Fourth Circuit Panel Reaffirms State Immunity From Sherman Antitrust Liability
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  • Fourth Circuit Panel Reaffirms State Immunity From Sherman Antitrust Liability

    On January 19, 2021, the United States Court of Appeals for the Fourth Circuit affirmed the dismissal of claims brought by Western Star Hospital Authority, Inc. (“Metro Heath”), an ambulance company, against the City of Richmond, Virginia and the Richmond Ambulance Authority (“RAA”), a public monopoly, under Section 2 of the Sherman Act.  The Fourth Circuit ruled that Metro Health’s claim that Richmond and the RAA had impermissibly limited competition in emergency medical services (“EMS”) was barred by the Parker state immunity doctrine.  Western Star Hospital Authority, Inc. v. City of Richmond, Virginia et. al., 19-1977 (4th Cir. Jan. 19, 2021).

    By statute, in 1979, the Commonwealth of Virginia granted municipal bodies the power to limit EMS services and set prices for those services.  Since 1991, Richmond has operated the RAA (created by state statute) as a public monopoly, providing all services in the city that use EMS vehicles, including non-emergency medical transportation services.  The state’s policy aim was to make EMS services economically feasible by granting exclusivity in the more profitable market for non-emergency transportation services.  In 2018, the Hunter Holms McGuire Veteran’s Administration Medical Center (“VA Medical Center”) requested quotes for non-emergency medical transportation services from providers other than the RAA.  Metro Health was ultimately granted a contract conditional on its ability to obtain an operating permit from the city.  When the city denied Metro Health’s request, Metro Health brought suit.

    The Fourth Circuit affirmed the district court’s grant of defendants’ motion to dismiss, finding that Virginia’s statutes fell within the Parker doctrine, and were therefore exempt from scrutiny under the Sherman Act, as they “clearly articulated and affirmatively expressed” a state policy to restrain competition.  Earlier district court decisions had found the same statutes “expressly authorize anticompetitive conduct.”  The Fourth Circuit found that, unlike in cases involving professional organizations run by private market participants, the RAA was directly managed by the City of Richmond, and was therefore not required to make a showing of “active state supervision.”  As a state entity, the RAA was “entitled to the presumption that they act in the public interest.”

    The Fourth Circuit also rejected Metro Health’s request that it find a “market participant exception” to the Parker doctrine and deny entities like RAA immunity where they provide services typically provided by private market participants.  The Court noted that no circuit has found such an exception and finding one would cause “unmistakable friction with longstanding Supreme Court precedent.” 

    Finally, the Court rejected Metro Health’s argument that the city had violated the Supremacy Clause of the United States Constitution by interfering with the ability of the VA Medical Center, which is part of the federal Veteran’s Administration, to contract with Metro Health.  The Court reasoned that the VA Medical Center had expressly conditioned its contract with Metro Health on the company’s ability to obtain an operating permit from the city.