|
Health Law Advisory Bulletin
Unionized Hospital Denied Antitrust
Exemption in Nurses’ Suit
By Mark
A. Hutcheson, Douglas
C. Ross, Mary
E. Drobka and Charles
S. Wright
[May 2007]
The University
of Chicago Hospitals (UCH) was recently denied immunity from antitrust
claims filed by nurses who alleged that UCH conspired with other
hospitals to depress registered nurse wages in the Chicago market
by sharing non-public compensation information. This ruling highlights
the importance of having antitrust guidelines in place to limit
circumstances in which hospitals share compensation information.
In Reed v.
Advocate Health Care, No. 06 C 3337 (N.D. Ill. filed 2006),
two RNs filed suit against several Chicago-area hospitals, alleging
that the hospitals were conspiring to depress RNs’ wages in
violation of § 1 of the Sherman Act. Plaintiffs allege that
the hospitals regularly shared information about what each was paying,
and what each was willing to pay, its RNs. The nurses seek to represent
a class of RNs impacted by this alleged practice. (A decision on
plaintiffs’ class certification motion is expected by the
fall.)
Similar cases
are pending in San Antonio, Memphis, Detroit, and Albany, and all
have the backing of the Service Employees International Union (SEIU).
Given SEIU’s aggressive efforts to organize in the health
care industry, additional such suits should be expected. In addition,
SEIU recently began circulating petitions asking the Department
of Justice to open antitrust investigations of registered nurse
compensation.
UCH has a collective
bargaining agreement with the nurses’ union. UCH filed a motion
for summary judgment, seeking immunity from plaintiffs’ claims
under the “nonstatutory exemption” from federal antitrust
laws. On March 28, 2007, the federal district court in Chicago rejected
UCH’s argument. Reed v. Advocate Health Care, No.
06 C 3337, 2007 WL 967932 (N.D. Ill. Mar. 28, 2007). The court held
that the nonstatutory exemption did not immunize UCH’s alleged
sharing of non-public wage information with other hospitals that
were not involved in collective bargaining with the nurses’
union.
Courts have recognized
the nonstatutory exemption as an “accommodation between the
congressional policy favoring collective bargaining under the [National
Labor Relations Act] and the congressional policy favoring free
competition in business markets.” Connell Constr. Co.
v. Plumbers & Steamfitters Local 100, 421 U.S. 616, 622
(1975). While the Clayton Act and Norris-LaGuardia Act exempt certain
activities by employees and unions, the nonstatutory exemption reaches
further to exempt “certain concerted activity among and between
employers and unions.” Reed, 2007 WL 967932, at *2.
For example, the Second Circuit recently held that the nonstatutory
exemption immunizes from the antitrust laws an agreement between
the various employers of the National Football League and the union
representing players employed in that league to set a minimum age
limit for entry into the league, despite the fact that that agreement
excludes willing employees from that market. Clarett v. National
Football League, 369 F.3d 124 (2d Cir. 2004). The Supreme Court
has never defined the precise contours of this exemption. See Brown
v. Pro Football, Inc., 518 U.S. 231, 250 (1996).
The Illinois court
had no trouble disposing of UCH’s argument that it was entitled
to the exemption. The court held that the exemption protects only
those situations where “a group of employers negotiates collectively
with a union representing all of the group’s employees.”
Reed, 2007 WL 967932, at *3. In contrast, UCH sought exemption
for its participation in “multi-employer conduct occurring
outside the context of any collective bargaining scenario.”
Id. The Reed court adopted the reasoning of a
federal district court in New York that reached the same result
in December 2006. See Unger v. Albany Med. Ctr., No. 06-CV-765-TJM-DRH
(N.D.N.Y. Dec. 11, 2006). As the Unger court noted, simply
because a hospital has entered a collective bargaining agreement,
it cannot provide its wage information to other hospitals in an
attempt to cap wages in the market. Reed, 2007 WL 967932,
at *5.
This preliminary
ruling is troubling, and obviously still subject to appeal. In the
meantime, it serves as a reminder that health care employers need
to consider many different laws and regulations which impact their
ability to obtain comparative wage information from each other.
Significantly, the National Labor Relations Act may enable unionized
employers to request from their unions copies of contracts (which
of course contain wage information) that union has with other health
care facilities, as part of the union’s obligation to share
information relevant and necessary to the collective bargaining
process. However, until Reed is resolved through trial
(and possibly appeal), unionized employers should obtain legal advice
before sharing either proposed or current wage information with
non-union employers.
In addition, private-sector
health care employers, unionized and non-union, should remember
that in addition to the “nonstatutory exception” discussed
in Reed, there is a safe harbor under the antitrust laws
that allows employers to share wage information with a third party
(like an association or compensation consultant) conducting a wage
survey. This safe harbor requires that the survey be managed by
the third party, that the wage information be more than three months
old, that at least five providers participate and no one provider’s
data represent more than 25 percent of any one statistic (on a weighted
basis), and that the wage information be reported back to the participants
only in a way that does not allow those receiving the survey results
to identify any particular participant’s wage rates.
Sharing of wage
information among private, nonprofit or for profit, health care
employers, should not be undertaken outside of a formal wage or
salary survey, and competitors who are not members of a multi-employer
bargaining unit should never agree on what to pay their respective
employees.
For more information, please contact:
This advisory is a publication of the
Health Law Group of Davis Wright Tremaine LLP. Our purpose in publishing
this advisory is to inform our clients and friends of recent legal
developments. It is not intended, nor should it be used, as a substitute
for specific legal advice as legal counsel may only be given in
response to inquiries regarding particular situations. Attorney
Advertising. Prior results do not guarantee a similar outcome. Thank
you.
Copyright 2007, Davis Wright Tremaine LLP.
return to Advisory Bulletins main page
|
