Deerfield, Ill.-based Surgical Care Affiliates, a division of UnitedHealth Group's Optum, on Oct. 19 filed a motion to dismiss a lawsuit that accuses it of making agreements with competitors not to poach senior-level employees, Law360 reports.
A January indictment from the Justice Department accuses SCA of conspiring with a Texas company to allocate senior-level executives by agreeing to not solicit each other's executives, violating the Sherman Act. The company is also accused of conspiring with a Colorado company on a similar non-solicitation agreement.
Employee "no-poach" agreements are not uncommon, but no court has ever accepted that they are "per se" illegal — illegal without external proof of any surrounding circumstances such as lack of knowledge — under the Sherman Act, according to Law360.
SCA argues that widespread forms of no-poach agreements have been used in the outpatient sector for decades, and the federal government did not show this case should be subject to the per se rule. The U.S. Supreme Court has held that only three types of agreements fall into that category: price-fixing, bid-rigging and market allocation.
On May 14, in a proposed reply brief, SCA said, "When it comes to employee non-solicitation agreements in particular, there does not even appear to be a case squarely condemning such an agreement under the rule of reason. Under those circumstances, it is fanciful to insist that employers have been given fair warning that entering into employee non-solicitation agreements is criminal misconduct. Unsurprisingly, the indictment here fails to allege that anyone thought they were breaking the law or tried to hide the existence of these agreements."
According to the Justice Department, the alleged violations carry a maximum penalty of $100 million. A judge can increase the fine to twice the amount earned from the crime or two times the loss suffered by the victims if either amount is more than the fine.