[Federal Register Volume 62, Number 42 (Tuesday, March 4, 1997)]
[Notices]
[Pages 9807-9812]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-5151]


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DEPARTMENT OF JUSTICE
Antitrust Division


United States v. Delta Dental of Rhode Island; Proposed Final 
Judgment and 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 
Final Judgment, a Stipulation, and a Competitive Impact Statement have 
been filed with the United States District Court for the District of 
Rhode Island in United States of America v. Delta Dental of Rhode 
Island, Civil Action No. 96-113P.
    The Complaint in the case alleges that Delta Dental of Rhode Island 
(``Delta'') entered into so-called ``most favored nation'' agreements 
with its panel dentists in unreasonable restraint of trade, in 
violation of Section 1 of the Sherman Act, 15 U.S.C. Sec. 1. Delta, a 
broad-panel plan contracting with over 90% of Rhode Island's dentists, 
required that participating dentists offer no lower price to competing 
dental plans. The agreements effectively restricted the willingness of 
panel dentists to discount fees for dental care and blocked competition 
from narrow-panel, lower cost dental plans.
    The proposed Final Judgment eliminates Delta's most favored nation 
clause and enjoins Delta from engaging in other actions that would 
limit future discounting by its participating dentists.
    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 Gail Kursh, Chief; Health Care Task 
Force; United States Department of Justice; Antitrust Division; Liberty 
Place; 325 7th Street, NW., Room 404, Washington, DC 20530 (202/307-
5799).
Rebecca P. Dick,
Deputy Director of Operations, Antitrust Division, United States 
Department of Justice.

United States District Court for the District of Rhode Island

[Civil Action No. 96-113P]
    United States of America, Plaintiff, vs. Delta Dental of Rhode 
Island, Defendant.

Stipulation

    It is stipulated by and between the undersigned parties, their 
respective attorneys, that:
    1. The Court has jurisdiction over the subject matter of this 
action and over both of the parties, and venue of this action is proper 
in the District of Rhode Island.
    2. The parties consent that a Final Judgment in the form attached 
may be filed and entered by the Court, upon the motion of either party 
or upon the Court's own action, 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 any by filing that notice with the Court.
    3. If Plaintiff withdraws its consent, or if the proposed Final 
Judgment is not entered pursuant to the terms of this Stipulation, this 
Stipulation shall be of no effect whatsoever, and the making of this 
Stipulation shall be without prejudice to either party in this or in 
any other proceeding.
    4. Defendant agrees to be bound by the provisions of the proposed 
Final Judgment pending its approval by the Court.

    Dated: ______.

For Plaintiff

Joel I. Klein,
Acting Assistant Attorney General.

A. Douglas Melamed,
Deputy Assistant Attorney General.

Rebecca P. Dick,
Deputy Director, Office of Operations.

Gail Kursh,
Chief, Health Care Task Force.

David C. Jordan,
Assistant Chief, Health Care Task Force, Antitrust Division, 
Department of Justice, Washington, D.C. 20530.

For Defendant

William R. Landry, #494,
Blish & Cavanagh, Commerce Center, 30 Exchange Terrace, Providence, 
R.I. 02903-1765, (401) 831-8900.

Steven Kramer,
William E. Berlin,
Mark J. Botti,
Michael S. Spector,
Richard S. Martin,
Attorneys, Antitrust Division, Department of Justice, 325 7th 
Street, N.W., Washington, D.C. 20530, (202) 307-0997.

Sheldon Whitehouse,
United States Attorney, District of Rhode Island.

By: Anthony DiGioia,
Ass't. U.S. Attorney, 10 Dorrance Street, Providence, R.I. 02903, 
(401) 528-5477.

William G. Kopit,
Espstein Becker & Green, 1227 25th Street, N.W., Washington, D.C. 
20037, (202) 861-9000.

United States District Court for the District of Rhode Island

[Civil Action No. 96-113P]
    United States of America, Plaintiff, vs. Delta Dental of Rhode 
Island, Defendant.

