Texas Surgeons, P.A. - Decision & Order

UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

COMMISSIONERS:: Robert Pitofsky, Chairman; Sheila F. Anthony; Mozelle W. Thompson; Orson Swindle; Thomas B. Leary

In the Matter of

TEXAS SURGEONS, P.A.,
AUSTIN SURGICAL CLINIC ASSOCIATION, P.A.,
CENTRAL TEXAS SURGICAL ASSOCIATES, P.A., and
SURGICAL ASSOCIATES OF AUSTIN, P.A. professional associations, and
AUSTIN SURGEONS, P.L.L.C.,
BRUCE McDONALD & ASSOCIATES, P.L.L.C., and
CAPITAL SURGEONS GROUP, P.L.L.C., professional limited liability corporations.

Docket No.

DECISION AND ORDER

The Federal Trade Commission ("Commission") having initiated an investigation of certain acts and practices of Texas Surgeons, P.A. ("Texas Surgeons"), Austin Surgeons, P.L.L.C. ("AS"), Austin Surgical Clinic Association, P.A. ("ASCA"), Bruce McDonald & Associates, P.L.L.C. ("BM&A"), Capital Surgeons Group, P.L.L.C. ("CSG"), Central Texas Surgical Associates, P.A. ("CTSA"), and Surgical Associates of Austin, P.A. ("SAA"), hereinafter sometimes referred to as "respondents," and respondents having been furnished thereafter with a copy of a draft of Complaint that the Bureau of Competition presented to the Commission for its consideration and which, if issued by the Commission, would charge respondents with violation of Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45; and

Respondents, their attorneys, and counsel for the Commission having thereafter executed an Agreement Containing Consent Order ("Consent Agreement"), containing an admission by respondents of all the jurisdictional facts set forth in the aforesaid draft of Complaint, a statement that the signing of said Consent Agreement is for settlement purposes only and does not constitute an admission by respondents that the law has been violated as alleged in such complaint, or that the facts as alleged in such complaint, other than jurisdictional facts, are true, and waivers and other provisions as required by the Commission's Rules; and

The Commission having thereafter considered the matter and having determined that it had reason to believe that respondents have violated the said Act, and that a Complaint should issue stating its charges in that respect, and having accepted the executed Consent Agreement and placed such Consent Agreement on the public record for a period of thirty (30) days for the receipt and consideration of public comments, now in further conformity with the procedure described in Commission Rule 2.34, 16 C.F.R. § 2.34, the Commission hereby issues its complaint, makes the following jurisdictional findings and issues the following Order:

1. Respondent Texas Surgeons is a professional association organized, existing, and doing business under and by virtue of the laws of the State of Texas, with its office and principal place of business at 4007 Marathon Blvd., Austin, Texas 78756.
: 2. Respondent AS is a professional limited liability corporation organized, existing, and doing business under and by virtue of the laws of the State of Texas, with its office and principal place of business at 3901 Medical Parkway, #200, Austin, Texas 78756.
: 3. Respondent ASCA is a professional association organized, existing, and doing business under and by virtue of the laws of the State of Texas, with its office and principal place of business at 2911 Medical Arts Street, Austin, Texas 78705.
: 4. Respondent BM&A is a professional limited liability corporation organized, existing, and doing business under and by virtue of the laws of the State of Texas, with its office and principal place of business at 4007 Marathon Blvd., Austin, Texas 78756.
: 5. Respondent CSG is a professional limited liability corporation organized, existing, and doing business under and by virtue of the laws of the State of Texas, with its office and principal place of business at 3705 Medical Parkway, Austin, Texas 78705.
: 6. Respondent CTSA is a professional association organized, existing, and doing business under and by virtue of the laws of the State of Texas, with its office and principal place of business at 2300 Round Rock Avenue, Round Rock, Texas 78681.
: 7. Respondent SAA is a professional association organized, existing, and doing business under and by virtue of the laws of the State of Texas, with its office and principal place of business at 1015 East 32^nd Street, Austin, Texas 78705.
: 8. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of respondents, and the proceeding is in the public interest.

