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The full case caption appears at the end of this opinion. LOKEN, Circuit Judge. Both physician anesthesiologists and nurse anesthetists are licensed in Minnesotato administer anesthesia during surgeries. Though they typically work as a team duringan individual surgery, anesthesiologists and nurse anesthetists compete for thecontractual right to provide anesthesia services at hospitals and other surgical facilities.In this antitrust case, twelve nurse anesthetists and the Minnesota Association of NurseAnesthetists appeal the district court’s [FOOTNOTE 1] grant of summary judgment dismissing theirclaims attacking exclusive dealing arrangements between three Minnesota hospitals andtwo groups of anesthesiologists. Concluding that these contracts are not properlyanalyzed as boycotts, and that plaintiffs have totally failed to demonstrate either marketpower or “actual, sustained adverse effects on competition,” FTC v. Indiana Fed’n ofDentists, 476 U.S. 447, 461 (1986), we affirm. I. Nurse anesthetists work under the direction of a physician. Anesthesiologistsare physicians who may administer anesthesia themselves or supervise one or morenurse anesthetists as they provide anesthesia services during surgeries. Historically inMinnesota, many hospitals employed nurse anesthetists and included the charges fortheir services in hospital bills, whereas anesthesiologists, like other physicians, billedpatients directly. The rise of managed health care plans and the accompanying focuson health-care cost containment have put financial and competitive pressures on thisdual-billing marketplace. To illustrate, we briefly summarize recent changes inMedicare reimbursement policies that played a significant role in triggering thecontracts at issue in this lawsuit. For many years, hospitals submitted non-itemized bills to Medicare that includedall anesthesia services related to a surgery, including the services of nurse anesthetistsemployed by the hospital. Indeed, Medicare did not permit nurse anesthetists to billdirectly. [FOOTNOTE 2] If an anesthesiologist also attended a surgery, he or she would separately billMedicare, and that bill did not necessarily indicate whether the anesthesiologist had administered anesthesia or simply supervised a nurse anesthetist. Therefore, accidentalor intentional “double billing” was a real possibility. In response, the Secretary ofHealth and Human Services amended the Medicare regulations to allowanesthesiologists different rates of reimbursement depending upon whether theypersonally administered the anesthesia, “directed” up to four concurrent procedures,or “supervised” more than four procedures. See 42 U.S.C. � 1395xx; 42 C.F.R. �415.110. These changes posed problems for hospitals that included nurse anesthetistservices in their billings. For example: — The new regulations prohibited reimbursement of both an anesthesiologist anda nurse anesthetist when the anesthesiologist was attending only one procedure, evenif the nurse anesthetist had assisted. The anesthesiologist was deemed to havepersonally performed the single procedure. Absent documentation establishing themedical necessity for two anesthesia providers, if the anesthesiologist submitted aseparate bill, Medicare would not pay the hospital for the nurse anesthetist’s services. [FOOTNOTE 3] — The combined fees for a supervising anesthesiologist and a nurse anesthetistwould frequently exceed the fee of an anesthesiologist working alone. In 1993, toaddress this problem, Congress capped anesthesia team payments at 120 percent of asolo anesthesiologist’s fee (decreasing to 100 percent in 1998), the total fee to be splitequally between the anesthesiologist and the nurse anesthetist. See 42 U.S.C. �1395w-4(a)(4); � 1395l(l)(4)(B)(iii). Some Minnesota hospitals (the record fails to reveal how many) responded tothese and other market changes by deciding to “sole-source” their anesthesia services.These hospitals terminated their nurse anesthetist employees and entered into exclusivecontracts with groups of practicing anesthesiologists for the provision of all anesthesiaservices. The anesthesiologists agreed to provide all the hospital’s requirements fornurse anesthetist services, either by directly employing nurse anesthetists (usually thosepreviously employed by the hospital), or by subcontracting with organizations formedto provide nurse anesthetist services at rates separately negotiated with third-partypayors of health care benefits such as insurance companies. Defendants Unity Hospital and Mercy Hospital are Twin Cities suburbanhospitals owned by defendant Allina Health System Corporation. Unity and Mercyimplemented these changes in March 1994, after a year of planning. Unity and Mercyterminated their nurse anesthetist employees and entered into an exclusive contract withdefendant Midwest Anesthesia, P.A. Many of the terminated nurse anesthetists thenformed Nurse Anesthesia Services, P.A., which