`
`
`
`
`
`In the
`United States Court of Appeals
`For the Seventh Circuit
`____________________
`
`No. 21‐3109
`RICARDO VASQUEZ,
`
`Plaintiff‐Appellant,
`
`v.
`
`INDIANA UNIVERSITY HEALTH, INC., et al.,
`
`Defendants‐Appellees.
`____________________
`
`Appeal from the United States District Court for the
`Southern District of Indiana, Indianapolis Division.
`No. 21‐cv‐1693 — Jane Magnus‐Stinson, Judge.
`____________________
`
`ARGUED APRIL 8, 2022 — DECIDED JULY 8, 2022
`____________________
`
`Before WOOD, HAMILTON, and JACKSON‐AKIWUMI, Circuit
`Judges.
`WOOD, Circuit Judge. Dr. Ricardo Vasquez is a vascular sur‐
`geon; he has practiced in Bloomington, Indiana, since 2006.
`Vasquez alleges that in the time since he opened up shop, In‐
`diana University Health (IU Health) has amassed considera‐
`ble market power in the region’s medical industry. Vasquez
`sued IU Health, claiming antitrust violations under the Sher‐
`man Act, 15 U.S.C. §§ 1–7, and the Clayton Act, id. §§ 12–27.
`
`
`
`Case: 21-3109 Document: 28 Filed: 07/08/2022 Pages: 12
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`No. 21‐3109
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`IU Health moved to dismiss, arguing that neither the Sher‐
`man Act nor the Clayton Act claims were premised on a plau‐
`sible geographic market, and that the Clayton Act claims also
`were time‐barred. The district court agreed on both points
`and dismissed the suit. But Vasquez’s allegations passed mus‐
`ter for the pleading stage, and so we reverse.
`I
`We begin with a few more details about Bloomington and
`the surrounding region, Vasquez’s practice, IU Health’s his‐
`tory in the market, and the complaint’s allegations. At this
`stage, we accept all well‐pleaded facts as true and draw all
`reasonable inferences in Vasquez’s favor. Mashallah, Inc. v.
`West Bend Mut. Ins. Co., 20 F.4th 311, 317 (7th Cir. 2021).
`Bloomington is a city in Monroe County, Indiana, with a
`population of about 90,000. The surrounding metropolitan
`statistical area has a population of about 200,000. Blooming‐
`ton is the largest metro area in its corner of southwestern In‐
`diana. From Bloomington, one can drive an hour and ten
`minutes northeast to Indianapolis (population 865,000); two
`hours southwest to Evansville (population 120,000); two
`hours southeast to Louisville, Kentucky (population 620,000);
`or two and a half hours east to Cincinnati, Ohio (population
`300,000). Most of the region bounded by those larger cities is
`rural, albeit spotted with small cities and large towns.
`Vasquez arrived in Bloomington in 2006 and soon after
`opened an independent vascular‐surgery practice. Many vas‐
`cular‐surgery patients require treatment with specialized
`equipment in a hospital setting, and so Vasquez sought and
`obtained admitting privileges at three different area hospitals:
`Bloomington Hospital, Monroe Hospital, and the Indiana
`
`
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`Specialty Surgery Center. Vasquez performed the lion’s share
`of his inpatient procedures (over 95%) at Bloomington Hospi‐
`tal, which had the best equipment.
`IU Health entered the Bloomington market in 2010 when
`it acquired Bloomington Hospital. (At the time, IU Health was
`known as Clarian Health Partners; it rebranded in 2011. Clar‐
`ian was formed by the merger of three Indianapolis‐area hos‐
`pitals in 1997.) In May 2017, IU Health expanded its footprint
`in southwestern Indiana by acquiring Premier Healthcare, an
`independent physician group based in Bloomington. At the
`time of the acquisition, Premier employed many of the re‐
`gion’s doctors, especially primary‐care providers (PCPs).
`Vasquez alleges that, as a consequence of the Premier acqui‐
`sition, IU Health now employs 97% of PCPs in Bloomington
`and over 80% of PCPs in the wider region.
