Opinion ID: 3015187
Heading Depth: 1
Heading Rank: 5

Heading: Health Care Quality Improvement Act Immunity

Text: In 1986 Congress enacted the Health Care Quality Improvement Act. As the name suggests, the purpose of the HCQIA was to improve the quality of medical care by restricting the ability of physicians who have been found to be incompetent from repeating malpractice by moving from state to state without discovery of such finding. 42 U.S.C. § 11101; H.R. Rep. No. 99-903 at 2, reprinted in 1986 U.S.C.C.A.N. 6384-6391. See also Mathews, 87 F.3d at 632 (recognizing the purpose of the HCQIA). The HCQIA established a national reporting system requiring that insurance companies report medical malpractice payments made; that boards of medical examiners report sanctions imposed against physicians; and that hospitals report adverse professional review information. 42 U.S.C. §§ 11131-33. To support that purpose and ensure that both hospitals and doctors engage in meaningful professional review, Congress provided immunity to those persons participating in professional review activities. See 42 U.S.C. § 11101(5), 11111(a); H.R. Rep. 99903 at 2-3, reprinted in 1986 U.S.C.C.A.N. at 6385. Specifically, the Act provides that persons participating in professional review activities or providing information to professional review bodies are immune from suit for money damages arising out of their participation in such activities. 42 U.S.C. § 11111(a)(1)-(2). At its heart, the HCQIA was intended to deter antitrust suits by disciplined physicians. Mathews, 87 F.3d at 633. Only actions that meet the definition of professional review action are eligible for immunity under the HCQIA. H.R. Rep. No. 99-903 at 21, reprinted in 1986 U.S.C.C.A.N. at 6403. The HCQIA defines “professional review action” as: [A]n action or recommendation of a professional review body which is taken or made in the conduct of a professional review activity, which is based on the competence or professional conduct of an individual physician (which conduct affects or could affect adversely the health or welfare of a patient or patients), and which affects (or may affect) adversely 24 the clinical privileges, or membership in a professional society, of the physician. Such term includes a formal decision of a professional review body not to take an action or make a recommendation described in the previous sentence and also includes professional review activities relating to a professional review action. 42 U.S.C. § 11151(9). In order to qualify for HCQIA immunity, a professional review action must be taken: (1) in the reasonable belief that the action was in the furtherance of quality healthcare, (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 other 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 requirement of paragraph (3). Id. at § 11112(a). A professional review action will be presumed to have met the preceding standards necessary for immunity to attach unless the presumption is rebutted by a preponderance of the evidence. Id. The HCQIA places a high burden on physicians to demonstrate that a professional review action should not be afforded immunity. 42 U.S.C. § 11112(a). In fact, an action is presumptively immune if it was made “in the reasonable belief that the action was in furtherance of quality health care.” 42 U.S.C. § 11112(a). This test will be satisfied “if the reviewers, with the information available to them at the time of the professional review action, would reasonably have concluded that their action would restrict 25 incompetent behavior or would protect patients.” H.R. Rep. No. 99-903 at 10, reprinted in 1986 U.S.C.C.A.N. at 6393; 42 U.S.C. § 11112(a). As we previously recognized, this presumption of immunity creates an unusual standard for reviewing summary judgment orders, as the plaintiff bears the burden of proving that the professional review process was not reasonable and thus did not meet the standard for immunity. Mathews, 87 F.3d at 633. See also Pamintuan v. Nanticoke Memorial Hosp., 192 F.3d 378, 388 (3d Cir. 1999). But Gordon attempts to avoid application of this presumption of immunity by attacking the actions taken against him on grounds that they were not “professional review actions” within the meaning of the HCQIA, 42 U.S.C. § 11151(9). It is Gordon’s position that the professional conduct at issue did not affect adversely the health or welfare of patients as required by § 11151(9), and therefore there was no professional review action to confer immunity on the Hospital. He asserts that he only could be expelled from the medical staff as a result of a professional review action if it was based on either his competence or his professional conduct, which conduct affects or could affect adversely the health or welfare of a patient or patients. See 42 U.S.C. § 11151(9). Since his professional competence has never been in dispute, Gordon argues that he was expelled for his conduct in violating the Conditions – his telephone conversation with Mrs. Seecora and the June 4th letter. According to Gordon, in order to qualify its actions based on that conduct as a “professional review action” entitled to immunity under the HCQIA, the Hospital bore the burden to show that his conduct “could affect adversely the health or welfare of patients”.13 13 We note that the arguments of The Pennsylvania Medical Society (“PMS”) as amicus for Gordon promote our adoption of a heightened standard