Nilavar v. Mercy Health System-Western Ohio

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 07a0546n.06
Filed: August 7, 2007

No. 06-3819

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

SUNDAR V. NILAVAR, M.D., )
)
Plaintiff-Appellant, )
)
v. ) ON APPEAL FROM THE UNITED
) STATES DISTRICT COURT FOR THE
MERCY HEALTH SYSTEM-WESTERN ) SOUTHERN DISTRICT OF OHIO
OHIO, CATHOLIC HEALTHCARE )
PARTNERS, MICHAEL J. PETERSON, )
JEROLD A. MAKI, DR. ROBIN OSBORN,
and DIAGNOSTIC IMAGING ON OHIO,
INC.,

Defendants-Appellees.

Before: COLE and McKEAGUE, Circuit Judges; and COHN, District Judge.*

AVERN COHN, District Judge. This is purported to be an antitrust case. Plaintiff-Appellant

Dr. Sundar V. Nilavar sued defendant-appellees Mercy Health System-Western Ohio (“MHS”),

Catholic Healthcare Partners, Michael J. Peterson, Jerold A. Maki, Dr. Robin Osborn, and

Diagnostic Imaging of Ohio, Inc. (“DIA”)1 (collectively, “defendants”), asserting claims under

state and federal antitrust law as well as related state tort claims. Plaintiff appeals from the

*
The Honorable Avern Cohn, United States District Judge for the Eastern District of
Michigan, sitting by designation.
1
Plaintiff’s claims against Dr. Osborn and DIA were dismissed and are not at issue on
appeal.
district court’s orders granting defendants’ motion for summary judgment and motion to exclude

plaintiff’s expert’s testimony, and from the denial of plaintiff’s motion for reconsideration

regarding the same. As will be explained, plaintiff challenges only the dismissal of his antitrust

claims. For the reasons that follow, we affirm.

I.

Plaintiff, a radiologist who last practiced medicine in 1995, sued defendants, claiming

injuries resulting from a decision by MHS to enter into an exclusive contract for radiology

services with Dr. Robin Osborn and his medical corporation, DRI, to provide radiology services

at the two hospitals MHS operates in Springfield and Urbana, Ohio (the “Mercy Hospitals”).2

For some years prior to 1995, plaintiff practiced radiology as part of a member of a practice

group, Springfield Radiology, Inc. (“SRI”), of which Dr. Osborn was also a member. SRI served

Mercy Hospitals in providing radiology services, although not under a formal exclusive

relationship. Dr. Osborn left SRI sometime in early 1995 and formed DIA. In March 1995,

MHS issued a Request for Proposal (“RFP”) for exclusive physician radiology services at the

Mercy Hospitals. Three physician groups responded to the RFP, including DIA. On September

2, 1995, plaintiff learned that DIA would be awarded the contract and that he had not been

included in the DIA proposal. By September 22, 1995, plaintiff experienced severe depression

which prevented him from working.

DIA was awarded the contract in December of 1995, effective January 1, 1996. As a

2
Defendant Catholic Healthcare Partners is the corporate parent of MHS, and the two
individual defendants, Michael Peterson and Jerold Maki, are officers of MHS.

2
result, MHS notified plaintiff that his clinical privileges would be terminated with MHS as of

January 1, 1996. Plaintiff, however, retained privileges at Springfield Community Hospital, but

declined an offer to work there due to his ongoing depression.

In 1996, plaintiff sued Dr. Osborn and DIA in state court, claiming breach of contract,

estoppel, breach of fiduciary duty, and fraud arising out of Dr. Osborn’s failure to negotiate the

exclusive contract with MHS on his behalf. As part of the state case, plaintiff admitted that he

has been unable to practice medicine as of September 22, 1995, because of severe depression

resulting from Dr. Osborn’s actions. Plaintiff obtained a $100,000.00 jury verdict against Dr.

