## Facts

- Dr. Simon J. Pinhas, an ophthalmologist in Los Angeles, held staff privileges at Midway Hospital Medical Center, owned by Summit Health, Ltd.
- Pinhas alleged that Summit Health, the hospital, and physicians on the medical staff conspired to exclude him from the Los Angeles ophthalmological services market through misuse of the hospital peer-review process after he refused to follow an allegedly unnecessary and costly surgical procedure.
- He alleged peer-review proceedings were conducted improperly, resulted in termination of his staff privileges, and would generate an adverse report disseminated beyond the hospital.
- The complaint asserted that ophthalmological services at hospitals affect interstate commerce because hospitals and physicians serve out-of-state patients and receive Medicare reimbursements.
- The complaint further asserted that peer-review reports are routinely transmitted across state lines and affect physicians’ employment opportunities nationwide.
- The district court dismissed the Sherman Act § 1 claim for failure to satisfy the interstate commerce (jurisdictional) requirement; the Ninth Circuit reversed.

## Issues

1. Whether a physician alleging a § 1 Sherman Act conspiracy to exclude him via hospital peer review sufficiently pleads the interstate commerce requirement without alleging actual effects on interstate commerce.
2. Whether allegations that a hospital serves nonresident patients, receives Medicare payments, and participates in interstate dissemination of peer-review reports adequately connect the alleged restraint to interstate commerce.

## Decision

- The Supreme Court affirmed the Ninth Circuit and reinstated the § 1 claim at the pleading stage.
- The Court held that Pinhas was not required to allege an actual effect on interstate commerce.
- The proper inquiry is the potential economic harm if the alleged conspiracy succeeded, focusing on the agreement and its foreseeable market impact.
- Allegations that exclusion would reduce ophthalmological services in the Los Angeles market, considered as a matter of practical economics, satisfied the interstate commerce requirement.
- The Court rejected a rule that a boycott of a single physician is categorically insufficient to meet Sherman Act interstate commerce jurisdiction.

## Legal Principles

- For Sherman Act § 1, the jurisdictional interstate commerce element may be satisfied at the pleading stage by allegations showing that the challenged agreement, if successful, would foreseeably restrain trade in a market tied to interstate commerce.
- A plaintiff need not plead realized or measurable effects on interstate commerce; potential harm from the alleged conspiracy is the relevant focus.
- Courts assess interstate commerce connections using a practical-economics approach, considering the market context and the economic role of the challenged mechanism (including hospital peer review and related reporting systems).

## Conclusion

The Court held that allegations of a conspiracy to exclude a physician through hospital peer review can satisfy Sherman Act § 1’s interstate commerce requirement at the motion-to-dismiss stage when the alleged restraint, if successful, would reduce services in a market connected to interstate commerce and operates through mechanisms linked to interstate patients, federal reimbursement, and interstate reporting.


Summit Health, Ltd. v. Pinhas, 500 U.S. 322 (1991)