La Asociacion Medica the Puerto Rico

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IN THE MA ITER OF LA ASOCIACION MEDICA DE PUERTO RICO, ET AL. CONSENT ORDER, ETe., IN REGARD TO ALLEGED VIOLA non OF SEe. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C- 3583. Complaint, June 1995-- Decision, June, 1995 This consent order prohibits, among other things, the Medical Association, the Physiatry Section, and the two doctors from encouraging, organizing or entering into: any boycott or refusal to deal with any third- pary payer; or any agreement to refuse to provide services to patients covered by any third-pary payer. In addition, the consent order prohibits, for five years, the respondents from soliciting infonnation from physiatrists regarding their decisions whether to participate in agreements with insurers and provide service; from passing such infonnation along to other doctors; and from giving physiatrists advice about making those decisions.

Appearances For the Commission: Alan B. Loughman and Alice Au. For the respondents: Demitrio Fernandez, Rio Piedras, Puerto Rico. Roberto Boneta, Muno, Boneta, Gonzalez, Arbona, Benitez & Peral Hato Rey, Puerto Rico.

COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act as amended, and by virtue of the authority vested in it by the Act, the Federal Trade Commission, having reason to believe that La Asociacion Medica de Puerto Rico; La Seccion de Fisiatrfa de la Asociacion Medica de Puerto Rico; Rafael L. Oms, individually and as an officer of La Seccion de Fisiatrfa de la Asociacion Medica de Puerto Rico; and Rafael E. Sefn, individually and as an offcer of La Seccion de Fisiatrfa de la Asociacion Medica de Puerto Rico, have violated the provisions of said Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows:

LA ASOCIACION MEDICA DE PUERTO RICO, ET AL. 773 772 Complaint PARAGRAPH 1. Respondent La Asociaci6n Medica de Puerto Rico (" La Asociaci6n Medical" ) and respondent La Secci6n de Fisiatria de la Asociaci6n Medica de Puerto Rico ("La Secci6n de Fisiatria ) are unincorporated associations organized, existing, and doing business under and by virtue of the laws of the Commonwealth of Puerto Rico. Both respondents have their offces and principal places of business at Ave. Fernandez Juncos Num. 1305, Apartado 9387, Santurce, Puerto Rico. Respondents are professional associations of physicians who practice or reside in Puerto Rico. PAR. 2. Respondent Rafael L. Oms is a physiatrist licensed to practice medicine in Puerto Rico and is engaged in the business of providing health-care services to patients for a fee in Puerto Rico. Dr. Oms served as president of La Secci6n de Fisiatria in 1991- 1992. Dr. Oms' business address is PaJmas Mail Station, Box 879, Suite 170, Humacao, Puerto Rico.

PAR. 3. Respondent Rafael E. Sefn physiatrist licensed to practice medicine in Puerto Rico and is engaged in the business of providing health-care services to patients for a fee in Puerto Rico. Dr. Sein has at all relevant times served as the president of the Comite de Planes Medicos ("Medical Plans Committee ) of La Secci6n de Fisiatria. Dr. Sein s business address is 11746 Fernandez Juncos Station, San Juan, Puerto Rico.

PAR. 4. The members of La Asociaci6n Medica are physicians engaged in the practice of medicine in Puerto Rico. The members of La Secci6n de Fisiatria are physicians engaged in the practice of physiatry (physical medicine and rehabilitation) in Puerto Rico. Except to the extent that competition has been restrained as alleged herein, the members of La Secci6n de Fisiatria have been and now are in competition among themselves and with other physiatrists in Puerto Rico.

PAR. 5. The acts and practices of the respondents, including those herein alleged, are in or affect commerce within the meaning of Section 5 of the Federal Trade Commission Act, as amended, 15 c. 45.

PAR. 6. Respondent associations are and have been, at all times relevant to this complaint, organized for the profit of their members within the meaning of Section 4 of the Federal Trade Commission Act, as amended, 15 U. c. 44.

PAR. 7. La Administraci6n de Compensaciones por Accidentes de Autom6viles ("Administration for Compensation of Automobile Complaint 119 FTC. Accidents " or "ACAA") is a third-party payer that provides health care coverage to automobile accident victims in Puerto Rico. Absent agreements among physiatrists, competing physiatrists decide individually whether to enter into contracts with third-party payers including ACAA, to treat their subscribers or enrollees. As of January 1991 , 108 physiatrists had contracts with ACAA, under which they agreed to accept designated reimbursement rates for services provided by them to persons covered by the ACAA insurance program.

