National Gerimedical Hosp. v. Blue Cross
452 U.S. 378 (1981)

Annotate this Case

U.S. Supreme Court

National Gerimedical Hosp. v. Blue Cross, 452 U.S. 378 (1981)

National Gerimedical Hospital and Gerontology Center v.

Blue Cross of Kansas City

No. 80-802

Argued April 29, 1981

Decided June 15, 1981

452 U.S. 378

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

Syllabus

Prior to the completion of its construction, petitioner, a private, acute care community hospital in the Kansas City, Mo., metropolitan area, sought to enter into a participating hospital agreement with respondent Blue Cross of Kansas City (Blue Cross), a nonprofit provider of individual and group health care reimbursement plans in the area. Blue Cross refused on the basis of its policy barring participation by any new hospital that could not show that it was meeting a clearly evident need for health care services in its service area. Blue Cross relied on petitioner's failure to obtain approval for construction from the Mid-America Health Systems Agency (MAHSA), a private, nonprofit, federally funded corporation which was the local "health system agency" (HSA) designated for the area under the National Health Planning and Resources Development Act of 1974 (NHPRDA). MAHSA's major function is health planning for the Kansas City metropolitan area. Petitioner had not sought approval of its construction from MAHSA because of the latter's announced policy that it would not approve any addition of acute care beds in view of its determination that there was a surplus of hospital beds in the area. Alleging a wrongful refusal to deal and a conspiracy between Blue Cross and MAHSA, which resulted in a competitive disadvantage to it, petitioner filed suit against respondents Blue Cross and the National Blue Cross Association for violation of the Sherman Act. Respondents contended that the NHPRDA had impliedly repealed the antitrust laws as applied to the conduct in question. The District Court granted judgment for respondents, finding a clear repugnancy between the NHPRDA and the antitrust laws, and congressional intent to repeal the antitrust laws in this context. The Court of Appeals affirmed.

Held: Although respondents may have acted with only the highest motives in seeking to implement the plans of the local HSA, they cannot defeat petitioner's antitrust claim by the assertion of immunity from the requirements of the Sherman Act. Pp. 452 U. S. 388-393.

Page 452 U. S. 379

(a) Implied antitrust immunity can be justified only by a convincing showing of clear repugnancy between the antitrust laws and the regulatory system. Even when an industry is regulated substantially, this does not necessarily evidence an intent to repeal the antitrust laws with respect to every action taken within the industry. And intent to repeal the antitrust laws is much clearer when a regulatory agency has been empowered to regulate the type of conduct under antitrust challenge. Pp. 452 U. S. 388-389.

(b) The action challenged here was neither compelled nor approved by any governmental regulatory body. Instead, it was a spontaneous response to the finding of only an advisory planning body, the local HSA which, under the NHPRDA, has no regulatory authority over health care providers. And the application of the antitrust laws to the Blue Cross' conduct would not frustrate a particular provision of the NHPRDA or create a conflict with the orders of any regulatory body. Nor does the NHPRDA require Blue Cross to take an action that, in essence, sought to enforce the advisory decision of MAHSA. There Is no reason to believe that Congress specifically contemplated "enforcement" of advisory decisions of an HSA by private insurance providers, let alone relied on such actions to put "teeth" into the noncompulsory local planning process. Pp. 452 U. S. 389-391.

(c) And NHPRDA is not so incompatible with antitrust concerns as to create a "pervasive" repeal of the antitrust laws as applied to every action taken in response to the health care planning process. Respondents have failed to make the showing necessary for an exemption of all such actions. Pp. 452 U. S. 391-393.

628 F.2d 1050, reversed and remanded.

POWELL, J., delivered the opinion for a unanimous Court.

Page 452 U. S. 380

JUSTICE POWELL delivered the opinion of the Court.

The petitioner in this case, National Gerimedical Hospital and Gerontology Center (National Gerimedical) filed an antitrust suit against respondents, Blue Cross of Kansas City (Blue Cross) and the national Blue Cross Association, challenging the refusal of Blue Cross to accept petitioner as a participating member provider under its health insurance plan. The issue presented here is whether this refusal by Blue Cross is immunized from antitrust scrutiny because it was intended to aid implementation of the plans of the "health systems agency" designated for the Kansas City area under the National Health Planning and Resources Development Act of 1974.

I

Petitioner National Gerimedical is a private, acute care community hospital opened in 1978 in the Kansas City, Mo., metropolitan area. [Footnote 1] Prior to the completion of construction, petitioner sought to enter into a participating hospital agreement with Blue Cross, a nonprofit provider of individual and group health care reimbursement plans in Missouri and Kansas. Under such an agreement, participating hospitals receive direct reimbursement of the full costs of covered services rendered to individual Blue Cross subscribers. [Footnote 2] When subscribers receive care in hospitals that are not participating members, Blue Cross pays only 80% of the cost, and these payments are made to the subscriber, rather than directly to the hospital.

