Opinion ID: 200500
Heading Depth: 2
Heading Rank: 1

Heading: The Principal Antitrust Claim.

Text: 22 Section 1 of the Sherman Act prohibits [e]very contract, combination ... or conspiracy, in restraint of trade. 15 U.S.C. § 1. That language establishes two prerequisites for a Section 1 claim. First, the plaintiff must show concerted action between two or more separate parties. Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 761, 104 S.Ct. 1464, 79 L.Ed.2d 775 (1984). Second, the plaintiff must show that such action unreasonably restrains trade. NYNEX Corp. v. Discon, Inc., 525 U.S. 128, 133, 119 S.Ct. 493, 142 L.Ed.2d 510 (1998). The district court restricted its analysis to the first of these prerequisites, finding insufficient evidence to support the plaintiffs' allegation that the defendants' benefits policies were born out of concerted action. We test this conclusion against the summary judgment standard. 23 1. The Standard of Review. The role of summary judgment is to pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial. Garside v. Osco Drug, Inc., 895 F.2d 46, 50 (1st Cir.1990) (quoting Fed. R.Civ.P. 56 advisory committee's note). Thus, summary judgment is appropriate as long as the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c). 24 We afford plenary review to orders granting or denying summary judgment. Garside, 895 F.2d at 48. Like the district court, we must view the entire record in the light most hospitable to the party opposing summary judgment, indulging all reasonable inferences in that party's favor. Griggs-Ryan, 904 F.2d at 115. Despite this favorable presumption, the evidence relied upon by the party opposing summary judgment must suffice to show a genuine issue of material fact, that is, a bona fide dispute about a fact that has the potential of affecting the outcome of the case under the applicable law. United States v. One Parcel of Real Prop. (Great Harbor Neck, New Shoreham, R.I.), 960 F.2d 200, 204 (1st Cir.1992). 25 To be sure, the Supreme Court has cautioned that, in antitrust cases, dismissals prior to giving the plaintiff ample opportunity for discovery should be granted very sparingly. Hosp. Bldg. Co. v. Trustees of Rex Hosp., 425 U.S. 738, 746, 96 S.Ct. 1848, 48 L.Ed.2d 338 (1976) (discussing Poller v. Columbia Broad. Sys., Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962)). This does not mean, however, that summary judgment is unavailable in antitrust cases. See First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 289-90, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968); see also Texaco P.R., Inc. v. Medina, 834 F.2d 242, 247 (1st Cir.1987) (noting that the courts, including the Supreme Court, now more freely approve the use of summary judgment in such cases). More to the point, the doctrine has no force in cases in which the plaintiff has been afforded sufficient opportunity for discovery. See, e.g., Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). This is such a case. 26 2. Sufficiency of the Evidence. Against this backdrop, we turn to the plaintiffs' basic allegation: that the evidence supports a finding of an anticompetitive conspiracy between and among those physicians who served on the defendants' boards and the defendants themselves. This allegation does not get them very far, for the Supreme Court has largely dismissed the possibility of an intraenterprise conspiracy as a basis for liability under Section 1 of the Sherman Act. See Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984); see also VII Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 1470 (2d ed.2003) (describing as universally accepted the proposition that a corporate officer cannot conspire with his own corporation). In other words, agreements between two or more actors who operate within and for the benefit of a single economic enterprise do not satisfy the concerted action requirement of Section 1. Copperweld, 467 U.S. at 769, 104 S.Ct. 2731. 27 That does not end our inquiry, for the Copperweld Court intended to exempt conduct from the rigors of Section 1 only when the actors, collectively, pursue[] the common interests of the whole rather than interests separate from those of the corporation itself. Id. at 770. A different analysis is required when the alleged co-conspirators, regardless of their status, pursue interests that diverge from those of the enterprise itself. Sullivan v. Nat'l Football League, 34 F.3d 1091, 1099 (1st Cir.1994); VII Areeda & Hovenkamp, supra, ¶¶ 1471a, 1471e2. This nuance does not help the plaintiffs in this case because they have not submitted any evidence suggesting that physicians on either board have their own agendas or harbor private economic interests distinct from those of the corporations themselves. Inasmuch as nothing in the record lends support to a conclusion that those physicians acted as independent, self-interested economic agents, the plaintiffs have not articulated a claim that involves anything more than activity occurring within a single enterprise. As we have said, such a claim falls within the sphere of Copperweld preclusion (and, accordingly, fails to articulate a viable antitrust claim). 