1995 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

9-1-1995

Brader v Alghny Gen Hosp

Precedential or Non-Precedential:

Docket 94-3578

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Recommended Citation

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1 

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT 

 

No. 94-3578 

 

ALAN H. BRADER, 

 Appellant

v. 

ALLEGHENY GENERAL HOSPITAL; GEORGE J. MAGOVERN 

and DANIEL L. DIAMOND 

 

On Appeal from the United States District Court 

for the Western District of Pennsylvania 

(D.C. No. 93-cv-01920) 

 

Argued May 2, 1995 

Before: SLOVITER, Chief Judge, ALITO and 

McKEE, Circuit Judges

(Filed September 1, 1995) 

Michael A. Cassidy (Argued) 

Kabala & Geeseman 

Pittsburgh, PA 15222 

Melvin L. Vatz 

Grossinger, Gordon & Vatz 

Pittsburgh, PA 15219 

 Attorneys for Appellant 

David L. McClenahan (Argued) 

Paul K. Stockman 

Kirkpatrick & Lockhart 

Pittsburgh, PA 15222 

 Attorneys for Appellees 
2 

 

OPINION OF THE COURT 

 

SLOVITER, Chief Judge. 

I. 

Facts and Procedural History

 Appellant Dr. Alan H. Brader challenges the district 

court's dismissal of his antitrust and breach of contract claims 

against defendants Allegheny General Hospital, Allegheny Surgical 

Associates ("ASA"), Cardio-Thoracic Surgical Associates ("CTSA"), 

Dr. George J. Magovern, and Dr. Daniel L. Diamond. Because the 

district court dismissed the complaint, the only facts before us 

are those alleged in the complaint itself. 

 Allegheny General, a hospital located in Pittsburgh, 

Pennsylvania, also serves as a regional referral hospital 

treating patients referred to it from Western Pennsylvania, 

Eastern Ohio and West Virginia. ASA, a Pennsylvania corporation 

with offices in Pittsburgh, engages in the practice of general 

surgery, with principal emphasis in trauma and vascular surgery. 

Dr. Diamond is the President of ASA and Division Director for 

General Surgery at Allegheny General. ASA obtains its patients 

through referrals from other physicians; Allegheny General uses 

ASA exclusively to perform its trauma service. CTSA, a 

Pennsylvania corporation that also maintains its offices in 

Pittsburgh, practices in the field of cardio-thoracic surgery. 

Dr. Magovern is the President of CTSA and Chairman of the 
3 

Department of Surgery at Allegheny General. CTSA obtains its 

patients through physician referrals and from on-call trauma 

referrals. 

 In July 1988, Brader, a physician licensed to practice 

in Pennsylvania and North Carolina, became a provisional staff 

member of Allegheny General and an employee of ASA. In June 

1989, Magovern accused Brader of incompetence and of having 

improperly rendered trauma treatment to a patient who was on the 

call service of CTSA (Magovern's group) although the details of 

Magovern's displeasure are not spelled out in the complaint. 

According to Brader's complaint, Magovern had no factual basis to 

support his accusations. Nonetheless, shortly thereafter, when 

the issue of Brader's advancement from provisional to regular 

staff status at Allegheny General arose, it was opposed by 

Magovern. Solely as a result of Magovern's opinion and based on 

this single issue, Diamond told Brader that he should look 

elsewhere for employment, that he would not support him for staff 

membership, that his prior support for Brader had jeopardized his 

"political" career at Allegheny General, and that Brader could 

not practice medicine at Allegheny General if he was not employed 

with ASA. 

 Sometime after this conversation, Diamond conducted an 

informal quality assurance study of (presumably Brader's) 

ruptured abdominal aortic aneurysm (AAA) procedures, which Brader 

contends was not performed in accordance with Allegheny General's 

medical staff bylaws. In May 1990 after the study was completed, 

at a meeting between Brader, Diamond and representatives of 
4 

Allegheny General, Diamond tried to suspend Brader, allegedly in 

violation of the bylaws and for no reasonable basis related to 

the quality of plaintiff's performance. 

 Later in May, at a meeting of Brader, Magovern and 

Diamond, Brader agreed to an independent review of his surgical 

record on AAA procedures. Magovern selected Dr. John Ochsner to 

conduct it. Brader alleges that Ochsner was a personal friend of 

Magovern. According to Brader, Diamond, Magovern and Allegheny 

General submitted inadequate and misleading information to 

Ochsner for his review. In addition, Brader contends that he was 

prevented from having an informal conference with Ochsner in 

violation of the medical staff bylaws. 

