Four Corners Nephrology Assocs. v. Mercy Med. Ctr. of Durango (Summary)

EXCLUSIVE CONTRACTS

Four Corners Nephrology Assocs. v. Mercy Med. Ctr. of Durango, No. 08-1231 (10th Cir. Sept. 29, 2009)

The Tenth Circuit affirmed a lower court judgment holding that a nephrologist’s monopolization and attempted monopolization claims against a hospital stemming out of the hospital’s decision to enter into an exclusive contract with a different nephrology provider were not sufficient to establish antitrust claims. In an effort to provide local residents with greater access to kidney dialysis, a hospital and an Indian tribe attempted to entice a nephrologist to move from the hospital’s consulting staff to the active staff and to provide inpatient and outpatient nephrology services at the hospital on a regular basis. After the nephrologist declined to do so, the hospital recruited and employed another nephrologist, and made the new nephrologist the exclusive provider of nephrology services at the hospital, barring the plaintiff nephrologist from then becoming a member of the active staff. Because the new practice was likely to be unprofitable for the foreseeable future, the hospital and the Indian tribe underwrote up to $2.5 million in expected losses involved in establishing the new practice. The court ruled that because the hospital made a substantial investment in its own nephrology practice, it was entitled to recoup its investment without sharing its facilities with a competitor, especially when doing so would actually help consumers, as evidenced by the fact that the community went from having zero nephrologists readily available in the immediate area to having two – the recruited nephrologist and his partner. To force the hospital to deal with the nephrologist who declined the hospital’s invitation to accept active staff membership, the court added, "might deter future investments of the sort the hospital and the tribe made and would undermine investment, innovation, and consumer choice."