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From Antitrust Law Daily, October 12, 2018

Terminated doctor’s conspiracy claims against hospital fail

By Nicole D. Prysby, J.D.

A terminated physician failed to adequately allege Sherman Act claims against a hospital because her complaint did not contain facts supporting her assertion that the hospital and practitioners engaged in an agreement to restrain competition, and it actually contained allegations that contradicted her claim. The physician alleged that she was terminated after a hospital and its committees and department heads conspired to restrict her privileges and eliminate her as a competitor. She alleged that she could not feasibly compete without the ability to see patients at that hospital. But her complaint contained allegations that contradicted her claim—for example, she alleged that the Chief Clinical Officer acted unilaterally when he fired her and bypassed the committees in doing so. If he acted unilaterally, then her termination was not the result of a conspiracy. She also failed to define relevant markets. The federal district court in Delaware granted dismissal with prejudice (Talley v. Christiana Care Health System, October 11, 2018, Burke, C.).

Background. Lynn E. Talley, an ob-gyn physician, was a member of the staff of Christiana Care hospital from 1982 until she was terminated in 2016. During her time at Christiana Care, Talley served on a committee of physicians and administrators that reviewed specific cases of concern and established and evaluated the safety processes and protocols. She raised multiple concerns regarding the safety of patients due to certain policy and procedures of Christiana Care Hospital. She was written up and placed on a Focused Professional Practice Evaluation (FPPE), which allegedly required Talley’s professional judgment to be second guessed by attendees with less experience and knowledge than Talley after she reported these incidents of safety concerns. Christiana Care allegedly began to increase its harassment and retaliation efforts by forcing residents to "spy" on Talley and encouraging them to make reports/complaints against her. According to the plaintiffs, after continued harassment and a suspension, Talley was terminated.

Talley alleged that her termination and Christiana Care’s actions were motivated by anticompetitive intent. The hospital and other defendants (the Chair of Obstetrics and Gynecology and the Chief Clinical Officer of the hospital) allegedly acted in concert to restrict Talley’s clinical privileges without providing due process in order to limit her privileges and curtailing her ability to practice medicine in the Delaware market, thereby effectively eliminating her as a competitor. Talley allegedly could not feasibly compete without the ability to see patients at Christiana Care. She filed a Sherman Act Section 1 claim, alleging that the defendants’ conduct was a per se violation because it involves a horizontal agreement among competitors to allocate markets and exclude competitors from relevant service markets. The defendants moved to dismiss the claim.

Sherman Act Section 1 claim fails. The court found that Talley failed to sufficiently allege an agreement in restraint of trade and failed to identify sufficient product and geographic markets. Her complaint not only failed to contain any facts supporting her assertion that hospital committees and practitioners engaged in an agreement to restrain competition, it contained allegations that contradicted her claim. For example, she alleged that the Chief Clinical Officer acted unilaterally when he fired her and bypassed the committees in doing so. If he acted unilaterally, then her termination was not the result of a conspiracy.

Talley’s alleged relevant product market was the field of obstetrics and gynecology at Christiana Care. But she failed to define her proposed relevant market with reference to the rule of reasonable interchangeability and cross-elasticity of demand. Other than stating that Christiana Care is the most advanced maternal hospital in the state, she pleaded no facts to explain why other providers of ob-gyn services are not reasonably interchangeable with those at Christiana Care. At oral argument, her counsel asserted that Talley only had privileges at Christiana Care, which made it the relevant market and that her higher risk patients would need the services at Christiana Care because it has a neonatal ICU and other local hospitals do not. Those arguments both failed because the relevant market is defined by whether there are other providers of ob-gyn services that the relevant consumers could go to, not whether Talley had privileges elsewhere, and because she failed to allege that the relevant market was limited to high risk patients.

She also claimed that the relevant geographic market is the state of Delaware, but failed allege why patients would be limited to seeking services in Delaware only and not at hospitals in neighboring states.

The case is No. 1:17-cv-00926-CJB.

Attorneys: Michele D. Allen (Law Offices of Michele D. Allen, LLC) for Lynn E. Talley. Joanna J. Cline (Pepper Hamilton LLP) for Christiana Care Health System.

Companies: Christiana Care Health System

MainStory: TopStory Antitrust DelawareNews

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