for providing HCQIA protection to a professional review action premised on physician conduct rather than competence. PMS suggests that the nexus between the physician conduct and adverse effect on patient welfare be judged by a standard of “concrete harm” or a realistic projection of it. However, as discussed infra, such a construction is not supported by the statute, as 26 The Conditions were imposed upon Gordon for the purpose of deterring Gordon’s harassment and intimidation of elderly patients by calling them to disparage Nancollas’s skills. The record contains a plethora of evidence that Gordon’s conduct in violating the Conditions could affect adversely the health or welfare of patients. Perhaps most compelling is the testimony of Mrs. Seecora’s daughter regarding the effect on her eighty-two year old mother of Gordon’s derogatory comments about Nancollas. Additionally, Everhart testified that Gordon’s behavior was unprofessional and posed a threat to patient care. The Hearing Officer concluded that perhaps no conditions could be drafted sufficient to protect the Hospital and its patients from Gordon’s poor judgment. The Appellate Review Panel upheld the recommended credentialing action because the Seecora phone call demonstrated that Gordon continued to harass, intimidate and upset elderly and vulnerable hospital patients. Such unprofessional conduct on the part of a physician is within the purview of a “professional review action” under the HCQIA. The plain language of the statute indicates the breadth of “conduct” encompassed within the definition of “professional review action” by the inclusion of conduct that “could affect adversely the health or welfare of a patient.” 42 U.S.C. § 11151(9). The statute contemplates not only potential harm through use of the term “could,” but it also affords protection to actions taken against physician conduct that either impacts or potentially impacts patient “welfare” adversely, meaning patient “well being in any respect; prosperity.” Black’s Law Dictionary (West Group, 7th Ed. 1999). Even if the statutory language was deemed to be ambiguous, the legislative history would support the same construction. See Health Care Quality Improvement Act of 1986, H.R. 5540, 99th Cong. 2d Session (1986), 132 Cong. Rec. at 30768 (Oct. 14, 1986) (“competence and professional conduct should be interpreted in a way that is sufficiently broad to protect legitimate actions based on matters that raise it conflicts with the objective standard applicable for the presumption of immunity - - when an action is undertaken “in the reasonable belief that the action was in the furtherance of quality health care.” 42 U.S.C. § 11112(a). 27 concerns for patients or patient care.”). Other courts similarly have applied immunity in circumstances where a physician’s unprofessional “conduct” was an issue in the challenged professional review actions. See, e.g., Brader v. Allegheny Gen. Hosp., 167 F.3d 832, 835 (3d Cir. 1999) (affirming summary judgment in favor of Hospital afforded HCQIA immunity for peer review decisions involving a surgeon characterized as “a disruptive force in the hospital”); Bryan v. James E. Holmes Reg’l Med. Ctr., 33 F.3d 1318, 1324 (11th Cir. 1994) (granting immunity when physician’s privileges revoked for inappropriate and unprofessional behavior stemming from his “being a volcanic-tempered perfectionist, a difficult man with whom to work, and a person who regularly viewed it as his obligation to criticize staff members at [the Hospital] for perceived incompetence or inefficiency,” some of which occurred in front of patients about to undergo surgery); Morgan v. PeaceHealth, Inc., 14 P.3d 773 (Wash. Ct. App. 2000) (upholding immunity when physician’s privileges suspended for sexual harassment and inappropriate behavior with patients); Meyers v. Columbia/HCA Healthcare Corp., 341 F.3d 461 (6th Cir. 2003) (upholding immunity when physician’s reappointment denied because of failure to timely disclose disciplinary actions in another state, personality problem and various incidents of disruptive behavior); Imperial v. Suburban Hosp. Ass’n, 37 F.3d 1026 (4th Cir. 1994) (affirming district court order granting summary judgment to hospital where physician’s reappointment to staff denied on basis of hospital’s conclusion that his professional activities did not meet standard of care, he was deficient in his record keeping, patient management, and work relationships with health care professionals at the hospital). Gordon simply cannot escape the ramifications of his conduct by relying on a tortured construction of the statute that ignores the fact that, at all levels of the process, his conduct was found to adversely impact patient health or welfare. There is no question on this record that Gordon’s conduct towards Mrs. Seecora adversely affected her welfare given that Gordon’s comments caused her to question her decision to allow Nancollas to operate on her cataract in March of 1997. Nor will this Court substitute its judgment for that of health care professionals and the governing body of the Hospital as 28 to whether Gordon’s conduct either did or could have an adverse impact on patient health or welfare. See Brader, 167 F.3d at 843 (citing Bryan v. James E. Holmes Regional Medical Center, 33 F.3d 1318, 1337 (11th Cir. 1994)); see also Lee v. Trinity Lutheran Hosp., 408 F.3d 1064 (8th Cir. 2005). Accordingly, Gordon’s arguments in this regard, though