Davita, former CEO charged for alleged noncompete conspiracies

By | July 18, 2021

Dive Brief:

  • DaVita, which operates outpatient care center centers across the U.S. focusing on kidney care and dialysis, along with its former CEO Kent Thiry, received a two-count federal indictment from a grand jury for conspiring with competing companies to not poach each other’s senior-level employees.
  • The indictment alleges the company and its CEO engaged in two separate conspiracies with two other healthcare companies “to suppress competition for the services of certain employees,” according to a Thursday release from the Department of Justice. Both DaVita and Thiry are scheduled for an initial court appearance Tuesday in the U.S. District Court for the District of Colorado.
  • DaVita said the charges are unjust and unwarranted. “The government’s case relies on an unprecedented and untested application of the antitrust laws to alleged discussions involving former executives that occurred many years ago,” the company said in an email statement.

Dive Insight:

The charges come on the heels of President Joe Biden’s executive order urging federal agencies to target a number of business practices he argues are thwarting competition, including noncompete agreements. But the charges in this case are alleging handshake deals rather than written agreements that restrict employees from finding work at competing companies. The antitrust division’s ongoing investigation into what it calls “employee allocation agreements” in the healthcare industry spurred the charges, according to DOJ.

From as early as February 2012 until as late as July 2017, DaVita and former CEO Thiry conspired with another company, Surgical Care Affiliates LLC and its related entity, collectively SCA, by agreeing not to solicit each others senior-level employees, the first count charges.

The second count charges the company and former CEO for conspiring with another unnamed healthcare company from as early as April 2017 until as late as June 2019 to allocate employees by agreeing the other company would not solicit DaVita’s employees.

“Those who conspire to deprive workers of free-market opportunities and mobility are committing serious crimes that we will prosecute to the full extent of the law,” Acting Assistant Attorney General Richard Powers of the Justice Department’s antitrust division said in a statement.

Co-conspirator SCA was charged in January though the case is still pending in the Northern District of Texas, according to the release.

DaVita and Thiry are charged with two counts of violating the Sherman act, and if convicted, DaVita faces a maximum penalty of a $ 100 million fine per count. Thiry faces a maximum penalty of 10 years in prison and a $ 1 million fine per count, according to the release.

“These allegations are false and rely on a radical legal theory about senior executive recruitment without precedent in U.S. history,” Karen Crummy, Thiry’s spokesperson, said in an email statement.

“The facts bear it out decisively: No antitrust violations occurred, these companies hired DaVita executives for years, and the companies are not competitors.”

Editor’s note: This story has been updated with a comment from Thiry’s spokesperson.

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