Court Opinion

ID: 4670680
Source: CourtListenerOpinion
Date Created: 2021-03-23 20:00:50.998333+00
Date Added: 2024-06-11T08:02:05.966234
License: Public Domain

PUBLISHED

                       UNITED STATES COURT OF APPEALS
                           FOR THE FOURTH CIRCUIT

                                       No. 19-2145

RAYMOND BENITEZ, individually and on behalf of all others similarly situated,

                     Plaintiff - Appellant,

              v.

THE CHARLOTTE-MECKLENBURG HOSPITAL AUTHORITY, d/b/a Carolinas
HealthCare System, d/b/a Atrium Health,

                     Defendants - Appellee.

Appeal from the United States District Court for the Western District of North Carolina, at
Charlotte. Robert J. Conrad, Jr., District Judge. (3:18-cv-00095-RJC-DSC)

Argued: January 29, 2021                                        Decided: March 23, 2021

Before GREGORY, Chief Judge, KEENAN, and QUATTLEBAUM, Circuit Judges.

Affirmed by published opinion. Judge Quattlebaum wrote the opinion, in which Chief
Judge Gregory and Judge Keenan joined.

ARGUED: Eric Franklin Citron, GOLDSTEIN & RUSSELL, P.C., Bethesda, Maryland,
for Appellant. James P. Cooney, III, WOMBLE BOND DICKINSON (US) LLP,
Charlotte, North Carolina, for Appellee. ON BRIEF: Robert Stephen Berry, BERRY
LAW PLLC, Washington, D.C.; Tejinder Singh, GOLDSTEIN & RUSSELL, P.C.,
Bethesda, Maryland, for Appellant. Debbie W. Harden, Mark J. Horoschak, Sarah Motley
Stone, Matthew F. Tilley, WOMBLE BOND DICKINSON (US) LLP, Charlotte, North
Carolina; Hampton Y. Dellinger, Richard A. Feinstein, Nicholas A. Widnell, BOIES
SCHILLER FLEXNER LLP, Washington, D.C., for Appellee.

                                     2
QUATTLEBAUM, Circuit Judge:

       This appeal involves the Local Government Antitrust Act of 1984, 15 U.S.C. § 34

et seq. Congress passed the Act “in order to broaden the scope of antitrust immunity

applicable to local governments” after a surge in the filing of antitrust lawsuits threatened

to “undermine a local government’s ability to govern in the public interest.” Sandcrest

Outpatient Servs., P.A. v. Cumberland Cnty. Hosp. Sys., Inc., 853 F.2d 1139, 1142 (4th

Cir. 1988) (internal quotation marks omitted). Although the Act does not preclude

injunctive or declaratory claims, it immunizes “local government[s]” from antitrust

damages. See 15 U.S.C. § 35. Today, we consider whether the Charlotte-Mecklenburg

Hospital Authority (the “Hospital Authority”) qualifies as a “local government” under the

Act.

       The Act defines “local government” in two ways. First, the Act covers traditional

subdivisions of a state, such as “a city, county, parish, township, village, or any other

general function governmental unit established by State law . . . .” 15 U.S.C. § 34(1)(A).

That provision does not apply here. Second, the Act applies to more specialized

governmental entities, such as “a school district, sanitary district, or any other special

function governmental unit established by State law in one or more states.” Id. § 34(1)(B).

We must decide if the Hospital Authority falls into the final category—a “special function

governmental unit established by State law in one or more states.” Id.

       After the Hospital Authority moved for judgment on the pleadings, the district court

concluded that it was such an entity and, therefore, dismissed the class action antitrust

claims brought by Raymond Benitez against the Hospital Authority. Benitez now appeals

                                             3
on two grounds. First, he argues that the Hospital Authority is not a “local government,”

and, therefore, not covered by the Act because it lacks the powers traditionally associated

with “local government[s],” such as the power to tax and issue general obligation bonds.

Second, he contends that, even if the Hospital Authority at one time qualified as a “special

function governmental unit,” it has now grown so large—by operating in three states and

generating $11 billion in annual revenue—that it can no longer be considered a “local

government.”

       As to Benitez’s first argument, we disagree. Congress’s broad definition of “local

government” does not impose the requirements he advances, and we decline to rewrite the

Act to include those requirements. As to Benitez’s second argument, while not addressed

by the district court, it also fails. Despite having some common-sense appeal, it again seeks

a limitation not contained in the Act. Accordingly, we affirm.

                                             I.

       Benitez—who had been treated at a Hospital Authority inpatient facility in 2016—

filed a class action complaint against the Hospital Authority, alleging violations of Section

1 of the Sherman Act. He alleges the Hospital Authority “is the second largest public health

system in the United States.” J.A. 12. It is also, Benitez asserts, the largest inpatient

healthcare provider in the Charlotte, North Carolina area, with approximately twelve

million patient encounters every year. Because of this, it receives more than fifty percent

of all inpatient revenue in the Charlotte area. According to Benitez, insurers recognize the

Hospital Authority’s large market share and—out of necessity—contract with the Hospital

                                             4
Authority so that Charlotte-area residents can easily receive inpatient services. Thus, in

reaching these contractual agreements, the Hospital Authority’s “market power has enabled

it to negotiate high prices (in the form of high ‘reimbursement rates’) for treating insured

patients.” J.A. 12. Additionally, Benitez claims the Hospital Authority “has imposed

steering restrictions in its contracts with insurers.” J.A. 13. He alleges these provisions are

anticompetitive because they preclude “insurers from providing financial incentives to

patients to encourage them to consider utilizing lower-cost but comparable or higher

quality alternative healthcare providers.” J.A. 13. And without such incentives, patients are

effectively required to go to the Hospital Authority where the rates are higher.

