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A sweeping class action against dozens of hospitals and medical schools and associations could mean huge payouts to a group of medical residents who say the system for assigning them residency posts violates antitrust laws by preventing them from negotiating pay and benefits. But a last-minute lobbying push for an antitrust exemption by the defendants could succeed in killing the litigation, now pending in the U.S. District Court for the District of Columbia. As of press time, lobbyists for the defendants said it was still possible that the exemption would be tacked on to the 2004 Senate omnibus appropriations bill, which is expected to be voted on sometime before Thanksgiving. If successful, the narrowly tailored exemption would allow the 26 teaching hospitals, seven professional associations, and six medical schools named in the suit to continue to use the National Resident Matching Program, or the match, as it is commonly known, without risking liability under federal antitrust laws. The prospect has drawn fire from members of Congress as well as from antitrust watchdogs. Such a move “would set a precedent that will encourage defendants in all types of pending litigation to come to Congress for relief,” wrote Sen. Jeff Bingaman (D-N.M.) and three colleagues in a Nov. 18 letter to Senate leaders. Bingaman sits on the Health, Education, Labor, and Pensions Committee. His office did not return calls for comment. Still, the defendants have garnered support from powerful allies, including Sen. Edward Kennedy (D-Mass.), ranking member of the health committee. Kennedy’s home state contains two of the teaching hospitals named in the suit. Plaintiffs, who are being represented by at least a half-dozen firms, charge that the match, which uses a computer algorithm to assign graduating medical students to residency programs based on their mutual preferences, doesn’t allow new doctors to field offers from competing employers. The result, they say, is a minimum of four years spent working long hours for low pay, with virtually no chance of moving to a more attractive employer. “This basically comes down to what hospitals are able to do to a captive work force,” says Chicago-based solo practitioner Sherman Marek, one of three co-lead counsel for the plaintiffs. But advocates of the match argue that the residency programs it offers are part of an ongoing medical education, and hardly amount to an anti-competitive conspiracy. “We’re not talking about nurses who are carrying bedpans. We’re talking about students who are being trained,” says Thomas Campbell, who is lead counsel for the match program and a partner with Gardner, Carton & Douglas in Chicago, where the match program is incorporated. “How much would you pay for that credential and training?” Doctors are required to complete at least four years of residency in order to become licensed practitioners. Supporters of the match, which was started in 1952, say the program ended a chaotic and highly subjective process of residency placement that required medical students to choose their teaching hospital as early as their second year of medical school. Covington & Burling antitrust partner James Atwood, who represents George Washington University and five other defendants, says that residents don’t usually bargain because they view their tenures at the teaching hospitals as further training. But he adds that the match does not strip residents of bargaining ability. In the fall of their final year of medical school — but before the match process begins — students interview with hospitals. Atwood says students can make salary requests at these interviews. “They are entitled to ask if they want,” says Atwood. “But it’s my understanding that that doesn’t occur very often.” The class of plaintiffs — and damages — could be enormous. On Oct. 31, the plaintiffs filed for class certification, which the complaint claims could include up to 200,000 current and former residents. Compensatory damages could top billions. “It’s a number big enough to bankrupt every hospital in the United States,” says Campbell. And because the plaintiffs’ lawyers are working on contingency, that could mean huge dividends if they prevail. The defendants have retained a veritable who’s who of antitrust lawyers, with more than 40 lawyers from more than 20 firms participating in the case. TAKING THE FIGHT TO THE HILL But not all defendants are reserving their firepower exclusively for the courts. Lobbyist Jeffrey Blattner, a Hogan & Hartson partner and former Kennedy staffer, has been hired by defendants Association of American Medical Colleges and the American Hospital Association to press Congress for an antitrust exemption. “Senators and representatives from both political parties recognize that the match protects the interests of medical students and hospitals,” Blattner says. “They believe it deserves protection, and we appreciate their support.” He confirms that he has been lobbying to win the match antitrust exemption, but says he hasn’t specifically lobbied for its inclusion on the appropriations bill. “Whether it ends up in the bill or not will be up to members of Congress to decide,” Blattner says. The plaintiffs are relying on Patricia Gilbert of D.C.’s Cuneo, Waldman & Gilbert to represent them on Capitol Hill. She calls the prospect of legislation protecting the match “disconcerting.” A spokesman for Kennedy says the senator supports such legislation, but would not comment on whether the proposed law would be piggybacked on the appropriations bill or whether the senator would introduce a separate bill. For some senators, the prospect of such legislation being attached to an appropriations bill raises a red flag. Bingaman’s Nov. 18 letter to Senate Majority Leader William Frist (R-Tenn.) and Minority Leader Thomas Daschle (D-S.D.) was co-signed by Wisconsin Democrats Russell Feingold and Herbert Kohl and Idaho Republican Larry Craig. It reads in part: “Congress should subject proposals like this one that hold widespread implications for patient safety and the working conditions of hundreds of thousands of medical residents to the regular legislative process.” Congress in the past has granted just a handful of antitrust exemptions. The best known exemption — for professional baseball — was delivered courtesy of the Supreme Court. In 1922, the high court ruled in Federal Baseball Club of Baltimore Inc. v. National Baseball Clubs that the Major League Baseball teams didn’t participate in interstate commerce and couldn’t be subject to federal antitrust laws. Under the 1945 McCarran-Ferguson Act, the insurance industry enjoys limited immunity from federal antitrust laws. The law was adopted in response to controversy over the jurisdiction of state and federal governments in regulating the insurance business. The act concludes that continued regulation and taxation of insurance by states are in the public’s best interest. And the Capper-Volstead Act of 1922 gives farmers the freedom to form cooperative marketing associations. Albert Foer, president of the American Antitrust Institute, says antitrust exceptions, such as the one currently being sought by the medical groups, have to be awarded carefully. “Antitrust exemptions are in great demand and should not be distributed quietly and without public debate to anyone who can show that his life would be easier without having to compete under the aegis of antitrust,” Foer wrote in a Nov. 16 letter to Wisconsin Republican F. James Sensenbrenner Jr., chairman of the House Judiciary Committee. “It would make a mockery of our traditions to create a new antitrust exemption without so much as a hearing, and would set a precedent that Congress would only regret.” THE MATCH GAME The three medical residents named as plaintiffs in the May 2002 suit, Jung, et al. v. Association of American Medical Colleges, et al., which is before Judge Paul Friedman, allege that the match allows participating teaching hospitals and colleges to sidestep competitive hiring. Through the match, students list about 10 hospitals where they would like to work, ranking them in order of preference. Hospitals in turn rank their choices of residents from the pool of applicants in the match. The new residents, who have completed four years of medical school, usually earn average annual salaries between $35,000 and $40,000 and are typically asked to work between 60 and 100 hours per week, including shifts of up to 48 hours, according to the complaint. Plaintiffs don’t specify exactly by how much the residents are underpaid, but defendants fear that they would be required to pay billions in compensatory damages. Students agree when signing up for the match to accept whatever position the program gives them. Supporters of the program say 85 percent of students are assigned one of their top three choices. The suit isn’t designed to destroy the match, but to stop wage fixing, says Stewart Weltman, a Cohen, Milstein, Hausfeld & Toll attorney in Washington representing the plaintiffs. “I don’t see this action as one attacking the match per se,” Weltman says. The match service costs medical students $65 and is run by a board that includes medical students. “That’s one of the other things that’s goofy about this antitrust conspiracy claim — the victims of the so-called conspiracy are sitting on the board,” Campbell says. “These conspiracies usually take place in smoke-filled rooms. This has operated in the open for 50 years.” According to the plaintiffs, however, the match is what holds together components of the alleged conspiracy to “stabilize wages below competitive levels.” They allege in the complaint that the matching program is “a mechanism that eliminates a free and competitive market and substitutes a centralized, anti-competitive allocation system assigning prospective resident physicians to a single, specific and mandatory residency position.” Medical students are not required to participate in the match, says Robert Beran, president of the National Resident Matching Program. But he also acknowledges that about 80 percent of all residency jobs in the United States are exclusively available through the program. “The positions that everyone’s looking for are in the match,” Beran says. The match recently gave future residents some clout at the bargaining table. In late October, the match board voted that before the match is complete, residents have to be provided with contracts from each of the hospitals they place on their match list. The new rule, which was strongly supported by the American Medical Student Association, will be effective for the 2005 match. Beran insists that the match itself bears no responsibility for setting salaries or affecting working conditions — and is widely accepted by students and doctors. For now, both parties are waiting on Judge Friedman to rule on motions to dismiss. But some defendants aren’t taking anything for granted. “There is a serious, time-sensitive need,” says defense lobbyist Blattner. “And we want the legislation.”

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