Hostname: page-component-cd9895bd7-hc48f Total loading time: 0 Render date: 2024-12-24T18:07:13.940Z Has data issue: false hasContentIssue false

Antitrust Implications of Health Planning: National Gerimedical Hospital and Gerontology Center v. Blue Cross of Kansas City

Published online by Cambridge University Press:  24 February 2021

Abstract

In National Gerimedical Hospital and Gerontology Center v. Blue Cross of Kansas City, the United States Supreme Court held that there is no blanket exemption from antitrust laws for health planning activities.‘The Court also held that no specific immunity can be granted where the challenged health planning activity is not undertaken pursuant to a federal regulatory scheme. This Comment reviews the Court’s decision and concludes that the Court correctly determined that the challenged activities did not qualify for an exemption. The Comment also examines the implications of the Court's statement that, where Congress has manifested a belief that competition is ineffective in the health care industry, application of the antitrust laws should be modified. The Comment recommends that an intermediate review standard such as the “presumptive, incentive modifying approach” should be used by future courts in deciding whether the ineffectiveness of competition in a given area of health planning activity warrants immunity from antitrust scrutiny.

Type
Notes and Comments
Copyright
Copyright © American Society of Law, Medicine and Ethics and Boston University 2020

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 Halper, The Health Care Industry and the Antitrust Laws: Collision Course? 49 A.B.A. Antitrust L.J. 17, 18 (1980). Antitrust principles were rarely applied to the health care industry until Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975), in which the United States Supreme Court held that the learned professions are not exempt from the antitrust laws. See also Bates v. State Bar of Arizona, 433 U.S. 350 (1977) (disciplinary rule prohibiting commercial advertising of legal services did not violate §§ 1 and 2 of the Sherman Act, since the rule imposing the restraint was an act of the government, imposed by the State acting in its sovereign capacity, and was therefore an act not prohibited by the Sherman Act); National Soc’y of Professional Eng’rs v. United States, 435 U.S. 679 (1978) (Professional self-regulation is measured under an antitrust analysis that examines whether the challenged policy or activity promotes or suppresses competition. Where fee or price-related restrictions are at issue, a “short form” rule of reason test that is scarcely distinguishable from the per se test may apply).

Cases in which other exemptions have been invoked to shield the health care industry include: Parker v. Brown, 317 U.S. 341 (1943) (state action); Eastern R.R. Presidents Conference v. Noerr Motor Freight, inc., 365 U.S. 127 (1961), UMW v. Pennington, 381 U.S. 657 (1965), and California Motor Transport Trucking Co. v. Trucking Unlimited, 404 U.S. 508 (1972) (concerted efforts to influence government action); Hospital Building Co. v. Trustees of Rex Hosp., 425 U.S. 738 (1976) (interstate commerce); Group Life and Health Ins. Co. v. Royal Drug Co., 440 U.S. 205 (1979) (interpreting the McCarran-Ferguson Act, 15 U.S.C. §§1101-1105 (1976), the business of insurance).

2 See Halper, supranote 1, at 17. Approximately five times as many antitrust actions have been brought in the health care field since Goldfarb was decided than were brought during the previous 85 years of antitrust laws; moreover, the pace is still accelerating. At the end of the 1982 term, the Supreme Court decided a series of cases which reinforced their position that health care is not so different from other industries as to be completely exempt from the antitrust laws. In Arizona v. Maricopa County Medical Soc’y, 102 S. Ct. 2466 (1982), the Court ruled that fee-setting arrangements among physicians will be treated the same as price-fixing in any other industry, i.e., as a per se violation of the the Sherman Act. In Union Labor life Ins. Co. v. Pireno, 102 S. Ct. 3002 (1982), the Court narrowed the scope of the McCarran-Ferguson “business of insurance” exemption by holding that an insurance company’s use of peer review committees for rate setting was not the business of insurance and was, therefore, not immune from antitrust scrutiny. In AMA v. FTC, 102 S. Ct. 1744 (1982), an equally divided Court affirmed a lower court decision which prevented the Federal Trade Commission from restraining advertising; the Court thus increased the likelihood of competition among physicians.

