Court Opinion

ID: 5117276
Source: CourtListenerOpinion
Date Created: 2021-10-08 18:00:39.264231+00
Date Added: 2024-06-11T09:01:51.427513
License: Public Domain

In the

    United States Court of Appeals
                 For the Seventh Circuit
                     ____________________
No. 20-3072
ASSOCIATION OF        AMERICAN        PHYSICIANS      &   SURGEONS,
INCORPORATED,
                                                  Plaintiff-Appellant,

                                 v.

AMERICAN BOARD OF MEDICAL SPECIALTIES,
                                      Defendant-Appellee.
                     ____________________

         Appeal from the United States District Court for the
           Northern District of Illinois, Eastern Division.
           No. 1:14-cv-02705 — Martha M. Pacold, Judge.
                     ____________________

  ARGUED SEPTEMBER 15, 2021 — DECIDED OCTOBER 8, 2021
                ____________________

   Before BRENNAN, SCUDDER, and ST. EVE, Circuit Judges.
    SCUDDER, Circuit Judge. In Bell Atlantic Corp. v. Twombly, the
Supreme Court considered whether a complaint alleging a vi-
olation of § 1 of the Sherman Act “can survive a motion to dis-
miss when it alleges that major telecommunications providers
engaged in certain parallel conduct unfavorable to competi-
tion, absent some factual context suggesting agreement, as
distinct from identical, independent action.” 550 U.S. 544,
2                                                 No. 20-3072

548–49 (2007). The Court held that such a complaint “must be
dismissed” for failure to allege “enough facts to state a claim
to relief that is plausible on its face.” Id. at 570.
   Swap major telecommunications providers for hospitals,
insurers, and the American Board of Medical Specialties, add
an accompanying state-law deceptive trade practices claim,
and you get this case. The Association of American Physicians
& Surgeons has alleged that the Board orchestrated a nation-
wide conspiracy to restrain trade in the market for medical
care. But its complaint comes nowhere close to stating a claim
under the standard announced in Twombly. The district court
was right to dismiss the case.
                               I
    The Association of American Physicians & Surgeons, or
AAPS, is a nonproﬁt membership organization of physicians
and surgeons. The American Board of Medical Specialties,
which we call the Board, is a nonproﬁt provider of medical
certiﬁcation services and itself an umbrella organization for
24 member boards, each dedicated to a particular medical
practice area. The Board deems physicians who meet its re-
quirements to be “Board certiﬁed.”
    Board certiﬁcation is not a one-and-done process. To re-
main certiﬁed, physicians must comply with the Board’s
Maintenance of Certiﬁcation (or MOC) program and the an-
nual continuing-education requirements that come with it.
According to AAPS, the MOC program does not measurably
improve the quality of medical care and instead results in un-
necessary expenditures of time and money for physicians. All
else equal, AAPS says, its member physicians would not par-
ticipate in the program.
No. 20-3072                                                    3

    But AAPS insists all else is not equal. True, all states per-
mit physicians who choose not to become (or remain) Board
certiﬁed to practice medicine. But according to AAPS’s com-
plaint, the Board has conspired with hospitals and health in-
surers nationwide to condition the granting of staﬀ privileges
and in-network status on physicians’ continued participation
in the MOC program. As a practical matter, AAPS says, phy-
sicians ﬁnd themselves forced to participate in the program to
practice medicine, at least if they wish to do so in hospitals or
to accept certain forms of insurance.
                               A
    AAPS claims this alleged arrangement violates the Sher-
man Act. Its initial complaint focused on the market for med-
ical care in hospitals. Invoking § 1 of the Sherman Act, AAPS
alleged that the Board had agreed with its member boards
and with a standard-setting organization called the Joint
Commission to make participation in the MOC program a re-
quirement for hospital staﬀ privileges. AAPS paired this § 1
claim with one for negligent misrepresentation under state
law, claiming that a host of statements on the Board’s website
“create the false impression that [the MOC program] is indic-
ative of the medical skills of physicians” and that physicians
who do not participate in the MOC program “are likely to be
less competent.”
    The district court granted the Board’s motion to dismiss,
explaining that AAPS had not stated a plausible claim under
either theory of liability. The district court then aﬀorded
AAPS a chance to cure the pleading deﬁciency in an amended
complaint with additional factual allegations.
4                                                 No. 20-3072

