Opinion ID: 1463806
Heading Depth: 2
Heading Rank: 1

Heading: Product Market

Text: A court's determination of the limits of a relevant product market requires inquiry into the choices available to consumers. Craftsmen Limousine, Inc. v. Ford Motor Co., 491 F.3d 380, 388 (8th Cir.2007). The focus is on how consumers will shift from one product to the other in response to changes in their relative costs. SuperTurf, Inc. v. Monsanto Co., 660 F.2d 1275, 1278 (8th Cir.1981). The relevant product market should include products that have reasonable interchangeability for the purpose for which they are produced. United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 404, 76 S.Ct. 994, 100 L.Ed. 1264 (1956). The district court found that Appellant's third amended complaint failed to allege a relevant product market because, among other reasons, the complaint erroneously defined the product market by how consumers pay for cardiology services. We agree. The parties extensively brief the issue of what LRCC alleges to be the relevant product market. The complaint first states, The relevant product is those medical services that cardiology patients receive exclusively in a hospital from a cardiologist. It also states, however, that cardiology services and hospital services are not distinct products for the purposes of antitrust analysis. Finally, it states that the relevant product market is the market for cardiology procedures obtained in hospitals by patients covered by private insurance. Thus, it is unclear whether LRCC is alleging a market in which there is a single, conjoined servicecardiology services obtained in hospitalsor a market in which there are two distinct and complementary serviceshospital services and cardiology services. One issue on which the parties agree, however, is that the product market LRCC alleges is limited to patients covered by private insurance. We base our affirmance of the district court's product-market holding on this undisputed limitation. LRCC proposes a market limited by how consumers pay for cardiology procedures. This theory lacks support in both logic and law. As stated above, the general issue when determining the relevant product market concerns the choices available to consumers. Craftsmen Limousine, 491 F.3d at 388. In this casean exclusive-dealing case involving shut-out cardiologiststhe relevant inquiry is whether there are alternative patients available to the cardiologists. See Campfield v. State Farm Mut. Auto. Ins. Co., 532 F.3d 1111, 1119 (10th Cir.2008) (When there are numerous sources of interchangeable demand, the plaintiff cannot circumscribe the market to a few buyers in an effort to manipulate those buyers' market share.); Stop & Shop Supermarket Co. v. Blue Cross & Blue Shield of R. I., 373 F.3d 57, 67 (1st Cir.2004) ([T]he concern in an ordinary exclusive dealing claim by a shut-out supplier is with the available market for the supplier. ); Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 494, 514 (3d Cir.1998) (stating the logical assumption that [a pharmacy] considers members of other prescription plans, or uninsured persons, completely interchangeable with [privately insured] members.). Thus, LRCC must look to alternative patients who are able to pay the required fees, not just those who pay using private insurance. LRCC argues that the product market should be limited to patients using private insurance because private insurance and government insurancethe other primary method of paymentare not reasonably interchangeable. The trouble with this theory is that it analyzes the issue from the wrong side of the transaction. It may be true that, from the patient's perspective, private insurance and Medicare/Medicaid are not reasonably interchangeable. For a variety of reasons, including age and financial considerations, a person with private insurance may not qualify for these government programs. But this lawsuit is not about the options available to patients, it is about the options available to shut-out cardiologists. LRCC's claims boil down to the allegation that, due to Baptist Health's allegedly unlawful actions, LRCC has access to fewer patients. The relevant question, then, is to whom might the cardiologists at LRCC potentially provide medical service? LRCC's complaint provides the answer: LRCC can provide service to patients... from either a government program such as Medicare or Medicaid, or from a private insurer. (emphasis added). Patients able to pay their medical bill, regardless of the method of payment, are reasonably interchangeable from the cardiologist's perspectivethe correct perspective from which to analyze the issue in this case. In reaching this conclusion we do not, as LRCC argues, disregard the well-pleaded allegations in the complaint. LRCC has made no allegation that private insurance is the only method of payment it can accept. Quite the opposite, LRCC's complaint states both that it can and that it does accept payment from sources other than private insurers. Our conclusion does not challenge LRCC's factual allegations, but rather its legal theory, to which we owe no deference. Wiles v. Capitol Indem. Corp., 280 F.3d 868, 870 (8th Cir. 2002). Nor, as LRCC contends, does our decision in F.T.C. v. Tenet Health Care Corp., 186 F.3d 1045 (8th Cir.1999), endorse LRCC's proposed market. Tenet was a monopolization case brought under § 7 of the Clayton Act, 15 U.S.C. § 18, in which we addressed the bounds of a relevant geographic market. Tenet, 186 F.3d at 1051-52. In so doing, we found only that the locations where a patient with private insurance could reasonably turn (a key inquiry in geographic-market analysis) were constrained by whether the patient's insurance covered the hospital in the relevant location. Id. at 1055. This does not address the inquiry in the case of a shut-out supplier: to whom can the supplier sell? Thus, Tenet is inapposite to our decision on the relevant product market in this case. We conclude that, as a matter of law, in an antitrust claim brought by a seller, a product market cannot be limited to a single method of payment when there are other methods of payment that are acceptable to the seller. We also analyze LRCC's alleged relevant geographic market as an alternative ground on which to affirm the district court's dismissal.