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Santa Barbara Cottage Hospital

Paul Wellman

Santa Barbara Cottage Hospital


$5 Million Anti-Trust Trial Underway Against Cottage

Surgeon Charges Conspiracy; Hospital Insists Quality of Care Paramount


The anti-trust case brought by Santa Barbara orthopedic surgeon Dr. Alan Moelleken against Cottage Health Systems and a team of three neurosurgeons — Thomas Jones, Scott Conner, and Richard Chung — promises to play out as a courtroom showdown between David and Goliath. But based on the opening arguments made last Friday in the courtroom of Judge Thomas Anderle, one of big challenges confronting the jury of eleven women and one man will be to ferret out who is the real David and who is the real Goliath.

At least on paper, the edge might appear to be with Moelleken. Since the closing of St. Francis Hospital across town several years ago, Cottage has clearly emerged as the South Coast’s health care mega-monopoly, swallowing up or merging with almost every other major institutional care provider. Moelleken contends that his efforts to get on the list of doctors offering emergency care for acute spinal trauma victims have been effectively stymied since 1996. Moelleken, who opened what’s become a thriving practice in Santa Barbara in 1994, claims he’s been the victim of a conspiracy between Cottage Health System on one hand and the three neurosurgeons making up the Neurosurgical Association — Jones, Conner and Chung — on the other to unfairly deny him access to potential business.

Dr. Alan Moelleken
Click to enlarge photo

Dr. Alan Moelleken

Because of this, Molleken claims, he’s lost $5.1 million. Only a small portion of that, he’s asserted, would have come from actual emergency surgeries. The vast bulk of the business Moelleken has lost out on came from non-emergency trauma cases he’s lost access to because he’s been excluded from the on-call list negotiated between Cottage Hospital and the Neurosurgical Association. Moelleken’s attorney, Maxwell Blecher, charged that the surgeons with the Neurosurgical Association not only rebuffed his entreaties for referrals but also actually threatened to withhold their services should Cottage Hospital take any steps to include Moelleken on the rotation of on-call specialists.

“This lawsuit is not a spontaneous reaction of a greedy man to make money,” stated Blecher. Moelleken, he said, was trained to perform spinal surgery and has specialized in spinal surgery his entire professional life. “This is what he was trained for,” Blecher said. He noted that $5.1 million might sound like a lot of money, but sought to persuade the jurors it really wasn’t considering the length of time — five years — and number of employees —100 — who’ve suffered from the loss of economic activity. Blecher concluded his opening arguments by telling the jurors, “No matter how how thin you try to make a pancake, there are always two sides.”

Leading the charge for the other side was Barry Cappello, representing the three neurosurgeons, and Jeffrey LeVee, representing Cottage Health Systems. LeVee and Cappello both emphatically denied any conspiracy took place, and both insisted that the decision to exclude Moelleken from the on-call panel of neurosurgeons was based on providing the best patient care a relatively small community like Santa Barbara can economically sustain. Moelleken, they explained, had been rebuffed by the three neurosurgeons because they’d worked with him in the past and found him to be unreliable. They claimed he failed to show on occasion, and they were forced to back him up.

While big city hospitals like UCLA and Cedars-Sinai have the patient base to sustain a panel of neurosurgeons, Santa Barbara does not. LeVee argued that Cottage Health System opted to field only a panel of neuro-surgeons because they can respond to both brain trauma and spinal trauma, as opposed to a spinal specialists, like Moelleken, who can only work on spines. (It turns out there are only eight cases a year on average where their emergency services are required.) LeVee and Cappello detailed how Cottage administrators responded to Moelleken’s entreaties by convening two panels of seven independent physicians to evaluate his demands. One panel unanimously concluded it was not in the best interest of patient care for Cottage to create a new panel of spinal surgeons to be on-call for emergency situations. The other panel concluded — also unanimously — that it would not be in the best interest of patient care for Moelleken to be included in the on-call panel of specialists to respond to emergency spinal and brain traumas. Both attorneys hotly disputed Moelleken’s accusation that the panel of neurosurgeons threatened to withhold services should Moelleken be added to the call list. Cappello said the neurosurgeons indicated they’d need to re-negotiate the terms of their existing contract if Cottage sought to change the terms on them, but he denied that constituted a threat of any kind.

Where LeVee was self-deprecating and somewhat folksy, Cappello was crisp and sharp. Both argued that Moelleken has been spectacularly successful as a business operator — a “mini-empire” Cappello called it — opening six clinics throughout the state that yielded him an annual salary in the $4 million range. How has he been damaged, they demanded, by not being on Cottage’s call list? Cappello repeatedly pronounced Moelleken’s name as “Mulligan,” prompting Moelleken’s attorney to beseech Judge Anderle to instruct Cappello to pronounce the plaintiff’s name correctly. Cappello made it clear that when he gets through, that will be the least of Moelleken’s concerns. He vowed to demonstrate that some of Moelleken’s business practices were less than savory. Specifically, he accused Moelleken of over-prescribing pain medication to clients and awarding physicians’ assistants with bonuses based on the number of prescriptions they issued. Likewise, he suggested that Moelleken insisted that his patients receive all their rehab treatment from him, regardless if there were better or cheaper providers available. He also suggested that Moelleken made sure to max out the individual sub-treatments — physical therapy, massage, acupuncture, and injections — the insurance companies would cover before moving them on to a different modality.

Cappello described his clients as brilliant and highly trained professionals who’ve sacrificed anything resembling a normal life so they can be on-call 24 hours a day, seven days a week, within 15 minutes to provide premium care to those in need of emergency treatment. Of Moelleken, he said repeatedly, “What Alan Moelleken wants, Alan Moelleken gets. And if he doesn’t get what he wants, he hires an attorney to sue.”

Judge Anderle, as ever a robust and forceful courtroom presence, reminded the jurors that nothing they’d heard from any of the attorneys constituted evidence, only what they contend the evidence will show. The real work begins Monday, when the dueling attorneys begin what promises to be a long and arduous campaign to marshal the evidence to fit their arguments.

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