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

United States District Court, D. New Jersey

April 2, 2014

ASSOCIATION OF AMERICAN PHYSICIANS & SURGEONS, INC., Plaintiff,
v.
AMERICAN BOARD OF MEDICAL SPECIALTIES, Defendant.

MEMORANDUM

PETER G. SHERIDAN, District Judge.

This matter comes before the Court on Defendant American Board of Medical Specialties' ("ABMS" or "Defendant") Motion to Dismiss Plaintiff Association of American Physicians & Surgeons, Inc.'s ("AAPS" or "Plaintiff") Complaint for improper venue pursuant to FED. R. CIV. P. 12(b)(3) and/or for failure to state a claim upon which relief can be granted pursuant to FED. R. CIV. P. 12(b)(6), or in the alternative, to transfer this matter to the United States District Court for the Northern District of Illinois pursuant to 28 U.S.C. § 1404(a) (ECF No. 11). AAPS alleges that ABMS reached agreement with twenty-four separate medical specialty boards, and acted in concert with a standard-setting organization, The Joint Commission, to impose formal recertification requirements on physicians that unreasonably restrain trade in violation of § 1 of the Sherman Act, 15 U.S.C. § 1. AAPS further alleges that ABMS made false and misleading statements regarding physicians who declined to participate in the recertification program. The Court decides this matter without oral argument pursuant to FED. R. CIV. P. 78(b). For the reasons set forth herein, the Court concludes that venue is improper in the District of New Jersey. The Court, therefore, in its discretion, will transfer, rather than dismiss, this action to the United States District Court for the Northern District of Illinois pursuant to 28 U.S.C. § 1406(a).[1]

I. BACKGROUND

Plaintiff Association of American Physicians & Surgeons, Inc. ("AAPS") is a membership organization of thousands of practicing physicians organized under the laws of the State of Indiana with its principal place of business in Tucson, Arizona. (Compl. at ¶ 4). Its membership includes physicians practicing in the State of New Jersey. ( Id. ).

Defendant American Board of Medical Specialties ("ABMS") is a not-for-profit organization organized under the laws of the State of Illinois with its principal place of business in Chicago, Illinois. ( Id. at ¶ 5). It serves as the umbrella organization for twenty-four medical specialty boards[2] ("Member Boards") and assists those boards in the development and use of standards in the ongoing evaluation and certification of physicians throughout the United States. (Def.'s Br. in Supp. of Mot. to Dismiss or Transfer ("Def.'s Br.") at 5). Each Member Board certifies physicians in a particular medical specialty provided those physicians: (1) voluntarily seek certification and complete an accredited medical residency program in the specialty; (2) pass an examination administered by the Member Board; and (3) otherwise comply with the Member Board's requirements for certification. ( Id. ). Certification by a Member Board is a voluntary process and no physician is required as a condition of medical licensure to be initially certified by an ABMS Member Board. (Compl. at ¶ 20). A physician generally prefers to be certified in his specialty, however, because certification may imply a certain level of knowledge and expertise in a particular area of medicine that would be attractive to a health care institution, insurer, or patient seeking medical services.

Originally, a physician who was certified by an ABMS Member Board was certified for life. (Def.'s Br. at 6). Beginning in the 1970s and 1980s, however, ABMS and its Member Boards "recognized that the state-of-the-art in each medical specialty evolves rapidly and that a physician's knowledge of, and skills in, a particular specialty may deteriorate over time." ( Id. ). To address these concerns, ABMS and its Member Boards instituted a program for recertification whereby physicians were required to renew their certifications every ten years. In 2000, after recognizing the inadequacies of a program requiring recertification every ten years, ABMS and its Member Boards "agreed to evolve their certification programs to one of continuous professional development" called ABMS Maintenance of Certification® ("MOC"). (Decl. of Laura Skarnulis in Supp. of Def.'s Mot. to Dismiss ("Skarnulis Decl.") at ¶ 3). According to the Defendant, "[t]he basic objective of the MOC program is to provide assurance to patients, hospitals, and insurers that a physician is staying up-to-date with advances in the relevant specialty and continually enhancing the physician's knowledge in the specialty." (Def.'s Br. at 7).

The MOC program requires each physician who has chosen to be certified in a medical specialty by one of the twenty-four Member Boards of ABMS to satisfy four conditions in order to remain certified. First, MOC requires a physician to maintain a valid, unrestricted medical license and adhere to the guidelines of the relevant Member Board in terms of professionalism and personal conduct. ( Id. ). Second, MOC requires a physician to devote a specified number of hours taking Continuing Medical Education courses and participate in other educational and self-assessment activities required by the relevant Member Board. ( Id. ). Third, MOC requires a physician to periodically take and pass an examination that is prepared by the certifying Member Board. ( Id. ). Fourth, MOC requires a physician to respond to periodic surveys regarding the care that they provide to their patients and identify strategies to improve that care. ( Id. at 8). While the board certification process, of which the MOC program is a part, is entirely voluntary, the MOC program has been widely adopted and relied upon in the medical community.

