Trauma Associates of North Broward, Inc., et al.; Proposed Consent Agreement With Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 921-0101]

Trauma Associates of North Broward, Inc., et al.; 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

require, among other things, Dr. Johnson, the president of a Florida

corporation, to dissolve Trauma Associates within 180 days after the

order becomes final, and would prohibit the ten surgeons from entering

into, organizing, or implementing any agreement to: refuse to provide

surgical services in connection with any effort to fix the level of

fees for such services; prevent the delivery of surgical services; or

deal on collectively determined terms with anyone who pays for health

services.

dates: Comments must be received on or before September 15, 1994.

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

Room 159, 6th St. and Pa. Ave., N.W., Washington, D.C. 20580.

for further information contact: Mark Horoschak or Markus Meier, FTC/S-

3115, Washington, D.C. 20580. (202) 326-2756 or 326-2781.

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 the 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)).

Trauma Associates of North Broward, Inc. a corporation, Richard A.

Johnson, M.D., individually and as President of said corporation,

and Carl Amko, M.D., Lucien Armand, M.D., Frantz Chery, M.D.,

William Cohen, M.D., Sergio Gallenero, M.D., Kwang-Jae Joh, M.D.,

J. R. Nabut, M.D., Aiden O'Rourke, M.D., Santiago Triana, M.D.,

individually; Agreement Containing Consent Order to Cease and

Desist

[File No. 921-0101]

The Federal Trade Commission having initiated an investigation of

certain acts and practices of the respondents named in the caption

hereof, hereinafter sometimes referred to as proposed respondents, and

it now appearing that the proposed respondents are 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 the proposed respondents and

counsel for the Federal Trade Commission that:

1. Proposed respondent Trauma Associates of North Broward, Inc., is

a corporation organized, existing, and doing business under and by

virtue of the laws of the State of Florida, with its office and

principal place of business located at 2170 Southeast 17th Street,

Suite 305, Fort Lauderdale, Florida 33316.

The proposed individual respondents, named in the caption above,

are general surgeons, licensed to practice medicine in the State of

Florida and are generally engaged in the business of providing surgical

services to patients for a fee in Broward County, Florida. Their

respective business addresses are:

Carl Amko, M.D., 412 Southeast 17th Street, Fort Lauderdale, Florida

33316;

Licien Armand, M.D., 4330 West Broward Boulevard, Suit 308, Plantation,

Florida 33324;

Frantz Chery, M.D., 4101 Northwest 4th Street, Suite 302, Plantation,

Florida 33317;

William Cohen, M.D., 8251 West Broward Boulevard, Suite H, Plantation,

Florida 33317;

Sergio Gallenero, M.D., 9750 Northwest 33rd Street, Coral Springs,

Florida 33065;

Kwang-Jae Joh, M.D., One West Sample Road, Suite 207, Pompano Beach,

Florida 33064;

Richard A. Johnson, M.D., 1625 Southeast 3rd Avenue, Suite 721, Fort

Lauderdale, Florida 33316;

J.R. Nabut, M.D., 1500 Hillsboro Boulevard, Suite 207, Deerfield Beach,

Florida 33441;

Aiden O'Rourke, M.D., 315 Southeast 13th Street, Fort Lauderdale,

Florida 33316;

Santiago Triana, M.D., Medical Building, 150 Northwest 70th Avenue,

Suite 7, Plantation, Florida 33317.

2. Proposed respondents admit all the jurisdictional facts set

forth in the draft of complaint here attached.

3. Proposed respondents waive: (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 with respect thereto will

be publicly released. The Commission thereafter may either withdraw its

acceptance of this agreement and so notify the proposed respondents, 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 respondents 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

respondents, (1) issue its complaint corresponding in form and

substance with the draft of 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 within 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 respondents' addresses as stated in this agreement shall

constitute service. Proposed respondents waive any right 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 respondents have read the proposed complaint and order

contemplated hereby. They understand that once the order has been

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

showing that they have fully complied with the order. Proposed

respondents further understand that they 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. ``Trauma Associates'' means Trauma Associates of North Broward,

Inc., a corporation organized, existing, and doing business under and

by virtue of the laws of the State of Florida, with its office and

principal place of business located at 2170 Southeast 17th Street,

Suite 305, Forth Lauderdale, Florida 33316, its Board of Directors,

committees, officers, members, representatives, agents, employees,

successors, and assigns.