 Ochsner concluded, as a result of the inadequate and 

misleading information, that Brader's mortality experience was 

not surprising or unexpected but recommended that his performance 

of ruptured AAA procedures should be supervised due to excessive 

morbidity. In October 1990 Magovern summarily suspended Brader's 

privileges to perform AAA procedures at the hospital without any 

factual basis. Later that month, Brader's application for 

advancement to attending staff status at Allegheny General was 

denied on the recommendations of Diamond and Magovern, and in 

part at Magovern's recommendation all of Brader's clinical 

privileges at the hospital were suspended. App. at 58. 

 Brader appealed all of these adverse actions in 

accordance with the medical staff bylaws. On October 9, 1991, a 

hearing panel recommended that the suspension of Brader's 

ruptured and elective AAA privileges be lifted, but on October 
5 

25, 1992 a hearing panel recommended that the decision not to 

advance Brader to attending staff status be sustained, and 

concluded that Brader's challenge to the suspension of his 

clinical privileges was moot. App. at 59. According to Brader's 

complaint, the decision not to advance him to attending staff 

status violated the medical staff bylaws because it was based on 

hearsay and he had no opportunity to confront the witnesses 

against him. App. at 60. 

 Brader appealed the adverse October 25, 1992 decision 

to an Appellate Review Panel, which on January 7, 1993 affirmed 

the recommendation not to advance Brader but concluded that there 

was no evidence to warrant the continuation of the suspension of 

Brader's clinical privileges. On February 26, 1993, however, the 

Allegheny General Board of Directors, allegedly in violation of 

the medical staff bylaws, reimposed the suspension of Brader's 

AAA procedures at the hospital. 

 Brader tried to obtain staff privileges at other 

hospitals in Allegheny County and Washington County, but he was 

unable to do so due to his suspension from Allegheny General. 

Brader contends that defendants' actions have prevented him from 

practicing medicine in any location within the market area served 

by the defendants and forced him to relocate his practice to 

North Carolina. 

 On November 18, 1993, Brader filed a three-count 

complaint against defendants alleging claims for violations of 

sections 1 and 2 of the Sherman Act as well as a claim for breach 

of contract arising from the alleged violations of the medical 
6 

staff bylaws. Shortly thereafter, Brader filed an Amended 

Complaint in order to correct the spelling of Magovern's name. 

 Defendants moved to dismiss Brader's Amended Complaint 

arguing that the complaint failed to allege facts sufficient to 

support the conclusion that Brader had suffered an "antitrust 

injury" so as to confer standing and that the complaint failed to 

allege various facts, such as the existence of a conspiracy and 

the relevant market power of the defendants, to support Brader's 

claims under the Sherman Act. The defendants also sought to 

dismiss Brader's claim of breach of contract because the 

complaint failed to allege which sections of the medical staff 

bylaws, if any, had been breached, and failed to allege facts 

sufficient to show that any of the alleged infractions were not 

merely de minimus violations. Finally, defendants argued that 

they were immune from suit with respect to all of Brader's claims 

under the Health Care Quality Improvement Act (HCQIA), 42 U.S.C. 

§§ 11101-11152. Brader sought leave to amend the complaint, and 

submitted a proposed Second Amended Complaint, and defendants 

renewed their motion to dismiss, relying upon the same grounds 

raised in the earlier motion. 

 By order dated September 14, 1994, the district court 

dismissed the Amended Complaint, granted Brader leave to amend, 

ordered the Second Amended Complaint to be filed, and granted 

defendants' motion to dismiss the Second Amended Complaint. In 

its accompanying opinion, the district court stated that the 

Second Amended Complaint contained sufficient allegations 

regarding a conspiracy and defendants' market power, but "failed 
7 

to adequately plead that there was an unlawful purpose for the 

defendants' conduct or that there was an actual anticompetitive 

effect as a result of plaintiff being denied staff privileges." 

App. at 13. The district court dismissed Brader's claims under 

both section 1 and section 2 of the Sherman Act on the ground 

that the complaint "does not suggest that [the defendants'] 

action did, or could have, effected [sic] interstate commerce in 

an anticompetitive manner." App. at 13. The court also 

dismissed Brader's breach of contract claim, holding that the 

Second Amended Complaint contained sufficient specific 

allegations of the bylaw sections allegedly breached by the 

defendants, but that it failed to allege facts sufficient to 

support a causal link between those alleged breaches and the 

injuries suffered by Brader. The district court's opinion did 

not address the defendants' claim of immunity to Brader's suit 

under HCQIA. 

 Brader now appeals the district court's dismissal of 

his Second Amended Complaint. This court has jurisdiction of 

Brader's appeal pursuant to 28 U.S.C. § 1291. We have plenary 

review over a district court's grant of a motion to dismiss. 

Malia v. General Elec. Co., 23 F.3d 828, 830 (3d Cir.), cert.

denied, 115 S. Ct. 377 (1994). In conducting our review, we 

accept as true all facts alleged in the complaint and all 

reasonable inferences that can be drawn therefrom. Id.

