[Federal Register Volume 65, Number 64 (Monday, April 3, 2000)]
[Notices]
[Pages 17506-17508]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-8130]


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FEDERAL TRADE COMMISSION

[File No. 971 0038]


Colegio de Cirujanos Dentistas de Puerto Rico; 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 June 2, 2000.

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

FOR FURTHER INFORMATION CONTACT: Richard Feinstein or Steven Osnowitz, 
FTC/S-3115, 600 Pennsylvania Ave., NW, Washington, D.C. 20580. (202) 
326-2574 or 326-2746.

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

[[Page 17507]]

order to cease and desist, having been filed with and accepted, subject 
to final approval, by the Commission, has been placed on the public 
record for a period of sixty (60) days. 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 21, 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, 
D.C. 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, D.C. 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 (``Commission'') has accepted, subject 
to final approval, a proposed consent order settling charges that the 
Colegio de Cirujanos Dentistas de Puerto Rico (``Colegio''), an 
association of dentists in Puerto Rico: (1) organized boycotts and 
refusals to deal, and engaged in other anticompetitive conduct, 
designed to raise prices for dental services; and (2) prohibited its 
members from engaging in certain types of truthful, nondeceptive 
advertising. The proposed consent order has been placed on the public 
record for sixty (60) days to receive comments by interested persons. 
The proposed consent order has been entered into for settlement 
purposes only and does not constitute an admission by the Colegio that 
it violated the law or that the facts alleged in the complaint, other 
than the jurisdictional facts, are true.

The Complaint

    The Colegio is an association of approximately 1800 dentists 
licensed to practice dentistry in Puerto Rico. Puerto Rico law 
requires, with certain limited exceptions, that dentists maintain 
membership in the Colegio to practice in Puerto Rico. Accordingly, the 
Colegio's members constitute the vast majority of dentists practicing 
in Puerto Rico.
    The complaint charges that the Colegio restrained competition among 
dentists in Puerto Rico by, among other things, fixing the terms under 
which individual dentists would deal with health insurers and other 
payers of health care services, and orchestrating or threatening 
boycotts of payers by its members to obtain higher reimbursement. 
According to the proposed complaint, the Colegio promulgated a Code of 
Ethics that bars dentists from contracting with any health insurance 
plan (``plan'') that is not endorsed by the Colegio. The Colegio 
refused to approve plans unless they: reimbursed dentists on a fee-for-
service basis rather than capitation; were open to participation by all 
dentists; and were ``responsive'' to raising fees at the Colegio's 
request. Plans sought the Colegio's endorsement or approval in order to 
secure a sufficient number of participating dentists.
    The complaint also alleges that the Colegio acted as the collective 
bargaining agent for its members. Through its Committee on Prepaid 
Dental Services, and in other ways, the Colegio engaged in discussions 
with numerous payers about fees and other terms its members would 
accept from these payers. For example, from 1992 through 1994, the 
Colegio successfully negotiated on behalf of its members to obtain fee 
increases from the two largest payers for dental coverage in Puerto 
Rico, Triple S and La Cruz Azul. In another instance, the complaint 
charges, the Colegio organized dentists to refuse to deal with a new 
plan proposed by Triple S that would have paid dentists a set amount 
per enrollee rather than the traditional fee for service, and Triple S 
was compelled to cancel the plan.
    The complaint further alleges that the Colegio set the prices and 
other terms under which its member dentists would deal with plans 
operating under Puerto Rico's Health Insurance Act of 1993 (the 
``Reform''), a program to provide health care services to the indigent. 
During 1995, for example, the Colegio successfully blocked Triple S 
attempts to implement a new plan in the North Region of the Reform, and 
defeated Triple S plans to implement a 10% discount for dental fees. In 
the Central Region of the Reform, the Colegio succeeded in forcing PCA 
to agree that payments to dentists would be based on fee for service, 
and that its dental panels would be open to all Colegio members. When 
PCA attempted in 1996 to revise its dental contracts for the Central 
Region, in order to provide for utilization and quality audits, the 
Colegio withheld its endorsement, and PCA was unable to secure 
contracts with a sufficient number of dentists to offer the plan.
    The complaint charges that the Colegio has acted to prevent certain 
forms of truthful, nondeceptive advertising. Its Code of Ethics bans 
advertising that is not ``professionally acceptable,'' use of most 
illustrations, advertisements deemed not in good taste, and all 
personal solicitations. The complaint further alleges that the Colegio 
applied its ban on unprofessional advertising against dentists from 
Ponce, Puerto Rico, who truthfully advertised their willingness to 
accept Reform patients from neighboring areas where dentists were 
conducting a boycott of the Reform.
    According to the complaint, the Colegio has not integrated the 
practices of its members in any economically significant way, nor has 
it created any efficiencies that might justify the acts and practices 
alleged in the complaint. Rather, the complaint charges that the 
Colegio's conduct has had the purpose and effect of restraining 
competition among dentists and injuring consumers by, among other 
things, fixing or increasing prices for dental services; fixing the 
terms and conditions upon which dentists would deal with payers, 
thereby raising the price to consumers of insurance coverage; raising 
prices paid by the Reform and delaying the offerings of dental services 
under the Reform; and depriving consumers of truthful information about 
dental services.

