Otiz v. st. peter’s case study 159223

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1) Read the case study (“Contract Violates Antitrust Laws”) on pages 100-101 in the textbook and answer the two discussion questions.

2) Write a paper (1,000-1,500 words) that addresses the discussion questions. Include a detailed rationale for your answers.

3) Prepare this assignment according to the APA guidelines found in the APA Style Guide, located in the Student Success Center. An abstract is not required.

4) This assignment uses a grading rubric. Instructors will be using the rubric to grade the assignment; therefore, students should review the rubric prior to beginning the assignment to become familiar with the assignment criteria and expectations for successful completion of the assignment.

 

Citation: Oltz v. St. Peter’s Community Hosp.,

 

 

 

 

 

 

19 F.3d 1312 (9th Cir. 1994)

 

 

 

 

 

 

 

Facts

 

 

 

 

 

 

 

Oltz, a nurse anesthetist, brought an antitrust

 

 

 

action against physician anesthesiologists and St.

 

 

 

Peter’s

 

 

 

Community Hospital after he was terminated.

 

 

 

Oltz had a billing agreement with the hospital,

 

 

 

which provided 84% of the surgical services

 

 

 

in the rural community that it served. The anesthesiologists

 

 

 

did not like competing with the nurse

 

 

 

anesthetist’s lower fees and, as a result, entered

 

 

 

into an exclusive contract with the hospital on April

 

 

 

29, 1980, in order to squeeze the nurse anesthetist

 

 

 

out of the market. This resulted in cancellation of

 

 

 

the nurse anesthetist’s contract with the hospital.

 

 

 

Oltz filed a suit against the anesthesiologists and

 

 

 

hospital for violation of the Sherman Antitrust Act,

 

 

 

15 U.S.C. § 1. The anesthesiologists settled for

 

 

 

$462,500 before trial.

 

 

 

The case against the hospital proceeded to trial.

 

 

 

The jury found that the hospital conspired with

 

 

 

the anesthesiologists and awarded the plaintiff

 

 

 

$212,182 in lost income and $209,649 in future

 

 

 

damages. The trial judge considered the damage

 

 

 

award to be excessive

 

 

 

and ordered a new trial.

 

 

 

The hospital motioned the court to exclude all

 

 

 

damages after June 26, 1982, which was the date

 

 

 

that the hospital renegotiated its exclusive contract

 

 

 

with the anesthesiology group. The court decided

 

 

 

that Oltz failed to prove that the renegotiated contract

 

 

 

also violated antitrust laws, thus ruling that

 

 

 

Oltz was not entitled to damages after June 26,

 

 

 

1982. Because

 

 

 

Oltz conceded that he could not

 

 

 

prove damages greater than those offset by his

 

 

 

settlement

 

 

 

with the physicians, his claim for damages

 

 

 

against the hospital was disposed of by summary

 

 

 

judgment.

 

 

 

The judge who presided over Oltz’s request for

 

 

 

attorneys’ fees restricted the amount that he could

 

 

 

claim. Because Oltz had been denied damages

 

 

 

from the hospital, the judge refused to award attorneys’

 

 

 

fees or costs for work performed after the

 

 

 

1986 liability trial.

 

 

 

 

 

Issue

 

 

 

 

 

 

 

Was Oltz entitled to seek recovery for all damages

 

 

 

resulting from destruction of his business after

 

 

 

June 26, 1982?

 

 

 

 

 

Holding

 

 

 

 

 

 

 

The US Court of Appeals for the Ninth Circuit

 

 

 

held that Oltz was entitled to seek recovery for all

 

 

 

damages.

 

 

 

 

 

Reason

 

 

 

 

 

 

 

Oltz introduced evidence that the initial exclusive

 

 

 

contract violated antitrust laws and that such

 

 

 

violation destroyed his practice. “Because the initial

 

 

 

conspiracy destroyed his practice, Oltz is entitled

 

 

 

to seek recovery for all damages resulting from the

 

 

 

destruction of his business. . . . The legality of any

 

 

 

subsequent agreements between the conspirators

 

 

 

is irrelevant, because the April 29, 1980, contract

 

 

 

severed the lifeline to Oltz’s thriving practice. . .”

 

 

 

Discussion

 

 

 

 

 

 

 

1. What should parties to a contract be aware of

 

 

 

when negotiating exclusive contracts?

 

 

 

2. What remedies are available when one party

 

 

 

breaches a contract by refusing to perform an

 

 

 

agreed-upon service?

 

 

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