creative, must fail. Gordon argues alternatively that his conduct with which the Hospital took issue falls within the ambit of the solicitation exception to professional review action. The HCQIA exempts from “professional review action” a number of actions not considered to be based on the competence or professional conduct of a physician. Id. One such exemption is the “solicitation exception,” which excludes from HCQIA coverage actions “based on the competence or professional conduct of a physician if the action is primarily based on . . . the physician’s fees or the physician’s advertising or engaging in other competitive acts intended to solicit or retain business.” Id. at 11151(9)(B). In denying the motions for summary judgment as to HCQIA immunity, the District Court initially determined that the applicability of HCQIA immunity turned on whether Gordon’s conduct (viewed from his subjective perspective) in contacting Mrs. Seecora and in mailing the June 4, 1997 letter was intended to solicit or retain business. But upon reconsideration, the District Court determined that the relevant intent is that of the Hospital in undertaking the action, not whether the physician had the subjective intent to solicit business when engaging in the conduct at issue. If the action were “primarily based on” conduct relating to the physician’s fees or the physician’s advertising or engaging in other competitive acts intended to solicit or retain business, then the action would be excluded from HCQIA coverage as a “professional review action.” Ultimately, the lack of evidence that the action was “primarily based on” Gordon’s efforts to solicit or retain business proved dispositive and the Hospital was granted immunity from money damages under the HCQIA. 29 We conclude the District Court’s construction upon reconsideration to be correct.14 “It is elementary that the meaning of the statute must, in the first instance, be sought in the language in which the act is framed, and if that is plain . . . the sole function of the courts is to enforce it according to its terms.” Abdul-Akbar v. McKelvie, 239 F.3d 307, 312 (3d Cir.), cert. denied, 533 U.S. 953 (2001). The plain language of the solicitation exception focuses on the basis of the “action” taken by the professional review body, not on the conduct of the physician precipitating the action – “an action is not considered to be based on the competence or professional conduct of a physician if the action is primarily based on . . . the physician’s fees or the physician’s advertising or engaging in other competitive acts intended to solicit or retain business.” 42 U.S.C. § 11151(9)(B) (emphasis added). Our precedent applying an objective standard to determine immunity from money damages under 42 U.S.C. § 11112(a) further supports this construction. See Mathews, 87 F.3d at 635 (holding that § 11112(a) of the HCQIA imposes an objective standard which is met when peer reviewers reasonably conclude that their actions will restrict incompetent behavior or protect patients and recognizing that an objective standard furthers Congressional intent that immunity issues may be resolved at summary judgment); Brader, 167 F.3d at 840 (“Like other circuits, we have adopted an objective standard of reasonableness in 14 Amicus for the Hospital, the Hospital & Healthsystem Association of Pennsylvania (“HAP”), aptly argue that the District Court initially erred in focusing on Gordon’s subjective intent because “[w]hat the solicitation exception actually excludes is a review action based upon the mere fact that a physician has engaged in activities with the intent to solicit or retain business; it does not exclude actions taken on the basis of the review committees’ reasonable conclusion that the physician’s activities (whether or not intended to solicit business) are unprofessional.” We agree with amicus’s further assertion that if HCQIA immunity hinged on the disruptive physician’s subjective intent, every disruptive physician would claim that the unprofessional conduct being reviewed was intended for a competitive purpose in order to invoke the solicitation exception to professional review action. 30 this context.”). See also H.R. Rep. 99-903 at 10, reprinted at 1986 U.S.C.C.A.N. at 6392-93 (adopting objective standard that a professional review action must be undertaken in the reasonable belief that it is in furtherance of quality healthcare and rejecting a “good faith” standard as being capable of being misinterpreted as requiring only a test of the subjective state of mind of the physicians conducting the professional review action). Consequently, even when the solicitation exception is in play, immunity will be judged by applying the objective standard regarding whether the Hospital based its actions upon the reasonable belief that they are in furtherance of quality healthcare. See 42 U.S.C. § 11112(a). The real issue in this regard is the sufficiency of the basis for the Hospital’s actions, i.e., whether it was undertaken to protect patients. See Brader, 167 F.3d at 840. See also Manion v. Evans, Civ. No. 89-7436, 1991 WL 575715 at  (N.D. Ohio 1991), appeal dismissed, 986 F.2d 1036 (6th Cir.), cert. denied, 510 U.S. 818 (1993) (hospital granted HCQIA immunity at summary judgment where physician invoked solicitation exception to professional review action but evidence supported conclusion that actions were “motivated solely by [the Committee’s] concern for the well being of patients,” thereby placing the burden upon physician to produce evidence that the Committee was not engaged in a professional review action); Rogers v. Columbia/HCA, 971 F. Supp. 229 (W.D. La. 1997), aff’d, 140 F.3d 1038 (5th Cir. 1998) (primary reason for disciplinary action was professional competence despite competition between peer review committee and disciplined physician). This standard is an objective one that looks to the totality of the circumstances. Mathews, 87 F.3d at 635 (citing Imperial, 37 F.3d at 1030). Of course, as with any challenge to the applicability of immunity to a professional review action, the burden is on the physician to overcome the presumption that the hospital was engaged in a professional review action. 