Osborn. The Ohio appellate court upheld the judgment, but remanded for a new trial on

damages. The case was settled on remand.

On November 19, 1999, plaintiff sued defendants in federal court, making eight claims,

as follows: (1) contract in restraint of trade, in violation of section 1 of the Sherman Act; (2)

tying arrangement in restraint of trade, in violation of section 1 of the Sherman Act; (3) contract

and tying arrangement in restraint of trade, in violation of Ohio’s Valentine [Antitrust] Act; (4) a

state law claim of tortious interference with a business relationship; (5) a state law claim of

breach of implied covenant of good faith and fair dealing; (6) a state law claim of civil

conspiracy; (7) a state law claim of denial of due process; and (8) a state law claim of breach of

contract. Defendants filed a motion to dismiss, which the district court granted in part and

denied in part. The district court dismissed Counts Two and Five, and parts of Counts Three and

Six. Nilavar v. Mercy Health Sys.-W. Ohio, 142 F. Supp. 2d 859, 880–90, 894 (S.D. Ohio 2000).

The district court later entered a stipulation dismissing all remaining claims against Dr. Osborn

3
and DIA. Plaintiff then added a ninth claim for intentional infliction of emotional distress.

Defendants then filed a motion for summary judgment based primarily on judicial estoppel as a

result of plaintiff’s statements in the state court case. The district court denied the motion.

Nilavar v. Mercy Health Sys.-W. Ohio, 254 F. Supp. 2d 897, 911 (S.D. Ohio 2003).

Defendants filed a second motion for summary judgment on all of plaintiff’s claims

except Count Nine, which was added after their motion was filed. On the date of defendants’

filing, plaintiff dismissed his state and federal antitrust claims based on illegal tying. Thus, only

his state and federal antitrust claims relating to the exclusive contract remained. Defendants also

filed a motion to bar the testimony of plaintiff’s economics expert, Dr. John Pisarkiewicz.

The district court granted defendants’ motions. As to the motion to strike the expert, the

district court found that the expert’s methodology for determining a relevant “geographic

market” was unreliable. As to the motion for summary judgment, the district court found that

plaintiff’s claims failed as a result of his failure to have expert testimony on the geographic

market and on the grounds that he could not show an antitrust injury because the contract at issue

was a mere “reshuffling of competitors” and the exclusive contract was of such short duration

that it could not restrain trade. The district court also asked the parties to address the viability of

Count Nine (intentional infliction of emotional distress).

Plaintiff filed a motion for reconsideration. Defendants filed a motion for summary

judgment on Count Nine. The district court denied plaintiff’s motion and granted defendants’

motion. A final judgment was entered. Plaintiff appeals, challenging the dismissal of his

4
antitrust claims and exclusion of his expert’s testimony.

Plaintiff’s antitrust theory is that defendants excluded plaintiff and other radiology

providers from the Mercy Hospitals by granting an exclusive contract to DIA to supply radiology

services and that DIA complied with MHS’s “cost-cutting interests” by utilizing “dangerous and

less expensive contrast agents,” which resulted in higher prices and reduced quality of radiology

services at the Mercy Hospitals that dominated the Springfield-Urbana area of Southwestern

Ohio.

II.

A.

We review the district court’s order granting summary judgment de novo. Am. Council of

Certified Podiatric Physicians & Surgeons v. Am. Bd. of Podiatric Surgery, Inc., 185 F.3d 606,

619 (6th Cir. 1999). We “must consider all the facts in the light most favorable to the

nonmovant and must give the nonmovant the benefit of every reasonable inference.” Id. The

moving party’s burden is to show “clearly and convincingly” the absence of any genuine issues

of material fact. Sims v. Memphis Processors, Inc., 926 F.2d 524, 526 (6th Cir. 1991) (quoting

Kochins v. Linden-Alimak, Inc., 799 F.2d 1128, 1133 (6th Cir. 1986)). Importantly, we have

observed that a movant’s summary judgment burden is not altered by virtue of the fact that the

case involves an antitrust claim. See Spirit Airlines, Inc. v. Nw. Airlines, Inc., 431 F.3d 917,

930–31 (6th Cir. 2005).

