[Federal Register Volume 59, Number 157 (Tuesday, August 16, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-20021]


[[Page Unknown]]

[Federal Register: August 16, 1994]


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FEDERAL TRADE COMMISSION
[File No. 921-0101]

 

Trauma Associates of North Broward, Inc., et al.; Proposed 
Consent Agreement With Analysis To Aid Public Comment

agency: Federal Trade Commission.

action: Proposed Consent Agreement.

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summary: In settlement of alleged violations of federal law prohibiting 
unfair acts and practices and unfair methods of competition, this 
consent agreement, accepted subject to final Commission approval, would 
require, among other things, Dr. Johnson, the president of a Florida 
corporation, to dissolve Trauma Associates within 180 days after the 
order becomes final, and would prohibit the ten surgeons from entering 
into, organizing, or implementing any agreement to: refuse to provide 
surgical services in connection with any effort to fix the level of 
fees for such services; prevent the delivery of surgical services; or 
deal on collectively determined terms with anyone who pays for health 
services.

dates: Comments must be received on or before September 15, 1994.

addresses: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 6th St. and Pa. Ave., N.W., Washington, D.C. 20580.

for further information contact: Mark Horoschak or Markus Meier, FTC/S-
3115, Washington, D.C. 20580. (202) 326-2756 or 326-2781.

supplementary information: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 2.34 of the 
Commission's Rules of Practice (16 CFR 2.34), notice is hereby given 
that the following consent agreement containing a consent order to 
cease and desist, having been filed with and accepted, subject to final 
approval by the Commission, has been placed on the public record for a 
period of sixty (60) days. Public comment is invited. Such comments or 
views will be considered by the Commission and will be available for 
inspection and copying at its principal office in accordance with 
Sec. 4.9(b)(6)(ii) of the Commission's Rules of Practice (16 CFR 
4.9(b)(6)(ii)).

Trauma Associates of North Broward, Inc. a corporation, Richard A. 
Johnson, M.D., individually and as President of said corporation, 
and Carl Amko, M.D., Lucien Armand, M.D., Frantz Chery, M.D., 
William Cohen, M.D., Sergio Gallenero, M.D., Kwang-Jae Joh, M.D., 
J. R. Nabut, M.D., Aiden O'Rourke, M.D., Santiago Triana, M.D., 
individually; Agreement Containing Consent Order to Cease and 
Desist

[File No. 921-0101]

    The Federal Trade Commission having initiated an investigation of 
certain acts and practices of the respondents named in the caption 
hereof, hereinafter sometimes referred to as proposed respondents, and 
it now appearing that the proposed respondents are willing to enter 
into an agreement containing an order to cease and desist from the use 
of the acts and practices being investigated.
    It is hereby agreed by and between the proposed respondents and 
counsel for the Federal Trade Commission that:
    1. Proposed respondent Trauma Associates of North Broward, Inc., is 
a corporation organized, existing, and doing business under and by 
virtue of the laws of the State of Florida, with its office and 
principal place of business located at 2170 Southeast 17th Street, 
Suite 305, Fort Lauderdale, Florida 33316.
    The proposed individual respondents, named in the caption above, 
are general surgeons, licensed to practice medicine in the State of 
Florida and are generally engaged in the business of providing surgical 
services to patients for a fee in Broward County, Florida. Their 
respective business addresses are:

Carl Amko, M.D., 412 Southeast 17th Street, Fort Lauderdale, Florida 
33316;
Licien Armand, M.D., 4330 West Broward Boulevard, Suit 308, Plantation, 
Florida 33324;
Frantz Chery, M.D., 4101 Northwest 4th Street, Suite 302, Plantation, 
Florida 33317;
William Cohen, M.D., 8251 West Broward Boulevard, Suite H, Plantation, 
Florida 33317;
Sergio Gallenero, M.D., 9750 Northwest 33rd Street, Coral Springs, 
Florida 33065;
Kwang-Jae Joh, M.D., One West Sample Road, Suite 207, Pompano Beach, 
Florida 33064;
Richard A. Johnson, M.D., 1625 Southeast 3rd Avenue, Suite 721, Fort 
Lauderdale, Florida 33316;
J.R. Nabut, M.D., 1500 Hillsboro Boulevard, Suite 207, Deerfield Beach, 
Florida 33441;
Aiden O'Rourke, M.D., 315 Southeast 13th Street, Fort Lauderdale, 
Florida 33316;
Santiago Triana, M.D., Medical Building, 150 Northwest 70th Avenue, 
Suite 7, Plantation, Florida 33317.

