International Healthcare v. Hawaii Coalition for Health

Page 600

332 F.3d 600

INTERNATIONAL HEALTHCARE MANAGEMENT, a Nevada limited liability company; Health Hawaii Network, a Nevada limited liability company, Plaintiffs-Appellants, v. The HAWAII COALITION FOR HEALTH, a Hawaii nonprofit corporation; Hawaii Medical Association, a Hawaii nonprofit corporation; Queens Physician Group, a Hawaii nonprofit corporation; Arleen Jouxson-Meyers, M.D., an individual; Peter Locatelli, M.D., an individual; Leonard Howard, M.D., an individual; John Drouilhet, M.D., an individual; Lockwood Young, M.D., an individual, Defendants-Appellees.

No. 01-17451.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 5, 2003.

Filed June 6, 2003.

John I. Alioto and Lisa Kimmel, Alioto & Alioto, San Francisco, CA, for the plaintiffs-appellants.

M. Laurence Popofsky, Heller Ehrman White & McAuliffe, San Francisco, CA, for the defendants-appellees Hawaii Medical Association and Leonard Howard, M.D.

Rafael G. Del Castillo, Honolulu, HI, for the defendants-appellees Hawaii Coalition for Health, Arleen Jouxson-Meyers, M.D., and Peter Locatelli, M.D.

J. Thomas Rosch, Latham & Watkins, San Francisco, CA, for the defendants-appellees Queen's Physician Group, Lockwood Young, M.D., and John Drouilhet, M.D.

Jack R. Bierig, Sidley Austin Brown & Wood, Chicago, IL, for the amicus.

Appeal from the United States District Court for the District of Hawaii; Helen Gillmor, Presiding District Judge. D.C. No. CV-00-00757-HG/BMK.

Before GOODWIN, RYMER, and T.G. NELSON, Circuit Judges.

OPINION

RYMER, Circuit Judge.

International Healthcare Management (IHM), a company that develops healthcare programs, and Health Hawaii Network (HHN), which was established to provide a network of doctors in Hawaii for a managed care health plan developed by IHM, appeal from summary judgment in favor of the Hawaii Medical Association (HMA), the Hawaii Coalition for Health ("the Coalition"), Queen's Physician Group (QPG), and certain of their officers who were also named as defendants.¹ IHM and HHN alleged a conspiracy to fix prices and to boycott their plan in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1, and Hawaii law. The district court found no evidence to support either theory, and no evidence of QPG's involvement in the alleged conspiracy. It concluded that, in the absence of any agreement or threat to boycott HHN, or attempt to fix prices, the joint efforts of HMA and the Coalition to negotiate the terms of HHN's provider agreement caused no antitrust injury under state or federal law. We agree, and affirm.

I

In 1997, IHM (and others not involved in this litigation) created the St. Francis Preferred Provider Organization managed care health plan ("St. Francis Plan") that it hoped to market to employers in Hawaii. HHN was the provider network for the St. Francis Plan.

The HMA is a not-for-profit professional association of physicians in the State of Hawaii. It is affiliated with the American Medical Association and has over 1600 members of whom 826 are active full pay members. At the time there were approximately 2500 active physicians in Hawaii. Among other things, the HMA reviews and provides information to its members about provider contracts, including managed care health plans operating in the state. The Coalition is a consumer advocacy organization that focuses on health care issues with a membership of physicians and non-physicians. QPG is an independent practice association (IPA) formed to enter into contracts with health plans.

When the Hawaii Medical Services Association (HMSA), which is Hawaii's Blue Cross/Blue Shield Plan, asked physicians to sign a new participating provider agreement (PPA)² in 1997, the Coalition, the HMA, QPG, and two other physicians' groups joined in a "Consortium" to discuss the PPA with HMSA. In HHN's view, this was the beginning of the conspiracy about which it complains. The Consortium asked HMSA to make a number of changes to the PPA (none of which included changes to the fee schedule or to physicians' compensation). The organizations comprising the Consortium communicated with their members about the progress of negotiations, and one letter noted that "[f]or the first time many of our physician organizations have joined forces and are working to seek improvement of HMSA's new [PPA]." HMSA revised its PPA somewhat, and the contract went into effect in 1998.

Against this background, HHN began recruiting physicians for its provider network in February 1998. A solicitation packet was sent to 1,000 doctors with HHN's participating provider agreement for the St. Francis Plan. Dr. Jouxson-Meyers happened to be on the mailing list. In her capacity as president of the Coalition, she wrote to HHN that its PPA contained several provisions which were similar to the ones HMSA had recently modified, and offered to help HHN improve its provider agreement. She also advised Coalition members that the PPA "is not very good" as it contained provisions similar to the initial version of HMSA's PPA.

