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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.
Copyright 2007, Davis Wright Tremaine
LLP.
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