Tarrant County Medical Society

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In THE MATTER OF TARRANT COUNTY MEDICAL SOCIETY CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-3219. Complaint, Nov. 2, 1987—Decision, Nov. 2, 1987 This consent order requires, among other things, the Tarrant County Medical Society, of Fort Worth, Texas, to agree not to restrict, regulate or declare unethical any doctor’s truthful advertising. Respondent also is required to provide, for 10 years, written notice to any doctor whose advertising it intends to challenge and allow that doctor a reasonable opportunity to respond. Appearances For the Commission: Roy Conn.

For the respondents: William B. Davis, Cantey, Hanger, Gooch, Munn, & Collins, Fort Worth, TX.

Complaint Pursuant to the provisions of the Federal Trade Commission Act, as amended (Title 15 U.S.C. 41 et seq.), and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that the named respondent has violated the provisions of Section 5 of the Federal Trade Commission Act and that a proceeding by it in respect thereof would be in the public interest, hereby issues this complaint, stating its charges as follows: PARAGRAPH 1. Respondent Tarrant County Medical Society is a corporation formed pursuant to the laws of the State of Texas, with its mailing address at 3855 Tulsa Way, Fort Worth, Texas. Par. 2. Respondent is a professional association formed to represent the interests of physicians who practice in Tarrant County, Texas. Respondent has approximately 1,300 members, constituting a substantial majority of the physicians in Tarrant County. Par. 3. Respondent is a component society of the Texas Medical Association, which in turn is a constituent society of the American Medical Association.

Par. 4. Members of respondent are engaged in the business of providing medical health care services for a fee. Except to the extent that competition has been restrained as herein alleged, members of re- Complaint 110 F.T.C.

spondent have been and are now in competition among themselves and with other physicians.

Par. 5. Respondent engages in substantial activities which further its members’ pecuniary interests. By virtue of its purposes and activities, respondent is a corporation within the meaning of Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C. 44. Par. 6. In the conduct of their business, members of respondent receive substantial sums of money, which flow across state lines, from the federal government and from private insurers for rendering medical services, and purchase equipment and supplies and prescribe medicines which are shipped in interstate commerce. The acts or practices described below are in interstate commerce, or affect the interstate activities of respondent’s members, third-parties who pay for medical services, other third parties, and some patients of respondent’s members, and are in or affect commerce within the meaning of Section 5(a)(1) of the Federal Trade Commission Act, 15 U.S.C. 45(a)(1).

Par. 7. Respondent has acted as a combination of at least some of its members or has conspired with at least some of its members to hinder, frustrate, or restrict competition among physicians in Tarrant County by restricting or attempting to restrict its members from disseminating information to consumers through truthful, non-deceptive advertising.

Par. 8. Respondent has engaged in various acts and practices in furtherance of this combination or conspiracy, including: A. Through its Board of Censors, restricting or attempting to restrict the amount, duration, and size of advertising announcements that members place in newspapers. For example, respondent distributed restrictions to members that limit advertising announcements in newspapers to ten days and one-column inch in size; and B. Through its Board of Censors, restricting or attempting to restrict the number of telephone directory listings its members place and the size of their print.

Par. 9. The purposes or effects of the combination or conspiracy and acts or practices of respondent as described above have been and are to unreasonably restrain competition and injure consumers in one or more of the following ways, among others:

A. Vigorous competition among physicians is impeded; B. Physicians are being deterred from advertising truthful information in the media about their prices, services, and qualifications; and C. Consumers are being deprived of receiving truthful information about physicians’ prices, services, and qualifications. Par. 10. The combination or conspiracy and the acts and practices TARRANT COUNTY MEDICAL SOCIETY 121 119 Decision and Order described above constitute unfair methods of competition and unfair acts or practices which violate Section 5 of the Federal Trade Commission Act, 15 U.S.C. 45. Such combination or conspiracy is continuing and will continue absent the entry against respondent of appropriate relief.

DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondent Tarrant County Medical Society (TCMS), and TCMS having been furnished thereafter with a copy of a draft of complaint which the Bureau of Competition proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondent with violation of the Federal Trade Commission Act; and TCMS, its duly authorized officer, its attorney, and counsel for the . Federal Trade Commission having thereafter executed an agreement containing a consent order, an admission by the respondent of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondent that the law has been violated as alleged in such complaint, 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 the respondent have violated the said Act, and that complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, now in further conformity with the procedures prescribed in Section 2.34 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order:

1. TCMS is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Texas, with its mailing address at 3855 Tulsa Way, Fort Worth, Texas. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent, and the proceeding is in the public interest.

Decision and Order 110 F.T.C.

ORDER I.

For purposes of this order, the following definitions shall apply: A. “TCMS” means respondent Tarrant County Medical Society, its officers, councils, committees, boards, representatives, agents, employees, successors, and assigns; and B. “Adverse action” means the revocation or suspension of, or refusal to grant, membership in TCMS, or the disciplining or penalizing of any physician.

II.

It is ordered, That TCMS, directly or indirectly, or through any device, shall forthwith cease and desist from: Restricting, regulating, declaring unethical, impeding, interfering with, or advising against the advertising or publishing by any person or organization of information about the prices, terms, or conditions of sale of physicians’ services, or of any information about physicians’ services, facilities, or equipment which are offered for sale or made available by physicians or by any organization with which physicians are affiliated, including but not limited to restricting or attempting to restrict the content, format, size, or frequency of any such advertisements or publications.

Nothing contained in this order shall prohibit TCMS from formulating, adopting, disseminating to its members, and enforcing reasonable ethical guidelines governing the conduct of its members with respect to representations, including unsubstantiated representations, that TCMS reasonably believes would be false or deceptive within the meaning of Section 5 of the Federal Trade Commission Act. Il.

It is further ordered, That TCMS shall cease and desist from: A. For a period of ten (10) years after service of this order, taking any adverse action against a person alleged to have violated any rule, policy, guideline, or ethical standard relating to physician advertising without first providing such person with written notice of the allegations against such person and without providing such person a reasonable opportunity to respond. The notice required by this part shall, at a minimum, clearly specify the rule, policy, guideline, or ethical stan- TARRANT COUNTY MEDICAL SOCIETY 123 119 Decision and Order dard alleged to have been violated, the specific conduct that is alleged to have violated the rule, policy, guideline, or ethical standard, and the reasons the conduct is alleged to have violated the rule, policy, guideline, or ethical standard; and B. Failing to maintain for five (5) years following the taking of any action referred to in this part of the order, in a separate file segregated by the name of any person against whom such action was taken, any document that embodies, discusses, mentions, refers, or relates to the action taken and any allegation relating to it. IV.

It is further ordered, That TCMS shall:

A. For a period of five (5) years, commencing on the date this order is served, provide each applicant for membership in TCMS with a copy of this order at the time the applicant applies for membership; B. Within sixty (60) days after service of this order, publish a copy of the complaint and this order in the Physician, or in any successor publication, with the same prominence as regularly published feature articles;

C. Within fifteen (15) days after service of this order, remove from TCMS’ documents entitled “Board of Censors Agenda for Meeting with Provisional Members” and “Board of Censors Meeting with Applicants for Membership,” and any other existing ethical or policy statement or guideline of TCMS, any provision, interpretation or statement which is inconsistent with Part II of this order, and within sixty (60) days after service of this order, publish, in the manner described in Part IV.B. of this order, a copy of the revised versions of such statements, guidelines, or interpretations to each of its members; D. Within sixty (60) days after service of this order, send to the Southwest Bell Telephone Company supervisor in charge of professional advertising a copy of this order and accompanying complaint; E. Within ninety (90) days after service of this order, and at any time the Commission, by written notice, may require, file with the Commission a report, in writing, setting forth in detail the manner and form in which TCMS has complied with this order; and F. For a period of five (5) years after service of this order, 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 Parts II and III of this order, including but not limited to any advice or interpretation rendered with respect to advertising involving any physician. Decision and Order 110. F.T.C.

V.

It is further ordered, That TCMS shall notify the Commission at least thirty (80) days prior to any proposed change in the respondent, such as dissolution or reorganization 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.

NEW MEDICAL TECHNIQUES, INC. 125 125 Complaint