# Association of American Physicians & Surgeons, Inc. v. American Board of Medical Specialties

> District Court, N.D. Illinois · September 22, 2020

URL: https://www.frixlaw.com/law-library/cases/10143425

## Case

- **Court:** District Court, N.D. Illinois
- **Decided:** September 22, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
ASSOCIATION OF AMERICAN
PHYSICIANS & SURGEONS, INC.,

Plaintiff,
Case No. 14-cv-02705
v.
Judge Martha M. Pacold
AMERICAN BOARD OF MEDICAL
SPECIALTIES,
Defendant.

MEMORANDUM OPINION AND ORDER
Plaintiff Association of American Physicians & Surgeons, Inc. (“AAPS”)
sued Defendant American Board of Medical Specialties (“ABMS”) regarding ABMS’s
Maintenance of Certification (“MOC”) program for physicians. Originally, AAPS
brought a claim for restraint of trade under Section 1 of the Sherman Act and
a negligent misrepresentation claim. ABMS moved to dismiss AAPS’s complaint.
The court granted the motion with leave to amend. [48]. AAPS filed an amended
complaint reasserting the restraint of trade claim under the Sherman Act and
asserting, instead of negligent misrepresentation, a claim under the Illinois
Uniform Deceptive Trade Practices Act, 815 ILCS 510/2. [49]. ABMS moved
to dismiss the amended complaint under Rule 12(b)(6). [51]. The motion is granted.
BACKGROUND
The court assumes familiarity with Judge Wood’s opinion dismissing the
original complaint, Ass’n of Am. Physicians & Surgeons, Inc. v. Am. Bd. of Med.
Specialties, No. 14-cv-02705, 2017 WL 6821094 (N.D. Ill. Dec. 13, 2017), and
the decision of the U.S. District Court for the District of New Jersey transferring
this action to this district pursuant to 28 U.S.C. § 1406(a), Ass’n of Am. Physicians
& Surgeons, Inc. v. Am. Bd. of Med. Specialties, No. Civ. A. 13-2609 PGS, 2014 WL
1334260 (D.N.J. Apr. 2, 2014).
In considering a Rule 12(b)(6) motion, “[t]he complaint’s well-pleaded factual
allegations, though not its legal conclusions, are assumed to be true.” Phillips v.
Prudential Ins. Co. of Am., 714 F.3d 1017, 1019 (7th Cir. 2013). “The facts are set
forth as favorably to [the plaintiff] as those materials allow. . . . In setting forth
those facts at the pleading stage, the court does not vouch for their accuracy.”
McWilliams v. Cook Cty., No. 15-cv-00053, 2018 WL 3970145, at *1 (N.D. Ill.
Aug. 20, 2018) (citations omitted).
The amended complaint alleges as follows. Plaintiff, AAPS (again, the
Association of American Physicians & Surgeons, Inc.), is a nonprofit membership
organization of physicians in virtually all specialties. Am. Compl., [49] at 3 ¶ 7.1
Defendant, ABMS (again, the American Board of Medical Specialties), is a nonprofit
entity headquartered in Chicago, Illinois. [49] at 3 ¶ 8.
ABMS offers a voluntary certification program for physicians that is “not
required to be licensed to practice medicine.” [48] at 2. Certification does not last
for life; to remain certified, physicians must participate in a “recertification”
program known as “ABMS Maintenance of Certification®” (“MOC”). [48] at 2;
[49] at 5 ¶ 13.
According to the complaint, ABMS has conspired with three types of entities
to impose ABMS’s MOC program on physicians: (1) 24 separate corporations known
as “specialty boards,” (2) health insurers, and (3) hospitals. [49] at 5–8 ¶¶ 13–31.
The 24 specialty boards (which are not defendants) are member medical
boards of ABMS that relate to particular medical specialties. Ass’n of Am.
Physicians & Surgeons, 2014 WL 1334260, at *1. Examples include the American
Board of Allergy and Immunology, the American Board of Anesthesiology, the
American Board of Colon and Rectal Surgery, the American Board of Dermatology,
and the American Board of Emergency Medicine. [49] at 5 ¶ 14. The complaint
alleges that ABMS and its member medical specialty boards “have conspired to
impose” the MOC program on all physicians who hold an M.D. degree, “with
arbitrary exemptions for older physicians.” [49] at 5 ¶ 15.
As to health insurers and hospitals (which also are not defendants),
the complaint alleges that ABMS “has conspired with health insurers and hospitals
to require physicians to purchase the ABMS MOC® product as a condition of being
in health plan networks or having medical staff privileges, respectively.” [49] at 5−6
¶ 16.
With respect to health insurers specifically, the complaint alleges that
“ABMS has conspired with health insurers having market power, in order to compel
physicians to purchase the ABMS MOC® product.” [49] at 6 ¶ 18. The complaint
alleges that “[f]or example, Defendant ABMS publicly admits that it encouraged
and obtained a commitment by the Blue Cross and Blue Shield Association
(‘BCBSA’) to require physicians to purchase and participate in ABMS MOC® as a
condition of physicians being in-network with health insurance plans, causing “Blue

1 Bracketed numbers refer to entries on the district court docket and are followed by the
page and / or paragraph number. Page number citations refer to the ECF page number.
