The Oltz v. St. Peter’s Community Hospital
The Oltz v. St. Peter’s Community Hospital
Anti-trust laws or statutes are of fundamental importance to the health sector, as they influence existing health care entities in several ways. Influence is significant in factors such as how the health care entities grow and expand, especially regarding their relations with medical providers and suppliers and in their own individual or group interaction. Anti-trust statutes, as found under the United States anti-trust law, pertain to a collection of both state and federal government laws that are crucial in regulating the overall organization and conduct of business entities. This is usually in terms of the general promotion of free and fair competition in the best interests and benefits of consumers or clientele.
This collection of laws contains the main 3 statutes, which have a fundamental influence on business regulation. The three main statutes are the Sherman Act (1890), the Clayton Act (1914), and the Federal Trade Commission Act (1914). These Acts perform the core function of restricting the formation of mergers or the proposition of acquisitions, especially with regard to the uptake of organizational entities in an attempt to lessen competition substantively. Secondly, these laws restrict the formation of negative-impacting cartels, in addition to prohibiting other practices of a collusive nature. This is especially if such actions are regarded as restraining trade in a free and a fair environment (John & Lawrence, 2003).
As the case of ‘Oltz v. St. Peter’s Community Hosp., 19 F. 3d 1312 (9th Cir. 1994)’, portrays, Oltz was not happy with the manner in which the defendant and pertinent physician anesthesiologists regarded his service provision. Of core importance was the fact that Oltz, was providing services at a lower fee than the hospital’s contracted physician anesthesiologists. The existing competition was not conducive for the other physicians, who consequently negotiated an exclusive contract agreement with the health entity later on: 29 April 1980. This move was specifically aimed at pushing Oltz out of business within the community. As the health entity, provided 84% of the total surgical services within this rural community, it meant that Oltz was thereafter left with only 16% of the existing clientele market.
The conspiracy among the defendants caused a significant reduction in Oltz’s overall patient-base. Under the terms provided in the American anti-trust laws, the hospital’s action was an example of collusive practice, which aimed at enhancing the overall profitability of the physician anesthesiologists. It is upon this action that Oltz decided to sue both the hospital and the anesthesiologists concerned. Of specific concern, was his basis of the suit under the Sherman Act (1890), 15 U.S.C § 1. As a part of the defendants, the anesthesiologists, decided to settle out, before trial for a remedy of $ 462,500, but the lawsuit still proceeded. This was influenced by Oltz’s decision to continue the lawsuit against St. Peters as an entity.
In the court hearing, the jury awarded Oltz for both income losses of $212,182 and future damages of $209,649; however, the presiding judge was of the opinion that the damage awarded was excessive, and thus ordered for a repeal. Specifically, the hospital requested the court not to include any damages incurred after the contract renegotiation with the anesthesiologists. Subsequently, the court ruled that Oltz had failed to show proof that the new contract did also violate anti-trust laws. Thus, it ruled that he should not receive compensation for damages incurred after the contractual agreement. This was further influenced by Oltz conceding his lack of proof that the damages accrued were greater than the amount offset in his earlier out-of-court-deal with the physician anesthesiologists.
Later on, the US Court of Appeal ruled in Oltz’ favor, holding that he was entitled to all damages, even those accrued after the renegotiated contract agreement. This was because the defendants’ actions had disadvantaged his enterprise, thereby proving any subsequent agreements as being irrelevant. This is informed by the fact that after 1980, his work as a health practitioner was severely affected after the termination of his services to the hospital. The basis of this decision by the Court of Appeal is influenced by the fact that the parties involved in a contract agreement, ought to be informed of different issues, especially concerning exclusive agreements. This case is an exemplification that the 3 different Acts provide an environment, where free and fair competition is cultivated (Adams & Brock, 1991).
Exclusive contracts, being founded on a limited number of parties’ overall agreement, do influence the health care sector. There is the issue of such a contract being in contravention of the Sherman Act, especially with regard to Section 1 and/ or 2. This is concerning whether such contract negotiation, whether in trust, conspiracy, the restraint of trade and commerce or otherwise, negatively influences the existing economic environment. A vital clause is that pertaining to ‘restraint of trade/ commerce’ under which fair and free competitiveness is negatively influenced by aspects of collusion and restrictive practices. Exclusive contracts often do affect, by way of restricting the contribution of other entities or parties present, within a given economic setting.
This is specifically focused on the limitation of other parties in their quest to provide services. This pertains to the case, where the action between two or more parties, acting jointly within a given conspiracy or agreement, aim at restricting another party’s ability to offer services or engage in business. In Oltz’s case, the decision by the two parties to block him for any reasons not applicable to the general membership present falls under this category of anti-trust violation. This is because such a conspiracy can be considered as restraint of trade (Areeda, Kaplow & Edlin, 2004). Additionally, is the fact that through such an act, there is the aspect of attempted monopoly or the monopolization of a part of trade: inclusive of conspiracy or collusion. Where such an action is proved, the parties involved shall be deemed guilty, and subsequently charged with a felony under the U.S. anti-trust laws.
When one party refuses to perform agreed-upon services, there is a violation of contract agreement laws. Legally, once contracts are signed, they are representative of the expected partnerships between the parties involved. In case of such a violation, the best remedy is through legal redress, which may entail the presence of a court hearing and subsequent ruling, or the preference of out-of-court settlement agreements. In the case of a legal court ruling, there is the potential aspect of the parties in breach of contract being fined and/ or charged with a felony. There is also the option of the parties involved, discussing and agreeing on the need for a renegotiation of the existing contract.
During a renegotiation, the parties involved may seek the option of detaching themselves from the contract as a whole and subsequently nullifying the agreement in general. Or there may be the option of reanalyzing the terms and conditions present within such a contract, with the aim of providing their terms and conditions. This should be inclusive of all the existing parties, as there is a need for consensus between all stakeholders involved, with the aim of solving such issues in an amicable, timely and proper manner (John & Lawrence, 2003). The unlawful nature of such a practice may in some instances lead to jail terms, if the subsequent effects did harm individual human lives and wellbeing.
Lawsuits similar to the issues raises by Oltz include Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) 5 to 2 and the Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., which were deemed as being in contravention of the Sherman Act, based on the aspect of tacit collusion.
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Areeda, P., Kaplow, L. & Edlin, A. S. (2004). Anti-trust Analysis: Problems, Text and Cases, (6th Ed.). New York: Aspen.
Frum, D. (2000). How We Got Here: The 70s. NY, New York: Basic Books.
John, E. K. & Lawrence, J. W. (2003). The Anti-trust Revolution: Economics, Competition and Policy, (Eds.). Routledge.