Opinion · Court of Appeals for the Fifth Circuit
Shah v. VHS San Antonio Partners
985 F.3d 450
- Type
- Opinion
- Court
- Court of Appeals for the Fifth Circuit
- Jurisdiction
- Federal
- Date
- 2021-01-13
- Topic
- antitrust
finding that plaintiff failed to define the relevant market where the proposed product market was “pediatric anesthesiologists,” when plaintiff “did not attempt to identify” other hospitals or clinics where consumers could practicably go for pediatric anesthesia services | to overcome summary judgment, a nonmovant “must identify specific evidence in the record and articulate the precise manner in which that evidence supports [her] claim” (alteration adopted, quotation marks and quoting reference omitted | the product market is a required component of the relevant market
Citator
- Cited by
- 55 opinions
Case: 20-50394 Document: 00515705908 Page: 1 Date Filed: 01/13/2021
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
January 13, 2021
No. 20-50394
Lyle W. Cayce
Clerk
Jaydeep Shah, M.D. M.A.,
Plaintiff—Appellant,
versus
VHS San Antonio Partners, L.L.C., doing business as
Baptist Health System, doing business as North
Central Baptist Hospital; Graham Reeve; Dana Kellis,
M.D.; William Waechter; Tenet Healthcare
Corporation; Tenet Healthcare, Limited,
Defendants—Appellees.
Appeal from the United States District Court
for the Western District of Texas
USDC No. 5:18-CV-751
Before Owen, Chief Judge, and King and Engelhardt, Circuit Judges.
Priscilla R. Owen, Chief Judge:
Pediatric anesthesiologist Dr. Jaydeep Shah alleges that Baptist
Health System (BHS), its officers, and its parent company (collectively, the
BHS parties) (1) committed violations of §§ 1 and 2 of the Sherman Antitrust
Act and (2) tortiously interfered with a business relationship by entering into
an agreement with STAR Anesthesia, P.A. (STAR) through which STAR
became the exclusive provider of anesthesia services to several of BHS’s
Case: 20-50394 Document: 00515705908 Page: 2 Date Filed: 01/13/2021
No. 20-50394
hospitals in the San Antonio area. Because Shah’s definition of the relevant
market is insufficient as a matter of law, we affirm the district court’s grant
of summary judgment in favor of the BHS parties.
I
Jaydeep Shah, M.D. M.A. is a board-certified anesthesiologist who
specializes in pediatric anesthesiology in San Antonio, Texas. In 2006, Shah
joined STAR Anesthesia, P.A., an independent group of anesthesiologists, as
the Director of Pediatric Anesthesiology. Soon after, Shah became a full
partner and shareholder of STAR. During Shah’s tenure with STAR, STAR
entered into a series of agreements (collectively, the BHS-STAR Agreement)
to become the exclusive provider of anesthesia services at several acute-care
hospitals in the San Antonio area operated by VHS San Antonio Partners,
L.L.C., doing business as Baptist Health System, including North Central
Baptist Hospital (NCB Hospital). For pediatric anesthesia specifically, BHS
agreed to provide STAR a pediatric income guarantee, promising STAR at
least $500,000 in collections for pediatric anesthesia services provided by
STAR at NCB Hospital.
In 2012, BHS and STAR incorporated their earlier agreements into an
overall agreement for anesthesiology coverage between them. With that
incorporation, STAR became the exclusive provider of anesthesia services at
four of BHS’s hospitals. Shah was not a party to the 2012 incorporation, nor
was he named in the pediatric income guarantee income provision. But he
continued to practice as a full-time pediatric anesthesiologist with STAR,
becoming the primary beneficiary of STAR’s guaranteed collections.
In 2016, STAR and BHS negotiated to amend the 2012 agreement and
eliminate the $500,000 pediatric income guarantee. The exclusivity
provision remained unchanged. The next month, as a result of the fallout
between Shah and STAR from the elimination of the income guarantee,
2
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No. 20-50394
STAR terminated its relationship with Shah for cause after notice and a
hearing. As a result, Shah could no longer provide pediatric anesthesia
services at NCB Hospital or any other BHS facility included in the BHS-
STAR Agreement’s exclusivity provision.
