[Federal Register Volume 68, Number 145 (Tuesday, July 29, 2003)]
[Notices]
[Pages 44570-44595]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-19051]



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Part II





Department of Justice





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Antitrust Division



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United States v. Mountain Health Care, P.A., Civil Action No. 
1:02CV288-T (W.D.N.C.); Response to Public Comments; Notice

  Federal Register / Vol. 68, No. 145 / Tuesday, July 29, 2003 / 
Notices  

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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Mountain Health Care, P.A., Civil Action No. 
1:02CV288-T (W.D.N.C.) Response to Public Comments

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that Public Comments and the 
Response of the United States have been filed with the United States 
District Court for the Western District of North Carolina in United 
States v. Mountain Health Care, P.A. Civil Action No. 1:02CV288-T 
(W.D.N.C., filed December 13, 2002). On December 13, 2002, the United 
States filed a Complaint alleging that defendant, Mountain Health Care, 
P.A. (``MHC'') and its physician owners and members, restrained 
competition in the sale of physician services to managed health care 
purchasers, in violation of Section 1 of the Sherman Act, 15 U.S.C. 1. 
The proposed Final Judgment, filed at the same time as the Complaint, 
requires MHC to dissolve.
    Public comment was invited within the statutory 60-day comment 
period. Such Comments, and the Responses thereto, are hereby published 
in the Federal Register and have been filed with the Court. Copies of 
the Complaint, Stipulation, proposed Final Judgment, Competitive Impact 
Statement, Public Comments and the Response of the United States are 
available for inspection in Room 4000 of the Antitrust Division, 
Department of Justice, 1401 H Street, NW., Washington, DC 20530 
(telephone: 202-307-0001) and at the Office of the Clerk of the United 
States District Court for the Western District of North Carolina, Room 
212, 401 West Trade Street, Charlotte, North Carolina.
    Copies of any of these materials may be obtained upon request and 
payment of a copying fee.

Constance K. Robinson,
Director of Operations, Antitrust Division.

United States District Court for the Western District of North Carolina

United States of America, Plaintiff, v. Mountain Health Care, P.A. 
Defendant; Response to Public Comments

[Civil No.: 1:02CV288-T; Filed]

    Pursuant to the requirements of the Antitrust Policies and 
Procedures Act, 15 U.S.C. 16(b)-(h) (the ``APPA'' or ``Tunney Act''), 
the United States responds to public comments received regarding the 
proposed Final Judgment submitted for entry in this civil antitrust 
proceeding.

I. Background

    On December 13, 2002, the United States filed a civil antitrust 
complaint alleging that defendant, Mountain Health Care, P.A., 
(``MHC'') and its physician owners and members, restrained competition 
in the sale of physician services to managed health care purchasers, in 
violation of Section 1 of the Sherman Act, 15 U.S.C. 1. MHC is a 
physician-owned network consisting of the vast majority of physicians 
practicing in the greater Asheville, North Carolina area. MHC was 
formed in 1994 to increase the bargaining power of its physicians with 
managed care insurance companies, self-insured employers, and third-
party administrators (collectively, ``managed care purchasers''). 
Complaint ] 8; Competitive Impact Statement (``CIS'') II.B. To 
facilitate that objective, MHC and its physicians established a uniform 
fee schedule that it incorporated into contracts with certain managed 
care purchasers. Complaint ] 10. The use of that fee schedule 
eliminated price competition among MHC's physicians, who did not 
clinically or financially integrate their practices in a way that would 
have justified their collective price setting conduct. Complaint ] 11. 
This resulted in increased physician reimbursement fees to managed care 
purchasers in the greater Asheville area. Complaint ] 14. MHC also 
exclusively represented its member physicians in negotiations with 
certain managed care purchasers. Complaint ] 13.
    Also on December 13, 2002, the United States filed a proposed Final 
Judgment and a Stipulation signed by both it and defendant MHC agreeing 
to entry of the Final Judgment following compliance with the Tunney 
Act. Pursuant to the Tunney Act, the Stipulation, proposed Final 
Judgment and Competitive Impact Statement (``CIS'') were published in 
the Federal Register on January 10, 2003. 68 FR 7, 1478-1482. A summary 
of the terms of the Complaint and the proposed Final Judgment were 
published for seven consecutive days in the Asheville Citizen-Times 
from January 24 through January 30, 2003. Pursuant to U.S.C. 16(b)-(d) 
the 60-day period for public comments on the Proposed Final Judgment 
began on January 11, 2003 and expired on March 12, 2003. During that 
time, nine comments and one amicus brief were received.

II. Response to Public Comments

A. Amicus Brief Filed by S.M. Oliva, President of Citizens for 
Voluntary Trade, and the Comments of Citizens for Voluntary Trade

    On February 15, 2003, S.M. Oliva, president of Citizens for 
Voluntary Trade (CVT), filed a motion for leave to file an amicus 
curiae brief. Attached to that motion was Oliva's 7-page amicus brief 
(attached, along with the motion, as Exhibit A). On March 7, 2003, 
Oliva submitted the 48-page Public Comments of Citizens for Voluntary 
Trade to the Proposed Final Judgment (Exhibit B), repeating the same 
arguments made in Oliva's amicus brief and including lengthy 
recitations of CVT's view of the history of the government's 
intervention in health care and other ``background'' information. On 
March 19, 2003, the United States filed a response to Oliva's amicus 
request, stating that it did not oppose the Court accepting his brief 
and treating it as another comment to the Proposed Final Judgment. On 
March 27, 2003 the Court ordered that Oliva's amicus brief be treated 
as a supplemental comment to the proposed Final Judgment. In this 
Response, the United States responds to the assertions made in both 
Oliva's amicus brief and CVT's comments.
1. CVT's and Oliva's Arguments About Why This Case Should Not Have Been 
Brought Are Irrelevant in a Tunney Act Proceeding
    The vast majority of the comments made by CVT and Oliva relate to 
whether this case should have been filed in the first instance, not to 
whether the relief in the Proposed Final Judgment is adequate to 
address the harm alleged in the Complaint. E.g., Exh. A at 3 (``no need 
for the government's proposed remedy--dissolution of MHC--because there 
is no illegal behavior taking place''). Oliva asks the Court to dismiss 
the complaint for failure to state a claim. Exh. B at 13. Because Oliva 
relies on factual assertions beyond the scope of the allegations in the 
Complaint, this request is, in effect, a motion, under Rule 56 of the 
Federal Rules of Civil Procedure, for summary judgment against the 
United States.
    Comments alleging that the United States does not have sufficient 
evidence to support the case it has pled, and requesting dismissal of 
the United States' complaint, are beyond the scope of this hearing. A 
Tunney Act proceeding is not an opportunity for a ``de novo 
determination of facts and issues,'' but rather is intended ``to 
determine whether the Department of

[[Page 44571]]

