The Future of the Match Program is Looking Brighter, For Better or for Worse

By Anne S. Kimbol, LL.M. Candidate

A decision by the D.C. Circuit on February 11, 2004 weakened the case of Paul Jung, M.D. and other members of the putative class of previous and current medical residents in their fight against the National Resident Matching Program (hereinafter “the Match” or “NRMP”).

In May 2002, Dr. Jung and two other former or current medical residents brought a class action suit against seven medical organizations and 29 medical centers on alleging that the Match is used in violation of antitrust laws in order to depress resident salaries and benefits.  See Jenny B. Davis, Disturbing Diagnosis: Physician Residents Sue Their System for Antitrust, 1 ABA Journal eReport 18 (2002).  The suit alleges that the institutional defendants exchange information regarding salaries and employee benefits in order to depress wages and working conditions for residents nationwide.  Plaintiffs allege that the Match, which assigns only one residency position per graduating medical student, eliminates the possibility of negotiations between to-be residents and the institutions.  See id.

In a decision issued on February 11, 2004, the D.C. Circuit granted motions to dismiss for the American Hospital Association (hereinafter “AHA”), the Council of Medical Specialty Societies (hereinafter “CMSS”), the American Medical Association (hereinafter “AMA”), the American Board of Medical Specialties (hereinafter “ABMS), Yeshiva University, and Washington University Medical Center.  See Jung v. Association of American Medical Colleges, 2004 U.S. Dist. LEXIS 1826 (D.C. Cir. 2004).  The court explained that plaintiffs allege a three-pronged antitrust conspiracy consisting of: the annual assignment of fourth year medical students to residency programs through the Match, which includes a contract students must sign committing themselves to the single assignment selected by the Match and the need to enter into the Match in order to gain employment in a program accredited by the Accreditation Council for Graduate Medical Education (hereinafter "ACGME"), which is a prerequisite for eligibility for board certification by the ABMS; the ACGME’s use of its accreditation standards to regulate the number of positions available in residency programs, create obstacles to a resident’s ability to transfer positions during residency, require participation in the Match for accreditation, and review compensation and other terms of employment with the purpose of depressing them; and the exchange of pricing information through surveys and databases, including the annual survey by the Council of Teaching Hospitals and Health Systems (hereinafter “COTH”) section of American Association of Medical Colleges (hereinafter “AAMC”) and the AMA’s Fellowship and Residency Electronic Interactive Database (hereinafter “FRIEDA”).  See id. at *6-12.

Sixteen institutional defendants as well as the ABMS and CMSS filed motions to dismiss for lack of personal jurisdiction.  See id. at *12.  The court examined the alleged bases for jurisdiction, which included the District of Columbia’s long-arm statute, jurisdiction under Section 12 of the Clayton Act, and the long-arm statute under the conspiracy jurisdiction doctrine.  The court held that participation in the Match was insufficient to establish minimum contacts with D.C., that plaintiffs failed to sufficiently allege the occurrence of a tortuous injury within D.C., and that defendants defeated the “transacting business” claim through the “government contacts” exception to jurisdiction under the Clayton Act.  See id. at *13-52.  The court found that plaintiffs had adequately alleged a conspiracy to depress resident incomes in order to prevail over the motions to dismiss for defendants who participated in the Match.  See id. at *52-59.  As there was no evidence that Washington University Medical Center participated in the Match, its motion to dismiss was granted.  See id. at 60.  The court further held that plaintiffs had failed to show that the ABMS or CMSS participated in the alleged conspiracy, and therefore found a lack of personal jurisdiction over those defendants.  See id. at *61.

The court then turned to the NRMP’s motion to dismiss for lack of subject matter jurisdiction and motion to compel arbitration, with which the AMA had joined.  See id.  The Student Contract between the NRMP and fourth year medical students contained an arbitration clause.  See id. at *61-62.  After a detailed analysis of the strong federal policy in support of arbitration clauses contained in the Federal Arbitration Act and countervailing policies, see id. at *65-96, the court concluded that the arbitration clause applied to only one prong of plaintiffs’ allegations and that such separation of the conspiracy allegation would be improper and therefore denied the motion.  See id. at *97-103.

The final motions to be discussed were motions to dismiss for failure to state a claim.  See id. at *104.  The court reviewed the requirements to state a claim for restraint of trade under Section 1 of the Sherman Act, specifically rejecting arguments that the Matsushita rule, which places an additional burden on plaintiffs relying on circumstantial evidence, is applicable to motions to dismiss.  See id. at *104-113.  The court held that plaintiffs’ allegations against the AHA, CMSS, ABMS, AMA and Yeshiva University were vague, conclusory, and insufficient to meet plaintiffs’ burden and therefore granted those defendants’ motions to dismiss.  See id. at *113-155.  The court denied motions on behalf of the AAMC and the ACGME.  As to the AAMC, the court found plaintiffs’ allegations focusing on the COTH survey were sufficient to support allegations of a price-fixing conspiracy as the survey could serve as a mechanism for conspirators to determine the appropriate level for resident incomes and to police co-conspirators to ensure that they are not departing from the price-fixing scheme. See id. at *130-140.  The ACGME’s motion was based on the argument that creating and enforcing accreditation standards is non-commercial conduct.  The court recognized that educational and professional associations have been held to be insulated from antitrust claims when their conduct was non-commercial but held that the question of whether the ACGME’s actions and motives were in fact non-commercial was an issue of fact.  Its motion to dismiss was therefore denied.  See id. at *144-151.

Through its extremely detailed decision, the court not only decreased the number of defendants remaining in this matter but laid a foundation for future cases involving arbitration clauses, antitrust conspiracies, and jurisdiction under the Clayton Act.  Most notable was the court’s long and detailed discussion of the Federal Arbitration Act and related issues despite the fact that its decision ultimately relied on its decision that splitting the claims would not be proper.  Given that the arbitration discussion was not dispositive, it can be classified as dicta, but an attorney filing a case in the D.C. Circuit would be well advised to read this analysis in detail.

The battle over the Match is also being fought on Capitol Hill.  In an additional move to avoid the potential consequences of the suit, the defendants have engaged in a lobbying effort seeking an antitrust exemption for the program.  This effort has proven controversial.  See Lily Henning, Hospitals Turn to Capitol Hill for Antitrust Edge, 229 Legal Intelligencer 105 (2003).  In a Nov. 18 letter to Senate leaders, Sen. Jeff Bingaman (D-N.M.), who sits on the Health, Education, Labor and Pensions Committee, and three colleagues wrote that granting the exemption "would set a precedent that will encourage defendants in all types of pending litigation to come to Congress for relief." See id.  Supporters of the lobbying efforts include Sen. Edward Kennedy (D-Mass.), a ranking member of the health committee. See id.

Whatever the final outcome, it is clear that the Match will continue to be an area of controversy, as residents and the public alike wonder about the consequences of physicians-in-training treating patients while working long hours on little pay.