3 See V. Fuchs, WHO Shall Live?: Health Economics and Social Choice (1974), J. Newhouse, the Economics of medical Care: A Policy Perspective 98-108 (1978), A. Sorkin, Health Economics, 4-8 (1977); Arrow, Uncertainty and the Welfare Economics of Medical Care, 153 Am. Econ. Rev; 941 (1963); Culyer, The Nature of the Commodity Health Care and Its Efficient Allocation, 23 Oxford Econ. Papers (1971).

4 To illustrate, antitrust enforcement does not change physicians’ monopoly over medical information or the incentive-distorting effects of third-party reimbursement.

5 National Health Planning and Resources Development Art of 1974, 42 U.S.C. §§ 300k-300n (1976 & Supp. Ill 1979) [hereinafter cited as Planning Act]. The Planning Act establishes a three-tiered (federal-state-local), decentralized system of regulation aimed at avoiding unnecessary or duplicative institutional services which are cost-reimbursed. Local Health Systems Agencies (“HSAs”) review the health care delivery system in their areas and formulate a detailed statement of objectives called “Health Systems Plans” and “Annual Implementation Plans” to facilitate achievement of the objectives. 42 U.S.C. § 300Z-2 (1976 & Supp. Ill 1979). The Act creates two state agencies: the State Health Planning and Development Agency and the State Health Coordinating Council. 42 U.S.C. §§ 300m-2, -3 (1976 & Supp. Ill 1979). The Act also envisions that each state will approve a certificate of need program requiring, institutional providers to obtain state agency approval of all new health facilities and of capital expenditures for improvements in existing facilities. 42 U.S.C. § 300m-2(a)(4)(B) (1976 & Supp. Ill 1979). The federal role in this regulatory scheme is essentially advisory. 42 U.S.C. §300k-3 (1976 & Supp. Ill 1979).

6 See Halper, supra note 1, at 31. “Health planning, including both mandatory controls and voluntary persuasion, is perhaps the purest form of regulation as antitrust lawyers know it, in the entire health care field.” Id.

7 See generally Miller, Antitrust and Certificate of Need: Health Systems Agencies, the Planning Act and Regulatory Capture, 68 GEO. L.J. 873, 874 (1980); Address by Richard L. Epstein, American Bar Association, Section on Antitrust Law and Forum Committee on Health Law, Joint Program on Antitrust and the Health Care Industry, Washington, D.C. (Sept. 24-25, 1981).

8 Miller, supra note 7, at 882.

9 Id. at 892.

10 452 U.S. 378 (1981).

11 Id. at 393.

12 Id. at 393 n.18. The full text of Footnote 18 states: Nevertheless, because Congress has remained convinced that competition does not operate effectively in some parts of the health care industry, e.g., 42 U.S.C. § 300k-2(b)(1976 ed., Supp III), we emphasize that our holding does not foreclose future claims of antitrust immunity in other factual contexts. Although favoring a reversal in this case, the United States as amicus curiae asserts that ‘there are some activities that must, by implication, be immune from antitrust attack if HSAs and state agencies are to exercise their authorized powers.’ Brief for the United States as Amicus Curiae 16, n.ll. Where, for example, an HSA has expressly advocated a form of cost-saving cooperation among providers, it may be that antitrust immunity is ‘necessary to make the [Planning Act] work. Silver v. New York Stock Exch., 373 U.S. 341, 357 (1963). See 124 Cong. Rec. 34932 (1978) (Rep. Rogers) (“The intent of Congress was that HSAs and providers who voluntarily work with them in carrying out the HSA’s (sic) statutory mandate should not be subject to the antitrust laws. If they were, Public Law 93-641 simply could not be implemented.”) Such a case would differ substantially from the present one, where the conduct at issue is not cooperation among providers, but an insurer’s refusal to deal with a provider that failed to heed the advice of an HSA. ‘

13 Id. See, e.g., C. Havighurst, Deregulating the Health Care Industry: Planning for Competition 125-79 (1981); Note, AntitrustImplied Repeal of the Antitrust Laws by the National Health Planning Act, 56 Tul. L. Rev. 749, 761-62 (1982).

