Cooperation among physicians is a hallmark of the medical profession with foundations as ancient as the Hippocratic Oath. More recently, even the courts have recognized that cooperation among physicians is the lubricant for smooth operation of our health care system. For example, in Feminists Women’s Health Center, Inc. vs. Mohammad, M.D., 415 F. Supp. 1258 (N.D. Fla. 1976) the court stated, at p. 1264, as follows:
"Further, in order to practice successfully [a physician] . . . must have the cooperation of other OB/GYNs. A doctor must be able to arrange professional amenities, such as backup or coverage for his patients when he is out of town, or otherwise unable to provide medical services to one of his patients."
Access to cooperation in the form of backup may also be necessary for granting of certain privileges. In large hospitals in urban areas, access to such backup is typically easy to obtain and maintain. Often, the hospital itself ensures that the appropriate coverage, for example, of the surgical suites, is available on site or within a certain number of minutes, simply to ensure that surgical remedies are close at hand.
Family physicians, no less than board certified gynecologists performing laparoscopic and other surgical procedures, may need access to cooperation and backup. For example, in an obstetrical setting where labor is to be induced, and where the family physician does not have cesarean privileges, there may be situations where the care of the patient is best handled with backup from an obstetrician/gynecologist whether or not board certified. In such situations, family physicians have for many years worked closely with OB/GYN physicians with the necessary privileges to provide backup.
The AAFP-ACOG Statement recognizes this cooperative requirement, providing that, "A cooperative and collaborative relationship among obstetricians, family physicians and nurse midwives is essential for provision of consistent, high-quality care to pregnant women. [Specifically] [t]his includes a willingness on the part of obstetricians to provide consultation and back-up for family physicians who provide maternity care." Further, any refusal to provide back-up care would be inconsistent with the Code of Professional Ethics of the American College of Obstetricians and Gynecologists, which, in regard to professional relations, states that "The obstetrician-gynecologist should respect and cooperate with other physicians, nurses, and health care professionals." Further, the ACOG’s Code of Conduct states that "The obstetrician-gynecologist should consult, refer, or cooperate with other physicians, health professionals, and institutions to the extent necessary to serve the best interests of their patients."
However, you have informed us that more recently backup is becoming increasingly difficult to obtain. This trend is, you believe, a result of efforts by certain groups to restrict the performance of obstetrical and other procedures to those who are certified by a certain specialty group, or trained in a certain specialty.
In addition to the ethical concerns addressed above, any action by a professional organization or a group of physicians to restrict backup to family physicians raises serious antitrust issues under doctrines which prevent group boycotts.
IV. Agreements or Understandings Which Prevent Appropriate Backup or Otherwise Deny Opportunities to Family Physicians
A. Introduction.
B. Group Boycott Defined; Per Se Violations of the Antitrust Laws.
A "group boycott," loosely defined, is an agreement among competitors to refuse to deal with another competitor. Traditionally, the Supreme Court of the United States viewed group boycotts as per se violations of Section 1 of the Sherman Act. See, e.g., Klor’s Inc. vs. Broadway Hale Stores, 359 U.S. 207, 79 S.Ct. 705, 3 L.Ed. 2d 741 (1959). A per se violation is a violation so pernicious in its effect as to be condemned without requiring any detailed analysis of the competitive effect in the given case. Examples are price fixing arrangements (even the establishment of maximum prices), division of markets, group boycotts and other similar practices.
Where the challenged practice is not so obviously violative of rules against restraints of trade, the practice is to be judged by the Rule of Reason. The Rule of Reason requires the court to analyze all of the relevant factors, including the effect upon competition, the facts peculiar to the business in question, the effect of the restraint measured by the activities of the business before and after the imposition of the restraint, the history of the restraint, and a variety of other factors. Per se violations are in essence those the court has determined would not under any circumstances measure up under the Rule of Reason.