42 U.S.C. § 11112. The record here establishes that the 1997 revocation of Gordon’s Medical-Dental Staff privileges resulted from concern for patient welfare. Gordon’s attempts to couch his telephone calls to Mrs. Seecora to fit within the parameters of the solicitation exception 31 are disingenuous based on the extensive record before this Court chronicling Gordon’s continued inappropriate conduct undertaken to advance his personal agenda to the detriment of patient welfare. To hold otherwise on a record such as this would effectively chill effective peer review by permitting the subject of the peer review process to control the application of HCQIA immunity by couching his or her intentions to fit within the solicitation exception to “professional review action.” Based on the foregoing discussion, we will affirm the determination of the District Court to confer upon the Hospital HCQIA immunity from money damages. V. Antitrust Claims Requiring Concerted Activity Gordon set forth multiple antitrust claims requiring proof of concerted activity or conspiracy. These claims invoked both Section 1 of the Sherman Act (see Counts I (Conditions as restraint of trade), IV (reciprocal dealing), V (group boycott) and VI (exclusive dealing)) and Section 2 of the Sherman Act (see Counts VII and VIII (conspiracy to monopolize markets)). The District Court granted summary judgment on grounds that there was no proof of concerted activity or conspiracy between the Hospital and Geisinger and/or Postal in undertaking disciplinary action against Gordon to restrain his ability to provide patients with competitive information.15 Gordon challenges the District Court’s grant of summary judgment in favor of the Hospital as to those claims. He also challenges the District Court’s entry of judgment for the Hospital at the conclusion of the non-jury trial as to Count I (Conditions as restraint of trade). Because concerted action is required for all of the aforementioned claims, we 15 The District Court initially granted summary judgment for the Hospital as to Count I (Conditions as restraint of trade). But upon reconsideration, the Court determined that it had erred by including this as a claim that required the existence of concerted activity or a conspiracy in order to survive summary judgment. Because there was a genuine issue of material fact regarding the relevant geographic market, that claim was part of the non-jury trial. 32 first address its parameters. We then address Gordon’s challenge to the claims disposed of at summary judgment followed by our analysis of Gordon’s challenge to the District Court’s post-trial rulings regarding Count I (Conditions as restraint of trade).
Section 1 of the Sherman Act provides: Every contract, combination in the form of trust or otherwise, 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. To establish a violation of Section 1, a plaintiff must prove: (1) concerted action by the defendants; (2) that produced anticompetitive effects within the relevant product and geographic markets; (3) that the concerted actions were illegal; and (4) that it was injured as a proximate result of the concerted action. Petruzzi’s IGA Supermarkets, Inc. v. Darling-Delaware Co., 998 F.2d 1224, 1229 (3d Cir.), cert denied sub nom. Moyer Packing Co. v. Petruzzi’s IGA Supermarkets, Inc., 510 U.S. 994 (1993). See also Big Apple BMW, Inc. v. BMW of North Am. Inc., 974 F.2d 1358, 1364 (3d Cir. 1992), cert. denied, 507 U.S. 912 (1993). Without proof of all of these elements, a Section 1 claim cannot be maintained. Id.16 The essence of a Section 1 claim is the existence of an agreement. Mathews, 87 F.3d at 639 (citing Alvord-Polk, Inc. v. F. Schumacher & Co., 37 F.3d 996, 999 (3d Cir. 1994), cert denied, 514 U.S. 1063 (1995). Unilateral action simply does not support liability; there must be a “unity of purpose or a common design and understanding or a meeting of the minds in an unlawful 16 Claims for conspiracy to monopolize under Section 2 of the Sherman Act also require evidence of a conspiracy. 15 U.S.C. § 2. Section 2 of the Sherman Act prohibits monopolization, attempts to monopolize and conspiracies to monopolize any part of interstate trade or commerce. 33 arrangement.” Siegel, 54 F.3d at 1131 (quoting Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 771 (1984)). Concerted action is established where two or more distinct entities have agreed to take action against the plaintiff. See Weiss v. York Hosp., 745 F.2d 786, 812 (3d Cir. 1984). Accordingly, it requires proof of a causal relationship between pressure from one conspirator and an anticompetitive decision of another conspirator. See Big Apple BMW, 974 F.2d at 1364.