Cross and Blue Shield-affiliated health plans in multiple states,” such as Blue Cross
and Blue Shield of Massachusetts and Independence Blue Cross of Pennsylvania, to
impose such a requirement. [49] at 6 ¶¶ 19−22. The complaint alleges that “[i]n
addition, Defendant ABMS has colluded with other groups to induce health insurers
to ‘use Board Certification by an ABMS Member Board as an essential tool to assess
physician credentials within a given medical specialty.’” [49] at 6 ¶ 23 (footnote
omitted). Ultimately, “[m]ost health insurers, particularly in metropolitan areas,
require that physicians purchase and comply with Defendant’s ABMS MOC®
product as a condition of being in-network with the insurer.” [49] at 7 ¶ 24.
As for hospitals, the complaint alleges that “Defendant ABMS has sought
and obtained agreement by hospitals having market power, in order to enforce
Defendant’s ABMS MOC® product as a condition of holding medical staff
privileges.” [49] at 7 ¶ 25. According to the complaint, the American Hospital
Association (“AHA”), a trade association representing nearly all hospitals in the
United States, is an associate member of ABMS and has agreed with ABMS to
impose the MOC program on physicians. [49] at 7 ¶ 26. Further, the complaint
alleges, “In Defendant ABMS’s ‘Portfolio Program™,’ ABMS explains its campaign
to induce hospitals to impose the ABMS MOC® product as a condition of holding
medical staff privileges,” and “ABMS requires of hospitals as a condition of joining
its Portfolio Program™ that the hospital agree and represent that it has ‘a
willingness to commit necessary resources and consider MOC a requirement for
medical staff privileges for eligible physicians.’” [49] at 7–8 ¶¶ 27–28 & n.6.2
Approximately 80% of hospitals nationwide now require physicians to have ABMS
certification to be on the medical staff. [49] at 8 ¶ 31. Within that group of
hospitals, outside of Texas and Oklahoma (which as discussed below have enacted
laws regarding MOC), nearly all now require that physicians purchase the MOC
program to have medical staff privileges. [49] at 8 ¶ 31.
ABMS’s MOC program has affected the practice of individual doctors.
An AAPS physician member identified as “J.E.,” who had been on the staff of the
Somerset Medical Center in Somerville, New Jersey for twenty-nine years, chose
not to participate in the MOC program. [49] at 9 ¶¶ 34–36. In 2011, the Somerset
Medical Center refused to allow J.E. to continue to remain on its medical staff
unless he purchased and complied with MOC. [49] at 9 ¶ 35. J.E. had been fully
certified in good standing with a predecessor to one of the specialty boards. [49] at 9
¶ 37. Effective June 24, 2011, the Somerset Medical Center excluded J.E. from its
medical staff due to ABMS’s activities and agreements to impose the MOC program.
[49] at 9 ¶ 39. J.E., like many other AAPS physicians, spends a substantial
percentage of his time providing charity care to patients who would not otherwise
have access to medical care. [49] at 9 ¶ 40. The complaint explains that “J.E.

2 The complaint cites the December 2016 Standards and Guidelines for Program
Sponsorship for ABMS’s Portfolio Program, [49] at 8 n.6, but does not describe the features
or function of the program.
manages and works in a standalone medical charity clinic for a substantial part of
each week.” [49] at 10 ¶ 49. “J.E. continued to serve his non-hospitalized charity
patients rather than comply with the immense burdens of recertification demanded
by Defendant’s agreements to implement ABMS MOC®.” [49] at 10−11 ¶ 52.
Such patients are “denied the benefit of being evaluated and treated by J.E. when
taken by emergency to [Somerset Medical Center].” [49] at 9 ¶ 41.
Physicians spend more time in training than most other professionals.
[49] at 10 ¶ 45. The “additional burdens on physicians’ time imposed by the [MOC]
product is substantial, often exceeding 100 hours per year.” [49] at 10 ¶ 46. For an
average physician “that time burden takes the physician’s ability away from more
than 700 patient visits per year.” [49] at 10 ¶ 47. ABMS has entered into
agreements with many of the specialty boards to impose even greater time and
expense burdens. [49] at 11 ¶ 53. According to the complaint, the MOC program
imposes greater burdens than any analogous program in any other profession.
[49] at 11 ¶ 56.
Every state has one or more official medical board authorized by law and
accountable to the public that is responsible for determining physicians’ fitness to
practice medicine. [49] at 12 ¶ 59. ABMS is not a state medical board or other state
entity, but a nonprofit organization. None of the state medical boards require
purchase of or participation in MOC. [49] at 12 ¶ 59. Several states, including
Texas and Oklahoma, have enacted laws prohibiting the imposition of MOC as a
requirement for physicians in various contexts. [49] at ¶ 60.
AAPS first brought this complaint in the District of New Jersey, alleging
(1) a violation of Section 1 of the Sherman Act, 15 U.S.C. § 1, and (2) negligent
misrepresentation. [1]. The court transferred the case to the Northern District of
Illinois pursuant to 28 U.S.C. § 1406(a). [22]; Ass’n of Am. Physicians & Surgeons,
2014 WL 1334260.
ABMS moved to dismiss the complaint. [30]. The court granted ABMS’s
motion. [48]; Ass’n of Am. Physicians & Surgeons, 2017 WL 6821094. The court
held that the complaint did not plausibly allege: (1) for purposes of the Sherman Act
claim, an unreasonable restraint of trade (under either the per se rule or the rule of
reason) or antitrust injury; or (2) with respect to the negligent misrepresentation
claim, any false statement of fact by ABMS. [48]. The court granted AAPS leave
to amend.
AAPS then filed this two-count amended complaint, (1) again bringing a
claim under Section 1 of the Sherman Act and (2) instead of negligent
misrepresentation, bringing a claim under the Illinois Uniform Deceptive Trade
Practices Act, 815 ILCS 510/2. [49]. AAPS seeks to represent the interests of its
members. [49] at 4–5 ¶ 12. It also seeks to bring claims on behalf of a class defined
as “all physicians in private practice who are in-network or seek to be in-network
with health insurers or who treat or seek to treat patients in hospitals, and who are
not exempt from the board certification burdens of ABMS and its above-listed
Specialty Boards.” [49] at 14 ¶ 72.
ABMS now moves to dismiss the amended complaint. [51].
DISCUSSION
“A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to
state a claim upon which relief may be granted.” Hallinan v. Fraternal Order of
Police Chicago Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). “[W]hen ruling on a
defendant’s motion to dismiss, a judge must accept as true all of the factual
allegations contained in the complaint.” Erickson v. Pardus, 551 U.S. 89, 94 (2007).
A “complaint must contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. v. Twombly, 550 U.S. 544, 570 (2007)). “Factual allegations
must be enough to raise a right to relief above the speculative level.” Twombly, 550
U.S. at 555. Mere conclusions “are not entitled to the assumption of truth.” Iqbal,
556 U.S. at 679.
I. Sherman Act Section 1 (Count 1)
Section 1 of the Sherman Act provides: “Every contract, combination in the
form of trust or otherwise, or conspiracy, in restraint of trade or commerce among
the several States, or with foreign nations, is declared to be illegal.” 15 U.S.C. § 1.
To state a claim for a Section 1 violation, the complaint must plausibly allege:
(1) a contract, combination, or conspiracy (i.e., an agreement), (2) a resultant
unreasonable restraint of trade in a relevant market, and (3) an accompanying
injury. Agnew v. Nat’l Collegiate Athletic Ass’n, 683 F.3d 328, 335 (7th Cir. 2012).
As discussed above, in dismissing the initial complaint, Judge Wood held that
the complaint did not plausibly allege the second or third elements of a Section 1
claim: an unreasonable restraint and antitrust injury. [48]. AAPS then filed
the operative amended complaint, again alleging that ABMS violated Section 1.
In the motion to dismiss, ABMS argues that the amended complaint did not cure
the deficiencies as to these two elements.
Unreasonable restraint of trade in a relevant market
On the second element, the complaint must plausibly allege an unreasonable
restraint of trade in a relevant market. The parties dispute whether any alleged
restraint was unreasonable. ABMS also contends that the complaint does not
define a relevant market.
“[T]he determination of whether a restraint is unreasonable must focus on
the competitive effects of challenged behavior relative to such alternatives as its
abandonment or a less restrictive substitute.” Agnew, 683 F.3d at 335 (quotation
marks and citations omitted). Courts use three categories of analysis to determine
whether actions have anticompetitive effects: per se, quick-look, and rule of reason,
“though the methods often blend together.” Id. “All of these methods of analysis
are meant to answer the same question: whether or not the challenged restraint
enhances competition.” Id. (citations and internal quotation marks omitted).
AAPS argues ABMS’s conduct is unlawful under both the per se and rule of reason
frameworks.
Here, AAPS appears to allege two different types of restraints: (1) unlawful
tying arrangements and (2) unlawful agreements to require MOC. The court
addresses each type of restraint below.
Tying
AAPS alleges that “ABMS’s collusion with health insurers and hospitals”
is an unlawful per se tying of “products and services.” [49] at 6 ¶ 17; see also
[49] at 16−17 ¶¶ 86−88.
A tying arrangement is “an agreement by a party to sell one product but only
on the condition that the buyer also purchases a different (or tied) product, or at
least agrees that he will not purchase that product from any other supplier.”
Northern Pacific R. Co. v. United States, 356 U.S. 1, 5–6 (1958); see also Eastman
Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 461−62 (1992); Jefferson Parish
Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 11−12 (1984), abrogated on other grounds
by Illinois Tool Works Inc. v. Indep. Ink, Inc., 547 U.S. 28 (2006); Viamedia, Inc.
v. Comcast Corp., 951 F.3d 429, 468 (7th Cir. 2020). “In order to establish the per se
illegality of a tying arrangement, a plaintiff must show that: (1) the tying
arrangement is between two distinct products or services, (2) the defendant has
sufficient economic power in the tying market to appreciably restrain free
competition in the market for the tied product, and (3) a not insubstantial amount
of interstate commerce is affected. . . . In addition, . . . an illegal tying arrangement
will not be found where the alleged tying company has absolutely no economic
interest in the sales of the tied seller, whose products are favored by the tie-in.”
