FOR IMMEDIATE RELEASE                                                                                        

AT

WEDNESDAY, AUGUST 12, 1998                                                           

(202) 616-2771

 TDD (202) 514-1888 
                                                                                                    Website: www.usdoj.gov

 
JUSTICE DEPARTMENT MOVES TO STOP ILLEGAL BOYCOTT

BY THE FEDERATION OF PHYSICIANS AND DENTISTS ON BEHALF OF 

DELAWARE ORTHOPEDIC SURGEONS

 
 
	WASHINGTON, D.C. -- The Department of Justice today moved to stop the
Federation of Physicians and Dentists  from illegally conducting a boycott aimed at
artificially maintaining high fees for orthopedic medical services in Delaware.

	The complaint, filed in U.S. District Court in Delaware, alleges that nearly all of
the orthopedic surgeons in Delaware are members of  the Federation,  who have
agreed to designate the Federation's executive director as their agent to negotiate the
fee levels they would accept from Blue Cross & Blue Shield of Delaware ("Blue Cross"). 
When Blue Cross declined to deal with them,  the Federation redoubled its efforts to
persuade doctors to deal with Blue Cross only through the Federation, and ultimately
organized all member orthopedists to terminate their contracts with Blue Cross.

	"The Federation organized an illegal boycott designed to insulate doctors' fees
from market forces and led the doctors well over the line into anticompetitive conduct,"
said Joel I. Klein, Assistant Attorney General in charge of the Antitrust Division. "We will
take action to stop illegal boycotts that injure the public and ultimately increase the
prices that consumers pay for health care."

	The Federation, a national organization of physicians and dentists, operates
elsewhere as a certified collective bargaining agent for doctors who work as employees of
public hospitals and other entities.  Today's complaint does not challenge any of those
activities.  In Delaware, however, the Federation has represented independent
practitioners, for whom it can not lawfully serve as a collective bargaining representative. 
In representing those practitioners, the Federation allegedly functions as a "third party
messenger."  The complaint charges that in this case the Federation misused a
"messenger" arrangement to facilitate illegal collusion by doctors to maintain high fee
levels.

	A "messenger" arrangement, when implemented with adequate safeguards, may
aid in the transmission of information between health insurance plans and doctors and
speed the negotiation process.  It may not, however, legally be used to strengthen the
bargaining power of those it serves.

	"There is an ongoing public discussion about the role of managed care, and
there are pending proposals to enact various reforms," said Klein.  "Physicians are free
to participate fully in the discussion and to support or oppose those proposals. 
However, they, like all citizens, must comply with antitrust laws that protect consumers."

	The antitrust laws have long been applied to various professional groups, such
as lawyers and doctors.  In the case, Federal Trade Commission v. Superior Court Trial
Lawyers Association (1990), the Supreme Court ruled that independent lawyers could
not engage in a group boycott to extract higher fees.  The antitrust laws prevent similar
conduct by physicians.

	In addition to the Federation's representation of Delaware orthopedic surgeons,
it has reportedly organized similar groups of independent physicians elsewhere.  The
Department's investigation of the Federation's activities involving independent
practitioners in other parts of the country is continuing.

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98-366