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Gordon H. CoplandSteptoe & Johnson PLLC
304-933-8162gordon.copland@steptoe-
johnson.com
FEDERAL - Sherman Act 15 U.S.C. § 1 et seq.
(1890)
STATE - W. Va. Anitrust Act W. Va. Code § 47-18-
1 et seq. (1978)
Both preclude “monopolies and “restraints of
trade”
Private lawsuits in state or federal court
West Virginia Attorney General
Federal Trade Commission
Department of Justice
ENFORCEMENTENFORCEMENT
Federal statute applies to interstate commerce
State law applies to commerce in West Virginia
Key provision of both is identical
“Every contract, combination in the form of trust
or
otherwise or conspiracy in restraint of trade . . . is
declared to be illegal”
STATUTORY PROVISIONSSTATUTORY PROVISIONS
110 years of cases – still not perfectly clear
except as to “per se” categories
Always requires agreement between two different
parties
Agreements among COMPETITORS are subject to
special scrutiny
Certain practice are “per se” illegal – no
requirement to show an economic “restraint”
““RESTRAINT OF TRADE”RESTRAINT OF TRADE”
Price Fixing requires:
Agreement between competitors
Related to price
On goods or services both buy or sell
PRICE FIXING IS A “PER SE” PRICE FIXING IS A “PER SE”
VIOLATIONVIOLATION
Includes agreement on wages [“services”]
Need not be a specific number “Level” or “range” or “ceiling” all prohibited
Method of calculating price prohibited
Agreement on “inputs” prohibited [for
example, on criteria, schooling]
PRICE FIXINGPRICE FIXING
Not illegal and not an antitrust violation
May be evidence of a tacit agreement on
wages
Therefore, it may be evidence of price fixing
SHARING WAGE INFORMATIONSHARING WAGE INFORMATION
NATURE OF THE RISKNATURE OF THE RISK
Higher damages than usual Treble Damages are automatic to a prevailing plaintiff
Attorneys’ fees are automatic to a prevailing plaintiff
‣ Class actions are frequently possible
‣ Cases are slow and expensive to resolve
‣ Union plaintiffs (as a bargaining chip in contracts, or in
seeking to be recognized) Five SEIU-supported cases filed in 2006*
All still active in 2011
Substantial settlement payments were made ($700K to $2.8M per
def.)
* The cases are in an “end slide” for reference.
“Statements of Antitrust Enforcement Policy
in Health Care”
Statement of enforcement policy of agencies
only
Creation of a “Safety Zone”
1996 GUIDELINES OF DOJ/FTC1996 GUIDELINES OF DOJ/FTC
1. An outside third party collects the information (e.g., purchaser, government agency, consultant, academic institution, trade association);
2. The price information exchanged among providers is more than three months old; and
3. the information is aggregated and anonymous
i) At least 5 parties;
ii) no provider may represent more than 25% of the weighted basis of a statistic; and
iii) sufficiently aggregated that recipients can’t identify pay by a specific competitor.
REQUIREMENTS OF THE SAFETY ZONEREQUIREMENTS OF THE SAFETY ZONE
Prevent tacit agreement on wages among employers.
“The conditions that must be met for an information exchange among providers to fall within the antitrust safety zone are to ensure that an exchange of price or cost data is not used by competing providers for
discussion or coordination of provider prices or costs.”*
*FTC/DOJ 1996 Guidelines, p.51
GOAL OF THE SAFETY ZONEGOAL OF THE SAFETY ZONE
Not controlling on private parties
Not controlling on WV Attorney General
May not be persuasive in state court
CAVEATS ON GUIDELINESCAVEATS ON GUIDELINES
Not illegal per se
No presumption of Illegality
What is the test of illegality
Is there enough evidence to show agreement on
wage
Possible exception: continuous, extensive sharing with
parallelism in wages
ACTIONS OUTSIDE THE SAFETY ZONEACTIONS OUTSIDE THE SAFETY ZONE
PROOF OF AGREEMENTPROOF OF AGREEMENT
Factors tending to show an agreement on
wages or wage levels:
Extensive communication
Communication on future, versus past, actions
Communication before setting wages generally
Parallel action by the participants
Wage market that seems “out of synch”
e.g. nursing shortage and static nursing wages
EXAMPLES OF HIGH RISK EXAMPLES OF HIGH RISK
STATEMENTSSTATEMENTS “We want to know if you are raising your pay for lab
techs this year”
Discussing the future; especially bad if the information is
given, and similar wages are set
“We want to hold increases to inflation plus 1%”
Agreement on a level or rate is just as illegal as a specific
wage
“We won’t raise CRNA wages if you don’t raise
perfusionists”
Suggests direct agreement
EXAMPLES OF HIGH RISK ACTIONSEXAMPLES OF HIGH RISK ACTIONS Regular (on annual or other basis) direct, mutual,
exchange of wage information, by competitor, followed by “parallel” wage action
Express refusal to go above competitor on a wage, especially if coupled with reference to a policy not to “rock the boat” or “make waves”
Multiple communications on particular shortage or other sensitive hard-to-fill positions, with explicit reference to wage levels and the shortage
Communications that refer to needs to restrain increases, ensure “reasonable market conditions,” avoid “stepping on each other’s toes” or the like
FACTORS REDUCING THE RISKFACTORS REDUCING THE RISK
Communications are sporadic, rather than
regular
Communications are “point-point-to-point” –
not to a group
Communications are about the past
Communications are about different positions
without year-to-year follow up
OTHER FACTORS REDUCING THE RISKOTHER FACTORS REDUCING THE RISK
There are no “wage anomalies” in the area
(e.g. high demand, stagnant wages)
There is no “parallelism” in the wage actions
of participants
Wage information is public (e.g. for state
entities and for certain positions disclosed in
HCA reports)
SOME EXCEPTIONS TO THE “JOINT ACTION” SOME EXCEPTIONS TO THE “JOINT ACTION” PROHIBITIONPROHIBITION
Multi-Employer Bargaining Groups
Employer coordination outside still prohibited
Joint action by same “Economic Entity”
Corporate parent/subsidiary
Related Non-Profit entities under common control
Different units of one entity
Joint action by participants in a joint venture (e.g. mobile MRI, shared radiology services)
NON-WAGE AREAS OF RISK
“Non-poaching” agreements preventing
hiring or solicitation of employees
Agreements on requirements or standards
for employees
Coordination of scheduling (other than for
EMTALA purposes or shared services)
LIST OF CASESLIST OF CASES Unger v. Albany Med. Ctr., No. 06-CV-0765 (N.D.N.Y. filed
June 20, 2006)
Reed v. Advocate Health Care, No. 06-C-3337 (N.D. Ill. filed June 20, 2006)
Schultz v. Evanston Healthcare, No. 06-CV-3569 (N.D. Ill. filed June 30, 2006)
Clarke v. Baptist Mem’l Healthcare Corp., No. 2:06-CV-02377-JPM (W.D. Tenn. filed June 20, 2006)
Cason-Merendo v. Detroit Med. Ctr., No. 2:06-CV-15601 (E.D. Mich. filed Dec. 13, 2006)
Maderazo v. VHS San Antonio Partners, L.P., No. 06-CV-0535 (W.D. Tex. filed Aug. 29, 2006)
