Legal Alert: Court Grants Partial Summary Judgment in Favor of Hospitals in Nurse Wage-Fixing Lawsuit

by FordHarrison
Contact

[authors: John Allgood, Todd Seelman]

Executive Summary:  On March 22, 2012, a Michigan federal district court granted summary judgment on some, but not all, antitrust claims alleged in a nurse wage-fixing lawsuit against five Detroit-area hospitals. 

Plaintiffs' complaint alleged two antitrust claims under §1 of the Sherman Act:  (1) a horizontal price-fixing conspiracy whose purpose was to depress nurse wages among the hospitals (analyzed as a per se violation which obviates the need to prove competitive harm in the relevant market) ("Count I") and (2) a horizontal information-exchange conspiracy whose purpose was to regularly exchange detailed, non-public nurse compensation information among the hospitals (analyzed under the rule of reason which requires proof of competitive harm in the relevant market) ("Count II").  In granting summary judgment as to Count I, the district court observed that – while a very close call – in examining all of the evidence in a light most favorable to the plaintiffs, there was insufficient evidence produced that tended to exclude the possibility of independent action by the hospitals.  In examining the same evidence, however, the district court denied summary judgment on the plaintiffs' Count II claim, leaving that claim to be decided by a jury.

Originally filed in 2006, the antitrust lawsuit – captioned Cason-Merenda  v. Detroit Medical Center  (Civil Action No. 2006-cv-15601-GER-DAS) – was filed by two registered nurses in the Eastern District of Michigan (Southern Division) on behalf of themselves and a class of registered nurses employed by the defendant hospitals between December 12, 2002 and December 15, 2006.  The class members were alleged to number in the thousands.  The lawsuit was originally filed against eight Detroit-area hospitals; however, by the time of the summary judgment decision, three of the hospitals had formally settled with the plaintiffs and two of the last five defendants had entered into tentative settlement agreements.  The motion for class certification is still pending.

The factual underpinnings supporting Counts I and II are largely the same.  The plaintiffs alleged and produced evidence to show that from December 2002 to the present, the eight hospitals routinely exchanged detailed, non-public nurse compensation-related information which was then used to artificially depress current and future nurse wages.  The information exchanges occurred through three mechanisms:  (a) direct communications between competitor hospitals' human resource staff; (b) industry meetings and health care industry organizations to which the defendant hospitals belonged; and (c) third-party surveys sponsored by the defendant hospitals. 

As to direct communications between hospital human resource staff, the plaintiffs submitted evidence that tended to show that it was not uncommon for human resource employees (who were responsible for determining nurse compensation) to telephone and/or meet on an ad hoc basis with their counterparts at other defendant hospitals and freely provide current nurse compensation-related information upon request.  Such communications also occurred as part of periodic hospital-hospital surveys.

As to communications through industry meetings and health care industry organizations, the evidence produced by the plaintiffs suggested that industry meetings were used as opportunities to disseminate and exchange wage-related information.

As to the third-party surveys, the district court noted that while the hospitals purportedly based their third-party surveys on Statement 6 of the 1996 Department of Justice/Federal Trade Commission "Statements of Antitrust Enforcement Policy in Health Care" (the "1996 DOJ/FTC Guidelines"), the plaintiffs provided evidence that tended to show that the defendant hospitals substantially deviated from those guidelines.  Under the 1996 DOJ/FTC Guidelines, an antitrust "safety zone" existed for health care providers who conducted written surveys on (a) the prices for health care services or (b) the wages, salaries, or benefits of health care personnel – if such written surveys satisfy the following conditions: (1) the written survey was managed by a third-party provider; (2) the data provided by participants was more than three months old, and (3)(i) there were at least five providers reporting data on which the statistics were based, (ii) no individual provider's data represented more than 25% on a weighted basis, and (iii) the data was sufficiently aggregated to prevent the recipients of the survey from identifying  the amount the providers charged or compensation paid by any particular provider. 

The plaintiffs put forth evidence that the defendant hospitals deviated from the 1996 DOJ/FTC Guidelines by:  (1) permitting the defendant hospitals to participate in the survey "design"; (2) exchanging data that was less than three months old (and in some cases even current or future data was used); and (3) unmasking the survey participants and disaggregating the survey results so that recipients knew which defendant hospitals were paying or charging specific prices.

In granting summary judgment in the hospitals' favor on Count I, the district court observed (and the plaintiffs acknowledged) that since there was no direct evidence of an explicit agreement to fix wages, the question would turn on whether the plaintiffs provided sufficient evidence that tended to exclude the possibility that the defendants acted independently.  In evaluating permissible inferences to be drawn from ambiguous evidence, and considering the factual record as a whole, the district court found the evidence supporting an inference of an unlawful wage-fixing agreement to be equally as strong as an inference that the hospitals' conduct was independent, which required a finding in the hospitals' favor.  In the end, what the district court found lacking in the factual record was evidence of coordinate use (unity of purpose) with the exchanged wage information.  In short, while it was clear that the hospitals freely exchanged wage-related information, it was unclear what "they" did with it.  A lack of post-exchange parallel pricing conduct (i.e., coordinated price reductions in nurse wages) cut against an inference of an unlawful conspiracy to depress nurse wages.   

That said, the district court also held that Count II would survive summary judgment, leaving the plaintiffs free to convince the jury that the hospitals' agreement to exchange wage information had harmed competition generally and the plaintiffs individually.  

Employers' Bottom Line:

Lawsuits alleging price fixing (employee wages) have become more common, especially in the health care industry.  Employers who exchange current wage information with competitors may be at risk for such lawsuits.  Ford & Harrison attorneys can provide you with guidance on the legal ramifications of exchanging wage information.  If you have questions regarding the issues discussed in this Legal Alert or other issues relating to sharing wage information, please contact the Ford & Harrison attorney with whom you usually work or the authors of this Alert, John Allgood, jallgood@fordharrison.com or Todd Seelman, tseelman@fordharrison.com.

Written by:

FordHarrison
Contact
more
less

FordHarrison on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.