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Welcome to Free Agency: The Antitrust Attack on the National Resident Match Program

Who is Yazoo Smith? If you don't know, you will by the end of this article. If you do know, then you also likely know the fate of the National Resident Match Program, which program matches medical students to specific graduate medical training programs. (Applicants and training programs rank their preferences for one another, and then a computer matches candidates to programs.)

More specifically, the National Resident Match Program is under attack by four recent residents who have filed two suits in the United States District Court for the District of Columbia alleging that the Match Program violates federal antitrust laws.

Although the suits touch on other subjects, the heart of the matter is an allegation that the National Resident Match Program has caused residents to be paid less than their fair market value, because each applicant is matched to one, and only one, graduate training program. The residents contend that the match eliminates the possibility of different hospitals bidding for each applicant's services.

For purposes of the suits, the four residents are attempting: to have a class certified, made up of all persons employed as resident physicians since May or June of 1998 in residency programs accredited by the Accreditation Council for Graduate Medical Education; and to be appointed as the representatives of that class. The 1998 date was chosen because there is a four year statute of limitations preventing people from suing for "old" antitrust injuries. (Accordingly, if you finished your residency before May or June of 1998, you should not expect a check in the mail anytime soon.)

A. In Commerce

The residents are alleging that the match violates Section 1 of the Sherman Antitrust Act, which prohibits "every contract, combination or conspiracy in restraint of trade or commerce." However, the training programs will likely argue that the activities in question are not "in commerce." In other words, the graduate programs will assert that the residents are essentially students, and that their activities are not sufficiently commercial to be subjected to antitrust scrutiny.

Similar cases have been tried in this regard, most notably involving undergraduate education at MIT and the eight Ivy League colleges. Beginning in 1948, these nine schools expressly agreed that they would award financial aid only on the basis of demonstrated need. Thus, merit-based aid was prohibited. Moreover, to ensure that aid packages would be comparable, the nine schools agreed to share financial information concerning admitted candidates and jointly to develop and to apply a uniform needs analysis for assessing family contributions.

Although the eight Ivy League schools chose to settle the case, MIT attempted to defend the program. Unfortunately for MIT, in 1993, a federal appellate court, in United States v. Brown University, concluded that, while purely charitable activities are not within the purview of the Sherman Act, that immunity does not extend to commercial aspects of the charity's endeavors. Further, the court held that "[t]he exchange of money for services, even by a non-profit organization, is a quintessential commercial transaction."

If undergraduate education is in commerce, then graduate education will also likely be found to be in commerce, especially since the graduate medical training programs are also paying the residents to provide services.

B. Who is Yazoo Smith?

If the residents' complaint is deemed subject to the Sherman Act, that will not be the end of the inquiry. The residents will still have to prove that the National Resident Match Program unreasonably restrains commerce in light of all relevant facts. The resident programs will likely point to the efficiencies of the match program, as well as the benefits of insulating medical students from the "stress" of free agency. However, at the end of the day, the attacking residents will likely follow the path of Yazoo Smith.

Yazoo Smith was a pro football player who played for one season for the Washington Redskins after being drafted in 1968. He later sued the National Football League, alleging that the football draft violated the federal antitrust laws.

In 1977, the Federal Court of Appeals for the District of Columbia concluded, in Smith v. Pro Football, Inc., that "[t]he draft inescapably forces each seller of football services to deal with one, and only one buyer, robbing the seller ... of any real bargaining power." Accordingly, the court found that the football draft violated the Sherman Act, and the same conclusion will likely be reached in regard to the National Resident Match Program.

C. The Law of Unintended Consequences

Now, you might be thinking to yourself that, since there still is a football draft, how could it have been struck down in 1977? Curiously, the answer to that question might turn out to be an extraordinary illustration of the law of unintended consequences.

The reason that there is still a football draft is that, after Smith v. Pro Football, the draft was brought back as part of the collective bargaining agreement between the football players' union and the National Football League, because there is an exemption to the antitrust laws for collective bargaining.

Of course, one would expect that the hospitals who sponsor residency programs would be the last organizations to encourage their residents to unionize. Nevertheless, one of the unintended consequences of the recent suit attacking the National Resident Match Program might be that these same hospitals will actually encourage their residents to unionize so that the hospitals can reinstate the National Resident Match Program through a collective bargaining agreement.

D. Conclusion

In any case, there will be years of legal wrangling before the antitrust attack on the National Resident Match Program is resolved. Nevertheless, if prior decisions are followed, then one can expect that sometime over the next five years the case will be resolved, through settlement or judicial decree, with the elimination of the Match Program, and with the issuing of checks in some amount to people who were residents after May or June of 1998, and in much larger amounts to the attorneys representing the resident physicians.


March 22, 2003




Rosen, Barry F.


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