Bona Law Enters Antitrust Lawsuit Against City of Richmond, Virginia for Monopolizing Non-Emergency Ambulance Market

Bona Law’s Aaron Gott filed a complaint and motion for preliminary injunction against the City of Richmond, Virginia and the Richmond Ambulance Authority February 8, 2019 on behalf of a U.S. Department of Veterans Affairs ambulance contractor in the U.S. District Court for the Eastern District of Virginia. The complaint alleges that the city and its corporate subsidiary monopolized the market for non-emergency patient transport in the area comprising Richmond, abusing its perceived regulatory authority to keep competitors out of the city.

Metro Health EMS was awarded a competitively bid contract by the U.S. Department of Veterans Affairs to provide all of its non-emergency patient transport for the Richmond VA Medical Center last summer, beating out another competitor and the city’s ambulance authority. Nevertheless, the city sought to retain its massive revenues from the VA by refusing to allow Metro Health to operate within city limits—effectively preventing it from performing its contract and forcing the VA to continue to use the city’s ambulances. As the complaint alleges, this costs the federal government more than $100,000 per month than it would pay for Metro Health’s services. That translates to the annual cost of approximately ten veterans’ healthcare that is effectively being misappropriated from the VA to the city.

“In other words, defendants have effectively preempted the prerogative of a U.S. cabinet-level department, interfered with its operations, extracted monopoly rents from it, caused the waste of hundreds of thousands of federal dollars earmarked for the care of our nation’s heroes, and excluded all competition for their proprietary benefit,” the complaint alleges.

Metro Health sued the city in September for constitutional and contract-related claims. In denying a temporary restraining order, the court suggested that Metro Health bring an antitrust claim. Thereafter, Metro Health hired Bona Law because of its leading expertise in antitrust and state-action immunity issues.

The success of the antitrust claim will likely turn on whether the city and its ambulance authority can meet their burden to show they are entitled to the affirmative defense called the state-action immunity. Under this doctrine, which is strictly limited and disfavored by the U.S. Supreme Court, a defendant is immune only if it can meet a high burden to show that its anticompetitive conduct was taken pursuant to a clearly articulated state policy to displace competition and that the state itself actively supervised its conduct. There is a narrow exception for the active supervision requirement for municipalities under some circumstances that the complaint alleges are not applicable here.

While Virginia law may give cities authority to regulate emergency services, the complaint alleges, it does not provide any authority to suggest that cities can regulate non-emergency services or use their regulatory power to exclude all competition in favor of themselves. Even if it did, Metro Health argues that the state-action immunity cannot be used to give a “free pass” to violate the antitrust laws, but instead any such displacement must be necessary to further a legitimate state regulatory goal.

In addition to the antitrust claims, the amended complaint also seeks relief for constitutional due process and equal protection violations and for preemption under the Supremacy Clause. Metro Health alleges in the complaint that the federal Competition in Contract Act, which requires U.S. agencies such as the VA to use competitive bidding when contracting for services, preempts the city’s regulations because they were designed specifically to thwart the required federal competitive bidding process. The complaint also alleges tortious interference with contract.