Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Ill.: Tying claim involving medical board certification dismissed again, this time, with prejudice, (May 15, 2024)

By Justin Marcus Smith, J.D.

The court repeatedly found the psychiatrists’ complaint did not involve the baseline substitutability required for a tying claim.

Two psychiatrists who complained about American Board of Psychology and Neurology (ABPN) maintenance of certification (MOC) requirements failed to state a tying claim with respect to state licensure continuing medical education (CME) credits, on their third attempt, consisting of over 250 paragraphs of allegations, held the federal district court in Chicago, Illinois. The court reasoned the psychiatrists failed to plead that ABPN MOC credit requirements were a plausible substitute for accredited CME products. The court found the MOC, as pleaded, primarily consisted of an obligation to buy accredited CME content from third parties. If MOC credit requirements did not pose any risk of foreclosing continuing medical education (CME) market competition, then the psychiatrists did not state a tying claim. While the court said it could imagine circumstances in which acceptance of direct credit could lead to physician customers substituting MOC for accredited CME products, the court held that theory relied on a “daisy-chain of assumptions” that the second amended complaint (SAC) did not spell out in sufficient detail. That theory would have required pleading facts, absent here, that an increase in the price of other CME products relative to the MOC would shift sales to the MOC. In any event, the psychiatrists would not have had standing because they were not licensed in states that accepted MOC credits in lieu of CME credits (Lazarou v. American Board of Psychology and Neurology, No. 1:19-cv-01614 (N. D. Ill. May 13, 2024)).

Background. Two licensed psychiatrists filed a second amended class action complaint (SAC) against the American Board of Psychology and Neurology (ABPN). The psychiatrists alleged the ABPN violated antitrust statutes by unlawfully “tying” its maintenance of certification (MOC) product to initial certification. Many hospitals, medical insurance providers, malpractice insurance providers, and employers required the ABPN certifications even though they were not related to state medical licensing requirements.

In 1994, ABPN replaced its lifetime certifications with the MOC program for psychiatrists certified thereafter. The MOC program involved, among other things, testing every 10 years and continuing education. No other organization competed with ABPN certification products.

In 2017 and 2018, the ABPN deprecated the respective plaintiff psychiatrists’ status for putative failure to meet MOC requirements. The psychiatrists complained that the MOC was overly burdensome and involved an unlawful tying of MOC certification status with CME certifications that allegedly limited CME choice and prevented potential CME market participants from competing with the ABPN on a level playing field.

In 2020 and 2023, the court granted ABPN’s dismissals, without prejudice, mostly holding that the psychiatrists failed to allege that the ABPN continuing professional development products (CPD) and the MOC were distinct products.

After the psychiatrists filed a second amended complaint, the ABPN moved to dismiss again. The court found the SAC did not cure deficiencies previously identified, hence the court granted ABPN’s motion and dismissed the psychiatrists’ antitrust claims, on this occasion, with prejudice.

No tying. Critically, as with the FAC, the court found no allegations indicating the ABPN provides for accredited CME products to satisfy MOC’s Activity Requirement, selects the courses or activities that participants must enroll in to obtain these credits, or has any interest in which CME products MOC participants buy to fulfill the Activity Requirement. Indeed, the complaint indicated that the third-party entities accredit CME products had “no role” in the ABPN’s sales of certifications to psychologists and neurologists.

The psychiatrists needed to plead facts making the MOC a plausible, “reasonably interchangeable” substitute for other CME products at the pre-contract stage, in other words, before or without imposition of the alleged tie. Reasonable interchangeability requires a “plausible inference of ‘cross-price elasticity’” such that, in a world without the alleged tying agreement, an increase in the price of other CME products relative to the MOC would shift sales to the MOC.

Without allegations that the ABPN sold, limited, or selected which CME credits the psychiatrists must obtain to satisfy the ABPN MOC, the fact that ABPN certified “diplomates” could sometimes use MOC “Category 1” Activity Requirement credits to satisfy state licensure requirements said nothing about substitutability for tying purposes.

Even assuming the potential “direct” application of MOC recertification credits as state CME licensure credits, the court said it still did not follow that MOC was a plausible substitute for accredited CME products. For one thing, the “direct” application process required ABPN diplomates to take extra steps to seek AMA credit. Without any allegations that MOC “direct” credits could be applied to satisfy MOC’s own Activity Requirement as well as state licensure requirements, the MOC appeared to be a poor substitute for other accredited CME products because it only involved creating a redundant and excessive obligation to obtain CME credits. MOC would still require diplomates to buy additional CME products from third party vendors.

Without allegations comparing the number of additional CME credits needed to satisfy MOC to the baseline requirement for state licensure, the court said it could not infer that the number of additional CME credits MOC required would be less than the number of CME credits a state licensee would need to buy, in the absence of MOC, so as to make MOC a plausible substitute. The court said the complaint said nothing about the number of CME credits requires for state licensure in any state, precluding any such inference.

The fact that some states would accept CME requirements earned through MOC’s Activity Requirement in complete or partial satisfaction of state licensure CME credit quotas was irrelevant where the complaint did not allege that any state required MOC to maintain state licensure.

The court acknowledged that there could be a hypothetical situation where a state accepted MOC as a total substitute for CME requirements. That might have anticompetitive effects on the market for CME products, provided such an arrangement would cause CME price increases to shift sales to MOC. Here, the court acknowledged the psychiatrists pleaded that Idaho, Minnesota, Oregon, New Hampshire, and West Virginia accept MOC in total satisfaction of CME state licensure requirements; however, the complaint contained “no detail about the number of CME credits that these states require for licensure, thus precluding an inference that the acceptance of MOC harms competition in the manner described above.” Moreover, neither of the two plaintiff psychiatrists here were licensed in any of these states, so they lacked standing with respect to those CME markets. Considering only the states in which the psychiatrists were licensed, their allegations were insufficient to state a claim.

Disposition. The court dismissed the SAC, with prejudice, given multiple opportunities afforded to cure recurring pleading deficiencies. The court again declined to exercise supplemental jurisdiction over the psychiatrists’ state law claims. The court acknowledged here that although the ABPN MOC requirements may have been frustrating, due to their cost or by taking time away from patient care, such concerns were not antitrust harms.

The Case is No. 1:19-cv-01614.

Judge: Daniel, J.

Attorneys: Cynthia H. Hyndman (Robinson Curley P.C.) for Emily Elizabeth Lazarou and Aafaque Akhter. Christopher B. Sullivan (Mitchell Barlow & Mansfield, P.C.) for American Board of Psychiatry and Neurology.

Companies: American Board of Psychiatry and Neurology

Cases: Antitrust IllinoisNews GCNNews