Puerto Rico Dental Association Agrees to Settle FTC Charges of Price Fixing, Boycotting Providers, and Restraining Truthful Advertising by Members

The Colegio de Cirujanos Dentistas de Puerto Rico ("Colegio"), an association of approximately 1800 dentists licensed to practice dentistry in Puerto Rico, has agreed to settle Federal Trade Commission charges that it restrained competition among dentists in Puerto Rico by fixing the terms under which individual dentists would deal with health insurers and other payers of health care services, orchestrating or threatening boycotts of payers by its members to obtain higher reimbursement, and preventing or discouraging truthful, nondeceptive advertising by members. The proposed settlement of the charges would prohibit the Colegio from continuing the illegal conduct alleged in the complaint.

The FTC's complaint alleges that the Colegio, with a membership that includes almost all dentists practicing in Puerto Rico, acted as the collective bargaining agent for its members. Through its Committee on Prepaid Dental Services, and in other ways, the Colegio engaged in negotiations with numerous payers about fees and other terms its members would accept from these payers.

According to the proposed complaint, the Colegio promulgated an ethical rule that bars dentists from contracting with any health insurance plan ("plan") that is not endorsed or approved by the Colegio. The complaint also alleges that the Colegio refused to approve plans unless they reimbursed dentists on a fee-for-service basis; were open to participation by all dentists; and were "responsive" to raising fees at the Colegio's request.

The complaint alleges that the Colegio set the prices and other terms under which its member dentists would deal with plans for many years, both before and after Puerto Rico's adoption of the "Reform," a program to provide medical, pharmaceutical, and dental services to the indigent established pursuant to the Puerto Rico Health Insurance Administration Act. For example, outside of the Reform, from 1992 through 1994, the Colegio successfully negotiated on behalf of its members to obtain fee increases from the two largest payers for dental coverage in Puerto Rico, Triple S and La Cruz Azul. Subsequently, under the Reform, the Colegio successfully limited payers from discounting the fees of dentists, blocked payers from implementing new health care delivery systems, and achieved some increases in fees paid to dentists.

The complaint also alleges that the Colegio has acted to prevent certain forms of truthful, nondeceptive advertising. Its Code of Ethics bans advertising that is not "professionally acceptable," use of most illustrations, advertisements deemed not in good taste, and all personal solicitations.

The complaint further alleges that the Colegio applied its Code of Ethics to ban advertising by dentists who truthfully advertised their willingness to accept Reform patients from neighboring areas where dentists were conducting a boycott of the Reform.

According to the FTC, the Colegio has not integrated the practices of its members in any economically significant way, nor has it created any efficiencies that might justify the acts alleged in the complaint. The complaint charges that conduct by the Colegio has restrained competition among dentists and injured consumers in a number of ways, such as:

• fixing or increasing the prices for dental services;
• fixing the terms and conditions upon which dentists would deal with payers (thereby raising the price to consumers of insurance coverage);
• raising prices paid by, and delaying the offer of dental services under, the Reform; and
• depriving consumers of truthful information about dental services.

Under the proposed settlement, the Colegio would be prohibited from:

• negotiating on behalf of any dentists with any payer or provider;
• refusing to deal, boycotting, or threatening to boycott any payer or provider;
• determining any terms, conditions, or requirements upon which dentists will deal with any provider, including terms of reimbursement, and whether the plan is open to participation by all Colegio members; and
• restricting or interfering with truthful advertising or solicitation concerning dental services.

Further, the Colegio would be prohibited from communicating to any payer or provider any term, condition, or requirement on which Colegio members are willing or unwilling to deal with a payer or provider, and from communicating with any member concerning the desirability or appropriateness of any term or condition of a payer relating to dental services, or whether the plan is open to participation by all Colegio members. The Colegio cannot facilitate in any manner, or transfer the exchange of, information concerning dentists' intentions to contract with any payer, or under what terms.

The proposed order does not prohibit the Colegio from engaging in activities encompassed in safety zones recognized by the DOJ/FTC Statements of Enforcement Policy in Health Care, or from communicating with payers about other matters, unless the communication is part of an agreement or course of conduct specifically prohibited by the order.

In addition, the proposed order would not restrict the right of the Colegio to provide government bodies with information and opinions in an effort to influence legislation or regulatory action. A proviso states explicitly that the order does not prohibit the Colegio from petitioning any federal, state, or Commonwealth government executive agency or legislative body concerning legislation, rules, or procedures, or from participating in any federal, state, or Commonwealth administrative or judicial proceeding, in so far as such activity is protected under doctrine recognized by the United States Supreme Court.

The proposed settlement would also prohibit the Colegio from restricting truthful advertising of dental services or solicitation of patients. The Colegio, however, can formulate, adopt, disseminate, and enforce reasonable ethical guidelines governing the conduct of its members with respect to representations that respondent reasonably believes would be false or deceptive within the meaning of Section 5 of the Federal Trade Commission Act.

The proposed settlement also contains a number of record keeping and reporting requirements to assist the Commission in monitoring compliance with the proposed order.

The Commission vote to place the proposed settlement on the public record for comment was 5-0.

An announcement regarding the proposed consent agreement will be published 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, 600 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, proposed settlement and an analysis of the agreement to aid in 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, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; toll-free: 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC Matter No.: 971 0038)