Gordon challenges the grant of summary judgment in favor of the Hospital on those of Gordon’s antitrust claims that require concerted action or conspiracy, concluding that there was no genuine issue of material fact regarding the concerted action. These include claims brought under Section 1 of the Sherman Act (Count IV (reciprocal dealing), Count V (group boycott), Count VI (exclusive dealing)) and claims brought under Section 2 of the Sherman Act (Counts VII and VIII (conspiracy to monopolize markets)). Gordon argues that the District Court erred given that the existence of concerted action is a fact-intensive inquiry not appropriate for summary judgment. Our review of a grant of summary judgment is plenary. Mathews, 87 F.3d at 639. Summary judgment must be granted where no genuine issue of material fact exists for resolution at trial and the moving party is entitled to judgment as a matter of law. Id. citing Fed. R. Civ. P. 56(c). The moving party bears the burden of showing the absence of any genuine issues of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317 (1986). A non-movant’s burden in defending against summary judgment in an antitrust case is no different than in any other case. In re Flat Glass Antitrust Litigation, 385 F.3d 350, 357-58 (3d Cir. 2004); Petruzzi’s, 998 F.2d at 1230 (citing Big Apple BMW, 974 F.2d at 1263). When the question involves concerted action, the non-movant may rely solely on circumstantial evidence and the reasonable inferences drawn therefrom to withstand summary judgment. Id. But 34 this requires more than mere complaints of concerted action. There must be evidence that tends to exclude the possibility of independent action, meaning that the evidence reasonably tends to prove that the alleged conspirators had a conscious commitment to a common scheme designed to achieve an unlawful objective. See Big Apple BMW, 974 F.2d at 1364, citing Monsanto Co. v. Spray-Rite Serv. Corp, 465 U.S. 752, 764 (1984); Alvord-Polk, 37 F.3d at 1001. This is because mistaken inferences in this context may serve to chill the very conduct that the antitrust laws are designed to protect. AlvordPolk, 37 F.3d at 1001 (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 594 (1986); Monsanto, 465 U.S. at 763-64). If such a showing is made, the movant bears the burden of proving that drawing an inference of unlawful behavior is unreasonable. Id. Evidence of conduct that is as consistent with permissible competition as with illegal conspiracy, without more, will not support an inference of conspiracy. Alvord-Polk, 37 F.3d at 1001. See also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986). Gordon takes exception to the District Court’s conclusion that the Hospital’s progressive discipline towards Gordon, which ultimately led to the 1996 suspension and 1997 revocation of his Medical-Dental Staff privileges, was unrelated to pressure from Geisinger. Gordon contends that there was ample evidence that Geisinger pressured the Hospital to muzzle his criticism of Nancollas, and that the Hospital did so without any independent permissible basis. He points to the Hospital’s 1989 refusal to discipline him for the comments he made about Nancollas to a nursing home patient as compared to the actions undertaken in 1996-97 when the Hospital was concerned regarding Geisinger’s renewal of its lease. According to Gordon, it follows that the Hospital strayed from its prior position of ignoring his conduct outside the Hospital and succumbed to pressure from Geisinger to muzzle Gordon by first suspending and then revoking his Medical-Dental Staff privileges.17 17 In addition to being the Chairman of the Hospital Board of Trustees, Postal also was the Chairman of the Mifflin County Industrial Development Authority, which was involved in advancing 35 We conclude, however, that the record evidence supports the District Court’s conclusion. The whole of the evidence simply does not exclude the possibility that the Hospital acted independently in undertaking its professional review actions. See Big Apple BMW, 974 F.2d at 1365. No evidence of record exists to permit even an inference of a causal connection between Geisinger and the professional review actions resulting in the suspension and revocation of Gordon’s privileges. Id. at 1364 (“A jury may not be permitted to speculate as to cause . . .; the plaintiff must demonstrate . . . ‘a unity of purpose or a common design and understanding, or a meeting of the minds.’”). Gordon relies on the Hospital’s “shift” in its response to Gordon’s conduct, asserting that discipline only was undertaken in 1995 and 1996 given pressure from Geisinger, on which the Hospital was economically dependent. Big Apple BMW, 974 F.2d at 1365 (evidence of concerted action spanning several years existed including meetings among dealers indicating their opposition to new franchisees); Arnold Pontiac-GMC, Inc. v. General Motors Corp., 786 F.2d 564 (3d Cir. 1986) (evidence of concerted action where after meeting with a competitor of plaintiff, dealer denied plaintiff’s franchise application despite previous affirmative steps taken toward granting the franchise). But there is no evidence of Geisinger’s involvement in the professional review action that resulted in the revocation of Gordon’s Medical-Dental Staff privileges. A review of Gordon’s tenure as a member of the Hospital’s Medical-Dental Staff reveals a consistent pattern of disruptive and unprofessional conduct. The independence of the Hospital’s actions in 1996 is not trumped simply because the Hospital’s discipline of Gordon became increasingly severe over time. As we recognized in Mathews, “[s]imply making a peer review recommendation does not prove the existence of a conspiracy [among the hospital and its staff]; there must be something more such as a conscious commitment by medical the financing for the Hospital Medical Arts Building in which Geisinger leased space. In light of this, Gordon attempts to link Postal’s involvement in effecting Gordon’s agreement to the Conditions (which he alleges “gagged” him from conveying information regarding Nancollas) to his interest in renewing the Geisinger lease. 