PAR. 8. Before 1988 a subcommittee of La Secci6n de Fisiatrfa was established to organize and coordinate Physiatry Section efforts to approach third-party payers and attempt to obtain higher reimbursement rates and adoption of "exclusive referral" rules under which patients would be reimbursed for physical therapy services only if referred for treatment by a physiatrist. ACAA did not make such changes because it regarded them as expensive and unnecessar, since ACAA was having no difficulty finding physiatrists who were wiling to serve its clients even at existing fee levels. PAR. 9. After La Secci6n de Fisiatria failed to persuade ACAA that ACAA's clients would be better served by adopting higher reimbursement rates and exclusive referral rules, it sought to use economic coercion to compel ACAA to adopt these changes. In October 1990, members of La Secci6n de Fisiatrfa met at the Annual Convention of Physiatrists and voted to stop accepting new ACAA patients as of February I , 1991. La Secci6n de Fisiatrfa and numerous physiatrists signed a letter to ACAA dated October 13, 1990, demanding, among other things, an increase in reimbursement rates for physical therapy services and adoption of an exclusive referral rule. The letter informed ACAA that the signatories would suspend services to new ACAA patients if their demands were not met.

PAR. 10. In subsequent meetings of La Secci6n de Fisiatrfa and of physiatrists in various local geographic areas, the participating physiatrsts reaffirmed their agreement to no longer accept the ACAA medical plan after February 1, 1991.

PAR. 11. In February 1991 , groups of physiatrists from the regions of Mayagiiez, Caguas, Bayamon, and Carolina signed and sent similar letters to ACAA. Each of these letters infonned ACAA that the signatories would not accept new ACAA patients until their demands, as outlined in La Secci6n de Fisiatrfa s October 13, 1990 LA ASOCIACION MEDICA DE PUERTO RICO, ET AL. 775 772 Complaint letter, were met. The sending of these letters and the implementation of the boycott of ACAA was coordinated by respondent La Secci6n de Fisiatrfa and by respondent Dr. Oms and respondent Dr. Sefn. La Asociaci6n Medica, though opposing the demand for exclusive referral powers, endorsed and supported La Secci6n de Fisiatrfa decision to boycott ACAA.

PAR. 12. By late Februar approximately forty-seven (47) of the 108 physiatrists who had contracts with ACAA were refusing to treat new ACAA patients. The concerted refusal to treat new patients continued at least until September 1991.

PAR. 13. Although ACAA continued to refuse to change its practices or reimbursement rates, the actions of the physiatrists who participated in the boycott required ACAA patients to forgo treatment from physiatrists or to seek services from physiatrists not participating in the boycott. These actions caused delays in receipt of medically-necessary treatment for some patients and subjected ACAA and its patients to other costs and inconveniences. PAR. 14. During the time when the respondents were planning and implementing this concerted refusal to deal with ACAA or to treat ACAA patients, the respondents solicited professional associations of physical therapists in Puerto Rico to join in the boycott. The physical therapy associations refused to do so. The invitation to the physical therapists to join in the boycott, if accepted would have constituted an agreement in restraint of trade. PAR. 15. The respondents have restrained competition among physiatrists by conspiring to engage in a concerted refusal to deal with ACAA or treat ACAA patients. The acts and practices of respondents, as herein alleged, have had the purpose or effect, or the tendency and capacity, to restrain competition and to injure consumers in the following ways, among others: A. By restraining competition among physiatrists in Puerto Rico; B. By restraining competition between physiatrists and other physicians in Puerto Rico;

C. By restraining competition between physiatrist-employed physical therapists and independent physical therapists; D. By fixing or increasing the reimbursement rates that physiatrists in Puerto Rico receive from third-party payers; and E. By increasing the rates that physiatrists or physical therapists receive from consumers and third-party payers. Decision and Order J 19 FTC. PAR. 16. The combination or conspiracy and the acts and practices described in paragraphs nine to fifteen above constitute unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act, as amended, 15 U.se. 45. The violation or effects thereof, as herein alleged, may continue or recur in the absence of the relief herein requested.

DECISION AND ORDER The Federal Trade Commssion having initiated an investigation of certain acts and practices of the respondents named in the caption hereof, and the respondents having been furnished thereafter with a copy of a draft of complaint which the New York Regional Office proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondents with violation of the Federal Trade Commission Act; and The respondents, their attorneys, and counsel for the Commssion having thereafter executed an agreement containing a consent order an admission by the respondents 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 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 the respondents have violated the said Act, and that a 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 confonnty with the procedure 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. Respondents La Asociacion Medica and La Seccion de Fisiatna are unincorporated associations organized, existing, and doing business under and by virtue of the laws of the Commonwealth of Puerto Rico, with their offces and principal place of business at LA ASOCIACION MEDICA DE PUERTO RICO, ET AL. 777 772 Decision and Order Ave. Fernandez Juncos Num. 1305, Aparado 9387, Santurce, Puerto Rico.