Justice's explanations were reasonable under the circumstances'' 
because ``[t]he balancing of competing social and political interests 
affected by a proposed antitrust decree must be left, in the first 
instance, to the discretion of the Attorney General.'' United States v. 
Western Elec. Co., 993 F.2d 1572, 1577 (D.C. Cir. 1993) (citations 
omitted). Courts consistently have refused to consider ``contentions 
going to the merits of the underlying claims and defenses.'' United 
States v. Bechtel, 648 F.2d 660, 666 (9th Cir. 1981.) CVT contends that 
the legislative history of the Tunney Act authorizes a review of the 
merits of the underlying case, and not just the adequacy of the 
proposed relief. Exh. B at 44-45. This is incorrect. During the Senate 
hearings on the Act, one witness specifically urged that ``as a 
condition precedent to * * * the entry of a consent decree in a civil 
case * * * the Department of Justice be required to file and make a 
matter of public record a detailed statement of the evidentiary facts 
on which the complaint * * * was predicated.'' \1\ That recommendation, 
however, was rejected. Congress did not intend to turn every Tunney Act 
proceeding into a full-blown trial on the merits of the Untied States' 
complaint.
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    \1\ The Antitrust Procedures and Penalties Act: Hearings on S. 
782 and S. 1088 Before the Subcommittee on Antitrust and Monopoly of 
the Senate Judiciary Committee, 93d Cong., 1st Sess. 26, 57 (1973) 
(prepared statement of Maxwell M. Blecher, attorney).
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    For this reason, assertions that the Untied States lacks 
jurisdiction, that MHC was a non-exclusive physician network, that it 
was really operating under a ``messenger model'' of contracting that 
has been approved by the United States, and that MHC's conduct did not 
cause anti-competitive effects--all of which pertain to the merits of 
the underlying case, but not the proposed remedy--are irrelevant to 
this proceeding, and should not be considered by this Court.\2\ 
Nonetheless, the United States responds to those assertions below.
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    \2\ Even farther afield are the lengthy and wide-ranging attacks 
in CVT's comments on various other subjects: The Medicaid and 
Medicare statutes (Exh. B at 14); the HMO Act of 1973 (id. at 15); 
settled Supreme Court precedent, Arizona v. Maricopa County Medical 
Society, 457 U.S. 332 (1982), holding that price fixing by 
physicians is unlawful (id. at 18-20); the Health Care Policy 
Statements issued by the Department of Justice and Federal Trade 
Commission (id. at 20-23); the ``morality'' of this case and others 
like it, which in CVT's view are not designed to protect consumers 
but to ``deny wealth to its rightful owners'' (id. at 23-25); and 
several cases against physician groups brought not by the Untied 
States Department of Justice, the plaintiff in this case, but by the 
Federal Trade Commission (id. at 26-36).
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2. The Complaint States a Claim Upon Which Relief Can Be Granted
    Even if CVT or Oliva had the right to file a motion to dismiss the 
Complaint under Rule 56, that motion would fail because the Complaint 
states a claim upon which relief can be granted. Federal Trade 
Commission v. Indiana Federation of Dentists, 476 U.S. 447 (1986) (A 
horizontal agreement by health care providers, causing an 
anticompetitive impact on third party payors, is an unreasonable 
restraint of trade). CVT and Oliva have not provided any evidence to 
dispute the allegations made in the Complaint. Nor do CVT or Oliva 
appear to have any independent knowledge of the health care market in 
Western North Carolina. Rather, it appears they reach their concussions 
on the basis of what Oliva says he learned during a telephone interview 
with Ellen Wells, President of defendant MHC, and from reading 
newspaper articles found on the defendant's Web site.\3\ The interest 
of CVT and Oliva appear to stem less from their knowledge of the 
Western North Carolina physician market and more from their ideology 
that the antitrust laws in general are unconstitutional, and that 
antitrust enforcement against physicians promotes socialism.\4\
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    \3\ Exh. A at 3 n.5 and accompanying text (citing Jan. 23, 2003 
telephone interview); Exh. B at 46 (relying on information 
``Mountain president Ellen Wells told CVT''); Exh. B Appendix A 
(attaching several documents from Mountain Health Care website).
    \4\ See CVT Comment at 36 (``the Sherman Act is unconstitutional 
in CVT's judgment''); at 48 (government's enforcement efforts moving 
country ``closer towards the complete socialization of health care 
under central control'').
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    The information already disclosed in the Complaint provides 
sufficient basis for this Court to make a public interest 
determination. The request of CVT and Oliva for highly detailed market 
information--for example, data to ``assess the state of the affected 
marketplace'' and ``empirical evidence demonstrating how the proposed 
remedy is likely to restore competition'' (Exh. A at 5)--is not 
justified. As noted above, this request is not relevant in this Tunney 
Act proceeding to the extent it relates to whether the United States 
had a good faith basis for concluding that MHC's conduct was 
anticompetitive and violated the antitrust laws. See supra, Section 
II.A.1. The United States is not required in its Complaint or in a 
Tunney Act proceeding to specify in detail all of the evidence upon 
which it based its decision to file a case here. Indeed, Congress 
specifically rejected such a requirement when the Act was being 
considered in the Senate. See supra Section II.A.1. Requiring the 
disclosure of this kind of evidence--that akin to the kind of 
information that would have to be disclosed during litigation in expert 
reports and other filings--would substantially undermine the benefits 
of settling government antitrust cases. One of the major benefits of 
antitrust consent judgments is that they enable the government ``to 
reallocate necessarily limited [enforcement] resources,'' Microsoft 
Corp., 56 F.3d at 1459, and that benefit would be lost if the United 
States were forced to compile and disclose during a Tunney Act 
proceeding the same kind of information it is required to disclose 
during litigation.
    a. The United States has jurisdiction to challenge Mountain Health 
Care's conduct in this case. CVT questions whether the United States 
has jurisdiction to bring this case because at least some of MHC's 
contracts were with businesses organized and doing business solely in 
North Carolina. Exh. B at 6-9. As alleged in the Complaint, MHC has 
contracts with out-of-state employers and those businesses ``remit 
substantial payments to MHC physicians in North Carolina.'' Complaint ] 
5. This is more than sufficient to meet the Sherman Act's expansive 
reach. Summit Health, Ltd. v. Pinhas, 500 U.S. 322 (1991) (interstate 
commerce nexus found where hospital and medical staff conspired to 
exclude single physician from Los Angeles market); McLain v. Real 
Estate Board of New Orleans, Inc., 444 U.S. 232 (1980) (price fixing by 
local real estate brokers); Hospital Building Co. v. Trustees of Rex 
Hospital, 425 U.S. 738 (1976) (conspiracy to block relocation and 
expansion of rival hospital).
    CVT further claims that, beyond the question of jurisdiction, this 
case raises the question of whether it is in the ``public interest'' 
for the United States to bring the charges because such an action 
infringes upon the ``regulation of private health care networks'' by 
the State of North Carolina. Exh. B at 8. Nothing about this case, or 
any of the relief in the Proposed Final Judgment, undermines the 
state's regulation of health care providers.
    b. Mountain Health Care was an exclusive network with substantial 
market power. Based solely on hearsay, CVT and Oliva claim that MHC is 
not really an exclusive network, that its providers contract freely 
with other networks and plans, and that those patients covered by MHC 
contracts make up only 8% of the patients seen by MHC's providers. 
E.g., Exh. B at 10. Whether a physician network is ``exclusive'' or 
``non-exclusive'' is

[[Page 44572]]

relevant to an inquiry into the competitive effects of that network. As 
explained in the Health Care Policy Statements issued by the U.S. 
Department of Justice and Federal Trade Commission:

    In an `exclusive' venture the network's physician participants 
are restricted in their ability to, or do not in practice, 
individually contract or affiliate with other network joint ventures 
or health plans. In a `non-exclusive' venture, on the other and, the 
physician participants in fact do, or are available to, affiliate 
with other networks or contract individually with other plans.

