Court Opinion

ID: 2829043
Source: CourtListenerOpinion
Date Created: 2015-08-20 20:01:12.166924+00
Date Added: 2024-06-11T11:31:34.029212
License: Public Domain

NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                                 _____________

                                      No. 14-4354
                                     _____________

                        VICTOR F. NOVAK, II, M.D., F.A.C.S.,
                                             Appellant

                                             v.

                  SOMERSET HOSPITAL; MICHAEL J. FARRELL;
                   M. JAVAD SAADAT, M.D.; PETER T. GO, M.D.

           ON APPEAL FROM THE UNITED STATES DISTRICT COURT
              FOR THE WESTERN DISTRICT OF PENNSYLVANIA
                              (No. 3-07-cv-00304)
                    District Judge: Hon. David. S. Cercone

                      Submitted under Third Circuit L.A.R. 34.1(a)
                                   on July 14, 2015

         Before: SMITH, GREENAWAY, JR., and SHWARTZ, Circuit Judges

                             (Opinion filed August 20, 2015)

                                        OPINION*

GREENAWAY, JR., Circuit Judge

*
 This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
       Victor Novak, M.D. (“Appellant” or “Novak”) brought various antitrust

allegations against Somerset Hospital, Michael Farrell (Somerset Hospital CEO), Dr. M.

Javad Saadat, and Dr. Peter T. Go (collectively “Appellees”). The District Court granted

summary judgment in favor of Appellees. We will affirm.

I.     BACKGROUND

       Novak is a general surgeon located in Somerset, Pennsylvania. He joined the staff

of Somerset Hospital in 1993 and since then, has practiced as an independent general

surgeon in Somerset and Cambria Counties. Somerset Hospital is located 32.5 miles

from Conemaugh Hospital and is approximately equidistant to two other hospitals —

Meyersdale Hospital and Windber Hospital. In 1998, Novak joined Conemaugh

Hospital’s medical staff and, during the following seven years, he held privileges at both

Somerset and Conemaugh Hospitals. During that time, Novak performed surgeries at

both facilities.

       Somerset Hospital is a community hospital and is a smaller and less

comprehensive facility than Conemaugh Hospital.1 Somerset Hospital’s primary service

area is comprised of the seventeen zip-codes located within its ten-mile radius. Somerset

Hospital draws 90% of its patients from this area. Based on 2005 patient data, 21.6% of

the patients in Somerset Hospital’s primary service area went to Conemaugh Hospital for

1
      Between 2006 and 2008 over 27,000 surgeries were performed at Conemaugh
Hospital. During the same period, only 7,184 surgeries were performed at Somerset
Hospital.

                                             2
inpatient general surgery services and 22.36% went to other hospitals for general surgery

services.2

         In August 2005, Novak performed two surgeries without proper authority. Based

on these transgressions, Somerset Hospital terminated Novak’s privileges. He has

continued to work at Conemaugh Hospital and maintains an office in Somerset County,

close to Somerset Hospital.

         Novak brought the instant action against Appellees alleging violations of Sections

1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, and seeking an injunction (and

reinstatement of privileges at Somerset Hospital) under Section 16 of the Clayton Act, 15

U.S.C. § 26.3 At bottom, Novak’s argument is that Farrell, Saadat, Go, and various

Somerset Hospital board members conspired to terminate his privileges, thereby

“allow[ing] Somerset to reduce the likelihood that its patients would be treated at

Conemaugh.” Appellant’s Br. at 6. This, he argues, has illegally restrained patient

choice for general surgical services in Somerset. He acknowledges that “Conemaugh . . .

provides substitute services for Somerset,” but argues that “Somerset does not provide

substitute services for [] larger tertiary care hospitals” such as Conemaugh Hospital. Id.

at 22.

2
       In other words, in 2005, nearly 44% of the patients in Somerset Hospital’s primary
service area obtained general surgery services elsewhere.
3
       Novak also brought various state law claims, over which the District Court
declined to exercise supplemental jurisdiction and which it dismissed without prejudice.
That decision is not before us on appeal.

                                              3
       The District Court determined that Novak did not show that he was shut out of the

relevant market or that patient choice was restrained. Therefore, the District Court

concluded, as a matter of law, that Novak failed to establish antitrust injury and granted

summary judgment in favor of Appellees. We will affirm.

II.    ANALYSIS4

       “For plaintiffs suing under federal antitrust laws, one of the prudential limitations

is the requirement of ‘antitrust standing.’” Ethypharm S.A. Fr. v. Abbott Labs., 707 F.3d
223, 232 (3d Cir. 2013) (quoting City of Pittsburgh v. W. Penn Power Co., 147 F.3d 256,

264 (3d Cir. 1998)) (footnote omitted). Antitrust standing augments the “case or

controversy” requirement under Article III, but “does not affect the subject matter

jurisdiction of the court.” Id. Rather, it simply “prevents a plaintiff from recovering

under the antitrust laws.” Id.