5
 We review the district court’s decision to exclude expert testimony for an abuse of

discretion. Barnes v. Kerr Corp., 418 F.3d 583, 588 (6th Cir. 2005).

B.

Plaintiff argues that the district court misconstrued the facts and misapplied the law

regarding antitrust actions. Plaintiff says he presented evidence of actual harm resulting from the

exclusive contract and therefore expert testimony on the relevant geographic market was not

necessary. Plaintiff alternatively argues that his expert’s methodology was reliable and should

not have been excluded. He further argues there are genuine issues of material fact as to whether

he suffered an antitrust injury and whether the exclusive contract was anticompetitve.

Defendants argue that there is no evidence of an antitrust injury and that exclusive

contracts, such as the one at issue, are commonplace in the medical field and do not violate the

antitrust laws. Defendants further argue that plaintiff’s expert’s ever-changing reports

demonstrate the flaws in his methodology in determining the relevant market.

C.

Plaintiff claims that defendants’ exclusive contract for radiology services with DIA

violates section 1 of the Sherman Act and Ohio’s Valentine Act, chapter 1331 of the Ohio

Revised Code.3 Section 1 states, in relevant part: “Every contract, combination . . . or

3
The Valentine Act was modeled after the Sherman Act and federal law applies to its
interpretation. See C.K. & J.K., Inc. v. Fairview Shopping Ctr. Corp., 63 Ohio St. 2d 201, 204
(1980).

6
conspiracy, in restraint of trade or commerce among the several States, . . . is declared to be

illegal.” 15 U.S.C. § 1. Read “literally,” section 1 “prohibits every agreement in restraint of

trade.” Arizona v. Maricopa County Med. Soc’y, 457 U.S. 332, 342 (1982) (internal quotation

marks omitted). However, the Supreme Court has long recognized that Congress intended to

outlaw only “unreasonable” restraints. State Oil Co. v. Khan, 522 U.S. 3, 10 (1997); Maricopa

County, 457 U.S. at 342–43 (citing United States v. Joint-Traffic Ass’n, 171 U.S. 505, 572

(1898), for the proposition that Congress does not always intend a literal interpretation of the

word “every”).

We have stated:

to establish a claim under section 1, the plaintiff must establish that the defendants
contracted, combined or conspired among each other, that the combination or conspiracy
produced adverse, anticompetitive effects within relevant product and geographic
markets, that the objects of and conduct pursuant to that contract or conspiracy were
illegal and that the plaintiff was injured as a proximate result of that conspiracy.
Crane & Shovel Sales Corp. v. Bucyrus-Erie Co., 854 F.2d 802, 805 (6th Cir. 1988) (internal

quotation marks omitted) (quoting Davis-Watkins Co. v. Serv. Merch., 686 F.2d 1190, 1195–96

(6th Cir. 1982), overruled in part by Bailey’s, Inc. v. Windsor Am., Inc., 948 F.3d 1018, 1029 n.5

(6th Cir. 1991)).

As noted above, the district court granted summary judgment to defendants on the

grounds that plaintiff (1) failed to show sufficient evidence of anti-competitive conduct,

including defining the relevant geographic market, (2) failed to establish a genuine issue of

material fact as to antitrust injury, and (3) failed to show that the exclusive contract restrained

trade. The first ground overlays the district court’s decision regarding the exclusion of plaintiff’s

7
proposed expert. Each ground is discussed in turn.

1.