U.S. Department of Justice and Federal Trade Commission, Statements of 
Enforcement Policy and Analytical Principles Relating to Health Care 
and Antitrust (``Health Care Policy Statements'') August 1996, at 58, 
available at http://www.atrnet.gov/policies/health. \5\ Those 
guidelines set forth ``antitrust safety zones,'' meaning that the 
government would not challenge absent extraordinary circumstances, 
exclusive physician joint ventures comprising 20 percent or less, and 
non-exclusive ventures comprising 30 percent or less, of the physicians 
in each specialty with active hospital privileges who practice in the 
relevant geographic market and share substantial financial risk. Id. at 
58-59.
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    \5\ The Health Care Policy Statements were originally issued by 
the United States Department of Justice and the Federal Trade 
Commission in 1993 to clarify the types of cooperative conduct that 
health care providers, including physician networks, could engage in 
without concerns of violating antitrust laws. To further clarify 
what cooperative conduct was permissible, the agencies committed to 
issuing expedited Department of Justice business reviews and FTC 
advisory opinions in response to requests for guidance on specific 
proposed conduct involving the health care industry.
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    In this case, MHC was a physician-owned network made up of the vast 
majority of physicians practicing in the Asheville area--in some 
specialties, 100 percent of the physicians--who did not share financial 
risk. Further, MHC, and members of its Board, made substantial efforts 
to discourage physicians from joining other networks.
    The assertion that MHC's members comprise only 8 percent of the 
provider's patient base is misleading because that calculation includes 
in the denominator a substantial number of patients that are not 
affected by MHC's contracting practices with managed care plans: Those 
patients covered by Medicare and Medicaid and those patients with no 
insurance at all.\6\ Further, in the provision of physician network 
services to employers self-insuring for their employees health care 
benefits, MHC had nearly 100% of the market.
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    \6\ These numbers are substantial. In the 17 counties served by 
MHC, there are approximately 150,000 Medicare beneficiaries (see 
www.cms.gov/healthplans/statistics/mpsct/), and 66,000 Medicaid 
enrollees (see www.dhhs.state.nc.us/dma/ca/enroll/caenrl1102.pdf). 
In addition, approximately 15% of the North Carolina's population as 
a whole is uninsured. www.unitedhealthfoundation.org/shr2002/components/risks/LackHealthInsurance, citing Current Population 
Survey, March 2002, U.S. Bureau of the Census.
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    At a more basic level, MHC possessed substantial market power given 
the fact that such a high percentage of Asheville-area physicians were 
members. This is apparently not disputed by CVT, which concedes that, 
``[i]f every doctor now affiliated with Mountain were to cease 
practicing medicine tomorrow, the managed care companies and consumers 
in western North Carolina would have no recourse.'' Exh. B. at 43.
    c. Mountain Health Care did not use a ``messenger model'' in 
contracting with managed care plans. CVT and Oliva allege--again, based 
solely on hearsay information--that MHC was no longer using its uniform 
fee schedule but rather using (or ``transitioning'' to) a ``messenger'' 
model in contracting with managed care purchasers. Exh. A at 3; Exh. B 
at 5-6. The Health Care Policy Statements describe how a physician 
network is able to contract with managed care purchasers on behalf of 
competing physicians without engaging in per se unlawful price fixing, 
by using a ``messenger model''. The ``messenger model'' is an 
arrangement where a third party offers each individual physician an 
opportunity to decide individually whether or not to accept an offer 
from a managed care provider. Health Care Policy Statements, August 
1996, at 114, available at http://www.atrnet.gov/policies/health gov/policies/health. 
``The key issue in any messenger model arrangement is whether the 
arrangement creates or facilitates an agreement among competitors on 
prices or price related terms.'' Id. Proper use of the messenger model 
may mean that a physician network's conduct may not rise to the level 
of per se illegal price fixing, but it does not mean, as Oliva and CVT 
appear to believe, that any agreement among physicians to ``messenger 
fees'' is insulated from antitrust challenges, when, as here, the 
agreement has resulted in actual anti-competitive effects.
    The United States thoroughly investigated the issue of whether 
Mountain Health Care's conduct was causing actual anticompetitive 
effects, regardless of whether it was using a messenger model. It bears 
clarification, however, that the Complaint alleges that Mountain Health 
Care was not merely a messenger for its member physicians; it was their 
exclusive bargaining agent. Physicians bargained through MHC which 
developed a uniform fee schedule for use in those negotiations. That 
collective activity among physicians to establish and bargain with that 
fee schedule anticompetitively raised the prices paid for physician 
services and thus violated section 1 of the Sherman Act. CIS, II.C.
    d. Mountain Health Care's conduct resulted in a substantial 
lessening of competition and increased prices paid by managed care 
plans. Despite the Complaint's allegations to the contrary, CVT and 
Oliva argue that MHC's conduct did not lessen competition or increase 
prices, and accuse the United States of disclosing inadequate 
information in its Complaint and CIS about the relevant market in which 
MHC competed, the prices it was charging, and how its actions actually 
harmed consumers. Exh. A at 4-6; Exh. B at 9-13, 37-38. These arguments 
lack merit.
    As alleged in the Complaint, the relevant market affected by MHC's 
conduct is Western North Carolina, encompassing Buncombe, Burke, 
Cherokee, Clay, Graham, Haywood, Henderson, Jackson, Macon, Madison, 
McDowell, Mitchell, Polk, Rutherford, Swain, Transylvania, and Yancey 
Counties. Complaint ] 2. Within that market, MHC possessed substantial 
market power, given that its membership included the vast majority of 
physicians practicing in that market, including the bulk of physicians 
with admitting privileges at Mission St. Joseph's Hospital, the only 
hospital available to the general public in the Asheville area. 
Complaint ] 8.
    MHC's collective price-setting activity increased prices paid by 
managed care purchasers. Complaint ] 17. This is not surprising, given 
that MHC was created in 1994 for the purpose of increasing its members' 
bargaining leverage over managed care purchasers. Complaint ] 8; CIS 
Sec.  II.B.
3. There Are No ``Determinative'' Documents
    CVT and Oliva assert that the United States is withholding 
``determinative'' documents, in violation of the Tunney Act. Exh. at 4, 
6; Exh. B at 38-40. The Tunney Act requires that the United States make 
available to the public copies of the proposed Final Judgment ``and any 
other materials and documents which the United States considered 
determinative in formulating such proposal.'' 15 U.S.C. 16(b). The 
scope of documents considered