In Arizona v. Maricopa County Medical Society, 457 U.S. 332 (1982), the United States Supreme Court found a price fixing arrangement by physicians in Maricopa County to be a per se violation of Section 1 of the Sherman Antitrust Act despite defense based upon the fact that the physicians were members of a learned profession, and despite the fact that the effect of the price fixing arrangements arrangement was alleged to be beneficial to consumers because it fixed a maximum price.
Most cases which have followed the reasoning contained in the Maricopa County case have come to the conclusion that group boycotts in the medical profession are modified per se violations of the antitrust laws. In reaching conclusions about whether a challenged practice of professionals such as physicians is a per se violation, the courts will, however, consider the reasons for the practice. If the action is based on legitimate and sincere concern over medical or ethical standards and not on competitive concerns, the practice may be analyzed under the Rule of Reason and may be considered lawful. In essence, the courts require some strong service to the public and a strong reason other than competition to take the challenged practice out of the per se category and place it in the Rule of Reason category. See, e.g., Kruezer v. American Academy of Periodontology, 735 F.2d 1479 (D.C. Cir. 1984); Wilk v. American Medical Association, 719 F.2d 207 (7th Cir. 1983). The defendant bears the burden of proof on this issue. The defendant must establish the validity of the purpose for the boycott. In other words, the defendant must establish the good faith of his practice.
In Wilk above, the court recognized a so-called "patient care defense." The AMA, in seeking to boycott chiropractors, argued that it was motivated primarily by a concern for patient care. The court, however, imposed a difficult burden on the availability of such a defense: it ruled that the defendants’ concern for patient care must be "objectively reasonable" and that the defendants must show that their concern could not have been adequately satisfied in a manner less restrictive of competition. According to the court, the AMA satisfied neither of these tests. Thus, Wilk (as well as later cases) greatly limits the influence and utility of any "quality of care" defense to charges of boycott.
In Mohammad above, the court applied the per se doctrine. On a motion for preliminary injunction, the court rejected the good faith defense to antitrust liability where the defendant physicians had refused to provide backup for plaintiff-physicians. Upon investigation by the court, it appears that the primary reason for the refusal to provide backup was that the plaintiff-physicians charged less for certain procedures than did the defendants.
In Nurse Midwifery Associates v. Hibbett, et al., 918 F.2d 605 (6th Cir. 1990), plaintiff midwives and supervising physicians sued a hospital, certain physicians and an insurance company in connection with a denial of privileges and related attempts to exclude the midwives from competition. The court made it clear that individual members of the medical staff who were in competition with the plaintiffs could be liable to the plaintiff for their actions as part of the medical staff denial of privileges. The case was remanded for a specific determination regarding the liability of the OB/GYN physicians who were alleged to have participated in the denial of privileges to midwives. The like effect is Sweeney v. Athens Regional Medical Center, 709 F.Supp. 1563 (M.D. Ga. 1989). In that case, the plaintiff claimed that the two groups of OB/GYN physicians had conspired to stop performing backup for the plaintiff’s midwifery practices. At p. 1573, n. 4, the court stated as follows:
"[Plaintiff] contends that these two groups of competitors conspired together to restrict her access to potential clients and to persuade other physicians to refuse to provide back-up for her ‘Family Birth’ practice. The court finds that the unlawful conduct alleged here is closely akin to a horizontal agreement between merchants to refuse to deal with another merchant, and therefore, should be analyzed under the per se test." (Emphasis added)
While an argument can be made that analysis of the reasons for the boycott turn professional boycotts into Rule of Reason rather than per se cases, we believe the better view is that this analysis is simply a traditional consideration of the "public interest." Physicians who rely on the "public interest" to support group boycotts had best be able to demonstrate (as it is their burden to do) that the conscious decision to refuse to provide support to other physicians is motivated by compassion and not by competition for patients. The case law makes it clear that upon proof of the fact of the boycott, unless the defendants can meet the high burden of demonstrating a substantial public health or safety reason for the boycott, the boycotting defendants do not fare well.
