Written by Daniel Crespo

The U.S. Department of Justice and Federal Trade Commission’s released a joint statement announcing a step-up in their antitrust enforcement efforts and heightened scrutiny of the healthcare sector to identify and prosecute providers, entities and associations that may be exploiting the circumstances created by the COVID-19 pandemic, particularly in the health care labor market.[1]

Healthcare providers should be aware that similar efforts and enforcement actions began years prior to the 1996 issuance of the Agencies’ Enforcement Policy in Health Care, and Statement 6 regarding Enforcement Policy on Provider Participation in Exchanges of Price and Cost Information.[2]  These renewed enforcement actions cover the conduct of compensation and other surveys, and provide an Antitrust Safety Zone for the conduct of surveys.  On an annual basis since 1994, Lawrence Associates has administered one of the few major surveys in the U.S. seeking guidance under the FTC and DOJ’s business review, or advisory opinion request on the conduct of a survey.

In relevant part, the Joint Statement on Antitrust Enforcement states that: [3]

The [FTC and DOJ] are on alert for employers, staffing companies (including medical travel and locum agencies), and recruiters, among others, who engage in collusion or other anticompetitive conduct in labor markets, such as agreements to lower wages or to reduce salaries or hours worked. For years, the Agencies have challenged unlawful wage-fixing and no-poach agreements, anticompetitive non-compete agreements, and the unlawful exchange of competitively sensitive employee information, including salary, wages, benefits, and compensation data. Moreover, the Division may criminally prosecute companies and individuals who enter into naked wage-fixing and no-poach agreements. Even absent a collusive agreement, the Bureau may pursue a civil enforcement action against companies and individuals that invite others to collude. The Agencies may also use their civil enforcement authority to challenge unilateral anticompetitive conduct by employers that harms competition in a labor market (monopsony power). Companies and individuals involved in the hiring, recruiting, retention, or placement of workers should be aware that anticompetitive conduct runs the risk of civil and/or criminal liability.

Although some in the industry have shrugged off these concerns, enforcement actions can (and will) arise whenever there is a possibility of collusion, regardless of an intent to promote compassion and flexibility. Historically, the DOJ has rigorously enforced antitrust laws in the healthcare sector, with notable enforcement actions in the industry dating back to a 1994 lawsuit against the Utah Society for Healthcare Human Resources Administration (settlement requiring the Society to appoint an Antitrust officer to monitor compliance going forward, coupled with stiff criminal penalties for further violations),[4] and a 2007 action against the Arizona Hospital and Healthcare Association ($22.4 million settlement).[5] Indeed, the footprint of the DOJ’s antitrust enforcement actions spans more than 51 judgments entered and estimated damages, fees and settlement payments exceeding $100 million in the healthcare sector alone.[6]

As highlighted in a recent Bloomberg Law article, “History has shown that severe recessions are followed by increased antitrust cartel enforcement. And given the current economic climate, the incentives to engage in potentially unlawful antitrust conduct may be higher than ever”.[7]  These violations carry with them stiff fines, penalties and potentially prison sentences in some situations.

[1] Federal Trade Commission, Press Release, “Federal Trade Commission and Justice Department Issue Joint Statement Announcing They are on Alert for Collusion in U.S. Labor Markets”, April 13, 2020, available at: https://www.ftc.gov/news-events/press-releases/2020/04/federal-trade-commission-justice-department-issue-joint-statement

[2] https://www.lawrenceassociates.com/pdfs/DOJ%20and%20FTC%20Survey%20hlth3s.pdf

[3] U.S. FTC & DOJ, Joint Statement, “Joint Statement Regarding COVID-19 and Competition in the Labor Markets”, April 13, 2020, available at: https://www.ftc.gov/system/files/documents/advocacy_documents/joint-statement-bureau-competition-federal-trade-commission-antitrust-division-department-justice/statement_on_coronavirus_and_labor_competition_04132020_final.pdf

[4] U.S. Dept. of Justice, Press Release, “Justice Department Files Antitrust Case Against Utah Hospitals”, Mar. 14, 1994, available at: https://www.justice.gov/archive/atr/public/press_releases/1994/211784.htm

[5] U.S. Dept. of Justice, Press Release, “ Justice Department Reaches Settlement with Arizona Hospital and Healthcare Association”, May 22, 2007, available at: https://www.justice.gov/archive/atr/public/press_releases/2007/223470.htm

[6] U.S. Dept. of Justice, Case Summary Archive, “Summary of Antitrust Division Health Care Cases”, available at: https://www.justice.gov/atr/file/783756/download

[7] Stephan Meisner & Lisa P. Rumin, Bloomberg Law Insights, If Past is Prologue, Ramped Up Antitrust Compliance is Critical”, Jun. 16, 2020, available at: https://news.bloomberglaw.com/health-law-and-business/insight-if-past-is-prologue-ramped-up-antitrust-compliance-is-critical?utm_campaign=COVID-19%20Daily%20Digest%206-16-20&utm_medium=email&utm_source=Eloqua