In a case that has continued for more than five years, the U.S. District Court for the Eastern District of Michigan recently issued a decision regarding the exchange of detailed, non-public information about the compensation rates of nurses among Detroit-area hospitals.*  The decision in this antitrust case is a classic example of "good" news and "bad" news.

The focus of the litigation is the defendants' compliance with a 1996 policy statement from the U.S. Justice Department and the Federal Trade Commission, "Statements of Antitrust Enforcement Policy in Health Care" (http://www.justice.gov/atr/public/guidelines/0000.htm).  Statement 6 provided that the federal agencies would not challenge the exchange of wage, salary, or benefits data, as violating the federal antitrust laws, if the exchange occurred via written surveys, under the following conditions:

  • The survey must be managed by a third party, such as a health care consultant or trade association;
  • The data being provided must be more than three months old; and
  • At least five employers must provide information, such that no individual employer's data represents more than 25 percent on a weighted basis of that statistic, and any information disseminated must be aggregated such that it would not allow a recipient to identify any particular employer's compensation.  

In Cason-Merenda, two registered nurses and a proposed class allege that eight Detroit-area hospitals (three remain in the case as defendants) violated the federal Sherman Act by exchanging pay information not otherwise available to the public, and then used the information to depress artificially current and future nurse wages (below what they would have been if they did not exchange information).  The plaintiffs contend and offered evidence proving that the information exchanges, in circumvention of the 1996 policy statement, were in the form of (a) direct communications between the HR staffs of the providers, (b) health care industry organization meetings, and (c) third-party surveys not meeting the required 1996 policy statement conditions.  As to the last point, the plaintiffs showed that the defendants took part in the design of the surveys, the surveys included compensation data less than three months old (and in some instances current data and future plans), and recipients were able to discern the specific compensation rates of individual hospitals.

The "good" news from the recent decision is that the Court entered summary judgment against plaintiffs' claim that the defendants had committed a per se violation of the Sherman Act by agreeing to fix wages.  The Court ruled that there was no evidence that the defendants had agreed to fix wages - if that had been proven, a per se violation would have been found - and that, consistent with the evidence, the defendants may have acted independently after receiving the data. 

The "bad" news from Cason-Merenda is that the Court denied the defendants' summary judgment motion on the alternative "Rule of Reason" Sherman Act claim.  In a Rule of Reason case, antitrust liability may rest on anti-competitive actions harmful to the marketplace, even when no anti-competitive conspiracy or intent is proven.  The Court ruled that a jury could infer from the evidence that defendants - while not having conspired to fix wages - caused harm to competition and/or injury to the plaintiffs or their putative class by their data exchange.  With this ruling, the case may proceed to trial.  Assiduous adherence to the 1996 DOJ/FTC policy statement by the defendants could have prevented this protracted litigation.

* Cason-Merenda v. Detroit Med. Center, No. 2:06-cv-15601 (E.D. Mich. Mar. 22, 2012).