[Federal Register Volume 60, Number 218 (Monday, November 13, 1995)]
[Notices]
[Pages 57017-57021]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-27939]



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DEPARTMENT OF JUSTICE

Antitrust Division


U.S. v. Vision Service Plan; Proposed Revised Final Judgment and 
Revised Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. Section 16 (b) through (h), that a proposed 
Revised Final Judgment, a Superseding Stipulation, and a Revised 
Competitive Impact Statement have been filed with the United States 
District Court for the District of Columbia in United States of America 
v. Vision Service Plan, Case No. 1:94CV02693.
    The Complaint in the case alleges that Vision Service Plan (VSP) 
entered into so-called ``most favored nation'' agreements with its 
panel doctors in unreasonable restraint of trade, in violation of 
Section 1 of the Sherman Act, 15 U.S.C. 1, by effectively restricting 
the willingness of panel doctors to discount fees for vision care 
services and substantially reducing discounted fees for vision care 
services.

[[Page 57018]]

    The proposed Revised Final Judgment eliminates VSP's most favored 
nation clause and enjoins VSP from engaging in other actions that would 
limit future discounting by its participating doctors. The proposed 
Revised Final Judgment modifies a few provisions of the original 
proposed Final Judgment in view of VSP's experience while operating 
under the terms of the original proposed Final Judgment, pursuant to a 
Stipulation with the Government, pending approval of a Final Judgment 
by the Court. The specific revisions, and the reason for making them, 
are summarized and explained in the Revised Competitive Impact 
Statement.
    Public comment on the proposed Revised 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 Gail Kursh, Chief; Professions & 
Intellectual Property Section/Health Care Task Force; United States 
Department of Justice; Antitrust Division; 600 E Street, NW., Room 
9300; Washington, DC 20530 (telephone: (202) 307-5799).
Rebecca P. Dick,
Deputy Director of Operations, Antitrust Division.

In the United States District Court for the District of Columbia:

    United States of America, Plaintiff, vs. Vision Service Plan, 
Defendant.

[Case No. 1:94CV02693 TPJ]

Superseding Stipulation

    It is stipulated by and between the undersigned parties, by their 
respective attorneys, that:
    1. This Superseding Stipulation supersedes the Stipulation of the 
parties filed with the Court on December 15, 1994.
    2. The Court has jurisdiction over the subject matter of this 
action and over each of the parties hereto, and venue of this action is 
proper in the District of Columbia.
    3. The parties consent that a Revised Final Judgment in the form 
hereto attached may be filed and entered by the Court, 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 plaintiff 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.
    4. Defendant agrees to be bound by the provisions of the proposed 
Revised Final Judgment pending its approval by the Court. If plaintiff 
withdraws its consent, or if the proposed Revised Final Judgment is not 
entered pursuant to the terms of the Superseding Stipulation, this 
Stipulation shall be of no effect whatsoever, and the making of this 
Stipulation shall be without prejudice to any party in this or in any 
other proceeding.

    For Plaintiff:
Anne K. Bingaman,
Assistant Attorney General.
Joel I. Klein,
Deputy Assistant Attorney General.
Rebecca P. Dick,
Deputy Director, Office of Operations.
Gail Kursh,
D.C. Bar #293118, Chief.
David C. Jordan,
D.C. Bar #914093, Ass't. Chief Professions & Intellectual Property 
Section, Antitrust Division, U.S. Department of Justice.
Steven Kramer
Richard S. Martin,
Attorneys, Antitrust Division, U.S. Dept. of Justice, 600 E Street, 
NW., Room 9420, BICN Bldg., Washington, DC 20530 (202) 307-0997.

    For Defendant:
John J. Miles,
D.C. Bar #364054, Ober, Kaler, Grimes & Shriver, Fifth Floor, 1401 H 
Street, NW., Washington, DC 20005-2202 (202) 326-5008.
Barclay L. Westerfeld,
General Counsel, Vision Service Plan, 3333 Quality Drive, Rancho 
Cordova, CA 95670, (916) 851-5000.

