at

373, 111 S.Ct. at 1350; see von Kalinowski, § 40.03[z] at 40-45.

Lower courts have applied Town of Hallie standards not only to

municipalities but also to counties and other public entities and

offices. See von Kalinowski § 40.03[2] at 40-46, 40-47 and 40-48

and authorities cited therein. Eg., Independent Taxicab Drivers'

Employees v. Greater Houston Transportation Co., 760 F.2d 607 (5th

Cir.) (city was immune for having granted taxi-cab company

exclusive right to provide airport's taxicab transportation where

statute granted city regulatory power over taxi-cab industry and

separate statute specifically authorized municipality to grant

contracts for services at airports), cert. denied sub nom. Arrow

Northwest Inc. v. Greater Houston Transp. Co., 474 U.S. 903, 106

S.Ct. 231, 88 L.Ed.2d 230 (1985).

B.

Application of Parker v. Brown State Action Doctrine to the

Actions of the Memorial Hospital at Gulfport, Jointly Owned by a

Municipality and Subdivision of the State

Applying the Hallie and Omni precepts to the present case, we

conclude that the Memorial Hospital at Gulfport is immune under the

Parker v. Brown state action doctrine from claims that it violated

the federal antitrust laws by entering an exclusive contract with
17

Dr. Lanier granting him the sole authority as Director or through

his designee to operate the hospital's ESRD.

The Memorial Hospital at Gulfport is a subdivision of the

state or municipal corporation thereof within the meaning and

contemplation of Miss.Code Ann. §§ 41-12-10 et seq. (1972 and

supplements). Enroth v. Memorial Hospital at Gulfport, 566 So.2d

202, 205 (Miss.1990). Consequently, to bring itself under the

aegis of the Parker v. Brown immunity doctrine the hospital need

prove only that it acted pursuant to a clearly articulated and

affirmatively expressed state policy. The hospital may satisfy

this requirement by showing a statutory scheme that demonstrates

that the state legislature clearly contemplated the challenged

anticompetitive conduct or that suppression of competition was the

foreseeable result of what the state authorized. It is not

necessary for the state legislature to have compelled or explicitly

permitted the hospital to enter exclusive contracts having

anticompetitive effects, Independent Taxicab Drivers', 760 F.2d at

610; it is enough if such suppression of competition was the

"foreseeable result" of what the state authorized. Omni Outdoor

Advertising, 499 U.S. at 372-373, 111 S.Ct. at 1350; Town of

Hallie, 471 U.S. at 42, 45-46, 105 S.Ct. 1718-1720.

The Mississippi statutes demonstrate that the state

legislature clearly contemplated anticompetitive conduct by (1)

authorizing a hospital to enter an exclusive contract with a single

individual to operate any aspect, division or department of its

operations, including its ESRD facility, and (2) requiring a
 

1§ 41-13-35, in part provides:

(5) The power of the board of trustees shall

specifically include, but not be limited to, the following

authority:

(g) To contract by way of lease ... or otherwise, with

any agency, department or other office of government or any

individual, partnership, corporation, owner, other board of

trustees, or other health care facility, for the providing

of property, equipment or services by or to the community

hospital or other entity or regarding any facet of the

construction, management, funding or operation of the

community hospital or any department or division thereof, or

any related activity, including without limitation, shared

management expertise or employee insurance and retirement

programs, and to terminate said contracts when deemed in the

best interest of the community hospital. 

18

hospital to obtain a certificate of need, based on criteria such as

population base and projected caseload, prior to establishing a

health facility, including an ESRD facility. See Mississippi State

Dept. of Health v. Golden Triangle Regional Medical Center, 603

So.2d 854 (Miss.1992) (certificate of need to establish cardiac

catheterization services).

The Miss.Code Annotated § 41-13-35(5)(g) (1972) authorizes the

board of trustees of a community hospital to contract with any

individual for the providing of services by or to the community

hospital regarding any facet of the operation of the hospital or

any division or department thereof, or any related activity, and to

terminate said contracts when deemed in the best interests of the

community hospital.1 The Mississippi Health Care Certificate of

Need Law of 1979 prohibits the construction, development,

establishment or relocation of a health care facility without

obtaining the required certificate of need. Miss.Code Ann. § 41-7-
19

191(1)(a) & (b) (1979). A certificate of need shall not be granted

or issued unless the proposal has been reviewed for consistency

with the specifications and criteria established by the State

Department of Health and substantially complies with the projection

of need as reported in the state health plan in effect at the time

the application for the proposal was submitted. § 41-7-193. A

"Certificate of Need" means a written order of the State Department

of Health setting forth the affirmative finding that a proposed

health facility, including an ESRD facility, sufficiently satisfies

the plans, standards and criteria prescribed for such service or

other project by Section 41-7-171 et seq., and by rules and

regulations promulgated thereunder by the State Department of

Health. Id. at § 41-7-173(b). "End stage renal disease (ESRD)

facilities" means kidney disease treatment centers, which include

freestanding hemodialysis units and limited care facilities. Id.

at § 41-7-173(h)(v). "Health care facility" includes, inter alia,

end stage renal disease (ESRD) facilities. Id. at § 41-7-173(h).