As to whether plaintiff produced sufficient evidence of anticompetitive conduct, “[t]wo

analytical approaches are used to determine whether a defendant’s conduct unreasonably

restrains trade: the per se rule and the rule of reason.” Law v. Nat’l Collegiate Athletic Ass’n,

134 F.3d 1010, 1016 (10th Cir. 1998) (citing S.C.F.C. I.L.C., Inc. v. Visa U.S.A., Inc., 36 F.3d

958, 963 (10th Cir. 1994)). The district court previously determined that the rule of reason

applied. See Nilavar, 142 F. Supp. 2d at 873–74.

“The rule of reason . . . requires a court to analyze the history of the restraint and the

restraint’s effect on competition.” Nat’l Hockey League Players’ Ass’n v. Plymouth Whalers

Hockey Club, 325 F.3d 712, 718 (6th Cir. 2003). “The rule of reason analysis employs a

burden-shifting framework.” Id. (citing Cal. Dental Ass’n v. FTC, 526 U.S. 756, 775 n.12

(1999)). First, the plaintiff must establish that the restraint produces significant anticompetitive

effects within the relevant product and geographic markets. See Tanaka v. Univ. of S. Cal., 252

F.3d 1059, 1063 (9th Cir. 2001). This is usually shown through the use of expert testimony

regarding the geographic market and a defendant’s market power. “If the plaintiff meets this

burden, the defendant must come forward with evidence of the restraint’s procompetitive effects”

to establish that the alleged conduct justifies the otherwise anticompetitive injuries. Id.; see also

United States v. Brown Univ., 5 F.3d 658, 669 (3d Cir. 1993). If the defendant is able to

demonstrate procompetitive effects, the plaintiff then must show that any legitimate objectives

8
can be achieved in a substantially less restrictive manner. Law, 134 F.3d at 1019.

However, the Supreme Court has found that if there is demonstrable evidence that the

challenged restraint is unreasonable, then there is significant evidence of competitive harm, and

therefore there is no need to resort to tools such as expert testimony to define the geographic

market and determination of market power. The rationale is that market power is simply a

surrogate for actual detrimental effects. See FTC v. Ind. Fed’n of Dentists, 476 U.S. 447, 458–61

(1986).

a.

When faced with the exclusion of his expert, plaintiff argued in his motion for

reconsideration that the expert’s testimony was not necessary because the record contained

significant evidence of competitive harm. The district court rejected this argument. Plaintiff

points to the same evidence considered by the district court, contending that it raises a genuine

issue of material fact as to whether actual detrimental effects flowed from the exclusive contract

between MHS and DIA. We agree with the district court that none of plaintiff’s evidence rises to

the level of significant competitive harm.

First, plaintiff points to the fact that under the exclusive contract, defendants were able to

use less expensive ionic contrast agents in radiology procedures, a practice which plaintiff has

long opposed. While plaintiff says the use of ionic, instead of non-ionic, contrast agents is

dangerous, there is no evidence that any patient at MHS suffered as a result of the use of ionic

contrast agents. Plaintiff also admitted at deposition that the ionic debate was a non-issue by

9
February 1995. Thus, this is not evidence of an actual detrimental effect on competition or

consumers.

Plaintiff also points to the fact that the contract permits the use of temporary or part-time

physicians and that Dr. Osborn doubled his income under the contract. However, plaintiff has no

evidence that any patients suffered as a result. There is also no evidence that any of the

temporary or part-time physicians were unqualified.

In short, the record does not contain sufficient evidence of detrimental effects that would

obviate the need for plaintiff to identify the relevant geographic market and market power in

order to determine whether the exclusive contract violates section 1 of the Sherman Act.

b.

(1)

Whether plaintiff established sufficient evidence of a geographic market so as to show an

antitrust violation centers on whether the district court erred in excluding plaintiff’s proposed

expert’s testimony.

Federal Rule of Evidence 702 provides:

If scientific, technical, or other specialized knowledge will assist the trier of fact to
understand the evidence or to determine a fact in issue, a witness qualified as an expert by
knowledge, skill, experience, training, or education, may testify thereto in the form of an
opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the
testimony is the product of reliable principles and methods, and (3) the witness has
applied the principles and methods reliably to the facts of the case.