In the United States District Court for the District of Columbia

    United States of America, Plaintiff, vs. Vision Service Plan, 
Defendant.

[Case No. 1:94CV02693 TPJ]

Revised Final Judgment

    Plaintiff, United States of America, filed its Complaint on 
December 15, 1994. Plaintiff and Defendant, by their respective 
attorneys, have consented to the entry of this Final Judgment without 
trial or adjudication of any issue of fact or law. This Final Judgment 
shall not be evidence against or an admission by any party about any 
issue of fact or law or that any violation of law has occurred. 
Therefore, before the taking of any testimony and without trial or 
adjudication of any issue of fact or law herein, and upon consent of 
the parties, it is hereby
    ORDERED, ADJUDGED, AND DECREED, as follows:

I

Jurisdiction

    This Court has jurisdiction over the subject matter of this action 
and over each of the parties consenting hereto. 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.

II

Definitions

    As used herein, the term:
    (A) ``Defendant'' or ``VSP'' means Vision Service Plan;
    (B) ``Panel Doctor's Agreement'' means the VSP Panel Member 
Agreement by which Defendant contracts with optometrists or 
ophthalmologists, including all amendments and additions, in effect at 
any time since January 1, 1992, and during the term of this Final 
Judgment;
    (C) ``Most Favored Nation Clause'' means:
    (1) the clause characterized as a Fee Non-Discrimination Clause in 
paragraph 6 of the VSP Panel Doctor's Agreement, pursuant to which each 
VSP member doctor agrees:
    (a) not to charge fees to VSP that are any higher than those 
charged to the doctor's non-VSP patients, nor those that the doctor 
accepts from any other non-governmental group, group plan, or panel;
    (b) If a published VSP fee schedule would cause payment in excess 
of the doctor's usual and customary fee, to notify VSP and accept such 
lower fee as is consistent with the doctor's usual and customary fees; 
and
    (c) if VSP determines that the doctor is charging fees to VSP that 
are higher than those charged non-VSP patients, VSP shall reduce the 
doctor's fees accordingly; or
    (2) any other existing or future clause in the VSP Panel Doctor's 
Agreement, VSP policy, or VSP practice having the same purpose or 
effect, in whole or in part.
    (D) ``Non-VSP patients'' means patients who are not members of a 
plan insured or administered by VSP.
    (E) ``Non-VSP plan'' means any plan (other than VSP) responsible 
for all or part of any expense for vision care services, provided to 
plan members, pursuant to contractual terms with providers of vision 
services limiting the fees that providers collect for serving the 
plan's members.
    (F) ``Usual and customary fees'' means the fees for services and 
materials that are charged, before any discounting, by VSP panel 
doctors to their private 

[[Page 57019]]
patients (patients not covered by Medicare or Medicaid programs).
    (G) ``VSP panel doctor'' means any optometrist or ophthalmologist 
who has entered into, or who has applied to enter into, a VSP Panel 
Doctor's Agreement.

III

Applicability

    This Final Judgment applies to:
    (A) the Defendant and to its successors and assigns, and to all 
other persons (including VSP panel doctors) in active concert or 
participation with any of them, who have received actual notice of the 
Final Judgment by personal service or otherwise; and
    (B) the Most Favored Nation Clause, as defined in Section II(C) of 
this Final Judgment, but to no other clause of the VSP Panel Doctor's 
Agreement, VSP policy, or VSP practice.

