Antitrust Law Daily South Carolina hospitals, trade organization could have illegally conspired against nurses
Tuesday, October 25, 2016

South Carolina hospitals, trade organization could have illegally conspired against nurses

By E. Darius Sturmer, J.D.

A South Carolina nurse-staffing company sufficiently stated federal antitrust claims against a not-for-profit trade organization of South Carolina hospitals and health care systems, its for-profit subsidiary, and numerous member hospitals, which allegedly conspired to control exclusively the traveling and temporary nurse-staffing industry in the state, the federal district court in Greenville, South Carolina, has ruled. Motions by the defendants to dismiss the Sherman Act claims, as well as a claim under the South Carolina Unfair and Deceptive Trade Practices Act, were denied (Advance Nursing Corp. v. South Carolina Hospital Assn., October 24, 2016, Lewis, M.).

The complaining staffing company alleged that the defendants had implemented and utilized a nurse registry program in the state—through which the organization and its affiliated entities managed an online portal for potential staffing companies to fill available traveling nurse positions for the hospitals—to standardize and reduce nurse benefits and wages. According to the staffing company, the defendants’ registry program also provided financial incentives for the hospitals to ensure their continued participation. Though the registry program reduced staffing wages and benefits, as well as staffing companies’ bottom lines, the defendants effectively coerced the complaining staffing company to join by threatening to refuse to do business with it otherwise, the company averred.

The court found that the company properly stated claims for violations of Section 1 of the Sherman Act. It alleged a per seviolation because of its charge that the defendants were indirectly price fixing, but also pled a rule-of-reason violation through its claims that the defendants improperly exercised market power through one-sided contract terms and a group boycott, the court said. The court further agreed with the company that it adequately defined the relevant markets and described the defendants’ market power. In detailing the effects of the program upon itself and all staffing companies and nurses within the relevant market, the company established its standing to pursue the claims, the court decided.

While the court agreed with the government hospitals defending the suit that they were local government entities entitled to absolute immunity from antitrust damages under the Local Government Antitrust Act of 1984, it reaffirmed the propriety of the plaintiff’s requested injunctive relief against the hospitals. The defendants were, however, entitled to reduced liability under the state’s unfair trade practices statute because that claim sounded in tort, it was noted.

An argument by one defending hospital management company that the claims against it should be dismissed because it only came into existence recently and thus could not have committed any of the earlier acts that formed the bulk of the allegations was rejected by the court. The complaining company had alleged continuing antitrust violations due to the hospital’s ongoing participation in the registry program and interference with staffing companies’ contractual relations, in the court’s view. Moreover, additional discovery was required to determine the nature of the defending company’s acquisition of an existing hospital.

The case is No. 6:16-00160-MGL.

Attorneys: Aimee Victoria-Ann Leary (Wendell L. Hawkins, PA) for Advance Nursing Corp. Kirsten Elena Small (Nexsen Pruet, LLC) for South Carolina Hospital Association. Joshua Tate Thompson (Holcombe Bomar Gunn & Bradford PA) for Spartanburg Regional Health Services District Inc., d/b/a Spartanburg Regional Healthcare System. Jeffrey A. Lehrer (FordHarrison LLP) for Mary Black Health System.

Companies: Advance Nursing Corp.; Spartanburg Regional Health Services District Inc. d/b/a Spartanburg Regional Healthcare System; South Carolina Hospital Association; Mary Black Health System

MainStory: TopStory Antitrust SouthCarolinaNews

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