[Federal Register Volume 65, Number 49 (Monday, March 13, 2000)]
[Notices]
[Pages 13385-13386]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-6046]


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FEDERAL TRADE COMMISSION

[File No. 991-0278]


Michael T. Berkley, D.C., and Mark A. Cassellius, D.C.; Analysis 
to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment describes both the allegations in the draft 
complaint that accompanies the consent agreement and the terms of the 
consent order--embodied in the consent agreement--that would settle 
these allegations.

DATES: Comments must be received on or before April 6, 2000.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 600 Pennsylvania Ave., NW, Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: C. Steven Baker or Nicholas Franczyk, 
Federal Trade Commission, Midwest Region, 55 E. Monroe St., Suite 1860, 
Chicago, IL 60603-5701. (312) 960-5633.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of 
the Commission's Rules of Practice (16 CFR 2.34), notice is hereby 
given that the above-captioned consent agreement containing a consent 
order to cease and desist, having been filed with and accepted, subject 
to final approval, by the Commission, has been placed on the public 
record for a period of thirty (30) days. The following Analysis to Aid 
Public Comment describes the terms of the consent agreement, and the 
allegations in the complaint. An electronic copy of the full text of 
the consent agreement package can be obtained from the FTC Home Page 
(for March 7, 2000), on the World Wide Web, at ``http://www.ftc.gov/
ftc/formal.htm.'' A paper copy can be obtained from the FTC Public 
Reference Room, Room H-130, 600 Pennsylvania Avenue, NW, Washington, DC 
20580, either in person or by calling (202) 326-3627.
    Public comment is invited. Comments should be directed to: FTC/
Office of the Secretary, Room 159, 600 Pennsylvania Ave., NW, 
Washington, DC 20580. Two paper copies of each comment should be filed, 
and should be accompanied, if possible, by a 3\1/2\ inch diskette 
containing an electronic copy of the comment. Such comments or views 
will be considered by the Commission and will be available for 
inspection and copying at its principal office in accordance with 
Section 4.9(b)(6)(ii) of the Commission's Rules of Practice (16 CFR 
4.9(b)(6)(ii)).

Analysis of Proposed Consent Order to Aid Public Comment

    The Federal Trade Commission has accepted, subject to final 
approval, an agreement from Michale T. Berkley, D.C., and Mark A. 
Cassellius, D.C., to a proposed consent order. The agreement settles 
charges by the Federal Trade Commission that Drs. Berkley and 
Cassellius have violated Section 5 of the Federal Trade Commission Act 
by conspiring between themselves and with other chiropractors to fix 
prices for chiropractic services and to boycott the Gundersen Lutheren 
Health Plan (``Gundersen'') to obtain higher reimbursement rates for 
services. The proposed consent order has been placed on the public 
record for thirty days for reception of comments by interested persons. 
Comments received during this period will become part of the public 
record. After thirty days, the Commission will review the agreement and 
the comments received, and will decide whether it should withdraw from 
the agreement or make the agreement and proposed order final.
    The purpose of this analysis is to facilitate public comment on the 
proposed order. The analysis is not intended to constitute an official 
interpretation of the agreement and proposed order or to modify in any 
way their terms. Further, the proposed consent order has been entered 
into for settlement purposes only and does not constitute an admission 
by Drs. Berkley and Cassellius that the law has been violated as 
alleged in the complaint.

The Complaint

    Drs. Berkley and Cassellius are chiropractors with their principal 
places of business in La Crosse, Wisconsin. Except to the extent that 
competition has been restrained as alleged in the complaint, Drs. 
Berkley and Cassellius have been, and are now, in competition with each 
other and with other chiropractors in and around La Crosse, Wisconsin.
    Since at least January 1997, and continuing until at least June 
1997, Drs. Berkley and Casselius conspired among themselves and with 
other chiropractors to fix prices for chiropractic services and to 
boycott Gundersen, a third-party payer doing business in and around La 
Crosse County, Wisconsin. The purpose of the boycott was, among other 
things, to obtain higher reimbursement from Gundersen for chiropractic 
services. Drs. Berkley and Cassellius organized at least two meetings 
of La Crosse area chiropractors to discuss their concerns about 
Gundersen. A central concern raised at these meetings was Gundersen's 
purportedly low reimbursement rates. During these meetings, the 
chiropractors agreed that Gundersen should increase its reimbursement 
rates and determined that a majority of the chiropractors were willing 
to leave the Gundersen network if it did not address their concerns. 
Dr. Berkley, acting on behalf of the group of chiropractors, 
communicated to Gundersen the chiropractors' concerns and the implicit 
threat of a boycott. The threatened boycott was successful: Gundersen, 
fearing the loss of a substantial number of chiropractic providers and 
the disruption of its network, acceded to the chiropractors' demands 
and increased its reimbursement rates by 20%.
    Drs. Berkley and Cassellius and the other unnamed chiropractors 
have not integrated their practices in any economically significant 
way, nor have they created any efficiencies that might justify this 
conduct. Had they done either of these, under some circumstances, the 
agreement on price might not have been unlawful. Their actions have 
harmed consumers by increasing the prices that are paid for 
chiropractic services and by depriving consumers of the benefits of 
competition among chiropractors.