10
Fed. R. Evid. 702. This rule reflects the Supreme Court’s decisions in Daubert v. Merrell Dow

Pharm. Inc., 509 U.S. 579 (1993) and Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999). In

Daubert, the Supreme Court provided a nonexhaustive list of factors which may, in any given

case, bear on a trial judge’s gatekeeping determination. 509 U.S. at 592–94. These factors

include: (1) whether a “theory or technique . . . can be (and has been) tested,” (2) whether the

theory “has been subjected to peer review and publication;” (3) whether, with respect to a

particular technique, there is a high “known or potential rate of error” and whether there are

“standards controlling the technique’s operation”; and (4) whether the theory or technique enjoys

“general acceptance” within a “relevant scientific community.” Id. Six years after issuing

Daubert, the Court made clear in Kumho that these same factors apply to all types of expert

testimony. 526 U.S. at 148–49.

(2)

The district court determined that although plaintiff’s proposed expert, John Pisarkiewicz,

Ph.D., could opine as to the relevant product market, his proffered testimony with respect to the

proposed geographic market was inadmissible under Rule 702. The district court found two

flaws in the expert’s analysis: (1) adjustments made by the expert to his analysis contradicted his

proposed product market definition, which resulted in his opinion being based on unreliable

methods; and (2) the adjustments made were incorrect as a matter of law.

Plaintiff offered the following definition of the relevant geographic market: “the

physician component of diagnostic radiology services provided in [a] . . . hospital setting” with a

11
relevant submarket consisting of “the physician component of diagnostic radiology services

provided to inpatients.” As to the locale, plaintiff defined it as “essentially comprising Clark and

Champaign Counties,” consisting of an area encompassed by nineteen ZIP codes. The expert

explained that his primary tools for opining that defendants exercise market power in that

geographic area were the Elzinga-Hogarty test and the critical loss test. Defendants argued, as

they do here, that the expert’s opinion is unreliable because he manipulated those tests to arrive

at a conclusion favorable to plaintiff. The district court agreed. We also agree.

(3)

The Elzinga-Hogarty test analyzes patterns of consumer origin and destination to identify

relevant competitors of the contracting entities. See FTC v. Freeman Hosp., 69 F.3d 260, 264

(8th Cir. 1995). In other words, the test measures the extent to which a product comes into (in-

flow) and leaves (out-flow) the market. In-flow and out-flow are represented by the two

variables of the test, LOFI (little out from inside) and LIFO (little in from outside), which are

expressed in percentages. In order to show actions which indicate market power having an

adverse effect on competition, a plaintiff would need to show that the in-flow and out-flow are

low. Here, plaintiff would have to show that few residents of his geographic market leave the

area to obtain hospital-based radiological services (LOFI) and that few patients residing outside

of the geographic market come to the area to obtain hospital based radiological services (LIFO).

Low scores would demonstrate the existence of a cohesive geographic market and show

defendants’ market power. Courts that have used the Elzinga-Hogarty test in antitrust cases have

found that a 10% threshold is needed for a strong result. See Gordon v. Lewistown Hosp., 272 F.

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Supp. 2d 393, 426 (M.D. Pa. 2003). That is, a geographic market is properly defined when 10%

or less of the consumers leave the area to obtain the product and when 10% or less of consumers

who obtain the product come in from outside the area. Id.

In the expert’s initial report, he found a LIFO ratio of 4.8% and a LOFI of 25.0%. While

the test says that 25% is a weak result, the expert described it as “good.” He also suggested that

the results could be strengthened by using individual ZIP codes rather than county borders.

Indeed, at his deposition, the expert supplemented his report by removing from consideration ZIP

codes in the southwest corner of Clark County and the northeast corner of Champaign County.

This caused his out-flow to drop to 16% and in-flow to increase to 11%. Following his

deposition, the expert further refined his analysis under the Elzinga-Hogarty test in an affidavit.

In the affidavit, he states that after further refinement, the average LOFI and LIFO ratios are

8.7%, or within the 10% generally called for by the test.

As explained by the district court, these refinements fundamentally altered the results of

the test, rendering them unreliable. The first problem is that the expert excluded patients from

the geographic market who required a procedure for which more than 90% of them left the

market. The district court found that such exclusion was improper as a matter of law. We agree.

This Circuit has held that “when the evidence indicates that a large proportion of consumers

within the proposed area in fact turn to alternative sources of supply outside the proposed area,

the market boundaries posited by the plaintiff must be rejected.” Re/Max Int’l, Inc. v. Realty

One, Inc., 173 F.3d 995, 1017 (6th Cir. 1999) (citing Bathke v. Casey’s Gen. Stores, Inc., 64 F.3d

340, 346 (8th Cir. 1995)).

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 The district court further noted that the expert’s admission that some of the patients who

left the area for services, whom he specifically excluded, did so not because the services they

required were not available at one of the three hospitals, but because the services were perceived

to be better elsewhere. This fact alone shows the presence of competition in the market. The

expert also excluded patients who left the area to visit specialty hospitals or out-of- state

hospitals or who required obstetrics and newborn care services. There is simply no proper

justification for all of these exclusions. These exclusions also indicate the presence of

competition, as patients are able to leave the geographic market to obtain services, which

presumably are available in the market, where they desire. At best, the exclusion show an

improper application of the Elzinga-Hogarty test. At worst, they show an effort to manipulate

the test. The district court was correct in excluding the expert’s report on this ground.

(4)

The expert also justified his conclusions using the critical loss test. This test is from the

Federal Trade Commission’s Horizontal Merger Guidelines. It assesses whether a market

participant would be able to raise prices without causing a “critical loss” of consumers that

would make the price increase ultimately unprofitable. See Coastal Fuels of P.R., Inc. v.

Caribbean Petroleum Corp., 79 F.3d 182, 198 (1st Cir. 1996) (“The touchstone of market

definition is whether a hypothetical monopolist could raise prices.”). The price increase

recommended by the Merger Guidelines is 5%. As applied to this case, the test would ask how

many patients would have to leave the market in order to defeat a price increase by defendants of

5% and whether those patients actually would leave the market. Defendants argue that the expert

14
erred in using “gross charges” for inpatient and outpatient radiological services when calculating

the critical loss figure, rather than actual charges. The district court bypassed this criticism,

noting a more fundamental flaw with utilization of the critical loss test—the fact that patients

were leaving the geographic area in the absence of any price increase. As noted above, the

expert’s initial conclusion was that 25% of patients within the geographic market were leaving

the area to obtain radiology services elsewhere. Because some patients were already leaving, it

makes no logical sense that these same patients would not also leave if prices increased. In an

attempt to rationalize this fact, the expert claimed that the patients who were leaving were

obtaining radiology services that were unavailable in the geographic market. This statement, if

true, contradicts the defined product market, which is “all diagnostic radiology services provided

in a hospital setting.” This definition does not distinguish between the type of services (other

than inpatient or outpatient) provided. Thus, the district court did not err in finding the expert’s

report inadmissible on this ground.

(5)

Overall, the expert’s opinion, whether based on the Elzinga-Hogarty test or the critical

loss test, is flawed to the point of unreliability. While the tests themselves are appropriate and

within the parameters of Daubert, the way in which the expert applied the tests undercuts his

opinion to the point that it is inadmissible under Rule 702.

2.

The district court also determined, alternatively, that plaintiff’s antitrust claim failed

15
because he did not establish an antitrust injury. A private antitrust plaintiff, in addition to having

to show injury-in-fact and proximate cause, must allege, and eventually prove, “antitrust injury.”

Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977). “Antitrust injury” is (1)

“injury of the type the antitrust laws were intended to prevent” and (2) injury “that flows from

that which makes defendants’ acts unlawful.” Id. As explained by the Supreme Court in

Brunswick, the antitrust injury doctrine is designed to ensure that “[t]he injury . . . reflect the

anticompetitive effect either of the violation or of anticompetitive acts made possible by the

violation.” Id. The Supreme Court has further explained the requirement as “ensur[ing] that the

harm claimed by the plaintiff corresponds to the rationale for finding a violation of the antitrust

laws in the first place,” and, more specifically, it “ensures that a plaintiff can recover only if the

loss stems from a competition-reducing aspect or effect of the defendant’s behavior.” Atl.

Richfield Co. v. U.S.A. Petroleum Co., 495 U.S. 328, 342–44 (1990).

The district court, relying on Balaklaw v. Lovell, 14 F.3d 793 (2d Cir. 1994), held that

plaintiff failed to establish an antitrust injury because the exclusive contract between defendants

and DIA was the result of competition between radiology providers. The facts in Balaklaw are

similar to the instant case. In Balaklaw, a physician who was president of a group of

anesthesiologists that had been the de facto provider of anesthesiology services at a hospital in

Cortland, New York, sued claiming an antitrust violation after his group lost in the competition

to be granted an exclusive-provider contract at that hospital. The Court of Appeals for the

Second Circuit held that plaintiff had not suffered an antitrust injury under the circumstances.

The Second Circuit explained:

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 “[I]t is the nature of competition that at some point there are winners and losers, and the
losers are excluded.” Konik v. Champlain Valley Physicians Hosp. Med. Ctr., 733 F.2d
1007, 1015 (2d Cir.), cert. denied, 469 U.S. 884 (1984). Here, Dr. Balaklaw entered the
competition for an exclusive contract, he interviewed for it, and he lost. He was therefore
excluded from further practice at CMH during the term of the contract. Especially in
light of the Supreme Court’s recognition that a hospital has the “unquestioned right to
exercise some control over the identity and the number of doctors to whom it accords
staff privileges,” Jefferson Parish, 466 U.S. at 30, and the frequently expressed judicial
approval of exclusive contracts for medical services, . . . such exclusion is not enough to
constitute an antitrust injury. As we said in Konik, “the Hospital is not required to open
its operating rooms to any and all anesthesiologists who wish to practice there.” 733 F.2d
at 1015. By closing it doors to Dr. Balaklaw in favor of one of his competitors, CMH did
nothing to inflict an injury of the type the antitrust laws were intended to prevent.
Balaklaw, 14 F.3d at 801–02 (internal citations omitted).

A careful examination of the evidence shows that the exclusive contract was truly the

result of a competitive process. Although plaintiff says that the process was not competitive

because Dr. Osborn “duped” the members of SRI into believing that he was submitting a

proposal on behalf of SRI and colluded with members of Mercy to assure that DIA was awarded

the contract, plaintiff admits that there were other bidders for the contract. Plaintiff offers no

evidence to support his allegations, which are based solely on speculation. The facts show that

SRI was the de facto exclusive provider of radiology services to Mercy for a number of years.

Mercy and SRI negotiated, unsuccessfully, to establish an exclusive contractual relationship.

Mercy thereafter decided to solicit proposals for an exclusive contract. RFPs were sent to seven

radiology groups, including SRI. Three groups submitted proposals. MHS appointed a

committee to review the proposals, and the committee recommended DIA. One marketplace

participant replaced another; that does not establish an antitrust violation. The fact that an Ohio

state court jury found that Dr. Osborn breached an agreement with plaintiff by not including his

name in the DIA proposal, of which there is no evidence MHS had knowledge, does not mean

17
that the overall process was anticompetitive.

