In the Matter of




Pursuant to the provisions of the Federal Trade Commission Act, as amended, and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that the Mesa County Physicians Independent Practice Association, Inc. ("Mesa County IPA" and "respondent") has violated and is violating Section 5 of the Federal Trade Commission Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues this amended complaint stating its charges in that respect as follows:

PARAGRAPH ONE: Respondent Mesa County IPA is a corporation, organized, existing, and doing business under and by virtue of the laws of the State of Colorado, with its address at 751 Horizon Court, Suite 256, Grand Junction, Mesa County, Colorado 81506.

PARAGRAPH TWO: Grand Junction (population exceeds 37,600) is the largest city in Mesa County (population exceeds 100,000), Colorado, and is located approximately 30 miles east of the Utah border. Grand Junction is the largest city between Salt Lake City, Utah to the west, and Denver, Colorado to the east, a distance of approximately 400 miles.

PARAGRAPH THREE: Respondent Mesa County IPA's members include at least 85% of the physicians (medical doctors and doctors of osteopathic medicine) in private practice in Mesa County, as well as at least 90% of the primary care physicians (family practitioners, general practitioners, internists, and pediatricians). These physicians compete in the Mesa County area. All of respondent's members are engaged in the business of providing health care services for a fee. Except to the extent that competition has been restrained as alleged herein, some or all of the physician members of respondent Mesa County IPA have been, and are now, in competition with each other for the provision of physician services.

PARAGRAPH FOUR: The general business practices of respondent Mesa County IPA and its members, including the acts and practices herein alleged, are in or affect "commerce" as defined in the Federal Trade Commission Act, as amended, 15 U.S.C. 45.

PARAGRAPH FIVE: Respondent Mesa County IPA engages in substantial activities for the pecuniary benefit of its members. At all times relevant to this complaint, respondent is and has been organized in substantial part for the profit of its members, and is therefore a corporation within the meaning of Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C.  44.

PARAGRAPH SIX: Respondent Mesa County IPA was formed in or about 1987 to promote the collective economic interests of Mesa County physicians. Respondent, acting as a combination of its members, and in conspiracy with at least some of its members, and others, has acted to restrain competition by, among other things, facilitating, entering into, and implementing agreements among its members, express or implied, to fix price and other competitively significant terms of dealing with payers, or by collectively refusing to deal with payers.

PARAGRAPH SEVEN: Respondent Mesa County IPA has a multi-year contract with the Rocky Mountain Health Maintenance Organization ("Rocky Mountain HMO"). The alliance between respondent and Rocky Mountain HMO has created a substantial obstacle to the ability of other payers to contract with a physician panel in Mesa County. Rocky Mountain HMO enrollees currently comprise at least 50% of the total patient volume of respondent's members.

PARAGRAPH EIGHT: As early as 1993, respondent Mesa County IPA began negotiating collectively, on behalf of all of its members, with several third-party payers. Respondent Mesa County IPA's Board of Directors approved a set of guidelines and a fee schedule to be used by respondent's Contract Review Committee in reviewing contract offers from payers. Respondent's fee schedule resulted in significantly higher prices to several payers for physician services.

PARAGRAPH NINE: Respondent Mesa County IPA, through its newsletters, documents, and other published media, has encouraged its physician members not to deal with new health plans or to do so only on terms that were approved by respondent, and has invited or contemplated concerted action by its members to avoid signing payer contracts. Respondent Mesa County IPA reviewed individual contract offerings to its members by third-party payers, and published adverse comments regarding such contracts. To facilitate its review of all contracts, respondent urged its members to forward all contracts to respondent's Contract Review Committee.

PARAGRAPH TEN: A wide range of third-party payers of physician services, including preferred provider organizations, health maintenance organizations, and employer health care purchasing cooperatives, were excluded from doing business in Mesa County as a result of respondent's conduct. Although most payers sought alternatives to respondent, they were forced to contract with respondent to obtain the physician services they needed to market viable plans, or else abandon their efforts to enter Mesa County.

PARAGRAPH ELEVEN: In November 1997, respondent Mesa County IPA signed a proposed consent agreement which, if accepted by the Federal Trade Commission, would have required, inter alia, that respondent Mesa County IPA abolish its Contract Review Committee. In December 1997, the corporation Innovative Reviewers Inc. was incorporated in the State of Colorado by a group of individuals that included the Executive Director of respondent Mesa County IPA and the former Chairman of the Contract Review Committee of respondent Mesa County IPA. All but one of the fifteen shareholders of Innovative Reviewers Inc. had ties to respondent Mesa County IPA: twelve were physicians participating in respondent Mesa County IPA; one was the Executive Director of respondent Mesa County IPA; and one was the husband of the Executive Director of respondent Mesa County IPA. After its formation, Innovative Reviewers Inc. engaged in conduct in which the Contract Review Committee of respondent Mesa County IPA had also engaged: reviewing payer contracts submitted by physicians, and advising those physicians whether particular terms and conditions of those contracts were acceptable.

PARAGRAPH TWELVE: The physician members of respondent Mesa County IPA have not integrated their practices to create efficiencies sufficient to justify their acts and practices described in Paragraphs 6 through 11.

PARAGRAPH THIRTEEN: The purpose, effects, tendency, or capacity of the conduct described in Paragraphs 6 through 11 are and have been to restrain trade unreasonably and hinder competition in the provision of primary care physician services, as well as physician services generally, in the Mesa County area in the following ways, among others:

A. Price and other forms of competition among respondent Mesa County IPA's member physicians were unreasonably restrained;
B. Higher prices for physician services have resulted;
C. The development of alternative health care financing and delivery systems, including employer developed self-funded plans, was hindered;
D. Health plans, employers, and individual consumers were deprived of the benefits of competition in the purchase of physician services;
E. Health plans, employers, and individual consumers were deprived of the benefits of competition between health plans.

PARAGRAPH FOURTEEN: The combination, conspiracy, acts and practices described above constitute unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act. Such combination, conspiracy, acts and practices, or the effects thereof, are continuing and will continue or recur in the absence of the relief herein requested.

WHEREFORE, THE PREMISES CONSIDERED, the Federal Trade Commission on this fourth day of May, 1999, issues its complaint against respondent Mesa County IPA.

By the Commission.

Donald S. Clark