[Federal Register Volume 59, Number 178 (Thursday, September 15, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-22844]


[[Page Unknown]]

[Federal Register: September 15, 1994]


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DEPARTMENT OF JUSTICE
Antitrust Division

 

Proposed Final Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, 
Settlement Agreement, and Competitive Impact Statement have been lodged 
with the United States District Court for the District of Arizona in 
United States of America and State of Arizona v. Delta Dental Plan of 
Arizona, Inc., an Arizona Corporation, Civil Action No. 94-1793PHXPGR. 
The Complaint in this case alleges that the defendant and co-
conspirators agreed to restrain or eliminate the discounting of fees 
for dental services to other dental plans or consumers in the State of 
Arizona in violation of the Sherman Act, 15 U.S.C. 1. A second count, 
not subject to the Antitrust Procedures and Penalties Act, alleges that 
the same actions violated the Uniform Arizona Antitrust Act, A.R.S. 
Sec. 44-1402. The proposed Final Judgment enjoins the defendant from 
maintaining, adopting, or enforcing a clause in dentist's contracts 
that requires the dentist to give the defendant the lowest fees offered 
to any person or dental plan. It also enjoins the defendant from 
demanding information about dentists' participation in other dental 
plans; monitoring dentist's fees to other persons or dental plans; 
writing to dentists about fees dentists charge to other plans; 
requiring a dentist to identify other plans he or she may participate 
in; seeking a vote of dentists on the levels of reimbursement; 
terminating, discriminating or retaliating against dentists who 
discount fees; treating dentists who discount fees differently from 
non-discounting dentists; and taking any other action to discourage 
dentists from discounting fees. Certain language in the defendant's 
contracts with dentists is voided. A companion Settlement Agreement 
requires, among other things, that the defendant notify dentists of the 
terms of the proposed Final Judgment, and reinstate any dentist dropped 
from the defendant's plan because of discounting, if the dentist so 
desires.
    Public comment on the proposed Final Judgment is invited within the 
statutory 60-day comment period. Such comments, and responses thereto, 
will be published in the Federal Register and filed with the Court. 
Comments should be directed to Gary R. Spratling, Chief, San Francisco 
Office, Box 36046, Antitrust Division, U.S. Department of Justice, San 
Francisco, California 94102 (telephone: (415) 556-6300).
Constance K. Robinson,
Director of Operations, Antitrust Division.
Barbara J. Nelson, Phillip R. Malone, Carla G. Addicks, Antitrust 
Division, U.S. Department of Justice, 450 Golden Gate Avenue, Box 
36046, 10th Floor, San Francisco, California 94102, (415) 556-6300

Attorneys for the United States

Grant Woods, Attorney General, Sydney K. Davis, Chief Counsel, 
ID#004041, Suzanne M. Dallimore, ID#014151, Lisa L. Glow, ID#013232, 
Consumer Protection & Antitrust Section, Department of Law Building, 
Room #259, 1275 West Washington Street, Phoenix, Arizona 85007-2997, 
(602) 542-3702

Attorneys for the State of Arizona

In the United States District Court District of Arizona

    United States of America, and State of Arizona, by and through 
its Attorney General Grant Woods, Plaintiffs, vs. Delta Dental Plan 
of Arizona, Inc., an Arizona Corporation, Defendant. Filed: August 
30, 1994. Civil No. 94-1793PHXPGR.

Complaint

Count One

    The United States of America, acting under the direction of the 
Attorney General of the United States, and the State of Arizona, acting 
under the direction of the Attorney General of the State of Arizona, 
bring this civil action to obtain equitable and other relief against 
the defendant named herein, and complain and allege as follows:

I

Jurisdiction and Venue

    1. This Complaint is filed by the United States under Section 4 of 
the Sherman Act, 15 U.S.C. Sec. 4, as amended, and by the State of 
Arizona under 15 U.S.C. Sec. 26, to prevent and restrain a continuing 
violation by the Defendant of Section 1 of the Sherman Act, 15 U.S.C. 
Sec. 1.
    2. The Defendant maintains an office, transacts business, and is 
found within the District of Arizona, within the meaning of 15 U.S.C. 
Sec. 22 and 28 U.S.C. Sec. 1391(c).

II

Defendant

    3. Delta Dental Plan of Arizona, Inc. (``Delta'' or ``the 
Defendant''), is an Arizona corporation with its principal place of 
business in Phoenix, Arizona. The defendant is a non-profit corporation 
whose participating providers consist of dentists licensed to practice 
in Arizona and who execute participating provider agreements with 
Delta. At material times, dentists comprised the majority of the Board 
of Directors of the Defendant.
    4. At material times, approximately eight-five percent of dentists 
licensed to practice in Arizona were participating providers of the 
Defendant with power and authority to vote on matters concerning their 
payment for services rendered.
    5. Whenever this Complaint refers to any corporation's act, deed, 
or transaction, it means that such corporation engaged in the act, 
deed, or transaction by or through its members, officers, directors, 
agents, employees, or other representatives while they actively were 
engaged in the management, direction, control, or transaction of its 
business or affairs.

III

Co-Conspirators

    6. Various firms and individuals, not named as defendants in this 
Complaint, have participated as co-conspirators with the Defendant in 
the violations alleged in this Complaint, and have performed acts and 
made statements in furtherance thereof.

IV

Trade and Commerce

    7. At material times, the Defendant has engaged in the business of 
providing dental insurance coverage for patients in the State of 
Arizona. The Defendant contracts directly with individual dentists an 
groups of dentists for the provision of dental services to persons 
covered by the Defendant's dental insurance plans. The Defendant 
compensates contracting dentist on the basis of submitted fee 
schedules. Dentists agree to comply with the terms of the contractual 
agreements with the Defendant.
    8. At material times, the confidential fee listings and 
participating dentist agreements between dentists and the Defendant 
contained provisions known as ``most favored nation'' clauses. These 
provisions stated that, for example, the dentists' ```usual fee' shall 
be deemed to be the lowest fee charged or offered and received as 
payment in full,''or ``I agree to charge to Delta Dental my usual fees 
charged to all my other patients or the amount accepted as payment in 
full, whichever is less. * * *'' In this case, the Defendant's most 
favored nation clauses had the effect of requiring participating 
dentists to charge fees to all other group dental care programs or non-
Delta patients that were the same as or higher than the fees they 
charged to the Defendant.
    9. At material times, payments from the Defendant constituted a 
significant portion of most individual dentist's receipts from the 
provision of dental services to patients having some form of dental 
insurance or coverage.
    10. After the Defendant began actively enforcing the most favored 
nation clauses in its agreements with participating dentists, most of 
those dentists refused to discount their fees to non-Delta patients or 
competing dental plans because the most favored nation clauses would 
have required them to also lower all of their charges to the Defendant 
to the same level. Because most participating dentists receive such a 
significant portion of their income from serving Delta patients, the 
costs of having to lower their Delta fees would have been too great. 
Consequently, the effect of the Defendant's most favored nation clauses 
is to require participating dentists to charge all other patients or 
dental plans fees as high as or higher than those charged to the 
Defendant.
    11. The Defendant's most favored nation clauses have caused large 
numbers of dentists who had previously chosen to reduce their fees to 
participate in competing discount dental plans to drop out of or resign 
from such plans. Participating dentists also have refused to join such 
plans.
    12. Because such a large percentage of Arizona dentists participate 
in the Defendant's plan, and because revenue from serving the 
Defendant's patients is a significant part of many of those dentists' 
receipts, among other reasons, the Delta most favored nation clauses 
have resulted in many competing dental plans being unable to attract 
and/or retain sufficient numbers of dentists to serve their members. 
Many competing plans have had their ability to attract and serve groups 
of patients severely restricted and may be forced out of business.
    13. Most dentists who are participants with the Defendant are 
independent, private practices and are in actual or potential 
competition with other participating dentists for the provision of 
dental services to patients.
    14. The Defendant is a member of Delta Dental Plans Association, 
located in the State of Illinois, which is a nationwide network of 
dental insurance providers. The Defendant pays annual dues and an 
advertising assessment to this organization, and participates in a 
nationwide advertising campaign.
    15. Certain corporate employers remit from outside the State or 
Arizona not insubstantial premium payments to the Defendant for 
providing dental career insurance to their employees.
    16. Many businesses that remit premiums to the Defendant for 
providing dental care insurance to their employees are involved in 
selling products and services outside the State of Arizona. The premium 
levels paid by such businesses affect the prices of such products and 
services.
    17. At material times, the Defendant and co-conspirators have 
utilized interstate banking facilities and purchased not insubstantial 
quantities of goods and services from outside the State of Arizona, for 
use in providing dental insurance coverage or dental services to 
patients.
    18. The activities of the Defendant that are the subject of this 
Complaint, and the activities of their co-conspirators, have been 
within the flow of, and have substantially affected, interstate trade 
and commerce.

