Surgical Care Affiliates Hit with Class Action Over ‘No-Poach’ Agreements in Wake of DOJ Indictment [UPDATE]
by Erin Shaak
Last Updated on July 21, 2021
Roe v. Surgical Care Affiliates, LLC et al.
Filed: January 19, 2021 ◆§ 1:21-cv-00305
Surgical Care Affiliates has been hit with a class action over its apparent “no-poach” agreements geared to restrict competition among senior-level employees.
Illinois
Case Updates
July 21, 2021 – DaVita Hit with Lawsuit Following DOJ Indictment
Another proposed class action has been filed against the defendants in the cases detailed on this page over their alleged “no-poach” agreements.
DaVita, Inc., another major operator of outpatient medical care facilities across the U.S., has also been named in the suit, which was filed one day after the company and its former CEO, Kent Thiry, were hit with a two-count indictment by a federal grand jury. The charges, which allege DaVita and Thiry agreed with competitors not to solicit each other’s senior-level employees in an attempt to suppress competition, are the result of the DOJ’s ongoing investigation into no-poach agreements within the healthcare industry, the DOJ reported.
The lawsuit, filed July 16, claims DaVita is “Company B” in the January 2021 DOJ indictment charging SCA with similar anti-competitive activities. ClassAction.org’s full write-up of the case can be found here.
March 9, 2021 – USPI Named in New Lawsuit Against UnitedHealth
The defendants in the case detailed on this page have been hit with another lawsuit that names as co-defendants United Surgical Partners International (USPI) and its affiliates and parent company.
The plaintiff suspects USPI, the largest ambulatory surgery platform in the U.S., is “Company A” in the DOJ criminal indictment that led to the lawsuits. He will request leave to amend the complaint with the identity of “Company B” once it’s revealed through discovery.
Per the case, the defendants conspired to save on labor costs by agreeing not to hire each other’s senior-level employees, thereby suppressing competition and reducing wages. According to the suit, the so-called “no-poach agreements” were “not necessary to any legitimate business transaction or lawful collaboration” among the defendants and were strictly a compensation-suppressing tool that violated antitrust provisions of the Sherman Act.
The lawsuit looks to represent anyone who worked in senior-level positions in the U.S. for one or more of the following defendants:
- Surgical Care Affiliates, LLC or one of its subsidiary outpatient medical care facilities between May 1, 2010 and October 31, 2017;
- United Surgical Partners Holding Company, Inc., United Surgical Partners International, Inc. or one of its subsidiary outpatient medical care facilities between May 1, 2010 to October 31, 2017; or
- “Company B” or one of its subsidiary outpatient medical care facilities between February 1, 2012 and July 31, 2017.
The full complaint can be read here.
Surgical Care Affiliates, LLC has been hit with a proposed class action following a recent criminal indictment announced by the U.S. Department of Justice (DOJ) over the healthcare company’s apparent “no-poach” agreements geared to restrict competition among senior-level employees.
The 15-page lawsuit alleges defendants Surgical Care Affiliates, LLC; SCAI Holdings, LLC; and parent company UnitedHealth Group, Inc. have conspired with two other outpatient medical care facility operators, referred to in the indictment and complaint as “Company A” and “Company B,” to suppress employees’ compensation by agreeing to not solicit each other’s top-level workers.
The so-called no-poach agreements, which were allegedly in effect between 2010 and 2017, reduced senior-level employees’ job opportunities, restricted their mobility and deprived them of information that would have proven useful in negotiating for better compensation and terms of employment, the lawsuit argues. Per the case, the agreements “were not necessary to any legitimate business transaction or lawful collaboration among the companies” but were strictly a tool to suppress the workers’ compensation and thereby reduce the conspirators’ expenses.
“These no-poach agreements accomplished their purpose,” the complaint states. “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.”
The lawsuit cites emails and other communications between the defendants and Company A and B in which their respective CEOs referenced apparent agreements stipulating that they, for example, “would not approach each other’s [senior-level employees] proactively.”
The case explains that direct soliciting is a particularly “efficient and effective method” of competing for qualified senior employees in the outpatient medical care industry, employees who the suit notes have specialized experience and may not respond to other recruiting methods. In a competitive labor market, prospective employers are motivated to make the best possible offers and employees, in turn, are better equipped to negotiate for higher salaries and better terms of employment in their current positions, the lawsuit relays. Absent competition, the “normal bargaining and price-setting mechanisms” are disrupted and senior-level employees’ compensation is suppressed, according to the complaint.
Per the lawsuit, the defendants’ alleged conspiracy was revealed in a January 7, 2021 DOJ press release announcing a criminal indictment against SCA. The action was the Antitrust Division’s first publicly announced criminal case involving no-poach agreements since the DOJ and Federal Trade Commission added the practice to the list of antitrust conduct that could result in criminal charges.
The lawsuit, which is possibly the first private action filed in the wake of SCA’s indictment, looks to represent anyone who was employed by SCA in the U.S. at the director level or above between January 1, 2010 and December 31, 2017.
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