Final Judgment

    Plaintiff, United States of America, filed its Complaint on 
February 29, 1996. Plaintiff and Defendant, by their respective 
attorneys, have consented to the entry of this Final Judgment without 
trial or final adjudication of any issue of fact or law. This Final 
Judgment shall not be evidence against or an admission by any party of 
any issue of fact or law, nor a determination that any violation of law 
has occurred. Therefore, before the taking of any trial testimony and 
without trial of any issue of fact or law, and upon consent of the 
parties, it is

    Ordered, adjudged, and decreed, as follows:

I. Jurisdiction

    This Court has jurisdiction over the subject matter of this action 
and over each of the consenting parties. The Complaint states a claim 
upon which relief may be granted against Delta under Section 1 of the 
Sherman Act, 15 U.S.C. 1.

II. Definitions

    As used herein, the term:
    (A) ``Defendant'' or ``Delta'' means Delta Dental of Rhode Island.
    (B) ``Participating Dentist's Agreement'' means Delta's agreement 
with dentists for the provision of dental services to Delta's 
subscribers, including Delta's Rules and Regulations referenced in the 
agreement, and all amendments and additions to any such agreement.
    (C) ``Participating Dentist'' means any dentist who has agreed to 
comply with the terms of the Participating Dentist's Agreement.
    (D) ``Most Favored Nation Clause'' means:

[[Page 9808]]

    (1) paragraph 10 of Delta's Rules and Regulations, sometimes 
characterized as Delta's ``Prudent Buyer Policy,'' pursuant to which:

``Delta Dental reserves the right to limit reimbursements to dentists 
to such levels as such dentists have agreed to accept as reimbursement 
from other non-governmental dental benefits reimbursement programs;'' 
or

    (2) any contractual provision, policy, or practice which requires a 
dentist to charge Delta no more than the lowest fee charged by that 
dentist to any non-Delta plan or patient.
    (E) ``Usual and customary fees'' means the fees for services and 
material that dentists usually charge, before any discounting, to their 
patients.

III. Applicability

    This Final Judgment applies to Delta and to its successors and 
assigns, and to all other persons (including Participating Dentists) in 
active concert or participation with any of them, who have received 
actual notice of the Final Judgment by personal service or otherwise.

IV. Prohibited Conduct

    Delta is enjoined and restrained from:
    (A) maintaining, adopting, or enforcing any Most Favored Nation 
Clause or similar provision in any Participating Dentist's Agreement, 
or by any other means or methods;
    (B) maintaining, adopting, or enforcing any policy or practice 
varying Delta's payments to, or other treatment of, any dentist because 
the dentist charges any non-Delta patient or plan a fee lower than the 
fee the dentist charges Delta;
    (C) taking any action to discourage any dentist from participating 
in any non-Delta plan or from offering or charging to any non-Delta 
patient, or any non-Delta plan, any fee lower than that paid to the 
dentist by Delta; and
    (D) monitoring, auditing, or obtaining from any dentist the fees a 
particular dentist charges any non-Delta patient or any non-Delta plan, 
except as provided in Section V.

V. Permitted Activities

    Nothing herein shall be construed so as to preclude Delta from:
    (A) establishing preferred provider networks or other forms of 
limited panels of providers, including discounted fee panels, 
recruiting dentists who are participating with other dental plans in 
similar panels, and negotiating bi-lateral fee arrangement with such 
dentists, provided that such activity does not violate any provision of 
Section IV;
    (B) establishing provider reimbursement levels as may be reasonable 
and necessary to respond to market conditions and having different 
reimbursement levels for different categories or panels of providers, 
provided that Delta's criteria for differentiation in reimbursement 
among categories or panels of dentists are not based on their 
participation in other dental plans, on fees those dentists offer other 
dental plans or persons, or on fees those dentists agree upon with 
other dental plans or persons; and
    (C) collecting through otherwise lawful means, including use of a 
survey sent to all Participating Dentists, (1) Participating Dentists' 
usual and customary fees for each applicable service, provided that 
such information is collected uniformly from all Participating 
Dentists; and (2) data and information, including reimbursement levels, 
regarding other dental plans.