A few months later, Shah sent a letter to the president of NCB
Hospital requesting authorization to provide pediatric anesthesia care at
NCB Hospital. In response, the president and CEO of BHS wrote back that
Shah’s reappointment to the Medical Staff of BHS and his privileges were
approved, and that BHS “welcome[d] [Shah’s] continued participation in
providing this care.” In actuality, the exclusivity provision of the BHS-
STAR Agreement precluded Shah—no longer affiliated with STAR—from
providing pediatric anesthesia services at six BHS facilities (including NCB
Hospital). Shah was required to receive an exception to the Agreement from
STAR and BHS, as they sometimes granted. An exception was not granted.
After suing STAR in Texas state court to no avail, 1 Shah filed the
present suit against BHS, three of its officers, and its parent company for
(1) violations of §§ 1 and 2 of the Sherman Act and (2) tortious interference
with a business relationship. Shah claimed that the BHS parties excluded
him and non-STAR anesthesiologists from practicing in Bexar County and
the surrounding areas, causing harm to surgeons and patients. The parties
conducted tiered discovery, with Tier One involving the issues of the
“relevant market” and “damages/antitrust injury.” The BHS parties then
moved for summary judgment. The district court granted the motion on the
1
See Shah v. Star Anesthesia, P.A., 580 S.W.3d 260
, 268 (Tex. App.—San Antonio 2019, no pet.) (affirming trial court); Star Anesthesia, P.A. v. Shah, No. 2018CI04393,2018 WL 3520044
, at *1 (244th Dist. Ct., Bexar County, Tex. June 12, 2018).
3
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No. 20-50394
merits—choosing not to decide the issue of antitrust standing. Shah
appealed to this court.
II
“We review the district court’s grant of summary judgment de
novo.” 2 Summary judgment is proper “if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment
as a matter of law.” 3 To defeat summary judgment, Shah must “identify
specific evidence in the record” and “articulate the ‘precise manner’ in
which that evidence support[s] [his] claim.” 4 In ruling, we must view all
facts and inferences in the light most favorable to Shah and resolve all factual
disputes in his favor. 5
Assuming without deciding that Shah provided enough evidence to
present a genuine dispute of material fact as to antitrust standing, he must do
the same for the individual Sherman Act claims. As a prerequisite to both
Sherman Act claims, Shah must define the relevant market. 6 “Without a
2
S&M Brands, Inc. v. Caldwell, 614 F.3d 172, 175
(5th Cir. 2010) (emphasis omitted) (citing Breaux v. Halliburton Energy Servs.,562 F.3d 358, 364
(5th Cir. 2009)).
3
Fed. R. Civ. P. 56(a).
4
Willis v. Cleco Corp., 749 F.3d 314, 317
(5th Cir. 2014) (first alteration in original) (quoting Forsyth v. Barr,19 F.3d 1527, 1537
(5th Cir. 1994)).
5
Boudreaux v. Swift Transp. Co., Inc., 402 F.3d 536, 540
(5th Cir. 2005) (first quoting Armstrong v. Am. Home Shield Corp.,333 F.3d 566, 568
(5th Cir. 2003); and then quoting Little v. Liquid Air Corp.,37 F.3d 1069, 1075
(5th Cir. 1994)).
6
See Golden Bridge Tech., Inc. v. Motorola, Inc., 547 F.3d 266, 271
(5th Cir. 2008) (“To establish a § 1 violation, a plaintiff must prove that: (1) the defendants engaged in a conspiracy; (2) that restrained trade; (3) in the relevant market.” (citing Apani Sw., Inc. v. Coca-Cola Enters., Inc.,300 F.3d 620, 627
(5th Cir. 2002))); Surgical Care Ctr. of Hammond, L.C. v. Hosp. Serv. Dist. No. 1 of Tangipahoa Par.,309 F.3d 836, 839-40
(5th Cir. 2002) (“To establish Section 2 violations . . . a plaintiff must define the relevant market.” (quoting Dr.’s Hosp. of Jefferson, Inc. v. Se. Med. All., Inc.,123 F.3d 301, 311
(5th Cir. 1997))).