IV

Prohibited Conduct

    Except as permitted in Section V, Defendant is enjoined and 
restrained from:
    (A) maintaining, adopting, or enforcing a Most Favored Nation 
Clause in any VSP Panel Doctor's Agreement, corporate bylaws, policies, 
rules, regulations, or by any other means or methods;
    (B) maintaining, adopting, or enforcing any policy or practice 
linking payments made by VSP to any VSP panel doctor to fees charged by 
the doctor to any non-VSP patient or any non-VSP plan;
    (C) differentiating VSP's payments to, or other treatment of, any 
VSP panel doctor because the doctor charges any fee lower than that 
charged by the doctor to VSP, to any non-VSP patient or to any non-VSP 
plan;
    (D) taking any action to discourage any VSP panel doctor from 
participating in any non-VSP plan or from offering or charging any fee 
lower than that paid to the doctor by VSP to any non-VSP patient or any 
non-VSP plan;
    (E) monitoring or auditing the fees any VSP panel doctor charges 
any non-VSP patient or any non-VSP plan; and
    (F) communicating in any fashion with any VSP panel doctor 
regarding the doctor's participation in any non-VSP plan or regarding 
the doctor's fees charged to any non-VSP patient or to any non-VSP 
plan.

V

Permitted Activities

    Despite any prohibition contained in Section IV of this Final 
Judgment,
    (A) for the purpose of calculating payments to be made to its panel 
doctors, Defendant may request annually that a VSP panel doctor report 
the doctor's usual and customary fee, for each applicable service, 
provided by the doctor during a preceding period of up to 12 months 
ending no later than 2 months before the information must be reported, 
provided that such information is requested uniformly from all panel 
doctors within a meaningful geographic area comprising zip codes;
    (B) Defendant may calculate the fees that it pays to a VSP panel 
doctor for services rendered to VSP patients based on the panel 
doctor's usual and customary fees, provided that Defendant employs a 
uniform method of calculation at least within each meaningful 
geographic area, comprising zip codes, in which it does business;
    (C) only for the purposes of verifying whether the information 
reported by a VSP panel doctor, pursuant to Section V(A), is accurate 
or of investigating a VSP panel doctor's suspected excessive billing to 
VSP, upon reasonable belief that the reported fees may be inaccurate or 
excessive, and subject to the reasonable convenience of the VSP panel 
doctor, Defendant may audit the VSP panel doctor's charges to patients;
    (D) consistently with Sections IV (C) and (D), Defendant may devise 
and utilize a fee system for doctors who apply for VSP panel membership 
after the date of this Final Judgment that is different from the system 
used to compensate current panel doctors, and that system may be based 
on the average fees VSP pays in a meaningful geographic area comprising 
zip codes;
    (E) consistently with Sections IV (C) and (D), Defendant may elect 
to maintain current fees for panel doctors at their existing levels and 
may base any future fee increases on the Consumer Price Index, VSP's 
own financial growth, or any other meaningful economic indicator;
    (F) consistently with Sections IV (C) and (D), Defendant may impose 
penalties on panel doctors who have misrepresented their usual and 
customary fees; and
    (G) when acting as an agent of the Medicare program or any state 
Medicaid program, Defendant may administer the payment methodologies 
employed by such programs, provided that any fee information, that VSP 
is required to collect from its panel doctors in administering any such 
payment methodology, is not considered by VSP in determining the fees 
that it pays its panel doctors for services rendered to patients not 
covered by these programs.

VI

Nullification

    The Most Favored Nation Clause shall be null and void and Defendant 
shall impose no further obligation arising from it on any VSP panel 
doctor. Within 60 days of entry of this Final Judgment, Defendant shall 
disseminate to each present VSP panel doctor an addendum to the Panel 
Doctor's Agreement, nullifying the Most Favored Nation Clause, and 
Defendant shall eliminate the Most Favored Nation Clause from all Panel 
Doctor's Agreements entered into after entry of this Final Judgment.