B. ``Surgeon respondents'' means Carl Amko, M.D., Lucien Armand,

M.D., Frantz Chery, M.D., William Cohen, M.D., Sergio Gallenero, M.D.,

Kwang-Jae Joh, M.D., Richard A. Johnson, M.D., J.R. Nabut, M.D., Aiden

O'Rourke, M.D., and Santiago Triana, M.D., each of whom is a general

surgeon licensed to practice medicine in the State of Florida, and is

engaged in the business of providing surgical services to patients for

a fee in Broward County, Florida.

C. ``The District'' means the North Broward Hospital District, a

tax-supported hospital authority, with its principal offices located at

1625 Southeast Third Avenue, Fort Lauderdale, Florida 33316, its

subsidiaries, affiliates, commissioners, officers, administrators,

directors, committees, agents, employees, representatives, successors,

and assigns.

D. ``Broward General'' means the Broward General Medical Center,

one of the hospitals of the North Broward Hospital District, located at

1600 South Andrews Avenue, Fort Lauderdale, Florida 33316, its

subsidiaries, affiliates, officers, administrators, directors,

committees, agents, employees, representatives, successors, and

assigns.

E. ``North Broward'' means the North Broward Medical Center one of

the hospitals of the North Broward Hospital District, located at 201

Sample Road, Pompano Beach, Florida 33064, its subsidiaries,

affiliates, officers, administrators, directors, committees, agents,

employees, representatives, successors, and assigns.

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

provide health-care services in which physicians who would otherwise be

competitors pool their capital to finance the venture, by themselves or

together with others, and share a substantial risk of loss from their

participation in the venture.

II

It is further ordered that each surgeon respondent directly or

indirectly, or through any corporate or other device, in connection

with the provision of health-care services in or affecting commerce, as

``commerce'' is defined in Section 4 of the Federal Trade Commission

Act, 15 U.S.C. Sec. 44, forthwith cease and desist from entering into,

attempting to enter into, organizing or attempting to organize,

implementing or attempting to implement, or continuing or attempting to

continue any combination, agreement, or understanding, express or

implied, for the purpose or with the effect of:

A. Preventing the offering or delivery of surgical services by the

District, Broward General, North Broward, or any other provider of

health-care services, including, but not limited to, any agreement to

refuse to deal or threaten to refuse to deal with the District, Broward

General, North Broward, or any other provider of health-care services;

B. Dealing with the District, Broward General, North Broward, or

any other provider of health-care services on collectively determined

terms; or

C. Encouraging, advising, pressuring, inducing, or attempting to

induce any person to engage in any action prohibited by this order.

Provided that nothing in this order shall be construed to prohibit

any individual surgeon respondent from:

1. Entering into an agreement or combination with any other

physician with whom the surgeon respondent practices in partnership or

in a professional corporation, or who is employed by the same person as

the surgeon respondent, to deal with any third party on collectively

determined terms; or

2. Forming, facilitating the formation of, or participating in an

integrated joint venture and dealing with any third party on

collectively determined terms through the joint venture, as long as the

surgeons participating in the joint venture remain free to deal

individually with third parties.

III

It is further ordered that respondent Richard A. Johnson, M.D.,

shall:

A. Dissolve Trauma Associates within one hundred and eighty (180)

days after the date on which this order becomes final; and

B. file a verified written report demonstrating how he has complied

with Section III.A. above, within two hundred and ten (210) days after

the date on which this order becomes final.

IV

It is further ordered that respondent Trauma Associates shall:

A. Within thirty (30) days after the date on which this order

becomes final, and prior to the dissolution provided for in Section

III.A. above, distribute by first-class mail a copy of this order and

the accompanying complaint to each party with whom Trauma Associates

has entered into contract negotiations or finalized a contract

concerning the provision of trauma surgical services; and

B. Within sixty (60) days after the date on which this order

becomes final, and prior to the dissolution provided for in Section

III.A. above, file a verified written report demonstrating how it has

complied with Section IV.A. above.

V

It is further ordered that each surgeon respondent shall:

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

days after the date the order becomes final, and annually thereafter

for three (3) years on the anniversary of the date order became final,

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

require, setting forth in detail the manner and form in which the

surgeon respondent has complied and is complying with the order;

B. For a period of five (5) years after the date on which this

order becomes final, notify the Commission in writing within thirty

(30) days after the surgeon respondent forms or participates in the

formation of, or joins or participates in, any integrated joint

venture; and

C. For a period of five (5) years after the date on which this

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

for inspection and copying upon reasonable notice, records sufficient

to describe in detail any action taken in connection with the

activities covered by this order.