The Hallie-Omni standards are amply met here. The very

purpose of a hospital's exclusive contract with a physician to

supervise a special unit and perform its critical functions is to

obtain the doctor's dedicated services by displacing unfettered

professional medical freedom in a manner that prevents normal acts

of competition, particularly on the part of other physicians

qualified to supervise and operate such a unit. Likewise, a

certificate of need law restricting the establishment of new health

facilities including ESRD facilities necessarily protects existing
20

facilities against competition from newcomers. Certificate of need

programs are federally funded, state-administered regulatory

mechanisms providing for review and approval by health planning

agencies of capital expenditures and service capacity expansion by

hospitals and other health care facilities. Their primary purpose

is to discourage unnecessary investment in health care facilities

and to channel investment so as to preserve and improve the quality

of institutional health care. See James B. Simpson, Full Circle:

The Return of Certificate of Need Regulation of Health Facilities

to State Control, 19 Ind.L.Rev. 1025, 1028-1033 (1986).

The hospital's allegedly anticompetitive conduct could have

been reasonably anticipated by the Mississippi Legislature when it

gave the hospital the power to enter a contract with an individual

physician to operate any aspect, division or department of its

operations. The state's certificate of need program necessarily

displaces unfettered competition of physicians operating health

facilities and restricts the entry of medical facilities and

services to those administratively found to be medically necessary

and affordable. Having concluded that the allegedly

anticompetitive results were foreseeable under the state action

doctrine, we reverse the district court's holding that the state

action doctrine fails to immunize the hospital's actions in

entering an exclusive contract for the operation of its ESRD unit.

4. The District Court's Decision

The district court concluded that the hospital and its board

were not entitled to state action immunity because the displacement
21

or suppression of competition was not a foreseeable result of the

state statutory scheme. We do not agree with the district court's

interpretation of the state statutes. As we explained earlier in

this opinion, § 41-13-35(g) of the Mississippi Code does not merely

provide general authority for the hospital to enter contracts. The

statute clearly, affirmatively and articulately empowers the

hospital to contract with any individual for the providing of

services by or to the hospital regarding any facet of the operation

of the hospital or any division or department thereof, or any

related activity. It is clearly a foreseeable result of what the

statute authorizes that a hospital would enter an exclusive

contract with an individual physician to supervise and perform the

critical functions of its ESRD units. The very purpose of the

statutory authorization is to enable the hospital to displace

unfettered competition among physicians in the performance of

critical operations such as chronic dialysis in ESRD units so as to

promote efficiency of health care provision, reduce the hospital's

supervisory burden, and control its exposure to liability.

Similarly, the certificate of need law, § 41-7-171 et seq.,

restricts the establishment and operation of ESRDs and necessarily

protects existing units against some competition from newcomers.

The Supreme Court has "rejected the contention that this

requirement [the clear articulation of a state policy to authorize

anticompetitive conduct] can be met only if the delegating statute

explicitly permits the displacement of competition ... It is enough

... if suppression of competition is the "foreseeable result' of
22

what the statute authorizes...." City of Columbia v. Omni Outdoor

Advertising, Inc., 499 U.S. 365, 372-373, 111 S.Ct. 1344, 1349-

1350, 113 L.Ed.2d 382 (1991); Independent Taxicab Drivers', 760

F.2d at 610. That condition is amply met here.

5. Disposition of Other Issues

The hospital contests the trial court's refusal to dismiss

plaintiff Dr. Martin's claims for damages under 42 U.S.C. § 1983,

for deprivation of Martin's constitutionally protected property and

liberty rights, for damages under state antitrust laws and

interference with existing and prospective business relations

claims. We lack jurisdiction to reach the merits of that appeal.

Although the collateral order doctrine allows review of the

district court's denial of state action immunity to the defendants

against the federal antitrust claims, that allowance does not

confer "pendent appellate jurisdiction" over the other issues.

Although in Swint v. Chambers County Commission, --- U.S. ----, 115

S.Ct. 1203, 131 L.Ed.2d 60 (1995), the Court implied that in rare

circumstances pendent appellate jurisdiction may be proper—if

issues were "inextricably intertwined" or where "review of the

former was necessary to ensure meaningful review of the latter",

id. at ----, 115 S.Ct. at 1208—defendants have not advanced reasons

for review more compelling than those rejected by the Court in

Swint. See also Woods v. Smith, 60 F.3d 1161 (5th Cir.1995), cert.

denied sub nom. Palermo v. Woods, --- U.S. ----, 116 S.Ct. 800, 133

L.Ed.2d 747 (1996); Silver Star Enterprises, Inc. v. M/V

Saramacca, 19 F.3d 1008 (5th Cir.1994).
23

Dr. Martin filed a cross-appeal contending that the district

court erred in deciding that the Local Government Antitrust Act

shields the individual board members with absolute immunity from

federal antitrust damages; the individual board member defendants

are entitled to summary judgment under qualified immunity as to the

constitutional due process claims of the plaintiff; and the

individual board member defendants are entitled to qualified

immunity as to the plaintiff's state claims. For the same reasons

expressed above, we have no jurisdiction to consider the court's

interlocutory orders.

Conclusion

The judgment denying summary judgment on the grounds of Parker

v. Brown state action immunity to the hospital and its individual

board members is REVERSED and the case is REMANDED to the district

court for the entry of such a summary judgment. The other appeals

and cross-appeals are DISMISSED for lack of appellate jurisdiction.

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