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Third Circuit Prevents Physician From Bringing Antitrust Suit Against Hospital That Terminated His Medical Staff Privileges

On Aug. 20, 2015, the United States Court of Appeals for the Third Circuit held that a physician who loses medical staff privileges at a hospital cannot bring an antitrust claim against the hospital if the physician is still able to provide the same surgical services to patients in the same geographical area at another hospital.

Victor Novak, M.D., the plaintiff in Novak v. Somerset Hospital et al., was a general surgeon who formerly held medical staff privileges to perform gastrointestinal surgery (GI surgery services) at two hospitals in Pennsylvania: Conemaugh Hospital, a larger tertiary care center, and Somerset Hospital, a smaller community hospital approximately thirty miles away.

After “perform[ing] two surgeries without proper authority,” Somerset Hospital terminated Dr. Novak’s medical staff privileges.

Dr. Novak alleged that the actual reason Somerset Hospital terminated his medical staff privileges was a conspiracy by its board members to prevent Somerset Hospital’s patients from being provided GI surgery services at the Conemaugh Hospital, in violation of federal antitrust laws.

In order for Dr. Novak to bring the case, federal antitrust laws require he have antitrust standing, or be able to show that he is a competitor in the relevant product and geographic markets in which competition was adversely impacted. Here, Dr. Novak argued that the relevant product market was GI surgery services offered specifically at Somerset Hospital and that in the relevant geographical market was the area proximate to the Somerset Hospital. Therefore, Somerset Hospital shut him out of these markets, harming competition for GI surgery services in the area proximate to the Somerset Hospital.

The court rejected Dr. Novak’s definitions of both markets, finding both markets to be broader and that, therefore, competition for GI surgery services in the geographical area was not adversely restricted.

With respect to product markets, the court held that the GI surgery services offered at the Somerset Hospital did not constitute their own product market, because Dr. Novak himself was admitted at both Somerset Hospital and Conemaugh Hospital to provide the same GI surgery services at both hospitals. The fact that Conemaugh Hospital generally provided more comprehensive care was not relevant.

With respect to geographical markets, the court emphasized that approximately one third of the Somerset Hospital’s patients regularly travelled outside of the proximate area to seek medical care. Additionally, the fact that Dr. Novak was arguing that Somerset Hospital terminated his privileges specifically to stop the flow of patients to Conemaugh Hospital suggests that the two hospitals are in the same geographical market.

Accordingly, “there is no evidence that Novak was shut out of the relevant market or that patient choice was restrained so as to demonstrate an actionable antitrust injury.” After losing his privileges at Somerset Hospital, he was still able to provide the same GI surgery services to patients in the same geographical area.



About this Author

Serj Mooradian, Barnes Thornburg, healthcare attorney, corporate law

Serj Mooradian is an associate in the Chicago office of Barnes & Thornburg LLP and a member of the Healthcare Department. He concentrates his practice on counseling healthcare clients on a range of federal and state regulatory and compliance issues, professional licensure matters, agreements, and transactional and corporate matters.

Prior to joining Barnes & Thornburg as a law clerk, Mr. Mooradian honed his legal research skills as a research specialist with the Institute for Health Research and Policy at the University of Illinois at...