    AAPS’s next attempt saw the alleged § 1 conspiracy grow
vaster but not any clearer. This time around, AAPS contended
that the Board had conspired individually with perhaps as
many as 80% of hospitals across the country to force doctors
to participate in the MOC program. The new complaint also
brought insurers into the fold, claiming that the Board had
conspired with an unspeciﬁed number of health insurers to
impose an MOC participation requirement for in-network
status. And AAPS expanded the alleged conspiracy’s scope.
While its ﬁrst complaint focused only on hospital care, the
amended complaint appeared to deﬁne the relevant market to
encompass almost all medical care nationwide.
    On the state-law front, AAPS repackaged its negligent
misrepresentation claim as one for deceptive trade practices
under 815 ILCS § 510/2(a). This new theory centered on two
statements the Board makes on its website, which allows us-
ers to search physicians’ names to see whether they are Board
certiﬁed. First, AAPS alleged, the use of the word “Board”
misleads by implying “some authority akin to an oﬃcial state
medical board.” Second, AAPS claimed that the Board’s stat-
ing on its website that particular physicians are “Not Meeting
MOC Requirements” falsely conveys that nonparticipating
physicians are less competent. These statements, as AAPS
views them, violate Illinois law by disparaging the quality of
medical care provided by physicians who do not participate
in the MOC program.
    The Board again moved to dismiss.
                              B
   The case was transferred to a new district judge, and once
again the district court dismissed AAPS’s complaint. Pleading
No. 20-3072                                                      5

a violation of § 1 of the Sherman Act, the district court ex-
plained, requires a plaintiﬀ to allege that the defendant (1) en-
tered into an agreement that (2) unreasonably restrains trade
in the relevant market and (3) caused the plaintiﬀ an antitrust
injury. See Agnew v. Nat’l Collegiate Athletic Ass’n, 683 F.3d 328,
335 (7th Cir. 2012). Without addressing the third prong, the
district court determined that AAPS’s amended allegations
fell well short of satisfying the ﬁrst two.
    As to the agreement element, the district court concluded
that AAPS’s claims that the Board had conspired with insur-
ers and hospitals nationwide to require physician participa-
tion in the MOC program pointed only to parallel conduct.
AAPS, the district court emphasized, pleaded no facts giving
rise to a plausible inference of “a nationwide agreement be-
tween [the Board] and an untold number of hospitals and
health insurers.” From there the district court determined that
AAPS had not plausibly alleged either of its two proﬀered re-
straints—unlawful tying arrangements and unlawful agree-
ments to require participation in the MOC program—under
either the per se or rule-of-reason frameworks of antitrust
analysis. Plain and simple, the district court found AAPS’s al-
legations to be conclusory and without factual support.
    Turning to AAPS’s state-law claims, the district court de-
termined that the Board’s use of the word “Board” and the
phrase “Not Meeting MOC Requirements” were not plausibly
false or misleading as required by the Illinois Uniform Decep-
tive Trade Practices Act. The district court concluded that
these statements could not reasonably deceive consumers. In
the end, then, the district court dismissed both counts of
AAPS’s complaint with prejudice.
   AAPS now appeals.
6                                                      No. 20-3072

                                 II
                                 A
     We can make quick work of AAPS’s state-law claims. Illi-
nois law makes actionable a “false or misleading representa-
tion of fact” that “disparages the goods, services, or business
of another.” 815 ILCS § 510/2(a)(8). The Board’s use of the
term “Board” to describe itself cannot disparage the business
of another. And its use of the phrase “Not Meeting MOC Re-
quirements” to describe nonparticipating physicians is liter-
ally true, so it can only be the basis for liability if in context it
is likely to deceive or mislead consumers. See Hot Wax, Inc. v.
Turtle Wax, Inc., 191 F.3d 813, 820 (7th Cir. 1999). AAPS’s com-
plaint contains no such well-pleaded allegations. The claims
require no further analysis.
    AAPS’s § 1 claim under the Sherman Act fares no better.
Foremost, the amended complaint does not plausibly allege
an agreement between the Board, hospitals, and insurers.
Mere legal conclusions, the Supreme Court has underscored,
are “not entitled to be assumed true” at the pleading stage.
Ashcroft v. Iqbal, 556 U.S. 662, 681 (2009). Yet, having taken our
own careful look at AAPS’s amended complaint, all we see
are conclusory allegations—that the Board “agreed,” “con-
spired,” “colluded,” or “induced” agreement, conspiracy, or
collusion. Repetition cannot substitute for factual allegations.
Once we ﬁlter out AAPS’s legal conclusions, not nearly
enough is left on the factual front for the amended complaint
to survive dismissal.
   To be sure, in no way do we question AAPS’s belief that
the Board’s MOC program is detrimental to the overall deliv-
ery and quality of healthcare across the nation. But that
No. 20-3072                                                     7

