[co-author: Stephanie Kozol]
New York Attorney General Letitia James recently reached a $400,000 settlement with Affordable Senior Care of New York LLC (Affordable) for engaging in anticompetitive conduct in the homecare industry. New York-based Affordable acts as a “fiscal intermediary” registered with New York’s Medicaid program’s Consumer Directed Personal Assistance Program. Fiscal intermediaries like Affordable handle “timesheet processing, payments to a patient’s caregivers, and other administrative jobs on behalf of patients.” Patients can choose the caregiver of their choice, including a family member or a friend, and naturally, tend to pick the fiscal intermediary that pays a higher hourly wage.
To compete with one another in the market to “recruit and retain patients and their selected caregivers,” fiscal intermediaries must not enter into unlawful, no-poach agreements. AG James’s investigation found that an Affordable executive entered into an unlawful no-poach agreement with its competitor Marks Homecare Agency — an entity with which AG James already reached a similar $500,000 settlement. The agreement prevented both companies from taking each other’s existing patients, and they also shared information about the hourly rates they paid caregivers to reduce competition. This prevented patients from switching to a provider that could pay their caregivers more, and it violated New York General Business Law Section 343 (Donnelly Act) and New York Executive Law Section 63(12).
In addition to the financial penalty, Affordable and its executive cannot enter into any anticompetitive agreements that restrict patient options. Affordable also must “administer an antitrust compliance program with training for its management and executive personnel.” Finally, Affordable must provide annual reports to the AG’s office regarding its compliance for the next five years.
Why It Matters
Not limited to the New York AG’s office, no-poach agreements and clauses already fall under intense scrutiny from federal and state regulators. In fact, Washington AG Ferguson released a report in 2020 on his two-year investigation, eliminating no-poach practices nationally at 237 corporate franchise chains with three or more locations in Washington. Also, the Federal Trade Commission recently pushed to ban noncompete clauses, highlighting the significance of no-poach agreements and the importance of complying with laws and regulations. As such, companies must take these issues seriously to avoid regulatory scrutiny and potential penalties.
