Geisinger Health, Evangelical Community Hospital Sued Over Alleged 'No-Poach’ Agreement in Central Penn.

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Geisinger Health and Evangelical Community Hospital face a proposed class action over an alleged agreement between the two competitors to not recruit, or “poach,” each other’s employees. 

The 35-page antitrust suit claims Geisinger and Evangelical conspired to not poach each other’s physicians, nurses, psychologists, therapists and other healthcare professionals in Central Pennsylvania, including in Union, Snyder, Northumberland, Montour, Lycoming and Columbia counties, and the cities of Danville and Lewisburg, where the defendants are headquartered.

According to the complaint, the illegal agreement between the defendants “was intended to, and did, reduce competition” for healthcare workers in Central Pennsylvania, and suppressed the job mobility and wages of proposed class members below the levels that would have existed absent the apparent no-poach deal. The lawsuit states Geisinger, the largest health system in Central Pennsylvania, employs roughly 32,000 people, while Evangelical, the largest independent community hospital in the central part of the state, employs approximately 1,800 workers. 

“Together, during the proposed Class Period, Defendants have employed approximately 70 to 75 percent of hospital Healthcare Workers in Central Pennsylvania,” the suit says. 

The alleged no-poach agreement was reached “at the highest levels” within the defendants’ respective companies and came to exist through “secretive verbal exchanges that were later confirmed by emails,” the complaint alleges. Per the suit, the defendants agreed to conceal the communications from outsiders, and the companies’ senior executives “periodically reaffirmed, monitored, and policed” the apparent no-poach deal. 

According to the lawsuit, the no-poach agreement between the defendants began by May 2015, and likely existed earlier than that, and ran until at least August 5, 2020, when the U.S. Department of Justice initiated a civil antitrust action to block Geisinger’s acquisition of Evangelical. 

In its complaint, the DOJ alleged Geisinger’s proposed partial acquisition of its competitor would “fundamentally reduce competition for healthcare services and raise the likelihood of continued unlawful coordination” between the companies, the lawsuit reads. The DOJ complaint alleged there exists a “history of collusion” between Geisinger and Evangelical, conduct that supposedly includes “picking and choosing when to compete with each other” and a no-poach agreement among the companies’ executives.

The suit goes on to allege Geisinger and Evangelical took “affirmative steps” to conceal their apparent no-poach agreement from proposed class members and the general public. From the complaint: 

“For example, at one time during the class period on Geisinger’s website, it advertised: ‘For your hard work, you’ll be rewarded with a competitive salary and a comprehensive benefits package, including health insurance, compensated vacation time and holidays, a 401(k) plan and more.’ It now states that: ‘Our competitive compensation and benefits package helps you and your loved ones stay healthy, meet your financial goals and thrive professionally and personally.’ Similarly, Evangelical’s website advertises, ‘Great benefits and competitive salary with partnership track.’ Defendants did not disclose on their respective websites (or anywhere else) that they had an agreement not to compete for each other’s employees. Defendants’ salaries were not ‘competitive’ because they were not competing with each of their main sources of competition for labor—namely, each other and thus were able to pay less-than-competitive wages to their Healthcare Workers.” 

Further, the defendants monitored each other’s compliance with the no-poach agreement and went back and forth with regard to “deviations” from the deal in order to enforce compliance, the case claims. More from the suit: 

“For instance, after learning that Geisinger potentially took actions contrary to the No-Poach Agreement by recruiting nurses, Evangelical’s CEO wrote to her counterpart at Geisinger, asking, ‘Can you please ask that this stop[?] Very counter to what we are trying to accomplish.’… Upon receiving this message, the Geisinger executive forwarded the email to Geisinger’s Vice President of Talent Acquisition, instructing her to ‘ask your staff to stop this activity with Evangelical.’”

The lawsuit describes the alleged no-poach agreement between the defendants as “made and enforced privately, confidentially, and at the highest levels of the organizations.” Absent the DOJ’s investigation of Geisinger’s proposed acquisition of Evangelical, and the subsequent publication of the DOJ’s complaint, the existence of the unlawful deal might have remained “permanently hidden,” the case says. 

The lawsuit looks to represent all individuals who worked at Geisinger or Evangelical as healthcare workers from May 2015, through such time as Defendants’ alleged anticompetitive conduct ceased. 

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