VI. Nullification

    Delta's Most Favored Nation Clause shall be null and void and Delta 
shall impose no obligation arising from it on any Participating 
Dentist. Within 90 days of entry of this Final Judgment, Delta shall 
disseminate to each Delta Participating Dentist revised Rules and 
Regulations, referenced in the Participating Dentist's Agreement, that 
omit the Most Favored Nation Clause. Delta shall eliminate the Most 
Favored Nation Clause from all Participating Dentist's Agreements 
entered into after entry of this Final Judgment.

VII. Compliance Measures

    The Delta shall:
    (A) distribute, within 60 days of the entry of this Final Judgment, 
a copy of this Final Judgment to: (1) all Delta officers and directors; 
and (2) all Delta employees who have any responsibility for approving, 
disapproving, monitoring, recommending, or implementing any provisions 
in agreements with Participating Dentists.
    (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) distribute, within 60 days of the entry of this Final Judgment, 
a copy of the attached letter, which has been approved by the Antitrust 
Division, by first-class mail to all currently Participating Dentists; 
and
    (F) report to the Plaintiff any violation of the Final Judgment.

VIII. Certification

    (A) Within 100 days of the entry of this Final Judgment, Delta 
shall certify to the Plaintiff whether it has: (1) disseminated revised 
Rules and Regulations pursuant to Section VI; (2) distributed the Final 
Judgment in accordance with Section VII(A); (3) obtained certifications 
in accordance with Section VII(C); and (4) distributed copies of the 
attached letter in accordance with Section VII(E).
    (B) For ten years after the entry of this Final Judgment, on or 
before its anniversary date, Delta 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 to Information

    (A) to determine or secure compliance with this Final Judgment, 
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 Delta made to its principal office, shall 
be permitted, subject to any legally recognized privilege:
    (1) Access during Delta's office hours to inspect and copy all 
documents in the possession or under the control of Delta, who may have 
counsel present, relating to any matters contained in this Final 
Judgment; and
    (2) Subject to the reasonable convenience of Delta and without 
restraint or interference from it, to interview officers, employees or 
agents of Delta, who may have Delta'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 Delta's principal office, 
Delta 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.

[[Page 9809]]

    (C) Delta shall have the right to be represented by counsel in any 
process under this Section.
    (D) 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.
    (E) If at the time information or documents are furnished by Delta 
to Plaintiff, Delta 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 Delta 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 Delta prior to divulging such material in any legal 
proceeding (other than a grand jury proceeding) to which Delta is not a 
party.
    (F) Nothing in this Final Judgment prohibits the Plaintiff from 
using any other investigatory method authorized by law.

X. Further Elements of the Final Judgment

    (A) This Final Judgment shall expire ten 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 no 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, 
based on changed circumstances of fact or law warranting such action; 
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.

Attachment

Attachment Referred to in Section VII(E)

    As you may know, Delta Dental has been involved in a lawsuit 
with the United States Department of Justice in the United States 
District Court of Rhode Island regarding Rule 10 of Delta's Rules 
and Regulations for Dentists, which is sometimes called Delta's 
``Prudent Buyer'' policy. Rule 10 has allowed Delta Dental to limit 
its payments to dentists to the lowest level the dentist had agreed 
to accept from any other non-governmental plan or from any uninsured 
patient.
    Delta Dental and the Department of Justice have agreed to a 
consent decree that has been entered as an order of the District 
Court. As part of this consent decree, Delta has agreed to eliminate 
Rule 10 if its Rules and Regulations.
    The consent decree declares Rule 10 null and void and prohibits 
Delta from varying its payments to, or other treatment of, any 
dentist because the dentist charges any non-Delta patient or plan a 
fee lower than the fee the dentists charges Delta. Within the next 
thirty (30) days, we will forward to you a superseding set of Rules 
and Regulations that omits Rule 10.

Sincerely yours,

________
Director of Provider Relations.
[Civil Action No. 96-113P]

United States District Court for the District of Rhode Island

    United States of America, Plaintiff, vs. Delta Dental of Rhode 
Island, Defendant.

