Alleged “No-Poach” Agreement In Health Care Industry Results In Another Criminal Antitrust Prosecution

The US Department of Justice (DOJ) recently announced the indictment by a grand jury charging four owners/managers of home health care agencies in Maine with participating in a conspiracy to suppress wages and restrict the job mobility of personal support specialist (PSS) workers in violation of Section 1 of the federal Sherman Act. According to the indictment, the owners/managers agreed to fix the rates paid to these workers and also agreed not to hire each other’s workers. The DOJ warned in a press release that “[t]his indictment is the first in this ongoing investigation into wage fixing and worker allocation schemes in the PSS industry,” and part of a larger “ongoing federal antitrust investigation into wage fixing and worker allocation in the home health care industry.”

Even before this latest indictment, the DOJ made clear its intention to prosecute unlawful collusion by employers in labor markets. The DOJ had warned in its Antitrust Guidance for Human Resource Professionals in 2016 that the antitrust laws apply to competition among firms to hire employees, and that the DOJ would bring criminal charges “against naked wage-fixing or no-poaching agreements.” In December 2020, the DOJ filed criminal charges against the former owner of a therapist staffing company based on an alleged scheme to fix the wages paid to physical therapists and therapist assistants in the Dallas-Fort Worth area. The court in that case recently denied a motion to dismiss, finding that a horizontal agreement among buyers in the labor market to fix the price of labor is a form of price fixing and thus per se illegal. Since December 2020, the DOJ has brought criminal charges against other health care companies for entering into no-poach and/or wage fixing agreements.

Not all agreements concerning the hiring or solicitation of a competitor’s employees are necessarily unlawful. In Aya Healthcare Servs., Inc. v. AMN Healthcare, Inc., 9 F.4th 1102 (9th Cir. Aug. 19, 2021), the Ninth Circuit drew a distinction between “naked” and “ancillary” restraints and clarified that non-solicitation provisions in business-to-business collaboration agreements are not per se violations of the Sherman Act. There, in considering a dispute between two health care staffing agencies, the Ninth Circuit explained that while Section 1 of the Sherman Act bars restraints on trade, courts distinguish between naked restraints, which are explicitly anticompetitive, and ancillary restraints, which restrain competition but are subordinate, collateral, and necessary to a legitimate business transaction and are therefore subject to a more lenient “rule of reason” factual analysis. The Ninth Circuit found that, given the purpose of the agreement at issue was to supply travel nurses, the non-solicitation provision was necessary for the defendant to ensure it would not lose personnel when it entered into staffing subcontractor agreements, and absent staffing subcontractors, there would be fewer nurses for hospitals facing chronic nurse shortages.

Wage-fixing and no-poach agreements will continue to be an antitrust enforcement priority for federal and state regulators in 2022. One important step all companies can take to significantly reduce antitrust risk is to implement and maintain a robust antitrust compliance policy, supported by regular programs and trainings. In 2019, the DOJ announced a new policy that directs prosecutors to consider the adequacy and effectiveness of a corporation’s compliance program at the charging stage, meaning that businesses that take antitrust compliance seriously may be able to avoid the worst consequences even if rogue employees violate the antitrust laws. This policy, along with the DOJ’s heightened criminal antitrust enforcement efforts, underscore the importance of consulting with antitrust counsel to develop and implement effective compliance training and to understand what types of agreements can expose a company to potential criminal and/or civil liability.