14 Havighurst, supra note 13.

15 National Gerimedical Hospital and Gerontology Center is a private, not-for-profit, acute-care community hospital which opened in 1978 in the Kansas City, Missouri metropolitan area. National Gerimedical had been licensed by the Missouri Division of Health since September, 1977 and had also been certified as a Medicare provider by the Department of Health and Human Services. However, the hospital had never sought approval from the local health systems agency for its construction. National Gerimedical, 452 U.S. at 380, 381-82 n.l.

16 Blue Cross of Kansas City is a major not-for-profit health service corporation which offers private individual and group health care reimbursement plans and programs to the general public in Western Missouri and Eastern Kansas. It contracts with other health service providers for the administration of its health care reimbursement plans. National Gerimedical Hosp. & Gerontology Center v. Blue Cross of Kansas City, 479 F. Supp. 1012, 1015 (W.D. Mo. 1979). Blue Cross’s individual members account for approximately one-fourth of all area hospital admissions. National Gerimedical, Designated Record at 4.

17 The Blue Cross Association (“BCA”) is a national organization in which local Blue Cross Plans, including Blue Cross of Kansas City, hold membership. National Gerimedical, Designated Record at 3. ‘ ‘

18 Under participating member provider agreements, hospitals are reimbursed for the full costs of covered services rendered to individual Blue Cross subscribers. When subscribers receive care in hospitals that are not participating members, Blue Cross pays 80% of the cost to the subscriber, rather than reimbursing the hospital directly. National Gerimedical, 479 F. Supp. at 1015-16. All general acute-care hospitals in the Blue Cross service area except National Gerimedical were participating hospitals under the contract with Blue Cross at the time the plaintiff sued. National Gerimedical, 452 U.S. at 380 n.2.

19 National Gerimedical, 479 F. Supp at 1015.

20 National Gerimedical, 452 U.S. at 381 n.3. Blue Cross’s policy was contained in guidelines called “Prerequisites,” issued on January 1, 1976. Blue Cross stated that it would base its decisions whether to accept new participating member hospitals on the guidelines. The guidelines also stated: “Health care institutions and institutional services shall be approved, and/or if required by law, certified as necessary, by the designated planning agency or areawide health planning agency, respectively; or by the designated State Agency as provided for in [the Planning Act].” Id. Blue Cross made clear that it retained final discretion in accepting new hospitals and that an applicant’s lack of knowledge or its requirements would not suffice as a waiver. Id.

21 Id. at 378. MAHSA, named as a non-defendant, alleged co-conspirator, is a private, non-profit, federally-funded Missouri corporation engaged in voluntary health planning. MAHSA was conditionally designated as an HSA under the Act and was notified of its designation for the eight-county bi-state region of the Kansas City metropolitan area by a letter of April 7, 1976 from the Department of Health and Human Services (“DHHS”), then the Department of Health, Education and Welfare. MAHSA enjoyed that status during the relevant time period of this case. National Gerimedical Hosp. & Gerontology Center v. Blue Cross of Kansas City, 628 F.2d 1050, 1052-53 (8th Cir. 1980).

22 Health Systems Agencies (“HSAs”) are federally-designated and funded health planning agencies authorized by the Planning Act. HSAs typically are private, non-profit corporations, although some are public regional planning bodies or local government units. 42 U.S.C. § 300/ (1976 & Supp. Ill 1979). Each HSA is charged with developing a five-year Health Systems Plan (“HSF”) as a blueprint for future development by all participants in its respective health care community. 42 U.S.C. § 300/-2(b) (1976 & Supp. Ill 1979). Each HSA is also required to produce an Annual Implementation Plan (“AIP”) which, “when developed, will assure that quality health services will be available and accessible in a manner which assures continuity of care, at reasonable cost, for all residents in the area.” 42 U.S.C. § 300J-2(b)(2) (1976 & Supp. Ill 1979). The Act further directs that each HSA “shall seek, to the extent practicable, to implement its HSP and AIP with the assistance of individuals and public and private entities in its health service area.” 42 U.S.C. § 300/-2(c)(l) (1976 & Supp. HI 1979). This is the section of the Act upon which the district court primarily rested its finding of antitrust immunity for Blue Cross. National Gerimedical, 628 F. 2d at 1052. The HSA submits these plans to its state regulatory agency and also makes recommendations on how its state agency should rule on certificate of need applications. 42 U.S.C. §§ 300/-2(c),(f) (1976 & Supp. Ill 1979); 42 U.S.C. § 300m-2(a)(4) (1976 & Supp. HI 1979). With respect to new hospital construction, the HSA only gives advice; it has no regulatory authority over health care providers. 42 U.S.C. §§ 300/-2(c)-(h) (1976 & Supp. Ill 1979). See also supra note 5. 23 National Gerimedkal, 452^ U.S. at 381-82.

