January 20, 2020

January 20, 2020

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Surgeon’s Anti-Trust and Third Party Beneficiary Claims Dismissed: McGary v. Williamsport Regional Medical Center

Dr. Susan McGary, a Board-Certified surgeon, practiced cardiothoracic surgery at Williamsport Regional Medical Center (the “Medical Center”) for ten years and, for some time, was also one of the two leaders of the Medical Center’s cardiothoracic surgery program.1 While holding this position, the Medical Center created a credentialing criteria requiring applicants for cardiothoracic surgery privileges to have performed at least 100 heart surgeries and 100 lung surgeries within the previous year (referred to as the “100/100 criteria”).2

Dr. McGary left employment with the Medical Center in 2007, but decided to return in 2011. The Medical Center did not offer her a position because it claimed it did not have enough work to support another cardiothoracic surgeon. As a result, Dr. McGary opened a private practice but still required privileges at the Medical Center in order to perform surgery. At the time Dr. McGary applied for privileges, she did not meet the 100/100 criteria.3 Once Dr. Scott Croll, Chairman of the Medical Center’s Surgery Department, and Dr. John Burks, Director of the Medical Center’s Heart and Vascular Institute, realized Dr. McGary did not meet the 100/100 criteria, they deemed her application incomplete and did not submit it for further review.4

Upon learning her application was not submitted for review, Dr. McGary suggested that the 100/100 criteria was excessively stringent and, at the request of the Medical Center’s Chief Medical Officer, Dr. George Manchester, researched credentialing criteria at other hospitals in the area.5 Based on this research, the Medical Center relaxed its credentialing criteria.6 Dr. McGary, however, believed she was still ineligible for privileges and filed a lawsuit.

The district court dismissed Dr. McGary’s claims against the Medical Center for violations of equal protection and due process under the Constitution, but allowed her claims of anticompetitive conduct, breach of contract, interference with prospective contractual relationships, and conspiracy in restraint of trade to move forward. Ultimately, the district court granted the Medical Center’s motion for summary judgment. The United States Court of Appeals for the Third Circuit affirmed the district court’s decision.

Claims for Anti-Competitive Behavior

Dr. McGary alleged multiple claims of anti-competitive behavior. The first claim of anti-competitive behavior, brought under Section 1 of the Sherman Act, which prohibits conspiracy in restraint of trade, failed because the Third Circuit found the Medical Center’s parent company, Susquehanna Health, was incapable of conspiring with its wholly owned subsidiary in violation of Section 1 of the Sherman Act.7 Dr. McGary’s claim for civil conspiracy in restraint of trade was also rejected on these grounds.8 Additionally, there was no evidence that the individual physician defendants were in competition with one another or would be in competition with Dr. McGary, except for Dr. Osevala.9

Dr. McGary alleged that Dr. Osevala was motivated by his own personal economic interest—specifically, an incentive bonus and the fear of losing his job—because Dr. Osevala recommended to Dr. Manchester that the Medical Center was too small to support two cardiothoracic surgeons.10 The Third Circuit, however, held that in order to prove concerted action between a hospital and its staff, “there must be something … such as a conscious commitment by the medical staff to coerce the hospital into accepting its recommendation”; a recommendation alone would not be sufficient to prove concerted action.11

Section 2 of the Sherman Act prohibits conspiracy, attempt, and actual monopolization of commerce.12 Here, the Third Circuit held that Dr. McGary’s claim failed because she did not explain or produce any evidence supporting an economic motive that the Medical Center had to deny a qualified surgeon practice privileges, as the Third Circuit previously required in Weiss v. York Hospital.13 The appellate court rejected Dr. McGary’s claim of attempted monopolization on the same grounds.14

State Law Claims

Under Pennsylvania law, Dr. McGary alleged that defendants breached her contractual right to have her application reviewed according to the process set forth in the Medical Center’s Medical Staff Bylaws on the basis of a third-party beneficiary theory.15 The appellate court denied this claim because Dr. McGary failed to cite to any Pennsylvania court decision recognizing an applicant for staff privileges as a third-party beneficiary of the Medical Staff Bylaws of a private hospital.16 Thus, the Third Circuit concluded that because Dr. McGary did not meet the standard for surgical privileges, it would not infer she had a right to protection as a third-party beneficiary of the Bylaws.17 Finally, the court denied Dr. McGary’s claim of intentional interference with prospective contractual relations because there was no evidence that defendants adopted or applied the credentialing criteria to prevent Dr. McGary from practicing at the Medical Center. The Third Circuit recognized that the criteria was adopted prior to Dr. McGary applying for privileges and the purpose of adopting the criteria was to ensure quality patient care.


1 McGary v. Williamsport Regional Medical Center, 755 Fed.Appx. 723, 725-26 (Third Cir. 2019).

2 Id. at 726.

3 Id.

4 Id.

5 Id.

6 Id.

7 Id. at 728-29.

8 Id. at 732-33.

9 Id. at 728.

10 Id. at 727-28.

11 Id. at 728.

12 Id.

13 Id. at 729.

14 Id. at 730.

15 Id. at 730-31.

16 Id.

17 Id. at 731.

© Polsinelli PC, Polsinelli LLP in California

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About this Author

Erin Muellenberg Medical Staff Law Attorney
Principal

Erin Muellenberg brings a strong skillset to her exclusive practice of medical staff law. As a former Director of Medical Staff Services in a large community-based hospital, she is intimately familiar with the daily operations of the Medical Staff Organization and its governance process. Erin’s practice focuses on advising hospitals, health systems, critical access hospitals, ambulatory surgery centers, and medical groups on the regulatory, compliance, and practical requirements for interfacing the medical staff and allied health professional staff with hospital operations.

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Meredith E. Eng Associate Chicago Health Care Services

Meredith is dedicated to providing effective, efficient, and innovative legal solutions to health care clients. Meredith’s education in health management and policy and experience as a hospital administrator in operations and strategy allow her to draw on her hands-on knowledge of the American health care system. As an Administrative Fellow at a Veterans Affairs hospital, she managed the operations of a variety of medical and surgical service lines, oversaw the implementation of an extensive action plan for quality improvement, and led multiple fact findings. Additionally, as a Strategy Manager for Loyola University Medical Center, she developed business plans for new services and programs and provided market share, competitor, and industry trend monitoring and analysis. She oversaw the creation of monthly clinical program dashboards and the completion of action plans and also co-wrote a proposal to a national, not-for-profit health system to make Loyola University Medical Center the preferred provider of organ transplants and VADs for the national, not-for-profit health system employees. 

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