3rd Circuit Denies Appeal by Physicians in Suit Against American Board of Internal Medicine

The Third Circuit denied an appeal on Thursday by four physicians, who originally sued the American Board of Internal Medicine (ABIM) over allegations of unjust enrichment, violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), and violations of Sections 1 and 2 of the Sherman Act.

The essential argument of internal medicine physicians Gerard Kenney, Alexa Joshua, Glen Dela Cruz Manalo, and Katherine Murray-Leisure was that “ABIM forces internists who purchase an initial certification to also purchase ABIM’s maintenance of certification product,” the court explained.

Nonprofit ABIM is one of 24 members of the American Board of Medical Specialties (ABMS) that offers certifications for medical specialties. Since 1990, ABIM has offered time-limited certifications that require internists to pass an exam and complete other requirements every 10 years in order to renew their certification, known as a maintenance of certification (MOC). The requirements have changed over time, and now, ABIM-certified physicians must pay an annual fee plus an MOC exam fee in order to test for recertification, the filing noted.

After each plaintiff experienced varying degrees of loss of their certifications and/or job responsibilities because of failure to take or pass ABIM’s MOC exams, they filed their complaint, which was dismissed by the district court and ultimately appealed by the plaintiffs.

The plaintiffs’ allegation regarding Section 1 of the Sherman Act involved a claim of a “tying agreement” between ABIM’s initial certifications and MOCs, which 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,” according to the act.

Pursuant to Allen-Myland, Inc. v. Int’l Bus. Machines Corp., the court noted, “a tying arrangement cannot exist unless there is a sufficient demand for the purchase of the tied product separate from the purchase of the tying product so as to identify a market structure in which it is efficient to offer the tied product separately from the tying product.”

Agreeing with the district court’s analysis, the Third Circuit stated that the plaintiffs did not properly allege that such an agreement existed between ABIM’s initial certifications and MOCs. The court quoted the plaintiffs’ complaint, saying that their argument simply was that “(i)nternists have a desire to obtain maintenance of certification from providers other than ABIM” and that “(n)umerous board certified internists do not want to be required to buy ABIM’s MOC and/or would seek maintenance of certification from a source other than ABIM.” In the court’s eyes, this failed to properly allege that ABIM’s initial certifications and MOC are separate products with separate demands, a criterion that is necessary to prove a tying agreement.

Similarly, to plead a Section 2 violation, the court contended, the plaintiffs would have had to sufficiently plead that two separate markets existed for the initial certifications and MOCs. Since the plaintiffs failed to allege that the two are separate products, the court concluded that they could not have alleged the existence of two markets.

Regarding RICO, the district court dismissed the allegation because it found that the plaintiffs did not allege that the actions of ABIM were “the proximate cause” of the alleged injuries. However, the Circuit found a more “fundamental issue” with the RICO allegation that caused it to fail: that the plaintiffs had not complied with the Federal Rule of Civil Procedure, failing to specify the dates and times of purported statements made by ABIM cited by the plaintiffs to implicate ABIM in a fraudulent mailing scheme, as well as who in particular heard or received the statements.

The Circuit also upheld the district court’s dismissal of the unjust enrichment allegation, concluding that the plaintiffs could not allege that they were forced to buy MOCs, noting that two of the physicians “were able to choose not to participate in MOC at certain points in their respective careers,” showing that the physicians did have agency over whether they bought MOCs.

The plaintiffs are represented by Carlson Lynch, Robinson Curley, and Lite DePalma Greenberg. The defendant is represented by Ballard Spahr.