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WAGNER v. MAGELLAN HEALTH SERVICES
June 21, 2000
RICHARD H. WAGNER, M.D., PLAINTIFF,
MAGELLAN HEALTH SERVICES, INC., PATRICIA PENHALL, SEAN CULL, RON GERSTEIN, DR. ROBERT SULLIVAN, DR. WIRTHMAN, POLLY POPE AND DR. BRUCE ROBERTS, DEFENDANTS.
The opinion of the court was delivered by: Bucklo, District Judge.
MEMORANDUM OPINION AND ORDER
Dr. Richard Wagner instituted this action alleging that he was
"blacklisted" by managed care organization Magellan Health
Services, Inc. ("Magellan") in violation of §§ 1 and 2 of the
Sherman Antitrust Act, 15 U.S.C. § 1 et seq. Dr. Wagner also
alleges defamation, civil conspiracy and intentional interference
with contractual relations. Magellan and the individually-named
defendants (the "defendants") move for judgment on the pleadings
pursuant to Federal Rule of Civil Procedure 12(c). I grant the
motion as to Counts I — III, and I dismiss the remaining counts,
IV — VI, without prejudice for lack of subject matter
jurisdiction. To the extent that Dr. Wagner's response to the
motion to dismiss seeks to add a RICO claim, it is denied, but
his motion to amend the complaint is granted.
Richard Wagner is a licensed, board-certified psychiatrist with
offices in Barrington, Illinois. Dr. Wagner also has staff
privileges at Good Shepherd Hospital in Barrington, which require
him to periodically be "on-call" for the hospital's emergency
room. Magellan Health Services, Inc., ("Magellan"), is a managed
care organization and a Delaware corporation with its principal
place of business in Columbia, Maryland. Defendants Pengall,
Gerstein, Sullivan, Wirthman, Pope, and Roberts are current or
former employees of Magellan.
The events giving rise to this complaint began on January 20,
1998, when Dr. Wagner — who is not a Magellan network provider —
was the on-call psychiatrist for the emergency room of Good
Shepherd Hospital. On that night, a patient arrived by ambulance
in severe emotional distress. The patient's primary care
physician came to the hospital, and after he and Dr. Wagner
conferred, Dr. Wagner admitted the patient, who had
out-of-network benefits with Magellan. Thereafter, Magellan
conducted an internal review of the case and decided not to
certify the patient's hospital stay for payment. Nonetheless, Dr.
Wagner refused to discharge the patient, believing it was in the
patient's best interest to remain hospitalized. Magellan
contacted Good Shepherd's Director of Psychiatry
to ask about Dr. Wagner and threatened to pull its contract with
Good Shepherd because of the incident. During the patient's
hospital stay, Magellan sent a letter to the patient via courier
indicating that it would not authorize payment for the hospital
stay; simultaneously, it sent a letter to the unit clerk at Good
Shepherd indicating that the patient may "require support" upon
reading the letter denying HMO benefit coverage. In response, Dr.
Wagner spoke with defendant Sullivan, Magellan's regional medical
director, about the treatment of his patient. Sullivan told Dr.
Wagner he would discuss the situation with Magellan's CEO and
renewed the threat of possible cancellation of Good Shepherd's
contract with Magellan.
On November 4, 1998, another emergency psychiatric patient
arrived at Good Shepherd when Dr. Wagner was on call. When a Good
Shepherd social worker contacted defendant Pehnall at Magellan
regarding the patient's insurance coverage, she was told that the
patient could be treated by "anyone but Dr. Wagner." Magellan
instructed the social worker to transfer the patient to another
hospital despite the fact that medical stability was not
established. Dr. Wagner informed the Magellan employee and
defendant Cull that Magellan's attempt to transfer the patient
without the attending physician's authorization was unethical and
against the hospital's by-laws. The incident was basically
repeated the next day, but Good Shepherd decided that the
incoming patient would be seen by a physician other than Dr.
Wagner. Another incident occurred on November 23, 1998, and Good
Shepherd's medical director, Dr. Jacobs, was forced to intervene
and confirm that a patient cannot be moved without following
proper hospital procedures and COBRA statutes. On December 15,
1998, Dr. Wagner met with Dr. Jacobs, who told him that Magellan
attempted to get Good Shepherd to deflect patients away from him
and have him bypassed in the normal emergency room rotation, but
the hospital refused Magellan's request. On October 14, 1999, a
Magellan case was admitted to the psychiatric unit and defendant
Pope of Magellan told the social worker that "I don't think the
patient can see Dr. Wagner, we've had a lot of problems with Dr.
Wagner." Dr. Wagner filed this action on December 17, 1999.
Federal Rule of Civil Procedure 12(c) permits a party to move
for judgment after the parties have filed the complaint and
answer. When considering a motion for judgment on the pleadings,
I regard all well-pleaded facts as true, view them in the light
most favorable to the plaintiff, and draw all reasonable
inferences in favor of the plaintiff. Hentosh v. Herman M. Finch
Univ. of Health Sciences/The Chicago Medical School,
167 F.3d 1170, 1173 (7th Cir. 1999); Frey v. Bank One, 91 F.3d 45, 46
(7th Cir. 1996) (standard is the same as Fed.R.Civ.P. 12(b)). I
grant judgment on the pleadings only when it appears beyond doubt
that the plaintiff cannot prove any facts that would support his
claim for relief. Forseth v. Village of Sussex, 199 F.3d 363,
368 (7th Cir. 2000). The complaint need only "narrate a claim,"
and need not depend on a particular theory of recovery. Id. at
367. Indeed, "a plaintiff may supplement the complaint with
factual narration in an affidavit or brief. If the extra
assertions make out a claim, then the complaint stands." Albiero
v. City of Kankakee, 122 F.3d 417, 419 (7th Cir. 1997) (citation
The defendants move for judgment on the pleadings claiming Dr.
Wagner has failed to allege the existence of a conspiracy, a
properly defined relevant product and geographic market, market
power in the relevant market or facts comprising a specific
intent to monopolize, or a cognizable antitrust injury.
A. Existence of Conspiracy
Section 1 of the Sherman Act prohibits contracts, combinations,
or conspiracies unreasonably restraining trade or commerce. The
fundamental prerequisite is unlawful conduct by two or more
parties pursuant to an agreement, explicit or implied. Solely
unilateral conduct, regardless of its anti-competitive effects,
is not prohibited by Section 1. Dr. Wagner proceeds under a
conspiracy theory in his § 2 claim as well.*fn1 Thus, both of
Dr. Wagner's claims depend upon the existence of a viable
conspiracy, and this is where the defendants claim he fails.
The defendants argue, correctly, that there can generally be no
conspiracy between a corporation and its employees or agents.
Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 104
S.Ct. 2731, 81 L.Ed.2d 628 (1984). If all Dr. Wagner alleges is a
conspiracy between the Magellan and its employees — the named
defendants, he fails to allege an actionable conspiracy. In each
of the antitrust counts in the complaint, the only ...