The Proposed Consent Order

    The proposed consent order prohibits the Colegio from continuing 
the illegal conduct described in the complaint. Specifically, Part II 
of the order prohibits the Colegio from endorsing or approving, 
refusing to endorse or approve, or prohibiting or declaring unethical a 
dentist's participation in a health plan based on the amount, manner of 
calculating, or other terms relating to reimbursement for dental 
services, or on whether the plan is open to participation by all 
Colegio members. The Colegio also is prohibited from (1) negotiating on 
behalf of any dentists with any payer or provider; (2) refusing to 
deal, boycotting, or threatening to boycott any payer or provider; or 
(3) determining any terms, conditions, or requirements upon which 
dentists will deal with any provider, including terms of reimbursement, 
and whether the plan is open to participation by all Colegio members.

[[Page 17508]]

    Further, the Colegio is prohibited from communicating to any payer 
or provider any term, condition, or requirement on which Colegio 
members are willing or unwilling to deal with a payer or provider, and 
from communicating with any member concerning the desirability or 
appropriateness of any term or condition of a payer relating to dental 
services, or whether the plan is open to participation by all Colegio 
members. The Colegio cannot facilitate in any manner, or transfer the 
exchange of, information concerning dentists' intentions to contract 
with any payer, or under what terms.
    The proposed order does not restrict legitimate communications 
between the Colegio and payers. Health care practitioners' provision of 
certain kinds of information to payers is not likely to raise antitrust 
concerns, but instead may serve to promote competition and benefit 
consumers. For example, the DOJ/FTC Statements of Enforcement Policy in 
Health Care (1996) define two ``antitrust safety zones'' dealing with 
the provision of information to payers, and state that conduct falling 
within these safety zones will not be challenged by the enforcement 
agencies absent extraordinary circumstances.\1\ The proposed order does 
not prohibit the Colegio from engaging in activities encompassed in 
these safety zones, or from communicating with payers about other 
matters, unless the communication is part of an agreement or course of 
conduct specifically prohibited by the order.
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    \1\ Statement 5 provides a safety zone for providers' collective 
provision of ``factual information concerning the providers' current 
or historical fees or other aspects of reimbursement, such as 
discounts or alternative reimbursement methods accepted * * *,'' so 
long as collection of the information meets certain requirements 
designed to ensure that the exchange of price or cost data is not 
used by competing providers to discuss or coordinate costs or 
prices. Statements at 44-45. The safety zone in Statement 4 covers 
the provision of ``underlying medical data that may improve 
purchasers' resolution of issues relating to the mode, quality, or 
efficiency of treatment,'' as well as providers' ``development of 
suggested practice parameters--standards for patient management 
developed to assist providers in clinical decisionmaking--that also 
may provide useful information to patients, providers, and 
purchasers.'' Statements at 41.
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    The proposed order likewise does not restrict the right of the 
Colegio to provide government bodies with information and opinions in 
an effort to influence legislation or regulatory action. A proviso 
states explicitly that the order does not prohibit the Colegio from 
petitioning any federal, state, or Commonwealth government executive 
agency or legislative body concerning legislation, rules, or 
procedures, or from participating in any federal, state, or 
Commonwealth administrative or judicial proceeding, insofar as the 
activity is protected from antitrust scrutiny by the Noerr-Pennington 
doctrine.\2\ That doctrine does not, however, protect price-fixing 
agreements, refusals to deal, or similar conduct designed to obtain 
higher prices from government purchasers.\3\
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    \2\ See, e.g., FTC v. Superior Court Trial Lawyers Ass'n, 493 
U.S. 411 (1990); United Mine Workers v. Pennington, 381 U.S. 657 
(1965); Eastern Railroad Presidents Conference v. Noerr Motor 
Freight, Inc., 365 U.S. 127 (1961).
    \3\ FTC v. Superior Court Trial Lawyers Ass'n, 493 U.S. at 424-
425.
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    Part III of the proposed order prohibits the Colegio from 
restricting truthful advertising of dental services or solicitation of 
patients. The Colegio, however, can formulate, adopt, disseminate, and 
enforce reasonable ethical guidelines governing the conduct of its 
members with respect to representations that respondent reasonably 
believes would be false or deceptive within the meaning of Section 5 of 
the Federal Trade Commission Act, or with respect to uninvited in-
person solicitation of actual or potential patients who, because of 
their particular circumstances, are vulnerable to undue influence.
    Part IV of the proposed order requires the Colegio to distribute 
copies of the order and accompanying complaint to its employees and 
members, and to payers or providers who since January 1, 1995, 
communicated a desire or interest in contracting for dentists' 
services. Part IV also requires the Colegio to maintain certain records 
pertaining to advertising for a period of ten years, while other order 
provisions will remain in effect for twenty years. Parts V and VI of 
the proposed order impose certain reporting requirements, while Part 
VII of the proposed order provides for access to the Colegio's 
documents and personnel. Parts V, VI, and VII are to assist the 
Commission in monitoring compliance with the proposed order.

Opportunity for Public Comment

    The proposed order has been placed on the public record for sixty 
(60) days in order to receive public comments from interested persons. 
Comments received during this period will become part of the public 
record. After sixty (60) days, the Commission will again review the 
agreement and the comments received and will decide whether it should 
withdraw from the agreement or make final the agreement's proposed 
order.
    The purpose of this analysis is to facilitate public comment on the 
agreement. The analysis is not intended to constitute an official 
interpretation of the agreement, the proposed complaint, or the 
proposed consent order, or to modify their terms in any way.
    By direction of the Commission.

Donald S. Clark,
Secretary.
[FR Doc. 00-8130 Filed 3-31-00; 8:45 am]
BILLING CODE 6750-01-M