‘Company B’: DaVita, Others Named in Class Action Alleging ‘No-Poach’ Agreements Suppressed Workers’ Wages
by Erin Shaak
Peña v. Surgical Care Affiliates, LLC et al.
Filed: July 16, 2021 ◆§ 1:21-cv-03803
A lawsuit claims the operators of outpatient medical facilities entered into unlawful “no-poach” agreements designed to suppress competition among senior-level employees.
DaVita, Inc. is among the defendants in a proposed class action filed one day after the U.S. Department of Justice announced that a federal grand jury indicted the company and its former CEO, Kent Thiry, for conspiring with competing employers to not hire each other’s high-level employees.
The 23-page lawsuit claims the defendants, who also include Surgical Care Affiliates, United Surgical Partners International and their affiliate companies (listed below), have violated federal antitrust law by entering into “no-poach” agreements designed to suppress senior-level employees’ wages and opportunities below competitive levels to the benefit of their employers, three of the largest out-patient medical care facility operators in the U.S.
Per the case, the anti-competitive agreements, which were alleged to have been in place as early as 2010 and until at least 2017, had their intended effect:
“These no-poach agreements accomplished their purpose. They reduced competition for Defendants’ senior-level employees and suppressed Defendants’ senior-level employee compensation below competitive levels. The conspiracy disrupted the efficient allocation of labor that would have resulted if Defendants had competed for, rather than colluded against, their current and prospective senior-level employees. Defendants’ agreements also denied their senior-level employees access to job opportunities, restricted their mobility, and deprived them of significant information that they could have used to negotiate for better compensation and terms of employment.”
According to the complaint, the no-poach agreements were unnecessary to accomplish “any legitimate business transaction or lawful collaboration” among the defendants and used for no purpose other than to suppress employees’ wages and thereby decrease the companies’ own expenses.
The lawsuit alleges Surgical Care Affiliates (SCA) and United Surgical Partners International (USPI), beginning in May 2010 and continuing until October 2017, entered into “a continuing agreement, understanding, and concert of action” to not solicit each other’s senior-level employees. In turn, SCA and DaVita are alleged to have entered into a similar agreement beginning in February 2012 and continuing until as late as July 2017. Per the case, the companies’ leadership had regular opportunities to meet together and “make sure that surgical center operations were uniform and consistent throughout all locations, creating a cookie-cutter operation.”
The case alleges the defendants’ anti-competitive agreements amounted to a shot in the leg to senior-level employees, who otherwise would have been able to obtain higher wages and better benefits had their employers been forced to compete for their experience and talent.
The lawsuit relays that the defendants’ conduct first came to light when the DOJ announced in January 2021 that it had secured a grand jury indictment against SCA over its apparent no-poach conspiracy with competitors identified at the time only as “Company A” and “Company B.” The case alleges that “Company A” is USPI, while “Company B” is DaVita.
A day prior to the lawsuit’s filing on July 16, the DOJ announced that a federal grand jury had returned a two-count indictment against DaVita and former CEO Kent Thiry for their alleged participation in the scheme, all but confirming the plaintiff’s suspicions.
The defendants in the case include Surgical Care Affiliates, LLC; SCAI Holdings, LLC; UnitedHealth Group, Inc.; DaVita, Inc.; United Surgical Partners Holding Company, Inc.; United Surgical Partners International, Inc.; and Tenet Healthcare Corporation.
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