American Medical Association

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IN THE MA'IER OF THE AMERICAN MEDICAL ASSOCIATION, ET AL.

MODIFYING ORDER IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Doket 9064. Final Order, Oct. 1979-Modifying Order, May, 1982 The Fr, in accordance with a decision and judgment rendered by the Court of Appeals for the Second Circuit on October 7, 1980, has modified its Final Order In the Matter of The American Medical Association, et a1. issued on October 12, 1979 (94 F. C. 701). The modified order, effective May 19, 1982 narrows the scope of the order so as not to encroach upon the valid activities of the AMA.

MODIFIED ORDER TO CEASE AND DESIST Respondents having fied in the United States Court of Appeals for the Second Circuit a petition for review of the Commission s cease and desist order issued herein on October 12, 1979; and the Court having rendered its decision and judgment on October 7, 1980 affrming and enforcing the Commission s order with modification of Part I and II; and the Supreme Court of the United States having affirmed by an equally divided court the judgment of the court of appeals on March 23, 1982, and having denied a petition for rehearing on May 3, 1982:

Now, therefore, it is hereby ordered That the aforesaid order to cease and desist be, and it hereby is, modified in accordance with the decision and judgment of the Court of Appeals to read as follows: ORDER It is ordered That respondent American Medical Association, and its delegates, trustees, councils, committees, officers, representatives agents, employees, successors and assigns, directly or indirectly, or through any corporate or other device, in or in connection with respondent' s activities as a professional association in or affecting commerce, as ucommerce" is defined in the Federal Trade Commissian Act, do forthwith cease and desist ' from: A. Restricting, regulating, impeding, declaring unethical, interfering with, or advising against the advertising or publishing by any person of the prices, terms or conditions of sale of physicians services, or of information about physicians' services, facilities or 440 Modifying Order equipment which are offered for sale or made available by physicians or by any organization with which physicians are affiiated; B. Restricting, regulating, impeding, declaring unethical, interfering with, or advising against the solicitation, through advertising or by any other means, including but not limited to hidding practices, of patients, patronage, or contracts to supply physicians' servces, by any physician or by any organization with which physicians are affliated; and C. Inducing, urging, encouraging, or assisting any physician, or any medical association, group of physicians, hospital, insurance carrier or any other non-governmental organization to take any of the actions prohibited by this Part.

Nothing contained in this Part shall prohibit respondent from formulating, adopting, disseminating to its constituent and component medical organizations and to its members, and enforcing reasonable ethical guidelines governing the conduct of its members with respect to representations, including unsubstantiated representations, that respondent reasonably believes would be false or deceptive within the meaning of Section 5 of the Federal Trade Commission Act, or with respect to uninvited, in-person solicitation of actual or potential patients, who, because of their particular circumstances, are vulnerable to undue influence. II.

It is further ordered That respondent American Medical Association, and its delegates, trustees, councils, committees, officers representatives, agents, employees, successors and assigns, directly or indirectly, or through any corporate or other device, in or in connection with respondent's activities as a professional association in or affecting commerce, as !!commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from: A. Restricting, regulating, impeding, advising on the ethical propriety of, or interfering with the consideration offered or provided to any physician in any contract with any entity that offers physicians' services to the public, in return for the sale, purchase or distribution of his or her professional services, except for professional peer review of fee practices of physicians; B. Restricting, interfering with, or impeding the growth, development or operations of any entity that offers physicians' services to the public, by means of any statement or other representation concerning the ethical propriety of medical service arrangements that limit the patient's choice of a physician; Modifying Order 99 F.

C. Restricitng, interfering with, or impeding the growth, development or operations of any entity that offers physicians' services to the public, by means of any statement or other representation concerning the ethical propriety of participation by non-physicians in the ownership or management of said organization; and D. Inducing, urging, encouraging, or assisting any physician, or any medical association, group of physicians, hospital, insurance carrier or any other non-governmental organization to take any of the actions prohibited by this Part.

III.

It is further ordered That respondent American Medical Association cease and desist from taking any formal action against a person alleged to have violated any ethical standard promulgated in conformity with this Order without first providing such person with: Reasonable written notice of the allegations against him or her;

B. A hearing wherein such person or a person retained by him or her may seek to rebut such allegations; and C. The written findings or conclusions of respondent with respect to such allegations.

IV.