ORDER

IT IS ORDERED that, for the purposes of this Order, the following definitions shall apply:

A. "Respondent Texas Surgeons" means Texas Surgeons, P.A., its directors, officers, employees, agents, representatives, predecessors, successors, and assigns; its subsidiaries, divisions, groups, and affiliates controlled by Texas Surgeons, P.A., and the respective directors, officers, employees, agents, representatives, successors, and assigns of each.

B. "Respondent medical practice groups" means Austin Surgeons, P.L.L.C., Austin Surgical Clinic Association, P.A., Bruce McDonald & Associates, P.L.L.C., Capital Surgeons Group, P.L.L.C., Central Texas Surgical Associates, P.A., and Surgical Associates of Austin, P.A., each of their directors, officers, employees, agents, representatives, predecessors, successors, and assigns; the subsidiaries, divisions, groups, and affiliates controlled by each respondent medical practice group, and the respective directors, officers, employees, agents, representatives, successors, and assigns of each.

C. "Respondents" means respondent Texas Surgeons and respondent medical practice groups.

D. "Person" means both natural persons and artificial persons, including, but not limited to, corporations, unincorporated entities, and governments.

E. "Payer" means any person that purchases, reimburses for, otherwise pays for all or part of, or arranges for the payment of, any health care services for itself or for any other person. Payer includes, but is not limited to: any health insurance company; preferred provider organization; prepaid hospital, medical, or other health service plan; health maintenance organization; government health benefits program; employer or other person providing or administering self-insured health benefits programs; and patients who purchase health care for themselves.

F. "Physician" means a doctor of allopathic medicine (M.D.) or a doctor of osteopathic medicine (D.O.).

G. "Provider" means any person, including but not limited to any physician, hospital, or clinic, that supplies health care services to any other person.

H. "Qualified risk-sharing joint arrangement" means an arrangement to provide physician services in which: (1) all participating physicians share substantial financial risk from their participation in the arrangement and thereby create incentives for the participating physicians to jointly control costs and improve quality by managing the provision of physician services, such as risk sharing involving (a) the provision of physician services to payers or providers at a capitated rate, (b) the provision of physician services for a predetermined percentage of premium or revenue from payers or providers, (c) the use of significant financial incentives (e.g., substantial withholds) for its participating physicians, as a group, to achieve specified cost-containment goals, or (d) the provision of a complex or extended course of treatment that requires the substantial coordination of care by physicians in different specialties offering a complementary mix of services, for a fixed, predetermined payment, where the costs of that course of treatment for any individual patient can vary greatly due to the individual patient's condition, the choice, complexity, or length of treatment, or other factors; (2) any agreement concerning reimbursement or other terms or conditions of dealing entered into by or within the arrangement is reasonably necessary to obtain significant efficiencies through the joint arrangement; and (3) the arrangement does not restrict the ability, or facilitate the refusal, of physicians participating in the arrangement to deal with payers or providers on an individual basis or through any other arrangement.

I. "Qualified clinically-integrated joint arrangement" means an arrangement to provide physician services in which: (1) all participating physicians participate in active and ongoing programs of the arrangement to evaluate and modify the practice patterns of, and create a high degree of interdependence and cooperation among, the physicians participating in the arrangement, in order to control costs and ensure the quality of services provided through the arrangement; (2) any agreement concerning reimbursement or other terms or conditions of dealing entered into by or within the arrangement is reasonably necessary to obtain significant efficiencies through the joint arrangement; and (3) the arrangement does not restrict the ability, or facilitate the refusal, of physicians participating in the arrangement to deal with payers or providers on an individual basis or through any other arrangement.

J. "Reimbursement" means any payment, whether cash or non-cash, or other benefit received for the provision of physician services.

K. "Austin area physician" means any physician who has active staff privileges at one or more hospitals within any of the Texas counties of Travis, Williamson, Hays, Caldwell, and Bastrop.

II.