       The Supreme Court has articulated several factors that guide our analysis of

whether a plaintiff has antitrust standing:

               (1) the causal connection between the antitrust violation and
              the harm to the plaintiff and the intent by the defendant to
              cause that harm, with neither factor alone conferring standing;
              (2) whether the plaintiff’s alleged injury is of the type for
              which the antitrust laws were intended to provide redress; (3)
              the directness of the injury, which addresses the concerns that
              liberal application of standing principles might produce

4
       The District Court had jurisdiction over Novak’s federal antitrust claims pursuant
to 28 U.S.C. § 1331. We have jurisdiction under 28 U.S.C. § 1291. We review the
District Court’s grant of summary judgment de novo and review the facts in the light
most favorable to the nonmoving party. Burns v. Pa. Dep’t of Corr., 642 F.3d 163, 170
(3d Cir. 2011). We will affirm if our review reveals that “there is no genuine dispute as
to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a).
                                              4
               speculative claims; (4) the existence of more direct victims of
               the alleged antitrust violations; and (5) the potential for
               duplicative recovery or complex apportionment of damages.

Ethypharm, 707 F.3d at 232–33 (citing Assoc. Gen. Contractors of Cal., Inc. v. Cal. State

Council of Carpenters, 459 U.S. 519, 545 (1983)). “The second factor, antitrust injury,

‘is a necessary . . . condition of antitrust standing.’ If it is lacking, [a court] need not

address the remaining [] factors.” Id. at 233 (quoting Barton & Pittinos, Inc. v.

SmithKline Beecham Corp., 118 F.3d 178, 182 (3d Cir. 1997)) (citation omitted). To

state a viable antitrust injury, a plaintiff must generally show that he is a competitor or a

consumer in the relevant product and geographic markets in which competition was

adversely impacted. See id.

       A.      Relevant Product Market

       The relevant “product market” is comprised of “commodities reasonably

interchangeable by consumers for the same purposes.” United States v. E.I. DuPont de

Nemours & Co., 351 U.S. 377, 394 (1956). Interchangeability “implies that one product

is roughly equivalent to another . . . [and] while there might be some degree of preference

for the one over the other, either would work effectively.” Allen-Myland, Inc. v. Int’l

Bus. Machs. Corp., 33 F.3d 194, 206 (3d Cir. 1994).

       Novak argues that, by virtue of his Somerset Hospital privileges being terminated,

he has been prevented from providing general and gastrointestinal (“GI”) surgery

services to the patient base he served while at Somerset Hospital. He further argues that

“tertiary care hospitals such as Conemaugh are not in the same product market as

                                                5
Somerset” because Conemaugh Hospital offers more comprehensive services than

Somerset Hospital. Appellant’s Br. at 42.

       As the District Court stated, the fact that Conemaugh Hospital is “a larger, more

comprehensive facility,” than Somerset Hospital does not provide a “rational basis . . .

for concluding that the general/GI surgical services offered at Conemaugh are not

reasonable substitutes for those same types of services offered at Somerset Hospital.”5

App. at 29. Accordingly, we agree with the District Court’s conclusion that Novak’s

“product market definition . . . provides no rational basis for distinguishing between

[general]/GI surgical services [at Somerset Hospital] and [general]/GI surgical services in

the larger facilities like Conemaugh.” App. at 29.

       B.     Relevant Geographic Market

       “The relevant geographic market is the area in which a potential buyer may

rationally look for the goods or services he or she seeks.” Pa. Dental Ass’n v. Med. Serv.

Ass’n of Pa., 745 F.2d 248, 260 (3d Cir. 1984). As Novak’s expert recognized, in 2005

more than 32% of patients from Somerset Hospital’s primary service area were admitted

to Conemaugh, Meyersdale, and Windber Hospitals. As such, Novak’s attempt to define

the relevant geographic market as only Somerset Hospital is illogical and inconsistent

with the record.

       This conclusion is further supported by Novak’s own argument that Farrell sought

to terminate Novak’s privileges at Somerset Hospital in part because “Farrell disapproved

5
       As an example, when Somerset Hospital placed a moratorium on certain bariatric
surgeries, Novak moved all of his bariatric surgeries to Conemaugh Hospital.

                                             6
of Dr. Novak’s treatment of patients at Conemaugh because it reduced income to

Somerset.” Appellant’s Br. at 6. This argument necessarily (and correctly) assumes that

potential patients seeking the surgical services Novak provides would rationally look to

both Somerset and Conemaugh Hospitals. Accordingly, Novak’s definition of the

relevant geographic market is legally insufficient.

       When the relevant product and geographic markets are properly defined as

including general/GI surgical services at Somerset and Conemaugh Hospitals, there is no

evidence that Novak was shut out of the relevant market or that patient choice was

restrained so as to demonstrate an actionable antitrust injury. See Mathews v. Lancaster

Gen. Hosp., 87 F.3d 624, 641 (3d Cir. 1996). Because Novak failed to do so, we agree

with the District Court that he lacks antitrust standing to pursue his claims and need not

address the other antitrust standing factors.

III.   CONCLUSION

       In light of the foregoing analysis, we will affirm the District Court’s grant of

summary judgment in favor of Appellees.

                                                7