UnitedHealth Group Subsidiary Indicted Over Alleged No-Poach Accord With Rivals--6th Update

By Brent Kendall

A subsidiary of UnitedHealth Group Inc. has been indicted on antitrust charges that it maintained yearslong agreements with rival health-care firms not to recruit each other's senior-level employees.

Surgical Care Affiliates was indicted on two counts in a federal district court in Texas. The Justice Department announced the case Thursday, after the indictment returned by a grand jury was posted on the court's docket late Wednesday.

"A freely competitive employment market is essential to the health of our economy and the mobility of American workers," Justice Department antitrust chief Makan Delrahim said.

SCA is a leading provider of surgical centers around the U.S., with more than 200 facilities. UnitedHealth's Optum health-services arm acquired the company in 2017.

The company said it would "defend itself against these unjustified allegations," which it said involved alleged conduct that took place before its acquisition by UnitedHealth.

"The position taken by the government in this matter represents a novel application of the antitrust laws as they relate to employee recruitment, for which there is no precedent or foundation," said Elizabeth Castro, a spokeswoman for Surgical Care Affiliates.

The Justice Department in previous years has brought civil cases challenging no-poach agreements, especially in the tech sector, against companies including Apple Inc., Google and Intel Corp. When businesses agree not to recruit or hire each other's workers, it robs employees of opportunities, information and the ability to use competing offers to negotiate better terms, the department has argued.

After years of civil cases, the department had warned that future antitrust violations involving anticompetitive behavior to suppress hiring could be prosecuted criminally, and the SCA indictment is at the forefront of that effort.

Prosecutors alleged that SCA conspired with two other unnamed companies not to poach each other's top officials. The agreement with one of the companies lasted more than seven years, prosecutors claimed.

The indictment quoted an array of internal communications, including from a senior human resources official at one of the unnamed companies instructing recruiters not to approach SCA employees.

Other communications indicated that SCA and the same unnamed company would only consider job candidates from each other's companies if those candidates informed their current employer of their interest in the rival firm.

"Yikes, she is not going to want to do that," one HR official said of a potential job candidate.

Write to Brent Kendall at brent.kendall@wsj.com

(END) Dow Jones Newswires

January 07, 2021 14:05 ET (19:05 GMT)

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