24 A certificate of need (“CON”) is a document which is tantamount to a license allowing an applicant to construct a new facility, expand an old facility, or purchase additional equipment. The Planning Act requires the states to establish CON programs as a prerequisite to receiving federal funds for certain public health purposes. 42 U.S.C. § 300m-2(a)(4)(B) (1976 & Supp. Ill 1979). A state administrative agency operating pursuant to a CON program must approve capital expenditures above a threshold amount. Thus, certificate of need programs effectively regulate free entry into the health care industry and the accompanying financing of construction, expansion, modernization and renovation of health care facilities. Lane, Certificate of Need and the Antitrust Laws: Can They Co-Exist?, 2 DET . C.L. Rev. 599 , 59 9 n. l (1980).

25 National Gerimedical, 452 U.S. at 390. Although MAHSA was the designated HSA under the Act, Missouri had no law either implementing the Act or designating any state agency with authority to review hospital construction during the relevant time period. See 42 U.S.C. § 300m (1976 & Supp. Ill 1979). Missouri did adopt certificate of need legislation in 1979 barring new hospital construction not approved by the state planning agency pursuant to the Act. Passage of CON legislation is required for funding under the Act. Mo. Rev. STAT. §§ 197.300-365 (1979 & Supp. 1980). Missouri passed a new “emergency” CON law in 1982, repealing portions of the earlier one and effectively exempting capital expenditures of up to $600,000 and expenditures on medical equipment of up to $400,000 from regulation under the Planning Act. New hospital construction, since its cost exceeds the specified minimum, still requires certificate of need approval in Missouri. See Laws of the 81st General Assembly, Vernon’s Missouri Legislative Service 423-28 (1982).

Prior to the relevant time period, Missouri had participated in the Social Security Act’s § 1122 Capital Health Expenditure Program, which included a state planning agency per-forming § 1122 program reviews. 42 U.S.C. § 1320a-l (Supp. 1978 & 1979). Blue Cross had required that large capital expenditures be approved by the local and regional planning arms (MAHSA in Missouri) of the § 1122 state planning agency before a hospital could become a member institution. The Capital Expenditure Program was designed to ensure that federal funds appropriated for Medicare and Medicaid were not used for unnecessary health care facilities.

Missouri, a participating state since 1973 under 42 U.S.C. § 1320a-l (Supp. 1978 & 1979) refused on June 30, 1976 to renew the state’s contract with HEW, and Missouri’s program for Capital Health Expenditures was terminated. It was in the wake of Missouri’s cancellation of the SSA’s § 1122 Capital Expenditure Program that Blue Cross announced in a “Special Newsletter” to member hospitals in Missouri that all projects in the Kansas City metropolitan area not approved by MAHSA would not be reimbursable by Blue Cross of Kansas City. National Gerimedical, 628 F.2d at 1053. See also infra note 104 (description of § 1122).

26 National Gerimedical, 45 2 U.S. a t 385,-86.

27 Id. a t 389.

28 Id. at 382.

29 Id.

30 Section on e states:

Every contract, combination in the form of trust o r otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding one million dollars if a corporation, or, if any other person, one hundre d thousand dollars, or, by imprisonment not exceeding three years, or by both said punishments. in the discretion of the court.

