Issue: Whether a hospital peer committee with the power to grant hospital privileges was absolutely immune from antitrust liability under the state action doctrine

Index Topics: Antitrust; Peer Review

Facts: Dr. Patrick was a surgeon in a small town in Oregon. After practicing with a clinic, he refused its offer of partnership and went into private practice, competing with some of the clinic doctors. The clinic doctors reported an instance of alleged substandard practice to the state Board of Medical Examiners and used their positions on the Hospital Peer Review Committee to attempt to withdraw Dr. Patrick's hospital privileges. Ultimately, Dr. Patrick resigned rather than face unfair proceedings. Dr. Patrick brought an antitrust action against the clinic doctors and a jury awarded him almost two million dollars in damages. The U.S. Court of Appeals for the Ninth Circuit reversed, holding that the peer review actions were protected by absolute immunity because of the state action exception to the antitrust law. The US Supreme Court granted review.

APA's Position: APA submitted an amicus brief arguing that: (1) state action immunity is inapplicable in the circumstances of this case because the challenged peer review decision denying petitioner hospital privileges was neither in furtherance of a clearly articulated state policy nor closely supervised by the state, and its imposition would needlessly thwart the free market goals of the Sherman Act; (2) resolution of the antitrust issues in this case should be informed by an understanding of the potential pro-health and pro-competitive benefits of peer review, but should also acknowledge the particular anti-competitive risks of unscrutinized interprofessional peer review; (3) the nature of hospital peer review requires care in defining the scope of state action immunity to ensure that pro-health and pro-competitive activity is protected while conduct intended solely to limit competition is not; and (4) these principles are also relevant to deciding broader questions of the appropriate antitrust analysis for hospital peer review practices.

Results: The US Supreme Court reversed. The Court adhered closely to the APA's argument that the active supervision prong was not satisfied. That prong requires that state officials have and exercise power to review particular anti-competitive acts of private parties and disapprove of those that fail to accord with state policy.