It is further ordered That respondent American Medical Associa- . tion:

A. Send by first class mail a copy of a letter in the form shown in Appendix A to this Order to each ofits present members and to each constituent and component organization of respondent, within sixty (60) days after this Order becomes final.

B. For a period of ten years, provide each new member of respondent and each constituent and component organization of respondent with a copy of this Order at the time the member is accepted into membership.

C. Within ninety (90) days after this Order becomes final, remove from respondent American Medical Association Principles of Medical Ethics and the Judicial Council's Opinions and Reports, and from the constitution and bylaws and any other existing policy statement or guideline of respondent, any provision, interpretation or policy statement which is inconsistent with the provisions of Part I and II of this Order and, within one hundred and twenty (120) days 440 Modifying Order after this Order becomes final, publish in the Journal of the American Medical Association and in American Medical News the revised versions of such documents, statements, or guidelines. D. Require as a condition of affiiation with respondent that any constituent or component organization agree by action taken by the constituent or component organization s governing body to adhere to the provisions of Part I, II, and III of this Order. E. Terminate for a period of one year their affiiation with any constituent or component organization within one hundred and twenty (120) days after learning or having reason to believe that said constituent or component organization has engaged, after the date this Order becomes final, in any act or practice that if committed by respondent would be prohibited by Part I, II, or III of this Order. It is further ordered That respondent American Medical Association:

A. Within sixty (60) days after the Order becomes final publish a copy of this Order with such prominence as feature articles are regularly published in the Journal of the American Medical Association and in American Medical News or in any successor publications. B. Within one hundred and twenty (120) days after this Order becomes final, fie a written report with the Federal Trade Commission setting forth in detail the manner and form in which it has complied with this Order.

C. For a period of five (5) years after this Order becomes final maintain and make available to the 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 Part I and II of this Order, including but not limited to any advice or interpretations rendered with respect to advertising, solicitation or contract practice involving any of its members. D. Within one year after this Order becomes final, and annually thereafter, for a period of five (5) years, fie a written report with the Federal Trade Commission setting forth in detail any action taken in connection with the activities covered by Part I and II of this Order including but not limited to any advice or interpretations rendered with respect to advertising, solicitation or contract practice involving any of its members.

Modifying Order 99 F.

VI.

It is further ordered That respondent American Medical Association shall notify the Commission at least thirty (30) days prior to any proposed change in the respondent, such as dissoluton, assignment or sale resulting in the emergence of a successor corporation or association, or any other change in the corporation or association which may affect compliance obligations arising out of this Order. Appendix A Dear Doctor:

As you know, the Federal Trade Commission issued a complaint against the AMA on December 19, 1975, challenging the AMA's ethical restrictions on the advertising, solicitation, and contractual practices of its members. The complaint also named the Connecticut State Medical Society and the New Haven County Medical Association Inc., as respondents.

In an opinion issued on linsert issue date). the ITC held that the AMA, the two Connecticut medical societies, and other state and local medical associations have unlawfully restricted the advertising, solicitation, and contractual practices of their members in violation of Section 5 of the Federal Trade Commission Act. In conjunction with that opinion, the Commission issued an order which has not become final. This order is printed in the finsert issue date) issue of the Journal of the American Medical Association, the (insert issue date) issue of American Medical News and may be obtained from the AMA headquarters or from your state or local medical society.

Among other things, the order forbids any action by AMA that would: Restrict its members' solicitation of patients by advertising, submission of bids, or other means.

Interfere with either the amount or the form of compensation provided a member in exchange for his or her professional services, in contracts with entities offering physician services to the public.

-Characterize as unethical the use of closed panel or other health care delivery plans that limit the patient' s choice of a physician. -Characterize as unethical the participation of non-physicians in the ownership or management of health care organizations that provide physician services to the public.

However, the order does not prohibit the AMA from formulating and enforcing reasonable ethical guidelines governing deceptive advertising and solicitation (including unsubstantiated representations). The AMA may also issue guidelines concerning uninvited, in-person solicitation of patients who, because of their particular circumstances, are vulnerable to undue influence. Finally, the order requires the AMA to amend the Principles of Medical Ethics and 440 Modifying Order the Judicial Council' Opinions and Reports and to sever all ties for one year with any state or local medical society that engages in conduct of the type prohibited under the order.

Thank you for your cooperation.

Sincerely, President Complaint 99 F.