Plaintiff also says that the process was anticompetitive in that the exclusive contract

resulted in a significant reduction in physician radiology services because physicians, including

plaintiff, lost their privileges after the contract was adopted. However, a loss of staff privileges

at a facility does not ispo facto establish an antitrust injury. See Oksanen v. Page Mem’l. Hosp.,

945 F.2d 696, 708 (4th Cir. 1991) (“If the law were otherwise, many a physician’s workplace

grievance with a hospital would be elevated to the status of an antitrust action.”).

Moreover, it cannot be ignored that this case involves a staffing decision by MHS

regarding the provider of radiology services. There is extensive circuit precedent, including our

own, that has upheld hospital-based exclusive provider agreements as not violative of the

antitrust laws. Although the reasons vary for the decisions, they offer support for the finding that

a hospital’s decision regarding staffing, including privileges, is not anticompetitive. See, e.g.,

Flegel v. Christian Hosp., Ne.-Nw., 4 F.3d 682 (8th Cir. 1993) (osteopaths denied privileges

because they lacked certification from a particular organization); Capital Imaging Assocs., P.C.

v. Mohawk Valley Med. Assocs., Inc., 996 F.2d 537 (2d Cir. 1993) (radiologists challenging

exclusive contract); Lie v. St. Joseph Hosp., 964 F.2d 567 (6th Cir. 1992) (physician’s surgical

privileges were suspended); Tarabishi v. McAlester Reg’l Hosp., 951 F.2d 1558 (10th Cir. 1991)

(physician opened up a treatment center and hospital greatly reduced his privileges); Oksanen,

945 F.2d at 696 (physician suspended, put on probation and then terminated); Bhan v. N.M.E.

Hosp., 929 F.2d 1404 (9th Cir. 1991) (anesthetist was excluded by policy of allowing only

physicians to perform anesthesia services); Todorov v. D.C.H. Healthcare Auth., 921 F.2d 1438

18
(11th Cir. 1991) (physician denied radiology privileges); Morgan, Strand, Wheeler & Biggs v.

Radiology, Ltd., 924 F.2d 1484 (9th Cir. 1991) (radiologists challenging exclusive contract);

Nurse Midwifery Assocs. v. Hibbett, 918 F.2d 605 (6th Cir. 1990) (midwives and obstetrician

allege they were prevented from operating a maternity practice or offering midwifery services at

hospitals); Beard v. Parkview Hosp., 912 F.2d 138 (6th Cir. 1990) (radiologist challenging

exclusive contract); Ezpeleta v. Sisters of Mercy Health Corp., 800 F.2d 119 (7th Cir. 1986)

(anesthesiologist’s privileges terminated); Goss v. Mem. Hosp. Sys., 789 F.2d 353 (5th Cir. 1986)

(physician’s privileges terminated); Konik v. Champlain Valley Physicians Hosp., 733 F.2d 1007

(2d Cir. 1984) (anesthesiologist challenging contract); Dos Santos v. Columbus-Cuneo-Cabrini

Med. Ctr., 684 F.2d 1346 (7th Cir. 1982) (vacating preliminary injunction that was decided in

favor of anesthesiologist who was challenging exclusive contract).

3.

Finally, plaintiff contends that whether the contract restrained trade is a factual dispute

over which there are genuine issues. We disagree. The contract was entered into in 1995 and

nominally effective for only two years. The district court initially declined to dismiss plaintiff’s

antitrust claim on these grounds, noting that plaintiff alleged the evidence may show that the

opportunity to compete in two years was illusory. After having the benefit of discovery,

plaintiff’s allegation as to the contract’s illusory nature simply did not come to pass.

4.

Defendants also argue that the district court may be affirmed on other grounds, including

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the statute of limitations and lack of antitrust standing. Both arguments were presented to and

rejected by the district court. See Nilavar, 142 F. Supp. 2d at 859. Defendants did not cross

appeal from these rulings; we therefore need not address them. Defendants also offer additional

grounds for excluding the opinion of plaintiff’s expert. We decline to address them.

III.

For the reasons stated above, the district court is AFFIRMED.

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