Competitive Impact Statement

    Pursuant to Section 2(b) of the Antitrust Procedures and Penalties 
Act, 15 U.S.C. Sec. 16 (b)-(h), the United States submits this 
Competitive Impact Statement describing the proposal Final Judgment 
submitted to resolve this civil antitrust proceeding.

I. Nature and Purpose of the Proceeding

    On February 29, 1996, the United States filed a civil antitrust 
compliant alleging that Delta Dental of Rhode Island (``Delta''), 
enters into agreements with its participating dentists that 
unreasonably restrain completion by inhibiting discounting of fees for 
denial care in violation of Section 1 of the Sherman Act, 15 U.S.C. 
Sec. 1. The Compliant seeks injunctive relief to enjoin continuance of 
the violation.
    Entry of the proposed Final Judgment will terminate this action, 
except that the Court will retain jurisdiction over the matter for any 
further proceedings that 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

    If this matter had proceeded to trial, the United States would have 
introduced evidence as follows. Delta is Rhode Island's largest dental 
insurer, insuring or administering plans providing insurance to about 
35-45% of Rhode Island residents covered by dental insurance. Delta 
seeks to offer its enrollees the broadest possible panel of dentists 
and contracts with over 90% of Rhode Island dentists. Delta accounts 
for a substantial percentage of the professional income of most Rhode 
Island dentists.
    Pursuant to Delta's Participating Dentist's Agreement (the 
``Agreement''), each contracting dentist agrees to comply with Delta's 
Rules and Regulations. Rule 10 of these Rules and Regulations is a Most 
Favored Nation (MFN) clause, which provides that Delta has the right to 
lower the fees it pays a dentist to the level of the lowest fees that 
that dentist charges any other plan. Delta has applied its MFN clause 
also to dentists' charges to uninsured patients. Rule 7 gives Delta the 
additional right to audit dentists' records to determine whether they 
are complying with the MFN clause.
    In contrast to Delta's program, which by design includes as many 
dentists as possible, some dental plans such as preferred provider 
organizations (``PPOs'') and health maintenance organizations 
(``HMOs''), contract selectively with a limited panel of dentists. By 
offering the prospect of increased patient volume, these managed care 
plans are able to contract with some dentists for services at fees 
substantially below Delta's. These plans then create financial 
incentives for their enrollees to use panel dentists. Selective 
contracting with dentists helps a managed dental care plan lower the 
cost of the delivery of dental service to its enrollees. Accordingly, 
these plans are able to offer patents lower premiums and lower out-of-
pocket costs.
    Delta currently provides so much more of most Rhode Island 
dentists' income than would any entering managed care plan that if 
these dentists were to reduce their fees to such plans, the resulting 
reduction in their income from Delta would be much greater than their 
added income from the entrant plan. Because few dentists in Rhode 
Island are not under contract with Delta, and because Delta's MFN 
clause gives its participating dentists strong disincentives to 
contract with dental managed care plans at fees below Delta's, other 
plans have been unable to form a competitively viable panel. By thus 
excluding from the dental insurance market reduced-cost plans that many 
consumers view as an important option, Delta's MFN clause has protected 
Delta from competition from such lower-cost plans at the expense of 
consumers.
    In recent years, Delta's MFN clause has blocked the entry or 
expansion of several low-cost plans. For example, Delta's MFN clause 
caused dentists to withdraw from Dental Blue PPO--a low-cost preferred 
provider organization established in the fall of 1993 by Blue

[[Page 9810]]

