Summit Health, Ltd. v. Pinhas, 500 U.S. 322 (1990)

Summit Health, Ltd. v. Pinhas

No. 89-1679

Argued Nov. 26, 1990
Decided May 28, 1991
500 U.S. 322

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Syllabus

Respondent Pinhas, an ophthalmologist on the staff of petitioner Midway Hospital Medical Center, filed a suit in the District Court, asserting a violation, inter alia, of § 1 of the Sherman Act by Midway and other petitioners, including several doctors. The amended complaint alleged, among other things, that petitioners conspired to exclude Pinhas from the Los Angeles ophthalmological services market when he refused to follow an unnecessarily costly surgical procedure used at Midway; that petitioners initiated peer review proceedings against him which did not conform to congressional requirements and which resulted in the termination of his Midway staff privileges; that, at the time he filed suit, petitioners were preparing to distribute an adverse report about him based on the peer review proceedings; that the provision of ophthalmological services affects interstate commerce because both physicians and hospitals serve nonresident patients and receive reimbursement from Medicare; and that reports from peer review proceedings are routinely distributed across state lines, and affect doctors’ employment opportunities throughout the Nation. The District Court dismissed the amended complaint, but the Court of Appeals reversed, rejecting petitioners’ argument that the Act’s jurisdictional requirements were not met because there was no allegation that interstate commerce would be affected by Pinhas’ removal from Midway’s staff. Rather, the court found that Midway’s peer review proceedings obviously affected the hospital’s interstate commerce because they affected its entire staff, and that Pinhas need not make a particularized showing of the effect on interstate commerce caused by the alleged conspiracy.

Held: Pinhas’ allegations satisfy the Act’s jurisdictional requirements. To be successful, Pinhas need not allege an actual effect on interstate commerce. Because the essence of any § 1 violation is the illegal agreement itself, the proper analysis focuses upon the potential harm that would ensue if the conspiracy were successful, not upon actual consequences. And if the conspiracy alleged in the complaint is successful, as a matter of practical economics, there will be a reduction in the provision of ophthalmological services in the Los Angeles market. Thus, petitioners erroneously contend that a boycott of a single surgeon, unlike a conspiracy to destroy a hospital department or a hospital, has no effect on interstate commerce because there remains an adequate supply of others to perform services for his patients. This case involves an alleged restraint on the practice of ophthalmological services accomplished by an alleged misuse of a congressionally regulated peer review process, which has been characterized as the gateway controlling access to the market for Pinhas’ services. When the competitive significance of respondent’s exclusion from the market is measured not by a particularized evaluation of his practice, but by a general evaluation of the restraint’s impact on other participants and potential participants in that market, the restraint is covered by the Act. Pp. 328-333.

894 F.2d 1024 (CA 9 1989), affirmed.

STEVENS, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and WHITE, MARSHALL, and BLACKMUN, JJ., joined. SCALIA, J., filed a dissenting opinion, in which O’CONNOR, KENNEDY, and SOUTER, JJ., joined, post, p. 333.