July 22, 2021
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DaVita, Thiry indicted on charges of non-solicitation for some employees

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A federal grand jury in Denver has charged DaVita Inc. and former CEO Kent Thiry with conspiring with competing employers not to solicit certain employees.

“These charges are the result of the antitrust division’s ongoing investigation into employee allocation agreements in the health care industry,” according to a press release from the Department of Justice (DOJ). DaVita and Thiry are charged with two counts of violating the Sherman Act.

Kent Thiry
Kent Thiry

The indictment alleges that DaVita and Thiry had an agreement with Surgical Care Affiliates LLC and its related entity (collectively SCA) to not solicit each other’s senior-level employees from as February 2012 until as late as July 2017, according to the DOJ.

In a second charge, DaVita and Thiry allegedly conspired with another health care company from as early as April 2017 until as late as June 2019 to allocate employees by agreeing that the other health care company would not solicit DaVita’s employees.

SCA was charged in January, and that case is pending in the Northern District of Texas, according to the release.

“Those who conspire to deprive workers of free-market opportunities and mobility are committing serious crimes that we will prosecute to the full extent of the law,” Richard A. Powers, acting assistant attorney general of the Justice Department’s Antitrust Division, said in the release.

“These charges show a disturbing pattern of behavior among health care company executives to conspire to limit the opportunities of workers,” Steven M. D’Antuono, assistant director in charge of the FBI’s Washington Field Office, said in the release.

If convicted, DaVita faces a maximum penalty of a $100 million fine per count, and Thiry faces a maximum penalty of 10 years in prison and a $1 million fine per count, according to the release.

In a statement, DaVita said: “The charges against the company are unjust and unwarranted. The government’s case relies on an unprecedented and untested application of the antitrust laws to alleged discussions involving former executives that occurred many years ago.

“We will vigorously defend the company against this unjustified action. The evidence will demonstrate the government has chosen to unjustly attack our reputation,” according to the company.

In an amicus brief, the U.S. Chamber of Commerce said the indictments should be dismissed because courts had not previously held “that non-solicitation agreements are per se illegal ... By purporting to declare a new per se criminal offense, the Department of Justice has usurped antitrust policy- and decision-making authority vested in Congress and the courts. “What is more, criminally prosecuting practices not firmly established by courts as per se unlawful at the time the conduct occurred violates due process principles and contravenes a host of Supreme Court cases emphasizing the need for clarity in federal criminal prohibitions,” according to the chamber.

Reference:

www.justice.gov/opa/pr/davita-inc-and-former-ceo-indicted-ongoing-investigation-labor-market-collusion-health-care