contracted with Midwest to providenurse anesthetist services at Unity and Mercy. Similarly, in November 1994, defendantSt. Cloud Hospital terminated its nurse anesthetists and entered into an exclusivecontract with defendant Anesthesia Associates of St. Cloud. The terminated nurseanesthetists were offered employment with Anesthesia Associates. Some accepted andcontinued providing anesthesia services at St. Cloud Hospital. In this action, plaintiffs assert that the sole-source contracts were part of a “grandconspiracy” by Minnesota anesthesiologists to eliminate nurse anesthetists as a classof lower-cost, equally competent competitors. The hospital defendants claim theyindependently decided to enter into these sole-source contracts to eliminate billingconfusion and uncertainty, to significantly reduce costs, and to provide anesthesiaservices more efficiently. The anesthesiologist defendants deny conspiring to boycottnurse anesthetists or to eliminate them from a marketplace in which they continue toprovide the same services as before. After substantial discovery, the district courtgranted summary judgment dismissing plaintiffs’ multiple claims under Section 1 andSection 2 of the Sherman Act, 15 U.S.C. � � 1 and 2. [FOOTNOTE 4] We review the grant of summaryjudgment de novo, reviewing the record in the light most favorable to the non-movingparty. See Bathke v. Casey’s Gen. Stores, Inc., 64 F.3d 340, 343 (8th Cir. 1995). II. Section 1 of the Sherman Act prohibits contracts and conspiracies “in restraintof trade.” 15 U.S.C. � 1. Most agreements are evaluated under the “rule of reason,”a standard that asks whether the contract unreasonably restrains trade in a relevantproduct or geographic market. Certain kinds of agreements are unlawful per sebecause they “will so often prove so harmful to competition and so rarely provejustified that the antitrust laws do not require proof that an agreement of that kind is,in fact, anticompetitive in the particular circumstances.” NYNEX Corp. v. Discon,Inc., 525 U.S. 128, 133 (1998). On appeal, plaintiffs misapply this basic Section 1analysis by trying to fit defendants’ conduct and agreements under antitrust precedentsthat simply do not apply. Ironically, plaintiffs do not even mention the most relevantSection 1 precedents, cases dealing with the legality of exclusive dealing contracts.Plaintiffs’ primary theory on appeal is that the sole-source contracts are per seunlawful group boycotts because they prevent nurse anesthetists from performinganesthesia services at the defendant hospitals. This theory is without merit, both legallyand factually. Legally, “group boycott” is a narrow category of per se violation,”limited to cases in which firms with market power boycott suppliers or customers inorder to discourage them from doing business with a competitor.” Indiana Dentists,476 U.S. at 458; see also Northwest Wholesale Stationers, Inc. v. Pacific Stationery& Printing Co., 472 U.S. 284, 296 (1985). It is not an antitrust “boycott” when onesupplier enters into an exclusive supply agreement with one customer, even though thesupplier’s competitors are “foreclosed” from that customer for the life of the contract. As the Supreme Court recently stated, “no boycott-related per se rule applies” to thedecision “by a buyer to purchase goods or services from one supplier rather thananother.” NYNEX, 525 U.S. at 135. Moreover, as a factual matter, neither party to theexclusive dealing contracts in this case stopped dealing with nurse anesthetists. Boththe hospitals and the anesthesiologists continued to seek out and use nurse anesthetistservices, albeit on different contractual terms. Thus, we reject plaintiffs’ theory thatthe sole-source contracts are per se unlawful boycotts as totally without merit. SeeFlegel v. Christian Hosp., 4 F.3d 682, 686-87 (8th Cir. 1993); see also Levine v.Central Fla. Med. Affiliates, Inc., 72 F.3d 1538, 1549-51 (11th Cir.), cert. denied, 519U.S. 820 (1996); BCB Anesthesia Care, Ltd. v. Passavant Mem’l Area Hosp. Ass’n,36 F.3d 664, 667-69 (7th Cir. 1994); Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1411-12 (9th Cir.), cert. denied, 502 U.S. 994 (1991). Next, plaintiffs argue that joint efforts by anesthesiologists to obtain sole-sourcecontracts from hospitals were an unlawful boycott of nurse anesthetists. Plaintiffs labelan October 1992 letter from counsel for the Minnesota Society of Anesthesiologistsadvising the Society’s members as “a blueprint for eliminating [nurse anesthetists] ascompetitors under the pretext of quality of care concerns.” Again, the theory isfactually unsound: there is no evidence Minnesota anesthesiologists refused to dobusiness with nurse anesthetists, or coerced hospitals to do so by threatening towithhold anesthesiological services. To be sure, as Indiana Dentists and other casesmake clear, a society of professionals will run afoul of the antitrust laws when its rulesor policies result in a horizontal agreement among