Dentists in Puerto Rico Agree to Settle FTC Charges That They Conspired to Fix Prices and Engaged in an Illegal Boycott Denying Dental Care to Residents of Puerto Rico

Dentists in three communities in Puerto Rico have agreed to settle Federal Trade Commission charges that they fixed prices and engaged in an illegal boycott in order to obtain higher reimbursement rates for dental services under Puerto Rico’s government managed care plan for the indigent. The FTC charged that, as a result of these actions, indigents in the three municipalities were unable to obtain dental care. Under the settlement, the dentists would be prohibited from jointly negotiating prices or other more favorable economic terms for dentists or jointly boycotting, threatening to boycott, or refusing to provide dental services to any payor or provider.

"Boycotts that affect consumers’ health care are not only illegal but pernicious," said William J. Baer, Director of the FTC’s Bureau of Competition. "One of the Commission’s top priorities is to make sure that this type of behavior is stopped as quickly as possible so that consumers can be guaranteed needed dental services."

According to the FTC, the dentists were concerned about the conditions under which they would participate in the "Reform," Puerto Rico’s program to provide medical, pharmaceutical, and dental services to the indigent. The Administracion de Seguros de Salud ("ASES"), the public corporation responsible for implementing the Reform, has divided Puerto Rico into regions, soliciting for each region bids from payers to provide services for the residents. The FTC’s complaint alleges that beginning in September 1995, the dentists named in the Commission’s complaint met to discuss the impending expansion of the Reform to their communities: Juana Diaz, Coamo, and Santa Isabel. During these meetings, the dentists agreed that only if they received certain prices would they participate in the Reform, the Commission alleged. The dentists thereafter threatened a boycott of the Reform if their demands were not met.

The complaint further alleges that when, on December 20, 1995, the Puerto Rican government expanded the Reform to cover the communities served by the dentists, the dentists concertedly refused to participate. Because of this boycott, residents of Juana Diaz, Coamo, and Santa Isabel who were eligible under the Reform were not able to receive dental services from local providers. In February, 1996, however, the dentists’ price demands were met and they agreed to participate in the Reform, effective February 1, 1996. During this period of time, the dentists constituted a majority of dentists engaged in the practice of dentistry in the three municipalities, the complaint alleges.

The proposed consent order to settle the charges would prohibit the dentists from jointly boycotting or refusing to deal with any third party payer or from collectively determining any terms or conditions for dealing with third party payers. Notwithstanding these provisions, the agreement would permit the dentists to engage in conduct that is reasonably necessary to operate (a) any “qualified risk-sharing joint arrangement,” or (b) upon prior notice to the Commission, any “qualified clinically integrated joint arrangement.” For purposes of the order, a “qualified risk-sharing joint arrangement” must satisfy two conditions: (a) participating dentists must share financial risk and (b) the arrangements must be non-exclusive, both in name and in fact. A “qualified clinically integrated joint arrangement” includes arrangements in which the dentists undertake cooperative activities to achieve efficiencies in the delivery of clinical services, without necessarily sharing substantial financial risk. These arrangements also must be non-exclusive.

The proposed order also would require each dentist to distribute copies of the order and complaint, as well as certified Spanish translations, to each payer or provider, who has, since January 1, 1995, communicated any desire or willingness to contract for these dentists’ goods and services.

The Commission vote to accept the proposed consent agreement for public comment was 4-0.

An analysis of the proposed agreement will appear in the Federal Register shortly. The agreement will be subject to public comment for 60 days, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

Copies of the complaint, the proposed consent order and the analysis of proposed consent order to aid public comment are available from the FTC’s web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202- 382-4357); TDD for the hearing impaired 1-866-653-4261. Consent agreements subject to public comment also are available by calling 202-326-3627. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC File No. 981-0154)