15 U.S.C. § 1 (1976). Section two states:

Every person who shall monopolize or attempt to monopolize, or combine or con- ‘ spire with any other person or persons, to monopolize any part of the trade or commerce amon g the several states, or with foreign nations, shall be deemed guilty of a felony, and on conviction thereof, shall be punished by fine not exceeding one million dollars if a corporation, or if any other person, on e hundre d thousand dollars, or by imprisonment not exceeding three years, or by both said punishments in the discretion of the court.

15 U.S.C. § 2 (1976).

31 National Gerimedical, 45 2 U.S . at 382 .

32 National Gerimedical, 47 9 F. Supp . at 1014.

33 Id. .

34 Id. Although a persuasive case can be made for finding Blue Cross not liable on the merits, the lower courts never reached the merits and they were not before the Supreme Court on appeal. Blue Cross’s action was arguably a unilateral refusal to deal, which is legal. United States v. Colgate & Co., 250 U.S. 300 (1919). The Justice Department’s position on the merits of this case supported the view that Blue Cross’s conduct was probably lawful unless it was the result of an unlawful agreement. Brief for the United States as amicus curiae at 11-12, National Gerimedical Hosp. & Gerontology Center v. Blue Cross of Kansas City. 452 U.S. 378 (1981).

35 National Gerimedical, 452 U.S. at 382.

36 Id.

37 Id. at 378.

38 15 U.S.C. §§ 1011-1015 (1976).

39 479 F. Supp. at 1014-15. None of these three defenses was appealed to the Supreme Court. 452 U.S. at 382 n.6.

40 National Gerimedical, 479 F. Supp. at 1024.

41 National Gerimedical, 479 F. Supp. at 1021.

42 Id.

43 Id.

44 Id. at 1024.

45 Id. at 1021.

46 Id. at 1024.

47 Id. at 1021 .

48 W. at 1024.

49 Id. at 1021-23.

50 National Gerimedical, 628F.2d at 1051.

51 Id. at 1055-56.

52 Id. at 1054.

53 Id. at 1057.

54 Id. at 1056.

55 Id. at 1054.

56 Id.

57 Id. at 1055.

58 4 2 U.S.C. § 300/-2(c)(l) (1976), quoted in National Gerimedical, 62 8 F.2da t 1055. See supra note 5.

59 Justice Powell wrote the opinion for a unanimous Court.

60 National’Gerimedical, 452 U.S. at 379.

61 Id. at 393. On remand the case was settled during the course of the discovery process. The parties filed a joint stipulation to dismiss the lawsuit. Under the terms of the settlement, National Gerimedical Hospital withdrew all its claims against Blue Cross and BCA, receiving in return a Blue Cross participating membership contract and an undisclosed sum of money.

62 Id. at 383.

63 Id. at 393.

64 Id. at 390.

65 Id. at 391.

66 Id. at 389-91.

67 National Gerimedical, 452 U.S. at 393.

68 Id. at 391.

69 Id..

1 Id. at 391-93.

71 Id. at 393 n.18.

72 Id. at 393 n.19.

73 Miller, supra note 7, a t 891.

74 See generally Annot., 45 L. Ed. 2d 841 (1976); P. Areeda & D. Turner, 1 Antitrust Law (1978); Note, Antitrust and Regulated Industries: A Critique and Proposal for Reform of the Implied Immunity Doctrine, 57 TEX. L. Rev. 751 (1979).

75 National Gerimedical, 628 F.2d at 1054-55:

The doctrine of implied immunity is a subspecie of implied statutory repeal. It is one of several distinct judicially-created rules, which include ‘primary jurisdiction’ and ‘exhaustion of remedies,’ designed toresolve potential conflicts between tworegimes with federal statutory authorization toregulate the conduct of business entities: federal administrative agencies and federal courts enforcing (among others) the antitrust laws.

The antitrust laws posit that the public interest is best served when business enterprises are compelled to compete in markets free of anticompetitive restraints. In contrast, the basic premise of administrative regulation is that the freedom of business entities must be in some degree curtailed to maximize the general welfare. When the same conduct falls within the scope of both the antitrust laws and the regulatory scheme, potential conflicts of competency and policy are resolved under the doctrine of implied immunity.

Id.