Cross and Blue Shield of Massachusetts to serve Raytheon employees and 
their dependents, including the approximately 1,000 employees and their 
dependents at Raytheon's facility in Portsmouth, Rhode Island. Dental 
Blue PPO had initially succeeded in contracting with a number of Rhode 
Island dentists at substantially discounted rates--rates, by Delta's 
calculations, that were 14% lower than Delta's. These PPO savings would 
have significantly reduced or eliminated Raytheon plan members' co-
payments.
    After identifying Dental Blue PPO as a long-run competitive threat, 
Delta's senior management pursued several related tactics. First, it 
contacted the former chairman of the Rhode Island Dental Association 
(``RIDA'')'s Council on Dental Programs, who supports Delta's MFN 
clause because he believes it sets a floor on dentists' fees. He sent 
RIDA's members a letter warning that because of Delta's MFN clause 
dentists would face ``severe financial penalties'' if they contracted 
with dental Blue PPO. Second, Delta's management sent a letter to Rhode 
Island dentists who Delta knew to be participating in Dental Blue PPO, 
announcing its intention to apply its MFN clause and describing the 
new, reduced payment levels they would receive from delta if they 
continued to participate in Dental Blue PPO.
    By the end of January 1994, all of the dentists contacted by Delta 
had withdrawn from Dental Blue PPO. Some of them made clear to Delta at 
the time that the reason for their withdrawal was Delta's decision to 
apply its MFN clause and requested that Delta return their payments to 
former levels. As a result, Raytheon employees were denied the 
opportunity to lower or eliminate their co-payments for dental care, 
and Rhode Island was denied the entry of a low-cost dental insurance 
plan.\1\
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    \1\ Delta's application of its MFN clause to the Dental Blue PPO 
demonstrates that Delta has not enforced the clause when a dentist, 
who had initially agreed to charge another plan substantially lower 
fees, then raised the fees to Delta's level or disaffiliated from 
the plan. Delta's approach suggests that Delta applied its MFN 
clause to prevent the entry of a new, low-cost rival, not just to 
ensure that it obtained the lowest prices available.
    Delta indeed did develop a contingency plan to compete on price 
with Dental Blue PPO by forming its own limited-panel, reduced-fee 
PPO. When Delta's MFN clause brought about the collapse of the 
Dental Blue PPO, however, Delta shelved its PPO plans. Rhode Island 
consumers thus remained without a limited panel, lower-cost 
competitive alternative to Delta's existing, mid-range plan.
---------------------------------------------------------------------------

    Delta's MFN clause also caused dentists to refuse to contract, at 
fees below levels paid by Delta, with at least two other lower-cost 
plans. In one instance, U.S. Healthcare attempted to establish a plan 
in Rhode Island (as it had in other states) that would have paid 
dentists at fee levels lower than Delta's. Rhode Island dentists 
uniformly refused to participate because they feared that Delta would 
apply its MFN clause. Similarly, Delta's participating dentists 
refused, because of Delta's MFN clause, to contract with dental Benefit 
Providers (``DBP'') at fee levels below Delta's, forcing DBP to pay 
Delta's higher rates to enter the market and depriving consumers of a 
low-cost alternative.
    Delta's MFN clause also prevented two other organizations--a self-
insured employee group and an uninsured retiree group--from recruiting 
additional dentists, at fee levels substantially below Delta's, to 
augment their limited panels of dentists. Both had persuaded a few 
Rhode Island dentists to accept fees substantially below Delta's and 
both had avoided the application of Delta's MFN clause--despite Delta's 
commitment to enforce the clause--only because Delta had been unaware 
of their operation. Although both wanted to expand their panels, they 
refrained from recruiting additional dentists because of their concern 
that such efforts would disclose their existence to Delta and trigger 
Delta's enforcement of its MFN clause, causing their existing dentists 
to disaffiliate. As a result, some members of these groups were denied 
more accessible, low-cost dental care that would have been available in 
the absence of the MFN clause.
    Although the language of Delta's MFN clause appears to apply only 
to fees dentists offer to insurance plans, Delta has also on occasion 
enforced the MFN when dentists have lowered their fees to uninsured 
patients. Some dentists who have been willing to serve uninsured 
patients at reduced rates have suffered an added financial penalty 
imposed by Delta. As a result, they and other dentists have been 
deterred from offering discounts to uninsured patients. Delta's MFN 
clause has thus raised the prices, and reduced the availability, of 
dental services to some of Rhode Island's most vulnerable consumers.
    By Delta's own admission, its MFN clause has not generated any 
meaningful savings or other procompetitive benefits. Far from saving 
consumers money, Delta's MFN clause has, in fact, eliminated most 
discounting by dentists below Delta's fees, and--as recognized by the 
former chairman of the RIDA's Council on Dental Programs--set a floor 
on dental fees, thus raising the costs of dental services and dental 
insurance for Rhode Island consumers.

