A split Seventh Circuit panel affirmed the dismissal of an antitrust suit Wednesday from a proposed class of psychiatrists and neurologists challenging the American Board of Psychiatry and Neurology's certification maintenance requirement, finding the plaintiffs failed to allege an illegal tying scheme.
The ABPN certifies psychiatrists and neurologists nationwide, and requires those certified after 1994 to maintain that status by completing its maintenance of certification, or MOC, program every 10 years, according to the physicians' suit. ABPN certification is not necessary to obtain or maintain state licensure, but many employers require it, insurers often refuse to cover professionals who don't have it, and those who do have it typically receive higher wages, they allege.
The panel's majority agreed that the ABPN has a monopoly on certain specialty certifications and its MOC program, but that it is not an illegal monopoly because there is no viable competing product. While the program does offer continuing medical education, or CME, hours that can be used by practitioners to maintain their license, the MOC also has other activity requirements that cannot be applied toward CME, the panel said.
This distinction sinks the plaintiffs' allegations because they must plausibly allege "cross-price elasticity" between MOC and other CME offerings to support their illegal tying claims, the majority said.
"Even if MOC fully or partially satisfies doctors' state licensure CME requirements, we cannot reasonably infer that doctors view MOC as reasonably interchangeable with CME, thereby causing unfair competition in the CME market," the majority said.
In a dissenting opinion, U.S. Circuit Judge Nancy L. Maldonado wrote that she is "concerned with the continuous heightening of the pleading standards for antitrust claims in this circuit," and said she would reverse the lower court's order so discovery could proceed.
Plaintiffs Emily Lazarou and Aafaque Akhter allege the board's program constitutes unlawful tying, through which it exercises monopoly power in the certification market to force consumers to buy its certification maintenance product. The claims were dismissed three times at the district court, with the second amended complaint being dismissed with prejudice.
The case shares some characteristics with a 2022 Seventh Circuit ruling in Siva v. American Board of Radiology , which affirmed the dismissal of an antitrust suit against the American Board of Radiology and held the lead plaintiff "has fallen short" in showing the group illegally tied its initial board certification for radiologists to a continuous certification program some physicians would rather buy elsewhere.
The Siva panel concluded the radiology board's MOC was not a substitute for the rest of the market's CME and "thus, no illegal tie existed."
The majority in the current case cited the U.S. Supreme Court's 1958 decision in N. Pac. Ry. Co. v. United States as holding that an illegal tying scheme is "an agreement by a party to sell one product but only on the condition that the buyer also purchases a different (or tied) product."
The majority said the plaintiffs must plausibly allege that "in a world without the tying arrangement — an increase in the price of other [CME] products relative to MOC would shift sales to MOC," but failed to do so because the MOC does not directly compete with CME. To receive an MOC, aside from educational CME credits, there are extensive non-CME elements that make them not direct competitors, the majority said.
The majority also affirmed the district court's dismissal of the complaint with prejudice.
"On appeal, plaintiffs do not argue why the court's dismissal was an abuse of discretion or how they could address the identified deficiencies through an amendment," the majority said. "On these facts, we see no abuse of discretion."
In dissent, Judge Maldonado said that since the promulgation of the Federal Rules of Civil Procedure in 1938, pleading standards have become increasingly stringent.
Rule 8 requires only that a complaint contain "a short and plain statement of the claim showing that the pleader is entitled to relief," but over time the "construction of Rule 8 has evolved to require detailed factual allegations, making plausible an inference of liability to justify the costs of discovery," Judge Maldonado wrote. "As a result, in practice, antitrust complaints have become far from 'short and plain.'"
The U.S. Supreme Court's 2007 ruling in Bell Atlantic Corp. v. Twombly raised the pleading standards, which require allegations to be "plausible on their face."
Judge Maldonado said that in the Seventh Circuit's Siva ruling, the court "expanded Twombly's cost-conscious language beyond antitrust conspiracy to affirm dismissal of MOC-related tying claims under [Section] 1 of the Sherman Act."
"We explained that to survive a motion to dismiss, plaintiffs had to plead facts 'permit[ting] an inference of what economists call 'cross-price elasticity' between MOC and other [CME] offerings' in order to 'mak[e] it plausible that MOC is a substitute for other [CME] products.'"
"Specifically, a plaintiff must 'define not only what a [CME] product is, but also what consumer demand in the [CME] market looks like' to determine whether a consumer 'would see the board's MOC product as a true competitor in the [CME] market' and would 'voluntarily purchase MOC if given the option,'" the judge continued.
"And a plaintiff must make these showings without appealing to the potential revocation of their certifications to bootstrap their claims," the judge added. "Put simply, we have come a long way from 'a short and plain statement of the claim showing that the pleader is entitled to relief.'"
Counsel for the parties did not immediately respond to requests for comment.
The plaintiffs are represented by C. Philip Curley and Robert L. Margolis of Robinson Curley PC.
The ABPN is represented by Christopher B. Sullivan of Mitchell Barlow & Mansfield PC, Darryl Tom and Anne I. Shaw of Shaw Legal Services Ltd. and Christopher Keleher of Keleher Appellate Law Group LLC.
The case is Lazarou et al. v. American Board of Psychiatry and Neurology, case number 24-1994, in the U.S. Court of Appeals for the Seventh Circuit.
Oct 30
Deal Summary