V

Violation Alleged

    19. Beginning at a time unknown to the Plaintiffs and continuing 
through at least July 1994, the Defendant and co-conspirators engaged 
in a combination and conspiracy in unreasonable restraint of interstate 
trade and commerce in violation of Section 1 of the Sherman Act, 15 
U.S.C. Sec. 1. This offense is likely to recur unless the relief 
hereinafter sought is granted.
    20. This combination and conspiracy consisted of a continuing 
agreement, understanding, and concert of action among the Defendant and 
co-conspirators to restrain or eliminate the discounting of fees for 
dental services to competing dental plans or to other consumers of 
dental services.
    21. For the purpose of forming and effectuating this combination 
and conspiracy, the Defendant and co-conspirators did the following 
things, among others:
    (a) agreed to adopt and enforce most favored nation clauses in the 
contracts and other agreements with dentists, for the purpose and with 
the effect of restraining or eliminating discount fees for dental 
services and restricting the ability of dentists to discount fees for 
dental services;
    (b) enforced most favored nation clauses; and
    (c) coerced participating dentists into dropping out of dental 
plans that competed with the defendant.
    22. This combination and conspiracy had the following effects, 
among others:
    (a) price competition among dentists for the provision of dental 
services has been unreasonably restrained;
    (b) price competition among dentists for the provision of dental 
services to plans in competition with the defendant has been 
unreasonably restrained, in that, to recruit and retain a marketable 
panel of dentists, competing dental plans would have had to increase 
fees paid to dentists to the level charged by defendant;
    (c) price competition among dental insurance plans has been 
unreasonably restrained, in that, most competing dental insurance plans 
have been unable to obtain or retain a sufficient number of dentists to 
provide services to their clients, because dentists have withdrawn from 
or refused to participate in dental insurance plans that pay them less 
than the defendant; and
    (d) consumers of dental services in Arizona have been deprived of 
the benefits of free and open competition.

Count Two

    The State of Arizona, acting under the direction of the Attorney 
General of the State of Arizona, complains and alleges as follows:
    23. Each and every allegation contained in paragraphs 3-22 of this 
Complaint is here re-alleged with the same force and effect as though 
said allegations were here set forth in full detail.

VI

Jurisdiction and Venue

    24. Count Two of this Complaint is filed by the State of Arizona 
pursuant to the Uniform Arizona Antitrust Act, A.R.S. Secs. 44-1402, 
et. seq., and is properly before this Court under the doctrine of 
pendent jurisdiction, 28 U.S.C. Sec. 1367.

VII

Violation Alleged

    25. The conduct alleged in paragraphs 20 through 22 of this 
Complaint is in violation of the Uniform Arizona Antitrust Act, A.R.S. 
Sec. 44-1402.

VIII

Prayer

    Wherefore, the Plaintiffs pray:
    1. That the Court adjudge and decree that the Defendant and co-
conspirators engaged in an unlawful agreement, combination and 
conspiracy in unreasonable restraint of interstate trade and commerce 
in violation of Section 1 of the Sherman Act, 15 U.S.C. 1, as alleged 
in Count One of the Complaint.
    2. That the Court adjudge and decree that the Defendant and co-
conspirators engaged in an unlawful agreement, combination and 
conspiracy in unreasonable restraint of Arizona trade and commerce in 
violation of the Uniform Arizona Antitrust Act, A.R.S. Sec. 44-1402, as 
alleged in Count Two of the Complaint.
    3. That the Defendant, its members, officers, directors, agents, 
employees, and successors and all other persons acting or claiming to 
act on its behalf be enjoined, restrained and prohibited for a period 
of five years from, in any manner, directly or indirectly, continuing, 
maintaining, or renewing the alleged combination and conspiracy, or 
from engaging in any other combination, conspiracy, agreement, 
understanding, plan, program, or other arrangement having a similar 
purpose or effect as the alleged combination and conspiracy.
    4. That the United States and the State of Arizona have such other 
relief as the nature of the case may require and the Court may deem 
just and proper.
Grant Woods,
Attorney General.
Sydney K. Davis,
Chief Counsel Consumer Protection & Antitrust Section.
Suzanne M. Dallimore,
Antitrust Unit Chief, Civil Division.
Lisa L. Glow,
Attorney, Antitrust Unit, State of Arizona.
Janet A. Napolitano,
United States Attorney, District of Arizona.
Anne K. Bingaman,
Assistant Attorney General.
Robert E. Litan,
Deputy Assistant Attorney General.
Mark C. Schechter,
Deputy Director of Operations.
Gary R. Spratling,
Chief.
Barbara J. Nelson,
Phillip R. Malone,
Carla G. Addicks,
Attorneys.
Antitrust Division, U.S. Department of Justice, Box 36046, 450 Golden 
Gate Avenue, San Francisco, California 94102, (415) 556-6300.
Barbara J. Nelson, Phillip R. Malone, Carla G. Addicks, Antitrust 
Division, U.S. Department of Justice, 450 Golden Gate Avenue, Box 
36046, 10th Floor, San Francisco, California 94102, (415) 556-6300

Attorneys for the United States

Grant Woods, Attorney General, Sydney K. Davis, Chief Counsel, ID# 
004041, Suzanne M. Dallimore, ID# 014151, Lisa L. Glow, ID# 013232, 
Consumer Protection & Antitrust Section, Department of Law Building, 
Room #259, 1275 West Washington Street, Phoenix, Arizona 85007-2997, 
(602) 542-3702

Attorneys for the State of Arizona

In the United States District Court--District of Arizona

    United States of America, and State of Arizona, by and through 
its Attorney General Grant Woods, Plaintiffs, vs. Delta Dental Plan 
of Arizona, Inc., an Arizona Corporation, Defendant. Filed August 
30, 1994. Civil No. 94-1793PHXPGR.