In November 2009, Defendant ABMS and several of its Member Boards allegedly reached an agreement with the Joint Commission, a private company that accredits more than 20, 000 health care organizations and hospitals, including the Somerset Medical Center (SMC") in Somerville, New Jersey, requiring physicians to obtain recertification through the MOC program in order to receive medical staff privileges at the medical facilities it accredits.[3] (Comp. at ¶ 13). According to the Plaintiff, "[t]o comply with [t]he Joint Commission's requirements, many hospitals impose parts or all of Defendant's ABMS MOC® program against physicians as a condition of having hospital staff privileges, and exclude qualified physicians simply because they do not participate in the... program." ( Id. at ¶ 15).

One physician who has chosen not to participate in the MOC program is an AAPS member referred to in Plaintiff's Complaint as "J.E." ( Id. at ¶ 29). According to the Plaintiff, J.E. had previously been certified by the American Board of Family Medicine ("ABFM") and had served as a physician at the Somerset Medical Center for twenty-nine years. ( Id. at ¶¶ 30-31). In 2011, SMC informed J.E. that he would lose his staff privileges unless he complied with the MOC program. ( Id. at ¶ 32). In light of the time and expense required, which Plaintiff alleges was "far in excess of 100 hours for a typical physician" and "many thousands of dollars in fees and travel expenses[, ]" J.E. chose not to participate in the program. ( Id. at ¶¶ 35-36, 41, 43). Consistent with its earlier warning, SMC responded by excluding J.E. from its medical staff effective June 24, 2011. ( Id. at ¶ 44). As a result, Plaintiff alleges that J.E.'s patients are "denied the benefit of being evaluated and treated by J.E." when taken to SMC for emergency care. ( Id. at ¶ 45). Plaintiff further alleges that J.E.'s situation is common and that many hospitals throughout the country have decided to deny staff privileges to physicians who have chosen not to meet the requirements of the MOC program.

On April 23, 2013, Plaintiff filed a two-count for the District of New Jersey. In Count One, Plaintiff alleges that the development and promotion of the MOC program constitutes an unlawful restraint of trade in violation of § 1 of the Sherman Act, 15 U.S.C. § 1. Specifically, Plaintiff alleges that ABMS restrained trade by: (1) seeking and obtaining agreements with its twenty-four Member Boards to impose formal recertification requirements on physicians as part of its MOC program; (2) seeking and obtaining agreement with the Joint Commission to require hospitals to enforce the formal recertification requirements; (3) inducing health insurance companies to exclude physicians who do not purchase and comply with the MOC program; (4) exempting older physicians from the requirements of the MOC program while requiring recertification by younger physicians; and (5) "acting in concert" with its twentyfour Member Boards to seek approval from the Federation of State Medical Boards ("FSMB") to impose the MOC program as a requirement for licensure by state medical boards. ( Id. at ¶¶ 57-61). In Count Two, Plaintiff asserts a state law claim of negligent misrepresentation against ABMS. Specifically, Plaintiff contends that certain statements made by ABMS "create the false impression that [the MOC program] is indicative of the medical skills of physicians, and that as a result physicians that decline to purchase Defendant's product are likely to be less competent." ( Id. at ¶ 81). Moreover, Plaintiff alleges that "Defendant misleads the public with its website by inviting patients to search... the names of individual physicians to see if they have complied with [the MOC] program, thereby implying that physicians who decline to participate or who do not fully complete the program are somehow less competent physicians." ( Id. at ¶ 82). Plaintiff seeks declaratory and injunctive relief "to enjoin Defendant's [alleged] continuing violations of antitrust law and misrepresentations about the medical skills of physicians who decline to purchase and spend time on it program." ( Id. at ¶ 3). Plaintiff further seeks a refund of fees paid by its members to ABMS. On June 17, 2013, Defendant filed the instant Motion to Dismiss or Transfer Venue to the United States District Court for the Northern District of Illinois.

II. DISCUSSION

A. Standard of Review Under FED. R. CIV. P. 12(b)(3)

Pursuant to FED. R. CIV. P. 12(b)(3), a district court may dismiss an action for improper venue. Under 28 U.S.C. § 1391(b), venue is proper if a plaintiff brings the action in a district that is: "(1) a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located; (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated; or (3) if there is no district in which an action may otherwise be brought as provided in this section, any judicial district in which any defendant is subject to the court's personal jurisdiction with respect to such action." 28 U.S.C. § 1391(b). Pursuant to Section 12 of the Clayton Act, "[a]ny suit, action, or proceeding under the antitrust laws against a corporation may be brought not only in the judicial district whereof it is an inhabitant, but also in any district wherein it may be found or transacts business[.]" 15 U.S.C. § 22. A defendant seeking dismissal under Rule ...


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