UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

In the Matter of
MICHAEL T. BERKLEY, D.C., and
MARK A. CASSELLIUS, D.C.

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 individuals named above, hereinafter "Respondents," have violated and are violating 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:

RESPONDENTS

PARAGRAPH ONE: Respondent Michael T. Berkley, D.C., is a chiropractor licensed and doing business under and by virtue of the laws of the State of Wisconsin, with his principal place of business at 322 Cameron Avenue, La Crosse, Wisconsin 54601. At all times during which the acts and practices described in Paragraphs Ten through Thirteen below took place, respondent Berkley was a member of the board of directors of the Wisconsin Chiropractic Association ("WCA").

PARAGRAPH TWO: Respondent Mark A. Cassellius, D.C., is a chiropractor licensed and doing business under and by virtue of the laws of the State of Wisconsin, with his principal place of business at 2045 32nd Street South, La Crosse, Wisconsin 54601. At all times during which the acts and practices described in Paragraphs Ten through Thirteen below took place, respondent Cassellius was the president of the Southwest District of the WCA.

JURISDICTION

PARAGRAPH THREE: The acts and practices of respondents, 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.

THE MARKET FOR CHIROPRACTIC SERVICES

PARAGRAPH FOUR: Except to the extent that competition has been restrained as alleged herein, the respondents have been, and are now, in competition among themselves and with other providers of chiropractic goods and services in and around La Crosse, Wisconsin.

PARAGRAPH FIVE: Professional services performed by chiropractors include, among other things, spinal and extra spinal manipulations. Prior to January 1, 1997, chiropractors generally billed for these services using a single billing code (A2000 for Medicare and 97260 for most private insurance) regardless of the number of spinal or extra spinal regions adjusted. Beginning on January 1, 1997, the Health Care Financing Administration and many private insurance companies began accepting four new chiropractic manipulative treatment ("CMT") codes (98940, 98941, 98942, and 98943) in place of the old single billing code. The new CMT codes reflected more detailed or precise descriptions of the manipulation services: 98940 (adjustment of 1-2 regions); 98941 (adjustment of 3-4 regions); 98942 (adjustment of 5 regions); and 98943 (adjustment of at least one extra spinal region).

PARAGRAPH SIX: Chiropractors often contract with health insurance firms and other third-party payers. Such contracts typically establish the terms and conditions under which the chiropractors will render services to the subscribers of the third-party payers, including terms and conditions of compensation and of cost containment. In many cases, chiropractors entering into such contracts agree to reductions in their compensation and to various cost containment procedures, including procedures for reviewing the utilization of medical resources by chiropractors and for dealing with chiropractors who have overutilized such resources. By lowering their costs in this manner, third-party payers are able to reduce the cost of medical care for their subscribers. The extensive use of such methods of lowering costs can be described as "managed care."

PARAGRAPH SEVEN: Absent agreements among competing chiropractors on the price and other terms upon which they will provide services to third-party payers, competing chiropractors decide individually whether to enter into contracts with third-party payers, and on the terms and conditions under which they are willing to enter into such contracts.

THE WCA TRAINING SEMINARS

PARAGRAPH EIGHT: The WCA organized and conducted seminars at eight different locations throughout the State of Wisconsin, including La Crosse, Wisconsin, to train chiropractors and their staffs on the new CMT codes (the "CMT Seminars "), including how to price the codes, and urged chiropractors not to make any decisions on their fees for the new CMT codes before attending one of the training seminars.

PARAGRAPH NINE: During the CMT Seminars, the WCA, through its Executive Director, Russell A. Leonard: (1) told the chiropractors that the new CMT codes had the same values as osteopathic manipulative treatment ("OMT ") codes; (2) represented that the market place expected the prices for the new CMT codes to be about the same as the prices for the OMT codes; (3) provided current statewide price data for the OMT codes and urged the chiropractors to call osteopaths in their own areas to determine their local charges; (4) urged chiropractors to question any third-party payer that reimbursed a lesser amount for the CMT codes than for the OMT codes and to notify the WCA; and (5) during at least some of the seminars, represented that it had surveyed numerous chiropractors and determined that private insurance companies were paying CMT code claims at the prices the chiropractors chose to charge.

ANTICOMPETITIVE CONDUCT

PARAGRAPH TEN: Beginning in late January 1997, and continuing until at least June 1997, respondents and other unnamed persons conspired to fix prices for chiropractic services and to conduct a boycott of the Gundersen Lutheran Health Plan ("Gundersen"), a third-party payer doing business in and around La Crosse County, Wisconsin, to obtain higher reimbursement for chiropractic services.

PARAGRAPH ELEVEN: In furtherance of the conspiracy described in Paragraph Ten:

A. Respondents organized at least two meetings of La Crosse County area chiropractors on or about February 13, 1997 and May 15, 1997. During these meetings the chiropractors discussed their displeasure with Gundersen's reimbursement rates for chiropractic services and the fact that they had learned at the WCA seminars that the new CMT codes presented an opportunity to charge significantly more for their services. Respondents surveyed the attendees to determine their average billed charges for the new CMT codes. The chiropractors agreed to negotiate reimbursement rates equal to at least 85% of average billed charges for services provided to Gundersen, significantly more than Gundersen's reimbursement rates. The chiropractors voted and determined that the majority of them were willing to terminate their agreements with Gundersen if it did not address their demands.

B. Respondent Berkley, acting on behalf of the La Crosse County area chiropractors, notified Gundersen that the chiropractors had met to discuss their displeasure with Gundersen's reimbursement, determined that the majority of them were willing to terminate their agreements with Gundersen if it did not address their concerns, and proposed that Gundersen increase its reimbursement rates to reflect at least 85% of average billed charges. Inherent in these negotiations was the threat that if Gundersen did not agree to the terms and conditions acceptable to the area chiropractors, Gundersen would be unable to obtain agreements with them.

PARAGRAPH TWELVE: On or about June 17, 1997, Gundersen, fearing the loss of a significant number of its chiropractic providers, acceded to the chiropractors' demands and revised its fee schedule to reflect a 20% increase on all fee schedule procedures effective July 1, 1997.

PARAGRAPH THIRTEEN: The respondents have not integrated their businesses in any economically significant way, nor have they created any efficiencies that might justify the acts and practices described in Paragraphs Ten through Twelve.

ANTICOMPETITIVE EFFECTS

PARAGRAPH FOURTEEN: The acts and practices of the respondents as described in this complaint have had the purpose, tendency, effect, and capacity to restrain trade unreasonably and hinder competition in the provision of chiropractic goods and services in and around La Crosse County, Wisconsin, in the following ways, among others:

A. to restrain competition among chiropractors;

B. to deprive consumers of the benefits of competition among chiropractors;

C. to fix or increase the prices that consumers pay for chiropractic services;

D. to fix the terms and conditions upon which chiropractors would deal with third- party payers, including terms of chiropractic compensation, thereby raising the price to consumers of medical insurance coverage issued by third-party payers; and

E. to deprive consumers of the benefits of managed care.

PARAGRAPH FIFTEEN: The aforesaid acts and practices of the respondents 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 respondents, 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 respondents.

By the Commission.

Donald S. Clark
Secretary

SEAL