36 staff to coerce the hospital into accepting its recommendation.” Mathews, 87 F.3d at 639-640. Moreover, peer review actions, when properly conducted, generally enhance competition and improve the quality of medical care. Id. at 640 (citing Weiss v. York Hosp., 745 F.2d 786, 821 n.60 (3d Cir. 1984). Although theoretically the lease could support an inference that Geisinger’s economic power may have had some influence on the Board’s decision, Gordon has not produced any evidence of any communication between the Hospital and Geisinger regarding the revocation of Gordon’s Medical-Dental privileges. Gordon also has not raised a genuine issue of material fact that Geisinger coerced the Hospital into revoking Gordon’s MedicalDental Staff privileges. There is as well no evidence to exclude the possibility that the Hospital acted independently in undertaking progressive peer review of Gordon. This precludes an inference of antitrust conspiracy. Mathews, 87 F.3d at 640-41. Accordingly, we will affirm the grant of summary judgment to the Hospital as to Counts IV (reciprocal dealing), V (group boycott), VI (exclusive dealing), VII and VIII (conspiracy to monopolize markets).
Judgment was entered in favor of the Hospital following a non-jury trial as to Count I (Conditions as restraint of trade) in which Gordon alleged that the Hospital and the Chairman of the Hospital Board, Postal, imposed the Conditions to prevent Gordon from competing to retain or obtain business by communicating truthful non-deceptive information to patients relevant to their surgical decisions. He asserts that the Conditions constituted an unreasonable restraint of trade in that they foreclosed him from competing in the physician services market for outpatient cataract surgery, inpatient eye surgery and emergency eye surgery. It also is asserted that the Hospital sought to prevent MCCSC from competing with it in the facility services market for outpatient cataract surgery. Gordon specifically contends that the District Court erred in concluding that he failed to sustain his burden of proving a prima 37 facie case under the traditional rule of reason test. First, Gordon challenges the District Court’s application of the traditional rule of reason rather than the “quick look” rule of reason analysis. The latter applies in cases where per se condemnation is inappropriate but where no elaborate industry analysis is required to demonstrate the anticompetitive character of an inherently suspect restraint. United States v. Brown Univ., 5 F.3d 658, 669 (3d Cir. 1993). Rather, the competitive harm is presumed and the defendant must set forth some competitive justification for the restraints. Id. Gordon contends that the information restraints were manifestly anticompetitive and not supported by any pro-competitive justification. Despite Gordon’s protestations, the quick look approach may be applied only when an observer with even a rudimentary understanding of economics could conclude that the arrangement in question would have an anticompetitive effect on customers and markets. California Dental Ass’n v. FTC, 526 U.S. 756, 770 (1999). Such is not the case here, where even if the Conditions were a restraint, they represent a nonprice vertical restraint between one hospital and one physician, which we have held is reviewed under the traditional rule of reason. See Orson Inc. v. Miramax Film Corp., 79 F.3d 1358, 1368 (3d Cir. 1996) (“[v]ertical restraints of trade, which do not present an express and implied agreement to set resale prices, are evaluated under the rule of reason.”). This is especially true given the District Court’s determination, with which we agree, that Gordon and the Hospital were not competitors in the relevant market in November 1995 when he agreed to the Conditions. His competition in the facility services market did not commence until MCCSC opened more than one year later. Application of the traditional “rule of reason” requires that a factfinder look at the totality of the circumstances in order to determine whether a business combination constitutes an unreasonable restraint of trade. Brown Univ., 5 F.3d at 668. Under this test, Gordon bears the initial burden of showing that the alleged contract produced an adverse, anticompetitive effect within the relevant geographic market. Id. This can be achieved by demonstrating that the restraint is facially anticompetitive or that its enforcement reduced output, raised prices or reduced quality. Id. 38 Alternatively, because proof that the concerted action actually caused anticompetitive effects is often impossible to sustain, proof of the defendant’s market power will suffice. Id.; F.T.C. v. Indiana Federation of Dentists, 476 U.S. 447, 460-61 (1986). Market power, the ability to raise prices above those that would otherwise prevail in a competitive