IT IS FURTHER ORDERED that each respondent, directly or indirectly, or through any corporate or other device, in connection with the provision of physician services in or affecting commerce, as "commerce" is defined in Section 4 of the Federal Trade Commission Act, 15 U.S.C. § 44, cease and desist from:

A. Entering into, adhering to, participating in, maintaining, organizing, implementing, enforcing, or otherwise facilitating any combination, conspiracy, agreement, or understanding:

1. To negotiate on behalf of any physicians with any payer or provider for physician services;

2. To deal, refuse to deal, or threaten to refuse to deal with, or boycott or threaten to boycott, any payer or provider;

3. Regarding any term, condition, or requirement upon which any physicians deal, or are willing to deal, with any payer or provider, including, but not limited to, terms of reimbursement;

4. To restrict the ability, or facilitate the refusal, of any physician to negotiate or deal with any payer or provider on an individual basis or through an arrangement not involving one or more respondents; or

5. To convey to any payer or provider through any Austin area physician any information (including, but not limited to, any actual or contemplated views, intentions, positions, terms, proposals, or decisions) on behalf of any physician concerning:

a. negotiation of any actual or proposed term, condition, or requirement of dealing with any payer or provider;

b. any actual or contemplated intention or decision with respect to:

(1) entering into, refusing to enter into, threatening to refuse to enter into, withdrawing from, or threatening to withdraw from any actual or proposed agreement with any payer or provider; or

(2) agreeing to, refusing to agree to, or willingness to agree to any actual or proposed term, condition, or requirement of dealing with any payer or provider.

B. Exchanging, transferring, or facilitating in any manner the exchange or transfer among any Austin area physicians of information (including, but not limited to, any views, intentions, positions, terms, proposals, or decisions) concerning:

1. negotiation with any payer or provider of actual or proposed terms, conditions, or requirements regarding reimbursement;

2. any Austin area physician's actual or contemplated intention or decision with respect to:

a. entering into, refusing to enter into, threatening to refuse to enter into, withdrawing from, or threatening to withdraw from any actual or proposed agreement with any payer or provider; or

b. agreeing to, refusing to agree to, or willingness to agree to any actual or proposed term, condition, or requirement of dealing with any payer or provider.

C. Encouraging, urging, suggesting, requesting, advising, pressuring, assisting, inducing, or attempting to induce any non-governmental person to engage in any action that would be prohibited if the person were subject to this Order.

PROVIDED that nothing in this Order shall prohibit any respondent medical practice group from participating in or furthering any arrangement to provide physician services that is limited to physicians who practice medicine within such respondent as a shareholder, owner, or employee.

PROVIDED FURTHER that nothing in this Order shall prohibit conduct that is approved and supervised by the State of Texas insofar as that conduct is protected from liability under the federal antitrust laws pursuant to the state action doctrine.

PROVIDED FURTHER that nothing in this Order shall prohibit any agreement involving, or conduct by, any respondent that is reasonably necessary to form, participate in, or take any other action in furtherance of a qualified risk-sharing joint arrangement or a qualified clinically-integrated joint arrangement, so long as the notification provisions contained in Paragraph V. of this Order have been satisfied.

III.

IT IS FURTHER ORDERED that:

A. Within thirty (30) days after the date on which this Order becomes final, respondent Texas Surgeons shall distribute by first-class mail a copy of this Order, the accompanying complaint, and the Notice in Attachment A to this Order, to:

1. Each payer or provider listed in Attachment B to this Order;

2. Each person who, at any time on or after January 1, 1996, has been an officer, director, manager, participating physician, shareholder, or owner of respondent Texas Surgeons;

3. Each other agent, representative, or employee of respondent Texas Surgeons.

B. Within thirty (30) days after the date on which this Order becomes final, each respondent medical practice group shall distribute by first-class mail a copy of this Order, the accompanying complaint, and the Notice in Attachment A to this Order, to:

1. Each officer, director, manager, participating physician, shareholder, or owner of such respondent who is not a shareholder of respondent Texas Surgeons;

2. Each other agent, representative, or employee of such respondent;

3. Each payer or provider not listed in Attachment B that, at any time from September 1, 1999 to December 31, 1999, has paid such respondent, or any participating physician of such respondent, for the provision of physician services under an executed contract.

