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A class action antitrust suit is the latest and potentially most effective weapon in a long doctors’ fight to improve their working conditions and, they argue, patient care in America. The lawsuit, filed May 7 in federal district court in Washington, D.C., targets the so-called National Resident Matching Program — the mechanism for matching newly-educated physicians with jobs as hospital residents — and the organizations, universities and hospitals that sponsor and participate in the program. The suit charges that those groups have illegally contracted and conspired to eliminate competition in the recruitment, hiring, compensation and other terms of employment of resident physicians. The suit says it’s estimated that there are more than 200,000 plaintiffs across the country and more than 1,000 defendants. The action comes on the heels of an independent effort in the U.S. House of Representatives to use the Medicare law to address the long hours and low pay associated with medical residency, and a rule-making petition pending before the Occupational Safety and Health Administration (OSHA). “The evidence is overwhelming that this is a problem,” says Dr. Sidney Wolfe, director of Washington, D.C.-based Public Citizen’s Health Research Group, which is a party to the OSHA petition. “But this is the first time for all three of these approaches to be used — the OSHA petition, the legislation and the antitrust suit. And all of these are symptomatic of the fact that people are literally tired of working these long hours. “When I was a resident 37 years ago, we seemed to be moving in a better direction, but that movement has had maturation arrest.” When she first learned of the antitrust suit, says health care scholar Wendy Parmet of Northeastern University School of Law, “I thought to myself: How come no one brought this 10 years ago?” Antitrust actions in the health care industry and in higher education are no longer novel, she says. “A lot of activities that once upon a time were thought of as outside the market, no longer are,” she explains. “It’s actually surprising nobody brought this case before.” PROBING A FRAMEWORK This particular antitrust action — Jung v. Association of American Medical Colleges — was hatched slowly and carefully, says class counsel Michael Freed of Chicago’s Much Shelist Freed Denenberg Ament & Rubenstein, whose name plaintiff is Dr. Paul Jung of Johns Hopkins University in Baltimore. “I have been involved in several cases in the health care industry and as a result, I get calls from time to time from potential clients and other lawyers,” says the antitrust litigator. “There seemed to be a flurry of calls in the last few years over the plight of medical residents.” A group of lawyers began speaking with the medical residents who had come forward, he recalls. “We looked more closely into what it was that made medical residents so vulnerable in terms of negotiating a decent salary and decent working conditions,” says Freed. “The more we looked, the more it became apparent there was a whole group of agreements out there restricting residents from engaging in a competitive market in the way other employees can engage,” Freed adds. “There’s just no element of competition that enters into it.” The National Resident Matching Program is a nonprofit corporation established in 1952 and managed by the Association of American Medical Colleges, which declined comment on the lawsuit. The program is sponsored by the association and the American Board of Medical Specialties, the American Medical Association, the American Hospital Association and the Council of Medical Specialty Societies. The program was created after World War II when the number of residency positions greatly outstripped the number of residents. Its purpose, described on its Web site, is “to provide an orderly and fair mechanism to match the preferences of applicants for U.S. residency positions with residency program choices of applicants. The program provides a common time for the announcement of the appointments, as well as an agreement by programs and applicants to honor the commitment to offer and accept an appointment if a match results.” Prospective resident physicians and residency programs submit confidential rankings to the Matching Program, which uses a computer program to match residents and programs according to their preferences. Each year, about 16,000 U.S. medical school students participate in the match. In addition, another 17,000 “independent” applicants compete for the approximately 23,000 available residency positions. All parties agree in advance to accept the match, without negotiations over salaries or hours. In a statement released after the suit was filed, Dr. Jordan Cohen, president of the Association of American Medical Colleges, said: “The Match is an orderly system that helps both students and health care institutions find the best fit between professional aspirations and educational opportunities, respectively. We intend to challenge this lawsuit with utmost vigor.” The program, says Freed, who