       Previously, the United States Department of Justice and the North Carolina Attorney

General’s Office filed a lawsuit in the Western District of North Carolina (the

“Enforcement Action”), seeking a declaration that the steering restrictions violate Section

1 of the Sherman Act and an injunction prohibiting the Hospital Authority from seeking,

agreeing to or enforcing any steering restrictions in its insurance contracts. See Complaint

at 11–12, United States v. Charlotte-Mecklenburg Hosp. Auth., d/b/a Carolinas Healthcare

Sys., No. 3:16-cv-00311-RJC-DCK (W.D.N.C. June 9, 2016), ECF No. 1. After several

years of litigation, the Enforcement Action was resolved by a settlement that prohibited

steering restrictions. See Final Judgment, United States v. Charlotte-Mecklenburg Hosp.

Auth., d/b/a Carolinas Healthcare Sys., No. 3:16-cv-00311-RJC-DCK (W.D.N.C. April

24, 2019), ECF No. 99.

       With claims that mirrored, in large part, the allegations made in the ongoing

Enforcement Action, Benitez also asserted that the Hospital Authority’s steering

                                              5
restrictions violated Section 1 of the Sherman Act. On top of declaratory and injunctive

relief, however, Benitez also sought monetary damages on behalf of a class of individuals

residing in the Charlotte area who made direct payments for inpatient procedures to the

Hospital Authority.

       The Hospital Authority answered, disputing Benitez’s factual allegations, defending

the legality of the steering restrictions and asserting a variety of affirmative defenses,

including immunity from damages, costs and attorneys’ fees pursuant to the Act.

Additionally, the Hospital Authority moved for judgment on the pleadings, arguing that it

was immune from monetary damages because it was a “special function governmental

unit”—and, therefore, a “local government”—under the Act. 1 To that end, it relied in large

part on Sandcrest, which—according to the Hospital Authority—held that a North Carolina

municipal hospital was a “local government” exempt from monetary damages under the

Act.

       Benitez responded first by detailing the Hospital Authority’s evolution from a local

hospital, “originally founded in 1943 to provide hospital services to the residents of

Charlotte,” to “the largest healthcare system in North and South Carolina and the second

largest public health system in the United States.” J.A. 80 (internal quotation marks

omitted). Next, Benitez argued that the Hospital Authority is not a “special function

governmental unit” under the Act because “large healthcare enterprises like [the Hospital

       1
        The Hospital Authority also claimed that insured patients are barred from seeking
damages because they are not direct purchasers and that Benitez does not have antitrust
standing. Since the district court did not reach these issues, they are not before us.

                                            6
Authority] bear no resemblance to the sorts of entities that the [Act] and its legislative

history mention as examples of ‘local government’ . . . .” J.A. 89. Finally, Benitez offered

an alternative argument—even if the Hospital Authority is a “special function

governmental unit,” it is nonetheless not a “local government” under the Act because

“Congress cannot possibly have had sprawling healthcare enterprises like [the Hospital

Authority] in mind when it created an immunity specifically for ‘local’ government

entities.” J.A. 92.

       The district court found that the Hospital Authority is a “local government” and,

therefore, immune from monetary damages. In making that finding, the district court

detailed the Hospital Authority’s creation and operation under North Carolina law and

concluded that it had “powers which are typically characterized as governmental powers.”

J.A. 195. The district court also heavily relied on our Sandcrest decision. It noted that

“[p]reviously, the Fourth Circuit has granted absolute immunity from antitrust damages to

a municipal hospital established under Chapter 131E [of the North Carolina General

Statutes], upholding the determination that the hospital qualified as a ‘special function

government[al] unit’ under the [Act].” J.A. 196 (citing Sandcrest, 853 F.2d at 1139). The

district court did not, however, address Benitez’s alternative argument that the Hospital

Authority’s multistate operations and explosive growth precluded a finding that it was a

“local government.” The district court then stayed Benitez’s claim for injunctive relief

pending a resolution of the Enforcement Action. After the Enforcement Action settled, the

Hospital Authority filed a renewed motion for judgment on the pleadings, which Benitez

                                             7
did not oppose. The district court granted the motion, dismissing all claims against the

Hospital Authority.

       Benitez filed a timely Notice of Appeal, and we have jurisdiction over the appeal.

28 U.S.C. § 1291.

                                             II.

                                             A.

       Before addressing Benitez’s arguments on appeal, we begin with some history.

“Congress enacted the Sherman Act in 1890.” Summit Health, Ltd. v. Pinhas, 500 U.S.

