WILLIAMSPORT – A federal judge has sustained discovery objections from Geisinger Health and ordered plaintiffs to identify the job categories that fall within the definition of “Healthcare Workers” – in a class action lawsuit against the company and Evangelical Community Hospital, which claimed the Pennsylvania hospitals engaged in a secret “no-poach agreement” that suppressed professional mobility and salaries in Central Pennsylvania.
Nichole Leib and Kevin Brokenshire of Pennsylvania and Diane Weigley of Georgia (and formerly of Pennsylvania) first filed suit in the U.S. District Court for the Middle District of Pennsylvania on Feb. 3, 2021 versus Geisinger Health of Danville and Evangelical Community Hospital, of Lewisburg.
“This class action challenges an illegal agreement between two competitors, Geisinger and Evangelical, not to recruit (or “poach”) each other’s physicians, nurses, psychologists, therapists and other health care professional.” the suit said.
“The ‘no-poach agreement’ covered defendants’ health care workers in a region in Central Pennsylvania that included Union, Snyder, Northumberland, Montour, Lycoming and Columbia Counties, and the cities of Danville and Lewisburg, where Geisinger Medical Center and Evangelical are headquartered, respectively.”
The plaintiffs added the allegedly illegal agreement was intended to, and did, reduce competition for health care workers in Central Pennsylvania and, as a result, suppressed the job mobility and wages of the plaintiffs and members of the proposed class below the levels that would have prevailed, but for the agreement.
Furthermore, the plaintiffs added that the U.S. Department of Justice issued comments on such agreements in 2019, noting: “When companies agree not to hire or recruit one another’s employees, they are agreeing not to compete for those employees’ labor. Robbing employees of labor market competition deprives them of job opportunities, information and the ability to use competing offers to negotiate better terms of employment. Under the antitrust laws, the same rules apply when employers compete for talent in labor markets as when they compete to sell goods and services.”
“Geisinger and Evangelical reached their unlawful horizontal agreement at the highest level of their organizations, through secretive verbal exchanges that were later confirmed by emails, which they agreed to conceal from outsiders, their respective employees who make up the proposed class, and the public. As described below, defendants’ senior executives periodically reaffirmed, monitored and policed the no-poach agreement,” per the suit.
“The no-poach agreement began by May 2015, likely existed earlier than May 2015, and continued until at least Aug. 5, 2020, when the DOJ brought a civil antitrust action to enjoin Geisinger’s partial acquisition of Evangelical. The DOJ complaint alleges that Geisinger’s proposed partial acquisition of Evangelical would fundamentally reduce competition for health care services and raise the likelihood of continued unlawful coordination between defendants.”
According to the DOJ, the defendants have a history of collusion, deciding when and when not to compete against the other, including the creation of the no-poach agreement that is the focus of the instant case.
Leib is currently employed with Geisinger, Brokenshire was employed with Geisinger until March 2018 and Weigley, who now lives in Georgia, was employed by Evangelical until August 2017.
Geisinger Health denied the plaintiffs’ account of the events in question.
“We adamantly disagree with allegations that Geisinger restricted its recruitment for staff in any way. In fact, Geisinger regularly conducts outreach to gauge interest and hires talent locally, regionally and nationally, including those from Evangelical Community Hospital, and provides competitive compensation and benefits. This approach allows us to have the best clinicians and staff to care for our patients. Any claims to the contrary are without merit,” the hospital system said, in a statement.
“Geisinger believes strongly that competition is a good thing for our patients, our members, our communities and team members. It helps ensure our organization is doing everything we can to reduce the total cost of care, create better affordability and deliver those benefits to the patient, while retaining and rewarding our staff.”
After an amended complaint was filed on March 18, 2021, Geisinger Health filed an answer to it on Dec. 7.
“Geisinger denies each and every allegation of the complaint, except as specifically stated, and denies that it violated in any way the antitrust laws under which plaintiffs purport to bring this action,” the answer stated.
