New Mexico Physician Association to Pay $263,000 Civil Penalty to Settle FTC Allegations That it Violated 2005 Order

An independent physician association in New Mexico called San Juan IPA has agreed to pay a $263,000 civil penalty to the Federal Trade Commission to settle allegations that it violated a 2005 consent order. The FTC’s 2005 case against San Juan IPA alleged that it orchestrated agreements among competing member physicians to coordinate joint pricing. Consent orders have the force of law, and the FTC will move swiftly to impose penalties for violations of those orders.

 To remedy these allegations, the 2005 order prohibited San Juan from, among other things, entering into, maintaining, enforcing, or facilitating any agreement or understanding among any physicians: 1) to negotiate on behalf of any physician with any payor; 2) to deal, refuse to deal, or threaten to refuse to deal with any payor; 3) regarding any term upon which any physician deals with a payor, including price terms; and 4) not to deal individually with any payor or not to deal with a payor except through the independent physician association. The order also prohibited San Juan from attempting to engage in, or encouraging any person to engage in, any prohibited action.

The FTC alleges that San Juan violated the 2005 order by:

• negotiating or attempting to negotiate two price-related provisions with a payor;
• threatening to terminate a contract with a payor unless the payor agreed to speed up negotiations with providers who had made counter-offers; and
• encouraging member providers to deal with a payer only through San Juan.

Enforcement Action

The proposed order settling the FTC’s complaint for violation of the 2005 order requires San Juan to:

• Pay a $263,000 civil penalty;
• File a report within 30 days after the judgment is entered detailing how it will act as a messenger in the future for physicians in connection with negotiations with payors, without negotiating prices or price-related provisions of contracts with physicians;
• Provide the Commission with a copy of any new contract with a payor and describe how it complied with the order during the course of negotiations with the payor;
• For five years, retain records of all communications with any payor relating to contract negotiations;
• Distribute the judgment within 15 days to each of its members, and to each payor that has had a contract with San Juan since Jan. 1, 2018;
• For five years, send a copy of the complaint and judgment to each new payor whom San Juan executes a contract for the provision of physician services no later then five days before executing such a contract;
• At the written request of a payor, terminate any contract with the payor within 30 days after the payor receives a copy of the complaint and judgment; and
• Consent to the Commission reopening the 2005 order to modify and extend the termination date of the order to June 30, 2030.

The Commission votes authorizing the staff to file the civil penalty complaint and to approve the proposed judgment were both 5-0. Commissioners Noah Joshua Phillips and Christine S. Wilson issued a concurring statement. The FTC filed the complaint and proposed judgment in U.S. District Court for the District of Columbia.

NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest.