TRAVERSE CITY — A federal lawsuit claims an agreement between Munson Healthcare and a local anesthesiology company is anticompetitive, and is asking the court to declare the agreement illegal.

The civil complaint addresses an alleged arrangement between the nonprofit hospital group and Traverse Anesthesia Associates, an independent pain management provider that works with Munson but employs its own anesthesiologists and nurse anesthetists, commonly known as CRNAs.

The complaint alleges the two had a “No-Poach” agreement in place. A “No-Poach” agreement stipulates that neither signatory will hire employees from the other. The arrangement can put employees at a disadvantage by forcing them to choose between non-employment and their current job, according to the United States Department of Justice, which issued guidelines on such agreements in 2016.

It also puts employees at a disadvantage when negotiating wages. The “No-Poach” allows a current employer to rest easy knowing that employees won’t be hired elsewhere, and therefore have limited options. In this case, the agreement stipulated a non-solicitation period of one year, filings in the lawsuit contend.

The lawsuit was filed on Aug. 2 by Joshua Schexnaildre, a CRNA and until recently an employee of Traverse Anesthesia Associates.

Schexnaildre said he first discovered the agreement when he tried to apply for a job at Munson-owned hospital. A recruiter told him that he was qualified for the job, but that Schexnaildre was ineligible to be hired because he had yet to run out a yearlong clock that began when he left his old job.

The complaint states that Schexnaildre spoke to multiple employees to confirm the agreement, including one who said details of the agreement came directly from his hospital’s CEO.

“Defendants’ agreement not only denied job opportunities that were otherwise available from Munson, but also prevented providers of anesthesia services employed by TAA and Munson from negotiating for better terms and conditions of employment,” the complaint states.

The lawsuit alleges that the agreement eliminated competition for anesthesia service providers in northern Michigan, stating that Munson controlled 89% of the market share for Schexnaildre’s profession.

Munson did not confirm or deny the existence of the agreement. The Traverse City Record-Eagle was not able to independently confirm that such an agreement exists.

“Munson Healthcare is in full compliance with all antitrust laws and prepared to defend the allegations made in this lawsuit. We look forward to the opportunity to address this matter with the court,” said Rachel Roe, Munson Medical Center’s Chief Legal Officer.

Munson’s alleged counterpart, Traverse Anesthesia Associates, describes itself as a single-specialty medical corporation. It works in a number of Munson-owned hospitals but is separately registered as a for-profit company. The company employs just more than 50 anesthesiologists and CRNAs, according to its company website.

In 2017, the company was bought by PhyMed group, a Nashville-based anesthesiology provider. In a press release, PhyMed said that the acquisition would bring support and resources “to create a platform for lasting success” for the Traverse City-based practice. In exchange, the acquisition was bringing PhyMed into a region of strategic interest, making it the fifth state in which the company now operates.

PhyMed has not responded to several requests for comment.

Traverse Anesthesia Associates has now been sued in federal court twice since the PhyMed acquisition. In 2019, an investigation led by the Department of Justice alleged the company had fraudulently over-billed Medicare for anesthesia procedures.

In that case, the company paid $607,966 to settle the claims, with no determination of guilt.

In a competitive environment, the Munson and Traverse Anesthesia Associates should be competing with each other to retain the best talent, said Nate Fink, a lawyer for Schexnaildre.

“Munson and TAA don’t have the right to enter into an agreement to keep Mr. Schexnaildre and other CRNAs in northern Michigan from obtaining employment for which they are qualified,” said Fink, whose firm specializes in class action and commercial lawsuits. The firm, Fink Bressack, is based in Southeast Michigan.

“These folks should not be permitted to control the market at the expense of nurse anesthetists. This agreement has eliminated competition for anesthesia service providers in northern Michigan and suppressed the compensation and benefits for these hard working members of the community.”

“No-Poach” agreements are not uncommon in healthcare, an industry which combines highly specialized lanes of labor and with hospital mega-employers that can set the rules of the road.

In 2016, the Department of Justice under President Barack Obama issued a guidance that it would criminally prosecute non-competitive collusion, including “No-Poach” and wage-fixing agreements.

But it has only recently begun to prosecute them. Earlier this year, DOJ attorneys announced indictments for a national surgical company that had at least two “No-Poach” agreements with competitors.

That case is one of the first of its kind brought by the DOJ’s antitrust division, and is being tried in the Northern District of Illinois.

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