Settlement Agreement

    This Agreement is made and entered into as of August 25, 1994, in 
the above-captioned matter.
    Whereas, the Plaintiffs, State of Arizona and the United States of 
America, through their respective attorneys, filed a complaint on 
August 30, 1994, alleging violations of the Sherman Act, 15 U.S.C. 
Sec. 1, and of the Uniform Arizona Antitrust Act, A.R.S. Sec. 44-1402;
    Whereas, the Defendant denies liability;
    Whereas, there has been no determination by the Court that a 
violation of law has occurred; and
    Whereas, the Plaintiffs, and Defendant, desiring to resolve their 
disputes without trial or adjudication of any issue of law or fact, 
have consented to the entry of the attached Final Judgment, filed 
herewith;
    Now Therefore, in consideration of the covenants and undertakings 
here set forth, and intending this agreement to be legally binding, it 
is agreed by and between Defendant and the Plaintiffs as follows:
    1. As used in this Settlement Agreement:
    A. ``Attorney General'' means any duly authorized representative of 
the Office of the Attorney General, State of Arizona.
    B. ``State'' means the State of Arizona, acting through its 
Attorney General.
    C. ``Person'' means any natural person and any corporation, 
partnership, joint venture, formal or informal association, and any 
other legal entity.
    D. ``Party'' means any person stipulating or otherwise consenting 
to the entry of the Final Judgment.
    E. ``Defendant'' means Delta Dental Plan of Arizona, an Arizona 
Corporation.
    F. ``Complaint'' means the Plaintiffs' complaint in this action.
    G. ``Term'' means the term of this Settlement Agreement and Final 
Judgment.
    H. ``Participating Provider'' and ``Provider'' means any dentist 
practicing in the State of Arizona who has entered into a Participating 
Dentist Agreement with the Defendant.
    I. ``Participating Dentist Agreement'' means the Delta Dental 
Participating Dentist Agreement and Confidential Fee Listing document 
by which Defendant contracts with dentists in the State of Arizona, 
including all versions, amendments and additions thereto in effect at 
any time since January 1, 1990 and during the term of this Settlement 
Agreement and Final Judgment.
    J. ``Most Favored Nation Clause'' or ``MFN'' means those provisions 
in the Defendant's participating dentist agreements that require that 
the participating dentist's usual and customary fee be the lowest fee 
charged or offered by that dentist to, or received from, any person or 
dental plan.
    K. ``This action'' means the matter of United States of America and 
State of Arizona v. Delta Dental Plan of Arizona, Inc., filed or to be 
filed in connection with this Settlement Agreement.
    L. ``Final Judgment'' means the Final Judgment entered or to be 
entered in the above-referenced action.
    M. ``Affiliate'' means any entity owned or controlled by Delta 
Dental.
    2. The terms of the Final Judgment and Settlement Agreement shall 
apply to the Defendant and to the Defendant's officers, employees, 
members acting as corporate policy makers, directors, successors, 
assigns, subsidiaries, divisions and any other organizational units of 
any kind, and to all other persons in active concert or participation 
with any of them who shall have received actual notice of the Final 
Judgment by personal service or otherwise.
    3. Defendant agrees that a Final Judgment in the form attached to 
this Agreement as Exhibit A and incorporated herein by this reference 
may be filed and entered by the Court upon execution of this Settlement 
Agreement upon the motion of any party or upon the Court's own motion, 
at any time after compliance with the requirements of the Antitrust 
Procedures and Penalties Act (15 U.S.C. 16) and without further notice 
to any party or other proceedings, provided that the United States has 
not withdrawn its consent, which it may do at any time before the entry 
of the proposed Final Judgment by serving notice thereof on defendant 
and by filing that notice with the Court, Defendant agrees to be bound 
to the terms of the Final Judgment.
    4. Defendant agrees to refrain from maintaining, adopting, or 
enforcing an MFN or similar provision in participating dentist 
agreements, in corporate by-laws, in rules or regulations, or by any 
other means or methods.
    5. Defendant agrees to comply with IV(A) of the Final Judgment.
    6. Defendant agrees to refrain from taking any action, directly or 
indirectly, to coerce any dentist or member to refrain from offering 
discount fees to any person or dental plan within the State of Arizona 
or to refrain from participating in any dental plan.
    7. Nothing contained in this Settlement Agreement shall restrict 
Defendant from examining, auditing or monitoring fees a dentist charges 
to Defendant, and taking appropriate action where there is good cause 
to believe that a participating dentist may have engaged in 
impermissible ``irregularities in billing'' as defined by A.R.S. 
Sec. 32-1201.11.
    8. Defendant agrees to amend its participating dentist agreements 
in accordance with the Final Judgment.
    9. Defendant agrees to, within fifteen (15) days of the execution 
of this agreement, send a letter by first class mail to every dentist 
participating as of January 1, 1993, stating as follows:
    Pursuant to Delta's settlement of an action brought by the Arizona 
Attorney General and the United States, Delta's Most Favored Nation 
pricing provisions in your participating Dentist Agreement are now void 
and of no force or effect. You are free to set your usual fees as you 
in your sole discretion determine. You are completely free to offer 
discounts to and to associate with, and to offer any price you want to 
any person or dental plan in the State or Arizona. Delta will not audit 
or monitor in any way the fees you charge other persons or dental plans 
in the future except in cases where there are reasonable grounds to 
suspect ``irregularities in billing'' as that term is defined in 
Arizona Revised Statutes Sec. 32-1201.11, which deals with fraudulent 
billing. If you have been terminated as a Delta dentist for failing to 
honor the MFN provisions of your agreement and if you wish to be 
reinstated as a Delta dentist, please so state in writing within thirty 
days of the date of this letter and your request will be honored within 
five days of receipt.
    Delta will not discriminate or retaliate against any dentist on the 
basis of his or her participation with a discount dental plan. Delta 
reserves the right to limit the number of dentists who may participate 
in any Preferred Provider Organization Delta may create, but will do so 
for reason unrelated to the dentist's fee discounting practices or his 
or her participation with any competing dental plan.
    10. Defendant agrees to provide a declaration of service of the 
foregoing letter on Delta dentists to the Plaintiff's offices within 
five (5) days of its mailing.
    11. Defendant agrees to reinstate terminated dentists in accordance 
with the letter described in 9.
    12. Defendant agrees that no later than thirty (30) days from the 
entry of the Final Judgment, Defendant shall pay to the Attorney 
General's Antitrust Revolving Fund an amount agreed upon by the 
parties.
    13. The State of Arizona agrees not to initiate debarment or 
termination proceedings relating to State of Arizona Contract No. A2-
0093-001 upon any ground arising out of the complaint in the action. 
The State certifies that as of the date of execution of this Settlement 
Agreement, no termination or partial termination, suspension or 
debarment of that contract has been initiated, that no such proceeding 
is contemplated or planned and that the State has no present intention 
of initiating such a proceeding upon information processed as of the 
date of this Settlement Agreement. The State agrees to notify Defendant 
in writing consistent with its contractual and legal obligations of any 
termination that may be initiated in the future. Nothing in this 
Settlement Agreement shall be construed to alter or amend any provision 
contained in State of Arizona Contract No. A2-0093-001, or to afford 
any party any additional rights or benefits.
    14. The term of this Settlement Agreement shall be for five years, 
from the date of entry of the Final Judgment.
    15. In the event that Plaintiffs reasonably believe that Defendant 
has violated the provisions of the Final Judgment or Settlement 
Agreement, Defendant agrees that the Plaintiffs, or each of them, may 
move the court for an order, upon affidavits stating the factual 
grounds therefore, and the Court, after notice by regular mail to the 
last known address of the Defendant and to its attorney of record, and 
after a hearing at which Defendant shall have a reasonable opportunity 
to present evidence and legal argument, may enter an order which, among 
other remedies, may require Defendant to pay a penalty in such amount 
as is established by the Court, per violation of the Final Judgment or 
this Settlement Agreement, such penalty to be paid within 30 days of 
the date on which the order is mailed, regular mail, to the last known 
address of Defendant. The Court may also enter such other sanction, 
including debarment, as it deems appropriate.
    16. Defendant agrees that upon failure to pay the penalty as 
provided in this section, or for any other violation of the Final 
Judgment or this Settlement Agreement, the plaintiffs or each of them 
may exercise all remedies available at law or in equity.
    17. Nothing contained in this Settlement Agreement or the Final 
Judgment shall limit the rights of the United States from utilizing 
other investigative alternatives, such as the Civil Investigative 
Demand process provided by 15 U.S.C. 1311-1314, or a federal grand 
jury, or the State of Arizona from utilizing its civil investigative 
authority under A.R.S. Sec. 44-1406.
    18. Except as provided in paragraph 13, nothing contained in this 
Settlement Agreement or the Final Judgment shall affect the rights or 
remedies of any State agency arising out of any contractual 
relationship with, or regulatory authority over, Defendant.
    19. By execution of this Settlement Agreement, the State of Arizona 
covenants and agrees to release, waive and forever discharge and to 
refrain forever from prosecuting or maintaining any suit or action 
against the Defendant, or its present or past officers, directors, 
agents, employees, affiliates, predecessors, or any of its respective 
successors, assigns or representatives known or unknown, fixed or 
contingent, suspected or claimed which the State of Arizona ever had or 
may now have against Defendant or any of this covenant's beneficiaries 
pertaining to all matters that were or could have been asserted in the 
complaint arising out of antitrust law.
    20. Nothing in this Settlement Agreement shall be deemed a release 
or waiver of any claims arising out of a breach of this Agreement.
    21. Nothing in this Settlement Agreement or Final Judgment shall be 
construed to release or to confer any right whatsoever on any party or 
state agency not expressly named in it.
    22. This Settlement Agreement, the Final Judgment, or any portion 
or draft thereof shall not be used as evidence, or construed in any way 
whatsoever as an admission by Defendant, the United States, or the 
State of Arizona with respect to any issue in this action.
    23. Upon filing the Complaint, Final Judgment, and Settlement 
Agreement in this case, the State of Arizona will dismiss the complaint 
filed in State of Arizona v. Delta Dental Plan of Arizona, Inc., No. CV 
94-10142, filed in the Superior Court of the State of Arizona in and 
for the County of Maricopa.
    24. Immediately upon Court approval of this Settlement Agreement 
and entry of the Final Judgment, the United States and the State of 
Arizona shall, at their own expense, and consistent with any federal or 
state law, return to Defendant all documents produced by Defendant to 
the Attorney General's Office and in the Plaintiffs' possession, 
custody, or control, and all copies thereof, or, at Plaintiffs' 
election, certify to counsel for Defendant that such documents have 
been disposed of in a manner mutually agreed upon by counsel for the 
parties.
    25. This Settlement Agreement constitutes the entire agreement 
between the parties. All prior oral or written agreements, commitments 
or understandings with respect to the matters provided for herein are 
hereby set aside and no evidence of any oral or written agreements, 
commitments or understandings with respect to the matters provided for 
herein shall be admissible in any proceeding for any purpose absent 
written consent of all parties to this Settlement Agreement and Final 
Judgment.
    26. Article headings contained in the Final Judgment are inserted 
for convenience of reference only, and shall not be deemed to be part 
of the Final Judgment for any purpose, and shall not in any way define 
or affect the meaning, construction or scope of any of the provisions 
of it.
    27. This Settlement Agreement shall be final upon execution. No 
delay in entry of the Final Judgment shall delay performance as agreed 
in this Settlement Agreement. In the vent that the United States 
withdraws its consent to this agreement or to the Final Judgment, the 
parties agree to re-negotiate this agreement in good faith.
    28. This Settlement Agreement may be executed in one or more 
counterparts, each of which shall for all purposes be deemed an 
original and all of which shall constitute the same instrument.
    29. Each of the parties to this Settlement Agreement represents and 
warrants that:
    a. It has the power and authority to enter into this Settlement 
Agreement and to perform its obligations thereunder;
    b. It has taken all action and has secured the consents of all 
persons necessary to authorize the execution, delivery and performance 
of this Settlement Agreement; and
    c. This Settlement Agreement has been duly executed and delivered 
by it and constitutes a valid and binding obligation enforceable 
against it is accordance with its terms.
    30. The Defendant will file a certified copy of a resolution of the 
Board of Directors of Defendant, authorizing entry into this 
stipulation and consenting to entry of the Final Judgment in the form 
of Final Judgment hereto attached.
    31. The parties intend that if there is any ambiguity in this 
Settlement Agreement, it will be construed in favor of settlement of 
claims.
    32. Nothing contained herein has been agreed to for the benefit of 
any third party and nothing herein shall be construed to provide any 
rights to any third party.
    In Witness Whereof, the parties hereto have executed this 
Settlement Agreement as of this 25th day of August, 1994.

