In The News

Osteopaths Settle Class Action Against American Osteopathic Association

By Michael Booth
July 31, 2018
New Jersey Law Journal

A class-action lawsuit filed by tens of thousands of osteopathic doctors against the American Osteopathic Association alleging fraud and antitrust violations has settled.

The 32,000 plaintiffs agreed to the settlement before U.S. District Judge Noel Hillman, sitting in Camden, on July 25.

A statement released by the plaintiffs’ law firm, Philadelphia-based Duane Morris, said the plaintiffs could receive up to $35 million in benefits as a result of the settlement. After class members have received notice of the settlement, Hillman will hold a hearing for final approval on Nov. 9.

The physician-plaintiffs who sued the AOA sufficiently stated antitrust claims at the pleading stage stemming from the agency’s alleged practice of tying board certification to association membership, Hillman ruled. The judge also ruled that the plaintiffs stated a viable claim under the New Jersey Consumer Fraud Act with their assertions about renewal fees imposed on doctors who had been promised their certifications would not expire.

Hillman also rejected the association’s motion to transfer the case to the Northern District of Illinois, near the group’s headquarters. The association did not argue that the District of New Jersey is an improper venue, but merely sought a transfer for its own convenience, he said.

The suit claims that 32,000 board-certified osteopathic physicians from around the country have no choice but to purchase the association’s memberships, even though they cost significantly more than membership in other physician associations with similar benefits.

Hillman found that, at the pleading stage, plaintiffs sufficiently stated claims for per se and “rule of reason” antitrust violations. The allegations, if accepted as true, show the association ties board certification to the purchases of two distinctive products, and that it affects a substantial amount of interstate commerce.

The suit was brought by three New Jersey physicians and one from Pennsylvania on behalf of a nationwide class of osteopathic physicians. The suit claims doctors were forced to purchase annual memberships, at $683 per year, in order to maintain their board certifications. Antitrust laws prohibit tying arrangements in which consumers who are interested in one product are forced to also purchase a second, the plaintiffs assert.

According to the terms of the settlement, association members will not be forced to take AOA-sponsored continuing medical education courses; membership in the AOA will not be a requirement of board certification; the plaintiffs will be offered two free AOA-sponsored CME courses of up to 12 credits; and the AOA will donate $2 million to a public-awareness campaign.

“The agreement appears to be the product of serious, informed, non-collusive and good faith reasonableness from the parties,” Hillman said in the order. “The agreement falls within the range of reasonableness.”

The plaintiffs were represented by Seth Goldberg, of the Philadelphia office of Duane Morris. The AOA was represented by Jeffrey Lorell, of Saiber in Florham Park.

Reprinted with permission from New Jersey Law Journal, © ALM Media Properties LLC. All rights reserved.