“No response to the allegations in the unnumbered paragraph on Page 1 is necessary or required because the allegations contain legal arguments and conclusions of law, or are otherwise moot, because the Court has dismissed with prejudice plaintiffs’ action under the ‘antitrust laws…of the Commonwealth of Pennsylvania.’ To the extent a response is required, Geisinger denies the allegations, except admits that plaintiffs purport to bring an action under the ‘antitrust laws of the United States.”
Geisinger Health also introduced 26 separate affirmative defenses – including among them, that the health system is not a proper party to this action, that it did not employ any of the plaintiffs or putative class members and any and all of the company’s actions challenged by plaintiffs were “lawful, reasonable, justified and constitute bona fide business practices.”
UPDATE
In a memorandum opinion issued June 3, U.S. District Court for the Middle District of Pennsylvania Judge Matthew W. Brann ruled in the hospital chain’s favor with respect to a discovery dispute.
The plaintiffs served their revised first set of requests for production, consisting of 44 separate requests.
“Specifically, the plaintiffs seek documents and data regarding all Geisinger and Evangelical employees from a specified period. The defendants object to the requests as overbroad, arguing that the plaintiffs’ definition of ‘employee’ impermissibly includes (1) non-healthcare workers who are not part of the putative class, and (2) workers outside the relevant market of Central Pennsylvania,” Brann.
“The Court agrees with the defendants and instructs the parties to proceed with discovery using a narrower definition of ‘employee’ consistent with the term ‘Healthcare Workers’ as defined in the plaintiffs’ consolidated class action complaint.”
Brann said the plaintiffs’ requests for discovery concerning all Geisinger and Evangelical employees “substantially exceed” the scope of the amended complaint, which focuses exclusively on skilled workers involved in delivering patient care.
“During the June 1, 2022, status call with the Court, counsel for the plaintiffs argued that the pre-2011 data is insufficient for benchmarking purposes because it is unclear when the alleged conspiracy began. But on this, the plaintiffs again exceed the scope of the class definition in the amended complaint. Although the plaintiffs allege that ‘the No-Poach Agreement began at least as early as 2010, and may have existed even earlier,’ they define the putative class as ‘all natural persons who worked at [Geisinger] or [Evangelical] from January 2011 through such time as the defendants’ anticompetitive conduct ceased.”
“In so doing, the plaintiffs set the parameters for the period in which the alleged anti-competitive conduct occurred. If the plaintiffs believe they mistakenly defined the class period too narrowly, that is an issue that must be addressed at the pleadings stage; they cannot now use discovery to broaden the scope of the suit beyond the class definition and class period provided in the amended complaint.”
For counts of violating the Sherman Act, the plaintiffs are seeking a declaration that the alleged conduct in question violated same, treble damages, restitution and disengorgement of ill-gotten gains, pre- and post-judgment interest, equitable relief, attorney’s fees, costs of suit, such other and further relief as the Court may deem just and proper and a trial by jury.
The plaintiffs are represented by Shanon J. Carson, Daniel J. Walker, Eric Leon Cramer and Mark Suter of Berger Montague, Gerard A. Dever, Mary L. Russell and Roberta D. Liebenberg of Fine Kaplan & Black and Ira Neil Richards of Schnader Harrison Segal & Lewis, all in Philadelphia, plus Adam J. Zapala, Alexander E. Barnett, Elizabeth Tran Castillo, James Gerard Beebe Dallal, Reid Wilson Wayman Gaa and Tamarah P. Prevost of Cotchett Pitre & McCarthy, in Burlingame, Calif.
The defendants are represented by Daniel T. Brier, Donna A. Walsh and Richard L. Armezzani of Myers Brier & Kelly in Scranton, Chahira Solh, Rosa M. Morales and Stefan M. Meisner of Crowell & Moring in Irvine, Calif., New York, N.Y. and Washington, D.C., John Cornell Fuller, Stephanie Resnick and Theodore H. Jobes of Fox Rothschild in Philadelphia and Christopher Yook, Norman Armstrong Jr. and Shannon M. Kasley of King Spalding, in Washington, D.C.
U.S. District Court for the Middle District of Pennsylvania case 4:21-cv-00196
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com