Though victorious in court, the South Florida Hospital Association has no plans to resurrect a group purchasing program for temporary nursing services that led to a six-year antitrust fight.
There is no nursing shortage, and the need for temporary nurses has dropped off significantly, said David Brown, assistant to the president of the Miami-based hospital association.
But there was a shortage in 1988, when the group and 13 of its hospitals developed a program under which temporary nurse agencies submitted bids to get on a "preferred agency" list.
Of the 16 companies that submitted bids, eight were placed on the list. To stay on the list, the winning agencies agreed to carry their own workers' compensation insurance, to pay the association a rebate based on a percentage of the agencies' yearly gross income and to not compete with the hospitals in the hiring of nurses.
Each of the participating hospitals agreed to consider the preferred agencies first when they needed temporary nursing services.
The program lasted three months before a federal district court in Miami issued a preliminary injunction, which shut it down until antitrust allegations could be resolved.
Four agencies that were excluded from the program charged the association, the hospitals and the accepted agencies with illegal price fixing and engaging in an illegal group boycott, both in violation of antitrust law.
In 1989, a federal appeals court lifted the injunction on technical grounds and ordered the district court to hold a trial, which it ultimately did last February.
After a four-week trial, a 10-member jury in U.S. District Court in Miami sided with the defendants on March 27, agreeing that the association and the hospitals didn't break the law because they didn't have enough market power to control prices or limit competition for temporary nursing services.
"Obviously, we were delighted with the findings," Brown said. "We did not feel antitrust was an issue, and the jury felt the same way."
From a legal standpoint, the verdict in favor of the hospitals was significant for several reasons, said Richard Feinstein, an antitrust attorney with McKenna & Cuneo in Washington who defended the association and hospitals.
First, the appeals court ruled that the hospitals' behavior shouldn't be viewed as an automatic violation of federal antitrust laws, he said. The appeals court said the district court should conduct a trial to consider any actual anti-competitive effects of the purchasing arrangement.
And second, the jury found that there was no anti-competitive effect because the hospitals competed in a wider geographic market for nursing services and didn't wield enough market power to fix prices, Feinstein said.
However, the losing agencies say they intend to appeal the jury verdict to the 11th U.S. Circuit Court of Appeals in Atlanta.