market, is essentially a surrogate for detrimental effects. Brown Univ., 5 F.3d at 668. We must be mindful that the legality of an agreement or regulation cannot be determined by so simple a test . . . as whether it restrains competition. Every agreement concerning trade, every regulation of trade, restrains. To bind, to restrain is of their very essence. The true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition. To determine that question, the court must ordinarily consider the facts peculiar to the business to which the restraint is applied; its condition before and after the restraint was imposed; the nature of the restraint and its effect actual or probable. The history of the restraint, the evil believed to exist, the reason for adopting the particular remedy, the purpose or end sought to be obtained, are all relevant facts. This is not because a good intention will save an otherwise objectionable regulation or the reverse; but because knowledge of intent may help the court to interpret facts and to predict consequences. Board of Trade of the City of Chicago v. United States, 246 U.S 231, 238-39 (1918). See also Eichorn v. AT & T Corp., 248 F.3d 131, 144-45 (3d Cir.), cert. denied, 534 U.S 1014 (2001) (indicating totality of circumstances considered under rule of reason includes facts peculiar to particular business to determine the nature and purpose of the allegedly illegal restraint). Although the District Court determined that Gordon met the concerted action requirement for purposes of this Sherman § 1 claim 39 through the existence of the Conditions of his reappointment, the District Court also determined that he failed to meet his burden of proving that enforcement of the Conditions by excluding him from the Medical-Dental Staff had anticompetitive effects. In applying the traditional rule of reason, we first must determine whether the Conditions had substantial anticompetitive effects. Gordon argues that the Conditions reduced output given that the output of a surgeon is not only the surgery itself but necessarily includes advice, scheduling, and hand-holding. See National Collegiate Athletic Ass’n v. Bd. of Regents of Univ. of Okla., 468 U.S. 85, 99 (1984) (restrictions on output are unreasonable restraints of trade). Gordon claims that the Conditions impaired historically effective competition between surgeons competing to provide surgery services by prohibiting him from conveying comparative information regarding procedures that were essential for patients to make informed decisions. In advancing his argument, Gordon asserts that Condition 3 prevents him from communicating with Nancollas’s patients or any other physician’s patients for the purpose of conveying comparative information and that it prevents him from making “any comment” at any time about “any other ophthalmologist” with any person in the Hospital’s service area. But Condition 3 only serves to chill Gordon’s comments regarding other ophthalmologists as part of his discharge instructions or at any other time when dealing with patients who have been or will be treated by the Hospital, excepting comments made “in response to a specific question or for the purpose of a referral.” In light of Gordon’s history, precluding him from making gratuitous statements at any time and in whatever fashion he deemed appropriate regardless of its impact or potential impact on patient health or welfare does not, standing alone, elevate Condition 3 to having anticompetitive effects. Likewise, as the District Court determined, Condition 2 only prohibited Gordon from commenting upon a particular surgical method as it relates to a particular physician, and not, as Gordon contends, from differentiating himself and his methods in surgical meetings. Next, we must determine whether the Hospital possessed market power in the relevant markets in order to determine if we may presume anticompetitive effects from the Conditions under the rule 40 of reason test. Determination of market power is a determination of fact; therefore we review the District Court’s conclusions to determine if they are clearly erroneous. Igbonwa, 120 F.3d at 440. Gordon bore the burden of proving the relevant product and geographic markets affected by the Hospital’s imposition of the Conditions. Eichorn v. At & T Corp., 248 F.3d 131, 147 n.4 (3d Cir. 2001). Once the markets are defined, we must determine whether the Hospital’s market share is sufficient to infer the existence of market power. Fineman v. Armstrong World Industries, Inc., 980 F.2d 171, 201-02 (3d Cir. 1992). The relevant product markets (each containing a facility and physician services component) are: (1) general outpatient cataract surgery, (2) general inpatient cataract surgery; and (3) general emergency eye surgery. Gordon disputes the District Court’s findings regarding the geographic market definition and determination of market power. The relevant geographic market, from which the court calculates the market share in the relevant product markets, is that area in which a potential buyer may rationally look for the goods or services he seeks. Pennsylvania Dental Ass’n v. Medical Service Ass’n of Pa., 745 F.2d 248 (3d Cir. 1984). The geographic scope of a relevant product market is a question of fact to be determined in the context of each case in acknowledgment of the commercial realities of the industry being considered. Borough of Lansdale v. Philadelphia Elec. Co., 692 F.2d 307, 311 (3d Cir. 1982). Gordon ascribes error to the District Court’s determination that the relevant geographic market for general outpatient cataract surgery consisted of all hospitals and surgical centers performing outpatient cataract surgery within a 30 mile radius of Lewistown, rather than only Mifflin and Juniata counties as he had proposed.18 He argues that defining a geographic market demands a review from the consumer’s perspective and that the District Court’s thirty mile 18 The geographic market as defined by the District Court included Mifflin and Juniata Counties in addition to portions of Snyder, Union, Clinton, Centre, Huntington, Franklin, Cumberland and Perry Counties. 