UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

In the Matter of

Colegio de Cirujanos Dentistas de Puerto Rico, a professional association.

Docket No.

COMPLAINT

Pursuant to the provisions of the Federal Trade Commission Act, as amended, 15 U.S.C.   41 et seq., and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that the Colegio de Cirujanos Dentistas de Puerto Rico ("Colegio"), hereinafter sometimes referred to as "respondent," has violated Section 5 of the Federal Trade Commission Act, 15 U.S.C. 45, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues this complaint, stating its charges as follows:

PARAGRAPH ONE: The Colegio is a nonprofit incorporated professional association of dentists in Puerto Rico, and is organized, existing, and doing business under and by virtue of the laws of the Commonwealth of Puerto Rico, with its principal place of business located at Calle Manuel V. Domenech #200, Hato Rey, Puerto Rico 00918.

PARAGRAPH TWO: The Colegio exists and operates, and at all times relevant to this complaint existed and operated, in substantial part for the pecuniary benefit of its members. By virtue of its purposes and activities, the Colegio is a "corporation" within the meaning of Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C.  44.

PARAGRAPH THREE: The acts and practices of the Colegio and its members, including those herein alleged, are in or affect commerce within the meaning of Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. 45.

PARAGRAPH FOUR: Approximately 1800 dentists are members of the Colegio, constituting almost all of the dentists licensed to practice in Puerto Rico. Membership in the Colegio is required by statute in order to practice dentistry in Puerto Rico, excepting only certain dental faculty and dentists in the United States Armed Forces.

PARAGRAPH FIVE: Colegio members are generally engaged in the business of providing dental services to patients for a fee. Absent agreements among competing dentists on the price and other terms upon which they will provide services to third-party payers and patients, competing dentists decide individually whether to enter into contracts with third-party payers and treat patients, and on the terms and conditions under which they are willing to enter into such contracts and treat patients.

PARAGRAPH SIX: Puerto Rico has created a program to provide medical, pharmaceutical, and dental services to the indigent ("the Reform"), established pursuant to the Puerto Rico Health Insurance Administration Act of 1993, Act No. 72, Article II. The Reform was intended to create a health insurance system to give high quality health care, including dental services, to indigent residents of Puerto Rico. The Reform is financed by the Commonwealth of Puerto Rico, federal Medicaid funds, and income from privatization funds (such as leases and sales of government owned health care facilities). The Administracion de Seguros de Salud ("ASES"), a public corporation, implements and administers the Reform. ASES has divided Puerto Rico into regions, soliciting for each region bids from payers to organize and provide services for beneficiaries. ASES selects payers for the regions, and each payer then contracts with providers, including hospitals, physicians, pharmacies, and dentists.

PARAGRAPH SEVEN: The Colegio, acting as a combination of its members, and in conspiracy with at least some of its members, has acted to restrain competition by, among other things, encouraging, facilitating, entering into, and implementing agreements among the Colegio's members, express or implied, to raise the fees paid by payers and patients to dentists, to conduct boycotts or threaten boycotts of payers to obtain higher reimbursement, and to restrain truthful, nondeceptive advertising by dentists.

PARAGRAPH EIGHT: The Colegio has promulgated a Code of Ethics that states that any dentist contracting with a plan not endorsed by the Colegio is in "serious" violation of the Code of Ethics. The Code provides that serious violations may be punished, at the discretion of the Ethics Committee, by penalties that can include suspension or expulsion from the Colegio. The Code also sets forth certain minimum requirements that plans must satisfy for dentists' participation to be acceptable, including requirements that plans be open to all Colegio members, and that the plans pay fees that are at an appropriate level. The Code of Ethics has been widely distributed to Colegio members, and Colegio officials have acted to promote adherence to the Code.

PARAGRAPH NINE: The Colegio established a Committee on Prepaid Dental Services to act as the collective bargaining agent for its members. Through this Committee, and in other ways, the Colegio has engaged in discussions with numerous payers about fees and other terms its members would accept as reimbursement from these payers. The Colegio has refused to give its endorsement or approval of health insurance plans ("plans") unless they meet certain conditions: the plans must reimburse dentists on a fee-for-service basis, and must not pay dentists on the basis of capitation; the plans must be open to the participation of all dentists ("free selection"); and the plans must be responsive to raising fees at the Colegio's request.

PARAGRAPH TEN: Many third-party payers seek endorsement or approval of their plans from the Colegio, in order to secure a sufficient number of participating dentists. When well-established third-party payers have been able to successfully market their plans to dentists without the formal endorsement or approval of the Colegio, it is because these plans have been consistent with the requirements of the Colegio: these plans are open to all dentists, pay relatively high levels of fee-for-service reimbursement, and do not include capitation as a form of payment to dentists.

PARAGRAPH ELEVEN: In furtherance of its anticompetitive agreements, combinations, and conspiracies to set the prices and other terms under which its member dentists would deal with payers, and raise the fees paid by payers and patients to dentists, the Colegio's conduct included, but was not limited to, the following with regard to contracts with payers not under the Reform:

A. Conducted negotiations with Island Health Care in 1989 over the terms and conditions of dental contracts for Colegio members, including the amount of fees and which procedures would be covered.
 
B. Conducted negotiations with payer representatives in 1993 and 1994 to achieve higher fees for Colegio members, while urging Colegio members to give the Colegio support and solidarity during these dealings. During 1993, when CIGNA attempted to establish a new PPO, the Colegio's President urged the membership to not sign the CIGNA contract until the Colegio and CIGNA reached an agreement that would insure periodic rate increases for Colegio members.
 