Reifert v. S. Cent. Wisconsin MLS Corp., 450 F.3d 312, 316 (7th Cir. 2006) (citations
omitted) (quoting Carl Sandburg Vill. Condo. Ass’n No. 1 v. First Condo. Dev. Co.,
758 F.2d 203, 207 (7th Cir. 1985)).
AAPS does not allege facts that suggest a tying arrangement between two
distinct products or services. AAPS cites Talone v. Am. Ost. Ass’n, No. 16-cv-04644,
2017 WL 2539394 (D.N.J. June 12, 2017). [55] at 8. But Talone involved the tying
of the American Osteopathic Association’s (“AOA”) certification and AOA
membership, i.e., AOA’s requiring osteopathic physicians, who were certified by
AOA, to purchase AOA membership to maintain their certification. Id. at *5.
Here, unlike in Talone, the nature of the tying arrangement is not entirely
clear. AAPS alleges that “ABMS’s collusion with health insurers and hospitals”
is an unlawful per se tying of “products and services.” [49] at 6 ¶ 17; see also [49]
at 16−17 ¶¶ 86−88. AAPS’s response brief states that “ABMS induces insurance
companies and hospitals to require or ‘tie’ ABMS MOC® as a condition of being
in-network or on staff.” [55] at 7. Later the response describes the “tying
of certification” without clearly identifying to what it is tied. [55] at 8. No further
allegations elaborate on the tying arrangement. It is unclear which products
or services are “tying” or “tied.”
The complaint may be alleging that ABMS, insurers, and hospitals are
colluding to tie a product unwanted by physicians (MOC) to the provision of
“services” wanted by physicians (in-network status and / or hospital privileges,
if these can even be considered “services”), but if so, the complaint does not allege
such a theory with sufficient clarity for the court to evaluate the claim, nor do the
briefs address such a theory. See Ellison v. Am. Bd. of Orthopaedic Surgery, Inc.,
No. 16-cv-08441, 2020 WL 1183345, at *10 (D.N.J. Mar. 12, 2020) (“A tying
arrangement must be viewed in light of the power wielded by the purported seller
to force a consumer to buy other products it did not want, or did not want on those
terms. . . . There are no facts tending to demonstrate that ABOS—the defendant
here—is conditioning staff privileges on participation in its certification program,
or profiting therefrom. The theory, then, must be some highly attenuated one,
for which the necessary facts are not pled.”) (emphasis in original). The allegations
do not plausibly suggest an arrangement to tie MOC and admitting privileges and
/ or in-network status between ABMS and a nationwide group of hospitals and / or
insurance companies. Nor does the complaint attempt to resolve the “difficulties in
treating hospital staff status as a tied ‘product’ sold in a market.” Id.
Because the complaint does not sufficiently allege a tying arrangement
between two products or services, a tying claim cannot proceed.
MOC requirements
Next, AAPS alleges that ABMS, the specialty boards, health insurers, and
hospitals have agreed to require physicians to purchase MOC. The question is
whether the complaint has plausibly alleged an unreasonable restraint of trade
under the per se rule or the rule of reason.
Per se rule
Under the per se rule, certain restraints may be deemed unreasonable
without any inquiry into the relevant market context. Nat’l Collegiate Athletic
Ass’n v. Bd. of Regents of Univ. of Oklahoma, 468 U.S. 85, 100 (1984). “The per se
rule, treating categories of restraints as necessarily illegal, eliminates the need
to study the reasonableness of an individual restraint in light of the real market
forces at work . . . . Restraints that are per se unlawful include horizontal
agreements among competitors to fix prices . . . or to divide markets . . . .”
Leegin Creative Leather Prod., Inc. v. PSKS, Inc., 551 U.S. 877, 886 (2007) (citations
omitted). “Resort to per se rules is confined to restraints, like those mentioned, that
would always or almost always tend to restrict competition and decrease output.
. . . To justify a per se prohibition a restraint must have manifestly anticompetitive
effects, . . . and lack . . . any redeeming virtue.” Id. (citations and internal quotation
marks omitted). “As a consequence, the per se rule is appropriate only after courts
have had considerable experience with the type of restraint at issue, . . . and only if
courts can predict with confidence that it would be invalidated in all or almost all
instances under the rule of reason,” rather than “in the context of business
relationships where the economic impact of certain practices is not immediately
obvious.” Id. at 886–87 (citations and internal quotation marks omitted); see also
Agnew, 683 F.3d at 336.
As Judge Wood held in dismissing the prior complaint: “AAPS has not alleged
any type of agreement suggesting a per se unlawful restraint, such as a horizontal
agreement among competitors to fix prices or to divide markets.” [48] at 7.
The allegations in the amended complaint do not solve this problem. There is no
basis to infer that the type of restraint alleged here is one that tends to restrict
competition and decrease output in all or almost all instances, nor does AAPS’s
response brief argue there is one. See BCB Anesthesia Care Ltd. v. Passavant Mem.
