Legal Library: Cases and Proceedings

Alta Bates Medical Group, Inc., a 600-physician independent practice association serving the Berkeley and Oakland, California, area, settleed Commission charges that it violated federal antitrust law by fixing prices charged to health care insurers. The consent order prohibits Alta Bates from collectively negotiating fee-for-service reimbursements and engaging in related anticompetitive conduct. In addition to price-fixing of fee-for-service reimbursements, the FTC’s complaint alleges an unlawful concerted refusal to deal.

The Commission challenged the conduct of AllCare IPA, alleging that AllCare restrained competition in fee-for-service contracts by fixing prices and other contract terms with payers, engaging in collective negotiations over the terms and conditions of dealing with payers, and preventing group members from negotiating with payers except on terms approved by All Care. The Commission issued a consent order prohibiting All Care from entering into agreements between or among physicians: 1) to negotiate on behalf of any physician with any payer; 2) to refuse to deal, or threaten to refuse to deal, with any payer; 3) to designate the terms, conditions, or requirements upon which any physician deals, or is willing to deal, with any payer, including, but not limited to price terms; 4) not to deal individually with any payer, or not to deal with any payer through any arrangement other than one involving All Care.

An administrative law judge upheld the administrative complaint that charged that the North Texas Specialty Physicians (NTSP), a physician group practicing in Forth Worth, Texas, collectively determined acceptable fees for physician services in negotiating contracts with health insurance plans and other third party payers; thus engaging in horizontal price fixing. On December 1, 2005, the Commission issued a unanimous decision upholding the allegations that NTSP negotiated agreements among participating physicians on price and other terms, refused to negotiate with payers except on terms agreed to among its members, and refused to submit payors offers to members if the terms did not satisfy the group’s demands. The Commission concluded that the group’s contracting activities with payors amounts to unlawful horizontal price fixing and that respondent’s efficiency claims were not legitimate and not supported by the evidence.

The respondent appealed the Commission decision to the U.S. Court of Appeals for the Fifth Circuit. The Court agreed with the Commission that the anticompetitive effects of NTSP’s practices were obvious. Per remand by the Court, the Commission modified one provision of its remedial order, issuing a Final Order in September 2008. On February 28, 2009, the U.S. Supreme Court denied NTSP's petition for review.