    2. Proposed respondents admit all the jurisdictional facts set 
forth in the draft of complaint here attached.
    3. Proposed respondents waive: (a) Any further procedural steps;
    (b) The requirement that the Commission's decision contain a 
statement of findings of fact and conclusions of law;
    (c) All rights to seek judicial review or otherwise to challenge or 
contest the validity of the order entered pursuant to this agreement; 
and
    (d) Any claim under the Equal Access to Justice Act.
    4. This agreement shall not become part of the public record of the 
proceeding unless and until it is accepted by the Commission. If this 
agreement is accepted by the Commission it, together with the draft of 
complaint contemplated thereby, will be placed on the public record for 
a period of sixty (60) days and information with respect thereto will 
be publicly released. The Commission thereafter may either withdraw its 
acceptance of this agreement and so notify the proposed respondents, in 
which event it will take such action as it may consider appropriate, or 
issue and serve its complaint (in such form as the circumstances may 
require) and decision, in disposition of the proceeding.
    5. This agreement is for settlement purposes only and does not 
constitute an admission by proposed respondents that the law has been 
violated as alleged in the draft of complaint here attached.
    6. This agreement contemplates that, if it is accepted by the 
Commission, and if such acceptance is not subsequently withdrawn by the 
Commission pursuant to the provisions of Sec. 2.34 of the Commission's 
Rules, the Commission may, without further notice to proposed 
respondents, (1) issue its complaint corresponding in form and 
substance with the draft of complaint here attached and its decision 
containing the following order to cease and desist in disposition of 
the proceeding and (2) make information public in respect thereto. When 
so entered, the order to cease and desist shall have the same force and 
effect and may be altered, modified, or set aside in the same manner 
and within the same time provided by statute for other orders. The 
order shall become final upon service. Delivery by the U.S. Postal 
Service of the complaint and decision containing the agreed-to order to 
proposed respondents' addresses as stated in this agreement shall 
constitute service. Proposed respondents waive any right to any other 
manner of service. The complaint may be used in construing the terms of 
the order, and no agreement, understanding, representation, or 
interpretation not contained in the order or the agreement may be used 
to vary or contradict the terms of the order.
    7. Proposed respondents have read the proposed complaint and order 
contemplated hereby. They understand that once the order has been 
issued, they will be required to file one or more compliance reports 
showing that they have fully complied with the order. Proposed 
respondents further understand that they may be liable for civil 
penalties in the amount provided by law for each violation of the order 
after the order becomes final.

