McLean County Chiropractic Association; Proposed Consent Agreement With Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 911 0121]

McLean County Chiropractic Association; Proposed Consent

Agreement With Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: In settlement of alleged violations of federal law prohibiting

unfair acts and practices and unfair methods of competition, this

consent agreement, accepted subject to final Commission approval, would

prohibit, among other things, an association of Illinois chiropractors

from agreeing to set fees for patients, or terms for third-party payor

contracts, and would require the association to give members copies of

the settlement.

DATES: Comments must be received on or before March 21, 1994.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,

room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:Mark Horoschak, FTC/S-3115, Washington,

DC 20580. (202) 326-2756.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 2.34 of the

Commission's Rules of Practice (16 CFR 2.34), notice is hereby given

that the following consent agreement containing a consent order to

cease and desist, having been filed with and accepted, subject to final

approval, by the Commission, has been placed on this public record for

a period of sixty (60) days. Public comment is invited. Such comments

or views will be considered by the Commission and will be available for

inspection and copying at its principal office in accordance with

Sec. 4.9(b)(6)(ii) of the Commission's Rules of Practice (16 CFR

4.9(b)(6)(ii)).

Agreement Containing Consent Order To Cease and Desist

In the matter of McLean County Chiropractic Association, an

unincorporated association.

The Federal Trade Commission having initiated an investigation of

certain acts and practices of proposed respondent named in the caption

hereof, and it now appearing that proposed respondent is willing to

enter into an agreement containing an order to cease and desist from

the use of the acts and practices being investigated,

It is hereby agreed by and between proposed respondent and their

attorney, and counsel for the Federal Trade Commission that:

1. Proposed respondent is an unincorporated association, with its

principal offices and places of business in McLean County, Illinois.

For purposes of this agreement and order, its address is as follows:

McLean County Chiropractic Association, c/o George R. Flynn, Esq., P.O.

Box 3574, Bloomington, IL 61702-3574.

2. Proposed respondent admits all the jurisdictional facts set

forth in the draft of complaint here attached.

3. Proposed respondent waives:

(a) Any further procedural steps;

(b) The requirement that the Commission's decision contain a

statement of findings of fact and conclusions of law;

(c) All rights to seek judicial review or otherwise to challenge or

contest the validity of the order entered pursuant to this agreement;

and

(d) Any claim under the Equal Access to Justice Act.

4. This agreement shall not become part of the public record of the

proceeding unless and until it is accepted by the Commission. If this

agreement is accepted by the Commission it, together with the draft of

complaint contemplated thereby, will be placed on the public record for

a period of sixty (60) days and information in respect thereto publicly

released. The Commission thereafter may either withdraw its acceptance

of this agreement and so notify proposed respondent, in which event it

will take such action as it may consider appropriate, or issue and

serve its complaint (in such form as the circumstances may require) and

decision, in disposition of the proceeding.

5. This agreement is for settlement purposes only and does not

constitute an admission by proposed respondent that the law has been

violated as alleged in the draft of complaint here attached.

6. This agreement contemplates that, if it is accepted by the

Commission, and if such acceptance is not subsequently withdrawn by the

Commission pursuant to the provisions of Sec. 2.34 of the Commission's

Rules, the Commission may, without further notice to proposed

respondent, (1) issue its complaint corresponding in form and substance

with the draft complaint here attached and its decision containing the

following order to cease and desist in disposition of the proceeding

and (2) make information public in respect thereto. When so entered,

the order to cease and desist shall have the same force and effect and

may be altered, modified or set aside in the same manner and with the

same time provided by statute for other orders. The order shall become

final upon service. Delivery by the U.S. Postal Service of the

complaint and decision containing the agreed-to order to proposed

respondent's addresses as stated in this agreement shall constitute

service. Proposed respondent waives any right it may have to any other

manner of service. The complaint may be used in construing the terms of

the order, and no agreement, understanding, representation, or

interpretation not contained in the order or the agreement may be used

to vary or contradict the terms of the order.

7. Proposed respondent has read the proposed complaint and order

contemplated hereby. It understands that once the order has been

issued, it will be required to file one or more compliance reports

showing that it has fully complied with the order. Proposed respondent

further understands that it may be liable for civil penalties in the

amount provided by law for each violation of the order after the order

becomes final.

Order

I

It is ordered, That for purposes of this order, the following

definitions shall apply:

A. ``Respondent MCCA'' means McLean County Chiropractic Association

and its Board of Directors, committees, officers, representatives,

agents, employees, successors, and assigns.

B. ``Payor'' means any person that purchases, reimburses for, or

otherwise pays for health care services for themselves or for any other

person--including, but not limited to, health insurance companies;

preferred provider organizations; prepaid hospital, medical, or other

health service plans; health maintenance organizations; government

health benefits programs; employers or other persons providing or

administering self-insured health benefits programs; and patients who

purchase health care for themselves.

C. ``Integrated joint venture'' means a joint arrangement to

provide health care services in which all chiropractors participating

in the venture who would otherwise be competitors (1) pool their

capital to finance the venture, by themselves or together with others,

and (2) share a substantial risk of loss from their participation in

the venture.

D. ``Case fee'' means the aggregate total of all fees charged to a

patient for the full course of treatment for a medical condition or

combination of medical conditions. ``Case fee'' does not mean a fee

charged for a particular product or service.

II

It is further ordered, That respondent MCCA directly or indirectly,

or through any device, in connection with activities in or affecting

commerce, as ``commerce'' is defined in the Federal Trade Commission

Act, as amended, do forthwith cease and desist from:

A. Entering into, attempting to enter into, organizing, continuing,

or acting in furtherance of any agreement or combination, express or

implied, with any chiropractors or among any chiropractors, to discuss

or collectively determine the fees which chiropractors charge to

payors; and

B. Entering into, attempting to enter into, organizing, continuing,

or acting in furtherance of any agreement or combination, express or

implied, with any chiropractors or among any chiropractors, to deal

with payors on collectively determined terms.

Provided, That, nothing in this order shall prevent chiropractors

who practice together as partners or employees in the same professional

corporation or partnership from collectively determining the fees to be

charged for services provided by that professional corporation or

partnership or from collectively determining other terms on which that

professional corporation or partnership deals with payors.

Further provided, That, nothing in this order shall prevent

chiropractors who participate in the same integrated joint venture from

collectively determining the fees to be charged for services provided

by that integrated joint venture or from collectively determining other

terms on which that integrated joint venture deals with payors.

Further provided, That, nothing in this order shall prevent

respondent MCCA from collecting historical data concerning case fees

for the purpose of providing such data to payors.

III

It is further ordered, That respondent MCCA:

A. File a written report with the Commission within ninety (90)

days after the date when the order becomes final, and annually for

three (3) years on the anniversary of the date when the order becomes

final, and at such other times as the Commission may by written notice

to respondent MCCA require, setting forth in detail the manner and form

in which it has complied and is complying with the order.

B. For a period of five (5) years after the date when the order

becomes final, maintain and make available to Commission staff, for

inspection and copying upon reasonable notice, records adequate to

describe in detail any action taken in connection with the activities

covered by Parts II and III of this order, including, but not limited

to, all documents generated by respondent MCCA or that come into its

possession, custody, or control, regardless of source, that discuss,

refer, or relate to any fee, term, or condition of any agreement,

actual or proposed, with any payor.

C. Distribute by first-class mail a copy of this order to each of

its members within thirty (30) days after the date when the order

becomes final.

D. For a period of five (5) years after the date when the order

becomes final, provide each new MCCA member with a copy of this order

at the time the member is accepted into membership.

E. Notify the Commission, at least thirty (30) days prior to any

proposed change to respondent MCCA which may affect compliance with

this order--including, but not limited to, dissolution or the emergence

of a successor.

McLean County Chiropractic Association Analysis of Proposed Consent

Order To Aid Public Comment

The Federal Trade Commission has accepted, subject to final

approval, the agreement to a proposed consent order from McLean County

Chiropractic Association (``MCCA''). The agreement settles charges by

the Federal Trade Commission that MCCA restrained competition by, among

other things, combining or conspiring both (1) To fix the maximum fees

charged by MCCA members and (2) to negotiate the terms and conditions

of agreements between MCCA members and third-party payors.