Delta Dental Plan of Arizona, Inc., and Arizona Corporation
James E. Judd,
President and CEO.
State of Arizona
Suzanne M. Dallimore.
United States of America
Barbara J. Nelson.

In the United States District Court--District of Arizona

    United States of America, and State of Arizona, by and through 
its Attorney General Grant Woods, Plaintiffs, vs. Delta Dental Plan 
of Arizona, Inc., an Arizona Corporation, Defendant. Civil No.

Final Judgment

    Whereas, Plaintiffs, United States of America and State of Arizona, 
through their respective attorneys, filed their Complaint on August 30, 
1994, alleging violations of the Sherman Act, 15 U.S.C. Sec. 1 and the 
Uniform Arizona Antitrust Act, A.R.S. Sec. 44-1402;
    Whereas, the Defendant denies liability;
    Whereas, there has been no determination by the Court that a 
violation of law has occurred;
    Whereas, the Plaintiffs and Defendant, desiring to resolve their 
disputes without trial or adjudication of any issue of law or fact, 
have entered into a Settlement Agreement dated as of August 25, 1994 in 
which they have provided for the entry of this Final Judgment;
    Whereas, this Final Judgment shall not be evidence against or an 
admission by any party with respect to any issue of fact or law; and
    Whereas, this Final Judgment is filed in accordance with the terms 
of the Antitrust Procedures and Penalties Act, 15 U.S.C. Sec. 16, and 
is a consent judgment as that term is used in 15 U.S.C. Sec. 16(a);
    Now therefore, before the taking of any testimony and without trial 
or adjudication of any issue of fact or law herein, it is hereby 
Ordered, Adjudged, and Decreed as follows:

I

Jurisdiction

    This Court has jurisdiction of the subject matter of this action 
and of each of the parties consenting hereto. The Court has 
jurisdiction over Count Two of the Complaint pursuant to 28 U.S.C. 
Sec. 1367(a). The Complaint states a claim upon which relief may be 
granted against the Defendant under Section 1 of the Sherman Act, 15 
U.S.C. Sec. 1, and under A.R.S. Sec. 44-1402.

II

Definitions

    As used herein, the term:
    (A) ``Defendant'' means Delta Dental Plan of Arizona, Inc., an 
Arizona Corporation;
    (B) ``Most Favored Nation Clause'' or ``MFN'' means those 
provisions in the Defendant's participating dentist agreements that 
require that the participating dentist's usual and customary fee be the 
lowest fee charged or offered by that dentist to, or received from, any 
person or dental plan;
    (C) ``Participating Dentist Agreement'' means the Delta Dental 
Participating Dentist Agreement and Confidential Fee Listing document 
by which Defendant contracts with dentists in the State of Arizona 
including all versions, amendments and additions thereto in effect at 
any time since January 1, 1990 and during the term of this Final 
Judgment.

III

Applicability

    (A) This Final Judgment applies to the Defendant and to the 
Defendant's officers, employees, members acting as corporate 
policymakers, directors, successors, assigns, subsidiaries, divisions 
and any other organizational units of any kind, and to all other 
persons in active concert or participation with any of them who shall 
have received actual notice of the Final Judgment by personal service 
or otherwise. Within 60 days of entry, Defendant shall mail a copy of 
this Final Judgment to each dentist who was a member as of January 1, 
1993.
    (B) Nothing herein contained shall suggest that any portion of this 
Final Judgment is or has been created for the benefit of any third 
party and nothing herein shall be construed to provide any rights to 
any third party.