Area Hosp. Ass’n, 36 F.3d 664, 667 (7th Cir. 1994) (“there is nothing obviously
anticompetitive about a hospital choosing one staffing pattern over another or in
restricting the staffing to some rather than many, or all”); Ellison, 2020 WL
1183345, at *7 (regarding a hospital’s requiring physicians to be certified,
“[i]t cannot be said that such a practice has no legitimate purpose, and can only be
aimed at restraining trade”; “a hospital’s requirement that physicians meet certain
qualifications will rarely if ever” be “found to be per se unreasonable”). Nor is there
any indication that courts have had considerable experience with similar alleged
restraints such that a per se analysis would be appropriate for the alleged
agreements here.
Rule of reason
Turning to the rule of reason, under that analysis, “the plaintiff carries the
burden of showing that an agreement or contract has an anticompetitive effect on a
given market within a given geographic area.” Agnew, 683 F.3d at 335. “As a
threshold matter, a plaintiff must show that the defendant has market power—that
is, the ability to raise prices significantly without going out of business—without
which the defendant could not cause anticompetitive effects on market pricing.” Id.
The amended complaint does not sufficiently allege a relevant market or
market power within that market.
As to the relevant market, the plaintiff’s “threshold burden” under the
ruleof reason “involves the showing of a precise market definition in order to
demonstrate that a defendant wields market power, which, by definition, means
that the defendant can produce anticompetitive effects.” Agnew, 683 F.3d at 337.
“Because legal presumptions that rest on formalistic distinctions rather than actual
market realities are generally disfavored in antitrust law, . . . courts usually cannot
properly apply the rule of reason without an accurate definition of the relevant
market. Without a definition of the market there is no way to measure the
defendant’s ability to lessen or destroy competition. . . . Thus, the relevant market
is defined as the area of effective competition. Typically this is the arena within
which significant substitution in consumption or production occurs.” Ohio v. Am.
Express Co., 138 S. Ct. 2274, 2285 (2018) (citations, internal quotation marks,
brackets, and footnote omitted). “The antitrust statutes require a pragmatic and
factual approach to defining the geographic market. . . . The market must
correspond to the commercial realities of the industry.” Sharif Pharmacy, Inc. v.
Prime Therapeutics, LLC, 950 F.3d 911, 917 (7th Cir. 2020) (citations and internal
quotation marks omitted); see also 42nd Parallel North v. E Street Denim Co., 286
F.3d 401, 406 (7th Cir. 2002).
The original complaint alleged that the relevant market consisted of “medical
care provided by physicians to hospitalized patients.” [1] at 4 ¶ 8. The amended
complaint defines the relevant market as follows: “The relevant service market
consists of medical care provided by physicians who are subject to MOC, and who
are either in-network, or seek to be in-network, with health insurers, or treat or
seek to treat hospitalized patients.” [49] at 13 ¶ 67. “The relevant geographic
market is nationwide except for States that have generally prohibited MOC
requirements, as Texas has.” [49] at 13 ¶ 68.
The market definition in the amended complaint does not plausibly
“correspond to the commercial realities” of the relevant industry. Sharif Pharmacy,
950 F.3d at 917. “It is true that in most cases, proper market definition can be
determined only after a factual inquiry into the commercial realities faced by
consumers. Plaintiffs err, however, when they try to turn this general rule into a
per se prohibition against dismissal of antitrust claims for failure to plead a
relevant market under Fed. R. Civ. P. 12(b)(6).” Queen City Pizza, Inc. v. Domino’s
Pizza, Inc., 124 F.3d 430, 436 (3d Cir. 1997); see also Little Rock Cardiology Clinic
PA v. Baptist Health, 591 F.3d 591, 601 (8th Cir. 2009) (affirming dismissal for
failure to plead plausible relevant market); Chapman v. New York State Div. for
Youth, 546 F.3d 230, 238 (2d Cir. 2008) (same).
Again, the relevant market is “the area of effective competition,” which is
generally the “arena within which significant substitution in consumption or
production occurs.” Ohio, 138 S. Ct. at 2285 (citations and internal quotation marks
omitted). The amended complaint does not allege facts that plausibly suggest that
consumers distinguish between physicians who are subject to MOC and those who
are not. Likewise for the definition’s geographic scope, which is “nationwide except
for States that have generally prohibited MOC requirements, as Texas has.”
[49] at 13 ¶ 68. “For highly exotic or highly elective hospital treatment, patients
will sometimes travel long distances, of course. But for the most part hospital
services are local. People want to be hospitalized near their families and homes,
in hospitals in which their own—local—doctors have hospital privileges.”
United States v. Rockford Mem’l Corp., 898 F.2d 1278, 1284–85 (7th Cir. 1990).3
The same is true of the outpatient care encompassed in the proposed market
definition. Further, even if consumers were willing to travel across the country
for substitute medical care, the complaint offers no reason why they would only go
to states that allow MOC requirements. The complaint provides no reason why
these limitations accurately reflect commercial realities.
Even if this definition plausibly described a market, the complaint does not
plausibly suggest market power in that market. “Substantial market power is an
essential ingredient of every antitrust case under the Rule of Reason.” Sanjuan v.
