Department of Justice’s 1st Wage-Fixing Case Survives Motion to Dismiss

In December 2020, a federal grand jury returned an indictment charging Neeraj Jindal, the former owner of a therapist staffing company, for participating in a price-fixing conspiracy to lower the rates paid to physical therapists and their assistants in north Texas. The case avoided its first challenge in late November 2021.  when a federal district court in Sherman, Texas declined to grant the defendants’ motion to dismiss the case.

The DOJ also accused ex-director John Rodgers of Jindal’s company of violating antitrust law by participating in the wage-fixing scheme. In April, a superseding indictment added charges against Rodgers, who allegedly helped coordinate the wage-fixing and tried to help conceal it from authorities. The case’s trial is currently scheduled to begin in early April 2022.

Jindal was the owner of a therapist staffing company that provided in-home physical therapy services. The two-count indictment filed in the U.S. District Court contained allegations that Jindal and other physical therapy services companies conspired to pay lower rates to certain physical therapists and physical therapist assistants. Jindal’s company and the co-conspirators carried out the scheme in the Dallas-Fort Worth area from March 2017 and continued it through August 2017.

Jindal is also charged with obstruction of the investigation to determine whether Jindal’s company or other therapist staffing companies violated Section 5 of the Federal Trade Commission Act. The indictment charges Jindal with making false and misleading statements, as well as withholding and concealing information during the Federal Trade Commission’s investigation.

Jindal filed a motion to dismiss in May arguing that there’s no precedent for bringing criminal charges over a wage-fixing agreement. U.S. District Judge Amos L. Mazzant disagreed and denied the motion, finding that federal antitrust law would consider the scheme, as alleged, to be illegal price-fixing.

The motion to dismiss the case contended that there is insufficient legal precedent to criminally prosecute the activity being alleged in the indictment. The motion argued that the Department of Justice (DOJ) brought forth criminal charges based on conduct, which would be considered a per se violation of the antitrust laws, or “conduct that extensive judicial experience has proven to be inherently ‘pernicious’ and patently anti-competitive.” But, the motion added, courts lack the experience needed with wage-fixing arrangements to consider them per se violations.

The order denying the motion said that Jindal and Rodgers take issue that the cases to label wage-fixing a per se violation have all been in the civil context so far, but said that “distinction is irrelevant.” The order also said it doesn’t matter that neither the U.S. Supreme Court nor any U.S. Court of Appeals has weighed in on the issue.

Mazzant’s order stated the following: “The definition of horizontal price-fixing agreements cuts broadly. As such, any naked agreement among competitors — whether by sellers or buyers — that fixes components that affect price, meets the definition of a horizontal price-fixing agreement.”

Mazzant stated that Jindal and Rodgers’ view of price-fixing arrangements is narrow and flawed. He contended that courts have not limited price-fixing conspiracies to the purchase and sale of goods, but have also found them in the content of the purchase and sale of services. The judge also said the Sherman Act protects the sellers of services to the same extent that the law protects buyers.

“The indictment thus alleges a naked price-fixing conspiracy among buyers in the labor market to fix the pay rates of the [physical therapists and therapist assistants],” the order said. “As such, the indictment describes a price-fixing conspiracy that is, per se, unlawful.” “Just because this is the first time the government has prosecuted for this type of offense does not mean that the conduct at issue has not been illegal until now,” the order said.

The dismissal motion also argued that the prosecution violated Jindal’s and Rodgers’ constitutional rights because they did not have “fair warning” that wage-fixing could be a criminal violation. But Judge Mazzant said that “decades of case law” made it reasonably clear the conduct was unlawful, even though it wasn’t in the criminal context. “The lack of criminal judicial decisions only indicates defendants’ unlucky status as the first two individuals that the government has prosecuted for this type of conduct,” the order said.

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