IV

Injunction

    (A) Within the State of Arizona, Defendant and its members are 
enjoined and restrained from any and all of the following conduct:
    (1) Maintaining, adopting, or enforcing an MFN or similar provision 
in participating dentist agreements, in corporate by-laws, in rules or 
regulations, or by any other means or methods;
    (2) Demanding information from dentists about their participation 
with any person or other dental plan;
    (3) Examining, auditing, or monitoring the fees a dentist charges 
to any other dental plan or to any person other than a Delta Dental 
Plan participant;
    (4) Sending written communication to dentists regarding the fees 
dentists charge to persons or dental plans other than Defendant's;
    (5) Requiring any dentist to identify the dental plans with which 
he or she participates;
    (6) Seeking any vote of dentists on the levels of reimbursement 
Defendant is to pay to its dentists;
    (7) Terminating, or discriminating or retaliating against, any 
dentist because he or she offers discounted fees to any person or 
dental plan;
    (8) Differentiating between dentists in payment or other treatment 
based on a dentist's discounting of fees; or
    (9) Taking any other action, directly or indirectly, to coerce any 
dentist to refrain from offering discount fees to any person or dental 
plan within the State or Arizona or to refrain from participating in 
any dental plan, or to discourage any dentist from offering discount 
fees or participating in any dental plan.
    However, nothing contained in this Final Judgment shall restrict 
Defendant from examining, auditing or monitoring fees a dentist charges 
to Defendant, and taking appropriate action, where there is good cause 
to believe that a participating dentist may have engaged in 
impermissible ``irregularities in billing'' as defined by A.R.S. 
Sec. 32-1201.11.
    (B) The following italicized language and all similar provisions of 
the Confidential Fee Listing and Participating Dentist Agreement shall 
be null and void and Defendant shall be entitled to no benefit from it, 
direct or indirect, prospective or retroactive:

Confidential Fee Listing

    USUAL: A ``usual fee'' for a patient is a fee charged or offered 
and intended to be collected by an individual dentist or group of 
dentists; i.e. his/her own usual fee. However, if a dentist or group 
of dentists charge a lower fee to patients who are members of any 
other individual or group dental care program for the same or 
similar service or procedure, the ``usual fee'' shall be deemed to 
be the lowest fee charged or offered and received as payment in 
full.

Participating Dentist Agreement

    5. I agree to charge Delta Dental my usual fees charged to all 
my other patients or the amount accepted as payment in full, 
whichever is less, for services rendered to Delta Dental's covered 
patients, and agree to accept Delta Dental's determination of 
reasonable fees for any procedure as full satisfaction of my fee 
where my usual fee for such services is determined to be in excess 
of the 90th percentile or the customary range of charges made by 
dentists of similar training for the same service(s) within the same 
geographic area as determined by Delta Dental.

    (C) Defendant shall, within fifteen (15) days of the date of the 
Settlement Agreement, mail a letter to all participating dentists 
containing the language set forth in the Settlement Agreement, and 
shall certify to the Plaintiffs in writing, within five (5) days of 
mailing, that the letter was sent.
    (D) No later than thirty (30) days from the date of entry of this 
Final Judgment, Defendant shall pay to the State of Arizona Attorney 
General's Antitrust Revolving Fund an amount to be agreed upon by the 
parties.
    (E) Defendant shall comply in all respects with all provisions of 
the Settlement Agreement dated August 25, 1994.

V

Retention of Jurisdiction

    Jurisdiction is retained by this Court for the purpose of enabling 
any of the parties to this Final Judgment to apply to this Court at any 
time for further orders and directions as may be necessary or 
appropriate to carry out or construe this Final Judgment, modify it on 
the basis of changed circumstances, terminate any of its provisions, 
enforce compliance, and punish violations of its provisions.
    Nothing in this provision shall give standing to any person not a 
party to this Final Judgment to seek any relief related to it.

VI

Access to Information

    For the purposes of determining or securing compliance with the 
Final Judgment, Defendant agrees that from time to time:
    (A) Duly authorized representatives of the United States, upon 
written request of the Assistant Attorney General in charge of the 
Antitrust Division, or the Attorney General of the State of Arizona, 
upon written request of the Attorney General, and on reasonable notice 
to Defendant, shall be permitted, subject to any legally recognized 
privilege, access, during office hours, to inspect and copy all books, 
ledgers, accounts, correspondence, memoranda and other records and 
documents in the possession or under the control of Defendant relating 
to any matters contained in this Final Judgment; and
    (B) Upon the written request of the Assistant Attorney General in 
charge of the Antitrust Division, or the Attorney General of the State 
of Arizona, it shall submit such written reports, under oath if 
requested, with respect to any of the matters contained in the Final 
Judgment.
    The parties agree that Defendant shall have the right to be 
represented by counsel in any such process.
    Any information provided to the Plaintiff under this section of the 
Final Judgment shall be kept confidential by the Plaintiffs and shall 
not be disclosed to third parties except as necessary to enforce the 
Final Judgment or as otherwise previously agreed or required by law.

VII

Term

    This Final Judgment shall expire five years from the date of its 
entry.

VIII

Public Interest

    Entry of this Final Judgment is in the public interest.

    Dated this ________ day of ____________________, 1994.

----------------------------------------------------------------------

United States District Judge

Resolution of the Board of Directors of Delta Dental Plan of Arizona, 
Inc.

    Resolved, that Delta Dental Plan of Arizona, Inc., an Arizona non-
profit corporation, shall enter into the Settlement Agreement and 
consent to the entry of a Final Judgment in the form exhibited to the 
Board of Directors, copies of which are attached to the minutes of the 
meeting at which this Resolution has been adopted.

Certificate

    Michael C. Bailey, D.M.D., Secretary of Delta Dental Plan of 
Arizona, Inc., an Arizona non-profit corporation, hereby certifies that 
there is set forth above the full text of a Resolution of the Board of 
Directors of said Delta Dental Plan of Arizona, Inc., duly and 
regularly adopted at a meeting of said Board of Directors on August 6, 
1994; that copies of the forms of Settlement Agreement and Final 
Judgment referred to in said Resolution are attached hereto as Exhibit 
``A'' and Exhibit ``B''; and that said Resolution is in full force and 
effect and has not been altered, amended or repealed.

    Dated: August 6, 1994.
Michael C. Bailey, D.M.D.,
Secretary.

In the United States District Court, District of Arizona

    United States of America, and State of Arizona, by and through 
its Attorney General Grant Woods, Plaintiffs, vs. Delta Dental Plan 
of Arizona, Inc., an Arizona Corporation, Defendant. Filed August 
30, 1994. Civil No. 94-1793PHXPGR.

Final Judgment

    Whereas, Plaintiff, United States of America and State of Arizona, 
through their respective attorneys, filed their Complaint on August 30, 
1994, alleging violations of the Sherman Act, 15 U.S.C. Sec. 1 and the 
Uniform Arizona Antitrust Act, A.R.S. Sec. 44-1402;
    Whereas, the Defendant denies liability;
    Whereas, there has been no determination by the Court that a 
violation of law has occurred;
    Whereas, the Plaintiffs and Defendant, desiring to resolve their 
disputes without trial or adjudication of any issue of law or fact, 
have entered into a Settlement Agreement dated as of August 25, 1994 in 
which they have provided for the entry of this Final Judgment;
    Whereas, this Final Judgment shall not be evidence against or an 
admission by any party with respect to any issue of fact or law; and
    Whereas, this Final Judgment is filed in accordance with the terms 
of the Antitrust Procedures and Penalties Act, 15 U.S.C. 16, and is a 
consent judgment as that term is used in 15 U.S.C. 16(a);
    Now Therefore, before the taking of any testimony and without trial 
or adjudication of any issue of fact or law herein, it is hereby 
Ordered, Adjudged, and Decreed as follows:

I

Jurisdiction

    This Court has jurisdiction of the subject matter of this action 
and of each of the parties consenting hereto. The Court has 
jurisdiction over Count Two of the Complaint pursuant to 28 U.S.C. 
1367(a). The Complaint states a claim upon which relief may be granted 
against the Defendant under Section 1 of the Sherman Act, 15 U.S.C. 1, 
and under A.R.S. Sec. 44-1402.