[[Page 44573]]

determinative, however, is extremely limited. Only documents that were 
``a substantial inducement to the government to enter into the consent 
decree'' are subject to disclosure. United States v. Bleznak, et al., 
153 F.3d 16, 20-21 (2d Cir. 1998). See also Massachusetts School of Law 
at Andover, Inc. v. United States, 118 F.3d 776, 784 (D.C. Cir. 1997) 
(only documents, ``such as reports to the government, `that 
individually had a significant impact on the government's formulation 
of relief--i.e., on its decision to propose or accept a particular 
settlement' '' need be disclosed). Even the one case cited by CVT 
recognized that the Tunney Act ``does not require full disclosure of 
Justice Department files, or grand jury files, or defendant's files, 
but it does require a good faith review of all pertinent documents and 
materials and a disclosure of those ``materials and documents that 
substantially contribute to the determination [by the government] to 
proceed by consent decree * * *.'' United States v. Central Contracting 
Co., 537 F. Supp. 571, 577 (E.D. Va. 1982).
    In this case, there are no determinative documents. The United 
States conducted a thorough investigation, involving the review of 
extensive documents from MHC as well as from MHC physicians, customers, 
and competitors. None were determinative in the decision to seek MHC's 
dissolution, nor were there any that constituted a substantial 
inducement to seek such relief.
4. The Dissolution of Mountain Health Care Is a Reasonable Remedy Given 
Its Substantial Market Power and Conduct Over the Past Nine Years
    The dissolution of MHC is an appropriate remedy based upon the 
facts cited in the Compliant and CIS. These facts show that MHC was 
created in part to enhance its market power through collective 
negotiations, that it has effectively used that market power through 
the use of a common fee schedules since its creation, and continued to 
enter or renew contracts under that common fees schedules until shortly 
before agreeing to dissolve. The Count is required to determine not 
whether a particular decree is the one that will best serve society, 
but whether the settlement is ``within the reaches of the public 
interest.'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.\7\
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    \7\ United States v. Bechtel Corp., 648 F.2d at 666 (citations 
omitted) (emphasis added); see United States v. BNS, Inc., 858 F.2d 
463; United States v. National Broadcasting Co., 449 F. Supp. 1127, 
1143 (C.D.Cal 1978); United States v. Gillette Co., 406 F.Supp. at 
716. See also United States v. American Cyanamid Co., 719 F.2d 558, 
565 (2d Cir. 1983), cert. denied, 465 U.S. 1101 (1984).
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    An argument that injunctive relief would be appropriate here, 
because the FTC accepted injunctive relief in other cases involving 
physicians, has no legal basis. The settlement in a matter between two 
parties is in no way binding on the manner in which a future matter 
between two different parties is settled, even if there are some 
similarities between the matters. Antitrust investigations are very 
fact specific matters. The particular facts in this investigation led 
the United States to conclude that the dissolution of MHC was likely to 
be far more effective than any injunctive relief would be.\8\
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    \8\ CVT's allegation that the United States never consulted 
customers who would be affected by the dissolution of MHC during the 
course of the investigation is correct. The United States discussed 
this possible remedy with numerous MHC customers.
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5. None of the Various and Inconsistent Request for Relief Made by CVT 
and Oliva Are in the Public Interest
    In the amicus brief, Oliva requests the Court to require the United 
States to file a revised Complaint and Competitive Impact Statement, 
and then extend the public notice and comment period to permit third 
parties to comment on these revised disclosures. Exh. A at 7. In his 
comment on behalf of CVT, however, he makes the contradictory request 
that the Court reject the proposed Final Judgment, dismiss the 
Complaint with prejudice, and impose sanctions on the United States 
under Rule 11.\9\ Exh. B at 46-47.
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    \9\ Oliva and CVT have opposed several recent antitrust consent 
decrees. Many of their comments, both official and unofficial, can 
be read at the CVT Web site, www.voluntarytrade.org.
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    There is no justification for either of these contrary request. The 
United States made appropriate disclosures of all information. Further, 
to delay this proceeding would not be in the public interest. Mountain 
Health Care has been in existence for nine years, using its uniform fee 
schedule during that entire time. Entry of the Proposed Final Judgment 
would quickly remedy the competitive harm caused by this conduct.

B. Comment From Center for the Advancement of Capitalism

    The Center for the Advancement of Capitalism (``CAC'') submitted a 
comment raising, in summary form, the same arguments raised by the 
comment and brief filed by CVT and Oliva.\10\ CAC claims, based solely 
on MHC's assertions, that MHC is complying with the government's Health 
Care Policy Statements because it is using a ``messenger model.'' Exh. 
C at 1-2. It accuses the United States, in seeking to reduce health 
care costs, of ignoring the individual rights of Physicians and 
resulting in the ``the partial socialization of medicine absent clear 
congressional authority.'' Id. at 2. It accuses the United States of 
specifically targeting physician groups that are unlikely to offer a 
defense. Id. at 2. And it repeats CVT's assertions that the United 
States has limited jurisdiction (``tenuous at best'') because MHC's 
conduct did not affect interstate commerce. Id. at 2-3.
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    \10\ Oliva is currently a senior fellow at CAC. Exh. A at 1. 
According to its comment, CAC is a tax-exempt organization that 
applies Ayn Rand's philosophy of Objectivism to contemporary public 
policy issues in order to identify and protect the individual rights 
of the American people. Exh. C at 1 n.1.
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    All but one of these arguments have been addressed, in detail, in 
response to CVT's and Oliva's comments. CAC's general accusation that 
the United States targets physician groups unable to defend themselves 
is not correct. In this matter, as in all of its matters, the United 
States targets conduct that is causing substantial anticompetitive 
effects and is harming consumers.

C. Comment From Marcia L. Brauchler, Physicians Ally, Inc.

    Ms. Brauchler, who operates Physicians Ally, Inc., a consulting 
business which assists physicians in dealing with insurance companies 
and other payors, submitted a comment opposing the proposed Final 
Judgment. In her view, the United States ``lacks insights into the 
practices of MHC's business,'' which was trying in good faith to comply 
with the government's Health Care Policy Statements. From her personal 
experience, she believes that the government claims that ``no one 
operates the messenger model correctly,'' and that physicians are 
therefore presumed guilty from the outset of an antitrust 
investigation. She believes that the antitrust laws were intended to be 
applied to insurance companies, not physicians, who are not, in her 
view, the cause of rising health insurance premiums. She does not 
believe that anyone was hurt by MHC's practices. Like CVT and CAC, she 
states that physicians, as United States citizens, have an absolute 
right to associate with other professionals for their mutual benefit 
unless they implement ``actual force against other individuals.'' 
Finally, she questions

[[Page 44574]]

why MHC is being forced to disband while other physician groups which 
have been sued in the past were allowed to continue to operate. Exh. D 
at 1-2.
    As she states in her comment, Ms. Brauchler has had personal 
experience in settling government antitrust cases. Exh. D at 1. She was 
a defendant in two antitrust actions brought by the Federal Trade 
Commission last year, challenging her role representing two physician 
groups in fee negotiations with managed care purchasers.\11\ As with 
CVT and CAC, the vast majority of her comments relate to whether the 
United States had a valid basis for finding a violation and filing this 
case, matters not relevant to this proceeding. See supra, Section 
II.A.1. Based on its thorough investigation during the past two years, 
the United States believes it obtained evidence about the business 
practices of MHC and that evidence shows that employers, particularly 
those employers who opt to self-insure for their employees health care 
benefits, were hurt by MHC's actions. Ms. Brauchler's implication that 
the United States is not applying the antitrust laws to insurance 
companies is simply not true. The United States has brought a number of 
actions against firms in the health insurance industry.\12\
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    \11\ Docket No. C-4054, In the Matter of Physician Integrated 
Services of Denver, Inc., Michael J. Guese, M.D., and Marcia L. 
Brauchler; Docket No. C-4055, In the Matter of Aurora Associated 
Primary Care Physicians, L.L.C., Richard A. Patt, M.D., Gary L. 
Gaede, M.D., and Marcia L. Brauchler, at http://www.ftc.gov/bc/CommissionActions/2002.htm.
    \12\ United States and Texas v. Aetna Inc. and The Prudential 
Insurance Company of America, 1999-2 Trade Cas. (CCH) ] 72,730 (N.D. 
Texas 1999); United States v. Medical Mutual of Ohio, Inc., 63 Fed. 
Reg. 52,764 (October 1, 1998); United States v. Delta Dental of 
Rhode Island, 943 F. Supp. 172 (D.R.I. 1996) & 1997-2 Trade Cas. 
(CCH) ] 71,860 (D.R.I. July 2, 1997); United States v. Vision 
Service Plan, 1996-1 Trade Cas. (CCH) ] 71,404 (D.D.C. 1996); United 
States v. Oregon Dental Service, 1995-2 Trade Cas. (CCH) ] 71,062 
(N.D. Ca. 1995); United States v. Delta Dental Plan of Arizona, 
Inc., 1995-1 Trade Cas. (CCH) ] 71,048 (D. Ariz. 1995).
---------------------------------------------------------------------------