There are also a number of reported consent orders of the Federal Trade Commission dealing with these issues. These cases make it clear that the FTC will aggressively pursue attempts by a physician to deny cooperation to another physician based upon professional affiliations, treatment of certain patients, attempts to compete and similar matters. See, e.g. Mabee, 112 F.T.C. 517 (1989); Hope, 98 F.T.C. 58 (1981); Health Care Management Corp., 107 F.T.C. 285 (1986); North Carolina Orthopaedic Association, 108 F.T.C. 116 (1986); and Medical Staff of Holy Cross Hospital, 114 F.T.C. 555 (1991). These and other recent FTC decisions clearly hold that members of a medical staff or credentialing committee can conspire among themselves or with the staff or committee when making decisions on granting privileges and staff admission, or supporting other physicians. See, e.g., Good Samaritan Regional Medical Center, 119 F.T.C. 106 (1995); Broward General Medical Center, 114 F.T.C. 542 (1991); Memorial Medical Center¸110 F.T.C. 541 (1988).
As an example, in the Hope matter, the physicians consented to the entry of an order preventing them from interfering in a number of different ways with a local hospital’s efforts to recruit additional physicians. The physicians consented to cease refusing to perform emergency services. The physicians had "threaten[ed] to refuse to professionally support . . . the new physician."
Similarly, in Mabee, a group of physicians was ordered to cease any agreement or combination designed to refuse to provide professional cooperation to any physician based on his or her affiliation with a medical school.
In both Health Care Management Corp. and North Carolina Orthopaedic Association, the issue involved conspiracies to restrain competition from podiatrists. In the former case, the hospital and its medical staff were charged, among other things, with imposing unreasonable conditions on podiatrists seeking to practice at the hospital. In the latter case, the association was charged with orchestrating an agreement to exclude or unreasonably discriminate against podiatrists who sought hospital privileges or access to hospitals. Both consent orders evidenced agreements to cease such practices.
In Medical Staff of Holy Cross Hospital, the consent order settled complaint charges that the hospital’s medical staff had conspired with its members to threaten to boycott the hospital in order to coerce the hospital not to enter a business relationship with a nearby clinic or grant privileges to the clinic’s physicians.
These consent orders evidence the sensitivity with which the Federal Trade Commission views attempts by physicians to boycott other physicians for purposes designed to enhance the competitive position of the boycotting doctors. A landmark July 2004 combined report of the Department of Justice and the FTC, "Improving Health Care: A Dose of Competition" (the "Report"), stated that "The Agencies view all anticompetitive conduct as serious, and will seek appropriate sanctions in light of the considerations outlined [within the report.]" The Report discussed anticompetitive behaviors regarding physician privileges and credentialing, as well as the large damage awards that have resulted when an exclusion or denial determination was made in bad faith. The Report also specifically observed that "Private parties should not engage in anticompetitive conduct in responding to marketplace developments." And further that, "If there is specific evidence of anticompetitive conduct by individual providers or provider collusion in response to marketplace developments, the Agencies will aggressively pursue those activities."
Where the challenged practice is not so obviously violative of rules against restraints of trade, the practice is to be judged by the Rule of Reason. The Rule of Reason requires the court to analyze all of the relevant factors, including the effect upon competition, the facts peculiar to the business in question, the effect of the restraint measured by the activities of the business before and after the imposition of the restraint, the history of the restraint, and a variety of other factors. Per se violations are in essence those the court has determined would not under any circumstances measure up under the Rule of Reason.
In Arizona v. Maricopa County Medical Society, 457 U.S. 332 (1982), the United States Supreme Court found a price fixing arrangement by physicians in Maricopa County to be a per se violation of Section 1 of the Sherman Antitrust Act despite defense based upon the fact that the physicians were members of a learned profession, and despite the fact that the effect of the price fixing arrangements arrangement was alleged to be beneficial to consumers because it fixed a maximum price.