`Vasquez’s alleged problems with IU Health began shortly
`after the Premier acquisition. At this early stage, little turns on
`the details, so we can be brief. Vasquez contends that in
`“[a]pproximately 2017,” around the time of the acquisition, IU
`Health launched “a systematic and targeted scheme” to ruin
`his reputation and practice. The scheme was motivated by
`Vasquez’s commitment to independent practice. IU Health
`preferred to employ the region’s doctors directly, an agenda
`which Vasquez resisted. In June 2018, IU Health threatened to
`revoke Vasquez’s privileges at Bloomington Hospital, and its
`employees began to cast aspersions on his reputation—alleg‐
`ing, for example, that he had been sued with unusual fre‐
`quency. Needless to say, Vasquez disputes the factual accu‐
`racy of these claims. In April 2019, IU Health followed
`through on its threat, revoking Vasquez’s Bloomington ad‐
`mitting privileges.
`
`
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`In June 2021, Vasquez filed this lawsuit. IU Health moved,
`successfully, to dismiss, and Vasquez now appeals.
`II
` Vasquez’s appeal raises three issues: (1) the dismissal of
`his claims under Sherman Act section 2, 15 U.S.C. § 2, and
`Clayton Act section 7, id. § 18, for failure to allege a proper
`geographic market; (2) the dismissal of the Clayton Act claims
`on timeliness grounds; and (3) the decision not to give him
`one opportunity to amend his complaint before dismissing
`with prejudice. We review the first two issues de novo, Warciak
`v. Subway Restaurants, Inc., 949 F.3d 354, 356 (7th Cir. 2020),
`and the third for abuse of discretion.
`A
`We begin with the geographic‐market analysis. Vasquez’s
`complaint needed to allege only one plausible geographic
`market to survive a motion to dismiss. See Bell Atlantic Corp.
`v. Twombly, 550 U.S. 544, 555 (2007). A rational jury could find
`that Bloomington is such a market, as we now explain.
`In FTC v. Advocate Health Care Network, 841 F.3d 460 (7th
`Cir. 2016) (“Advocate”), a case concerning a hospital merger,
`we endorsed the use of the “hypothetical monopolist test” to
`analyze geographic healthcare markets. As a general matter,
`that test asks “what would happen if a single firm became the
`only seller in a candidate geographic region.” Id. at 468. “If
`that hypothetical monopolist could profitably raise prices
`above competitive levels, the region is a relevant geographic
`market.” Id. But if, instead, “customers would defeat the at‐
`tempted price increase by buying from outside the region, it
`is not a relevant market; the test should be rerun using a larger
`candidate region.” Id. In this sense, the inquiry “is iterative,
`
`
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`meaning it should be repeated with ever‐larger candidates
`until it identifies a relevant geographic market.” Id. Im‐
`portantly, the determination of the area of effective competi‐
`tion poses a question of fact, not one of law. See Fishman v.
`Estate of Wirtz, 807 F.2d 520, 531 (7th Cir. 1986).
`We see no reason to break with Advocate here. The hypo‐
`thetical‐monopolist test remains the best approach to geo‐
`graphic‐market analysis in the healthcare context. It focuses
`courts’ attention on the crucial question whether it is possible,
`within a given defined geographic area, for a hypothetical sin‐
`gle firm to engage in anticompetitive practices (i.e., raising
`price or reducing output, or otherwise harming consumer
`welfare). With that in mind, we turn to Vasquez’s arguments.
`Vasquez first posits that the vascular‐surgery market in
`Bloomington is inherently local. This is because “vascular sur‐
`gery patients need ongoing care, oftentimes lifetime care.” So,
`Vasquez reasons, if a Bloomington patient “is sent to Indian‐
`apolis, that patient must continue to travel for a lifetime if he
`or she wants continuity of care.” And because most patients
`would consider that a bad deal—as Advocate recognized, see
`841 F.3d at 470—insurers (the most directly affected buyers
`here) face pressure to provide vascular surgery in or near
`Bloomington.1 An insurer that does not provide such care
`
`
`1 We note in this connection that the antitrust laws confer a right of
`action on “any person … injured in his business or property,” see 15 U.S.C.