II

Definitions

    As used herein, the term:
    (A) ``Defendant'' means Delta Dental Plan of Arizona, Inc., an 
Arizona Corporation;
    (B) ``Most Favored Nation Clause'' or ``MFN'' means those 
provisions in the Defendant's participating dentist agreements that 
require that the participating dentist's usual and customary fee be the 
lowest fee charged or offered by that dentist to, or received from, any 
person or dental plan;
    (C) ``Participating Dentist Agreement'' means the Delta Dental 
Participating Dentist Agreement and Confidential Fee Listing document 
by which Defendant contracts with dentists in the State of Arizona 
including all versions, amendments and additions thereto in effect at 
any time since January 1, 1990 and during the term of this Final 
Judgment.

III

Applicability

    (A) This Final Judgment applies to the Defendant and to the 
Defendant's officers, employees, members acting as corporate policy 
makers, directors, successors, assigns, subsidiaries, divisions and any 
other organizational units of any kind, and to all other persons in 
active concert or participation with any of them who shall have 
received actual notice of the Final Judgment by personal service or 
otherwise. Within 60 days of entry, Defendant shall mail a copy of this 
Final Judgment to each dentist who was a member as of January 1, 1993.
    (B) Nothing herein contained shall suggest that any portion of this 
Final Judgment is or has been created for the benefit of any third 
party and nothing herein shall be construed to provide any rights to 
any third party.

IV

Injunction

    (A) Within the State of Arizona, Defendant and its members are 
enjoined and restrained from any and all of the following conduct:
    (1) Maintaining, adopting, or enforcing an MFN or similar provision 
in participating dentist agreements, in corporate by-laws, in rules or 
regulations, or by any other means or methods;
    (2) Demanding information from dentists about their participation 
with any person or other dental plan;
    (3) Examining, auditing, or monitoring the fees a dentist charges 
to any other dental plan or to any person other than a Delta Dental 
Plan participant;
    (4) Sending written communication to dentists regarding the fees 
dentists charge to persons or dental plans other than Defendant's;
    (5) Requiring any dentist to identify the dental plans with which 
he or she participates;
    (6) Seeking any vote of dentists on the levels of reimbursement 
Defendant is to pay to its dentists;
    (7) Terminating, or discriminating or retaliating against, any 
dentist because he or she offers discounted fees to any person or 
dental plan;
    (8) Differentiating between dentists in payment or other treatment 
based on a dentist's discounting of fees; or
    (9) Taking any other action, directly or indirectly, to coerce any 
dentist to refrain from offering discount fees to any person or dental 
plan within the State of Arizona or to refrain from participating in 
any dental plan, or to discourage any dentist from offering discount 
fees or participating in any dental plan.
    However, nothing contained in this Final Judgment shall restrict 
Defendant from examining, auditing or monitoring fees a dentist charges 
to Defendant, and taking appropriate action, where there is good cause 
to believe that a participating dentist may have engaged in 
impermissible ``irregularities in billing'' as defined by A.R.S. 
Sec. 32-1201.11.
    (B) The following underlined language and all similar provisions of 
the Confidential Fee Listing and Participating Dentist Agreement shall 
be null and void and Defendant shall be entitled to no benefit from it, 
direct or indirect, prospective or retroactive:

Confidential Fee Listing

    USUAL: A ``usual fee'' for a patient is a fee charged or offered 
and intended to be collected by an individual dentist or a group of 
dentists; i.e. his/her own usual fee. However, if a dentist or group 
of dentists charge a lower fee to patients who are members of any 
other individual or group dental care program for the same or 
similar service or procedure, the ``usual fee'' shall be deemed to 
be the lowest fee charged or offered and received as payment in 
full.

Participating Dentist Agreement

    5. I agree to charge Delta Dental my usual fees charged to all 
my other patients or the amount accepted as payment in full, 
whichever is less, for services rendered to Delta Dental's covered 
patients, and agree to accept Delta Dental's determination of 
reasonable fees for any procedure as full satisfaction of my fee 
where my usual fee for such services is determined to be in excess 
of the 90th percentile or the customary range of charges made by 
dentists of similar training for the same service(s) within the same 
geographic area as determined by Delta Dental.

    (C) Defendant shall, within fifteen (15) days of the date of the 
Settlement Agreement, mail a letter to all participating dentists 
containing the language set forth in the Settlement Agreement, and 
shall certify to the Plaintiffs in writing, within five (5) days of 
mailing, that the letter was sent.
    (D) No later than thirty (30) days from the date of entry of this 
Final Judgment, Defendant shall pay to the State of Arizona Attorney 
General's Antitrust Revolving Fund an amount to be agreed upon by the 
parties.
    (E) Defendant shall comply in all respects with all provisions of 
the Settlement Agreement dated August 25, 1994.

V

Retention of Jurisdiction

    Jurisdiction is retained by this Court for the purpose of enabling 
any of the parties to this Final Judgment to apply to this Court at any 
time for further orders and directions as may be necessary or 
appropriate to carry out or construe this Final Judgment, modify it on 
the basis of changed circumstances, terminate any of its provisions, 
enforce compliance, and punish violations of its provisions.
    Nothing in this provision shall give standing to any person not a 
party to this Final Judgment to seek any relief related to it.

VI

Access to Information

    For the purposes of determining or securing compliance with the 
Final Judgment, Defendant agrees that from time to time;
    (A) Duly authorized representatives of the United States, upon 
written request of the Assistant Attorney General in charge of the 
Antitrust Division, or the Attorney General of the State of Arizona, 
upon written request of the Attorney General and on reasonable notice 
to Defendant, shall be permitted, subject to any legally recognized 
privilege, access, during office hours, to inspect and copy all books, 
ledgers, accounts, correspondence, memoranda and other records and 
documents in the possession or under the control of Defendant relating 
to any matters contained in this Final Judgment; and
    (B) Upon the written request of the Assistant Attorney General in 
charge of the Antitrust Division, or the Attorney General of the State 
of Arizona, it shall submit such written reports, under oath if 
requested, with respect to any of the matters contained in the Final 
Judgment.
    The parties agree that Defendant shall have the right to be 
represented by counsel in any such process.
    Any information provided to the Plaintiffs under this section of 
the Final Judgment shall be kept confidential by the Plaintiffs and 
shall not be disclosed to third parties except as necessary to enforce 
the Final Judgment or as otherwise previously agreed or required by 
law.

VII

Term

    This Final Judgment shall expire five years from the date of its 
entry.

VIII

Public Interest

    Entry of this Final Judgment is in the public interest.

    Dated this ________ day of ____________, 1994.
----------------------------------------------------------------------

United States District Judge

Barbara J. Nelson, Phillip R. Malone, Carla G. Addicks, Antitrust 
Division, U.S. Department of Justice, 450 Golden Gate Avenue, Box 
36046, 10th Floor, San Francisco, California 94102, (415) 556-6300

Attorneys for the United States

In the United States District Court District of Arizona

    United States of America, and State of Arizona, by and through 
its Attorney General Grant Woods, Plaintiffs, vs. Delta Dental Plan 
of Arizona, Inc., an Arizona Corporation, Defendant. Filed: August 
30, 1994. Civil No. 94-1793PHXPGR

Competitive Impact Statement

    Pursuant to Section 2(b) of the Antitrust Procedures and Penalties 
Act, 15 U.S.C. 16(b)-(h), the United States submits this Competitive 
Impact Statement relating to the proposed Final Judgment (or ``the 
Judgment'') submitted for entry against and with the consent of Delta 
Dental Plan of Arizona, Inc., an Arizona Corporation, in this civil 
antitrust proceeding.