322, 328 (1991). Section 1 of the Sherman Act prohibits “[e]very contract, combination in

the form of trust or otherwise, or conspiracy, in restraint of trade or commerce . . . .” 15

U.S.C. § 1. This provision works in conjunction with Section 4 of the Clayton Act, which

provides a private right of action for violations of the Sherman Act. See 15 U.S.C. § 15. As

a result, any person who is “injured in his business or property” due to a violation of the

Sherman Act, or other antitrust provisions, may bring a cause of action in federal court and

recover treble damages. Id.

       In 1943, the Supreme Court recognized that states, “as sovereign[s],” are immune

from antitrust liability when they impose anticompetitive restraints on trade or commerce

“as an act of government.” Parker v. Brown, 317 U.S. 341, 352 (1943). In reaching this

holding, the Supreme Court found “nothing in the language of the Sherman Act or in its

history which suggests that its purpose was to restrain a state or its officers or agents from

                                              8
activities directed by its legislature.” 2 Id. at 350–51. State action immunity, however, did

not extend to local governments. Instead, more than thirty years after Parker, a series of

Supreme Court decisions opened the door to substantial municipal antitrust liability.

       First, in 1978, the Court held that local governments were not automatically exempt

from antitrust liability, recognizing the “serious economic dislocation which could result

if cities were free to place their own parochial interests above the Nation’s economic goals

reflected in the antitrust laws . . . .” City of Lafayette, La. v. La. Power & Light Co., 435

U.S. 389, 411–13 (1978). A plurality of the Court suggested, without deciding, that local

governments were exempted only when they acted “pursuant to state policy to displace

competition with regulation or monopoly public service” and when the state policy was

“clearly articulated and affirmatively expressed.” 3 Id. at 410, 413. Four years later, the

       2
         Parker was decided during “the most vigorous period of antitrust enforcement in
American history.” Michael J. Sandel, The Constitution of the Procedural Republic:
Liberal Rights and Civic Virtues, 66 FORDHAM L. REV. 1, 9 (1997). The increase in
antitrust enforcement at the tail end of the Great Depression followed President Franklin
D. Roosevelt’s 1938 appointment of Thurmond Arnold as head of the Antitrust Division
of the Department of Justice. See id. But 1938 was not only a watershed year for
competition in the marketplace; it was also the year of “the greatest horserace in history”
when an “undersized, crooked-legged race horse” named Seabiscuit became a national hero
by trouncing the legendary War Admiral. See Scott S. Brinkmeyer, A Winning
Combination, 82-OCT MICH. B. J. 12, 12 & n.4 (2003). Ironically, early on, Seabiscuit
seemed uninterested in racing. But during one training session, after he caught sight of
another horse on the track, he took off with the ferocity and determination that propelled
him to success and fame. His trainer, Tom Smith, at that moment remarked “sometimes
they just hanker for a little competition.” SEABISCUIT (DreamWorks Pictures 2003).
Benitez apparently “hankers” for the same.
       3
        The Court also suggested that the municipal action must be “actively supervised”
by the state. Id. at 410. The Court addressed this issue in Town of Hallie v. City of Eau
Claire, where it held that “[o]nce it is clear that state authorization exists, there is no need

                                               9
Court again addressed the issue of a local government’s exemption from antitrust laws in

Community Communications Co., Inc. v. City of Boulder, Colorado, 455 U.S. 40 (1982).

There, the Court held that Colorado’s Home Rule Amendment, which vested local

governments with the power to govern local affairs, did not constitute a clearly articulated

and affirmatively expressed policy “to enact specific anticompetitive ordinances . . . .” Id.

at 54–57.

       After these decisions, antitrust litigation against local governments spiked. See

Sandcrest, 853 F.2d at 1142 (noting the pendency of more than one hundred federal

antitrust lawsuits when Congress was debating the Act). Recognizing the potential for large

judgments and attorneys’ fees, which would be borne by taxpayers, Congress passed the

Act in order to legislatively shield local governments from antitrust damages. See id.; see

also Genty v. Resol. Trust Corp., 937 F.2d 899, 914 n.8 (3d Cir. 1991) (“In response to

[Lafayette and Boulder] holding municipalities liable, Congress subsequently amended the

anti-trust laws to exempt local government entities from liability for damages arising under

the antitrust statute.”). Thus, the Act was passed to prevent taxpayers from bearing the

financial burden of their local governments’ anticompetitive activity and to allow local

governments to effectively govern without devoting significant time and resources to

antitrust litigation. The Act does not, however, preclude lawsuits seeking injunctive relief. 4

to require the State to supervise actively the municipality’s execution of what is a properly
delegated function.” 471 U.S. 34, 47 (1985).
       4
         A local government may, nonetheless, be immune from all liability—including
injunctive relief—if it “demonstrate[s] that it is engaging in the challenged activity

                                              10
       To that end, the Act provides that “[n]o damages, interest on damages, costs, or

attorney’s fees may be recovered under section 4, 4A, or 4C of the Clayton Act (15 U.S.C.

§ 15, 15a, or 15c) from any local government, or official or employee thereof acting in an

official capacity.” 15 U.S.C. § 35(a) (emphasis added). A “local government” is defined as

follows:

       (A) a city, county, parish, town, township, village, or any other general
           function governmental unit established by State law, or

       (B) a school district, sanitary district, or any other special function
           governmental unit established by State law in one or more States.