VII

Compliance Measures

    The Defendant shall:
    (A) distribute, within 60 days of the entry of this Final Judgment, 
a copy of this Final Judgment to: (1) all VSP officers and directors; 
(2) VSP employees who have any responsibility for approving, 
disapproving, monitoring, recommending, or implementing any provisions 
in agreements with VSP panel doctors; and (3) all present VSP panel 
doctors and all former VSP panel doctors whom VSP should reasonably 
know have resigned because of the Most Favored Nation Clause;
    (B) distribute in a timely manner a copy of this Final Judgment to 
any officer, director, or employee who succeeds to a position described 
in Section VII(A) (1) or (2);
    (C) obtain from each present or future officer, director, or 
employee designated in Section VII(A) (1) or (2), within 60 days of 
entry of this Final Judgment or of the person's succession to a 
designated position, a written certification that he or she: (1) Has 
read, understands, and agrees to abide by the terms of this Final 
Judgment; and (2) has been advised and understands that his or her 
failure to comply with this Final Judgment may result in conviction for 
criminal contempt of court;
    (D) maintain a record of persons to whom the Final Judgment has 
been distributed and from whom, pursuant to Section VII(C), the 
certification has been obtained;
    (E) The Defendant shall notify all former VSP panel doctors whom it 
should reasonably know have resigned because of the Most Favored Nation 
Clause, that they are reinstated, on terms and conditions that VSP may 
establish consistently with this Final Judgment, unless they do not 
desire reinstatement; and
    (F) report to the Plaintiff any violation of the Final Judgment.

[[Page 57020]]


VIII

Certification

    (A) Within 75 days of the entry of this Final Judgment, the 
Defendant shall certify to the Plaintiff whether it has: (1) 
disseminated contractual addenda pursuant to Section VI, (2) 
distributed the Final Judgment in accordance with Section VII(A), and 
(3) obtained certifications in accordance with Section VII(C).
    (B) For five years after the entry of this Final Judgment, on or 
before its anniversary date, the Defendant shall file with the 
Plaintiff an annual Declaration as to the fact and manner of its 
compliance with the provisions of Sections IV, V, VI, and VII.

IX

Plaintiff's Access

    (A) To determine or secure compliance with this Final Judgment and 
for no other purpose, duly authorized representatives of the Plaintiff, 
upon written request of the Assistant Attorney General in charge of the 
Antitrust Division and on reasonable notice to the Defendant made to 
its principal office, shall be permitted, subject to any legally 
recognized privilege:
    (1) access during the Defendant's office hours to inspect and copy 
all documents in the possession or under the control of the Defendant, 
who may have counsel present, relating to any matters contained in this 
Final Judgment; and
    (2) subject to the reasonable convenience of the Defendant and 
without restraint or interference from it, to interview officers, 
employees or agents of the Defendant, who may have Defendant's counsel 
and/or their own counsel present, regarding such matters.
    (B) Upon the written request of the Assistant Attorney General in 
charge of the Antitrust Division made to the Defendant's principal 
office, the Defendant shall submit such written reports, under oath if 
requested, relating to any matters contained in this Final Judgment as 
may be reasonably requested, subject to any legally recognized 
privilege.
    (C) No information or documents obtained by the means provided in 
Section IX shall be divulged by the Plaintiff to any person other than 
duly authorized representatives of the Executive Branch of the United 
States, except in the course of legal proceedings to which the United 
States is a party, or for the purpose of securing compliance with this 
Final Judgment, or as otherwise required by law.
    (D) If at the time information or documents are furnished by the 
Defendant to Plaintiff, the Defendant represents and identifies in 
writing the material in any such information or documents to which a 
claim of protection may be asserted under Rule 26(c)(7) of the Federal 
Rules of Civil Procedure, and the Defendant marks each pertinent page 
of such material, ``subject to claim of protection under Rule 26(c)(7) 
of the Federal Rules of Civil Procedure,'' then 10 days notice shall be 
given by Plaintiff to the Defendant prior to divulging such material in 
any legal proceeding (other than a grand jury proceeding) to which the 
Defendant is not a party.

Further Elements of the Final Judgment

    (A) This Final Judgment shall expire five years from the date of 
its entry.
    (B) Jurisdiction is retained by this Court for the purpose of 
enabling either of the parties to this Final Judgment, but not other 
person, 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, to modify or terminate any of its provisions, to 
enforce compliance, and to punish violations of its provisions.
    (C) Entry of this Final Judgment is in the public interest.

