Medical Antitrust

¶ … Federal Trade Commission ruled on charges of anti-trust leveled against the Wisconsin Chiropractic Association. The WCA and its executive director, Russell A. Leonard, had been charged with organizing a conspiracy among members of the WCA, which represent 90% of the chiropractors in Wisconsin, of conspiring to force health care providers to pay higher rates for chiropractic services than they had previously paid.

According to the proceeding records (FTC, 2003) and published statements by the FTC (FTC, 2000a), the plan began when the federal government as well as many insurance companies adopted new billing codes to cover chiropractic treatments. In addition, two other chiropractors, Michael T. Berkley, D.C., and Mark A. Cassellius, D.C., settled with the FTC on similar charges (FTC, 2000a). The final settlement included about 2,800 words of restrictions on the WCA and Leonard, some of them extending to the year 2020 (FTC, 2003).

The FTC alleged that the WCA held a seminar in which they instructed chiropractors on how to work together to force insurance companies to raise the amount they would reimburse chiropractors for covered services. One chiropractor, speaking for the WCA, went to a provider and told them that if they did not raise their rates, all WCA members would withdraw.

This was a threat to the insurance company because people choosing insurance coverage would note the gap and possibly opt for a different company that included more chiropractor care givers on their list of service providers. Berkley and Cassellius allegedly brought the WCA plan to the insurance company. Eventually the company raised the rate at which it reimbursed chiropractors by 20% to appease the WCA. The WCA was very active in its efforts to help the chiropractors of Wisconsin to act together to force higher rates of compensation.

They advised chiropractors to raise rates to specific amounts, and predicted that if they stuck together, the new rates would be accepted by third party providers (FTC, 2000a). Executive Director Leonard directed the WCA to conduct surveys on fees and actively encouraged the members to confer with each other about their rates to strengthen their bargaining position, and encouraged the boycott of two providers who resisted the demand for higher rates (FTC, 2000a). By taking this action, the WCA led by Russell A. Leonard and assisted by Michael T.

Berkley, D.C., and Mark A. Cassellius, D.C, formed a conspiracy that committed price fixing in direct violation of Section 4 of the Federal Trade Commission Act, 15 U.S.C. 44 (FTC, 2000b). The settlement forbid the WCA from participate any further in any kind of price fixing as well as telling others to engage in price fixing. They were directed to not set prices or fee schedules for chiropractic treatment and barred the WCA from acting as a negotiator on the behalf of chiropractors.

They were directed to participate in no boycotts of any providers and to stop telling chiropractors what terms of payment from third party providers to accept or reject (FTC, 2000a). Specific limits were placed on what the WCA could and could not do, including careful control of any surveys taken, since a survey had been used to help the conspiracy meet its goals. Specific protections were put in place to make it easier for the FTC to make sure the WCA complied with the terms of the agreement.

It should be noted that the fact that the parties agreed to the FTC ruling did not mean that any individual acknowledged any actual guilt. The final decree, which included about 2,800 words of specific restrictions on the WCA and its current or future representatives, such as this example: IT IS FURTHER ORDERED that respondent WCA..

forthwith cease and desist from: Requesting, proposing, urging, advising, recommending, advocating, or attempting to persuade in any way any person to fix, establish, raise, stabilize, maintain, adjust, or tamper with any fee, fee schedule, price, pricing formula, discount, conversion factor, or other aspect or term or condition of the fees charged or to be charged for any chiropractic goods or services." The WCA was told to not conduct any surveys for two years; and for five years to conduct surveys only through third parties.

Leonard was specifically directed to take no part whatsoever in discussions or negotiations regarding chiropractic fees either with individual chiropractors, organizations, third party providers or anyone else concerned in any way with chiropractic fees; to discuss boycotts in any way; to participate in any kind of conspiracy related to the issues in this action; to organize any kind of activity that might lead to such discussions, presumably directed at preventing future seminars such as the type given by him that led to the conspiracy; to continue in any kind of discussion if the conversation turns toward such topics; and many more.

The FTC's response was specific, clear and extremely detailed. It required the WCA to maintain complete and detailed records of all meetings and discussions for five years; to not allow anyone else to take the actions forbidden to Leonard; regularly notify members of the WCA of the rules laid down in this settlement; and that the WCA file yearly reports to the FTC detailing the WCA's continued compliance with the order.

Considering that if criminal charges had been brought the fines would have amounted to hundreds of thousands of dollars, The FTC acted with restraint. The Federal Trade Commission played a crucial role in protecting the public interest by taking this action. Price-fixing hurts all. When the WCA took action to strongly encourage all chiropractors to charge the same amount for similar services, it prevented both individuals and third party providers from shopping for the best price.