Earlier this year we reported that a federal judge narrowed the claims, but refused to grant summary judgment in its entirety, in a “wage-fixing” case involving several Detroit-area hospitals. As we reported in that blog post, three of the eight hospitals originally named as defendants in Carson-Merenda v. Detroit Medical Center had previously agreed to a maximum total settlement of $21,091,475. After the ruling on the motion for summary judgment, William Beaumont Hospital submitted a motion for preliminary approval of a settlement totaling $11,342,904. Now another defendant in the lawsuit, Mount Clemens General Hospital Inc., is seeking preliminary approval of a $2 million settlement with the plaintiffs. According to the proposed agreements filed with the courts, each of the two recent settlements is equivalent to approximately two percent of the total registered nurses’ wages. If approved, these settlements would leave only three hospitals as defendants in the case: Detroit Medical Center, Henry Ford Health System, and Trinity Health Corp.

The plaintiffs in the case alleged that the hospitals violated the federal Sherman Antitrust Act by: (i) conspiring among themselves and with other local hospitals to hold down the wages of RNs employed by these institutions; and (ii) exchanging compensation-related information among themselves in a manner that reduced competition among Detroit-area hospitals in the wages paid to RNs. Thus far, Detroit area hospitals may pay up to $34 million in settlements, with the potential for the payment of even more as litigation continues with the remaining hospitals. Of course, in addition to the amount of the settlements, the legal fees and expenses incurred in these protracted cases have also been significant.

Similar cases by nurses alleging “wage fixing” by hospitals have also been winding their way through the courts in other parts of the country. Although courts have denied class certification in many of these cases, five New York State hospitals settled a nurses “wage-fixing” antitrust suit, in Fleischman v. Albany Medical Center, for a total of approximately $14 million.

The potential cost of these types of cases serve to underscore the importance of training all managers, not just compensation and benefits managers, about the do’s and don’ts regarding sharing and obtaining employee compensation data.

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