海角大神

As I鈥檝e long suspected, 鈥渉ealth care reform鈥� has emboldened the Justice Department to take a more active role in enforcing government price controls against physicians. Today the , joined by , forced a a group of Boise orthopedists to accept price controls for worker鈥檚 compensation and HMO contracts as part of a settlement accusing the doctors of 鈥減rice fixing鈥�:

According to the complaint, the conspiring orthopedists engaged in two antitrust conspiracies, which took place from 2006 to 2008. In the first conspiracy, through a series of meetings and other communications, the orthopedists agreed not to treat most patients covered by workers鈥� compensation insurance.

They entered into a group boycott in order to force the Idaho Industrial Commission to increase the rates at which orthopedists were paid for treating injured workers. The Idaho Industrial Commission sets the fee schedule that determines the amount that orthopedists and other healthcare providers usually receive for treating patients covered by workers鈥� compensation insurance. The boycott resulted in a shortage of orthopedists willing to treat workers鈥� compensation patients, causing higher rates for orthopedic services.

In the second conspiracy, all of the defendants, except [one], and other conspiring orthopedists agreed to threaten to terminate their contracts with Blue Cross of Idaho. They jointly threatened to terminate their contracts to force Blue Cross of Idaho to offer better contract terms to orthopedists.

The proposed settlement prevents the Idaho Orthopaedic Society and the named orthopedists from agreeing with their competitors on fees and contract terms. The settlement also prohibits them from collectively denying medical care to patients, refusing to deal with any payer or threatening to terminate contracts with any payer.

This case is a watershed for two reasons:

First, until now the Federal Trade Commission, not the Justice Department, has taken the lead in prosecuting physicians. Since 2000, the FTC has brought about three dozen cases against physicians (all but one of which settled without any trial). But the FTC only has civil and administrative jurisdiction; the Antitrust Division has civil and criminal jurisdiction. The Sherman Act makes no distinction between civil and criminal 鈥減rice fixing,鈥� so in a case like this, it鈥檚 entirely a matter of prosecutorial discretion whether to charge the doctors with a civil or criminal offense.

Based on the descriptions in the Antitrust Division鈥檚 press release, there鈥檚 certainly no reason they couldn鈥檛 have prosecuted the doctors criminally and insisted upon prison sentences 鈥� and there鈥檚 little doubt such threats were made or implied to obtain the physicians鈥� agreement to the proposed 鈥渟ettlement.鈥�

The second reason this is a landmark case is that the Justice Department has unambiguously stated that refusal to accept government price controls is a form of illegal 鈥減rice fixing.鈥�

The when it鈥檚 said physicians must accept Medicare-based reimbursement schedules from insurance companies. But the DOJ has gone the final step and said, 鈥淕overnment prices are market prices,鈥� in the form of the . The IIC administers the state鈥檚 worker compensation system and is composed of three commissioners appointed by the governor. This isn鈥檛 a quasi-private or semi-private entity. It鈥檚 a purely government operation.

What鈥檚 more, the Antitrust Division has linked a refusal to accept government price controls with a refusal to accept a 鈥減rivate鈥� insurance company鈥檚 contract offer. This lives little doubt that antitrust regulators consider insurance party contracts the equivalent of government price controls 鈥� and physicians and patients have no choice but to accept them.

Despite this, Antitrust Division chief Christine Varney, an Obama political appointee, insists she鈥檚 trying to protect 鈥渃ompetition鈥�:

The orthopedists who participated in these group boycotts denied medical care to Idaho workers and caused higher prices for orthopedic services. Today鈥檚 action seeks to prevent the recurrence of these illegal acts and protects Idaho consumers by promoting competition in the healthcare industry.鈥�

The Idaho attorney general compounds the lie:

The free marketplace works best when there is fair competition. Anticompetitive activity harms the marketplace, businesses and consumers. Enforcement of the antitrust laws restores competition to the marketplace to the benefit of businesses and consumers and the marketplace as a whole.

But what 鈥渃ompetition鈥� do they refer to? The IIC fee schedule is set by government fiat. There鈥檚 no 鈥渃ompetition鈥� among orthopedists 鈥� or any other physicians for that matter. Everyone gets paid exactly the same 鈥渁cceptable charges鈥� based on the schedule. Even in the case of the Blue Cross contract, the physicians weren鈥檛 鈥渃ompeting鈥� on price; they were simply told to accept the reimbursement levels proposed by the insurer.

And as much as the government would tout the 鈥渃onspiracy鈥� among physicians, as , we鈥檙e basically talking about people having conversations with one another. The truth is the antitrust regulators don鈥檛 need much to establish a Sherman Act 鈥渃onspiracy.鈥� Even if there鈥檚 no evidence of direct communication between physicians, if a large number of physicians in a given market individually reject a government price control scheme or insurance company contract, the Antitrust Division can simply 鈥渋nfer鈥� the existence of a conspiracy.

This is another reason why the DOJ鈥檚 presence in a physician case is more disturbing than the normal FTC case. The DOJ has a number of 鈥渢ools鈥� the FTC does not, including the self-granted power to award amnesties from criminal prosecutions to the first 鈥渃onspirator鈥� to step forward and provide evidence against one鈥檚 competitors.

A doctor that feared prosecution could seek amnesty 鈥� and provide the Justice Department a blank check to rummage through his files and private communications. And if that doesn鈥檛 work, the DOJ can always seek wiretaps of physicians鈥� phones and computers, during a 2006 renewal of the PATRIOT Act. The potential exposure of your physician鈥檚 confidential records 鈥� including your medical records 鈥� is limitless.

And while I usually caution against reading partisan political motives into an antitrust case 鈥� and I鈥檇 note the Idaho attorney general is a Republican 鈥� it鈥檚 hard to segregate today鈥檚 action from the larger political context of 鈥�Obamacare.鈥� Christine Varney is an Obama political appointee, and if the Idaho case is an indication her Division plans to take a more hands-on approach to dealing with local physician groups, this policy will quickly degenerate into political demagoguery. It鈥檚 just too easy to label physicians 鈥減rice fixers鈥� and scapegoat them for the failure of government planning of the healthcare industry.

UPDATE: The DOJ has released the and . It鈥檚 a naked censorship order that restrains the physicians from

(A) encouraging, facilitating, entering into, participating in, or attempting to engage in any actual or potential agreement or understanding with, between, or among competing physicians about:

• any fee, or other payer contract term or condition, with any payer or group of payers, including the acceptability or negotiation of any fee or other payer contract term with any payer or group of payers;
• the manner in which the defendant or any competing physician will negotiate with, contract with, or otherwise deal with any payer or group of payers, including participating in or terminating any payer contract; or
• any refusal to deal or threatened refusal to deal with any payer;

or

(B) communicating with any competing physician or facilitating the exchange of information between or among competing physicians about:

• the actual or possible view, intention, or position of any defendant or his or her medical practice group, or any competing physician concerning the negotiation or acceptability of any proposed or existing payer contract or contract term, including the negotiating or contracting status of the defendant, his or her medical group, or any competing physician with any payer or group of payers, or
• any proposed or existing term of any payer contract that affects:
• the amount of fees or payment, however determined, that the defendant, his or her medical practice group, or any competing physician charges, contracts for, or accepts from or considers charging, contracting for, or accepting from any payer or group of payers for providing physician services;
• the duration, amendment, or termination of any payer contract; or
• the manner of resolving disputes between any parties to any payer contract.

The order also illegally legislates through the courts by requiring the physicians to adhere to the 1996 Department of Justice and Federal Trade Commission Statements of Antitrust Enforcement Policy in Health Care, which is not law but merely the subjective opinions of unelected government antitrust lawyers. The order also requires the physicians to make 鈥渁ll books, ledgers, accounts, records, data, and documents,鈥� available for government inspection at any time in the next ten years.

Since this is an DOJ case, it is subject to final approval by a federal judge in Idaho. There鈥檚 a mandatory 60-day public comment period, after which the judge will almost certainly rubber stamp the order as being 鈥渋n the public interest.鈥� Still, there鈥檚 at least an opportunity to express some serious dissent to what鈥檚 transpired here.

2ND UPDATE: It turns out the Idaho physicians who used to run the Antitrust Division鈥檚 litigation department 鈥� and developed the government鈥檚 anti-physician antitrust rules 鈥� to represent them. No wonder they settled without a fight.

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