III. Explanation of the Proposed Final Judgment

    The Plaintiff 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. Sec. 16(b)-(h). The proposed 
Final Judgment provides that its entry does not constitute any evidence 
against or admission by any party of any issue of fact or law.
    Under the provisions of Section 2(e) of the Antitrust Procedures 
and Penalties Act, 15 U.S.C. Sec. 16(e), the proposed Final Judgment 
may not be entered unless the Court finds that entry is in the public 
interest. Section X(C) of the proposed Final Judgment sets forth such a 
finding.
    The proposed Final Judgment is intended to ensure that Delta 
eliminates its MFN clause and ceases all similar practices that 
unreasonably restrain competition among dentists and dental insurance 
plans.

A. Scope of the Proposed Final Judgment

    Section III of the proposed Final Judgment provides that the Final 
Judgment shall apply to Delta, to its successors and assigns, and to 
all other persons (including Delta's participating dentists) in active 
concert or participation with any of them, who shall have received 
actual notice of the Final Judgment by personal service or otherwise.
    In the Stipulation to the proposed Final Judgment, Delta has agreed 
to be bound by the provisions of the proposed Final Judgment pending 
its approval by the Court.

B. Prohibitions and Obligations

    Under Section IV(A) of the proposed Final Judgment, Delta is 
enjoined and restrained for a period of ten years from maintaining, 
adopting, or enforcing any Most Favored Nation Clause or similar 
provision in any Participating Dentist's Agreement or by any other 
means or methods. Other provisions of the Final Judgment seek to ensure 
that the MFN clause's anticompetitive effects cannot be achieved in 
other ways. Specifically, Section IV(B) enjoins Delta from maintaining, 
adopting, or enforcing any policy or practice varying its payments to, 
or other treatment of, any dentist because the dentist charges any non-
Delta patient or plan a fee lower than the fee the dentist charges 
Delta; Section IV(C) enjoins Delta from taking any action to discourage 
any dentist from participating in any non-Delta plan or from offering 
or charging to any non-

[[Page 9811]]

 Delta patient, or any non-Delta plan, any fee lower than that paid to 
the dentist by Delta; and Section IV(D) enjoins Delta from monitoring, 
auditing, or obtaining from any dentist information about the fees a 
particular dentist charges any non-Delta patient or any non-Delta plan, 
except as provided in Section V.
    Section V permits Delta to engage in certain specified activities 
without violating the prohibitions of Section IV, including creation of 
a limited-panel plan, implementation of different reimbursement levels 
under certain circumstances, and collection through certain means of 
information about market rates. These activities will likely 
facilitate, rather than impair, competition.
    Section VI of the Final Judgment declares Delta's MFN clause null 
and void. It directs Delta to disseminate to each Delta participating 
dentist revised Rules and Regulations, referenced in the Participating 
Dentist's Agreement, that omit the Most Favored Nation Clause. This 
Section also requires Delta to eliminate the Most Favored Nation Clause 
from all Participating Dentist's Agreements entered into after entry of 
the Final Judgment.
    Section VII of the Final Judgment imposes various compliance 
measures. Section VII(A) requires Delta to distribute, within 60 days 
of entry of the Final Judgment, a copy of the Final Judgment to: (1) 
all Delta officers and directors; and (2) all Delta employees who have 
any responsibility for approving, disapproving, monitoring, 
recommending, or implementing any provisions in agreements with 
participating dentists. Sections VII(B)-(D) require Delta to provide a 
copy of the Final Judgment to future officers, directors, and employees 
who have any responsibility for approving, disapproving, monitoring, 
recommending, or implementing any provisions in agreements with 
participating dentists and to obtain and maintain records of such 
persons' written certifications that they have read, understand, and 
will abide by the terms of the Final Judgment. Section VII(E) requires 
Delta to distribute a copy of a letter, approved by the Antitrust 
Division and attached to the Final Judgment, to all currently 
participating dentists. Section VII(F) obligates Delta to report to the 
Plaintiff any violation of the Final Judgment.
    Finally, Section VIII obligates Delta to certify its compliance 
with specified requirements, summarized above, of Sections IV, V, VI, 
and VII of the Final Judgment. In addition, Section IX sets forth a 
series of measures by which the Plaintiff may have access to 
information needed to determine or secure Delta's compliance with the 
Final Judgment.