28 In a variation on this theme, the plaintiffs argue that physicians controlled the defendants and their benefits policies, so that each defendant was little more than a corporate carapace housing a conspiracy among physicians. According to this argument, the defendants' benefits policies were products of the antecedent conspiracy. 29 This argument focuses our attention on the issue of physician control. After all, when competing health-care providers challenge an insurer's benefits policies, alleging exclusionary practices instigated by physicians, those providers must make a threshold showing that the physicians effectively control the health-care plan. Hahn, 868 F.2d at 1029; Pa. Dental Ass'n v. Med. Serv. Ass'n, 745 F.2d 248, 256 (3d Cir.1984); Va. Acad. of Clinical Psychologists, 624 F.2d at 481. This is as it should be, for a health insurer's actions can reflect an agreement in restraint of trade among physicians only if, and to the extent that, the insurer is an instrumentality of the physicians' concerted action. See VII Areeda & Hovenkamp, supra, ¶ 1475a. 30 The district court characterized the inquiry as one involving whether the physicians operated a structural conspiracy within the defendants' corporate skeletons. It examined the makeup of the defendants' boards and the identity of key decisionmakers. Based on this appraisal, the court ruled that the record did not contain evidence adequate to establish that physicians either dictated the defendants' benefits policies or otherwise exercised the requisite degree of control. The plaintiffs challenge this assessment. 31 The inquiry into whether an organization represents, or is a reflection of, the concerted action of conspiring economic actors is a functional one. See United States v. Sealy, Inc., 388 U.S. 350, 352-53, 87 S.Ct. 1847, 18 L.Ed.2d 1238 (1967) ([W]e look at substance rather than form... [and] we are moved by the identity of the persons who act, rather than the label of their hats.). Thus, the preferred approach — and the one that we adopt — is to examine the composition of a corporation's board to determine whether a particular group has exercised (or has the ability to exercise) majority control. See, e.g., Hahn, 868 F.2d at 1030; Pa. Dental Ass'n, 745 F.2d at 258; Va. Acad. of Clinical Psychologists, 624 F.2d at 480. 32 Regarding Triple-S, the plaintiffs managed to establish nothing more than that physicians held eight of the nineteen seats on the board. That is a minority position — and plainly not enough to show control. The corporate bylaws make manifest that board action requires a majority vote, and the physicians simply do not constitute a majority. Nor can they achieve control under the extant circumstances; the bylaws specify that at least ten of the nineteen board members must at all times be non-physicians. 33 The plaintiffs' fallback position covers a great deal of ground. They asseverate that physicians have enough representation on the board to influence board decisions; that physicians play important roles when Triple-S formulates its restrictive benefits policies; that many key executives of Triple-S, including the board chair and medical director, are physicians; and that physicians occupy three of seven seats on the executive committee. This is a mixture of unsupported conclusions and marginally relevant (but ultimately unconvincing) facts. 34 The first two statements are argumentative. The mere fact that physicians have some input into Triple-S's decisionmaking processes does not show control. See, e.g., Barry v. Blue Cross, 805 F.2d 866, 868-69 (9th Cir.1986); Pa. Dental Ass'n, 745 F.2d at 258. Without hard proof that physician input metamorphosed into physician dominance — and the summary judgment record contains none — these exhortations do not advance the plaintiffs' cause. 35 The second two statements are factual, but not probative. It is true that certain of Triple-S's ranking executives are medical doctors and that three of them serve on its executive committee. But such facts, without more, prove very little. See Pa. Dental Ass'n, 745 F.2d at 258 (discounting the influence of physicians serving on certain committees when corporate bylaws vested ultimate control in the board); see also Barry, 805 F.2d at 868-69 (employing the same reasoning when company rules placed ultimate control elsewhere). 