debate is not for us to resolve. Our role is limited to an answer
we can supply with conﬁdence: AAPS’s amended complaint
fails to state a § 1 claim. It does no more than point to “an al-
legation of parallel conduct and a bare assertion of conspir-
acy.” Twombly, 550 U.S. at 556. The district court had no choice
but to dismiss the case a second time.
    In some ways, it seems AAPS knows this to be true. At oral
argument, AAPS’s counsel expressed dismay that “28 times
in the decision the trial judge use[d] the word ‘plausible,’ or
‘plausibly,’ or ‘implausible’—some variation—28 times with-
out allowing any discovery.” But AAPS surely knows that the
district court’s focus on the plausibility of the alleged § 1 vio-
lation reﬂected close and careful adherence to the Supreme
Court’s instruction in Twombly requiring a plaintiﬀ to allege
“enough facts to state a claim to relief that is plausible on its
face.” Id. at 570.
    Right to it, Twombly bars the discover-ﬁrst, plead-later ap-
proach that AAPS urges us to adopt. For good reason: modern
antitrust litigation is expensive. Only by requiring plaintiﬀs
to plead facts plausibly suggesting conspiracy can we “avoid
the potentially enormous expense of discovery in cases with
no reasonably founded hope that the discovery process will
reveal relevant evidence to support a § 1 claim.” Id. at 559
(cleaned up). This is just such a case.
   The Board contends that AAPS’s disregard of the Twombly
standard warrants sanctions under Federal Rule of Appellate
Procedure 38. The Board is half right—this appeal is frivolous.
But the Board sought fees only by requesting them in its ap-
pellate brief rather than complying with Rule 38 by ﬁling a
separate motion—a requirement we strictly enforce and have
8                                                       No. 20-3072

underscored on many prior occasions. See, e.g., Heinen v.
Northrop Grumman Corp., 671 F.3d 669, 671 (7th Cir. 2012).
    AAPS should make no mistake, though. Twombly is the
law. And under Twombly, a plaintiﬀ’s pleading burden “re-
quires more than labels and conclusions, and a formulaic rec-
itation of the elements of a cause of action will not do.” 550
U.S. at 555. We expect much more than we saw from AAPS in
this appeal.
                                  B
    This case has been around a long time—since 2013—and
AAPS now urges us to extend it once again. It wants another
chance to amend its complaint, and it says the district court
abused its discretion by dismissing the amended complaint
with prejudice. See Jauquet v. Green Bay Area Catholic Educa-
tion, Inc., 996 F.3d 802, 807 (7th Cir. 2021). It is true that Federal
Rule of Civil Procedure 15(a) takes a “liberal approach to
granting leave to amend.” Haywood v. Massage Envy Franchis-
ing, LLC, 887 F.3d 329, 335 (7th Cir. 2018). But AAPS has al-
ready had one opportunity to amend its complaint—to no
avail. And “[n]othing in Rule 15, nor in any of our cases, sug-
gests that a district court must give leave to amend a com-
plaint where a party does not request it or suggest to the court
the ways in which it might cure the defects.” Id. AAPS never
asked the district court for permission to amend a second
time, and its arguments on appeal all but concede that, with-
out the beneﬁt of discovery, another amendment would be
futile. Nearly eight years after AAPS ﬁled its initial complaint,
the district court was right to put an end to this case.
   This case’s long stay on the federal docket leads us to a
ﬁnal observation. Our review of the proceedings in the district
No. 20-3072                                                    9

court shows that the Board moved to dismiss AAPS’s initial
complaint in May of 2014. The original district judge granted
that motion, but not until September 30, 2017—more than
three years later—and then only for “the reasons stated in the
Memorandum Opinion to follow.” That opinion did not fol-
low until December 13, 2017.
    We have condemned this practice in the past and do so
again today. This approach may have the beneﬁt of ticking a
case oﬀ a list of outstanding motions, but it risks catastrophe
for litigants. Under Federal Rule of Appellate Procedure
4(a)(7)(A)(ii), judgment is deemed to be entered “on the earlier
of the Rule 58 judgment or 150 days after a dispositive order
is entered on the civil docket.” Walker v. Weatherspoon, 900 F.3d
354, 356 (2018) (emphasis in original). Those 150 days start
running when the district court actually dismisses the case—
here, September 30—not when it later issues its reasoned
opinion. If the opinion does not follow for more than 180
days—150 days plus the ordinary 30 days for an appeal—the
appeal may be barred, “spell[ing] disaster for a litigant not
versed in the appellate rules.” Id. The delay here was 75 days,
so no such disaster ensued. But we reaﬃrm what we empha-
sized in Walker: unless extenuating circumstances require the
“speedy announcement of the outcome, the opinion should
accompany the decision.” Id.
                                                    AFFIRMED