Am. Bd. of Psychiatry & Neurology, Inc., 40 F.3d 247, 251 (7th Cir. 1994), as
amended on denial of reh’g (Jan. 11, 1995).
Even assuming that it would be appropriate to consider the market power
of not just ABMS but also the specialty boards, health insurers, and hospitals,
in order to have market power in the relevant market, ABMS and the specialty
boards, health insurers, and hospitals would need to be able to raise the prices
of physician care—effectively in a nationwide market—without going out
of business. The amended complaint asserts, without elaboration, that health
insurers and hospitals themselves have sufficient market power. [49] at 6–7
¶¶ 18, 25; id. at 16 ¶ 86. AAPS further states in its brief:
There is no lack of market power by any entity on Defendant’s side of
this case. The aggregate market power of the American Hospital
Association and the Blue Cross and Blue Shield Association, through
their members, cannot seriously be doubted. Each hospital almost
always has market power in its community, as do insurance companies
within their respective States. Through their trade associations they

3 AAPS argues that “[e]ach hospital almost always has market power in its community, as
do insurance companies within their respective States.” [55] at 9–10. Even if AAPS could
proceed on a theory that ABMS conspired with entities nationwide to restrain trade in most
or all localized markets for physician care, this conclusory statement about market power is
far too general to support AAPS’s proposed market definition.
have market power in the relevant market of medical services provided
at hospitals or through insurance networks.
[55] at 9–10. AAPS does not elaborate on these conclusory allegations, nor does
AAPS provide any facts substantiating the alleged market share belonging to the
American Hospital Association, the Blue Cross and Blue Shield Association, or any
other participant in the alleged market. Without some assertion of the relevant
market size and the power wielded by the alleged co-conspirators, there are no facts
to support ABMS’s alleged market power (with or without the agreements alleged
in the complaint). See Sheridan v. Marathon Petroleum Co. LLC, 530 F.3d 590, 595
(7th Cir. 2008) (“[U]nder the pleading regime created by [Twombly], the plaintiffs’
naked assertion of Marathon’s “appreciable economic power”—an empty phrase—
cannot save the complaint.”).
Because the complaint does not sufficiently allege either a relevant market or
market power within that market, it does not state a Section 1 claim under the rule
of reason.
Agreement
The parties dispute not only whether any restraint was unreasonable
(discussed above) but also whether ABMS imposed any restraint at all. The dispute
concerns the second element of a Section 1 claim (restraint), but AAPS’s arguments
on the issue undermine the first element (agreement).
Judge Wood held in dismissing the original complaint: “AAPS has alleged no
facts showing that ABMS has the ability to control hospitals nationwide or coerce
hospitals to force physicians to participate in the MOC program” and “AAPS has not
pleaded facts plausibly suggesting that ABMS has authority over any insurance
companies sufficient to cause a restraint of trade.” [48] at 8, 9 n.2. This is true of
the amended complaint as well; there are no facts that plausibly suggest ABMS
possesses authority or control over hospitals or insurers.
Consistent with Judge Wood’s holding, ABMS argues in the motion to dismiss
that ABMS lacks control or authority over insurers and hospitals and thus could not
have restrained trade. [52] at 8–10; [56] at 6–7. See Schachar v. American
Academy of Ophthalmology, 870 F.2d 397, 399 (7th Cir. 1989) (no restraint where
defendant had “no authority over hospitals, insurers, state medical societies or
licensing boards”); Marrese v. Am. Acad. of Orthopaedic Surgeons, 977 F.2d 585, at
*7 (7th Cir. 1992); Patel v. American Board of Psychiatry & Neurology, Inc., No. 89-
cv-01751, 1989 WL 152816, at *3 (N.D. Ill. Nov. 21, 1989); Oral Implantology, 390
F. Supp. 3d at 906 (“If the certifying entity lacks the power to prevent (or has not
prevented) the professional from practicing without a certification, there has been
no antitrust violation”).4
In response to this argument, AAPS clarifies that it is alleging that the
specialty boards, hospitals, and health insurers are co-conspirators, and disclaims
any allegation that ABMS exerted control over those entities. See AAPS Resp., [55]
at 5 (“AAPS does not allege that ABMS has forced insurance companies or hospitals
to do anything, but rather that ABMS has conspired and colluded with insurance
companies and hospitals”). The amended complaint alleges: “ABMS has conspired
with health insurers and hospitals to require physicians to purchase the ABMS
MOC® product as a condition of being in health plan networks or having medical
staff privileges, respectively.” [49] at 6 ¶ 16. With the restraint of trade framed
this way, the fact that ABMS lacks authority or control over its coconspirators does
not itself decide whether the alleged coconspirators together restrained trade.
However, as ABMS points out in its reply brief, this new framing only works
if AAPS has plausibly alleged such a conspiracy. See [56] at 6–7.5 Indeed, Section 1
does not prohibit all unreasonable restraints on trade, but only those effected by a
contract, combination, or conspiracy, in other words, by an agreement. Twombly,
550 U.S. at 553. To allege a conspiracy or agreement, AAPS must allege that ABMS
“had a conscious commitment to a common scheme designed to achieve an unlawful
objective.” Omnicare, Inc. v. UnitedHealth Group, Inc., 629 F.3d 697, 706 (7th Cir.