    Dated: ______________
----------------------------------------------------------------------
 United States District Judge

In the United States District Court for the District of Columbia

    United States of America, Plaintiff, vs. Vision Service Plan, 
Defendant.

[Case No. 1:94CV02693 TPJ]

Revised Competitive Impact Statement

I

Background

    Pursuant to Section 2(b) of the Antitrust Procedures and Penalties 
Act, 15 U.S.C. 16(b)-(h), the United States submits this Revised 
Competitive Impact Statement relating to the proposed Revised Final 
Judgment submitted for entry in this civil antitrust proceeding. These 
documents are styled as ``Revised'' because they reflect changes made 
to a few of the provisions of the proposed Final Judgment, filed on 
December 15, 1994, as the basis for settling this antitrust lawsuit, 
and in related portions of the Competitive Impact Statement, filed on 
January 13, 1995, and published at 60 Fed. Reg. 5110-17 (1995).
    This civil antitrust action commenced on December 15, 1994, when 
the United States filed a Compliant alleging that Vision Service Plan 
(VSP), in all or parts of the 46 states and the District of Columbia in 
which VSP operates vision care plans, entered into agreements with its 
panel doctors that unreasonably restrain competition by restraining 
discounting of fees for vision care services in violation of Section 1 
of the Sherman Act, 15 U.S.C. 1. The Complaint seeks injunctive relief 
to enjoin continuance of the violation.
    The previously filed Competitive Impact Statement is incorporated 
by reference herein, except as modified by this Revised Competitive 
Impact Statement. The Government has agreed to the revisions of the 
proposed Final Judgment that are contained in the proposed Revised 
Final Judgment and outlined below to remedy certain problems VSP has 
experienced while operating under the terms of the proposed Final 
Judgment since it was filed, pursuant to a Stipulation with the 
Government, pending the Court's approval of the Final Judgment.

II

Explanation of the Proposed Final Judgment

A. Definitions
    A definition of ``VSP panel doctor'' has been added as Section 
II(G) of the proposed Revised Final Judgment to clarify that to the 
extent provisions of the Final Judgment prohibit VSP from taking, or 
permit VSP to take, specified actions regarding the doctors on its 
panel, those provisions apply in the same manner also to doctors who 
have applied for panel membership. In addition, the definitions of 
``modal fee'' and ``median fee,'' which had been Sections II (F) and 
(G) of the original proposed Final Judgment, have been deleted because, 
as explained below, VSP will no longer collect or use information 
concerning the modal or median fees of its panel doctors in calculating 
payments to be made to them. A definition of ``usual and customary 
fees'' has been added as a new Section II(F) because, as explained 
below, VSP will be permitted to collect and use information concerning 
the usual and customary fees that its panel doctors charge in 
calculating VSP's payments to them.
B. Permitted Activities and Obligations
    The proposed Revised Final Judgment modifies Section V of the 
original proposed Final Judgment. Generally, Section V permits VSP to 
undertake prescribed activities in determining payments to its panel 
doctors that could otherwise violate applicable injunctive provisions 
of Section IV. The proposed 