The proposed consent order has been placed on the public record for

sixty (60) days for reception of comments by interested persons.

Comments received during this period will become part of the public

record. After sixty (60) days, the Commission will again review the

agreement and the comments received and will decide whether it should

withdraw from the agreement or make final the agreement's proposed

order.

The purpose of this analysis is to facilitate public comment on the

agreement. The analysis is not intended to constitute an official

interpretation of either the proposed complaint or the proposed consent

order or to modify their terms in any way.

The Complaint

Under the terms of the agreement, a proposed complaint would be

issued by the Commission along with the proposed consent order. The

proposed complaint alleges that MCCA has thirteen members, of whom all

are chiropractors with offices in McLean County, Illinois. MCCA's

members compete among themselves and with other chiropractors to offer

chiropractic services in and around McLean County.

The complaint further alleges that MCCA acted as a combination of

its members, conspired with at least some of its members, and acted to

implement an agreement among its members to restrain competition among

chiropractors in McLean County, Illinois, and its vicinity. Such

actions included facilitating, entering into, and implementing an

agreement under which

A. MCCA would set the maximum fees to be charged by MCCA members;

and

B. MCCA would negotiate agreements between its members and third-

party payors, including the fees to be paid to MCCA members under such

agreements.

In furtherance of this combination or conspiracy, MCCA periodically

voted to raise such limits on maximum fees, and attempted to negotiate

such agreements between its members and third-party payors.

The complaint alleges that the above actions of MCCA had, or had

the tendency and capacity to have, the following effects:

A. Restraining competition among chiropractors in McLean County,

Illinois, and its vicinity;

B. Fixing or affecting the fees that chiropractors in McLean

County, Illinois, and its vicinity charge for their services; and

C. Depriving consumers of chiropractic services and third-party

payors of the benefits of competition among chiropractors in McLean

County, Illinois, and its vicinity.

Finally, the complaint alleges that the above actions of MCCA

constitute unfair methods of competition in violation of Section 5 of

the Federal Trade Commission Act, 15 U.S.C. 45.

The Proposed Consent Order

The proposed consent order would prohibit MCCA from entering into,

organizing, or acting in furtherance of, any agreement or combination

with or among chiropractors.

A. To discuss or set the fees to be charged by chiropractors, or

B. To deal on collectively determined terms with anyone who pays

for health services,

The order specifically provides that it does not prevent the

following:

1. Chiropractors who practice together as partners or employees in

the same professional corporation or partnership collectively

determining the fees to be charged by that professional corporation or

partnership.

2. Chiropractors who participate in the same integrated joint

venture collectively determining the fees to be charged by that

integrated joint venture. (For purposes of the consent order,

``integrated joint venture'' means a joint arrangement to provide

health care services in which all chiropractors participating in the

venture would otherwise be competitors (1) pool their capital to

finance the venture, by themselves or together with others, and (2)

share a substantial risk of loss from their participation in the

venture.)

3. The collection of historical data concerning case fees for the

purpose of providing such data to those who pay for health services.

(For purposes of the consent order, ``case fee'' means the aggregate

total of all fees charged to a patient for the full course of treatment

for a medical condition or combination of medical conditions, and does

not mean a fee charged for a particular product or service.)

The order would require MCCA to distribute copies of the order to

its members and, for five years, to its new members when they join

MCCA.

The order also requires MCCA to (1) file compliance reports with

the Commission, (2) maintain certain files relating to MCCA's

compliance with the order, and (3) notify the Commission of any

proposed change in MCCA that may affect MCCA's compliance with the

order.

MCCA agreed to the order for settlement purposes only, and MCCA's

agreement to the order does not constitute an admission by MCCA that

the law has been violated as alleged in the complaint.

Donald S. Clark,

Secretary.

[FR Doc. 94-1372 Filed 1-19-94; 8:45 am]

BILLING CODE 6750-01-M