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Summit Health v. Pinhas - 500 U.S. 322, 111 S. Ct. 1842 (1991)

Rule:

For purposes of the Sherman Act, 15 U.S.C.S. § 1, et seq., the competitive significance of a complainant's exclusion from a market must be measured, not just by a particularized evaluation of his own practice, but rather, by a general evaluation of the impact of the restraint on other participants and potential participants in the market from which he has been excluded.

Facts:

In 1987, plaintiff Dr. Simon J. Pinhas, an ophthalmologist and a member of the staff of defendant Midway Hospital Medical Center ("Hospital"), filed a complaint in a federal district court, alleging that the Hospital, together with other defendants, namely the Hospital's corporate owner and several doctors on the Hospital's medical staff, violated § 1 of the Sherman Act, 15 U.S.C.S. § 1, et seq., which prohibited conspiracies in restraint of interstate commerce. Specifically, Phinas alleged that defendants conspired to exclude the Phinas, who was a licensed surgeon, from the market for ophthalmological services in Los Angeles because he refused to follow an unnecessarily costly procedure that was required with respect to eye surgery performed at the Hospital. The complaint alleged that: (1) his medical staff privileges had been summarily suspended, and subsequently terminated, as a result of peer-review proceedings that were conducted in an unfair manner by biased decisionmakers, and; (2) when Pinhas' action was commenced, preparations were being made for distribution—to all hospitals of which he was a member or to which he might apply—of an adverse report that would preclude him from continued competition in California, if not the United States, thus effectuating a boycott of his services. On defendants' motion, the district court dismissed the complaint without leave to amend. On appeal, the court of appeals reinstated the Sherman Act claim. The court of appeals rejected the argument that the Act's jurisdictional requirements had not been satisfied because there was no allegation that interstate commerce would be affected by Pinhas' removal from the Hospital's medical staff, and held that as a matter of practical economics, the Hospital's peer-review process affected interstate commerce, because the peer-review proceedings affected the entire Hospital staff and thus affected the Hospital's interstate commerce. Defendants were granted a writ of certiorari.

Issue:

Did Pinhas' complaint satisfy the jurisdictional requirements of the Sherman Act?

Answer:

Yes.

Conclusion:

The Supreme Court of the United States affirmed the decision of the court of appeals that Pinhas' claim had a sufficient nexus with interstate commerce to support federal jurisdiction under the Sherman Act. Liability under the Sherman Act could be established by proof of either an unlawful purpose or an anticompetitive effect. The Health Care Quality Improvement Act granted immunity from antitrust and other action of a peer review process, but only if that process was conducted in accordance with statutory guidelines. There was no protection under the statute for actions that were taken for anticompetitive purposes. Therefore, where defendants' were alleged to be for the sole purpose of excluding Pinhas from performing his ophthalmologic services within a geographic area, immunity did not apply, and federal jurisdiction under the Sherman Act was applicable.

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