41 radius of Lewistown ignores the geography of the region – that Mifflin and Juniata Counties sit within a valley that was isolated by mountain ranges making the actual distances that patients must travel much greater than that perceived when relying on an “as the crow flies” radius. Gordon essentially seeks to substitute the Hospital’s primary service area for the relevant geographic market. Absent more, however, a primary service area does not equate to the relevant geographic market for outpatient cataract surgery services. See Miller v. Indiana Hosp., 814 F. Supp. 1254, 1263 (W.D. Pa. 1992), aff’d, 975 F.2d 1550 (3d Cir. 1992), cert. denied, 507 U.S. 952 (1993). The District Court’s findings regarding the scope of the geographic market were not clearly erroneous. The District Court determined from its review of Gordon’s expert’s report and testimony that the greater the importance of the medical procedure to patients, the greater the willingness of the patients to travel to receive that service. Further, the evidence revealed that two-thirds of the patients that live within eight miles of the Hospital received cataract surgery elsewhere. Conversely, approximately 21% of the Hospital’s patients for outpatient cataract surgery live closer to other facilities yet chose Lewistown Hospital. Gordon’s proposed two-county market excluded competitors for cataract surgery facilities services located in other counties to whom Lewistown area optometrists referred patients, including, among others, the J.D. Blair Hospital in Huntington, Centre Community Hospital in State College, Pinnacle Health System and Pennsylvania Eye Surgery Center in Harrisburg. Accordingly, the record supports the District Court’s rejection of a two-county geographic market. Gordon further challenges the District Court’s determination that the Hospital lacked market power in the outpatient cataract surgery market even when using the District Court’s thirty mile radius geographic market. He asserts that the District Court erroneously calculated percentages of market power based on two demonstrative exhibits prepared by the Hospital. The first chart (“Gordon/Nancollas Procedures Chart”) reflected all patients in the twenty-eight zip codes that were within the thirty mile radius of Lewistown from which the Hospital drew patients. It summarized the number of procedures 42 performed by Gordon and Nancollas in 1996. Although the chart included some non-cataract procedures performed by those physicians, cataract procedures accounted for 95% of the total and reflected a Hospital market share of 46%. The second chart (“Ophthalmic Surgery Cases Chart”) contained numbers for all ophthalmic surgeries performed on patients in the same twenty-eight zip codes but without identifying what percentage of those were cataract procedures. Using this chart, the District Court determined that the Hospital’s market share was only 39%. Gordon contests this finding because the Ophthalmic Surgery Cases Chart reflects hundreds of specialized procedures that are not performed at the Hospital and necessarily are performed outside of the Hospital’s service area. Instead, he advocates use of the Gordon/Nancollas Procedures Chart, which he claims more accurately described the cataract market. In either case, however, the market share is insufficient to prove market power. Fineman, 980 F.2d at 201 (50% share is insufficient as a matter of law to establish market power). In addition, the District Court analyzed a number of other scenarios, all falling well-below the legal threshold for market power. Perhaps most telling of the Hospital’s lack of market power is the evidence that outpatient surgical volume at the Hospital declined significantly after Gordon left and that MCCSC became the dominant provider of outpatient cataract surgery within less than 2 years of the Hospital’s decision to revoke Gordon’s Medical-Dental Staff privileges. See Assam Drug Co. v. Miller Brewing Co., 798 F.2d 311, 318 (8th Cir. 1986) (no market power because market share was declining). Despite Gordon’s challenges, the District Court’s finding that the Hospital lacked market power in the outpatient cataract surgery market was well supported by the evidence and therefore was not clearly erroneous.19 19 Although Gordon also challenges the District Court’s finding that the Hospital lacked market power in the inpatient eye surgery market, he failed to meet his burden of proof that the Hospital possessed market power in that market, particularly since Gordon’s expert testified that the market for inpatient eye surgery services is de minimis. We affirm the District Court’s finding in this regard. Gordon also argued that he met the prima facie requirements even 43 Based on the foregoing, we will affirm the judgment of the District Court regarding Count I (Conditions as restraint of trade).