members that achieves ananticompetitive objective. But we see nothing wrong with a society of medicalprofessionals counseling its members as to what form of contractual relationships withhospitals might be in their self-interest, absent evidence that the society’s members thencollectively and coercively used market power to accomplish their objectives. Next, plaintiffs suggest the defendant hospitals “conspired” with each other toboycott nurse anesthetists, based upon evidence that, after the Allina hospitals publiclyannounced their decision to sole-source their anesthesia services, St. Cloud Hospitaladministrators discussed this decision with Allina hospital administrators. Butplaintiffs’ own market analysis places the St. Cloud Hospital in a different geographicmarket than the Allina hospitals. Non-competing hospitals have no logical motive to”conspire” with each other concerning the way each organizes the anesthesiacomponent of its surgery services. Thus, we agree with the district court that plaintiffsfailed to present sufficient evidence of conspiracy, that is, evidence that “tends toexclude the possibility that the alleged conspirators acted independently.” MatsushitaElec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986). Moreover, even ifthese non-competing hospital administrators did “agree” that sole-sourcing was themost desirable way to structure their surgeries, we see no evidence such an agreementrestrained trade at all, much less unreasonably. Exchanges of information of this typetend to be, if anything, pro-competitive. From the hospitals’ perspective, sole-sourcingdid not eliminate their use of nurse anesthetists. It did eliminate the hospitals’ problemswhen billing for nurse anesthetist but not anesthesiologist services, and sole-sourcingheld out the promise that anesthesia services would be delivered more efficiently andcost effectively. Putting aside plaintiffs’ misguided boycott theories, we must nonethelessexamine whether the sole-source contracts between the hospital defendants and theanesthesiologist defendants violate Section 1 of the Sherman Act. Exclusive dealingcontracts are analyzed under the rule of reason. See Tampa Elec. Co. v. Nashville CoalCo., 365 U.S. 320, 333-35 (1961). Though plaintiffs give us no help in this regard, theanalysis is made easier by the Supreme Court’s decision in Jefferson Parish Hosp. Dist.No. 2 v. Hyde, 466 U.S. 2 (1984). Jefferson Parish involved an exclusive contract between a New Orleans hospitaland a group of anesthesiologists to provide anesthesia services at the hospital. Theagreement was challenged by an excluded anesthesiologist. The court of appeals ruledfor the plaintiff, concluding the hospital had illegally “tied” anesthesia services to itsother surgery services. The Supreme Court reversed. The Court’s lead opinion appliedits tying precedents and concluded, “there has been no showing that the market as awhole has been affected at all by the contract.” 466 U.S. at 31. But the fourconcurring Justices concluded the tying precedents were inapplicable and analyzedwhether this exclusive dealing contract was an unreasonable restraint on trade: Exclusive dealing is an unreasonable restraint on trade only when asignificant fraction of buyers and sellers are frozen out of a market by theexclusive deal. When the sellers of services are numerous and mobile,and the number of buyers is large, exclusive-dealing arrangements ofnarrow scope pose no threat of adverse economic consequences. To thecontrary, they may be substantially procompetitive by ensuring stablemarkets and encouraging long-term, mutually advantageous businessrelationships. At issue here is an exclusive-dealing arrangement between a firmof four anesthesiologists and one relatively small hospital. There is nosuggestion that East Jefferson Hospital is likely to create a “bottleneck”in the availability of anesthesiologists that might deprive other hospitalsof access to needed anesthesiological services, or that the [favoredanesthesiologists] have unreasonably narrowed the range of choicesavailable to other anesthesiologists in search of a hospital or patients thatwill buy their services. . . . Even without engaging in a detailed analysisof the size of the relevant markets we may readily conclude that there isno likelihood that the exclusive-dealing arrangement challenged here willeither unreasonably enhance the hospital’s market position relative toother hospitals, or unreasonably permit [the favored anesthesiologists] toacquire power relative to other anesthesiologists. Accordingly, thisexclusive-dealing arrangement must be sustained under the rule of reason. 