15 U.S.C. § 34(1).

                                                B.

       With that background in mind, we turn to Benitez’s appeal. 5 Benitez first claims

that the Hospital Authority is not a “special function governmental unit” under § 34(1)(B)

because it does not share any of the hallmarks of a governmental entity and does not have

pursuant to a clearly expressed state policy” to displace competition. Town of Hallie, 471
U.S. at 40. In this instance, a local government is, in effect, afforded state action immunity.
       5
         We review the district court’s grant of the Hospital Authority’s Rule 12(c) motion
de novo, applying the same legal standards as the district court. See Priority Auto Grp., Inc.
v. Ford Motor Co., 757 F.3d 137, 139 (4th Cir. 2014). While courts “should strive to
resolve the immunity issue as early as possible, with a minimum of expense and time to
the parties . . . in order to further the purpose underlying the provision of immunity,”
Sandcrest, 853 F.2d at 1148 n.9, a Rule 12(c) motion “should only be granted if, ‘accepting
all well-pleaded allegations in the plaintiff’s complaint as true and drawing all reasonable
factual inferences from those facts in the plaintiff’s favor, it appears certain that the plaintiff
cannot prove any set of facts in support of his claim entitling him to relief.’” Priority Auto,
757 F.3d at 139 (quoting Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999)).

                                                11
any of the attendant powers associated with general or special purpose “local

government[s].” Benitez advances four arguments in support of his contention. First, he

argues that our Sandcrest decision did not address the issues presented here and is,

therefore, not controlling. Second, he asserts that the Hospital Authority does not share the

functional characteristics of the specific examples that precede “special function

governmental unit” in the Act—school districts and sanitary districts—and does not exhibit

the core governmental powers of “a city, county, parish, town, township, village, or . . .

other general function governmental unit established by State law,” such as the power to

tax, issue general obligation bonds or exercise eminent domain. 15 U.S.C. § 34. Third, he

argues that the Hospital Authority is not viewed by North Carolina as a traditional

governmental body because it is not immune from tort liability. Finally, he contends that

the Hospital Authority does not share the same relationship with North Carolina as the

other entities listed in 15 U.S.C. § 34 because it is not a political subdivision of the state.

                                               1.

       Addressing each of Benitez’s arguments in turn, we turn first to his claim that the

district court erred in interpreting Sandcrest. The district court determined that in

Sandcrest, we held that a North Carolina quasi-municipal hospital, established pursuant to

the North Carolina Hospital Authorities Act, is a “special function governmental unit”—

and thus a “local government”—under the Act. It explained “[p]reviously, the Fourth

Circuit has granted absolute immunity from antitrust damages to a municipal hospital

established under Chapter 131E, upholding the determination that the hospital qualified as

a ‘special function government unit.’” J.A. 196 (citing Sandcrest, 853 F.2d 1139). Benitez

                                              12
argues that this interpretation of Sandcrest is incorrect. He contends that Sandcrest did not

address, much less decide, the issues we face here. We agree. Respectfully, the district

court and the Hospital Authority misread our decision in Sandcrest.

       In Sandcrest, a county hospital was established under Chapter 131E of the North

Carolina General Statutes. That hospital, owned and operated by the Cumberland County

Hospital System, Inc., declined to renew a contract with a professional association of

emergency room physicians. 853 F.2d at 1141. The physicians filed an antitrust action

against the county hospital authority, its corporate manager and several individuals. Id. The

district court granted summary judgment in favor of all defendants, finding they were

entitled to immunity under the Act. Id.

       On appeal, we noted that the physicians did not challenge the district court’s

determination that the county hospital authority was a “local government.” Id. at 1142.

Instead, the physicians only argued that the corporate manager and individual defendants

were not entitled to immunity. See id. This argument implicated a different subsection of

the Act, which provides that monetary damages may not be recovered “in any claim against

a person based on any official action directed by a local government, or official or

employee thereof acting in an official capacity.” 15 U.S.C. § 36(a). Thus, while we

assumed that the county hospital authority was a “local government” for purposes of this

                                             13
analysis, we did so only because the physicians did not appeal the district court’s finding. 6

See Sandcrest, 853 F.2d at 1142.

       The Hospital Authority, in an attempt to buttress the district court’s analysis of

Sandcrest, argues that we could not have determined that the defendants were immune

“unless [we] also concluded the county hospital system constituted a unit of local

government.” Br. of Appellee at 41. But that would give an assumption far more weight

than it deserves. Appellate courts frequently assume unappealed findings to be true, even

when the underlying premise involves a question of law. See, e.g., Campbell-Ewald Co. v.