I

Nature and Purpose of the Proceeding

    On August 30, 1994, the United States and the State of Arizona, 
acting under the direction of their respective Attorneys General, filed 
this civil antitrust suit. Count One of the Complaint, brought by both 
the United States and the State of Arizona, alleges that Delta Dental 
Plan of Arizona, Inc. (``Delta''), an Arizona corporation, and its co-
conspirators conspired to unreasonably restrain competition by 
restraining or eliminating discounting of fees for dental services in 
violation of Section 1 of the Sherman Act, 15 U.S.C. 1. Count One of 
the Complaint asks the Court to find that Delta has violated Section 1 
of the Sherman Act, and further requests the Court to enjoin the 
continuance of the conspiracy. Count Two of the Complaint is brought 
solely by the State of Arizona and alleges a violation of the Uniform 
Arizona Antitrust Act, A.R.S. Sec. 44-1402, by the same conduct. This 
Competitive Impact Statement addresses only the Court advanced by the 
United States, Count One.
    Entry of the proposed Final Judgment will terminate the entire 
action, except that the Court will retain jurisdiction over the matter 
for further proceedings which may be required to interpret, enforce or 
modify the Judgment or to punish violations of any of its provisions.

II

Practices Giving Rise to the Alleged Violation

    Defendant Delta is an Arizona corporation with its principal place 
of business in Phoenix, Arizona. The majority of the Board of Directors 
of Delta is made up of dentists. Delta contracts with businesses, 
government agencies, and other organizations to provide pre-paid dental 
care coverage to their employees. Delta contracts directly with 
dentists or groups of dentists to provide dental services to patients 
who are members of these covered groups. Delta compensates its 
participating provider dentists for their services on the basis of a 
fee for service determined by Delta in part using fee schedules 
submitted by each dentist.
    Approximately 85 percent of the dentists in the state of Arizona 
have provider contracts with Delta. For most of these dentists, 
payments received from Delta for treating Delta member patients are a 
significant part of their income. Most of these dentists are in 
independent, private practice and actually or potentially compete with 
other participating Delta dentists to provide dental services to both 
Delta and non-Delta patients.
    Defendant Delta's participating dentist agreements and confidential 
fee listings with dentists participating in its dental plan each 
contain what is called a ``most favored nation'' clause (``MFN''). 
These clauses on their face require that each dentist charge Delta the 
lowest price that dentist charges any patient or competing dental care 
plan. If dentists wish to reduce their fees for dental services to any 
other plan or patient, the MFN requires them to also reduce their fees 
to Delta to the same level. For the reasons described below, however, 
the actual effect of the MFN clauses has been to require participating 
Delta dentists to charge other dental plans and non-Delta patients fees 
that are as high as or higher than the fees the dentists charge to 
Delta.
    Count One of the Complaint alleges that, beginning at a time 
unknown to the Plaintiffs and continuing through at least July 1994, 
Delta and its co-conspirators agreed, combined and conspired to 
unreasonably restrain or eliminate the discounting of fees for dental 
services to competing dental plans or to other consumers of dental 
services in violation of Section 1 of the Sherman Act. The Complaint 
alleges that, for the purpose and with the effect of forming and 
carrying out this conspiracy, Delta and its co-conspirators agreed to 
adopt and enforce an MFN in Delta's participating dentist agreements 
and confidential fee listings with participating dentists for the 
purpose of restraining or eliminating discount fees for dental services 
and restricting the ability of dentists to discount their fees, then 
enforced the MFN, and coerced dentists into dropping out of discount 
dental plans that were attempting to compete with Delta.
    Had this case proceeded to trail, the Plaintiffs were prepared to 
prove that the conspiracy has unreasonably restrained price competition 
among dentists and between other dental insurance plans and Delta.
    Delta's adoption and enforcement of the MFN in its agreements with 
participating dentists has restrained price competition among Arizona 
dentists for the provision of dental services because it has caused 
large numbers of dentists to refuse to discount their fees. Before the 
MFN was enforced, many Arizona dentists chose to reduce their fees to 
participate in various competing managed-care and other discount plans. 
For example, at one pint a competing discount plan claimed to have 
contracts with over 1000 participating dentists.
    After Delta began enforcing the MFN clauses, however, most 
participating dentists refused to discount their fees to non-Delta 
patients or competing discount dental plans because, if they did, the 
MFN would require them to also lower all of their fees to Delta. Since 
most dentists in Arizona who participate with Delta receive a 
significant portion of their income from treating Delta patients, the 
cost to those dentists of discounting their fees to non-Delta patients 
or competing dental care programs would be too great to justify 
discounting. For the same reason, it would be too costly for most 
dentists to drop their participation in Delta's plan in order to avoid 
the MFN and be able to discount their fees to competing discount dental 
plans. Consequently, the MFN clauses have substantially restrained both 
the discounting that previously was occurring and future discounting 
that otherwise would have occurred.
    The Plaintiffs were also prepared to prove that the conspiracy has 
unreasonably restrained competition between other dental insurance 
plans and Delta. Delta's vigorous enforcement of the MFN has forced 
large numbers of dentists who had previously been discounting their 
fees to resign from competing discount dental plans. The MFN has also 
prevented those and other dentists from joining competing discount 
plans. As a result, the competing discount plans have not been able to 
attract and/or keep a sufficiently large, qualified, and geographically 
varied panel of dentists necessary to adequately serve their members 
and make their plans commercially marketable to employers and other 
potential patient groups. Many competing plans were about to be forced 
out of business or had in fact seen their ability to attract and serve 
patient groups severely restricted, leading to a substantial reduction 
in competition with Delta.
    The conspiracy has deprived Arizona dental consumers of the 
benefits of free and open competition. Delta's activities have deprived 
consumers of price competition among dentists who are no longer 
discounting their fees. The conspiracy has also denied patients the 
opportunity to choose among competing dental insurance plans offering 
different combinations of dentists, services, and price. This reduction 
in the availability of dental coverage alternatives, such as managed 
care and other discount plans, has substantially reduced the cost 
savings to consumers that such competing plans could provide if they 
were able to contract for dentists' services at discounted fees. In 
fact, in some smaller Arizona communities, all of the dentists 
providing services to patients under competing discount plans have 
resigned from those plans as a result of Delta's enforcement of the 
MFN, leaving consumers there without any access to lower-cost dental 
services.
    The anticompetitive effects of the Delta MFN would not be mitigated 
by any willingness or ability of competing plans to raise their 
payments to participating dentists up to the level of the Delta 
payments. If other plans did so, they would no longer be achieving the 
same cost savings to pass on to dental care consumers. The MFN would 
still cause increased costs to consumers and would not result in Delta 
obtaining any reduction in its fees or costs.

Explanation of the Proposed Final Judgment

    The Plaintiffs and Delta have stipulated that the Court may enter 
the proposed Final Judgment after compliance with the Antitrust 
Procedures and Penalties Act, 15 U.S.C. 16(b)-(h). The proposed Final 
Judgment provides that its entry does not constitute any evidence 
against or admission of any party with respect to any issue of fact or 
law.
    Under the provisions of section 2(e) of the Antitrust Procedures 
and Penalties Act, 15 U.S.C. 16(e), the proposed Final Judgment may not 
be entered unless the Court finds that entry is in the public interest. 
Section VIII of the proposed Final Judgment sets forth such a finding.
    The proposed Final Judgment is accompanied by a Settlement 
Agreement between Plaintiffs and Delta. Section IV. (E) of the Final 
Judgment requires Delta to comply with all the terms of this Settlement 
Agreement. Paragraph 3 of the Settlement Agreement sets forth the 
parties' stipulation that the proposed Final Judgment may be entered 
when appropriate.
    The proposed Final Judgment is intended to ensure that Delta 
eliminates its MFN and stops all similar practices that unreasonably 
restrain competition among dentists and dental care plans in the state 
of Arizona.