II. 

Discussion

A. 
8 

 Brader first contends that the district court erred in 

concluding that his complaint failed to allege the requisite 

nexus between the defendants' activities and interstate commerce 

to support his antitrust claims. There is no dispute that both 

of Brader's antitrust claims require a showing that the 

defendants' actions affect interstate commerce. Section 1 of the 

Sherman Act provides that "[e]very contract, combination . . ., 

or conspiracy, in restraint of trade or commerce among the 

several States, or with foreign nations, is declared to be 

illegal." 15 U.S.C. § 1 (emphasis added). Section 2 provides 

that "[e]very person who shall monopolize, or attempt to 

monopolize, or combine or conspire with any other person or 

persons, to monopolize any part of the trade or commerce among 

the several states, or with foreign nations, shall be deemed 

guilty of a misdemeanor . . . ." 15 U.S.C. § 2 (emphasis added). 

Moreover, the parties agree that for the purposes of the 

interstate commerce requirement, there is no distinction between 

section 1 and section 2 of the Sherman Act. See Weiss v. York 

Hosp., 745 F.2d 786, 825 n.67 (3d Cir. 1984), cert. denied, 470 

U.S. 1060 (1985). 

 Although the "interstate commerce requirement" of the 

Sherman Act is often referred to as "jurisdictional," the Supreme 

Court has held that there is no practical distinction between the 

"jurisdictional" interstate commerce inquiry and consideration of 

whether a complaint pleads an effect on interstate commerce 

sufficient to state a claim for relief under the Sherman Act. In 

Hospital Bldg. Co. v. Trustees of Rex Hosp., 425 U.S. 738, 742 & 
9 

n.1 (1976), the Court stated that an analysis of challenges to 

antitrust claims based on the interstate commerce element under 

either Federal Rule of Civil Procedure 12(b)(1) or 12(b)(6) leads 

to the same result. Similarly, in Weiss we noted that "[the] 

interstate impact requirement has been construed as an element of 

both jurisdiction and the substantive offense under the Sherman 

Act," and that "[t]he inquiry is the same for both elements." 745 

F.2d at 824 n.67 (citations omitted); see also Note, Sherman Act 

"Jurisdiction" in Hospital Staff Exclusion Cases, 132 U. Pa. L. 

Rev. 121, 126-29 (1983). 

 Moreover, the Supreme Court has held that the reach of 

the Sherman Act is as broad as Congress's power under the 

Commerce Clause. McLain v. Real Estate Bd. of New Orleans, 444 

U.S. 232, 241-42 (1980); see also Hospital Bldg. Co., 425 U.S. at 

743 n.2; United States v. Frankfort Distilleries, Inc., 324 U.S. 

293, 298 (1945). Thus, the interstate commerce requirement of 

the Sherman Act may be satisfied by demonstrating that 

defendant's activities either are in interstate commerce or 

affect interstate commerce. McLain, 444 U.S. at 242. 

 In Summit Health, Ltd. v. Pinhas, 500 U.S. 322 (1991), 

the Supreme Court addressed the interstate commerce requirement 

of the Sherman Act with respect to the attempted exclusion of a 

physician from a particular geographic market. Pinhas, an 

ophthalmologist, alleged that a hospital, its corporate owner and 

its medical staff conspired in violation of section 1 of the 

Sherman Act to prevent him from providing ophthalmological 

services in the Los Angeles market by, inter alia, initiating 
10 

peer review proceedings against him, summarily suspending and 

terminating his medical staff privileges, and threatening to 

distribute an adverse report about him to all hospitals in the 

market area. Id. at 324, 326-27. 

 The defendants moved to dismiss the complaint, 

contending that there was no "factual nexus between the restraint 

on this one surgeon's practice and interstate commerce." Id. at 

330. The Supreme Court rejected this argument, stating that the 

alleged conspiracy, if successful, would cause "a reduction in 

the provision of ophthalmological services in the Los Angeles 

market." Id. at 331. The Court reasoned that the "competitive 

significance of [the single physician's] exclusion from the 

market must be measured, not just by a particularized evaluation 

of his own practice, but rather, by a general evaluation of the 

impact of the restraint on other participants and potential 

participants in the market from which he has been excluded." Id.

at 332. The Court concluded that the complaint satisfied the 

interstate commerce requirement of the Sherman Act. Id. at 333. 

