Does Fire-Based EMS Create An Illegal Monopoly?
Today’s burning question: Do fire departments that provide exclusive EMS services in their jurisdictions violate federal antitrust laws by creating an illegal monopoly?
Answer: That is the one of the primary allegations in a federal lawsuit filed last week by a California ambulance provider against the City of Huntington Beach.
AmeriCare MedServices, Inc. claims that Huntington Beach has illegally monopolized emergency medical services in the city in violation of the Sherman Anti-Trust Act. AmeriCare describes itself as “a family owned, Orange County-based California corporation” and alleges it has been denied the opportunity to provide services within Huntington Beach despite the fact it is qualified by Orange County EMS to operate elsewhere in the county.
According to the complaint:
- The city displaced a competitive private ambulance service with its own fire department, repudiating the competitive bidding process once and for all, in direct violation of state law. In doing so, it created an illegal monopoly in violation of Sherman Act Section 2.
- The City of Huntington Beach established an illegal monopoly with 100% market power and an ability to raise prices above market levels—indeed, to any price it so deems—in A09, while providing minimal quality and speed of service without regard to market demand.
- In direct contravention of State of California policy, the city displaced all competition in the market for prehospital EMS in the area comprising Huntington Beach. As a result, consumers of prehospital EMS in the relevant market pay supracompetitive prices and suffer slower response times and lesser quality emergency services than those provided in a competitive market.
The Sherman Anti-Trust Act goes back to 1890. This is not the first time that a private ambulance provider has sought to apply anti-trust laws to attack fire-based EMS. Generally such attempts have been unsuccessful, based in large part upon a principle announced by the US Supreme Court in the case of Parker v. Brown, 317 U.S. 341 (1943). In Parker the Supreme Court held that held federal anti-trust laws do not restrain states from regulating competition.
Where the AmeriCare complaint gets interesting is that Parker immunity applies when the restraint of trade and/or creation of a monopoly is the result of an action by the state’s legislature or the state’s supreme court. However, where the action emanates from another source, courts apply a stricter analysis. AmeriCare is alleging that because Huntington Beach acted outside of the authority granted by the state legislature in creating an exclusive EMS system, it does not enjoy Parker Immunity.
Pretty heady stuff… and definitely not in my wheelhouse. If any anti-trust gurus are out there that have a solid grip on this issue, feel free to help shed additional light on the subject.
Here is a copy of the complaint: AmeriCare v Huntington Beach
Curt,
This issue of anti-trust in the California ambulance community has been a long standing issue over the years and over last several years has seemed to come to light. Continued pressure is mounting to maintain profitability and compete for the dwindling reimbursement dollars in prehospital ambulance transport.
From my understanding, California allows ambulance service in two separate avenues.
California Health and Safety Code section 1797.201 reads:
http://law.justia.com/codes/california/2011/hsc/division-2-5/1797.200-1797.226/1797.201
This would be applicable to a city, or fire district which has provided ambulance services since 1980. Basically, think of cities such as Los Angeles, San Francisco, Berkeley. These cites have no requirement to competively bid their ambulance services.
The other section would be California Health and Saftety Section 1797.224:
http://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=HSC§ionNum=1797.224
Basically, this section would apply to a public or private provider(s) who are part of a local ems agency created exclusive operating area which has been competively bid, or provider(s) who have been “grandfathered” into this status by virtue of their continued operation since 1981. The state regulatory agency oversees this process and has criteria to determine the competively bid process. These contracts are generally re-bid after 10 years. Since the provision of ambulance service is a county responsibility (unless a fire department has provided that service since 1980, as above) the county will usually initiate a competively bid contract for ambulance service in most California counties.
The cities which are providing ambulance service under a 1797.201 system are actually relieving a county of the obligation to provide ambulance service in their respective jurisdiction. This is certainly a cost shift (savings) from the county, and/or a private ambulance provider who would be providing this service had the city entity not been providing the service to the city, or fire entity.
Here’s a copy of a published opinion from California Attorney General Kamala Harris which provides some insight:
https://oag.ca.gov/system/files/opinions/pdfs/11-707.pdf
Hope this provides a brief introduction. There’s also substantial number of legal cases in California law detailing more history.
I’m glad I don’t live in California. I love the word “Scheme” used in the complaint instead of law. I also find it interesting that the majority of the complaint references Federal laws and codes, not state laws and codes, and was filed in Federal Court, but claim the city violates State law.
Thank you Jared
Complicated issue for sure.