Gomez, 577 U.S. 153, 160–66 (2016) (holding that “an unaccepted settlement offer or offer

of judgment does not moot a plaintiff’s case” but noting that the Supreme Court had

previously “simply assumed, without deciding, that an offer of complete relief pursuant to

Rule 68, even if unaccepted, moots a plaintiff’s claim” when a plaintiff did not challenge

the lower court’s finding on that point). Doing so efficiently allows claims that are clearly

presented, and perhaps dispositive, to be considered without unnecessarily deciding

issues. 7 But, as we have previously held, “[w]e are bound by holdings, not unwritten

       6
         We ultimately concluded that all defendants were entitled to immunity because
their conduct was “undertaken within the scope of their authority and under adequate
supervision” of the county hospital authority and the county hospital’s board of trustees.
Id. at 1146.
       7
         There are many reasons assumptions arise in cases. Sometimes, like in Sandcrest,
an issue was assumed because it was not appealed by the parties. Other times, a court
assumes an issue to further an important doctrine like constitutional avoidance. See United
States v. Reed, 780 F.3d 260, 269 (4th Cir. 2015) (assuming a violation of the Confrontation
Clause because any alleged error “was harmless beyond a reasonable doubt”). Or there can

                                             14
assumptions.” Fernandez v. Keisler, 502 F.3d 337, 343 n.2 (4th Cir. 2007). Accordingly,

we write today on a blank slate.

                                             2.

       Benitez’s remaining three arguments can be considered together. They all suggest

that “special function governmental unit” as described in § 34(1)(B) applies only to

governmental entities with certain powers and/or characteristics—the power of taxation,

immunity from tort liability and characterization as a political subdivision—that Benitez

insists the Hospital Authority lacks. To support this argument, he draws on the legislative

history of the Act, which he claims reflects a desire to protect taxpayers from bearing the

burden of large antitrust awards. See, e.g., H.R. Rep. No. 98-965, at 11 (1984) (“[P]ayment

of any antitrust judgment would ultimately be drawn from the ‘general revenues,’ thus

shifting the burden of the punitive damage award . . . from the local officials to the

‘innocent’ taxpayers—a most misdirected and inequitable result.”). According to Benitez,

a governmental entity that would not be required to increase taxes on its citizens to satisfy

an antitrust damages award, or that lacks the power to even do so, falls outside Congress’

intent in passing the Act.

       If we were to look solely at the Act’s legislative history, this argument might be

persuasive. The argument falls short, however, when we evaluate the Act’s actual text. The

text includes none of the limitations on a “special function governmental unit” that Benitez

be other reasons. The key point here is that, regardless of the reason, assumptions are not
holdings. Nor are they even dicta.

                                             15
advances. Congress could have defined “special function governmental unit” to only

include those entities that have the powers and characteristics Benitez describes. But it did

not do so—not originally nor in the thirty-seven years since its passage. Since Congress

did not include those limitations, we decline to impose them. Our job is to interpret and

apply the law, not to make it.

       Benitez insists, however, that the text actually supports his arguments. He relies on

the statutory interpretation principle noscitur a sociis—“a word is known by the company

it keeps.” Yates v. United States, 574 U.S. 528, 543 (2015). According to Benitez, “because

‘any other special function governmental unit’ comes at the end of an illustrative list of

examples, we should expect the ‘other’ units referred to here to share the most definitive

elements of the illustrations (i.e., ‘school districts’ or ‘sanitary districts’).” Appellant’s Br.

at 33. Put differently, Benitez claims that the Hospital Authority must share the powers and

characteristics of school districts or sanitary districts in order to be a “special function

governmental unit.” This argument is predicated on the idea that every “school district”

and “sanitary district” is a political subdivision, with the corresponding power to tax and

immunity from tort liability. For two reasons, we disagree.

       First, as noted above, the plain text suggests otherwise. Tools of statutory

construction like the one Benitez employs can be helpful. But we must not use them in a

way that contravenes plain statutory text. Indeed, the Supreme Court has held that courts

should “rely on the principle of noscitur a sociis . . . to ‘avoid ascribing to one word a

meaning so broad that it is inconsistent with its accompanying words, thus giving

unintended breadth to the Acts of Congress.’” Yates, 574 U.S. at 543 (quoting Gustafson

                                               16
v. Alloyd Co., 513 U.S. 561, 575 (1995)). As discussed in more detail below, we do not

find the district court’s interpretation of “special function governmental unit” to diverge

from the accompanying words in § 34(1)(B).

       Second, the premise of Benitez’s argument is not at all certain. Take, for example,

the issue of taxation. While many school districts and sanitary districts may be fiscally

independent and have the ability to raise their own revenues, some states limit the power

to tax to the legislature or cities or counties. See, e.g., Marshall v. N. Va. Transp. Auth.,

657 S.E.2d 71, 78–80 (Va. 2008) (discussing various provisions of the Virginia State

Constitution that require a majority vote of the Virginia Senate and House of Delegates to

impose a tax, unless a “special act for the organization, government, and powers of any

county, city, town, or regional government” authorizes the power to tax). 8 This leads to a

paradox that exposes the fallacies of Benitez’s arguments. Benitez argues that a “special

function governmental unit” must have the power to tax because the two specific entities

the Act lists—school districts and sanitary districts—have that power. But in some states,

       8
          In Marshall, the Supreme Court of Virginia invalidated a statute that delegated the
power of taxation to the Northern Virginia Transportation Authority (“NVTA”)—“a
political subdivision narrowly charged by the General Assembly with the responsibility of
addressing certain regional transportation issues in the Northern Virginia localities it
encompasses.” 657 S.E.2d at 79. Relying on several state constitutional provisions, the
Court held that “NVTA is not a county, city, town, or regional government, and thus it is
not a political subdivision to which the General Assembly may constitutionally delegate
its legislative taxing authority . . . .” Id.