Page 452 U. S. 381

Blue Cross refused to enter into a participating hospital agreement with petitioner on the basis of its official policy barring participation by any new hospital that could not show that it was meeting "a clearly evident need for health care services in its defined service area." [Footnote 3] In determining that petitioner had not satisfied this requirement, Blue Cross relied on petitioner's failure to obtain approval for construction from the local "health systems agency" or "HSA" -- the Mid-America Health Systems Agency (MAHSA). [Footnote 4] This agency is a private, nonprofit corporation, federally funded under the National Health Planning and Resources Development Act of 1974 (NHPRDA), 88 Stat. 2229, as amended, 42 U.S.C. § 300l (1976 ed. and Supp. IV). Its major function is health planning for the Kansas City metropolitan area.

In conducting its planning functions, MAHSA had determined that there was a surplus of hospital beds in the area,

Page 452 U. S. 382

and had announced that it would not approve any addition of acute care beds in area hospitals. As a result of this announced policy, petitioner did not seek MAHSA approval of its construction, leading to the refusal of participating hospital status by Blue Cross.

Claiming that this refusal by Blue Cross put it at a competitive disadvantage, petitioner filed suit in the United States District Court for the Western District of Missouri against Blue Cross and the national Blue Cross Association. It claimed violations of §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, alleging a wrongful refusal to deal and a conspiracy between Blue Cross and MAHSA. [Footnote 5] As relief, petitioner sought treble damages and an injunction to prevent future violations.

Respondents moved to dismiss the complaint on the ground that the NHPRDA had impliedly repealed the antitrust laws as applied to the conduct in question. [Footnote 6] The District Court treated this motion as one for summary judgment, and granted judgment for respondents. 479 F.Supp. 1012 (1979). It reasoned that, if private parties seeking to effectuate the planning objectives of an HSA could be subjected to antitrust liability, accomplishment of the goals of the NHPRDA would be frustrated. Id. at 1021. Having found a "clear repugnancy," id. at 1024, between this Act and the antitrust laws, the court relied largely on legislative history for the view that

"Congress intended that action taken pursuant to the Act and clearly within the scope of the Act would be exempt from application of the antitrust laws."

Ibid.

Page 452 U. S. 383

The United States Court of Appeals for the Eighth Circuit affirmed, essentially adopting the reasoning of the District Court. 628 F.2d 1050 (1980). The Court of Appeals agreed with the District Court's

"finding of clear repugnancy between the Act and the antitrust laws, as the Act and regulatory scheme clearly call for the action which has now become the basis of an antitrust claim."

Id. at 1055-1056. It then quoted in full the District Court's argument for the view that Congress intended repeal of the antitrust laws in this context.

We granted a writ of certiorari to review this important question. 449 U.S. 1123 (1981).

II

Our decision in this case requires careful attention to the structure and goals of the NHPRDA, as well as a review of this Court's decisions in the area of implied repeals of the antitrust laws. We begin with a description of the complex scheme of regulatory and planning agencies established by the NHPRDA in order to assess the legal significance of that Act with respect to the antitrust claim brought here.

MAHSA, the health systems agency whose refusal to approve new hospital construction in the Kansas City area prompted Blue Cross not to accept petitioner as a participating hospital, is but one part of a larger statutory scheme. The NHPRDA, 42 U.S.C. § 300k et seq., created federal. state, and local bodies that coordinate their activities in the area of health planning and policy. Building on existing planning and development statutes, [Footnote 7] Congress sought in 1974

Page 452 U. S. 384

to create a statutory scheme that would assist in preventing overinvestment in and maldistribution of health facilities. See 1974 Senate Report at 39.

HSA's such as MAHSA are concerned with health planning in a particular metropolitan area. See generally H.R.Rep. No. 93 1382, pp. 401 (1974). Each is a nonprofit private corporation, public regional planning body, or single unit of local government, serving a particular "health service area." 42 U.S.C. § 300l-1(b)(1). The statute requires that a majority of HSA board members be consumers of health care, and that at least 40% be health care "providers." 300l-1(b)(3)(C). The "primary responsibility" of each HSA is

"effective health planning for its health service area and the promotion of the development within the area of health services, manpower, and facilities which meet identified needs, reduce documented inefficiencies, and implement the health plans of the agency."

§ 300l-2(a). As originally enacted, the Act established four general goals: "improving the health of residents," "increasing the accessibility . . . , acceptability, continuity, and quality of . . . health services," "restraining increases in the cost of . . . health services," and "'preventing unnecessary duplication of health resources." § 300l-2(a). [Footnote 8] To accomplish these goals, the Act requires each HSA to formulate a "detailed statement of goals" called a "health systems plan," § 300l-2(b)(2), an "annual implementation plan" describing the objectives that will achieve the goals of the general plan, § 300l-2(b)(3),

Page 452 U. S. 385

and "specific plans and projects for achieving the objectives established in the" annual implementation plan, § 300l-2(b)(4). Each HSA is instructed to

"seek, to the extent practicable, to implement [its plans] with the assistance of individuals and public and private entities in its health service area."

§ 300l-2(c)(1). In addition, it may provide "technical assistance" to individuals and public and private entities for the development of necessary projects and programs, § 300l-2(c)(2), and should use grants and contracts to encourage these projects and programs, § 300l-2(c)(3). The agencies do not possess regulatory authority over health care providers.

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