2011) (quoting Monsanto Co. v. Spray–Rite Serv. Corp., 465 U.S. 752, 764 (1984)).
“That is, the circumstances of the case must reveal ‘a unity of purpose or a common
design and understanding, or a meeting of minds in an unlawful arrangement.’”
Omnicare, 629 F.3d at 706 (quoting Am. Tobacco Co. v. United States, 328 U.S. 781,
810 (1946)).
The allegations in the amended complaint do not plausibly allege a
nationwide agreement between ABMS and an untold number of hospitals and
health insurers. Yet again, the problem stems from the proposed market definition.
As noted above, that definition is as follows: “The relevant service market consists
of medical care provided by physicians who are subject to MOC, and who are either
in-network, or seek to be in-network, with health insurers, or treat or seek to treat
hospitalized patients.” [49] at 13 ¶ 67. “The relevant geographic market is
nationwide except for States that have generally prohibited MOC requirements,

4 The opinion in Oral Implantology was issued after the parties finished briefing this
motion but involves a similar analysis about the lack of restraint in the professional
certification context.
5 ABMS did not directly challenge the allegations supporting the alleged agreement until
its reply brief. However, AAPS addressed the alleged conspiracy in its response brief, so it
is appropriate to reach the issue. See Carver v. Nall, 172 F.3d 513, 515 (7th Cir. 1999)
(“specifically address[ing]” point in response brief not raised in opening constitutes waiver
of forfeiture argument).
as Texas has.” [49] at 13 ¶ 68. The proposed market appears to encompass a
substantial number, if not the vast majority, of physicians nationwide (with the
exceptions of Texas, Oklahoma, and perhaps other unspecified states) who are
subject to MOC and who treat patients in typical, common settings, such as
hospitals and clinics. The sweeping breadth of the alleged market and the sheer
number of hospitals and insurance companies that would have to be involved make
the alleged agreement implausible. See Ellison, 2020 WL 1183345, at *8 (illegal
agreement between American Board of Orthopaedic Surgery and “large collection of
New Jersey hospitals” implausible).
The other relevant allegations in the amended complaint do not make the
claim plausible. Some allegations describe the widespread adoption by insurers and
hospitals of MOC as a requirement for physicians. The complaint alleges that “Blue
Cross and Blue Shield-affiliated health plans in multiple states,” such as Blue Cross
and Blue Shield of Massachusetts and Independence Blue Cross of Pennsylvania,
“impose a requirement that physicians purchase and participate in ABMS MOC® as
a condition of participating in their health insurance networks.” [49] at 6−7 ¶¶
19−22. The complaint further alleges that “[a]pproximately 80% of hospitals now
require certification by ABMS as a condition for physicians to be on the medical
staff,” [49] at 8 ¶ 31, and “[m]ost health insurers, particularly in metropolitan areas,
require that physicians purchase and comply with Defendant’s ABMS MOC®
product as a condition of being in-network with the insurer,” [49] at 7 ¶ 24.
Additionally, the AHA (a hospital trade association) “is an associate member of
Defendant ABMS and agrees with it to impose ABMS MOC® on physicians.”
[49] at 7 ¶ 26. However, “an allegation of parallel conduct and a bare assertion of
conspiracy will not suffice.” Twombly, 550 U.S. at 556; see also Ellison, 2020 WL
1183345, at *7–8 (“Without more, the mere fact that certain hospitals require Board
Certification for admitting privileges combined with a bare assertion that hospitals
conspired with ABOS is not a sufficient allegation of an unlawful agreement. . . .
Nothing in this complaint goes beyond an allegation that the hospitals chose to
require certification by an outside organization, ABOS.”).
Other than the allegations of widespread adoption of MOC as a physician
requirement (which are not sufficient as discussed above), there are no plausible
factual allegations about how ABMS entered into an arrangement with hospitals
and insurers throughout the country, nor why it would make sense for these diverse
entities to do so. ABMS allegedly “publicly admits that it encouraged and obtained
a commitment by the Blue Cross and Blue Shield Association (‘BCBSA’) to require
physicians to purchase and participate in ABMS MOC® as a condition of physicians
being in-network with health insurance plans,” causing “Blue Cross and Blue
Shield-affiliated health plans in multiple states,” such as Blue Cross and Blue
Shield of Massachusetts and Independence Blue Cross of Pennsylvania, to impose
such a requirement. [49] at 6 ¶¶ 19−22. And ABMS has referenced its “campaign
to induce hospitals to impose the ABMS MOC® product as a condition of holding
medical staff privileges.” [49] at 7–8 ¶ 27. Encouraging and campaigning for MOC
adoption are not the same as a conspiracy, and nothing suggests BCBSA did not
independently decide to require MOC. See Ellison, 2020 WL 1183345, at *8 (“These
vague allegations that ABMS influenced or pressured hospitals into requiring board
certification actually suggest just the opposite. Lacking any actual agreement with
hospitals, ABMS engaged in public marketing efforts in an attempt to expand the
reach of its programs.”). And even if these allegations plausibly suggested an
agreement with Blue Cross and Blue Shield-affiliated health plans in particular
(which they do not), they still would not plausibly suggest a nationwide agreement
between insurers, hospitals, and ABMS. The complaint also offers no explanation
for why hospitals and insurers would enter into an agreement that allegedly
reduces the output and increases the cost of physician care just to benefit ABMS.