                                             17
school districts and sanitary districts are prohibited from imposing taxes. 9 See id. Thus, the

premise of Benitez’s argument is flawed.

        For these reasons, we are unpersuaded that either the Act’s text or the statutory

interpretation principle noscitur a sociis supports Benitez’s position.

                                              3.

        Without the limits advanced by Benitez, we turn to the ultimate question of whether

the Hospital Authority qualifies as a “special function governmental unit” under the Act.

The ultimate answer is a function of federal law. But Congress’ pairing of the term “special

function governmental unit” with the phrase “established by State law in one or more

States” requires that we also consider state law. Thus, we review the Supreme Court of

North Carolina’s recent decision in DiCesare v. Charlotte-Mecklenburg Hospital

Authority, 852 S.E.2d 146 (N.C. 2020), which involved state-law unfair trade practices and

antitrust claims arising out of the same type of contractual steering restrictions at issue

here.

        In DiCesare, the Supreme Court of North Carolina described the Hospital

Authority’s creation and operation as follows:

        The Hospital Authority was established in 1943 pursuant to the North
        Carolina Hospital Authorities Act, N.C.G.S. §§ 131E-15 et seq., and is
        jointly chartered by Mecklenburg County and the City of Charlotte. The Act
        states that “[t]he General Assembly finds and declares that in order to protect

        9
         According to a white paper issued by the North Carolina School Board
Association, school boards in most states are considered independent units of government.
But others are not; instead, they are dependent on the general government. NCSBA, FISCAL
INDEPENDENCE ISSUE BRIEF, https://www.ncsba.org/wp-content/uploads/2016/08/NC
SBA-Fiscal-Independence-Issue-Brief.pdf.

                                              18
       the public health, safety, and welfare, including that of low income persons,
       it is necessary that counties and cities be authorized to provide adequate
       hospital, medical, and health care and that the provision of such care is a
       public purpose.” N.C.G.S. § 131E-1(b) (2019). The Act is intended “to
       provide an alternate method for counties and cities to provide hospital,
       medical, and health care,” id., and defines a hospital authority as “a public
       body and a body corporate and politic organized under the provisions of [the
       Act].” N.C.G.S. § 131E-16(14). The Hospital Authority is governed by a
       Board of Commissioners, whose members are appointed by the mayor or
       chairman of the county commission. N.C.G.S. § 131E-17(b).

       The Hospital Authority provides, among other things, a suite of general acute
       care inpatient hospital services, including a broad range of medical and
       surgical diagnostic and treatment services, to individuals insured under
       group, fully-insured, and self-funded healthcare plans. The Hospital
       Authority has a large general acute-care hospital located in downtown
       Charlotte and nine other general acute-care hospitals in the Charlotte area.
       There are at least two other inpatient hospitals or multi-hospital systems
       operating within the Charlotte area: Novant, which operates five inpatient
       hospitals in the Charlotte area, and CaroMont Regional Medical Center.

Id. at 148–49 (footnote omitted).

       The Court further characterized the Hospital Authority as a “quasi-municipal

corporation,” which was “created ‘to serve a particular government purpose,’ with the

General Assembly having ‘giv[en] to these specially created agencies [certain] powers and

call[ed] upon them to perform such functions as the Legislature may deem best.’” Id. at

160–61 (alterations in original) (quoting Greensboro-High Point Airport Auth. v. Johnson,

36 S.E.2d 803, 809 (N.C. 1946)). Quasi-municipal corporations, such as the Hospital

Authority, are commonly used in North Carolina “to perform ancillary functions in

government more easily and perfectly by devoting to them, because of their character,

special personnel, skill and care.” Id. at 161 (internal quotation marks omitted). “In such

instances, ‘for purposes of government and for the benefit and service of the public, the

                                            19
[S]tate delegates portions of its sovereignty, to be exercised within particular portions of

its territory, or for certain well-defined public purposes.’” Id. (alteration in original)

(quoting Gentry v. Town of Hot Springs, 44 S.E.2d 85, 86 (N.C. 1947)).

       Against this backdrop, the Court then detailed the Hospital Authority’s “particular

government purpose” and the powers and functions delegated to it by the North Carolina

General Assembly. See id. at 160–61 (internal quotation marks omitted).

       [T]he Hospital Authority was created in accordance with N.C.G.S. § 131E-
       17(a) when the Charlotte city council adopted a resolution in which it
       “[found] that the public health and welfare, including the health and welfare
       of persons of low income in the City and said surrounding area, require the
       construction, maintenance, or operation of public hospital facilities for the
       inhabitants thereof.” At that point, the mayor of Charlotte appointed eighteen
       individuals to serve as commissioners of the Hospital Authority pursuant to
       N.C.G.S. §§ 131E-17(b), -18, with the mayor having maintained the
       authority to remove commissioners “for inefficiency, neglect of duty, or
       misconduct in office” in accordance with N.C.G.S. § 131E-22. The Hospital
       Authority possesses the authority to acquire real property by eminent domain
       pursuant to N.C.G.S. § 131E-24 and to issue revenue bonds under the Local
       Government Revenue Bond Act pursuant to N.C.G.S. § 131E-26. The
       Hospital Authority is subject to annual audits by the mayor or the chairman
       of the county commission pursuant to N.C.G.S. § 131E-29; to the Public
       Records Law, and to regulation by the Local Government Commission. In
       sum, the Hospital Authority was clearly created by the City of Charlotte,
       pursuant to statute, to provide public healthcare facilities for the benefit of
       the municipality’s inhabitants.