`§ 15, and that the Supreme Court has confirmed that both consumers, such
`as the insurers here, and competitors, such as Vasquez, fall within the
`scope of the law. See Assoc. Gen. Contractors of Cal., Inc. v. Cal. State Council
`of Carpenters, 459 U.S. 519, 538 (1983) (“[T]he Sherman Act was enacted to
`assure customers the benefits of price competition, and [the Court’s] prior
`
`
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`risks being outcompeted by other insurers within Blooming‐
`ton. It follows that a hypothetical monopolist over vascular
`surgery in Bloomington would be able to abuse its market
`power considerably by jacking up payor prices and freezing
`out potential competitors. In particular, because much vascu‐
`lar surgery is performed in a hospital setting with special
`equipment, a hypothetical vertically integrated monopolist
`that controlled the hospital, the equipment, and most of the
`surgeons would be well‐positioned to engage in anticompet‐
`itive practices.
`Vasquez also alleges that vascular surgeons’ reliance on
`referrals makes Bloomington an appropriate geographic mar‐
`ket in a second sense. The idea is that while Bloomington res‐
`idents may be willing to travel to Indianapolis for some cate‐
`gories of specialist care, they will not be willing to drive an
`hour or more for routine primary care. Bloomington, after all,
`has two hospitals, a medical‐school campus, and a metro pop‐
`ulation that ought to be more than adequate to support a
`healthy, competitive primary‐care practice market. All agree
`that vascular surgeons, who are specialists, get most patients
`by referral from primary‐care providers. Thus, a hypothetical
`monopolist over primary‐care services in Bloomington would
`control not only that market but also the flow of patients to
`vascular surgeons. By cutting off the flow of new patients to
`its vascular‐surgery competitors, the monopolist could cap‐
`ture the entire market, thereby positioning itself to raise payor
`prices without repercussion.
`
`
`cases have emphasized the central interest in protecting the economic free‐
`dom of participants in the relevant market”).
`
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`Both stories are plausible accounts of how a hypothetical
`monopolist could wield anticompetitive power in Blooming‐
`ton’s vascular‐surgery market. We could stop there; at the
`pleading stage, a plausible scenario is all we require to estab‐
`lish the geographic market. But as it happens, Vasquez goes
`considerably further. He alleges not only that a hypothetical
`monopolist could dominate the Bloomington market in the
`two ways he suggests but also that IU Health already does so.
`With regard to vascular surgery itself, Vasquez contends that
`IU Health controls the hospital with the most advanced
`equipment and, other than him, all the vascular surgeons.
`And regarding upstream referrals, he alleges without contra‐
`diction that IU Health employs 97% of the primary‐care phy‐
`sicians in Bloomington, meaning that virtually every patient
`sees an IU Health PCP. (That is one reason why the existence
`of other hospitals in the Bloomington area does not neces‐
`sarily defeat Vasquez’s claim.) To repeat: these contentions
`are by no means necessary in order adequately to plead a ge‐
`ographic market. But they are sufficient. The hypothetical‐
`monopolist test concerns hypotheticals, as it says on the label,
`not realities. But the detailed allegations about the on‐the‐
`ground realities in Bloomington drive home the key point:
`Vasquez’s allegations easily clear the plausibility bar.
`This is not the time to evaluate the merits of Vasquez’s al‐
`legations, and that in any event is a task that requires expert
`testimony. The motion‐to‐dismiss stage does not lend itself to
`rigorous hypothetical‐monopolist analysis. Normally, the
`way that analysis is conducted is by survey. Experts canvass
`a representative sample of local market participants, asking
`about both their actual behavior in the market as it is and how
`it would change if certain hypothetical conditions came to
`pass. Here, for instance, an expert might try to determine at
`
`
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`No. 21‐3109
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`what price point an insurer would stop paying for vascular‐
`surgery services in Bloomington, opting instead to cover only
`patients who went to specialists in Indianapolis. It may turn
`out that Indianapolis providers are close enough to act as a
`market check on any and all price increases. If so, Blooming‐
`ton would not be a geographic market. But for present pur‐
`poses, we cannot substitute our own speculations for the req‐
`uisite analysis.2
`It is worth recalling at this juncture what is required in a
`pleading. As the Supreme Court put it in Twombly, “a com‐
`plaint attacked by a Rule 12(b)(6) motion to dismiss does not
`need detailed factual allegations … .” 550 U.S. at 555. Indeed,
`the allegations do not even need to establish the probability
`of the plaintiff’s recovery. Id. at 556. They need only present
`“enough fact to raise a reasonable expectation that discovery
`will reveal evidence” of illegal acts. Id. So too in this case, we
`need not decide whether Vasquez’s story is probable; we are
`assessing only its plausibility.