    Finally, the argument that injunctive relief would be appropriate 
here, because the FTC accepted injunctive relief in other cases 
involving physicians, as noted in response to the CVT's comments, has 
no legal basis. Antitrust investigations are very fact-specific 
matters. The particular facts in this investigation led the United 
States to conclude that the dissolution of MHC is likely to be far more 
effective than any injunctive relief would be.

D. Comment From Anonymous ``Concerned Employees''

    An anonymous group of ``concerned employees,'' submitted a comment 
in support of the proposed Final Judgment. This comment states that is 
``common knowledge'' among current and former employees that Ellen 
Wells, MHC's chief executive officer, ``purposely put off changing to 
Messengering because she was under the impression that the DOJ would 
just disappear,'' and because she believed that it would affect MHC's 
collections and impact her bonus. Exh. E. Other than expressing support 
for the dissolution of MHC this comment is primarily a personal 
criticism of Ms. Wells and raises issues that are not relevant to the 
relief contained in the proposed Final Judgment.

E. Comment From Anonymous Person Attaching Newspaper Advertisements

    An anonymous person submitted a comment asking why MHC, if it 
engaged in the conduct alleged in this case, would run newspaper 
advertisements implying that it did nothing wrong. Exh. F. This comment 
does not address the substance of the proposed Final Judgment, and 
should be considered by the Court.

F. Comment From Janine Mazur, Mountain Health Care Department Head

    Ms. Mazur submitted a comment criticizing the government's 
investigation and filing of this case. She states her opinion that 
MHC's collective rate setting has not resulted in higher physician 
reimbursements, claiming that MHC's fee schedule had not been changed 
since the start of the company. She opines that the physicians intended 
to provide cost-effective health care, not increase their fees. She 
believes that the dissolution of MHC will increase the cost of health 
care because it will increase the market power of national insurance 
carriers such as Aetna and Cigna, which have higher fee schedules than 
MHC's schedule. Exh. G.
    Ms. Mazur is a department head of MHC, a fact that she does not 
disclose to the Court in her letter. Although she criticizes the 
proposed dissolution of MHC, her substantive comments relate entirely 
to the decision to bring this case in the first instance. As noted 
above, such comments lack any relevancy in this Tunney Act proceeding. 
See supra. Section II.A.1. Moreover, the United States conducted a 
thorough investigation of MHC's conduct here, and concluded that MHC's 
conduct reduced competition, increased prices, and that its dissolution 
will have a procompetitive effect on the market.

G. Comment From Steward M. Auten, President of Auten Printing, Inc.

    Mr. Auten submitted a comment criticizing the government's decision 
to file this case. In his view, the case is based on ``emotions, 
circumstantial evidence, hype and superficial information.'' He 
believes that MHC gives quality care and lower rates, and that the 
dissolution of MHC will increase health care costs in Western North 
Carolina. Exh. H.
    Again, Mr. Auten's comment relates to the government's decision to 
file this case, which is not a relevant issue here. See supra, Section 
II.A.1. That decision was made after a thorough, two-year investigation 
of the local market. One focus of that investigation was to assess the 
effect that Mountain's collective rate setting conduct had on the fees 
paid by employers in Western North Carolina. To do that, the government 
interviewed numerous employers in the area and concluded that MHC's 
conduct was increasing their health care costs.

H. Two Comments From Individual Consumers

    Two comments were received from individual consumers, Mike and Gale 
Grooms, who have been satisfied with the medical services they have 
received from Mountain Health Care. (Exh. I) Both oppose this case and 
the proposed dissolution of MHC. Another consumer submitted a comment 
that characterizes the filing of this case as ``tyrannical'' and 
questions how MHC could increase medical costs in the area given that 
they cover only 8% of the population. Exh. J. Even though these 
customers liked the service they received from Mountain Health Care, 
they could have received lower prices and better service with 
competition. These comments do not raise specific facts relevant to 
this Tunney Act proceeding.

III. Conclusion

    After careful consideration of these public comments, the United 
States has concluded that entry of proposed Final Judgment will provide 
an effective and appropriate remedy for the antitrust violation alleged 
in the Complaint, and is therefore in the public interest. Once these 
comments and this Response are published in the Federal Register, the 
United States will move the Court to enter the proposed Final Judgment.

    Dated: June XX, 2003.

     Respectfully submitted.

David C. Kelly,
Department of Justice, Antitrust Division, Litigation I Section, 
1401 H Street, NW., Suite 4000, Washington, DC 20530, 202-616-9447.

Motion of S.M. Oliva for Leave To File Brief  Amicus Curiae

Before: Judge Lacy Thornburg

    Pursuant to 15 U.S.C. 16(f), I, S.M. Oliva, acting pro se, 
respectfully move

[[Page 44575]]

this Court for leave to file the accompanying brief as amicus curiae.
    I am a public policy analyst specializing in the study of federal 
antitrust settlements. I am currently a senior fellow at the Center for 
the Advancement of Capitalism in Arlington, Virginia, and president of 
Citizens for Voluntary Trade, a nonprofit association located in the 
District of Columbia. In the past year, I have filed extensive public 
comments on behalf of both organizations in response to antitrust 
consent orders negotiated by the Department of Justice and the Federal 
Trade Commission.
    Of particular interest to my work is the impact of antitrust laws 
on the rights of physicians and other health care providers. In the 
FTC's consent orders with five separate physician groups last year, I 
provided the only extended and substantial public comments on the 
settlements. As such, I am in a unique position to present this Court 
with insight into the case at bar.
    The proposed brief presents information that will hopefully assist 
the Court in determining whether the Proposed Final Judgment filed in 
this case on December 13, 2002, satisfies the public interest 
requirements of the Tunney Act. It is not the goal of this brief to 
comment on the particulars of the settlement, but on the lack of 
necessary information necessary to properly make a public interest 
determination. I expect to separately file substantial public comments 
discussing the entire case prior to the expiration of the comment 
period.
    For these reasons, I request leave to file the accompanying brief 
as amicus curiae.

    Dated: February 15, 2003.