Order

I
    It is ordered that, for purposes of this order, the following 
definitions shall apply:
    A. ``Trauma Associates'' means Trauma Associates of North Broward, 
Inc., a corporation organized, existing, and doing business under and 
by virtue of the laws of the State of Florida, with its office and 
principal place of business located at 2170 Southeast 17th Street, 
Suite 305, Forth Lauderdale, Florida 33316, its Board of Directors, 
committees, officers, members, representatives, agents, employees, 
successors, and assigns.
    B. ``Surgeon respondents'' means Carl Amko, M.D., Lucien Armand, 
M.D., Frantz Chery, M.D., William Cohen, M.D., Sergio Gallenero, M.D., 
Kwang-Jae Joh, M.D., Richard A. Johnson, M.D., J.R. Nabut, M.D., Aiden 
O'Rourke, M.D., and Santiago Triana, M.D., each of whom is a general 
surgeon licensed to practice medicine in the State of Florida, and is 
engaged in the business of providing surgical services to patients for 
a fee in Broward County, Florida.
    C. ``The District'' means the North Broward Hospital District, a 
tax-supported hospital authority, with its principal offices located at 
1625 Southeast Third Avenue, Fort Lauderdale, Florida 33316, its 
subsidiaries, affiliates, commissioners, officers, administrators, 
directors, committees, agents, employees, representatives, successors, 
and assigns.
    D. ``Broward General'' means the Broward General Medical Center, 
one of the hospitals of the North Broward Hospital District, located at 
1600 South Andrews Avenue, Fort Lauderdale, Florida 33316, its 
subsidiaries, affiliates, officers, administrators, directors, 
committees, agents, employees, representatives, successors, and 
assigns.
    E. ``North Broward'' means the North Broward Medical Center one of 
the hospitals of the North Broward Hospital District, located at 201 
Sample Road, Pompano Beach, Florida 33064, its subsidiaries, 
affiliates, officers, administrators, directors, committees, agents, 
employees, representatives, successors, and assigns.
    F. ``Integrated joint venture'' means a joint arrangement to 
provide health-care services in which physicians who would otherwise be 
competitors pool their capital to finance the venture, by themselves or 
together with others, and share a substantial risk of loss from their 
participation in the venture.
II
    It is further ordered that each surgeon respondent directly or 
indirectly, or through any corporate or other device, in connection 
with the provision of health-care services in or affecting commerce, as 
``commerce'' is defined in Section 4 of the Federal Trade Commission 
Act, 15 U.S.C. Sec. 44, forthwith cease and desist from entering into, 
attempting to enter into, organizing or attempting to organize, 
implementing or attempting to implement, or continuing or attempting to 
continue any combination, agreement, or understanding, express or 
implied, for the purpose or with the effect of:
    A. Preventing the offering or delivery of surgical services by the 
District, Broward General, North Broward, or any other provider of 
health-care services, including, but not limited to, any agreement to 
refuse to deal or threaten to refuse to deal with the District, Broward 
General, North Broward, or any other provider of health-care services;
    B. Dealing with the District, Broward General, North Broward, or 
any other provider of health-care services on collectively determined 
terms; or
    C. Encouraging, advising, pressuring, inducing, or attempting to 
induce any person to engage in any action prohibited by this order.
    Provided that nothing in this order shall be construed to prohibit 
any individual surgeon respondent from:
    1. Entering into an agreement or combination with any other 
physician with whom the surgeon respondent practices in partnership or 
in a professional corporation, or who is employed by the same person as 
the surgeon respondent, to deal with any third party on collectively 
determined terms; or
    2. Forming, facilitating the formation of, or participating in an 
integrated joint venture and dealing with any third party on 
collectively determined terms through the joint venture, as long as the 
surgeons participating in the joint venture remain free to deal 
individually with third parties.
III
    It is further ordered that respondent Richard A. Johnson, M.D., 
shall:
    A. Dissolve Trauma Associates within one hundred and eighty (180) 
days after the date on which this order becomes final; and
    B. file a verified written report demonstrating how he has complied 
with Section III.A. above, within two hundred and ten (210) days after 
the date on which this order becomes final.
IV
    It is further ordered that respondent Trauma Associates shall:
    A. Within thirty (30) days after the date on which this order 
becomes final, and prior to the dissolution provided for in Section 
III.A. above, distribute by first-class mail a copy of this order and 
the accompanying complaint to each party with whom Trauma Associates 
has entered into contract negotiations or finalized a contract 
concerning the provision of trauma surgical services; and
    B. Within sixty (60) days after the date on which this order 
becomes final, and prior to the dissolution provided for in Section 
III.A. above, file a verified written report demonstrating how it has 
complied with Section IV.A. above.
V
    It is further ordered that each surgeon respondent shall:
    A. File a written report with the Commission within ninety (90) 
days after the date the order becomes final, and annually thereafter 
for three (3) years on the anniversary of the date order became final, 
and at such other times as the Commission may by written notice 
require, setting forth in detail the manner and form in which the 
surgeon respondent has complied and is complying with the order;
    B. For a period of five (5) years after the date on which this 
order becomes final, notify the Commission in writing within thirty 
(30) days after the surgeon respondent forms or participates in the 
formation of, or joins or participates in, any integrated joint 
venture; and
    C. For a 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 this order.

Trauma Associates of North Broward, Inc., et al. Analysis of 
Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted, subject to final 
approval, an agreement to a proposed consent order from Trauma 
Associates of North Broward, Inc. (``Trauma Associates''), and ten 
surgeons in Broward County, Florida (``surgeon respondents''). The 
agreement would settle charges by the Federal Trade Commission that 
Trauma Associates and the surgeon respondents violated Section 5 of the 
Federal Trade Commission Act by, among other things, combining or 
conspiring to (1) Fix or increase the fees received by the surgeon 
respondents for the provision of trauma services and (2) threaten and 
carry out a concerted refusal to deal.
    The proposed consent order has been placed on the public record for 
sixty (60) days for reception of comments by interested persons. 
Comments received during this period will become part of the public 
record. After sixty (60) days, the Commission will again review the 
agreement and the comments received and will decide whether it should 
withdraw from the agreement or make final the agreement's proposed 
order.
    The purpose of this analysis is to facilitate public comment on the 
agreement. The analysis is not intended to constitute an official 
interpretation of either the proposed complaint or the proposed consent 
order to modify their terms in any way.