466 U.S. at 45-46 (O’Connor, J., concurring) (citations omitted). The parallel betweenthis case and Jefferson Parish is both obvious and compelling. Although the excludedplaintiffs here are nurse anesthetists, rather than competing anesthesiologists, plaintiffspresent no evidence why that should affect the rule of reason analysis. Indeed, theexclusion in this case is less complete, because the favored anesthesiologists continuedto use the services of nurse anesthetists previously employed by the hospitals. Applying the rule of reason analysis from Jefferson Parish and other exclusivedealing cases, plaintiffs have proved neither that the defendants possess market power,nor that their acts have caused actual detrimental effects on competition in a relevantmarket. Plaintiffs’ claim that the labor market for nurse anesthetist services has beeninjured because they have been forced to seek employment elsewhere. But as plaintiffsconcede, given the mobility of these health care professionals, the proper geographicbounds of that market are nationwide. There is no assertion defendants have nationalmarket power, or that their acts have driven plaintiffs out of the nationwide market. Indeed, plaintiffs have made no showing that defendants have market power in thelocal labor market for anesthesia services. Midwest Anesthesia’s membership includesless than eight percent of the Twin Cities anesthesiologists. Nurse anesthetists continueto provide anesthesia services at the defendant hospitals, and there is evidence thoseremaining earn more than they did as hospital employees. That plaintiffs have chosento work elsewhere is not an antitrust injury, for at most it reflects only harm toindividual competitors, not to competition. In essence, plaintiffs claim a right under theantitrust laws to access all hospital surgeries as independent, direct-billingprofessionals. That claim is without merit. Plaintiffs also assert that patients (and their third-party insurers) have beendeprived of a lower-cost alternative provider of anesthesia services. Jefferson Parishrecognized a distinct product market for anesthesia services, in which patients are thepurchasers. But plaintiffs have failed to prove actual adverse effects on competitionin that market, such as increased prices for anesthesia services, or a decline in eitherthe quality or quantity of such services available to surgery patients. Absent concreteevidence of this nature, plaintiffs must prove market power in a relevant geographicmarket. They have utterly failed to do so. To be probative, geographic marketevidence “must address where consumers could practicably go, not on where theyactually go.” FTC v. Tenet Health Care Corp., 186 F.3d 1045, 1052 (8th Cir. 1999). Plaintiffs’ market share analysis focused on each hospital’s trade area, but a seller’strade area is not necessarily the relevant geographic market for purposes of antitrustanalysis. See Bathke, 64 F.3d at 346. Defendants’ analysis allocated to eachdefendant hospital a local market share comparable to that of the defendant hospital inJefferson Parish, which was held not to confer market power. Plaintiffs’ expertassigned somewhat larger market shares, but nowhere near the dominant 84% sharethat justified the jury verdict for a nurse anesthetist plaintiff in Oltz v. St. Peter’sCommunity Hosp., 861 F.2d 1440, 1442 (9th Cir. 1988). On this record, we conclude that defendants’ exclusive sole-source contracts forproviding anesthesia services at the Allina and St. Cloud hospitals are entitled to “thefrequently expressed judicial approval of exclusive contracts for medical services.”Balaklaw v. Lovell, 14 F.3d 793, 802 (2d Cir. 1994). Therefore, the district courtproperly granted summary judgment dismissing plaintiffs’ Section 1 claims. As inJefferson Parish and Midwest Radio Co. v. Forum Pub. Co., 942 F.2d 1294, 1297 (8thCir. 1991), plaintiffs’ failure to prove market power, or a dangerous probability thatdefendants will acquire market power, defeats their other antitrust claims of tying,essential facilities, and Section 2 violations, claims they virtually abandon on appeal.Accordingly, the judgment of the district court is affirmed. A true copy. Attest: CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT. :::FOOTNOTES::: FN1 The HONORABLE ANN D. MONTGOMERY, United States District Judgefor the District of Minnesota. FN2In 1989, Congress gave nurse anesthetists the authority to bill Medicareseparately for their services. See 42 U.S.C. 1395l(l)(5). FN3 In 1998, the regulations were amended to allow for 50-50 reimbursement of theanesthesiologist and the nurse anesthetist in these situations. See 42 C.F.R.� 414.46(d)(iii). FN4 Plaintiffs’ complaint also alleged numerous causes of action under state law, butthis appeal concerns only their federal antitrust claims.
Minnesota Association of Nurse Anesthetists v. Unity Hospital United States Court of Appeals for the Eighth Circuit Minnesota Association of Nurse Anesthetists, et al., Plaintiffs – Appellants, v. Unity Hospital, et al., Defendants – Appellees. No. 98-2677 Appeal from the United States District Court for the District of Minnesota. Submitted: October 18, 1999 Filed: April 3, 2000 Before: WOLLMAN, Chief Judge, LAY and LOKEN, Circuit Judges.
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