Most cases which have followed the reasoning contained in the Maricopa County case have come to the conclusion that group boycotts in the medical profession are modified per se violations of the antitrust laws. In reaching conclusions about whether a challenged practice of professionals such as physicians is a per se violation, the courts will, however, consider the reasons for the practice. If the action is based on legitimate and sincere concern over medical or ethical standards and not on competitive concerns, the practice may be analyzed under the Rule of Reason and may be considered lawful. In essence, the courts require some strong service to the public and a strong reason other than competition to take the challenged practice out of the per se category and place it in the Rule of Reason category. See, e.g., Kruezer v. American Academy of Periodontology, 735 F.2d 1479 (D.C. Cir. 1984); Wilk v. American Medical Association, 719 F.2d 207 (7th Cir. 1983). The defendant bears the burden of proof on this issue. The defendant must establish the validity of the purpose for the boycott. In other words, the defendant must establish the good faith of his practice.
In Wilk above, the court recognized a so-called "patient care defense." The AMA, in seeking to boycott chiropractors, argued that it was motivated primarily by a concern for patient care. The court, however, imposed a difficult burden on the availability of such a defense: it ruled that the defendants’ concern for patient care must be "objectively reasonable" and that the defendants must show that their concern could not have been adequately satisfied in a manner less restrictive of competition. According to the court, the AMA satisfied neither of these tests. Thus, Wilk (as well as later cases) greatly limits the influence and utility of any "quality of care" defense to charges of boycott.
In Mohammad above, the court applied the per se doctrine. On a motion for preliminary injunction, the court rejected the good faith defense to antitrust liability where the defendant physicians had refused to provide backup for plaintiff-physicians. Upon investigation by the court, it appears that the primary reason for the refusal to provide backup was that the plaintiff-physicians charged less for certain procedures than did the defendants.
In Nurse Midwifery Associates v. Hibbett, et al., 918 F.2d 605 (6th Cir. 1990), plaintiff midwives and supervising physicians sued a hospital, certain physicians and an insurance company in connection with a denial of privileges and related attempts to exclude the midwives from competition. The court made it clear that individual members of the medical staff who were in competition with the plaintiffs could be liable to the plaintiff for their actions as part of the medical staff denial of privileges. The case was remanded for a specific determination regarding the liability of the OB/GYN physicians who were alleged to have participated in the denial of privileges to midwives. The like effect is Sweeney v. Athens Regional Medical Center, 709 F.Supp. 1563 (M.D. Ga. 1989). In that case, the plaintiff claimed that the two groups of OB/GYN physicians had conspired to stop performing backup for the plaintiff’s midwifery practices. At p. 1573, n. 4, the court stated as follows:
"[Plaintiff] contends that these two groups of competitors conspired together to restrict her access to potential clients and to persuade other physicians to refuse to provide back-up for her ‘Family Birth’ practice. The court finds that the unlawful conduct alleged here is closely akin to a horizontal agreement between merchants to refuse to deal with another merchant, and therefore, should be analyzed under the per se test." (Emphasis added)
While an argument can be made that analysis of the reasons for the boycott turn professional boycotts into Rule of Reason rather than per se cases, we believe the better view is that this analysis is simply a traditional consideration of the "public interest." Physicians who rely on the "public interest" to support group boycotts had best be able to demonstrate (as it is their burden to do) that the conscious decision to refuse to provide support to other physicians is motivated by compassion and not by competition for patients. The case law makes it clear that upon proof of the fact of the boycott, unless the defendants can meet the high burden of demonstrating a substantial public health or safety reason for the boycott, the boycotting defendants do not fare well.
