Ari Armstrong, Crime, Criminal Justice, Uncategorized

Armstrong: What Kent Thiry is accused of shouldn’t be a crime

As far as I remember, I’ve never met Kent Thiry. I first became aware of him a few years ago when he promoted the redistricting Measures Y and Z while I opposed them. I know little about him; I see on Wikipedia that he became CEO of Denver-based DaVita Inc. in 1999, where he served until 2019. That company “provides kidney dialysis services through a network of 2,816 outpatient dialysis centers in the United States, serving 204,200 patients,” Wiki notes. The most obvious fact about Thiry, then, is that much of his life’s work involved extending the lives of many of our fellow Americans.

But, according to the U.S. Department of Justice, Thiry is an alleged criminal facing up to twenty years in federal prison. So what is it that Thiry is alleged to have done such that he may face prison time comparable to what many murderers get? Basically, he didn’t hire people the “right” way, allegedly.

The allegations

Here’s how the DOJ explains matters:

“A federal grand jury in Denver returned a two-count indictment charging DaVita Inc. and its former CEO, Kent Thiry, for conspiring with competing employers not to solicit certain employees…These charges are the result of the Antitrust Division’s ongoing investigation into employee allocation agreements in the health care industry…

“The indictment alleges that DaVita and Thiry both participated in two separate conspiracies to suppress competition for the services of certain employees. Count One charges DaVita and Thiry for conspiring with SCA [Surgical Care Affiliates LLC] to allocate senior-level employees by agreeing not to solicit each other’s senior-level employees from as early as February 2012 until as late as July 2017. Count Two charges DaVita and Thiry for conspiring with another health care company from as early as April 2017 until as late as June 2019 to allocate employees by agreeing that the other health care company would not solicit DaVita’s employees…

“DaVita and Thiry are charged with two counts of violating the Sherman Act…If convicted, DaVita faces a maximum penalty of a $100 million fine per count, and Thiry faces a maximum penalty of 10 years in prison and a $1 million fine per count…

“Today’s announcement is the result of an ongoing federal investigation being conducted by the Antitrust Division’s Washington Criminal II Section and the Washington Field Office of the FBI.”

My aim here is not to evaluate the factual basis of the case. I have no more details than what I gleaned from the DOJ and from media reports. For what it’s worth, Thiry denied the allegations via a spokesperson: “These allegations are false and rely on a radical legal theory about senior executive recruitment without precedent in U.S. history. The government took steps to ignore—and even hide—key evidence. The facts bear it out decisively: No antitrust violations occurred, these companies hired DaVita executives for years, and the companies are not competitors.” And Thiry’s attorney says DaVita’s hiring policies were allowed under antitrust law.

Nor am I going to discuss (beyond this mention) DaVita’s previous legal troubles under Thiry, Thiry’s eccentricities (as lampooned by John Oliver), alleged quality issues at DaVita facilities, or the broader political policies surrounding dialysis, which I find worrisome. And I won’t follow some on the left in presuming Thiry suspect just because he’s a wealthy business leader.

I will indulge an aside: By outlawing kidney sales, government kills many thousands of people every year and creates greater need for dialysis. But you’ll notice that the antitrust crusaders almost never care about cases where government limits choice or competition or artificially props up businesses. Their attitude is basically that anything government does is fine while anything private businesses do is suspect.

An unjust law

Here is the question I want to address: Did Thiry allegedly do anything in this case that the government should prosecute as a crime? Notice that this is a different question than whether Thiry in fact violated the statute at hand, which I do not know. At issue is whether the statute is just. I hold that it is not. Hence, the just outcome would be for government not to prosecute Thiry under the statute in question, but to repeal the statute.

The only legitimate basis for a criminal statute is that it outlaws rights-violating acts. If an act does not violate the rights of others, then it is not morally a crime, and government ought not treat it as such. Crimes, to paraphrase Matt Kibbe, generally come down to hurting people or taking their stuff.

Already that is a pretty radical step. Both conservatives and leftists want to criminalize all sorts of acts that do not violate others’ rights. For example, possessing a gun magazine beyond a certain capacity violates no one’s rights, yet it is currently a crime in Colorado. So is possessing various drugs. Many people will reject out of hand my claim that crimes properly pertain to rights violations, or they will concoct so nebulous a theory of rights as to strip the concept of all meaning.

Yet even someone who buys my general principle might argue that it applies in the case at hand. To sketch the argument: “By allegedly reducing competition for employees in this sector, Thiry denied them raises and other benefits that were properly theirs. Hence, he violated their rights in that respect.” But that stance relies on a bogus and incoherent theory of rights. Bear with me.

Where’s the crime?

I am not claiming here that two firms conspiring to reduce the competitiveness of a labor market is a good thing. I am claiming simply that government ought not treat it as a crime. Although all appropriately criminalized acts are immoral, it is not the case that all immoral acts should be considered crimes. The equation of immorality with criminality is a sure pathway to totalitarianism.

Generally, I think “we” should try to discourage companies from throttling competition through our economic actions and through social pressure. I hasten to point out that providing excellent-quality goods or services at economical prices is not “throttling competition” in the relevant sense, although the antitrust crusaders often pretend that it is.

Generally, companies ought not agree to try to prop up prices or limit hiring practices. Practically speaking, insofar as the market is free (and these days it very often is not), this sort of collusion almost always quickly fails just because every individual actor continually faces temptation to break the agreement. And these are not the sorts of agreements that government properly upholds as contracts, so there’s no enforcement mechanism.

I do see an important role for torts here. I think a company reasonably sets the hiring policy not to collude with other companies to limit employment opportunities. If that was part of the employment contract, then employees could sue if companies violated the agreement, and government properly would oversee such lawsuits.

But, in terms of rights violations, absent a prior agreement, a company simply does not have a moral obligation to hire a certain person or to offer someone a larger compensation package. A rights violation involves taking positive action to harm a person. Simply declining to hire a person, or to hire a person at a particular wage, is not a rights violation, even if related to some (non-legally-enforceable) agreement with another company. Compare: If two friends agree not to date each other’s ex-boyfriends, they should not be thrown in prison for twenty years or otherwise hassled by government. Declining to associate with someone in either case does not constitute a rights violation.

Advocates of antitrust laws often are quick to quote Adam Smith on the topic. We do well to read the complete relevant paragraph:

“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.”

To restate, I have no idea whether Thiry in fact violated the statute in question. My point is that, even if he did, the criminal prosecution of Thirty is horribly unjust.

Ari Armstrong writes regularly for Complete Colorado and is the author of books about Ayn Rand, Harry Potter, and classical liberalism.  He can be reached at ari at ariarmstrong dot com.

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