     Respectfully Submitted,

S.M. Oliva,
2000 F Street, NW., 315, Washington, DC 20006-4217, Tel: 
(202) 223-0071, E-mail: [email protected]. Amicus Curiae

Brief of S.M. Oliva, as Amicus Curiae

Statement of Interest

    I, S.M. Oliva, declare that I have no financial interest in this 
case, nor do I have a financial interest in any competitor of Mountain 
Health Care, P.A. The views expressed in this brief are my own, and are 
based on my experience as a public policy analyst in the field of 
antitrust and competition law.

Summary

    In reviewing the Proposed Final Judgment before the Court in this 
case, amicus offers two arguments:
    [sbull] The United States failed to disclose material facts in 
their complaint and Competitive Impact Statement (CIS).
    [sbull] The United States provided insufficient information in the 
CIS regarding the status and role of Mountain Health Care in the 
relevant marketplace, as well as how Mountain's acts directly impacted 
competition in those markets.
    A major purpose of the Tunney Act \1\ is to facilitate public 
comments which may assist the Court in determining whether a proposed 
consent decree is in the public interest. The CIS, in part, is supposed 
to provide the public with an adequate description of the ``practices 
or events'' giving rise to an alleged antitrust violation, as well as 
disclosure of any ``determinative materials or documents'' considered 
by the government in preparing the proposed Final Judgment.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. Sec.  16(b)-(h).
---------------------------------------------------------------------------

    In this case, the CIS failed both of these tests. The United States 
took substantial shortcuts in complying with the Tunney Act, and in the 
process failed to fulfill Congress's underlying objectives. This Court, 
however, possesses broad statutory power to remedy this situation, by 
directing the United States to file a revised CIS that provides the 
public--and the Court--with adequate information to decide whether the 
proposed decree is in the public interest.

Failure To Disclose Material Facts

    In the complaint, the United States asserts that Mountain 
``organized and directed an effort to develop a uniform fee schedule to 
be used to negotiate and contract for fees for physician 
reimbursement'' \2\ from a number of managed care companies and other 
third-party benefit providers. This fee schedule, according to the 
government, ``unreasonably restrained competition'' in violation of 
section 1 of the Sherman Act.\3\ As a result, the United States filed 
suit to obtain the dissolution of Mountain ``before further inquiry to 
consumers in North Carolina or elsewhere occurs.'' \4\
---------------------------------------------------------------------------

    \2\ Compl. ] 1.
    \3\ Id.
    \4\ Id.
---------------------------------------------------------------------------

    This ``uniform fee schedule'' is the nexus of the complaint and the 
resulting proposed Final Judgment. So long as Mountain maintains this 
schedule, consumers remain in danger under the Sherman Act. The only 
way to get rid of the schedule, in the government's view, is for 
Mountain to be denied its very existence. Otherwise, this fee schedule 
will continue to run amok, spreading its anti-competitive effects 
throughout western North Carolina.
    But the problem is, the fee schedule the government speaks of may 
no longer be in play. According to statements made to amicus by Ellen 
Wells, Mountain's president and chief executive, Mountain's current 
``fee schedule'' is nothing more than individual doctors informing an 
independent consultant about their general pricing terms. In other 
words, a third party spoke to Mountain's physicians separately, 
obtained independent fee requests, and passed that information along to 
the managed care companies and other payors. At no point, according to 
Wells, was there an agreement or conspiracy among Mountain physicians 
to create a ``universal'' schedule of fixed fees.\5\
---------------------------------------------------------------------------

    \5\ Telephone interview with Ellen Wells, President of Mountain 
Health Care, P.A. (Jan. 23, 2003).
---------------------------------------------------------------------------

    Not only does this system not violate the Sherman Act, the United 
States expressly endorses this type of ``messenger model'' as a safe 
haven from the general prohibition on independent physicians 
collectively bargaining with payors. According to the 1996 revisions to 
the Department of Justice-Federal Trade Commission Statements of 
Antitrust Enforcement Policy in Health Care:

    Some networks that are not substantially integrated use a 
variety of ``messenger model'' arrangements to facilitate 
contracting between providers and payers and avoid price-fixing 
agreements among competing network providers. Arrangements that are 
designed simply to minimize the costs associated with the 
contracting process, and that do not result in a collective 
determination by the competing network providers on prices or price-
related terms, are not per se illegal price fixing.

    If Mountain's claim, then, is true, and they were employing (or 
transitioning to) a messenger model, there is no need for the 
government's proposed remedy--dissolution of Mountain--because there is 
no illegal behavior taking place. Yet nowhere in the complaint or CIS 
does the United States discuss, or even acknowledge, Mountain's claim 
that they employed a messenger model. The government doesn't even offer 
evidence to refute the claim. Instead, the complaint and CIS present a 
carefully edited, limited recitation of the facts, omitting a key 
detail that might influence the public's analysis of the case. In the 
absence of these disclosures, the public is left to incorrectly 
conclude that Mountain was simply an illegal price-fixing arrangement 
among physicians, and that

[[Page 44576]]

they made no good faith efforts to comply with the law.

Insufficient Information

    Congress acknowledged, in passing the Tunney Act, that the public 
has an interest in ``the integrity of judicial proceedings'' involving 
proposed antitrust settlements.\6\ To that end, the United States has 
an obligation to disclose enough facts about a case to enable the 
public to form reasoned judgments about the terms of a proposed Final 
Judgment. Of key importance is information that details the 
government's analysis of the marketplace, the competitive problem 
arising thereto, and the selected remedy. Here, we have little to go 
by. The United States insists that ``[t]here are no determinative 
materials or documents'' within the Tunney Act's meaning that warranted 
public disclosure.\7\ Amicus disagrees.
---------------------------------------------------------------------------

    \6\ H.R. Rep. No. 93-1463 (1974), reprinted in 1974 U.S.C.C.A.N. 
6536, 6539.
    \7\ Competitive Impact Statement, 68 FR 1478, 1481 (Jan. 10, 
2003).
---------------------------------------------------------------------------

    The complaint and CIS repeatedly argue that Mountain's actions 
illegally ``increased physician reimbursement fees.''\8\ The complaint 
argues that customers ``have paid higher prices for physician services 
sold through managed care purchasers than they would have paid in the 
absence'' of Mountain's actions.\9\ The CIS further states that 
Mountain's physicians ``have not clinically or financially integrated 
their practices'' in such a way as to justify maintaining their uniform 
fee schedule.\10\
---------------------------------------------------------------------------

    \8\ Compl. ] 14.
    \9\ Compl. ] 17(c).
    \10\ CIS, 68 FR at 1480.
---------------------------------------------------------------------------

    None of these arguments are supported by evidence, at least not 
evidence that's presented for public review in the complaint or CIS. 
For example, the public knows nothing, from the government's 
disclosures, of the exact nature of the market for physician services 
in western North Carolina. We don't know who Mountain was competing 
with, what prices they were charging, or even how consumer prices fared 
in comparison to neighboring marketplaces. We certainly don't know if 
Mountain's action actually harmed any consumers. We simply don't know 
much of anything, beyond the government's mere allegation that there 
was a fee schedule, and that it was illegal.
    Once again, amicus faces conflicting information. The United States 
claims that Mountain increased costs and harmed consumers. Mountain's 
Ellen Wells, in contrast, claims to amicus that Mountain's customers 
realized an average 14-20% savings over other service networks. Nothing 
in the complaint or CIS points this out.\11\ Furthermore, there is no 
evidence in the public record that suggests any Mountain customer was 
dissatisfied with their services or costs. Even one customer complaint 
would provide valuable information to the public on the exact nature of 
the alleged illegal actions. But once again, we're left only with the 
government's word, despite the existence of evidence that refutes key 
points of their argument.
---------------------------------------------------------------------------

    \11\ Telephone interview.
---------------------------------------------------------------------------

    It's worth noting that the government's lack of disclosure is 
hardly unusual in a Tunney Act proceeding. In the overwhelming majority 
of antitrust settlements, the CIS provides little useful information 
about a case. In one recent proceeding, Albert Foer of the American 
Antitrust Institute noted: ``The [Justice] Department has traditionally 
been reluctant to say a great deal in its CIS disclosures, presumably 
because it risks disclosure of confidential information, adds to the 
staff's workload, and opens up the door to additional inquiry.''\12\ 
All of these explanations may be applicable in this case, but none of 
them justify withholding relevant and material information from the 
public.

