Wesley Health System, LLC v. Forrest County Board of Supervisors, No. 2:12-CV-59-KS-MTP, 2012 WL 4799506 (S.D. Miss. Oct.

9, 2012) In Wesley Health System, LLC v. Forrest County Board of Supervisors, a district court in the Southern District of Mississippi held that the state-action doctrine does not protect Forrest General Hospital (which is a subdivision of Forrest County, Mississippi) from Sherman Act claims based on an alleged conspiracy between Forrest General Hospital, an ambulance service, and others. The plaintiff, Wesley Health System, operates a hospital that competes with Forrest General. Wesley alleged that Forrest General and others conspired to divert emergency-medical patients away from Wesley. As the court put it, Wesley alleged that the defendants, among other things, ignored patients desire to receive medical services at Wesley, intentionally falsified medical records to justify transporting patients to Forrest General, . . . [and] ignored Mississippis Trauma System destination guidelines. Forrest General moved to dismiss the Sherman Act claim, contending that it was barred by the stateaction doctrine. The court (relying on decisions from the Supreme Court and the Fifth Circuit) described the state-action doctrine like this: [T]o be entitled to the protection of the state action doctrine, Forrest General must demonstrate that the alleged anticompetitive activity was authorized by the State pursuant to state policy to displace competition with regulation or monopoly public services. It is not enough that Mississippi simply declared Forrest Generals alleged activity to be lawful. Rather, a local entity seeking protection from federal antitrust laws must prove a state policy to displace competition. (Internal quotation marks and citations omitted.) The court also said that Forrest General could prevail on its motion only if it demonstrate[d] a clearly articulated and affirmatively expressed state policy to displace competition with regulation, and that the legislature contemplated the kind of action complained of. (Internal quotation marks and citations omitted.) To meet this burden, Forrest General relied on a Mississippi statute that authorizes the state department of health to regulate emergency-medical services. As part of this regulatory scheme, Forrest General argued, the state had set guidelines for determining whether a patient qualifies as a trauma patient and where the EMS provider should transport them. The court disagreed with Forrest General. Plaintiff, the court reasoned, does not allege anticompetitive activity in the field of regulating EMS services. Rather, Plaintiff alleges anticompetitive activity in the field of providing EMS services. Moreover, the statute cited by Forrest General does not evince a state policy of displacing competition in the field of EMS services. In fact, the statute contemplates the existence of private EMS services. The court therefore denied Forrest Generals motion to dismiss. The Wesley Health System decision was not all bad for Forrest General. Forrest General also invoked the Local Government Antitrust Act (LGAA), 15 U.S.C. 35, arguing that it barred plaintiff from recovering antitrust damages from Forrest General. The LGAA endorsed and expanded the state action doctrine by . . . protect[ing] municipalities against antitrust damage claims. (Internal quotation marks omitted.) Given Forrest Generals relation to Forrest County, the court agreed with this argument. But the court also noted that the LGAA allows for injunctive relief against local governments (as well as for costs and attorneys fees). The court, therefore, held that Plaintiff may not recover any damages from Forrest General for alleged antitrust violations. However, Plaintiff may seek injunctive relief against Forrest General, and, if successful, Plaintiff may recover costs and fees.