76 Carnation Co. v. Pacific Westbound Conference, 383 U.S. 213, 218 (1966). See also United States v. Topco Ass’n., 405 U.S. 596, 610 (1972) (Sherman Act is the “Magna Carta of free enterprise”); Northern Pac. R.R. v. United States, 356 U.S. 1, 4 (1958) (Sherman Act is designed to preserve free and unfettered competition).

77 Federal Maritime Comm’n v. Seatrain Lines, Inc., 411 U.S. 726, 733 (1973). “Silver v. New York Stock Exchange, 373 U.S. 341, 357 (1963).

79 Oahu Gas Service, Inc. v. Pacific Resources, Inc., 460 F. Supp. 1359, 1366 (D. Hawaii) (1978). Sec Essential Communication Sys. v. AT&T Co., 446 F. Supp. 1090, 1094-95 (D. N.J. 1978), rev’d, 610 F.2d 1114 (3d Cir. 1979).

80 Legal Times, March 17, 1980, at 25, col.l.

81 Id. at 25, col. 1-2.

82 National Gerimedical, 452 U.S. at 390.

83 Id.

84 Id.

85 Havighurst, supra note 13, at 125.

86 Miller, supra note 7, at 891.

87 Halper , supra note 1, at 34.

88 Miller, supra note 7, at 891.

89 Havighurst , supra note 13, at 127.

90 S. Rep. NO. 93-1285 , 93 d Cong. , 2 d Sess. (1974), reprinted in 1974 U.S. Code Cong. & AD. News 7842 , 7878.

91 National Gerimedical, 479 F. Supp. at 1021-22; National Gerimedical, 628 F.2da t 1056-57.

92 National Gerimedkal, 45 2 U.S. a t 392.

93 Id.

94 Havighurst, supra note 13, at 143.

95 Id. at 146. This provision has been codified as 42 U.S.C. § 300k-2(b) (1976 & Supp. Ill 1979). Section 300k-2(b) states:

(1) The Congress finds that the effect of competition on decisions of providers respecting the supply of health services and facilities is diminished. The primary source of the lessening of such effect is the prevailing methods of paying for health services by public and private health insurers, particularly for inpatient health ser-vices and other institutional health services. As a result, there is duplication and excess supply of certain health services and facilities, particularly in the case of inpatient health services.

(2) For health services, such as inpatient health services and other institutional health services, for which competition does not or will not appropriately allocate supply consistent with health systems plans and State health plans, health systems agencies and State health planning and development agencies should in the exercise of their functions under this subchapter take actions (where appropriate to advance the purposes of quality assurance, cost effectiveness, and access and the other purposes of this subchapter) to allocate the supply of such services.

(3) For the health services for which competition appropriately allocates supply consistent with health systems plans and State health plans, health systems agencies and State health planning and development agencies should in the performance of their functions under this subchapter give priority (where appropriate to advance the purposes of quality assurance, cost effectiveness and access) to actions which would strengthen the effect of competition on the supply of such services.

42 U.S.C. § 300k-2(b) (1976 & Supp. Ill 1979).

96 Plannin g Act, supra note 5, at § 300M(b)(4)(A)(i) (1976), cited in Halper.supr a note 1, at 33 n.57.

97 E. Crawford , The Construction of Statutes § 195, at 33 4 (1940) , cited in Note, Intent, Clear Statements, and the Common Law: Statutory Interpretation in the Supreme Court, 95 HARV. L. Rev. 892, 895 (1982). 98See National R.R. Passenger Corp. v. National Ass’n of R.R. Passengers (Amtrak), 414 U.S. 453, 458 (1974) (the maxim “clearly compels” the conclusion that Congress intended to do only what it did expressly), discussed in Note, supra note 97, at 895.

99 S. REP. NO. 96-96, 96th Cong., 1st Sess. 52 (1979) cited in Havighurst, supra note 13, at 148 (emphasis added).

100 Id.

101 H.R. REP. NO. 96-190, 96th Cong., 1st Sess. 54 (1979) discussed in Havighurst, supra note 13, at 161.

102 Id.

103 Id. at 160. Id..

104 Id.

105 Id.

106 Id. at 160-61.

107 1979 S. REP. at 3, reprinted in 1979 U.S. Code Cong. & AD. News 1308.