`The district court found Vasquez’s complaint wanting for
`two reasons. First, it thought that Vasquez’s geographic‐mar‐
`ket allegations were contradictory. The purported contradic‐
`tion was between two factual claims in the complaint: (1) that
`
`
`2 We note, in this connection, that Vasquez alleges an alternative mar‐
`ket, “Southern Indiana,” which he defines to include Morgan, Owen,
`Monroe, Brown, Greene, Daviess, Martin, Lawrence, Orange, and Wash‐
`ington counties. For present purposes, we focus on Bloomington, both be‐
`cause it is the smallest plausible market alleged and because the alterna‐
`tive market includes it. That said, the Southern Indiana market may turn
`out to be the best object of analysis as this litigation progresses and further
`facts emerge. Our present attention to the Bloomington market should in
`no way be taken to limit the parties to arguments about that market.
`
`
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`patients “prefer to stay within Bloomington to receive care,”
`and (2) that “many of the patients who arrive at Bloomington
`Hospital for care travel from rural areas, some of them up to
`two hours away.” The district court saw an inconsistency be‐
`tween the two claims, and it thought that clash undermined
`the Bloomington market’s plausibility.
`We see several problems with this reasoning. First, Federal
`Rule of Civil Procedure 8(d)(3) specifically permits contradic‐
`tory pleadings, and so this criticism was misplaced. And in
`any event, our own examination of the allegations persuades
`us that they are not contradictory at all. They concern two dif‐
`ferent groups of people—urban and rural patients—with dif‐
`ferent expectations, motivations, and market behaviors.
`Bloomington is a regional hub, home to a major university
`and substantial medical infrastructure. Patients who reside
`there no doubt expect to get most medical care close to home.
`Patients in surrounding rural communities, in contrast, real‐
`istically expect to travel to hospitals in large cities when the
`alternative is getting sick or dying, though they may other‐
`wise prefer to purchase services at home in Loogootee (popu‐
`lation 2,751) or French Lick (population 1,841). Both allega‐
`tions could be true; indeed, both are true in many places. On
`top of that, the allegation about two‐hour travel is hardly the
`linchpin of Vasquez’s theory of the geographic market. It
`comprises two clauses buried thirty pages into the complaint,
`in the context of a tangential discussion of the impacts IU
`Health’s alleged monopoly has on patients. And even assum‐
`ing some level of tension between Vasquez’s allegations, a fi‐
`nal problem is that the district court did not attempt to situate
`that tension in any antitrust market‐analysis doctrine. A con‐
`tradiction could undermine a market’s plausibility if it
`
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`showed that the alleged market failed the hypothetical‐mo‐
`nopolist test. But we do not see how that could be true here.
`The district court also reasoned that Bloomington could
`not be “the appropriate geographic market” if “a significant
`portion of [IU Health’s] patients regularly travel substantial
`distances to get to Bloomington.” But this confuses two dif‐
`ferent sorts of market. The geographic market for an antitrust
`claim need not—and very often will not—correspond to the
`comprehensive market that the alleged monopolist serves.