[[Page 13386]]

The Proposed Consent Order

    The proposed consent order is designed to prevent the illegal 
concerted action alleged in the complaint. Paragraph II.A prohibits 
Drs. Berkley and Cassellius from fixing prices for any chiropractic 
goods or services. Paragraph II.B prohibits them from: (1) Engaging in 
collective negotiations on behalf of any chiropractors; (2) 
orchestrating concerted refusals to deal; or (3) fixing prices, or any 
other terms, on which chiropractors deal. Paragraph II.C. prohibits 
Drs. Berkley and Cassellius from encouraging, advising, or pressuring 
any person to engage in any action that would be prohibited if the 
person were subject to the order.
    Paragraph II. includes a proviso allowing Drs. Berkley and 
Cassellius to engage in conduct (including collectively determining 
reimbursement and other terms of contracts with payers) that is 
reasonably necessary to operate (a) any ``qualified risk-sharing joint 
arrangement,'' or, provided Drs. Berkley and Cassellius have complied 
with the order's prior notification requirements, (b) any ``qualified 
clinically integrated joint arrangement.''
    For the purposes of the order, a ``qualified risk-sharing joint 
arrangement'' must satisfy three conditions. First, all physicians 
participating in the arrangement must share substantial financial risk 
from their participation in the arrangement. The order lists ways in 
which physicians might share financial risk, tracking the types of 
financial risk sharing set forth in the Statements of Antitrust 
Enforcement Policy in Health Care, Statement 8 on Physician Network 
Joint Ventures issued jointly by the FTC and the Department of Justice 
on August 28, 1996 (4 Trade Reg. Rep. (CCH) para.13,153 at 20,814). For 
example, physician participants can agree to provide services to a 
health plan at a ``capitated'' rate (a fixed payment per enrollee 
regardless of the amount of services provided to an enrollee). Second, 
any agreement on prices or terms of reimbursement entered into by the 
arrangement must be reasonably necessary to obtain significant 
efficiencies through the joint arrangement. For example, a joint 
arrangement for billing services alone would not be sufficient, because 
the agreement on prices would not be necessary to achieve the benefits 
of the billing services. Third, the arrangement must be non-exclusive, 
i.e., physicians can also deal with payers individually or through 
other arrangements.
    For purposes of the order, a ``qualified clinically integrated 
joint arrangement'' is one in which physicians undertake cooperative 
activities to achieve efficiencies in the delivery of clinical services 
without necessarily sharing substantial financial risk. The cooperation 
may include: (1) Establishing mechanisms to monitor and control 
utilization of health care services that are designed to control costs 
and assure quality of care; (2) selectively choosing network physicians 
who are likely to further these efficiency objectives; and (3) the 
significant investment of capital, both monetary and human, in the 
necessary infrastructure and capability to realize the claimed 
efficiencies. Id. at 20,817.
    In order for a qualified clinically integrated joint arrangement 
formed by Drs. Berkley and Cassellius to fall within the proviso, they 
must comply with the order's requirements for prior notification. The 
prior notification mechanism will allow the Commission to evaluate a 
specific proposed arrangement and assess its likely competitive impact. 
This requirement will help guard against the recurrence of acts and 
practices that have restrained competition and consumer choice.
    Paragraph III. requires that Drs. Berkley and Cassellius distribute 
a notification letter and copies of the complaint and order to all 
current and future agents, representatives, and employees whose 
activities are affected by the order, or who have responsibilities with 
respect to the subject matter of the order. Paragraph IV. requires that 
Drs. Berkley and Cassellius notify the Commission of any change in 
their employment and would require them to provide copies of the 
complaint and consent order to any new employer for which their new 
duties and responsibilities are subject to any provisions in the order.
    Paragraph V. requires that Drs. Berkley and Cassellius distribute a 
copy of the complaint and order to each payer or provider who, at any 
time since January 1, 1997, has communicated any desire, willingness, 
or interest in contracting for chiropractic goods and services with 
either of them.
    Paragraphs VI. and VII. consist of standard Commission reporting 
and compliance procedures. Finally, Paragraph VIII. contains a standard 
twenty year ``sunset'' provision under which the terms of the order 
terminate twenty years after the date of issuance.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 00-6046 Filed 3-10-00; 8:45 am]
BILLING CODE 6750-01-M