36 Here, there is no more. The plaintiffs have wholly failed to show how the placement of these individuals translates into control. Equally as important, they have not shown how their placement suffices to overcome the significance and role of the board. The corporate bylaws state unambiguously that all business decisions and policy changes are subject to board approval, and nothing in the record suggests that the board relinquished this authority. Absent some probative evidence that board approval was a rubber stamp — an ingredient that is lacking here — the antitrust claim against Triple-S cannot stand. 37 The plaintiffs likewise have failed to adduce sufficient evidence to suggest that Blue Cross is under physician control. The record shows that, during the period from 1995 to 1998, physicians constituted a distinct minority of the board (holding seven out of twenty-eight seats). This was not fortuitous: both the corporation's former bylaws and the relevant provisions of Law 152, 6 P.R. Laws Ann. § 43(1) (1994), demanded this minority status. From 1998 forward, the possibility of physician control seems even more remote; the corporation became a for-profit entity, and the board became a physician-free zone. 38 In a creative formulation, the plaintiffs attempt to change the arithmetic by pointing out that physicians and hospital executives collectively held half of the seats on Blue Cross's non-profit board. This is mathematically accurate — the twenty-eight member board included seven physicians and seven hospital representatives — but legally irrelevant. The record is barren of any evidence indicating that these two groups worked as a unit or even that they shared common economic interests. Certainly, we cannot infer as much in the absence of any proof. Physicians and hospitals are in some respects natural enemies, squabbling over how to divide the steadily shrinking portion of premium dollars that insurers devote to provider reimbursement. See, e.g., Jeffrey E. Harris, Regulation and Internal Control in Hospitals, 55 Bull. N.Y. Acad. of Med. 88, 90-95 (1979) (discussing structural and historical tensions pitting hospital administrators against medical staff). 39 The plaintiffs' next initiative is to note that physicians occupied certain ancillary offices, such as positions on the fees and contracts committee and the medical committee. They couple this with an assessment of the roles that these committees played in Blue Cross's operations. From these facts, they argue that physicians were responsible for the development of the insurer's policies. As with Triple-S, however, we can attach no special significance to the unadorned fact of physician participation on any committee. See Barry, 805 F.2d at 868-69; Pa. Dental Ass'n, 745 F.2d at 258. This is especially true in light of the bylaw provision that expressly grants the Blue Cross board the sole authority to set ... the services to be offered to the subscribers. 40 To sum up, the plaintiffs have failed to establish the first foundational element of their argument. The defendants' boards retained the ultimate say over their benefits policies and reimbursement rates, and physicians were represented sparsely (if at all) on these boards. By the same token, the plaintiffs have not established that physicians exercised the requisite degree of control over policymaking in any other fashion. Accordingly, the district court did not err in granting summary judgment on the plaintiffs' structural conspiracy antitrust claim. 41 Let us be perfectly clear. We base this ruling on the plaintiffs' failure to muster evidence showing physician control. We hasten to add, however, that for purposes of Section 1 of the Sherman Act, control is a necessary but not a sufficient condition for finding concerted action. See, e.g., Arizona v. Maricopa County Med. Soc'y, 457 U.S. 332, 356, 102 S.Ct. 2466, 73 L.Ed.2d 48 (1982); Broad. Music, Inc. v. Columbia Broad. Sys., Inc., 441 U.S. 1, 22, 99 S.Ct. 1551, 60 L.Ed.2d 1 (1979); see also VII Areeda & Hovenkamp, supra, ¶ 1478. Even then, satisfying the concerted action requirement is but one precondition to establishing a Section 1 violation. See, e.g., NCAA v. Bd. of Regents, 468 U.S. 85, 98-101, 104 S.Ct. 2948, 82 L.Ed.2d 70 (1984). This appeal, however, turns on the question of whether physicians exercised the requisite degree of control over the defendants to support a Section 1 claim. Having answered that question in the negative, we take no view as to whether any additional factors might independently preclude the maintenance of an action under the statute. 42