    \12\ Letter from Albert A. Foer to Roger W. Fones 2 (Dec. 27, 
2002) (available at http://antitrustinstitute.org/recent2/223a.pdf).
---------------------------------------------------------------------------

    At an absolute minimum, the United States should provide the public 
with enough information to assess the state of the affected marketplace 
at the time the complaint is filed, and also empirical evidence 
demonstrating how the proposed remedy is likely to restore competition 
allegedly lost. The government may consider this an inconvenient 
burden, but the Tunney Act does not contain exceptions for official 
laziness.
    This Court has clear authority to compel government disclosure of 
relevant information. Congress stated as much in the Tunney Act's 
legislative history, noting ``the court must obtain the necessary 
information to make its determination that the proposed consent decree 
is in the public interest.''\13\ And in one of the few cases where a 
court actually employed its Tunney Act discretion, United States v. 
Central Contracting Co.,\14\ the district judge emphasized the 
importance of vigorous judicial enforcement of the public's right to 
information:
---------------------------------------------------------------------------

    \13\ H.R. Rep. No. 93-1463, reprinted in 1974 U.S.C.C.A.N. at 
6538 (citing S. Rep. 93-298).
    \14\ 537 F. Sup. 571 (E.D. Va. 1982).

    The need for scrutiny is important in any case, but judicial 
scrutiny is perhaps more important in a run-of-the-mill case on 
which public attention is not focused and where abuse may escape 
unnoticed than in a ``big case'' where public interest supplements 
the court's scrutiny. If the Court in this case doesn't scrutinize 
---------------------------------------------------------------------------
there wil be no independent scrutiny.\15\

    \15\ Id. at 575.

    Similarly, this ``run-of-the-mill'' case runs the risk of escaping 
public attention and scrutiny completely. Without timely intervention 
by this Court to procure necessary additional information, it is likely 
the proposed Final Judgment will be entered without any serious 
examination of the government's arguments. This would render the Tunney 
Act effectively worthless in safeguarding the public interest.

Conclusion

    The public--and this Court--cannot rely on the complaint and CIS, 
in their present form, to make a proper determination under the Tunney 
Act on whether entry of the proposed Final Judgment is in the public 
interest. The United States omitted key facts from the complaint, and 
failed to disclose relevant information that would assist the public in 
forming reasoned judgments about this case. The Tunney Act grants the 
Court ample power to ensure the government's full compliance, and this 
case warrants exercise of that power.
    Accordingly, the Court should direct the United States to file a 
revised complaint and CIS, addressing the objections and concerns set 
forth in this brief. Additionally, the Court should extend the public 
comment period to allow third parties adequate time to review the 
revised disclosures so that they may provide appropriate comments to 
the Court.

    Dated: February 15, 2003.

     Respectfully Submitted,

S.M. Oliva,
2000 F Street, NW., #315, Washington, DC 20006-4217, Tel: (202) 223-
0071, E-mail: [email protected], Amicus Curiae.

Certificate of Service

    I hereby certify that on this 15th day of February, 2003, I caused 
a true and correct copy of the foregoing Motion for Leave to File and 
Brief of Amicus Curiae to be mailed by First Class United States Mail 
to:

    For Plaintiff United States of America:


[[Page 44577]]


Mark J. Botti, Antitrust Division, Litigation I Section, 1401 H 
Street, NW., Suite 4000, Washington, DC 20530, Tel: (202) 307-0001.

    For Defendant Mountain Health Care, P.A.:

Jeff Miles, Olber, Kaler, Grimes & Shriver, 1401 H Street, NW., 
Washington, DC 20005;
Jeri Kumar, Esq., D.B. & T. Building, Suite 510, Asheville, NC 
28801.

S.M. Oliva.

Public Comments of Citizens for Voluntary Trade to the Proposed Final 
Judgment

Before: Judge Graham C. Mullen

    Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 
(b)-(h), and the notice filed by the United States in the January 10, 
2003, edition of the Federal Register, Citizens for Voluntary Trade 
respectfully submits the enclosed public comments in response to the 
proposed Final Judgment in the above-captioned case.

    Filed: March 7, 2003.

S.M. Oliva,
President, Citizens for Voluntary Trade, 2000 F Street, NW., #315, 
Washington, DC 20006, (202) 223-0071.

Table of Contents

Resolution
Introduction
Part I: Analysis of the Complaint
    A. Mountain and the ``uniform fee schedule''
    B. Jurisdictional issues
    C. Marketplace description and analysis
    D. Anti-Competitive Effects
    E. Request for relief
Part II: Historical Background
    A. Origins of government intervention in healthcare
    B. Origins of physician antitrust prosecutions
    C. The DOJ-FTC ``Statements''
    D. Constitutional analysis of the DOJ's antitrust policies
Part III: Recent Cases
    A. OGMC Of Napa Valley
    B. The Colorado cases
    C. System Health Providers
    D. Conclusions based on recent cases
Part IV: Analysis of the Proposed Final Judgment
    A. The Competitive Impact Statement
    B. The proposed remedy
    C. Defining the ``public interest''
    D. The Court's powers and duties
Part V: Alternatives to the Proposed Final Judgment
Conclusion

Resolution

    The Board of Directors of Citizens for Voluntary Trade,
    Considering the fundamental role of judicial review in protecting 
the rights of Americans from the abuse of government power,
    Recognizing the ever-increasing impact of antitrust law on the 
ability of Americans to maintain a capitalist system based on the 
principle of voluntary trade for mutual benefit,
    Noting that the principles of capitalism are inconsistent with the 
enforcement of the antitrust laws,
    Affirming that antitrust law is not the proper means of promoting 
honest competition and free trade among individuals and businesses,
    Recalling the numerous abuses of federal antitrust authorities in 
applying the antitrust laws unjustly to the collective bargaining 
actions of physicians and health care providers,
    Believing that the case currently pending against Mountain Health 
Care is baseless as a matter of fact, law, and justice,
    Convinced that the only means to protect the rights of Mountain 
Health Care, and of Americans generally, is for immediate judicial 
action,
    1. Directs the president of Citizens for Voluntary Trade to file 
timely and substantial comments with the United States opposing entry 
of the proposed Final Judgment against Mountain Health Care;
    2. Appeals to the United States District Court for the Western 
District of North Carolina to reject entry of the proposed Final 
Judgment;
    3. Urges the United States Department of Justice to dismiss its 
complaint against Mountain Health Care; and
    4. Calls upon the United States Government to rescind its 
Statements of Antitrust Enforcement Policy in Health Care with all 
deliberate speed.

