FTC Settles Charges That Colorado Physicians Group Director Attempted to Evade Terms of 2008 Price-Fixing Order

The Federal Trade Commission settled charges that the executive director of a Colorado physicians’ association actively tried to evade the terms of a 2008 FTC order by telling insurers that because she was not named individually in the order, she could simply negotiate on behalf of competing physicians on the “outside” and “not with my [association] hat, but as an individual.” The Commission complaint and consent order settling the FTC’s charges name the executive director individually, and will prevent her from orchestrating or implementing price-fixing agreements among the group’s competing physicians.

In December 2008, as part of a consent order settling FTC antitrust charges, the Boulder Valley Individual Practice Association (BVIPA) agreed to stop fixing prices that its member physicians charge insurers for their services (see press release at: http://www.ftc.gov/opa/2008/12/allcare.shtm). That order named only BVIPA and not any individuals. According to the FTC, after it issued that 2008 order, the executive director, M. Catherine Higgins, attempted to evade its terms by telling insurers that she could continue negotiating on behalf of the association’s doctors individually, as long as it was not in her official capacity. Therefore, the FTC today issued a complaint naming Higgins, to prevent future antitrust violations.

In issuing the complaint and proposed consent order, the Commission stated, “When an employee of an association, especially a senior one like Ms. Higgins, tries to evade an order against the association by acting in her individual capacity, the Commission has little choice but to seek additional relief to protect competition and health care consumers.”

BVIPA is a network of about 365 physicians, competing independently or as members of small group practices. Physicians joining the association sign agreements authorizing it to contract on their behalf with health insurers and other third-party payers.

According to the complaint announced today, starting around 2001, Higgins negotiated contracts with numerous payers on behalf of association members. In 2004 Higgins told insurers
and other payers that she would pass along their offers to individual doctors, but she screened out fees that she thought were too low. Payers that refused to negotiate with Higgins or meet her demands were threatened with termination of their association contracts.

The complaint also alleges that Higgins told doctors not to contract directly with payers and that when payers offered contracts directly to individual physicians, many members refused and instead referred them to the association. Association doctors then were able to charge substantially higher fees than they could get by negotiating individually, the FTC contends.

The settlement announced today, along with the 2008 order against BVIPA, will prevent Higgins from continuing to arrange illegal price-fixing agreements among physicians in Boulder County both in her personal capacity and in her official capacity. It prohibits her from negotiating with insurers on behalf of doctors, with some limited exceptions.

The Commission vote to issue the administrative complaint and to place the consent order on the public record for comment was 3-1, with the majority Commissioners issuing a statement, and Commissioner J. Thomas Rosch issuing a separate dissenting statement, both of which can be found on the FTC’s Web site and as a link to this press release.

In his dissenting statement, Commissioner Rosch wrote that, “I am gravely concerned that the Commission’s abrupt decision to change its tune can be viewed as retaliation for Ms. Higgins’s decision to exercise her First Amendment rights when she publicly criticized the Commission’s initial decision against Boulder Valley and for her ensuing decision to meet individual Commissioners in an effort to persuade them not to pursue her separately.”

The FTC is accepting comments on the proposed consent order against Higgins for 30 days, until March 5, 2010, after which it will decide whether to make it final. Comments should be sent to: FTC Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, DC, 20580. Comments also can be submitted electronically at the following link: https://public.commentworks.com/ftc/BVIPAHiggins. The Commission has decided to defer final approval of the order against BVIPA until after the public comment period for the Higgins order has closed.

NOTE: The Commission issues a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of a complaint is not a finding or ruling that the respondent has violated the law. 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 up to $16,000.

Copies of the complaint and consent order are available now on the FTC’s Web site and as a link to this press release. The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust@ftc.gov, or write to the Office of Policy and Coordination, Room 383, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

(FTC File No. 051-0252)
(Boulder Valley.final.wpd)