Dennis Hursh, Esq.
Organized medicine is a tremendous boon to the physician practicing in a small or mid-sized firm. Organized as “trade associations” for tax purposes, most organized medical societies (federal, state and county) offer the ability to pool resources of physicians and closely monitor important legislative and regulatory issues. Most practitioners quite rightly view organized medicine as presenting a chance to leverage the power of the association to do things together which would be impossible or impractical to do alone.
Meetings of organized medicine often present an invaluable opportunity to network with your peers and learn what is working (and what isn’t) in both clinical medicine and (often more importantly) in management of the business of practicing medicine.
However, physicians should be alert to the legal risks of discussing managed care contracting issues with their peers. In many locations, physicians are working long hard hours, and may be turning away patients from the practice because they simply cannot devote adequate attention to the care of more patients. Under these circumstances, it is natural to assume that your colleague in the same specialty is just that – a colleague, and not a “competitor.” Thinking of your fellow physicians as competitors is simply not the way you were trained and, in many cases does not really comport with reality. It is certainly difficult to justify treating a physician in the same area of practice as you in the same town as a “competitor” when both of you may be turning away patients from your respective practices because of the demands on your time.
Nevertheless, for purposes of antitrust law, physicians in the same specialty (or for that matter, physicians treating patients with the same conditions as those for which you frequently provide treatment) are considered your competitors.
The Sherman Antitrust Act prohibits “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states or with foreign nations.” Put more simply, the Sherman Act prohibits agreements that unreasonably restrain competition. As noted above, physicians are considered competitors, so when these “competitors” get together to discuss how they will work together against a managed care company, this is considered by regulators to be a violation of the Sherman Act.
A “conspiracy” can be found in several ways. First, physicians could be deemed to be “conspiring” to fix the prices at which they sell their services to a managed care company. So, for example, it would be considered a violation of the Sherman Act for you to agree with a physician in a separate group practice that you will not participate in the Monolithic Health Insurance Company panel of providers unless you receive an agreed upon minimum fee. In the parlance of the regulators, the “sellers” (physicians providing professional services) would be deemed to be “conspiring” to fix prices, by discussing a minimum reasonable amount to accept as payment for services from a given insurance company (the “buyer”).
Regulators also see this specter of illegal action where physicians from “competing” groups jointly decide, through discussions with their colleagues, that they will not participate in the panel of a given insurance company. The reasons for this joint decision may be extremely valid (poor or slow payment for services, unreasonable claims procedures, etc). Nevertheless, regulators would consider this a “group boycott” or a “concerted refusal to deal.” If the regulators can prove discussions were held on the topic at an organized medicine event, you could be required to prove that your action in dropping out of a panel (or not joining a panel) was your individual decision, and was not an attempt to jointly act with your “competitors.” Attempting to prove a negative is rarely easy.
Analysis of discussions of contracting with managed care companies at organized medical events can become a slippery slope. For example, a discussion in which everybody agrees that managed care generally is bad for health care would probably pass muster. If everyone agreed that Monolithic Health Insurance Company is a bad company, though, a regulator could argue that everybody implicitly agreed not to deal with Monolithic. If one physician states that her practice is not going to participate in the Monolithic panel and others subsequently refused to join the panel, a regulator’s argument that the competing doctors are acting jointly appears much stronger. In short, an offhand comment by one physician could lead to problems for everyone at the meeting.
The federal antitrust laws are enforced by the United States Department of Justice, the Federal Trade Commission, and the state Attorney General. It is important to note that the Sherman Act can be enforced either criminally or through a civil action. A violation of the Sherman Act is a felony, punishable by incarceration of not more than three years and a fine of not more than $350,000. The agencies also have the ability to seek an injunction restraining physicians from further unlawful activities.
Of course, there are many defenses, and prosecution is never certain. Nevertheless, unless the prospect of trading your white coat for a fluorescent orange jumpsuit is appealing to you, obviously the best policy is not to risk a run-in with the regulators. Even a successful defense of an antitrust action will be extremely costly, in terms of time expended, your professional reputation, and potentially massive legal fees.
Accordingly, a prudent physician will avoid discussing details of price negotiations, or any discussion of dealings with insurance companies with fellow physicians who are not in his or her own group practice.
You are certainly free to argue that this isn’t “fair.” Given the near monopolistic power of some insurance companies, common sense may tell you that a joining up of “the little guys” against the big bad insurance company should be tolerated, if not actively encouraged. However, many recent enforcement activities have shown that the regulators can and do attack physicians whom they view as violating the antitrust laws.
Unquestionably, this is an area where the risks are so great, and the rewards so paltry, that erring on the side of caution is the obvious way to proceed.
Dennis Hursh, Esq., is a principal in Hursh & Hursh, P.C., a Middletown, Pennsylvania law firm concentrating on representation of physicians, physician group practices and physician organizations.