4
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No. 20-50394
definition of the market there is no way to measure the defendant’s ability to
lessen or destroy competition.” 7 The relevant market is “the area of
effective competition” 8 “in which the seller operates, and to which the
purchaser can practicably turn for supplies.” 9 The relevant market has two
components: a product market and a geographic market. 10
“Whether a relevant market has been identified is usually a question
of fact; however, in some circumstances, the issue may be determined as a
matter of law.” 11 If Shah fails to define his “proposed relevant market with
reference to the rule of reasonable interchangeability and cross-elasticity of
demand, or alleges a proposed relevant market that clearly does not
encompass all interchangeable substitute products even when all factual
inferences are granted in [his] favor, the relevant market is legally
insufficient.” 12 That is, in order for Shah’s definition to be legally sufficient,
it “must include all ‘commodities reasonably interchangeable by consumers
for the same purposes.’” 13
Shah defines the product market as “pediatric anesthesiologists” and
the geographic market as “Bexar County and the seven contiguous
counties.” He emphasizes that his “product market” definition is not
7
Ohio v. Am. Express Co., 138 S. Ct. 2274, 2285
(2018) (alterations omitted) (quoting Walker Process Equip., Inc. v. Food Mach. & Chem. Corp.,382 U.S. 172, 177
(1965)).
8
Id.
9
Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320, 327
(1961).
10
Wampler v. Sw. Bell Tel. Co., 597 F.3d 741, 744
(5th Cir. 2010).
11
Apani, 300 F.3d at 628
(citing Seidenstein v. Nat’l Med. Enters., Inc.,769 F.2d 1100
, 1106 (5th Cir. 1985)).
12
Id.
13
PSKS, Inc. v. Leegin Creative Leather Prods., Inc., 615 F.3d 412, 417
(5th Cir. 2010) (quoting United States v. E.I. du Pont de Nemours & Co.,351 U.S. 377, 395
(1956)).
5
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No. 20-50394
hospitals, as the district court may have understood, but the pediatric
anesthesiologists themselves. The BHS parties contend that “in reality,”
Shah’s product market definition is “far narrower” because it “includes only
facilities that provide pediatric anesthesia services where [Shah] cannot
practice, and excludes other hospitals and non-hospital environments where
pediatric anesthesia services are rendered—including some where [Shah] has
himself practiced.” The BHS parties argue that the product market as
defined by Shah does not encompass all interchangeable substitute products
and is insufficient as a matter of law.
The district court, relying on our decision in Surgical Care Center of
Hammond, 14 held that “‘[a]bsent a showing of where people could practically
go’ for pediatric anesthesia services,” Shah’s definition of the relevant
market “failed to meet his burden of presenting sufficient evidence.” 15 In
Hammond, a hospital sued another hospital under §§ 1 and 2 of the Sherman
Act, alleging that the defendant-hospital was attempting to monopolize the
outpatient surgery product market by abusing its market power over the
inpatient care product market, thus “tying” the two products. 16 This court
rejected the plaintiff’s definition of the relevant market because its expert
did not attempt to identify the hospitals or clinics that may be
deemed competitors of [the defendant]. [The expert] relied
solely on what he defined as [the defendant’s] service area to
14
Surgical Care Ctr. of Hammond, L.C. v. Hosp. Serv. Dist. No. 1 of Tangipahoa Par.,
309 F.3d 836
(5th Cir. 2002).
15
Shah v. VHS San Antonio Partners LLC, No. SA-18-CV-00751-XR, 2020 WL 1854969
, at *6 (W.D. Tex. Apr. 9, 2020) (quoting id. at 840); see also Shah,2020 WL 1854969
, at *5 n.8 (noting that Shah’s varying use of the terms “‘pediatric anesthesia
services’ (such as ‘pediatric anesthesiology,’ ‘pediatric anesthesia,’ and ‘pediatric
anesthesiology services’)” are “differences without distinction” for purposes of the
relevant market definition).
16
Hammond, 309 F.3d at 838
.
6
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compose the geographic market. Absent a showing of where
people could practicably go for inpatient services, [the plaintiff]
failed to meet its burden of presenting sufficient evidence to
define the relevant geographic market. 17
Shah, a pediatric anesthesiologist, sued BHS, a hospital system,
alleging Sherman Act violations related to the pediatric anesthesiologist
product market. Shah did not attempt to identify, either at summary
judgment or in his opening brief, hospitals or clinics “where people could
practicably go” for pediatric anesthesia services within Bexar County and the
seven contiguous counties. He did not even specify individual pediatric
anesthesiologists from whom patients could practicably obtain health care
services. Rather, he provided tallies, by county, of pediatric anesthesiologists
in Texas that fit the anesthesiology requirements of the BHS-STAR
Agreement.
