(Law360) The former information technology director for outpatient clinic Surgical Care Affiliates has filed a proposed class action in Illinois federal court accusing the company of conspiring with competitors to not hire each other’s executives in order to depress salaries.
Allan Spradling’s suit, filed Tuesday in the Northern District of Illinois, said Surgical Care Affiliates LLC reached an illicit agreement in 2010 with companies including UnitedHealth Group Inc. and Tenet Healthcare Corp. and carried it out through at least 2017, in violation of the Sherman Act and Clayton Act.
Surgical Care and its parent company, SCAI Holdings LLC, are facing related criminal charges and have pled not guilty to conspiracy charges related to the alleged “no-poach” deal.
The goal of the agreement among the companies was to hold down salaries of senior-level executives by eliminating competition for their services, with the aim of cutting expenses in the multibillion-dollar industry, Spradling said.
“Defendants’ no-poach agreements were not necessary to any legitimate business transaction or lawful collaboration among the companies,” he said.
Spradling added that the conspiracy substantially reduced competition for labor by imposing a “naked restraint” on trade by stopping industry veterans from seeking higher-paying jobs from May 1, 2010, through at least Oct. 31, 2017.
He is seeking to represent a class of thousands of executives across multiple companies, and asking that the damages be tripled under the Sherman Act.
“The class members are highly compensated individuals,” Spradling’s attorney Joe Saveri of Joseph Saveri Law Firm told Law360 in an email. “Reductions in compensation of even relatively small percentages could easily total hundreds of millions of dollars when trebled as required by law for the entire class.”
Saveri said an investigation showed the “breadth and scope” of the claims and seriousness of the harms.
“There is probably nothing more important than ensuring that individuals receive fair compensation for [their] talents and skills and the markets for labor function competitively,” he said.
Spradling alleges the executives with the seven health care companies openly coordinated their efforts as part of the agreement.
In an email in December 2015, former Surgical Care president Andrew Hayek told an executive at a competing business, United Surgical Partners, that someone was trying to recruit SCA’s executives in violation of the “no-poach” agreement, Spradling said.
“Just wanted to let you know that [recruiting company] is reaching out to a couple of our execs. I’m sure they are not aware of our understanding,” Hayek told the executive, according to the lawsuit.
Named as defendants in the suit are SCAI Holdings LLC, Hayek, UnitedHealth Group, United Surgical Partners Holding Co. Inc., United Surgical Partners International Inc., Tenant Healthcare Corp. and 10 John Does—companies whose identities are unknown but which Spradling says took part in the conspiracy.
Spradling’s suit is the third civil case filed accusing the companies of a conspiracy to take part in a “no-poach” plan. A former senior-level UnitedHealth employee sued in February in Illinois, and another senior executive filed suit in January.
In a complaint filed Wednesday, a plaintiff going by the pseudonym “Steven Smith” hit UnitedHealth unit Surgical Care Affiliates LLC with what is the second proposed class action targeting the companies.
In the criminal case, the U.S. Department of Justice brought charges against Surgical Care and its parent company in January in Texas federal court. The businesses are accused of conspiracy in restraint of trade to allocate employees and conspiring with unnamed companies in a “no-poach” deal to not hire each other’s executives.
None of the other defendants in the civil suit are listed in the indictment.
Representatives for the defendants did not immediately return messages seeking comment Wednesday.
(Reporting by Brett Barrouguere)