Id. at 161 (citations omitted).

       DiCesare’s thorough analysis provides a helpful foundation for evaluating whether

the Hospital Authority is a “special function governmental unit established by State law in

one or more States.” See 15 U.S.C. § 34(1)(B). Undoubtedly, the Hospital Authority was

“established by” North Carolina law. See DiCesare, 852 S.E.2d at 148–49 (“The Hospital

Authority was established in 1943 pursuant to the North Carolina Hospital Authorities Act,

                                             20
N.C.G.S. §§ 131E-15 et seq., and is jointly chartered by Mecklenburg County and the City

of Charlotte.” (footnote omitted)). The legislative purpose of the Hospital Authorities Act

is express: “The General Assembly finds and declares that in order to protect the public

health, safety, and welfare, including that of low income persons, it is necessary that

counties and cities be authorized to provide adequate hospital, medical, and health care and

that the provision of such care is a public purpose.” N.C.G.S. § 131E-15(b) (emphasis

added). The Hospital Authorities Act specifically defines a “hospital authority” as “a public

body and a body corporate and politic organized under the provisions of this [Act].” Id.

§ 131E-16(14). As the Supreme Court of North Carolina held in DiCesare, “[a]lthough

quasi-municipal corporations are not subject to all of the requirements applicable to other

governmental entities, it is clear that their essential function is, at its core, the governmental

provision of services.” 852 S.E.2d at 162.

       Further, as the district court noted, the Hospital Authority has many “powers which

are typically characterized as governmental powers,” including the power to:

       (1) construct and maintain hospitals, (2) issue bonds, (3) acquire real or
       personal property, (4) establish a fee schedule for services received from
       hospital facilities and make the services available regardless of ability to pay,
       (5) contract with other governmental or public agencies, (6) lease any
       hospital facility to a nonprofit corporation, and (7) to exercise the power of
       eminent domain to acquire real property.

J.A. 195–96 n.7. To be sure, private hospitals also share several of these powers, but the

authority to acquire real property by eminent domain and the “power to issue revenue

bonds under the Local Government Revenue Bond Act . . . for the purpose of acquiring,

                                               21
constructing, . . . or operating hospital facilities” are uniquely governmental powers. Id.

§§ 131E-24, 26.

       There is no magic combination of powers that a governmental body must have to

be classified as a “special function governmental unit.” However, those of the Hospital

Authority, as outlined by the Supreme Court of North Carolina, readily qualify.

                                              4.

       We recognize that the Tenth Circuit, in Tarabishi v. McAlester Regional Hospital,

951 F.2d 1558 (10th Cir. 1991), reached a different conclusion in finding an Oklahoma

public trust hospital was not a “special function governmental unit.” In reaching this

conclusion, the Tenth Circuit was guided by two considerations: (1) that citizens of the

Oklahoma city were beneficiaries of the public trust and would not be liable for any

antitrust damages award; and (2) state law “viewed public trust hospitals as entities

different from political subdivisions.” Id. at 1566.

       At first blush, Tarabishi is seemingly at odds with our holding. After all, it, like

Benitez, places significant emphasis on the Act’s legislative history. See id. at 1564. There,

the hospital “was formed as a trust for furtherance of public functions under [Oklahoma

state law].” Id. at 1565 n.6. In contrast, the Hospital Authority is “a public body and a body

corporate and politic organized under the provisions of [the North Carolina Hospital

Authorities Act].” Id. § 131E-16(14). Importantly, however, Tarabishi recognized that how

an entity is classified under state law is critical and cited to a variety of cases where

hospitals were held to be “local governments.” See Tarabishi, 951 F.2d at 1565–66

(collecting cases). The Tenth Circuit did not question the validity of these cases and,

                                             22
instead, emphasized that the structure of a public trust hospital was unique and

distinguishable. See id. at 1566 (“None of these cases directly answers the question of

whether a hospital operated as a public trust for furtherance of public functions with a city

as its beneficiary should be considered a special function governmental unit.”).

       Indeed, we note that the Hospital Authority is far more similar to the hospital in

Sweeney v. Athens Regional Medical Center, which was distinguished by Tarabishi, than

to the public trust hospital in Tarabishi. See Sweeney, 705 F. Supp. 1556, 1561–62 (M.D.

Ga. 1989) (holding that Athens Regional Medical Center, “a public hospital authority

organized under the Georgia Hospital Authorities Law,” is a “local governmental unit for

purposes of the Act” because it is “deemed to exercise public and essential governmental

functions and shall have all the powers necessary or convenient to carry out and effectuate

the purposes and provisions of [the Hospital Authorities Law]” (quoting Ga. Code Ann.