HHN set up a meeting with Dr. Jouxson-Meyers; with HHN's blessing, she invited representatives from other organizations that had participated in the HMSA discussions to attend. An HMA representative was there, but no one came from QPG. HHN indicated that it would only consider concerns with its PPA that the Coalition put into writing. Dr. Jouxson-Meyers complied on March 21 with a letter that identified eleven specific concerns, including the requirement that physicians fully comply with the PPA's utilization management program or face a threat of reduced reimbursement and the lack of assurance that reimbursement rates would be fair or reasonable.³ HHN forwarded the letter to Dr. Sidney Steinberg, a health care management consultant, who responded to the Coalition on April 20 that Dr. Jouxson-Meyers's letter raised several issues that "need review and either modification or clarification," including credentials evaluation and utilization management. He invited the Coalition to stay in touch as HHN "undertakes a comprehensive review of the provider agreement to assure that the issues you raised are properly addressed...."

Meanwhile, HHN acquired the assets of Pacific Benefit Services, Inc. (PBS). On April 29 HHN advised physicians who were PBS providers that their agreements with PBS were being assigned to HHN. This prompted the Coalition to communicate with its members about the assignment, and the HMA, Hawaii Federation of Physicians and Dentists, and the Coalition to issue an "Alert." The June 15 "Alert" informed members that their organizations had tried without success to enter a dialogue with HHN about "serious problems" with its PPA; that HHN had acquired PBS but may not have notified all PBS physicians that their PPAs had been assigned to HHN; and that they had met with the Insurance Commissioner, who expressed concerns about the number of corporate entities involved in HHN's health plan and the accuracy of the participating provider listings that HHN may be using to recruit members. The "Alert" reported that

"[t]he Insurance Commissioner suggested that it might be wise for physicians to wait until these issues can be clarified and resolved before signing up as a participating provider with HHN. If physicians have concerns about the possibility that their PBS Participating Agreement has been assigned to HHN, they could also call HHN to clarify the situation."

The Insurance Commissioner reviewed and commented upon a draft before the "Alert" was distributed.

On July 10, the HMA sent counsel for the St. Francis Plan a marked-up copy of the HHN provider agreement noting suggested changes. These suggestions were consistent with the modifications that HMSA had previously made to its PPA. Representatives of the HMA and HHN met several times in July 1998. The discussions centered on HHN's credentialing procedures; whether doctors were required to use only HHN's list of hospitals in all situations; the one day notice for inspection of records; the termination of doctors without cause; the indemnification provision; the quality of HHN's utilization management program; whether doctors should be allowed to provide HHN with information regarding their costs so HHN could consider those costs when revising the fee schedule; and the lack of an appeal process for doctors regarding reimbursement. HHN was unwilling to make any changes.

Overall, some 510 physicians signed up for the St. Francis Plan. Seventy physicians, as well as a large IPA and Queens Medical Center, the largest hospital in Hawaii, executed PPAs after the HMA "Alert." Fewer than a dozen withdrew at any time. Nevertheless, HHN abandoned its marketing efforts in Hawaii and filed this action. The district court granted summary judgment on all claims, and this timely appeal followed.⁴

II

The material facts are largely undisputed. "Although antitrust cases are sometimes difficult to resolve on summary judgment because of their factual complexity, summary judgment is still appropriate in certain cases." County of Tuolumne v. Sonora Cmty. Hosp., 236 F.3d 1148, 1154 (9th Cir.2001) (citing Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir. 1991)). Summary judgment is only disfavored in "`complex antitrust litigation where motive and intent are important, proof is largely in the hands of the alleged conspirators, and relevant information is controlled by hostile witnesses.'" See Metronet Servs. Corp. v. U.S. West Communications, 329 F.3d 986, 2003 WL 21181644 at *8 (9th Cir. May 21, 2003) (quoting Toscano v. Prof'l Golfers' Ass'n, 258 F.3d 978, 982 (9th Cir.2001)). This is not such a case.

A

HHN argues that the district court erroneously held that it is lawful for physician associations to negotiate with health plans on behalf of their competing physician members. It faults the court for having found that HHN flunked the Monsanto v. Spray-Rite test⁵ because HHN failed to produce evidence that: (1) the...