C. For a period of five (5) years after the date this Order becomes final, respondent Texas Surgeons shall:

1. Within thirty (30) days of the date the person assumes such position, distribute by first-class mail a copy of this Order and the accompanying complaint to each new officer, director, manager, participating physician, shareholder, or owner of respondent Texas Surgeons, and to each other new agent, representative, or employee of respondent Texas Surgeons;

2. Annually publish, in an official annual report, newsletter, or memorandum sent to all shareholders, owners, and participating physicians, a copy of this Order and the accompanying complaint with such prominence as is given to official communications or regularly featured articles;

3. Annually brief shareholders, owners, and participating physicians on the meaning and requirements of this Order and the antitrust laws, including penalties for the violation of this Order.

D. For a period of five (5) years after the date this Order becomes final, each respondent medical practice group shall:

1. Within thirty (30) days of the date the person assumes such position, distribute by first-class mail a copy of this Order and the accompanying complaint to each new officer, director, manager, participating physician, shareholder, or owner of such respondent (unless such person is a shareholder of respondent Texas Surgeons), and to each other new agent, representative, or employee of such respondent;

2. Annually publish, in an official annual report, newsletter, or memorandum sent to all shareholders, owners, and participating physicians of such respondent, a copy of this Order and the accompanying complaint with such prominence as is given to official communications or regularly featured articles;

3. Annually brief shareholders, owners, and participating physicians of such respondent, who are not shareholders of respondent Texas Surgeons, on the meaning and requirements of this Order and the antitrust laws, including penalties for the violation of this Order.

IV.

IT IS FURTHER ORDERED that each respondent shall:

A. File a verified written report with the Commission within sixty (60) days after this Order becomes final, annually thereafter for five (5) years on the anniversary of the date the Order becomes final, and at such other times as the Commission may by written notice require, setting forth in detail the manner and form in which such respondent intends to comply, is complying, and has complied, with this Order. In addition to any other information that may be necessary to demonstrate compliance, respondent Texas Surgeons shall include in such reports information identifying each payer and provider that has communicated with respondent Texas Surgeons concerning a possible contract for physician services, the proposed terms and conditions of any such contract, and respondent Texas Surgeons' response to such payer or provider.

B. Notify the Commission at least thirty (30) days prior to any proposed change in such respondent, such as dissolution, assignment, sale resulting in the emergence of a successor, the creation or dissolution of subsidiaries, or any other change in respondent that may affect compliance obligations arising out of this Order.

IT IS FURTHER ORDERED that, for a period of ten (10) years after the date this Order is entered:

A. Each respondent shall notify the Commission in writing at least thirty (30) days prior to forming, participating in, or taking any action, other than planning, in furtherance of any:

1. Qualified risk-sharing joint arrangement or qualified clinically-integrated joint arrangement involving two (2) or more Austin area physicians; or

2. Other arrangement that, in dealing or negotiating with any payer or provider, is using, or intends to use, an agent that represents two (2) or more Austin area physicians.

B. If a representative of the Commission makes a written request for information within thirty (30) days after receipt of a notice pursuant to Paragraph V.A.1. of this Order, respondents shall not form, participate in, or take any action, other than planning, in furtherance of the arrangement until thirty (30) days after substantially complying with such request for information or such shorter waiting period as may be granted by letter from the Bureau of Competition.

PROVIDED that no prior notification is required under this Paragraph for action by a respondent medical practice group in furtherance of any arrangement that is limited to physicians who practice medicine within such respondent as a shareholder, owner, or employee.

VI.

IT IS FURTHER ORDERED that, for the purpose of determining or securing compliance with this Order, each respondent shall permit any duly authorized representative of the Commission:

A. Access, during office hours and in the presence of counsel, to inspect and copy all books, ledgers, accounts, correspondences, memoranda, calendars, and other records and documents in the possession or under the control of such respondent relating to any matter contained in this Order; and

B. Upon five (5) business days' notice, and without restraint or interference, to interview officers, directors, employees, agents, and other representatives of any respondent.

VII.

IT IS FURTHER ORDERED that this Order shall terminate twenty (20) years from the date this Order was issued by the Commission.

By the Commission.

Donald S. Clark
Secretary

SEAL

ISSUED: