Anti-Trust the FTC Safeguards Consumers

¶ … Anti-Trust The FTC safeguards consumers and acts against unfair competition. One prominent case involved AllCare/IPAMG, which conspired to fix prices in the Modesto, California area. After a complaint was brought by the FTC, AllCare/IPAMG consented to extensive penalties for a period of 3 years. Role of FTC and Public Policy Considerations Against Anti-Competitive Behavior The Federal Trade Commission is an independent Federal agency established in 1914 by the Federal Trade Commissions Act. The agency: reports to the U.S.

Congress regarding unfair business practices and threats to consumer protection; educates the public about consumer choices and the competitive process; brings, hears and decides actions against people and organizations it perceives to be violators of consumer protection and/or perpetrators of unfair business practices; and attempts to do all that without unduly hampering legitimate business. The agency also acts through the Bureaus of Economics, Competition and Consumer Protection, as well as 7 smaller regional offices (Federal Trade Commission, 2012).

The public policy considerations against anti-competitive behavior are protection and education of consumers and legitimate business to encourage high quality, low costs and enhance "efficiency, innovation, and consumer choice" (Federal Trade Commission, 2012). b. Conduct of Independent Physician Associates Medical Group, Inc., Doing Business as Allcare IPA, a California Corporation AllCare was a California corporation and joint venture of approximately 500 physicians in the Modesto, California area who had multiple, independent medical practices.

AllCare negotiated and contracted with payors for medical services and contractual payments and received capitated payments from its member physicians in exchange for work obtained pursuant to those contracts; however, AllCare's member physicians were free to also negotiate independent contracts with payors and to treat individuals on a fee-for-service basis.

Since at least 2005, AllCare members conspired and acted to fix prices by discouraging and preventing its member physicians from independently negotiating with payors, and a large number of its member physicians sent letters to those payors terminating their independent contracts with the payors and specifically limiting their business with the payors to contracts negotiated by AllCare (Federal Trade Commission, 2009, pp. 1-3). c.

Why Conduct of IPAMG Was Deemed Anti-Competitive Behavior by FTC The FTC deemed IPAMG's conduct anti-competitive in violation of Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C.

§ 45, because: it did not have the legitimate purpose of improving efficiency; if successful, IPAMG's conspiratorial price-fixing would unreasonably restrain trade and hinder competition in the Modesto, California area by unreasonably restraining competition/price among its member physicians, raising prices for their services, depriving payors such as individuals, insurers and employers of the benefits of competition among those member physicians, depriving consumers of the benefits of competition among those payors, and would probably continue if not stopped (Federal Trade Commission, 2009, pp. 3-4). d.

Penalty and Its Fairness The penalty directed IPAMG and all its members to: cease and desist from the anti-competitive behavior described above; for 3 years from the order's final date, notify the FTC of any contracts and of the specifics of any possible contracts, arrangements among its members or contact of payors at least 60 days beforehand, respond fully to any FTC requests for further information from the FTC if made within 15 days after receipt of the information, delay in entering the contract, entering the arrangement or contacting the payors for at least 30 days after responding fully to the request, not enter into the contract or arrangement or contact the payors if it is rejected by the FTC.

In addition, within 30 days of the order's final date, notify with a copy of the order by first-class mail or electronic mail with appropriate return receipt/confirmation, every physician who participated in IPAMG since January 1, 2005, every physician who intends to become a member, every current IPAMG officer, director, manager and employee, and every payor with whom IPAMG has a contract. Furthermore, existing contracts may be terminated by appropriate request by the payor, or extended for 1 year per a payor's request for extension.

IPAMG is also required to file an official report with the FTC within 60 days from the Order's date and again on every anniversary of the Order's date for 3 years describing in detail how it is complying with the Order, the specifics of any payor with whom IPAMG has contact and the receipts/confirmations from its notifications. IPAMG must also publish an official annual report/newsletter to all member physicians, a copy of the order and the complaint as prominently as if it was in a feature article.

IPAMG must also notify the FTC of change of address, any acquisition, merger or consolidation, or any other change that might affect its compliance with the order. Finally, IPAMG must allow inspection by the FTC of all records and interview of IPAMG officers, directors, or employees upon 5 days' notice (Federal Trade Commission, 2009, pp. 4-10). The penalties, while extensive, appear fair because IPAMG consented to them, they will effectively prevent further.