When Will They Learn? Doctors Continue to Face Antitrust Charges for Jointly Negotiating Contracts without Clinical or Financial Integration

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Legitimate joint marketing and selling arrangements have the potential to produce efficiencies. This is particularly so, for example, where the arrangement enables the participants to make or market products that they could not do alone. The Antitrust Guidelines for Collaborations among Competitors, Statements of Antitrust Enforcement Policy in Health Care, as well as scores of U.S. Department of Justice (DOJ) business review letters, FTC advisory opinions and enforcement actions provide a wealth of guidance in this area. Yet despite this guidance and the attention accountable care organizations have received, doctors remain in the crosshairs of antitrust enforcers for jointly negotiating contracts with insurance companies (payors) without any clinical or financial integration on their part.

Recently, an Oklahoma association of approximately 350 competing chiropractors, representing nearly half of all chiropractors practicing in Oklahoma, and the association's director became the latest healthcare practitioners to settle price-fixing charges. As alleged in the DOJ's complaint, since at least 2004, the association required chiropractors joining the association to enter into a membership agreement that: (1) designates the association as the party that will "[c]ontract with [the] Third-Party Payor or Network"; (2) "suspends any existing agreement to which the [chiropractor] is a party with any Third-Party Payor or Network"; (3) specifies a reimbursement floor chiropractors must accept; and (4) prohibits member chiropractors from offering payors rebates or incentives, such as waiving deductibles or co-pays.

Until the DOJ started its investigation, the association's website apparently stated that the association "concentrates the power of [its] state chiropractic physicians into one group" and boasted that "[t]hrough [the association], a chiropractor can maintain an individual practice while associating with other chiropractors to increase contract-negotiating power." From 2004 to 2011, the association and its director supposedly exercised that "increase[d] contract-negotiating power" by negotiating at least seven contracts with payors that fixed prices and price-related terms for all association members dealing with those payors. Predictably, higher prices for chiropractic services in Oklahoma resulted.

The DOJ filed its complaint, because the negotiation of the contracts on behalf of the association's members was not ancillary to any procompetitive purpose of the association or reasonably necessary to achieving any efficiencies. Notably, the DOJ alleged, other than for those doctors in the same practice group, the association's members "[did] not share any financial risk in providing chiropractic services, [did] not significantly collaborate in a program to monitor and modify their clinical practice patterns to control costs or ensure quality, [did] not integrate their delivery of care to patients, and [did] not otherwise integrate their activities to produce significant efficiencies."

Topics:  Anti-Competitive, Chiropractors, Joint Purchasing Programs, Price-Fixing

Published In: Antitrust & Trade Regulation Updates, Health Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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