UNITED STATES OF AMERICA
In the Matter of
Colegio de Cirujanos Dentistas de Puerto Rico, a professional association.
Docket No. C-3953
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:
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:
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:
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 twelfth day of June, 2000, issues its complaint against said respondent.
By the Commission.
Donald S. Clark