MERHIGE, District Judge.
Plaintiff Human Resource Institute of Norfolk, Inc. (HRI), a private psychiatric hospital, brings this action against Blue Cross of Virginia (BCV), a non-profit Virginia corporation which provides prepaid hospital services to subscribers. Plaintiff, which is not a participating hospital in the Blue Cross system, alleges that BCV has engaged in acts and practices intended to force HRI out of business or into the status of a Blue Cross participating hospital, in violation of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2. Pendent state claims,
Jurisdiction is founded on Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and 26, and on 28 U.S.C. §§ 1331(a) and 1337. BCV has moved for summary judgment on all counts. HRI has responded, the parties have briefed the issues, the Court has heard oral argument, and the matter is ripe for disposition.
HRI's complaint sets forth a number of actions allegedly taken by BCV in furtherance of a conspiracy and an attempt to monopolize the business of third party payment for hospital services. Plaintiff contends that BCV has refused to process promptly, and properly, HRI's claims for covered services; that BCV has wrongfully demanded repayment of $3,000,000 from HRI on claims already paid, and has instituted baseless litigation in state court to recover that amount; that BCV has tortiously defamed plaintiff; and that BCV has reduced the coverage afforded to non-participating hospitals.
Initially, plaintiff also named as a defendant the Blue Cross Association (BCA), an Illinois corporation which owns the Blue Cross name and symbol and which licenses local plans such as BCV to use them. While it was not alleged that BCA itself engaged in the acts described in the above paragraph, HRI contended that BCA had conspired with BCV, in that BCA had "agreed
I. Plaintiff's Conspiracy Claims
Plaintiff contends that BCV's alleged attempt to force HRI out of business or into the status of a participating hospital was undertaken in conspiracy with BCA, the Blue Cross participating hospitals in the BCV service area, and "various others".
In support of its motion for summary judgment, defendant has filed affidavits of BCV officers stating that the decisions to engage in the acts and practices complained of were made by BCV alone, without prior consultation with, and not pursuant to any agreement with, the Blue Cross participating hospitals. The affidavit of BCV President Alden Flory declares that neither the decision to bring suit against HRI, nor any statements concerning HRI, were made in complicity with the member hospitals. Similarly, the affidavits of BCV's Director of Benefit Control and its Director of Claims state that their respective divisions decide whether to pay or deny a particular HRI claim without consultation or agreement with the participating hospitals.
HRI has uncovered no evidence which refutes the sworn statements of the BCV officers; indeed, the Court's understanding is that HRI does not seek to challenge the literal truth of the statements. At oral argument, counsel for plaintiff conceded that the sole issue of fact is the question of the defendant's motive in engaging in the acts and practices of which plaintiff complains.
There being no issue of fact, plaintiff's conspiracy claims are now based on the theory that the acts of defendant are concerted as a matter of law. HRI argues that a conspiracy in violation of the Sherman Act exists by virtue of the agency relationship
The Court is of the opinion that plaintiff's reliance on the VACP case is misplaced. VACP does not stand for the proposition that an agency relationship, or a "collective nature", can, without more, bring a prepaid health plan within the purview of the Sherman Act. Rather, the Court's discussion of the facts in VACP makes it clear that it was the abundant evidence of physician control of the plans which established the existence of a combination or conspiracy. The Court cited the fact that the plans' by-laws required that a majority of the Boards of Directors be physicians, and that five members of the Boards be elected from a list of physicians designated by the Medical Society of Virginia. In addition, the panel found evidence tending to show physician control in Blue Shield documents and statements made by plan officers.
In the instant case, there are no comparable structural factors that would facilitate the type of provider control condemned in VACP. Indeed, BCV's enabling statute requires that a majority of a plan's Board of Directors be subscribers, i. e. health care consumers.
There is not a scintilla of evidence tendered to the effect that BCV has conspired with its member hospitals, either through a traditional combination, or through a structure that allows provider control. Therefore, summary judgment on HRI's conspiracy claims must be granted to defendant.
II. Plaintiff's Attempt to Monopolize Claims
The second count of plaintiff's complaint alleges that BCV has conspired to monopolize and attempted to monopolize in violation of Section 2 of the Sherman Act. As noted above, the Court finds no evidence of conspiracy, either to restrain trade or to attempt to monopolize. Therefore, only the allegation that BCV alone has attempted to monopolize remains. As with the conspiracy claims, there are, for the attempted monopolization claim, no disputed issues of material fact.
