November 21, 2017

November 20, 2017

Subscribe to Latest Legal News and Analysis

A Tie Too Far: Antitrust Class Action Alleging Physician Association Tied Board Certification to Association Membership Survives Motion to Dismiss

A New Jersey district court recently denied a motion to dismiss in an antitrust class action alleging that a physician association illegally tied board certification to association membership in violation of Section 1 of the Sherman Act. Talone, et. al. v. The American Osteopathic Association, Case No. 1:16-cv-04644 (D. N.J. Jun. 12, 2017). The defendant association moved to dismiss, arguing that plaintiffs, a group of affected doctors, had failed to allege sufficient facts to demonstrate foreclosure of competition or antitrust injury.

The suit was filed in August 2016 by a group of osteopathic doctors against the primary certifying body for osteopathic physicians in the United States. To practice medicine and obtain a medical license in the United States, an osteopathic physician must complete an accredited residency training program after obtaining a Doctor of Osteopathic Medicine degree. The American Osteopathic Association (“AOA”) is the only accrediting agency for osteopathic graduate medical education. A further component of practicing medicine is board certification to signify a particular specialty. The AOA offers board certification for osteopathic medicine. The American Board of Medical Specialties (“ABMS”) also offers board certification, but osteopathic physicians who complete their residencies at AOA accredited programs—the only accredited osteopathic programs—are not eligible for ABMS board certification. The AOA board certification typically cost in excess of $1000 for the examination and administrative fees, plus annual board certification maintenance.

Plaintiffs’ case targeted the fact that starting in 2012, in addition to the annual board certification maintenance fee, the AOA has required all AOA board certified physicians to purchase and maintain annual membership in the AOA—or risk cancellation of their certification.

Plaintiffs’ antitrust tying claim is that the AOA has exploited its control over board certification for the practice of osteopathic medicine to force osteopathic physicians to become members of the AOA. They allege that they are forced to purchase AOA membership even though it serves no purpose with respect to, and has no actual connection with, AOA board certification or their medical practice. Plaintiffs further allege that the AOA’s requirement has reduced the number of osteopathic physicians willing to purchase membership in other physician associations and has thus foreclosed competition in the market for membership in professional physician associations. As a result of the reduced competition, Plaintiffs also claim that the AOA has been able to increase the price of its annual membership dues.

The AOA argued that plaintiffs failed to plead an antitrust injury because plaintiffs are not competitors of the AOA who have lost members due to the alleged tying. The AOA also asserted that plaintiffs’ claim that they were forced to purchase AOA membership does not show that the AOA has market power or that the AOA has foreclosed other physician associations from competition.

The court found that plaintiffs sufficiently stated claims to overcome a motion to dismiss for a per se and “rule of reason” tying antitrust violation. Citing the approximately 32,000 AOA board certified osteopathic physicians who have no choice but to purchase AOA membership in order to maintain their board certification, the court found that the allegations, when taken as true, show that the AOA ties two distinct products—board certification and AOA membership, that it has market power in the tying product market—board certification, and that it affects a substantial amount of interstate commerce. The allegations, when accepted as true, also show that the AOA’s actions substantially lessen competition and prevent other physician associations from competing for members.

The class action also includes claims under New Jersey’s Consumer Fraud Act related to AOA’s alleged promise pre-2000 that its certification would never expire. The court also denied AOA’s motion to dismiss those claims as well as AOA’s motion to transfer venue.

©1994-2017 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

TRENDING LEGAL ANALYSIS


About this Author

Bruce Sokler, Antitrust, Attorney, Mintz Levin, Law firm
Member

Bruce is Chair of the Antitrust Section and in his over 30 years in private practice, he has developed extensive experience in both antitrust and communications regulation, including associated First Amendment and copyright law matters

In the antitrust area, Bruce’s practice includes antitrust counseling and representation in connection with federal and state governmental matters, as well as private antitrust litigation. He counsels and has represented Fortune 100 companies, not-for-profits, start-up entities, and domestic and international joint ventures. Bruce has been involved in...

202-434-7303
Robert Kidwell, Regulatory, Attorney, Mintz Levin, Law Firm
Member

Rob provides counseling on a range of regulatory issues at the federal and state level, including antitrust and unfair/deceptive trade practice issues, as well as representing clients in litigation.

Rob represents clients in complex litigation, class action and otherwise, under both state and federal competition laws, the Communications Act, and the Administrative Procedure Act. He also assists clients in avoiding litigation by guiding them through the transaction review process before the Department of Justice and the Federal Trade Commission and through various proceedings before the Federal Communications Commission.

202-661-8752
Dionne Lomax, Antitrust and Trade Attorney, Mintz Levin Law Firm
Member

Dionne’s antitrust and trade regulation practice includes counseling and representation in connection with merger and nonmerger related activities, litigation, and matters before the US Department of Justice (DOJ) and the Federal Trade Commission (FTC). Dionne has been involved in antitrust matters spanning a broad range of industries, but has particularly deep experience in the health care and energy sectors.

In the health care industry, Dionne has represented large health systems, major medical associations, large multi-specialty physician groups, pharmaceutical companies, and...

202-434-7419
Farrah Short, Regulatory, Antitrust, Attorney, Mintz Levin, Law Firm
Associate

Farrah provides counseling on a wide range of federal regulatory issues, with a focus on antitrust compliance and litigation matters. She also participates actively in the firm’s pro bono program.

Farrah specializes in guiding clients through the Hart-Scott-Rodino (HSR) premerger review process before the Federal Trade Commission and the Department of Justice, including responding to Second Requests. She also counsels clients on competition law issues under the Sherman Act, the Clayton Act, and the FTC Act and provides related advice on mergers and acquisitions, joint ventures,...

202-585-3518