[[Page 57021]]
Revised Final Judgment adds a new Section V(G) and revises Sections V 
(A), (B), (C), and (F).
    The addition of Section V(G) is the primary basis for submitting 
the Revised Final Judgment. Section V(G) permits VSP to implement the 
reimbursement methodologies of any Medicare program or any state 
Medicaid program that it may administer. VSP acts as the agent for 
those programs in several states, but, in negotiating the proposed 
Final Judgment, VSP simply overlooked the Final Judgment's possible 
restriction upon its ability to carry out its obligations to those 
governmental programs. Section V(G) of the proposed Revised Final 
Judgment, therefore, makes clear that nothing in the Judgment should be 
construed to prevent VSP from gathering fee information required by 
Medicare or Medicaid, while precluding VSP from using that fee 
information in setting the fees that VSP pays its panel doctors for 
providing services to VSP patients not covered by Medicare or Medicaid 
programs.
    Sections V (A), (B), (C), and (F) of the proposed Revised Final 
Judgment have been changed to reflect that VSP will no longer maintain 
the option, contained in the original proposed Final Judgment, to 
calculate the payments made to its panel doctors based on a doctor's 
modal or median fee and to collect and, if warranted, verify the 
accuracy of, the fee data from its panel doctors needed to make such 
calculations. Pursuant to revised Sections V (A), (B), (C) and (F), VSP 
will now merely retain the option of calculating the fees that it pays 
panel doctors based on their usual and customary fees, and it will no 
longer be permitted to request panel doctors annually to report 
``sufficient information'' or, if warranted, verify the accuracy of the 
reported information, to enable VSP ``to calculate'' a doctor's modal 
or median fee. Rather, VSP will simply be permitted to ask each panel 
doctor to report annually only the doctor's usual and customary fees 
before any discounts are applied, and it will be allowed, if warranted, 
to verify only that fee information. These changes will substantially 
reduce both the level of detail of fee information that VSP will be 
permitted to obtain routinely from its panel doctors and the resultant 
reporting requirements it may impose on VSP panel doctors.
    VSP requested these changes because of difficulties encountered 
during the past several months in trying to calculate the modal and 
median fees of its panel doctors pursuant to the terms of the original 
proposed Final Judgment. Based on that experience, VSP has concluded 
that it does not routinely need to obtain more detailed fee information 
from its panel doctors than an annual report of each doctor's usual and 
customary fees, as now provided by Sections V (A) and (B) of the 
proposed Revised Final Judgment. The Government is amendable to making 
these requested changes because they narrow the scope of activities 
permitted by VSP under the Final Judgment and raise no competitive 
concerns.

III

Procedures Available for Modification of the Proposed Revised Final 
Judgment

    As provided by the Antitrust Procedures and Penalties Act, any 
person believing that the proposed Revised Final Judgment should be 
modified may submit written comments to Gail Kursh, Chief; Professions 
& Intellectual Property Section/Health Care Task Force; Department of 
Justice; Antitrust Division; 600 E Street, N.W.; Room 9300; Washington, 
D.C. 20530, within the 60-day period provided by the Act. Comments 
received, along with comments already received on the previously 
published Competitive Impact Statement, 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 2 of 
the Stipulation, to withdraw its consent to the proposed Revised Final 
Judgment at any time before its entry if the Department should 
determine that some modification of the Judgment is necessary to the 
public interest. The proposed Revised Final 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.

IV

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. 16(b), were 
considered in formulating the proposed Revised Final Judgment. 
Consequently, none are filed herewith.

    Dated: ______________

      Respectfully submitted,
----------------------------------------------------------------------
Steven Kramer
----------------------------------------------------------------------
Richard S. Martin,
Attorneys, Antitrust Division, U.S. Dept. of Justice, 600 E Street, 
N.W., Room 9420, Washington, D.C. 20530, (202) 307-0997.

In the United States District Court for the District of Columbia

    United States of America, Plaintiff, vs. Vision Service Plan, 
Defendant.

[Case No. 1:94CV02693 TPJ]

Certificate of Service

    I certify that I caused copies of the Revised Final Judgment, 
Revised Competitive Impact Statement and Superseding Stipulation to be 
served on October ____, 1995, by Federal Express to: Barclay L. 
Westerfeld, General Counsel, Vision Service Plan, 3333 Quality Drive, 
Rancho Cordova, California 95670, and by courier to: John J. Miles, 
Ober, Kaler, Grimes & Shriver, 1401 H Street, NW., Fifth Floor, 
Washington, DC 20005-2110.

    Dated: ______________.

----------------------------------------------------------------------
Steven Kramer,
Attorney, Antitrust Division, Department of Justice, 600 E Street, NW., 
Room 9420, Washington, DC 20530, (202) 307-1029.
[FR Doc. 95-27939 Filed 11-9-95; 8:45 am]
BILLING CODE 4410-01-M