The defendant challenges HRI's standing to sue for attempted monopolization on the grounds that plaintiff neither competes in the same market as defendant, nor is located "within the sector of the economy in which the [alleged] violation threatened a breakdown of competitive conditions." South Carolina Council of Milk Producers v. Newton, 360 F.2d 414, 418 (4th Cir. 1966). Plaintiff responds by acknowledging that HRI does not compete directly with BCV, but urges that HRI is within the "target area" of the economy. Plaintiff argues that insofar as BCV controls the market for third party payment for hospital services, it dictates the providers from whom consumers will buy in the neighboring market for psychiatric services, in which plaintiff competes.
Two separate elements must be proved to establish an attempt to monopolize: a specific intent to monopolize, coupled with the consequent dangerous probability of success. Swift and Co. v. United States, 196 U.S. 375, 25 S.Ct. 276, 49 L.Ed. 518 (1905); Lorain Journal Co. v. United States, 342 U.S. 143, 72 S.Ct. 181, 96 L.Ed. 162 (1951). The Court finds, on the basis of the undisputed facts, that BCV did not have the requisite intent.
The Supreme Court of the United States has made clear that while the completed offense of monopolization requires only a general intent, a "specific intent to destroy competition or build monopoly", Times Picayune Publishing Co. v. United States, 345 U.S. 594, 626, 73 S.Ct. 872, 890, 97 L.Ed. 1277 (1953) is essential to a finding of attempted monopoly. A mere intent to prevail over rivals or to improve market position is insufficient. Even an intent to perform acts which can be objectively viewed as tending toward the acquisition of monopoly power is insufficient, unless it appears that the acts were not "predominantly motivated by legitimate business aims." Times Picayune, supra at 627, 73 S.Ct. at 890.
Plaintiff concedes that after many months of discovery it has no direct evidence that BCV specifically intended to seek a monopoly position in the market for third party payment for hospital services. Further, plaintiff has not claimed that it needs more time to seek evidence of specific intent.
Plaintiff is correct in stating that specific intent to monopolize need not be shown by direct evidence. In this area of antitrust law as in others, courts have been sensitive to the obvious fact that those who intend to perform evil deeds rarely broadcast their intentions. Thus, specific intent to monopolize may be inferred from extreme predatory or exclusionary conduct. United States v. Jerrold Electronics Corp., 187 F.Supp. 545 (E.D.Pa.1960), aff'd 365 U.S. 567, 81 S.Ct. 755, 5 L.Ed.2d 806 (1961); Greenville Publishing Co. v. Daily Reflector, Inc., 496 F.2d 391 (4th Cir. 1974). The Court, however, is of the opinion that the facts presented are insufficient as a matter of law to support such an inference.
An examination of the facts upon which plaintiff relies reveals the highly resistable nature of the inference it urges the Court to adopt. That BCV has refused to process HRI's claims promptly, that it has instituted state court litigation to recover what it claims are overpayments, and that it has allegedly defamed plaintiff, indicate only that the parties are in substantial disagreement concerning their respective rights and obligations. It is not for this Court to decide the merits of their contractual and other disputes. The fact that BCV has reduced the coverage it affords to non-participating hospitals indicates no more than that BCV intends and seeks to make participation in the Blue Cross system more attractive than non-participation. Antitrust law does not condemn effective merchandising. Traveler's Insurance Co. v. Blue Cross, 481 F.2d 80, 84 (3d Cir.) cert. denied 414 U.S. 1093, 94 S.Ct. 724, 38 L.Ed.2d 550 (1973). The Court is unable to infer from
Having so concluded, there is no necessity of addressing the question of whether the defendant has shown itself to be entitled to summary judgment on the basis of the second element of the attempted monopolization offense: a dangerous probability that the attempt will succeed. Indeed, a decision on this issue would be inappropriate on the present state of the record. Defendant's affidavits do not speak to this point. Moreover, the Court has not been given the benefit of a full development of the facts that might bear on the likelihood of BCV achieving a monopoly, such as the history of and trends in the relevant markets, the market share that would be regarded as indicative of monopoly power, or the number and vitality of BCV's competitors, despite the fact that ample opportunity has been granted plaintiff to ferret out any such evidence.
For the reasons heretofore stated, summary judgment will be granted to defendant BCV on both counts; and the pendent state claims will be dismissed without prejudice.