Antitrust Law Daily Wrap Up, TOP STORY—D.P.R.: Puerto Rico public corporation was immune from chiropractor’s monopolization claims, (Dec 30, 2015)

By Greg Hammond, J.D.

A public corporation that was created by the Puerto Rico legislature to carry out the Puerto Rico workers’ compensation law was immune from claims that it violated the Sherman Act by discriminating against chiropractors and taking steps to exclude them from the services provided by the corporation. The federal district court in San Juan, Puerto Rico, concluded that, under Parker immunity, the public corporation’s actions were expressly authorized or inherent results of the Puerto Rico legislature’s delegation to the corporation and the corporation was exempt from showing that it is actively supervised by Puerto Rico (Rivera-Nazario v. Corporacion del Fondo del Seguro del Estado, December 29, 2015, Garcia-Gregory, J.).

Corporacion del Fondo del Seguro del Estado (CFSE) is a public corporation created by the Puerto Rico legislature for the purpose of carrying out the Puerto Rico Compensation System for Work-Related Accidents Act. A group of chiropractors and chiropractic practices sued CFSE and several CFSE directors and officials, alleging that the defendants violated Sections 1 and 2 of the Sherman Act by illegally discriminating against chiropractors and taking steps to exclude them from the services provided by CFSE. CFSE moved to dismiss the illegal agreement and monopolization claims.

Clear articulation requirement. In granting dismissal with prejudice, the court first determined that all of the alleged anticompetitive actions complied with the clear articulation requirement set forth in California Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S. 97 (1980). The first two alleged anticompetitive acts—refusing or renewing service agreements and issuing new guidelines concerning the chiropractic care approved by CFSE—are specifically authorized by the workers’ compensation statute, the court found. In addition, the other three alleged anticompetitive acts—establishing extra requirements for approving chiropractic services; denying or decreasing referrals to chiropractors; and communicating information about the adverse effects of chiropractic services—were all deemed “inherent, logical, or ordinary” results of the Puerto Rico legislature’s delegation to CFSE to establish treatment programs and procedures to be followed for worker’s compensation patients.

Active supervision requirement. Lastly, CFSE was exempt from complying with the Midcal active supervision requirement. The court reasoned that: (1) the chiropractor plaintiffs failed to allege that any CFSE officials are actually active market participants that compete with chiropractors in the worker’s compensation market; (2) even assuming members of the CFSE’s Industrial Medical Council are active market participants, the council does not have sufficient authority to dictate CFSE policy; and (3) the CFSE’s Board of Directors members are all elected by the governor and the governor has the power to remove them. CFSE was therefore not required to show that it is actively supervised by Puerto Rico to claim Parker immunity.

The case is No. 14-1533 (JAG).

Attorneys: Alberto G. Estrella (Estrella, LLC) for Dr. Luis B. Rivera-Nazario. Luis E. Pabon-Roca (Faccio & Pabon Roca) for Corporacion del Fondo del Seguro del Estado.

Companies: Corporacion del Fondo del Seguro del Estado

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