Respondents Dr. Oms and Dr. Sefn are physiatrists, licensed to practice medicine in the Commonwealth of Puerto Rico. Drs. Oms and Sefn, have at relevant times been offcers of La Secci6n de Fisiatna. Dr. Oms' business address is Palmas Mail Station, Box 879, Suite 170, Humacao, Puerto Rico and Dr. Sefn s business address is 1 1746 Fernandez Juncos Station, San Juan, Puerto Rico. 2. The Federal Trade Commssion has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER It is ordered, That, as used in this order, the following definitions shall apply:

A. La Asociacion Medica means La Asociaci6n Medica de Medical Association of Puerto Rico, itsPuerto Rico the predecessors, sections, committees, subsidiaries, divisions, groups and affliates, and their respective directors, officers, employees, agents, consultants, and any other persons working for or on behalf of the foregoing, and their respective successors and assigns; B. La Seccion de Fisiatr(a means La Secci6n de Fisiatna de la Asociaci6n Medica de Puerto Rico, the Physiatry Section of the Medical Association of Puerto Rico, its predecessors, sections, committees, subsidiaries, divisions, groups, and affliates and their respective directors, officers, employees, agents, consultants, and any other persons working for or on behalf of the foregoing, and their respective successors and assigns;

C. Rafael Oms means Rafael L. Oms, M. , his agents, and employees;

D. Rafael Sein means Rafael E. Sefn, M. , his agents, and employees;

E. Third-party payer means any person or entity that provides a program or plan pursuant to which such person or entity agrees to pay for treatment by physicians or therapists to individuals described in the plan or program as eligible for such coverage ("Covered Decision and Order 119 F.T. Persons ), and includes, but is not limited to, health insurance companies; prepaid hospital, medical, or other health service plans whether operated by a private or governmental entity; health maintenance organizations; preferred provider organizations; prescription service administrative organizations; health benefits programs for government employees, retirees, and dependents; administrators of self-insured health benefits programs; and employers or other entities providing self-insured health benefits programs; and F. Participation agreement means any existing or proposed agreement, oral or written, in which a third-party payer agrees to reimburse a physician or therapist for the provision of medical physical therapy, or other health-care services to Covered Persons, and the physician or therapist agrees to accept such payment from the third-party payer for such provision of medical, physical therapy, or other health-care services during the term of the agreement. II.

It is further ordered That respondents, directly or indirectly, or through any corporate or other device, in or in connection with their activities in or affecting commerce, as "commerce " is defined in Section 4 of the Federal Trade Commission Act, 15 U. c. 44 forthwith cease and desist from:

A. Entering into, threatening or attempting to enter into organizing or attempting to organize, encouraging, continuing, cooperating in or carrying out any agreement, either express or implied, between or among any physiatrists, to boycott or refuse to deal with any third-party payer, or to withdraw from, threaten to withdraw from, refuse to enter into, or threaten to refuse to enter into any proposed or existing participation agreement; B. Entering into, threatening or attempting to enter into organizing or attempting to organize, encouraging, continuing, cooperating in or carrying out any agreement, either express or implied, between or among any physiatrists, to refuse to provide services to patients covered by any third-party payer in any proposed or existing participation agreement, or to threaten to refuse to provide services to such patients;

LA ASOCIACI6N MEDICA DE PUERTO RICO, ET AL. 779 772 Decision and Order C. For a period of five (5) years after the date this order becomes final, continuing a formal or informal meeting of physiatrists after I. Any person makes any statement concerning one or more physiatrists, intentions or decisions with respect to a. Entering into, refusing to enter into, threatening to refuse to enter into, participating in, threatening to withdraw from, or withdrawing from any existing or proposed paricipation agreement; b. Refusing or threatening to refuse to provide services to patients covered by any third-party payer in any existing or proposed paricipation Agreement;

and respondents La Asociaci6n Medica and La Secci6n de Fisiatrfa fail to eject such person from the meeting; or 2. Two persons make statements prohibited in order paragraphs II.C.l.a. or II.C.l.b.

provided, however, that respondent Oms or Sefn, shall not be in violation of the order if, immediately following a violation of this paragraph of the order, he leaves a meeting continued in violation of this paragraph, and within thirty (30) days after such meeting, reports to the Commission the circumstances of such meeting, the substance and source of the prohibited statements, and the respondents' actions in response thereto;