108 Havighurst, supra note 13, at 162.

109 Epstein, supra note 7, at 2. See infra notes 115-22 and accompanying text.

110 In addition to CON review, HSAs alsoreview initial capital expenditures under § 1122 of the Social Security Act of 1972. 42 U.S.C. § 1320a-l (1976 & Supp. Ill 1979). Section 1122 review is an optional program which enables participating states to use federal sanctions toreinforce their CON decisions. If the state agency recommends and the Secretary of DHHS finds that a proposed capital expenditure is unwarranted based on the § 1122 review, then the interest, depreciation, and return on equity attributable to that project will not be reimbursed under the Medicare, Medicaid, and Maternal and Child Health Programs. 42 U.S.C. § 320a-l(d) (1976).

111 National Gerimedical, 452 U.S. at 390 n.15.

112 Id. at 393 n. 18.

113 In Huron Valley Hosp., Inc. v. City of Pontiac, 666 F.2d 1029 (6th Cir. 1981), decided after National Gerimedical, the United States Court of Appeals for the Sixth Circuit reversed the lower court and found no implied immunity on facts involving a much more direct conflict between the Planning Act and the antitrust laws. Id. at 1031. Where Michigan’s state health planning and development agency, acting on the recommendation of a local HSA, refused to issue a CON to Huron Valley but instead issued a CON to a competitor torebuild its existing hospital, the Sixth Circuit held that: (1) Huron Valley had standing to sue; (2) consideration of Huron Valley’s antitrust allegation that Pontiac General Hospital and its allies had captured the administrative process and thereby restricted market entry was not precluded by the Planning Act; and (3) combination of prior resort doctrines of administrative law prevented adjudication of the antitrust claim until after state proceedings were completed. Id. at 1030.

While the Huron Valley court quoted Footnote 18, it made no attempt to apply it to the facts of the case. It simply applied the no blanket implied immunity holding without the qualification at Footnote 18. Id. at 1034.

114 National Gerimedical, 452 U.S. at 390.

115 Id.

116 Id.

117 Parker v. Brown, 317 U.S. 341 (1943).

118 National Gerimedical, 452 U.S. at 385. r

119 Parker v. Brown, 317 U.S. at 368.

120 See, e.g., Goldfarb v. Virginia State Bar Ass’n, 421 U.S. 773 (1975); Cantor v. Detroit Edison, 428 U.S. 579 (1976); California Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S. 97 (1980).

121 Midcal, 445 U.S. 105. The most recent Supreme Court articulation of the state action doctrine is Community Communications Co., Inc. v. City of Boulder, 102 S. Ct. 835 (1982) (the City of Boulder’s ordinance setting a three month moratorium on cable television expansion held not exempt from antitrust scrutiny under the Parker doctrine). However, the Boulder opinion concerns application of the doctrine to the actions of municipalities, not states, and therefore does not affect this analysis of National Gerimedical.

122 The major Supreme Court cases developing this doctrine are: R.R. President’s Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961) (a concerted attempt to influence legislation held not invalid under the Sherman Act simply because of its anticompetitive effect—the Sherman Act was designed toregulate business and not political activity); UMW v. Pennington, 381 U.S. 657, 670 (1965) (“Joint efforts to influence public officials do not violate the antitrust laws even though intended to eliminate competition.”); California Motor Trans-port Trucking Co. v. Trucking Unlimited, 404 U.S. 508 (1972).

123 40 4 U.S. at 510-11.

124 See supra note 110.

125 Miller, supra note 7, a t 892.

126 Epstein, supra note 7, at 12.

127 Congress has an ideal opportunity to clarify its intent when it renews the Planning Act, which expired October 1, 1982. The Act is still in effect under Continuing Resolution HJ. Res. 599. The continuing resolution runs through December 17, 1982 but contains a provision authorizing its renewal until formal amendments are passed to supersede it. The House of Representatives has passed H.R. 704 which would continue and fund the Planning Act under a block grant.Two bills are now pending before the Senate. They are S. 2311 (Amendments to the National Institutes of Health Reauthorization Bill, which was reported out of the Committee on Labor and Human Resources in March, 1982) and S. 5720 (Amendments to S. 2311), under which the Planning Act would be phased out.

