Fourth Circuit: Municipal Licensing, Permitting, and Franchising of Ambulance Services Is Immune from Federal Antitrust Laws

Fourth Circuit: Municipal Licensing, Permitting, and Franchising of Ambulance Services Is Immune from Federal Antitrust Laws

The U.S. Fourth Circuit Court of Appeals recently held that when state law authorizes a city to regulate ambulance services through a licensing, permitting, and franchising ordinance, the city’s enforcement of such an ordinance is immune from federal antitrust laws under Parker v. Brown, 317 U.S. 341 (1943).

In Western Star Hospital Authority, Inc. v. City of Richmond, 986 F.3d 354 (4th Cir. 2021), the plaintiff ambulance service provider sued defendants the City of Richmond (City) and the Richmond Ambulance Authority (RAA), a City-governed public instrumentality and City’s exclusive emergency and nonemergency ambulance services contractor for nearly 30 years.  The plaintiff’s complaint asserted claims for monopolization and attempted monopolization in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2, based on the City’s refusal to grant plaintiff an emergency medical services (EMS) vehicle services permit pursuant to the City’s ordinance.

The Fourth Circuit affirmed the district court’s dismissal of the action, concluding that the Parker doctrine shielded the defendants from federal antitrust liability.

Current Parker doctrine affords local governmental entities immunity from federal antitrust laws when: (1) they act pursuant to a clearly articulated and affirmatively expressed state policy to displace competition with regulation or monopoly public service; and (2) their alleged anticompetitive activity is the inherent, logical, or foreseeable result of the exercise of authority delegated to them by the state.

The Fourth Circuit found the City and RAA satisfied this test. Virginia statutes expressly authorize the City regulate EMS vehicles and services on an anticompetitive basis by adopting a licensing, permitting, and franchise ordinance that, among other things, grants the City to power to issue permits for EMS vehicles, prohibit EMS vehicles from operating without a City permit, limit the number and location of EMS vehicles operating in the City, set prices for services, and establish other necessary regulations for the operation of EMS vehicles. As such, the defendants were acting pursuant to the broad statutory authority expressly conferred by the Virginia legislature on the City to engage in anticompetitive regulation of the EMS vehicle services market, including the power to.  And since the Virginia statutes clearly contemplate that the City’s regulation and RAA’s provision of EMS would necessarily supplant unrestrained market competition, the defendants’ alleged anticompetitive conduct was the logical and foreseeable result of their statutory authority.

The Fourth Circuit rejected several arguments offered by the plaintiff.  First, the Court rejected the argument that Virginia law authorized the defendants to regulate emergency, but not nonemergency, medical services because the relevant statute authorized them to regulate “emergency medical services vehicles,” irrespective of whether they are providing emergency or nonemergency services.  Second, it disagreed that the Virginia laws at issue merely empowered the RAA and City to provide emergency and nonemergency services (and thus did not authorize them to regulate anticompetitively) because those laws also authorized them to set prices for, and control entry into, the EMS vehicle services market.  Third, the Court followed existing precedent and refused to require the City and RAA to show their challenged conduct was “actively supervised by the State,” which is a requirement for private, but not public, entities.  Fourth, it declined the plaintiff’s invitation to adopt a novel “market participant” exception to the Parker doctrine as inconsistent with U.S. Supreme Court precedent.

Persons and entities seeking advice regarding these, or other antitrust matters, should contact Wright, L’Estrange & Ergastolo’s Antitrust & Unfair Competition practice group.

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