`See United States v. E. I. du Pont de Nemours & Co., 353 U.S. 586,
`593 (1957) (explaining that “the bounds of a relevant market
`for the purposes of [a] case” need not be “coextensive with the
`total market”). At the fringes, even a monopolist is likely to
`face competition. Under Advocate, 841 F.3d at 476, the appro‐
`priate object of the geographic‐market analysis is the smallest
`market a hypothetical monopolist could dominate. Patient
`flows may help to define the borders of that market, but such
`flows are just one piece of data in the broader picture—they
`are not likely to be dispositive. To hold otherwise would be to
`carve a large loophole into antitrust law; realistically, some
`fuzziness about market boundaries will occur in most cases.
`To sum up: Either of Vasquez’s accounts of how a hypo‐
`thetical monopolist could dominate Bloomington’s vascular‐
`surgery market suffice for the pleading stage. Dismissal was
`thus not warranted.
`
`B
`The district court also gave a second reason for dismissing
`Vasquez’s Clayton Act claims (but not his Sherman Act
`claims): timeliness. The Clayton Act’s statute of limitations
`requires a damages action to be “commenced within four
`
`
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`years after the cause of action accrued.” 15 U.S.C. § 15b. The
`district court understood that requirement to bar Vasquez’s
`Clayton Act damages claim, and by analogy applied the equi‐
`table doctrine of laches to bar his injunctive claims. (Like the
`district court, we treat the laches defense at issue here as ris‐
`ing or falling with the statute of limitations defense, though it
`need not in every case.)
`Timeliness is an affirmative defense. “An antitrust cause
`of action accrues and the statute begins to run when a defend‐
`ant commits an act that injures a plaintiffʹs business.” In re
`Copper Antitrust Litig., 436 F.3d 782, 789 (7th Cir. 2006)
`(cleaned up). That rule “is qualified by the discovery rule,
`which postpones the beginning of the limitations period from
`the date when the plaintiff is wronged to the date when he
`discovers he has been injured.” Id. (cleaned up). We have ap‐
`plied a demanding standard to dismissals on timeliness
`grounds at the pleading stage of antitrust cases, asking
`whether “the plaintiff pleads itself out of court.” Xechem, Inc.
`v. Bristol‐Myers Squibb Co., 372 F.3d 899, 902 (7th Cir. 2004).
`Vasquez did not. To be sure, he filed suit four years and
`one month after IU Health acquired Premier. So, if that acqui‐
`sition started the clock, Vasquez missed his window by a
`month. But to affirm the dismissal, we would need to be sure
`that the undisputed facts show that the operative injury both
`occurred and was discovered at the moment of acquisition (or
`at the latest, during the following month). But the complaint
`does not paint such a one‐sided picture.
`The earliest potential injury the complaint identifies is its
`allegation of a “systematic and targeted scheme to ruin Dr.
`Vasquez’s reputation and practice” in “approximately 2017,
`around the time that IU Health acquired Premier.” But
`
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`No. 21‐3109
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`“[a]round the time” plausibly could mean “six weeks after,”
`which would be enough to save the Clayton Act claims for
`now. Nor do we have enough information, at this stage, to
`ascertain exactly when Vasquez learned of the purported
`scheme, which is what really matters. Another plausible
`measuring stick occurred a year later, in June 2018, when IU
`Health’s anti‐Vasquez vendetta is alleged to have started in
`earnest. That is when, for instance, IU Health employees be‐
`gan to suggest that Vasquez had often been sued and to
`threaten termination of privileges. A third plausible measur‐
`ing stick is the actual revocation of Vasquez’s privileges in
`April 2019—the event that one assumes would have had the
`most concrete impact on Vasquez’s income. Until IU Health
`took that step, Vasquez reasonably may have thought that an
`accommodation was possible.
`Without discovery, choosing among these alternatives is
`difficult, if not impossible. What matters is that the complaint
`presents a plausible account under which his suit is timely.
`We note as well that timeliness is an affirmative defense and
`thus normally (and here) is not properly resolved at the Rule
`12(b)(6) stage.
`
`III
`Given our disposition of Vasquez’s principal arguments,
`we have no need to discuss his request to file an amended
`complaint. The district court’s grant of IU Health’s motion to
`dismiss is REVERSED and the case is REMANDED for further pro‐
`ceedings consistent with this opinion.
`
`