There are also a number of reported consent orders of the Federal Trade Commission dealing with these issues. These cases make it clear that the FTC will aggressively pursue attempts by a physician to deny cooperation to another physician based upon professional affiliations, treatment of certain patients, attempts to compete and similar matters. See, e.g. Mabee, 112 F.T.C. 517 (1989); Hope, 98 F.T.C. 58 (1981); Health Care Management Corp., 107 F.T.C. 285 (1986); North Carolina Orthopaedic Association, 108 F.T.C. 116 (1986); and Medical Staff of Holy Cross Hospital, 114 F.T.C. 555 (1991). These and other recent FTC decisions clearly hold that members of a medical staff or credentialing committee can conspire among themselves or with the staff or committee when making decisions on granting privileges and staff admission, or supporting other physicians. See, e.g., Good Samaritan Regional Medical Center, 119 F.T.C. 106 (1995); Broward General Medical Center, 114 F.T.C. 542 (1991); Memorial Medical Center¸110 F.T.C. 541 (1988).
As an example, in the Hope matter, the physicians consented to the entry of an order preventing them from interfering in a number of different ways with a local hospital’s efforts to recruit additional physicians. The physicians consented to cease refusing to perform emergency services. The physicians had "threaten[ed] to refuse to professionally support . . . the new physician."
Similarly, in Mabee, a group of physicians was ordered to cease any agreement or combination designed to refuse to provide professional cooperation to any physician based on his or her affiliation with a medical school.
In both Health Care Management Corp. and North Carolina Orthopaedic Association, the issue involved conspiracies to restrain competition from podiatrists. In the former case, the hospital and its medical staff were charged, among other things, with imposing unreasonable conditions on podiatrists seeking to practice at the hospital. In the latter case, the association was charged with orchestrating an agreement to exclude or unreasonably discriminate against podiatrists who sought hospital privileges or access to hospitals. Both consent orders evidenced agreements to cease such practices.
In Medical Staff of Holy Cross Hospital, the consent order settled complaint charges that the hospital’s medical staff had conspired with its members to threaten to boycott the hospital in order to coerce the hospital not to enter a business relationship with a nearby clinic or grant privileges to the clinic’s physicians.
These consent orders evidence the sensitivity with which the Federal Trade Commission views attempts by physicians to boycott other physicians for purposes designed to enhance the competitive position of the boycotting doctors. A landmark July 2004 combined report of the Department of Justice and the FTC, "Improving Health Care: A Dose of Competition" (the "Report"), stated that "The Agencies view all anticompetitive conduct as serious, and will seek appropriate sanctions in light of the considerations outlined [within the report.]" The Report discussed anticompetitive behaviors regarding physician privileges and credentialing, as well as the large damage awards that have resulted when an exclusion or denial determination was made in bad faith. The Report also specifically observed that "Private parties should not engage in anticompetitive conduct in responding to marketplace developments." And further that, "If there is specific evidence of anticompetitive conduct by individual providers or provider collusion in response to marketplace developments, the Agencies will aggressively pursue those activities."
C. General and Summary.
The failure of other specialists to provide backup and cooperation to family physicians is clearly a boycott.
Under applicable case law, once the fact of the boycott is established, the boycott is unlawful unless a substantial public health or safety reason can be established. Establishing these reasons has proven difficult.
Therefore, under existing case law, we think a very strong argument can be made that the decision by a group of physicians, even a group as small as two, to refuse to provide backup and cooperation to family physicians is a restraint of trade and may subject the boycotting physicians to liability for per se violations of Section 1 of the Sherman Act.
Under applicable case law, once the fact of the boycott is established, the boycott is unlawful unless a substantial public health or safety reason can be established. Establishing these reasons has proven difficult.
Therefore, under existing case law, we think a very strong argument can be made that the decision by a group of physicians, even a group as small as two, to refuse to provide backup and cooperation to family physicians is a restraint of trade and may subject the boycotting physicians to liability for per se violations of Section 1 of the Sherman Act.
Procedural Privileges Legal Opinion
Agreements Which Prevent Appropriate Backup or Deny Opportunities