Moreover, there is an alternative explanation for hospitals and insurers to
require MOC aside from an unlawful agreement—that hospitals and insurers
independently decided MOC provides useful information. See Ellison, 2020 WL
1183345, at *8 (“the 2AC asserts nothing to suggest that this large collection of New
Jersey hospitals decided to require board certification as a prerequisite to medical
staff privileges based on an illicit agreement, rather than as the result of their own
independent calculation that this requirement would improve the quality of care or
make them more competitive in attracting patients”). In light of this alternative,
the allegations do not plausibly suggest an agreement to restrain trade.
See Twombly, 550 U.S. at 567–69; Iqbal, 556 U.S. at 682. At best, the complaint
alleges facts that are “merely consistent with” a conspiracy, and that is not enough.
Twombly, 550 U.S. at 557; see also Ellison, 2020 WL 1183345, at *7–8.
For these reasons, to the extent the amended complaint has alleged
a restraint on trade, it has not alleged one effected by a conspiracy.
Since the amended complaint plausibly alleges neither an unreasonable
restraint of trade in a relevant market nor an agreement in the first place, the court
need not address whether the complaint plausibly alleges an antitrust injury.
Count 1 is dismissed.
II. Illinois Uniform Deceptive Trade Practices Act (Count 2)
In the original complaint, AAPS asserted a negligent misrepresentation
claim. Judge Wood granted ABMS’s motion to dismiss that claim. See [48] at 12–
13.
Instead of negligent misrepresentation, Count 2 of the amended complaint
asserts a claim under the Illinois Uniform Deceptive Trade Practices Act, 815 ILCS
510/2. [49] at 18–22 ¶¶ 97–121.
The Act provides as relevant:
(a) A person engages in a deceptive trade practice when, in the course
of his or her business, vocation, or occupation, the person: . . .
(8) disparages the goods, services, or business of another by false or
misleading representation of fact . . . .
815 ILCS 510/2(a)(8); see ATC Healthcare Services, Inc. v. RCM Technology, 192 F.
Supp. 3d 943, 952 (N.D. Ill. 2016); Menasha Corp. v. News Am. Mktg. In–Store, Inc.,
238 F. Supp. 2d 1024, 1035 (N.D. Ill. 2003). A plaintiff must identify some form
of communication to the public regarding the plaintiff’s services that is “false,
misleading, or deceptive.” Lynch Ford, Inc. v. Ford Motor Co., 957 F. Supp. 142, 147
(N.D. Ill. 1997); see also Associated Underwriters of America Agency, Inc.
v. McCarthy, 356 Ill. App. 3d 1010, 1021, 826 N.E.2d 1160, 1169 (2005) (“In its
complaint and on appeal, plaintiff is unable to point to any specific communication
by defendants that disparaged plaintiff’s business.”) (emphasis added).
In holding that the complaint did not state a negligent misrepresentation
claim, Judge Wood held that many of ABMS’s representations were “simply true
statements.” [48] at 12–13. Abandoning its previous argument that ABMS made
false statements of fact, AAPS now contends that ABMS’s representations are
misleading. AAPS focuses its argument on two words: “board” and “requirements.”
Specifically, AAPS argues that “ABMS calling itself a ‘Board’ while referring to
its arbitrary conditions as ‘requirements’ is misleading and unfair.” [55] at 14.
“Board,” according to AAPS, misleadingly implies that ABMS “has some authority
akin to an official state medical board, when in fact Defendant and its
co-conspirators lack any official legitimacy.” [49] at 20 ¶ 110. The amended
complaint does not plausibly allege how an ordinary person would infer “official
state authority” upon hearing “board.” Boards come in a variety of forms and
are not always official state government entities. The argument with respect to
“requirements” fares no better. Under this theory, the use of the word
“requirements” misleadingly connotes a “legal, governmental, or academic
requirement or oversight.” [49] at 18 ¶ 102. The amended complaint does not
plausibly allege that “requirements” implies such oversight, particularly when
many “requirements” without a formal legal, governmental, or academic
mandate exist.
Finally, AAPS’s general allegations about ABMS, e.g., [49] at 19 ¶¶ 105, 107,
do not plausibly allege communications about an identifiable good or service.
See Associated Underwriters, 826 N.E.2d at 1169; Maui Jim, Inc. v. SmartBuy
Guru Enterprises, 386 F. Supp. 3d 926, 939 (N.D. Ill. 2019) (“under the UDTPA
a plaintiff must allege that defendant published untrue or misleading statements
that disparaged the plaintiff’s goods or services”) (citation omitted). Count 2
is dismissed.
CONCLUSION
The motion to dismiss [51] is granted. The amended complaint is dismissed
with prejudice.

Date: September 22, 2020 /s/ Martha M. Pacold

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10143425. Public record. Not legal advice.