Trauma Associates of North Broward, Inc., et al. Analysis of

Proposed Consent Order To Aid Public Comment

The Federal Trade Commission has accepted, subject to final

approval, an agreement to a proposed consent order from Trauma

Associates of North Broward, Inc. (``Trauma Associates''), and ten

surgeons in Broward County, Florida (``surgeon respondents''). The

agreement would settle charges by the Federal Trade Commission that

Trauma Associates and the surgeon respondents violated Section 5 of the

Federal Trade Commission Act by, among other things, combining or

conspiring to (1) Fix or increase the fees received by the surgeon

respondents for the provision of trauma services and (2) threaten and

carry out a concerted refusal to deal.

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 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 the North Broward Hospital District

(``the District''), a hospital authority in Broward County, Florida,

resolved in March, 1992, to seek a state license to operate trauma

centers at two District hospitals. According to the complaint, the

surgeon respondents, who compete among themselves and with other

general surgeons in Broward County, signed individual statements

committing themselves to participate in the District's trauma program.

The complaint further alleges that the surgeon respondents, who

have not integrated their practices, refused to contract with the

District individually, and agreed on price proposals prior to

submitting them to the District. On May 1, 1992, the surgeon

respondents began providing trauma services to the District, and

several days later Dr. Richard A. Johnson, the surgeon respondents'

leader, signed a letter of intent with the District outlining the terms

under which the surgeon respondents would provide services at the

District's trauma centers. Dr. Johnson also reached an understanding

with the District on the prices to be paid for the surgeon respondents'

services.

The complaint alleges that Dr. Johnson incorporated Trauma

Associates on May 7, 1992, and is its sole owner. Trauma Associates

served as the vehicle for the surgeon respondents to engage in

collective negotiations on fees and other contract terms to be sought

from the District.

The complaint alleges that in July 1992, the District decided not

to contract with the surgeon respondents as a group, and that in

response the surgeon respondents: (1) refused to deal with the District

individually; (2) sent the District a letter with a list of demands,

including price terms; (3) threatened to cease providing services at

the District's trauma centers if their demands were not met; and (4)

walked out of the District's trauma centers. As a direct result of the

walkout, one of the two trauma centers had to be shut down, and the

other was adversely affected.

The complaint alleges that the above actions of the proposed

respondents have had the purpose or effect in Broward County, Florida,

of:

(1) Restraining competition among general surgeons;

(2) Fixing or increasing the prices that are paid to general

surgeons who provide trauma services;

(3) Raising the cost, lowering the quality, and reducing access to

and the quality-adjusted output of the District's trauma services; and

(4) Depriving the District and its patients of the benefits of

competition among general surgeons.

Finally, the complaint alleges that the above actions of the

proposed respondents 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 the surgeon respondents

from entering into, organizing, or implementing, any agreement to:

(1) Refuse to provide surgical services in connection with any

effort to fix the level of fees for such services;

(2) Prevent the offering or delivery of surgical services;

(3) Deal on collectively determined terms with anyone who pays for

health services; and

(4) Encourage any person to engage in any action prohibited by the

order.

The order provides that it does not prevent the following:

(1) Surgeon respondents who practice together as partners or

employees in the same professional corporation or partnership dealing

with any third party on collectively determined terms; or

(2) Surgeon respondents who participate in the same integrated

joint venture dealing with others on collectively determined terms

through the joint venture, so long as they remain free to deal

individually with others that decline to deal with the joint venture.

(The consent order defines ``integrated joint venture'' as a joint

arrangement to provide health care services in which surgeons

participating in the venture who would otherwise be competitors pool

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

others, and share a substantial risk of loss from their participation

in the venture.)

The proposed order would require respondent surgeon Richard A.

Johnson, M.D., to dissolve Trauma Associates within 180 days after the

order becomes final. Furthermore, before such dissolution takes place,

the order would require Trauma Associates to distribute copies of the

complaint and order to each person with whom it has entered into

contract negotiations concerning the provision of trauma surgical

services.

The order also requires the proposed surgeon respondents to file

compliance reports with the Commission, notify the Commission if they

form or participate in the formation of an integrated joint venture,

and maintain certain files relating to their compliance with the order.

The proposed respondents agreed to the order for settlement

purposes only, and their agreement to the order does not constitute an

admission by them that the law has been violated as alleged in the

complaint.

C. Landis Plummer,

Acting Secretary.

[FR Doc. 94-20021 Filed 8-15-94; 8:45 am]

BILLING CODE 6750-01-M