 Brader argues that the facts of this case are 

essentially identical to the facts of Summit Health. In a 

graphic side-by-side column analysis in his brief, Brader 

demonstrates that like Pinhas in Summit Health he has alleged 

that the defendants conspired to suspend his medical privileges 

through a biased and unfair peer review process. In addition, as 

in Summit Health, the alleged effect of the defendants' actions 

was to deny Brader access to the relevant geographic market, as 

the hospital's dissemination of the report of his suspension has 
11 

allegedly prevented him from obtaining another position, causing 

a reduction in the provision of medical services to the 

Pittsburgh market. Brader then argues that the district court's 

conclusion that his complaint failed to allege a sufficient 

effect on interstate commerce is fundamentally inconsistent with 

Summit Health. 

 The district court attempted to distinguish Summit 

Health on the ground that the dispute in that case arose from the 

physician's objection to the hospital's costly requirement that 

eye surgeons absorb the cost of an assistant surgeon during 

surgical procedures. See Summit Health, 500 U.S. at 326. The 

district court reasoned that this case involved no similar 

"systemic anticompetitive effect on interstate commerce," and 

that because Brader alleges no "market-wide" harm, Summit Health

was inapplicable. 

 The Summit Health opinion is somewhat unclear on 

whether the interstate commerce nexus was satisfied merely by the 

defendants' attempt to exclude the plaintiff from the relevant 

market, or by the fact that the attempted exclusion was coupled 

with an allegation regarding the defendants' "insist[ence] upon 

adhering to an unnecessarily costly procedure." Summit Health, 

500 U.S. at 332. However, our decision in Fuentes v. South Hills 

Cardiology, 946 F.2d 196 (3d Cir. 1991), resolved this ambiguity 

by holding that the mere exclusion of a single physician from a 

market is sufficient. In Fuentes, a plaintiff physician brought 

a Sherman Act claim against a hospital and medical group due to 

the termination of the physician's medical privileges. Fuentes, 
12 

946 F.2d at 197. When the plaintiff could not obtain another 

position within or outside of Pennsylvania, he alleged that the 

defendants were acting in concert to effect an interstate boycott 

of his services. Id. at 198. There is no suggestion in the 

Fuentes opinion that Fuentes alleged that the defendants were 

engaged in anti-competitive pricing practices similar to those 

alleged in Summit Health; the only alleged anti-competitive 

effect referred to in Fuentes was the exclusion of the plaintiff 

physician from the relevant market. Notably, the termination in 

Fuentes, like the termination in this case, apparently arose over 

"a disagreement concerning patient care." Id. at 197. 

 Despite the lack of broader allegations regarding the 

defendants' anticompetitive motive, we inferred from Fuentes' 

allegations that he was excluded from practicing in the relevant 

market and that out-of-state patients who travelled to Pittsburgh 

would be deprived of Fuentes' services. Id. at 200. Thus, the 

plaintiff in Fuentes had alleged a sufficient effect on 

interstate commerce to support his Sherman Act claim. Id. at 

201. 

 The Fuentes opinion forecloses the district court's 

restrictive reading of Summit Health and controls the "interstate 

commerce" issue in this case. Brader, like Fuentes, has alleged 

that the defendants wrongfully terminated his staff privileges at 

Allegheny General and that such denial limited his ability to 

serve patients in the relevant market. At the complaint stage no 

more is required, as defendants conceded at oral argument. Under 
13 

Fuentes, this allegation is sufficient to satisfy the "interstate 

commerce requirement" of the Sherman Act. 

B. 

 Defendants next contend that we may affirm the 

dismissal on any ground presented to the district court, see

Langer v. Monarch Life Ins. Co., 966 F.2d 786, 807-08 (3d Cir. 

1992), and that we may do so here because Brader failed to plead 

facts sufficient to support the conclusion that he suffered an 

"antitrust injury." They state that while the district court may 

have erroneously used the "interstate commerce" label, in effect 

it concluded that no antitrust injury was pled because Brader's 

complaint did not allege that defendants' actions had any 

measurable impact on any market.1

 Defendants' argument proceeds along the following 

steps: Brader's right to maintain a private cause of action for 

damages flows from section 4 of the Clayton Act, which provides 

for suits by "any person who shall be injured in his business or 

property by reason of anything forbidden in the antitrust laws 

. . . ." 15 U.S.C. § 15(a). This requires proof that the 

plaintiff suffered an "antitrust injury" before recovering 

 

1 Judge Alito would not reach the question addressed in part IIB 

of this opinion. He does not think that the district court's 

decision was based on the question of antitrust injury. Thus, in 

his view, part IIB addresses a possible alternative ground for 

affirmance and, as a discretionary matter, he would not reach 

that question now. The question is a difficult one --compare 

part IIB with BCB Anesthesia Care v. Passavant Memorial Area 

Hosp., 36 F.3d 664, 669 (7th Cir. 1994); Lie v. St. Joseph Hosp., 

964 F.2d 567, 570 (6th Cir. 1992) -- and he thinks that it would 

be preferable for the question to be decided in the first 

instance by the district court. 
14 

damages for that violation. See Atlantic Richfield Co. v. USA 

Petroleum Co, 495 U.S. 328, 339 (1990); Brunswick Corp. v. Pueblo 

Bowl-o-Mat, Inc., 429 U.S. 477, 489 (1977). According to 

defendants, this "antitrust injury" rule requires that Brader 

plead facts to support the inference that defendants caused an 

injury to competition, which in turn injured Brader. Defendants 

contend that this requirement is far more stringent than the mere 

"jurisdictional" requirement of the interstate commerce test, and 

that therefore Summit Health and Fuentes do not resolve the issue 

in this case. 

 Defendants' argument, even if not implausible, appears 

to be flatly inconsistent with Fuentes. There too we considered 

whether the complaint of a physician whose hospital privileges 

were allegedly terminated at the request of physicians with whom 

he had been associated stated a claim for relief under the 

Sherman Act. Fuentes had alleged that "the defendants acted in 

concert to deny Fuentes, a provider of cardiological services, 

access to the Pittsburgh cardiological market," and that "by 

eliminating him as a competitor, the boycott successfully reduced 

competition for the defendants' cardiological services." Fuentes, 

946 F.2d at 202. Accepting as true Fuentes' allegations and all 

reasonable inferences therefrom we concluded that these 

allegations were sufficient to survive a motion to dismiss, as 

"such an exclusion constitutes an unlawful restraint of trade." 

Id.; see also Boczar v. Manatee Hosps. & Health Sys., Inc., 993 

F.2d 1514, 1519 (11th Cir. 1993) (hospital's actions in 
15 

suspending the plaintiff's privileges "had the effect of 

restraining trade"). 

 Brader's Second Amended Complaint alleges that the 

defendants' activities "prevent[ed] the Plaintiff and others from 

engaging in the practice of general vascular trauma surgery in 

the relevant market, and . . . prevent[ed] other hospitals in the 

relevant market from employing or granting medical staff 

privileges to the Plaintiff for the purpose of competing with 

defendants." App. at 64. This conduct, Brader alleges, has 

"prevent[ed] competition in the relevant product market within 

the relevant geographic market." App. at 64. Under Fuentes, 

these allegations are sufficient to state a claim for an 

antitrust injury. 

 We are not in a position to predict whether Brader will 

ultimately be able to sustain his burden of proof on this issue 

since Brader has not yet had an opportunity to obtain evidence. 

After Summit Health, the adequacy of a physician's contentions 

regarding the effect on competition is typically resolved after 

discovery, either on summary judgment or after trial. See, e.g., 

Lie v. St. Joseph Hosp., 964 F.2d 567, 570 (6th Cir. 1992) 

(affirming summary judgment where physician failed to show "an 

injury to competition in the form of increased cost or reduced 

supply of services or harm to the consumer"); Tarabashi v. 

McAlester Regional Hosp., 951 F.2d 1558, 1571 (10th Cir. 1991) 

(affirming judgment against physician after trial in part because 

physician "failed to establish the required impact upon 

competition") (emphasis in original), cert. denied, 112 S. Ct. 
16 

2996 (1992); Oksanen v. Page Memorial Hosp., 945 F.2d 696 (4th 

Cir. 1991) (in banc) (affirming summary judgment for hospital and 

medical staff after physician had "received adequate discovery on 

the key issues" on his claim of antitrust violations arising from 

alleged misuse of peer review process), cert. denied, 502 U.S. 

1074 (1992). 

 Even the antitrust cases cited by defendants that do 

not involve physicians suggest that the existence of an 

"antitrust injury" is not typically resolved through motions to 

dismiss. See, e.g., Atlantic Richfield Co., 495 U.S. at 346 

(finding plaintiff had "failed to demonstrate that it has 

suffered any antitrust injury" at summary judgment stage); Town 

Sound & Custom Tops, Inc. v. Chrysler Motors Corp., 959 F.2d 468, 

495 (3d Cir.) (in banc) (addressing "antitrust injury" issue in 

summary judgment context), cert. denied, 113 S. Ct. 196 (1992); 

Tunis Bros. Co. v. Ford Motor Co., 952 F.2d 715, 727-28 (3d Cir. 

1991) (resolving "antitrust injury" issue on appeal of denial of 

motion for judgment notwithstanding the verdict), cert. denied, 

112 S. Ct. 3034 (1992). 

 We recognize that one court of appeals has upheld the 

dismissal for failure to state a claim in an antitrust complaint 

filed by nurse anesthetists alleging a conspiracy between a 

hospital and physicians to terminate plaintiffs' contract for 

services. See BCB Anesthesia Care, Ltd. v. Passavant Memorial 

Area Hosp. Ass'n, 36 F.3d 664, 668-69 (7th Cir. 1994). The 

district court based the dismissal on plaintiffs' failure to 

allege a sufficient nexus with interstate commerce, a rationale 
17 

that the appellate court did not accept. Instead, the court of 

appeals, in a divided opinion, upheld dismissal of the complaint 

stating that "[a] staffing decision does not itself constitute an 

antitrust injury," id. at 669, notwithstanding that the hospital 

was the only acute care general hospital within twenty-five 

miles, which substantially limited plaintiffs' options. Id. at 

668. The court recognized that the substitution of medical 

physician anesthetists might cause "the prices the hospital 

charges [to] be somewhat higher now than they were." Id. The 

BCB majority even acknowledged that the antitrust injury issue is 

one that is typically reserved for summary judgment. Id. As the 

dissent in BCB noted, it is difficult to reconcile the majority's 

conclusion with Summit Health. Id. at 669 (Cudahy, dissenting). 

 The BCB majority stressed the inconvenience to the 

courts of proceeding beyond the pleading stage and noted the 

"hundreds or thousands of pages" of decisions in antitrust cases 

decided after discovery in which the plaintiff physicians have 

ultimately been unsuccessful. Id. at 667. We believe that such 

impatience with the notice pleading embodied in the Federal Rules 

is foreclosed by the Supreme Court's decision in Leatherman v. 

Tarrant County Narcotics Intelligence & Coordination Unit, 113 S. 

Ct. 1160, 1163 (1993) (rejecting a "heightened pleading standard" 

in a case arising under 42 U.S.C. § 1983), and is an issue to be 

addressed, if needed, by Congress. We decline to adopt the BCB

majority approach here. 

 Defendants' argument that Brader is a "poor champion of 

consumers" is essentially the same argument. They take the quote 
18 

from a case decided after discovery in which we upheld the 

judgment because of the plaintiff's failure to show that its loss 

of sales was sufficiently related to the anticompetitive activity 

alleged. See Alberta Gas Chems. Ltd. v. E.I. du Pont de Nemours 

& Co., 826 F.2d 1235, 1239 (3d Cir. 1987)(quoting Ball Memorial 

Hosp. v. Mutual Hosp. Ins., Inc., 784 F.2d 1325, 1334 (7th Cir. 

1986)), cert. denied, 486 U.S. 1059 (1988). They also rely on 

Todorov v. DCH Healthcare Auth., 921 F.2d 1438, 1454 (11th Cir. 

1991), which affirmed summary judgment against the plaintiff 

physician who had not even argued that his exclusion from the 

market hurt competition and increased prices for consumers, but 

instead sought an injunction so that he could join a virtual 

monopoly and share in the physicians' supercompetitive profits. 

In contrast, the type of injury alleged by Brader (the loss of 

income due to an inability to practice in the relevant market 

area) is directly related to the illegal activity in which the 

defendant allegedly engaged: a conspiracy to exclude Brader from 

the relevant market. 

 Under Summit Health and Fuentes, Brader's pleading 

requirement on this issue is satisfied by his allegation that the 

defendants unreasonably restricted his ability to practice in the 

Pittsburgh area and thereby "successfully reduced competition" 

for the defendants' services. See Fuentes, 946 F.2d at 202. We 

therefore reject defendants' argument regarding the adequacy of 

Brader's pleading of an "antitrust injury" and decline to affirm 

the dismissal of his claim on this ground at this stage of the 

litigation. 
19 

C. 

 Defendants contend that we should affirm the decision 

of the district court on the alternative ground that the Second 

Amended Complaint fails to contain sufficient allegations 

regarding the defendants' market power. Market power may be 

relevant in some Sherman Act section 1 claims but it is an 

essential factor to be considered in all Sherman Act section 2 

claims. Neither the parties nor the district court make the 

distinctions necessary to analyze those two sections, and we are 

unwilling to affirm on this ground in the absence of any 

consideration by the district court. We briefly set forth the 

distinctions, as the issue will inevitably arise on remand. 

 Under section 2 of the Sherman Act, Brader must show, 

at a minimum, that defendants have "a dangerous probability of 

achieving monopoly power" in the relevant market. Spectrum 

Sports, Inc. v. McQuillan, 113 S. Ct. 884, 890-91 (1993); see

also Pastore v. Bell Telephone Co., 24 F.3d 508, 512 (3d Cir. 

1994). Although disposition of that question is typically one 

that is not resolved at the pleading stage unless it is clear on 

the face of the complaint that the "dangerous probability" 

standard cannot be met as a matter of law, the complaint should 

allege viable relevant markets. Brader's complaint is not 

specific as to either the product market or the relevant 

geographic market. In his count alleging violation of section 2, 

he refers to the product market as "the practice of certain 

specialized vascular and trauma surgery and cardio-thoracic 

surgery at [Allegheny General]." App. at 66. Elsewhere the 
20 

complaint states that "the geographic extent of [the market from 

which he was excluded] is co-existent with the area from which 

the defendants attract their patients which will be further 

defined through discovery." App. at 63. It appears that Brader 

suggests two geographic markets, one confined to the hospital and 

the other encompassing a portion of the tri-state area. 

 We do not decide whether under these circumstances 

Allegheny General is an appropriate geographic market, but we 

note that every court that has addressed this issue has held or 

suggested that, absent an allegation that the hospital is the 

only one serving a particular area or offers a unique set of 

services, a physician may not limit the relevant geographic 

market to a single hospital. See, e.g., Collins v. Associated 

Pathologists, Ltd., 844 F.2d 473, 480 n.5 (7th Cir.) (physician 

was "slicing the geographic market much too thin" in limiting 

market to one hospital), cert. denied, 488 U.S. 852 (1988); 

Seidenstein v. National Medical Enterprises, Inc., 769 F.2d 1100, 

1106 (5th Cir. 1985) (no evidence that the hospital "is 

recognized as a separate and distinct market, or that unique 

services or facilities existed there"); Dos Santos v. ColumbusCuneo-Cabrini Medical Ctr., 684 F.2d 1346, 1353 (7th Cir. 1982) 

(noting that "we have reason to doubt whether the relevant market 

can be sliced so small as to embrace only a single hospital"); 

Flegel v. Christian Hosp. Northeast-Northwest, 804 F. Supp. 1165, 

1174 (E.D. Mo. 1992) (limiting the relevant geographic market to 

one hospital lacked any "reasonable legal or factual basis"), 

aff'd, 4 F.3d 682 (8th Cir. 1993); Drs. Steuer & Latham P.A. v. 
21 

National Medical Enterprises, Inc., 672 F. Supp. 1489, 1514 

(D.S.C. 1987), aff'd, 846 F.2d 70 (4th Cir. 1988); Friedman v. 

Delaware County Memorial Hosp., 672 F. Supp. 171, 195 (E.D. Pa. 

1987), aff'd, 849 F.2d 600 (3d Cir. 1988). 

 On the other hand, there is some suggestion in the 

complaint and in the briefs that Allegheny General may offer 

unique trauma and vascular surgery services in the broader 

geographic tri-state area served by Allegheny General. We leave 

for the district court whether the complaint makes a colorable 

claim that the defendants have "a dangerous probability of 

achieving monopoly power" over the relevant product in that area. 

 In contrast, under section 1 of the Sherman Act the 

defendants' "market power" is relevant only to the extent that it 

is a factor in the determination of the reasonableness of the 

restraint. See e.g., Oksanen, 945 F.2d at 709. Defendants have 

not presented any case holding that the precise scope of that 

"market power" must be specifically pled in the complaint to 

support the type of section 1 claim at issue here. Neither 

Summit Health nor Fuentes so suggested. Therefore, we decline to 

accept defendants' suggestion that we affirm on this alternative 

ground. 

D. 

 Brader alleged a breach of contract claim asserting a 

series of violations by the defendants of the medical staff 

bylaws. The district court dismissed this claim on the ground 

that the complaint failed to allege a connection between the 

alleged breaches and the losses suffered by Brader. In 
22 

particular, the district court found that Ochsner's independent 

review of Brader's record superseded the alleged breach committed 

by Diamond in conducting the informal quality assurance review, 

that Diamond's unsuccessful attempts to suspend Brader 

unilaterally could not have caused Brader any damage, and that 

Brader had relocated to North Carolina before the reimposition of 

his suspension by the hospital in February 1993, and therefore 

the reimposed suspension could not have caused his losses. 

 Brader argues that the district court erred in assuming 

that he would have been suspended regardless of any breach of the 

bylaws and that he has not suffered any economic damages as a 

result. These conclusions, Brader reasons, are factual and 

should not be the basis of a dismissal order under Rule 12(b)(6). 

 The parties agree that, under Pennsylvania law, the 

Allegheny General medical staff by-laws constitute an enforceable 

contract between a hospital and members of its medical staff. See

Miller v. Indiana Hosp., 419 A.2d 1191, 1193 (Pa. Super. Ct. 