The Complaint

    Under the terms of the agreement, a proposed complaint would be 
issued by the Commission along with the proposed consent order. The 
proposed complaint alleges that the North Broward Hospital District 
(``the District''), a hospital authority in Broward County, Florida, 
resolved in March, 1992, to seek a state license to operate trauma 
centers at two District hospitals. According to the complaint, the 
surgeon respondents, who compete among themselves and with other 
general surgeons in Broward County, signed individual statements 
committing themselves to participate in the District's trauma program.
    The complaint further alleges that the surgeon respondents, who 
have not integrated their practices, refused to contract with the 
District individually, and agreed on price proposals prior to 
submitting them to the District. On May 1, 1992, the surgeon 
respondents began providing trauma services to the District, and 
several days later Dr. Richard A. Johnson, the surgeon respondents' 
leader, signed a letter of intent with the District outlining the terms 
under which the surgeon respondents would provide services at the 
District's trauma centers. Dr. Johnson also reached an understanding 
with the District on the prices to be paid for the surgeon respondents' 
services.
    The complaint alleges that Dr. Johnson incorporated Trauma 
Associates on May 7, 1992, and is its sole owner. Trauma Associates 
served as the vehicle for the surgeon respondents to engage in 
collective negotiations on fees and other contract terms to be sought 
from the District.
    The complaint alleges that in July 1992, the District decided not 
to contract with the surgeon respondents as a group, and that in 
response the surgeon respondents: (1) refused to deal with the District 
individually; (2) sent the District a letter with a list of demands, 
including price terms; (3) threatened to cease providing services at 
the District's trauma centers if their demands were not met; and (4) 
walked out of the District's trauma centers. As a direct result of the 
walkout, one of the two trauma centers had to be shut down, and the 
other was adversely affected.
    The complaint alleges that the above actions of the proposed 
respondents have had the purpose or effect in Broward County, Florida, 
of:
    (1) Restraining competition among general surgeons;
    (2) Fixing or increasing the prices that are paid to general 
surgeons who provide trauma services;
    (3) Raising the cost, lowering the quality, and reducing access to 
and the quality-adjusted output of the District's trauma services; and
    (4) Depriving the District and its patients of the benefits of 
competition among general surgeons.
    Finally, the complaint alleges that the above actions of the 
proposed respondents constitute unfair methods of competition in 
violation of Section 5 of the Federal Trade Commission Act, 15 U.S.C. 
45.

The Proposed Consent Order

    The proposed consent order would prohibit the surgeon respondents 
from entering into, organizing, or implementing, any agreement to:
    (1) Refuse to provide surgical services in connection with any 
effort to fix the level of fees for such services;
    (2) Prevent the offering or delivery of surgical services;
    (3) Deal on collectively determined terms with anyone who pays for 
health services; and
    (4) Encourage any person to engage in any action prohibited by the 
order.
    The order provides that it does not prevent the following:
    (1) Surgeon respondents who practice together as partners or 
employees in the same professional corporation or partnership dealing 
with any third party on collectively determined terms; or
    (2) Surgeon respondents who participate in the same integrated 
joint venture dealing with others on collectively determined terms 
through the joint venture, so long as they remain free to deal 
individually with others that decline to deal with the joint venture. 
(The consent order defines ``integrated joint venture'' as a joint 
arrangement to provide health care services in which surgeons 
participating in the venture who would otherwise be competitors pool 
their capital to finance the venture, by themselves or together with 
others, and share a substantial risk of loss from their participation 
in the venture.)
    The proposed order would require respondent surgeon Richard A. 
Johnson, M.D., to dissolve Trauma Associates within 180 days after the 
order becomes final. Furthermore, before such dissolution takes place, 
the order would require Trauma Associates to distribute copies of the 
complaint and order to each person with whom it has entered into 
contract negotiations concerning the provision of trauma surgical 
services.
    The order also requires the proposed surgeon respondents to file 
compliance reports with the Commission, notify the Commission if they 
form or participate in the formation of an integrated joint venture, 
and maintain certain files relating to their compliance with the order.
    The proposed respondents agreed to the order for settlement 
purposes only, and their agreement to the order does not constitute an 
admission by them that the law has been violated as alleged in the 
complaint.
C. Landis Plummer,
Acting Secretary.
[FR Doc. 94-20021 Filed 8-15-94; 8:45 am]
BILLING CODE 6750-01-M