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WAGNER v. MAGELLAN HEALTH SERVICES

June 21, 2000

RICHARD H. WAGNER, M.D., PLAINTIFF,
V.
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.

I.

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.

II.

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 omitted).

III. Antitrust Claims

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 ...


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