1980). In order to state a claim for damages arising from a 

breach of contract, a plaintiff must also plead damages resulting 

from the alleged breach. See General State Auth. v. Coleman 

Cable & Wire Co., 365 A.2d 1347, 1349 (Pa. Commw. Ct. 1976). This 

is a natural extension of the general rule that damages for 

breach of contract are not recoverable unless there is a "causal 

relationship between the breach and the loss." See Robinson 

Protective Alarm Co. v. Bolger & Picker, 516 A.2d 299, 303 n.9 

(Pa. 1986). 
23 

 Brader's complaint adequately alleges the requisite 

causal connection. The complaint alleges that the defendants' 

breach of the bylaws caused him to suffer damages such as the 

loss of income that he would have had at Allegheny General, loss 

of personal and professional reputation, emotional distress, 

expenses for a new job search and the costs of appeals. We 

cannot assume that if Brader had been given the benefit of the 

protections of the bylaws and been able, for example, to confront 

the witnesses against him, he would not have been able to 

successfully demonstrate the inadequacies of the case against 

him. In fact, he did convince the Appellate Review Panel that 

there was no evidence to warrant the continued suspension of his 

clinical privileges. 

 The district court apparently assumed that, absent the 

alleged breaches, Brader still would have lost his position at 

Allegheny General. Its discussion on this issue is cursory, but 

if the court based its conclusion on the results of Ochsner's 

allegedly independent review, the court failed to take into 

account that Brader has pled that Ochsner's review also failed to 

comply with the bylaws. 

 We therefore will reverse the district court's 

dismissal of Brader's breach of contract claims. The allegations 

in the complaint allege a sufficient causal nexus between the 

alleged breaches and the damages suffered by Brader to support a 

cause of action under Pennsylvania law. 

E. 
24 

 Finally, defendants contend that this court should 

affirm the district court's order of dismissal due to Brader's 

failure to allege properly that defendants are not immune from 

suit under the Health Care Quality Improvement Act (HCQIA), 42 

U.S.C. §§ 11101-11151. The HCQIA provides that parties to a 

professional review body shall not be liable for damages where 

the actions are taken "(1) in the reasonable belief that the 

action was in the furtherance of quality health care, (2) after a 

reasonable effort to obtain the facts of the matter, (3) after 

adequate notice and hearing procedures are afforded to the 

physician involved or after such procedures as are fair to the 

physician under the circumstances, and (4) in the reasonable 

belief that the action was warranted by the facts known after 

such reasonable effort to obtain facts and after meeting the 

requirements of paragraph (3)." 42 U.S.C. §§ 11111(a)(1), 

11112(a). 

 Under the HCQIA, professional review actions are 

presumed to meet the required standard unless that presumption is 

"rebutted by a preponderance of the evidence." 42 U.S.C. 

§11112(a). This provision necessarily implies that plaintiffs 

bear the burden of proving noncompliance with these standards. 

See Bryan v. James E. Holmes Regional Medical Ctr., 33 F.3d 1318, 

1333 (11th Cir. 1994) (reviewing district court's denial of 

defendants' motion for judgment as a matter of law on the issue 

of HCQIA immunity), cert. denied, 115 S. Ct. 1363 (1995). It 

also implies some opportunity to discover relevant evidence. See

Smith v. Ricks, 31 F.3d 1478, 1485 (9th Cir. 1994) (suggesting 
25 

that the "reasonableness" requirements of HCQIA may be addressed 

through a motion for summary judgment), cert. denied, 115 S. Ct. 

1400 (1995). 

 On appeal, defendants focus on the adequacy of Brader's 

pleadings regarding defendants' HCQIA immunity, arguing that the 

complaint's recitation of the language of HCQIA is insufficient 

to support an absence of HCQIA immunity. However, Brader made 

extensive allegations regarding alleged improprieties by 

physicians participating in Allegheny General's peer review 

process. If Brader's allegations, such as the alleged failure to 

provide Brader with fair hearing procedures, are true, the 

defendants would not be entitled to HCQIA immunity. We therefore 

decline to affirm the district court's dismissal of Brader's 

claims on the alternative grounds of HCQIA immunity. 

 We understand that the HCQIA was enacted at least in 

part to protect hospitals and other care providers from the type 

of frivolous suit complaining about staffing decisions that 

concerned the court in BCB. Moreover, we also are concerned that 

health care providers may be deterred by the expense of 

litigation from promptly terminating the privileges of physicians 

and other employees who the hospital believes are not competent 

to discharge the life and death decisions for which they have 

responsibility. On the other hand, these considerations cannot 

justify the judiciary in pretermitting consideration of the 

application of the antitrust laws to the health care field, 

particularly now that the provision of health services is 

becoming increasingly concentrated and the opportunities for 
26 

physicians more limited. Once the plaintiff has alleged that the 

defendants have failed to satisfy the requirements of HCQIA 

immunity, we can only rely on the Federal Rules of Civil 

Procedure, particularly the obligations of parties and attorneys 

under Rule 11, to stem the tide of lawsuits subsequently held to 

be without factual or legal foundation. 

III. 

Conclusion

 For the foregoing reasons, we will reverse the district 

court's dismissal of Brader's claims and remand for proceedings 

consistent with this opinion.