C. Conducted negotiations with Atlantic Southern Insurance Co. ("Atlantic") during 1993 and 1994, including negotiation of price terms, as a condition for giving Atlantic the Colegio's endorsement. Atlantic had difficulty signing up dentists absent the Colegio's endorsement, which the Colegio provided after Atlantic agreed to added reimbursement by expanding coverage for high-priced procedures, and Atlantic committed to meet annually with Colegio representatives to review and adjust fees.
 
D. Conducted negotiations for many years with the two largest payers for dental coverage in Puerto Rico, Triple S and La Cruz Azul, concerning the fees they would reimburse for dental services. From 1992 through 1994, the President of the Colegio and other Colegio officials successfully negotiated fee increases from both payers for a variety of procedures.
 
E. During 1994, Triple S attempted to form a managed care plan under which dentists would be paid by capitation. The Colegio helped organize dentists to refuse to deal with this proposed plan, and Triple S was compelled to cancel its capitated plan.

PARAGRAPH TWELVE: In furtherance of its anticompetitive agreements, combinations, and conspiracies to set the prices and other terms under which its member dentists would deal with payers, and raise the fees paid by payers to dentists, the Colegio's conduct included, but was not limited to, the following with regard to contracts with payers under the Reform:

A. During 1995, the Colegio successfully resisted Triple S attempts to implement a system of capitation for the payment of dentists in the North Region of the Reform, resisted Triple S attempts to implement a 10% discount for dental fees, and negotiated a limited discount of 5% off of regular dental fees. During 1996, the Colegio successfully imposed the same terms and conditions of payment on Triple S for the Northwest region of the Reform.
 
B. During 1995, the Colegio negotiated with PCA, a payer, the terms under which its member dentists would participate in the Central Region of Reform. In return for obtaining the Colegio's endorsement, the Colegio required PCA to agree that payments to dentists would be based on fee for service, with dental panels open to all Colegio members. During 1996, when PCA attempted to revise its dental contracts for the Central Region to provide for utilization and quality audits, the Colegio withheld its endorsement. When PCA attempted to bypass the Colegio and approached dentists in the Central Region of the Reform individually, only 60 of 450 dentists contracted with it, an insufficient number under ASES regulations. In return for most dentists agreeing to deal with PCA, the Colegio was able to limit utilization review.
 
C. During 1995 after another payer, United, contacted individual dentists about their willingness to participate in capitation, United was informed by the Colegio that its members would refuse to participate in any capitation plan. As a result, United was forced to implement its Reform plans in the Southwest and East Regions without capitation.
 
D. During 1998, the Colegio succeeded in forcing Triple S to raise its fees for dentists in the North Region of the Reform. During these efforts to raise fees, the President of the Colegio wrote to Triple S that when members of the Colegio's Board of Directors, Executive Committee, or Committee on Prepaid Dental Services meet with Triple S, these dentists do so as representatives of the membership of the Colegio, and not as individual dentists.

PARAGRAPH THIRTEEN: The Colegio maintains, distributes to its members, and enforces a Code of Ethics that prohibits truthful, nondeceptive advertising and solicitation. Among other things, the Colegio's rules ban advertising that is not professionally acceptable, use of most illustrations, advertisements deemed not in good taste, and all personal solicitations. The Ethics Committee and other Colegio officials have acted to ensure that Colegio members adhere to the Code of Ethics.

PARAGRAPH FOURTEEN: During December 1995 and January 1996, dentists from Juana Diaz, Coamo, and Santa Isabel, Puerto Rico, in an effort to secure higher fees and other terms as a condition for participating in the Reform, concertedly refused to treat patients under the Reform. Dentists from Ponce truthfully advertised their willingness to accept Reform patients from Juana Diaz, Coamo, and Santa Isabel. In response to complaints by boycotting dentists about this advertising, the Colegio found three Ponce dentists to be in violation of the Code of Ethics for engaging in newspaper advertising not professionally acceptable. In addition, one of the dentists from Ponce was found to be in violation of the Code of Ethics rules on advertising on the ground that signs and banners containing his advertisements were placed too close to the offices of the dentists conducting a boycott of the Reform. In response to the Colegio's inquiries and actions, the Ponce dentists stopped advertising that was targeted to residents of Juana Diaz, Coamo, and Santa Isabel.

PARAGRAPH FIFTEEN: The Colegio has not integrated the practices of its members in any economically significant way, nor has it created any efficiencies that might justify the acts and practices described in paragraphs seven through fourteen.

PARAGRAPH SIXTEEN: The acts and practices of the respondent as described in this complaint have had the purpose, tendency, effects, and capacity to restrain trade unreasonably and hinder competition in the provision of dental goods and services in Puerto Rico in the following ways, among others:

A. to restrain competition among dentists;
 
B. to deprive consumers of the benefits of competition among dentists;
 
C. to fix or increase the prices that consumers and third-party payers pay for dental services;
 
D. to fix the terms and conditions upon which dentists would deal with third-party payers, including terms of compensation for dental services, thereby raising the price to consumers of insurance coverage issued by third-party payers;
 
E. to raise prices paid by ASES and delay the offering of dental services under the Reform;
 
F. to deprive consumers of the benefits of new health care delivery systems; and
 
G. to deprive consumers of the benefits of truthful information contained in advertising.

PARAGRAPH SEVENTEEN: The aforesaid acts and practices of the respondent are to the prejudice and injury of the public and constitute unfair methods of competition in or affecting commerce in violation of Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C.  45. The acts and practices of the respondent, as herein alleged, are continuing and will continue or recur in the absence of the relief requested.

WHEREFORE, THE PREMISES CONSIDERED, the Federal Trade Commission on this day of , , issues its complaint against said respondent.

By the Commission.

Donald S. Clark

Secretary

SEAL