is working with 16 other firms on the suit, substitutes a centralized, anti-competitive system for a free and competitive market, which has the effect of “depressing, standardizing and stabilizing compensation and other terms of employment.” The medical school group and the AMA, the suit charges, regularly exchange competitively sensitive information on resident compensation and other terms of employment through an annual survey and make the results known to their members. First-year residents, who are not students, but doctors, says Freed, earned an average salary of $35,700 during 2000-2001 — substantially lower than what they could earn moonlighting. Residency programs, he says, routinely require 60 to 100 hours of work per week, including 36-hour and 48-hour shifts. “They work for a salary which is in an extremely narrow band — it probably doesn’t vary by $3,000 across the country,” says Freed. “They can’t — in many instances — make enough money to live and pay their school debt. And they have no flexibility on where they can go to do their residencies.” OTHER AVENUES The issue of residents’ pay and hours has come into the courts, not through antitrust law, but through tort law, says David Orentlicher of Indiana University School of Law. He recalls the Libby Zion case more than a decade ago in New York, in which an allegedly fatigued resident caused Zion’s death in an emergency room. New York, in response, issued regulations governing residents’ hours. But Orentlicher and others say not many states have done the same. In 1999, the National Labor Relations Board ruled that residents at private hospitals are employees with the same right to unionize as residents at public hospitals. The ruling, which physicians and others hoped would spur reforms in residents’ working conditions, affected an estimated 90,000 resident physicians. But unionization is not yet widespread, observers say. One problem with unionizing is that each workplace would have to be organized, says Orentlicher. “So you’d have to do it in every hospital.” Another obstacle, he says, may be the power that chiefs of residency programs exert over future careers. “When I was a resident, the program chief had a lot of power over you,” he says. “If you want to do a fellowship for further training, you need a recommendation. So there are a lot of reasons residents are reluctant to organize.” Last August, one residents’ union — the Service Employees International Union Committee of Interns and Residents — the Public Citizen’s Health Research Group, the American Medical Student Association and several individual doctors petitioned OSHA to promulgate a standard limiting the working hours of medical professionals. OSHA has created a working group on what it has called “novel legal and policy issues” raised by the petition and is expected to respond to the petition by the end of this summer. “OSHA could and should grant our petition just from the standpoint of worker protection,” says Public Citizen’s Wolfe. Legislation in the U.S. House goes beyond the petition, he adds, and recognizes there are adverse effects from current working conditions not just on residents but on patient health in general. The legislation is H.R. 3236, introduced by Rep. John Conyers, D-Mich., last October. It would limit residents’ hours to a maximum of 80 hours per week and no more than 24 hours per shift. It would require at least 10 hours off between shifts and at least one full day off out of every seven and one full weekend off per month. The medical profession has done little to change the current working conditions, says Orentlicher, partly because this way of training doctors is deeply entrenched and partly because the economic implications of change are huge. If resident salaries had to be doubled, the financial consequences would be enormous, he says. Parmet agrees, saying, “I think the issue has often been sidestepped because of the cost implications. I do believe there have been some articles suggesting the New York regulations are not even followed.” And so it is not surprising, she adds, that antitrust law is the latest approach. “If you start thinking about this as an antitrust matter, it puts the problem in a whole different perspective,” she explains. “You get out of health care and think this is a bunch of hospitals and other places trying to keep prices down and make competition difficult. It makes people think and shakes things up a bit.” The concept of a matching program is “fine,” says Wolfe. “It’s just that accompanying it is a non-negotiable contract that on that day you agree to go to that place and whatever rules are in place, you’re forced to abide by those,” he says. Even if the program began for altruistic reasons, its origins are irrelevant if the program is illegal, says Freed. “Defenders will say they brought order to chaos,” he says. “I’m sure there’s chaos in the legal market, the investment banking market and in a lot of areas. But even if there was chaos, so what? Competition is never so tidy as an organized response.”

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