C. Effect of the Proposed Final Judgment on Competition

    By eliminating the MFN clause, the relief imposed by the proposed 
Final Judgment will enjoin and eliminate a substantial restraint on 
price competition between Delta and other dental insurance plans and 
among dentists in Rhode Island and its environs. It will do so by 
eliminating the disincentives created by the MFN clause for dentists to 
discount their fees and to join non-Delta plans offering payments below 
Delta's levels. The Judgment also prevents Delta from taking any other 
action to discourage dentists from discounting or participating in 
competing dental insurance plans. Consequently, non-Delta plans' 
efforts to attract and maintain viable panels of dentists to serve 
their members will no longer be hampered.
    The proposed Final Judgment will restore the benefits of free and 
open competition to dental insurance plans and consumers in Rhode 
Island. Consequently, limited panel dental insurance plans should be 
able to achieve cost savings that they can pass on to consumers, and 
consumers should be able to choose from a wider array of dental 
insurance alternatives. Competition among dentists should also be 
invigorated.

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. Such a trial would involve substantial 
costs to both the United States and Delta and is not warranted because 
the proposed Final Judgment provides all of the relief that the United 
States would likely obtain upon a favorable decision at the close of 
trial and fully remedies the violations of the Sherman Act alleged in 
the Complaint.

V. Remedies Available to Private Litigants

    Section 4 of the Clayton Act, 15 U.S.C. Sec. 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. Sec. 16(a), the Final Judgment has no prima 
facie effect in any subsequent lawsuits that may be brought against 
Delta in this matter.

VI. Procedures Available for Modification of the Proposed Final 
Judgment

    As provided by the Antitrust Procedures and Penalties Act, any 
person believing that the proposed Final Judgment should be modified 
may submit written comments to Gail Kursh, Chief; Health Care Task 
Force; Department of Justice; Antitrust Division; 325 7th Street, N.W.; 
Room 404; Washington, D.C. 20530, within the 60-day period provided by 
the Act. Comments received, 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 Final Judgment at any time before 
its entry if the Department should determine that some modification of 
the Judgment is necessary to protect the public interest. The proposed 
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.

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 Final Judgment. Consequently, 
none are filed herewith.

    Dated: February 19, 1997.

Respectfully submitted,

Steven Kramer,
William E. Berlin
Mark J. Botti,
Michael S. Spector,
Richard S. Martin,
Attorneys, Antitrust Division, U.S. Department of Justice, 325 7th 
Street, N.W., Room 426, Washington, D.C. 20530, (202) 307-0997.

United States District Court for the District of Rhode Island

[Civil Action No. 96-113P]
    United States of America, Plaintiff, vs. Delta Dental of Rhode 
Island, Defendant.

Certificate of Service

    I certify that I caused a copy of the Stipulation, the Final 
Judgment, and the United States' Competitive Impact

[[Page 9812]]

Statement to be served on February 20, 1997, by overnight delivery to:

William R. Landry, Blish & Cavanagh, Commerce Center, 30 Exchange 
Terrace, Providence, R.I. 02903-1765

and by first class mail to:

William G. Kopit, Epstein Becker & Green, 1227 25th Street, N.W., 
Washington, D.C. 20037.

    Dated: February 20, 1997.

Steven Kramer,
Attorney, Antitrust Division, U.S. Department of Justice, 325 7th 
Street, N.W., Room 426, Washington, D.C. 20530, (202) 307-0997.
[FR Doc. 97-5151 Filed 3-3-97; 8:45 am]
BILLING CODE 4410-11-M