§§ 31-7-75, 77 (1985))). Thus, while we reach a different result than Tarabishi, our holding

is not inconsistent with its reasoning.

       In sum, we conclude that the Hospital Authority is a “special function governmental

unit” under the Act.

                                             C.

       Having rejected Benitez’s primary argument, we now turn to his alternative

position. Benitez has consistently argued that even if the Hospital Authority was a “local

government” when it was established, it has outgrown its immunity. Specifically, in

response to the Hospital Authority’s motion for judgment on the pleadings, Benitez

claimed that the Hospital Authority “now operates in 47 different locations spread across

                                             23
North and South Carolina,” with nearly two-thirds of those locations being located “outside

the Charlotte metropolitan area,” and “recently announced plans to open in Georgia.” J.A.

80–81. Because of this rapid expansion, Benitez argued that the Hospital Authority “is not

a local entity in any sense of the term.” J.A. 90. Benitez insists this argument is supported

by the Act’s text because the Act “is the Local Government Antitrust Act, and by its terms

applies only to ‘local government’ entities.” Appellant’s Br. at 59.

       The Hospital Authority offers several responses. First, it argues the text does not

support Benitez’s position. According to the Hospital Authority, if Congress intended to

impose the limitation Benitez advances, it could easily have done so. But it did not. Instead,

Congress defined “local government” to include “a school district, sanitary district, or any

other special function governmental unit established by State law in one or more States.”

15 U.S.C. § 34(1)(B). That means, according to the Hospital Authority, any boundaries,

geographic or otherwise, depend on North Carolina law.

       Next, the Hospital Authority contends that the Act’s “established by State law in

one or more States” language contemplates a “local government” that operates in more

than one state. In fact, the Hospital Authority points to entities that operate in many states

that have been held immune as a “local government” under the Act. See, e.g., Cap. Freight

Servs., Inc. v. Trailer Marine Transp. Corp., 704 F. Supp. 1190, 1199–1200 (S.D.N.Y.

1988) (finding that a Puerto Rican international shipping authority was a “local

government” entitled to immunity under the Act and noting “there is no requirement that

the governmental instrumentality have a geographically defined jurisdiction”).

                                             24
       After carefully considering the parties’ arguments, we acknowledge that Benitez’s

argument has some initial appeal. It does seem unusual for an organization of the

geographic and financial scope of the Hospital Authority to qualify as a “local

government.” The problem with this argument, however, is that the language of the Act

does not support it. The text asks only whether an organization qualifies as a “local

government,” as defined by the Act. And that determination requires examining the state

law applicable to the entity’s creation. See 15 U.S.C. § 34(1)(B) (defining “local

government” to include various entities “established by State law in one or more States”).

As with Benitez’s other argument, he asks us to re-write the Act to impose a limitation it

does not currently contain.

       And even if we were to adopt Benitez’s position, how would we determine the

boundaries of a “local government”? If an organization was able to simply outgrow the

Act’s protection, what would be the lines that would disqualify it? Would they be

financially based? That would be difficult given that the revenues of some cities, which are

clearly “local government[s]” under the Act, dwarf those of the Hospital Authority. 10 Or

would the limitations be geographic? If so, would an entity cease to be “local” if it grew

beyond the city or county that created it, even if allowed by state law? Would any growth

beyond those borders be disqualifying? Or would it require going into another state? In

other words, how much growth is too much?

       10
          For example, New York City’s budget in 2017 was approximately $85 billion.
Understanding New York City’s Budget A Guide, New York City Independent Budget
Office at 2, https://www.ibo.nyc.ny.us/iboreports/understandingthebudget.pdf.

                                            25
       The answers to these questions involve complex policy considerations. Navigating

these considerations is the work of lawmakers, not judges. It may make eminent sense to

amend the Act to impose some sort of limitation beyond which an entity could no longer

qualify as a “local government.” But if that is to be done, it should be done by Congress,

not us. Thus, we reject Benitez’s argument that the Hospital Authority has outgrown its

status as a “local government.”

       But our decision is limited to Benitez’s argument. Benitez does not allege, for

example, that the Hospital Authority is operating outside the purview of a its statutory

authority under North Carolina law or even that it committed anticompetitive acts outside

of the local area where it was created. Indeed, as the Hospital Authority pointed out at oral

argument, both Benitez’s treatment and the alleged anti-competitive activity took place in

the Charlotte area. Because of that, Benitez’s allegations involve only “local” conduct.

       There may be circumstances where a “special function governmental unit” does not

enjoy the Act’s immunity. For example, if Benitez alleged that the Hospital Authority was

operating in contravention of North Carolina law or if the Hospital Authority was sued in

Georgia involving alleged anticompetitive conduct in a Georgia geographic market, we

might reach a different conclusion. But since those issues are not presented to us, we

express no view on them and leave them for another day.

                                             26
                                             III.

       For the reasons stated above, we agree with the district court that the Hospital

Authority is a “special function governmental unit” and, therefore, a “local government”

under the Act. Accordingly, the district court’s order is

                                                                           AFFIRMED.

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