Court: Court of Appeals for the Ninth Circuit; September 10, 1999; Federal Appellate Court
The case examines the extent of state action immunity from federal antitrust laws under California's Emergency Medical Services System and the Prehospital Emergency Medical Care Personnel Act (EMS Act). Redwood Empire Life Support (Redwood) filed an antitrust claim against Sonoma County and Sonoma Life Support, contesting the County's exclusive contract with Sonoma Life Support for ambulance services in central Sonoma County. The district court had issued a permanent injunction against the County, ruling the EMS Act did not permit exclusive contracts for non-emergency ambulance services at the basic life support (BLS) level.
However, referencing the California court's interpretation in Schaefer’s Ambulance Service v. County of San Bernardino, the current decision reverses the lower court's ruling, establishing that the EMS Act does authorize exclusive franchises for all service levels provided by ambulances. Under the EMS Act, counties can develop emergency medical service programs, and local EMS agencies can create exclusive operating areas for ambulance services, receiving immunity from federal antitrust laws for their actions. The Sonoma County Board of Supervisors enacted ordinances that allowed the creation of these exclusive areas, encompassing emergency ambulance services, advanced life support (ALS), and limited ALS, while clarifying that basic life support is a subset of ALS and not separately recognized under the exclusive operating area provisions.
Sonoma County's ordinance mandated that all ambulances in its exclusive operating area provide limited Advanced Life Support (ALS) services. The County established an "exclusive franchise zone" allowing only one provider, Sonoma Life Support, to offer ambulance services. Following a competitive bidding process, the County awarded the contract to Sonoma Life Support, which led to Redwood, a former service provider, being informed it could no longer operate in the exclusive area and was denied a permit for non-emergency services. The County indicated that only Sonoma Life Support was eligible for emergency ambulance permits, but Redwood could operate non-emergency vehicles without advanced medical equipment.
In 1991, Redwood sued Sonoma County and Sonoma Life Support, claiming the exclusive contract violated federal antitrust laws regarding non-emergency interfacility transfers. The district court issued a preliminary injunction against the contract as it applied to non-emergency medical transport, which was later affirmed. Upon trial, however, the court dismissed Redwood’s antitrust claims, citing the A-1 Ambulance Service, Inc. v. County of Monterey decision, which allowed exclusive ALS providers to engage in non-emergency transportation. Redwood subsequently moved to amend the judgment, arguing that the district court overlooked the inclusion of Basic Life Support (BLS) services within the exclusive operating area. After reviewing arguments, the district court granted Redwood's motion and issued a permanent injunction against Sonoma County, blocking enforcement of the contract with Sonoma Life Support in relation to Redwood's provision of non-emergency ambulance services at a BLS level.
Redwood was awarded $47,243.25 in costs and attorney's fees by the district court under 15 U.S.C. § 26. The analysis focuses on the applicability of Section 1 of the Sherman Act, which prohibits contracts in restraint of trade, to local governments, as established in City of Lafayette v. Louisiana Power & Light Co. The County's contract granting Sonoma Life Support a monopoly for ambulance services may violate this provision unless it qualifies for state action immunity, a doctrine allowing local governments to restrict trade if state law authorizes such action. California has been found to grant this immunity for emergency medical services plans in accordance with the EMS Act. If the County's contract aligns with the EMS Act, it can be immune from federal antitrust laws. Sonoma County argues its exclusive operating area is justified under the EMS Act, which allows a single provider for ambulance services. However, Redwood contends this requirement effectively excludes other providers from non-emergency BLS services, arguing that the EMS Act is limited to emergency services. The district court sided with Redwood, referencing a prior case (A-1 Ambulance) that did not resolve whether a monopoly on non-emergency BLS services falls outside EMS Act immunity. This remains an issue of state statutory interpretation. Following the district court's injunction, the California Court of Appeal in Schaefer’s Ambulance Service v. County of San Bernardino ruled that counties can create exclusive operating areas for all services rendered by emergency ambulances, not limited to advanced life support, which may impact the interpretation of the EMS Act in this context.
San Bernardino County contended that all interfacility transfers conducted by emergency ambulances, defined as those staffed to provide at least Basic Life Support (BLS), qualify as emergency ambulance services. The court supported the county's position, referencing the A-1 Ambulance decision, which clarified that the classification of an ambulance service is based on the service level it can provide, rather than the patient's emergency status. The California Court of Appeal affirmed that emergency ambulances can facilitate non-emergency interfacility transfers within a designated operating area under the Emergency Medical Services (EMS) Act. The EMS Act lacks a definition for emergency ambulance services, leading to the understanding that an emergency ambulance must offer at least BLS service. The court ruled that counties may create exclusive operating areas where operators can provide non-emergency BLS services, reinforcing a regulatory framework that balances protections for exclusive operators in populous areas against the requirement to serve less profitable regions. This framework is intended to prevent external providers from competing for non-emergency transfers, which would undermine the financial stability of exclusive operators. The court also noted that excluding interfacility transfers from exclusive areas would complicate enforcement, necessitating assessments of patient needs for each ambulance service. Ultimately, the court concluded that Sonoma County's ordinances and its contract with Sonoma Life Support are shielded by state action immunity, allowing Sonoma Life Support, which provides Advanced Life Support (ALS), to exclusively conduct non-emergency interfacility transfers. The court vacated the district court's injunction, affirming the county's authority to create an exclusive operating area for all emergency ambulance services.
Redwood argues that, regardless of California courts' interpretations of state law, state action immunity should not be governed by those interpretations. Citing *Columbia Steel Casting Co. v. Portland General Electric Co.*, Redwood emphasizes that a state public utility commission did not grant immunity to private utilities due to a lack of clear intent to create exclusive operating areas. In contrast, the EMS Act clearly expresses a state policy for exclusive operating areas for emergency ambulance services, as outlined in Cal. Health & Safety Code §§ 1797.6 and 1797.85. Redwood asserts that the EMS Act does not confer immunity for non-emergency basic life support (BLS) services since § 1797.85 specifically mentions only emergency services. However, this argument is countered by *Town of Hallie v. City of Eau Claire*, which established that a legislature does not need explicit authorization to confer antitrust immunity if the statute's logical outcome displaces competition. This court has previously recognized that the EMS Act’s provisions can have anti-competitive effects.
Additionally, Redwood claims the exclusive operating area was created by the County’s Board of Supervisors rather than the EMS agency, referencing *Memorial Hosp. Ass’n v. Randol*. The County argues this point was raised too late in the appeal and should not be considered. The court notes that similar claims in previous cases were dismissed when not raised at trial. Sonoma County maintains that it established the exclusive area based on EMS agency recommendations, a permissible action under *Randol*. The court refrains from addressing this issue due to its reliance on disputed facts. Since Redwood is no longer the prevailing party, the district court's award of costs and fees to Redwood, totaling $47,243.25, is vacated. The judgment is reversed, and the injunction is vacated. Key provisions of the EMS Act allow local EMS agencies to create exclusive operating areas if a competitive selection process is utilized.