A. Scope of the Proposed Final Judgment

    Section III of the proposed Final Judgment provides that the Final 
Judgment shall apply to Delta and to its officers, employees, members 
acting as corporate policy makes, directors, successors, assigns, 
subsidiaries, divisions and other organizational units, and to all 
other persons in active concert or participation with any of them who 
shall have received actual notice of the Final Judgment by personal 
service or otherwise.

B. Prohibitions and Obligations

    Under Section IV of the proposed Final Judgment, Delta is enjoined 
and restrained for a period of five years from maintaining, enforcing, 
or adopting an MFN or similar provision in its participating dentist 
agreements, in its corporate by-laws, in rules or regulations, or by 
any other means or methods. Other provisions of the Final Judgment 
ensure that the MFN's anticompetitive purpose or effects cannot be 
achieved in other ways. Specifically, delta is further enjoined and 
restrained from: (1) Demanding information from dentists about their 
participation with any person or other dental plan; (2) examining, 
auditing, or monitoring the fees a dentist charges to any person or to 
any other dental plan; (3) sending any written communication to 
dentists regarding the fees dentists charge to persons or dental plans 
other than the Defendant's; (4) requiring any dentist to identify the 
dental plans with which he or she participates; (5) seeking any vote of 
dentists on the levels of reimbursement that the Defendant is to pay to 
its dentists; (6) terminating, or discriminating or retaliating 
against, any dentist because he or she offers discounted fees to any 
person or dental plan; (7) differentiating between dentists in payment 
or other treatment based on a dentist's discounting of fees; and (8) 
taking any other action, directly or indirectly, to coerce any dentist 
to refrain from offering discount fees to any person or dental plan 
within the State of Arizona or to refrain from participating in any 
dental plan, or to discourage any dentist from offering discount fees 
or participating in any dental plan.
    Section IV.(B) of the Final Judgment declares that specified 
portions of Delta's Confidential Fee Listing and Participating Dentist 
Agreement which constitute the MFN provisions, or any similar 
provisions, are null and void.
    The Final Judgment excepts from its terms, and does not prohibit, 
Delta's auditing of dentists' fees for the purpose of determining 
compliance with A.R.S. Sec. 32-1201.11, an Arizona state law relating 
to fraudulent billing.
    The Final Judgment requires that, within 60 days of entry of the 
Final Judgment, Delta provide a copy of the Final Judgment to all 
dentists who were Delta members on January 1, 1993. (Section III.(A)).
    Section IV.(C) of the Final Judgment obligates Delta to mail to all 
participating dentists, within 15 days of the date of the Settlement 
Agreement, a letter containing specific language set forth in Paragraph 
9 of the Settlement Agreement. That language advises dentists, among 
other things, that the MFN pricing provisions in the Delta provider 
agreements are void; that the dentists are free to offer discounts to 
and to associate with, and to offer any price they want, to any person 
or dental plan in Arizona; and that Delta will not discriminate or 
retaliate against any dentist based on that dentist's participation 
with a discount dental plan. The language of the letter also advises 
dentists that, if they have been terminated as Delta members because of 
failure to honor the MFN provision, they will be reinstated if they so 
choose.
    The Judgment also provides that the United States and Arizona will 
have access to information to enforce the judgment. (Section VI).

C. Effect of the Proposed Final Judgment on Competition

    The relief required by the proposed Final Judgment will enjoin and 
eliminate a substantial restraint on price competition among dentists 
and between Delta and other dental plans in Arizona, by removing the 
limitations imposed by the MFN on dentists abilities to discount their 
fees and to join discount dental coverage plans if they so choose. The 
Judgment will stop the conspiracy between Delta and its co-conspirators 
by eliminating the anticompetitive MFN, and by preventing Delta and its 
co-conspirators from taking any other action to dissuade or discourage 
dentists from discounting or participating in competing dental plans. 
As a result, the conspiracy will no longer hamper discount dental 
plans' efforts to attract and maintain viable panels of dentists to 
serve their members. At the same time, Delta will still be able to 
compete with other dental plans because it will not be restricted from 
seeking and achieving lower-cost fees through other, legitimate means.
    Significant discounting and price competition was occurring before 
enforcement of the MFN. Because the MFN is the mechanism that has been 
used to restrain or eliminate that discounting and to prevent discount 
plans from retaining participating dentists eliminating the MFN and 
similar restrictions will restore the competition lost as a result of 
the conspiracy. Additional relief, such as requiring changes in the 
dentist control of Delta's board, is not warranted since the Department 
of Justice discovered no evidence in this case that competition was 
suppressed by circumstances other than Delta's adoption and enforcement 
of the MFN.
    The prohibitions and obligations in the proposed Final Judgment 
will restore to dental consumers in Arizona the benefits of free and 
open competition that were suppressed by Delta's adoption and 
enforcement of the MFN. Without the Delta MFN, consumers should have 
access to a greater and more meaningful selection of dental insurance 
alternatives. Discount dental plans should be able to achieve cost 
savings which they can pass on to consumers.

IV

Alternatives to the Proposed Final Judgment

    The alternative to the proposed Final Judgment would be a full 
trial on the merits of the case. In the view of the Department of 
Justice such a trial would involve substantial cost to the United 
States and is not warranted because the proposed Final Judgment 
provides all the relief that is needed to remedy the violations of the 
Sherman Act alleged in the United States Complaint.

V

Remedies Available to Private Litigants

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages suffered, as well as costs and reasonable attorney's fees. 
Entry of the proposed Final Judgment will neither impair nor assist in 
the bringing of such actions. Under the provisions of Section 5(a) of 
the Clayton Act, 15 U.S.C. 16(a), the Final Judgment has no prima facie 
effect in any subsequent lawsuits that may be brought against the 
Defendant in this matter.

VI

Procedures Available for Modification of the Proposed Judgment

    As provided by the Antitrust Procedures and Penalties Act, any 
person believing that the proposed judgment should be modified may 
submit written comments to Gary R. Spratling, Chief, San Francisco 
Office Department of Justice, Antitrust Division, 450 Golden Gate 
Avenue, San Francisco, California 94102, within the 60-day period 
provided by the Act. These comments, and the Government's responses to 
them, will be filed with the Court and published in the Federal 
Register. All comments will be given due consideration by the 
Department of Justice, which remains free, pursuant to Paragraph 3 of 
the Settlement Agreement, to withdraw its consent to the proposed 
judgment at any time prior to its entry if the Department should 
determine that some modification of the judgment is necessary to the 
public interest. The proposed Judgment itself provides that the Court 
will retain jurisdiction over this action, and that the parties may 
apply to the court for such orders as may be necessary or appropriate 
for the modification, interpretation, or enforcement of the Judgment.

VII

Determinative Documents

    No materials and documents of the type described in Section 2(b) of 
the Antitrust Procedures and Penalties Act, 15 U.S.C. Sec. 16(b), were 
considered in formulating the proposed Judgment. Consequently, none are 
filed herewith.

    Dated: August 25, 1994.

        Respectfully submitted,
Barbara J. Nelson,
Philllip R. Malone,
Carla G. Addicks,
Antitrust Division, U.S. Department of Justice, 450 Golden Gate Avenue, 
Box 36046, 10th Floor, San Francisco, California 94102, (415) 556-6300.

Attorneys for the United States.
[FR Doc. 94-22844 Filed 9-14-94; 8:45 am]
BILLING CODE 4410-01-M