Moreover, as the BHS parties argue, Shah’s proposed relevant market
does not encompass all interchangeable substitute products because it does
not include the two non-BHS facilities that the BHS parties contend serve as
viable alternatives to BHS facilities. Shah has not provided evidence or any
persuasive argument to raise a genuine dispute as to either of those facilities.
In fact, in his reply brief, Shah appears to identify those two hospitals as
“included in the relevant geographic market.” But claims raised for the first
time in a reply brief are forfeited. 18
Drawing all factual inferences in Shah’s favor, his relevant market
definition is insufficient as a matter of law.
17
Id. at 840
.
18
United States v. Ponce, 896 F.3d 726, 728
(5th Cir. 2018); Ashford v. Aeroframe Servs., L.L.C.,907 F.3d 385, 398
(5th Cir. 2018) (Jones, J., dissenting).
7
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III
To bolster his § 1 Sherman Act claim, Shah argues that the exclusive
BHS-STAR Agreement is a per se illegal tying arrangement. A tying
arrangement is “an agreement by a party to sell one product but only on the
condition that the buyer also purchases a different (or tied) product, or at
least agrees that he will not purchase that product from any other supplier.” 19
The BHS parties, citing Keelan v. Majesco Software, Inc., 20 argue that Shah
waived his tying arguments because he did not raise those arguments in his
pleadings or summary judgment response. Assuming without deciding that
Shah did not forfeit the argument, it nevertheless fails.
In Jefferson Parish, 21 the Supreme Court held that an exclusive
agreement between a hospital and a group of anesthesiologists “does not
provide a basis for applying the per se rule against tying.” 22 “Tying
arrangements need only be condemned if they restrain competition on the
merits by forcing purchases that would not otherwise be made.” 23 The Court
explained that “every patient undergoing a surgical operation needs the
services of an anesthesiologist”; the record contained “no evidence that the
19
Schlotzsky’s, Ltd. v. Sterling Purchasing & Nat’l Distrib. Co., Inc., 520 F.3d 393, 405
(5th Cir. 2008) (quoting Eastman Kodak Co. v. Image Tech. Servs., Inc.,504 U.S. 451, 461
(1992)).
20
407 F.3d 332, 339-40
(5th Cir. 2005) (“If a party wishes to preserve an argument for appeal, the party must press and not merely intimate the argument during the proceedings before the district court. An argument must be raised to such a degree that the district court has an opportunity to rule on it.” (citation and internal quotation marks omitted) (quoting N.Y. Life Ins. Co. v. Brown,84 F.3d 137
, 141 n.4 (5th Cir. 1996))).
21
Jefferson Par. Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2
(1984), abrogated on other grounds by Ill. Tool Works Inc. v. Indep. Ink, Inc.,547 U.S. 28
(2006).
22
Id. at 4-5, 29.
23
Id. at 27.
8
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No. 20-50394
hospital ‘forced’ any such services on unwilling patients.” 24 The same is
true here. Shah’s tying arrangement fails.
IV
In addition to the Sherman Act claims, Shah asserted a claim for
tortious interference, alleging that the BHS parties tortiously interfered with
his business relationships with STAR, pediatric surgeons, and patients, and
ultimately caused his termination from STAR. A required element of a
tortious interference claim under Texas law is an independently unlawful
action. 25 There is no dispute that the only alleged unlawful actions upon
which Shah’s tortious interference claim is premised are those underlying his
Sherman Act claims. Accordingly, as Shah acknowledges, because the
Sherman Act claims fail, “so too does the tortious interference claim.”
* * *
For the foregoing reasons, the judgment of the district court is
AFFIRMED.
24
Id. at 28 (emphasis added); see also id. at 43 (O’Connor, J., concurring)
(“[T]here is no sound economic reason for treating surgery and anesthesia as separate
services. Patients are interested in purchasing anesthesia only in conjunction with hospital
services, so the Hospital can acquire no additional market power by selling the two services
together.”).
25
D’Onofrio v. Vacation Publ’ns, Inc., 888 F.3d 197, 214
(5th Cir. 2018) (quoting Am. Med. Int’l, Inc. v. Giurintano,821 S.W.2d 331, 335
(Tex. App.—Houston [14th Dist.]
1991, no writ)).
9