128 Epstein, supra note 7, at 10-12.

129 Havighurst, supra note 13, at 167.

130 Id.

131 Id. at 169.

132 Id.

133 Id.

134 National Gerimedkal, 45 2 U.S. at 39 3 n.18.

135 Havighurst, supra note 13.

136 See supra note 79 and accompanyin g text.

137 See supra note 9 5 and accompanying text.

138 See Broadcast Music, Inc. v. CBS, Inc., 441 U.S. 1, at 23-24.

139 3 See supra note 126 and accompanying text.

140 Brodleyon Ventures and Antitrust Policy, 9 5 Harv. L. Rev. 1523 (1982).

141 Id. at 1588.

142 Id.

143 National Gerimedkal, 452 U.S. at 393 n. 18.

144 Historically, the courts have taken two basic approaches to antitrust analysis. The first is referred to as the per se doctrine, and the second as the rule of reason standard. The per se doctrine labels as illegal any agreement or action the nature and necessary effect of which is so plainly anticompetitive that no elaborate study of the reasons for the practice or its effects is needed. Northern Pac. Ry. v. United States, 356 U.S. 1 (1958). Examples include price-fixing, division of markets, group boycotts, and tying arrangements. The rule of reason standard requires an extensive analysis of the facts peculiar to the industry and of the nature, purpose and effect of the challenged agreement or action before reaching a decision about illegality. Board of Trade of Chicago v. United States, 246 U.S. 231 (1918). Emphasis is on whether the action in question promotes or suppresses competition. National Soc’y of Professional Eng’rs v. United States, 435 U.S. 679 (1978). “The true test of illegality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition.” Id. Included are exclusive dealing arrangements, vertical territorial restrictions, and all other non-per se activities.

145 Brodley, supra note 140, at 1537.

146 Id. at 1523.

147 Id.

148 Id. at 1524.

149 629 F.2d 1351 (5th Cir. l980).Seealso Mardirosian v. American Inst. of Architects, 474 F. Supp. 628 (D.D.C. 1979) and United States v. American Soc’y of Anesthesiologists, 473 F. Supp. 147 (S.D.N.Y. 1979); Leibenluft & Pollard, Antitrust Scrutiny of the Health Professions: Developinga Framework for Assessing Private Restraints 34 VAND. L. Rev. 927, 955-58 (1981) (other examples of cases where courts have used an intermediate approach to antitrust scrutiny).

150 Realty Multi-List, 629 F.2d 1351, discussed in Brodley, supra note 140, at 1568.

151 Brodley, supra note 140, at 1568-69.

152 Brodley, supra note 140, at 1539.

153 Havighurst, supra note 13, at 170.

154 Miller, supra note 7, at 891.

155 Planning Act, 42 U.S.C. § 300k-2(b)(2) (1976 and Supp. Il l 1979), noted in Miller, supra note 7, at 891.

156 Havighurst, supra note 13, at 171. 157 Id- 158 Payto n & Powsner , Regulation Through the Looking Glass: Hospitals, Blue Cross, and Certificate of Need, 7 9 M I C H L. Rev. 203 , 20 9 (1980).

160 Havighurst, supra note 13, at 171.

161 Miller, supra note 7, at 882.

162 Id. One way in which Congress attempted to deal with this problem was to give consumers a voice in health planning, i.e., to democratize the cartel. Havighurst, supra note 13, at 171. The Planning Act requires consumers and providers toreach a consensus on the future of area health resources. Miller, supra note 7, at 885. Almost inevitably, however, the called-for consensus is a compromise among providers rather than between consumers and providers. Miller, supra note 7, at 885.

163 Havighurst, supra note 13, at 175.

164 Halper, supra note 1, at 34.

165 Legal Times, supra notes 80 & 81.

166 Havighurst, supra note 13,-at 175.

167 Id. at 172-73.

168 Id. at 173.