D. For a period of five (5) years after the date this order becomes final, providing advice to any physiatrist regarding I. The desirability or appropriateness of participating in any existing or proposed participation agreement; or 2. Refusing or threatening to refuse to provide services to patients covered by any third-party payer in any existing or proposed participation agreement;

provided, however, that nothing contained in this paragraph II. shall prohibit respondents from communicating purely factual information describing the terms and conditions of any participation agreement or operations of any third-party payer; Decision and Order 119 FTC. E. For a period of five (5) years after the date this order becomes final, communicating in any way to any physiatrist any information concerning any physiatrist's intentions or decisions with respect to 1. Entering into, refusing to enter into, threatening to refuse to enter into, participating in, threatening to withdraw from, or withdrawing from any existing or proposed participation agreement; 2. Refusing or threatening to refuse to provide services to patients covered by any third-party payer in any existing or proposed participation agreement; or F. For a period of five (5) years after the date this order becomes final, soliciting from any physiatrist any information concerning that physiatrist s or any other physiatrist s intentions or decisions with respect to 1. Entering into, refusing to enter into, threatening to refuse to enter into, participating in, threatening to withdraw from, or withdrawing from any existing or proposed participation agreement; 2. Refusing or threatening to refuse to provide services to patients covered by any third-party payer in any existing or proposed participation agreement.

Provided, however, that nothing in this order shall be construed to prevent respondents from exercising rights permitted under the First Amendment to the United States Constitution to petition any federal, state, or commonwealth government executive agency or legislative body concerning legislation, rules, programs, or procedures, or to participate in any federal, state or commonwealth administrative or judicial proceeding;

Provided further that this order shall not be construed to prohibit any respondent or any member of respondent associations from entering into an agreement or combination with any other physician or health care practitioner with whom the individual physician practices in partnership or in a professional corporation, or who is employed by the same person.

LA ASOCIACION MEDICA DE PUERTO RICO, ET AL. 781 772 Decision and Order It is further ordered That this order shall not be construed to prohibit respondents Drs. Oms or Sefn from communicating Medical conditions or personal assessments of individual patients, where such communication neither constitutes nor is part of (1) an agreement proposed agreement, or attempt to enter into an agreement among physiatrists to boycott or refuse to deal with any third-pary payer, or (2) any other agreement, combination, or conspiracy the purpose, effect, or likely effect of which is to impede competition unreasonably.

IV.

It is further ordered That:

A. La Secci6n de Fisiatrfa, within thirty (30) days after the date on which this order becomes final, distribute by first-class mail a copy of this order and the accompanying complaint to each of its CUITent members, and to the last known address of any other person who was a member of La Secci6n de Fisiatrfa in 1990 or 1991; B. La Asociaci6n Medica, within thirty (30) days after the date on which this order becomes final, distribute by first-class mail a copy of this order and the accompanying complaint to each of its CUITent members who is not also a member of La Secci6n de Fisiatrfa;

C. La Secci6n de Fisiatrfa, within thirty (30) days after the date on which this order becomes final, distribute by first-class mail a copy of this order and the accompanying complaint to each thirdparty payer with whom La Secci6n de Fisiatrfa has entered into negotiations concerning the provision of physiatry services; D. La Asociaci6n Medica, within sixty (60) days after the date on which this order becomes final, publish in Spanish this order and the accompanying complaint in an issue of Prensa Medica or in any successor publication, in the same type size normally used for articles that are published in Prensa Medica or successor publication; E. La Secci6n de Fisiatrfa and La Asociaci6n Medica, for a period of five (5) years after the date on which this order becomes final, provide each new member of La Secci6n de Fisiatrfa and new member of La Asociaci6n Medica with a copy of this order at the Decision and Order J 19 FTC. time the member is accepted into membership of La Secci6n de Fisiatria or La Asociaci6n Medica;

P. La Secci6n de Fisiatria and La Asociaci6n Medica each file a verified, written report with the Commission within ninety (90) days after the date on which this order becomes final, and annually thereafter for five (5) years on the anniversary of the date on which this order becomes final, and at such other times as the Commission may require, by written notice to La Secci6n de Fisiatria or La Asociaci6n Medica, setting forth in detail the manner and form in which it has complied and is complying with this order; G. La Secci6n. de Pisiatria and La Asociaci6n Medica for 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 Parts II and IV of this order; H. For a period of five (5) years after the date on which this order becomes final, La Secci6n de Fisiatria and La Asociaci6n Medica notify the Commission at least thirty (30) days prior to any proposed change in La Secci6n de Fisiatria or La Asociaci6n Medica, such as dissolution, assignment, or sale resulting in the emergence of a successor corporation or association, a change of name, a change of address, or any other change that may affect compliance obligations with this order.

It is further ordered That this order shall tenninate on June 2 2015.

SCHWEGMANN GIANT SUPER MARKETS, INe. 783 783 Complaint