Introduction

    On December 13, 2002, following a two-year investigation, the 
United States Department of Justice (DOJ) sued Mountain Health Care, 
P.A. (Mountain), a North Carolina corporation operating as a preferred-
provider organization under state law. Mountain is a network of more 
than 1,800 health care providers, approximately 400 of whom are 
physician shareholders. Mountain sells access to its network to managed 
care purchasers and other insurers throughout the greater Asheville, 
North Carolina area, and generally in western North Carolina.
    The DOJ alleged Mountain violated the Sherman Act by maintaining a 
fee schedule that effectively fixed prices for network services. Rather 
then contest the government's charges in court, Mountain agreed to 
surrender without a fight, and acquiesce in the government's demand for 
Mountain's immediate dissolution. A proposed Final Judgment directing 
this dissolution was submitted by the DOJ and Mountain to the United 
States District Court for the Western District of North Carolina on the 
same day as the government's complaint was filed.\1\
---------------------------------------------------------------------------

    \1\ The case was initially assigned to Judge Lacy Thornburg, who 
recused himself on February 20, 2003, and the case was subsequently 
reassigned to Chief Judge Graham C. Mullen on February 25.
---------------------------------------------------------------------------

    On January 10, 2003, pursuant to the federal Tunney Act, 15 U.S.C. 
16, the United States published the proposed Final Judgment, along with 
a required Competitive Impact Statement (CIS) in the Federal Register, 
thereby commencing a 60-day comment period. Citizen for Voluntary Trade 
(CVT) henceforth submits the following comments in response to the 
proposed Final Judgment.
    CVT is a national nonprofit association based in Washington, DC. 
CVT is organized to promote the public welfare by examining the 
enforcement and antitrust and competition laws against private 
businesses and individuals. CVT's standing policy is to file comments 
in all proceedings where the United States seeks to violate the 
individual rights of businesses through unjust and unfounded antitrust 
prosecutions.\2\ This case presents just such a situation, where an 
innocent business in the form of Mountain Health Care is being punished 
despite the fact they committed no crime against the public interest. 
For the reasons stated below, CVT opposes entry of the proposed Final 
Judgment and respectfully requests the government withdraw its 
complaint against Mountain.
---------------------------------------------------------------------------

    \2\ S.M. Oliva, the present of Citizens of Voluntary Trade, 
filed a brief as amicus curiae with the Court on February 15, 2003, 
seeking the release of additional information from the United States 
on the allegations contained in the complaint. At the time of the 
filing, the Court has not yet ruled on Oliva's motion to file the 
brief or on the brief's substantive requests. A copy of the brief is 
included in the appendix to these comments.
---------------------------------------------------------------------------

    For the record, Citizens for Voluntary Trade does not have a 
financial interest in the outcome of this case, nor do we have any 
financial interest in any competitor of Mountain Health Care. These 
comments reflect the veiw of the Board of Directors of Citizens for 
Voluntary Trade.

Part I: Analysis of the Complaint

A. Mountain and the ``Uniform Fee Schedule''

    We begin our comments by examining the government's complaint 
against Mountain. The DOJ's central claim is that Mountain ``organized 
and directed an effort to develop a uniform fee schedule'' which 
Mountain allegedly used in negotiations with managed care companies and 
other third-party

[[Page 44578]]

insurers.\3\ The DOJ claims this fee schedule violated Section 1 of the 
Sherman Act by ``unreasonably'' retraining competition among physicians 
in western North Carolina,\4\ approximately 400 of whom were Mountain 
shareholders.
---------------------------------------------------------------------------

    \3\ Compl., ] 1.
    \4\ Id.
---------------------------------------------------------------------------

    Mountain's alleged crimes seem to have begun at the time of their 
incorporation in 1994, eight years before the DOJ took action.\5\ In 
essence, Mountain's very existence is considered by the government as 
prima facie evidence of antitrust violations simply because its 
provider network includes ``the vast majority of private practice 
physicians in the greater Asheville area.'' \6\ Of particular interest 
is the DOJ's belief that Mountain ``has not clinically or financially 
integrated its physicians to create efficiencies'' that would justify 
setting a uniform fee schedule.\7\
---------------------------------------------------------------------------

    \5\ Compl. ] 15.
    \6\ Compl. ] 8.
    \7\ Compl. ] 11.
---------------------------------------------------------------------------

    The government objects to Mountain's alleged fee schedule because 
Mountain relied ``exclusively'' on this schedule in contract 
negotiations with managed care companies, which the DOJ believes 
resulted in unfairly higher prices in the marketplace.\8\ Since the DOJ 
considers this a legal injury to consumers, they allege Mountain 
violated Section 1 of the Sherman Act.
---------------------------------------------------------------------------

    \8\ Compl. ] 14.
---------------------------------------------------------------------------

    The nexus of the government's argument is that Mountain's fee 
schedule equaled a price-fixing scheme; that is, Mountain's 
participating physicians agreed to abide by the schedule exclusively in 
setting prices for their individual practices. Mountain publicly denied 
this was the case. Mountain claims they are not an exclusive network, 
and member physicians set their own office charges and may even join 
other provider networks and health plans not affiliated with Mountain.
    Mountain does not deny that they've used non-exclusive fee 
schedules in the past. But as they note, such fee schedules are common 
to the majority of health plans operating in North Carolina. Mountain 
further contends that ``[i]n response to existing antitrust guidelines, 
Mountain Health Care has transitioned to a messenger model where each 
payer negotiates directly with each physician.''\9\ The messenger model 
is an exception to the DOJ's general prohibition on physician 
collective bargaining arrangements. Under the model, a group of doctors 
may pass along fee information to an insurance company through a third-
party ``messenger,'' but the doctors may not speak with one another 
about fees or otherwise jointly discuss contract terms.
---------------------------------------------------------------------------

    \9\ ``Myths and Facts about Mountain Health Care,'' Asheville 
Citizen-Times (Jan. 6, 2003) (accessed online at http://www.mountainhealthcare.com/pressrelease.htm.)
---------------------------------------------------------------------------

    Dr. Stephan Buie, a psychiatrist and a member of the Mountain 
network, offered this description of Mountain's operations:

    [Mountain Health Care] works through a blind messenger system, 
whereby MHC negotiates a rate for services with an employer and then 
sends those rates to each member practice. Each practice 
independently decides whether to accept the rate or to counter 
propose a different rate. All members have been informed that it is 
not legal to consult with other practices about their participation 
or their rates. Employers were free to negotiate with other managed 
care organizations.\10\
---------------------------------------------------------------------------

    \10\ Stephan Buie, ``Competition needs to grow between insurance 
companies,'' Asheville Citizen-Times (Dec. 30, 2002) (accessed 
online at http://www.mountainhealthcare.com/pressrelease.htm).

    Curiously, the complaint makes no mention of Mountain's messenger 
model claims. This omission changes the entire character of the 
government's case. If Mountain's claim is true, then the DOJ 
intentionally withheld a material fact from its complaint. 
Consequently, the government's view that Mountain was nothing more than 
a ``price-setting organization'' \11\ would be erroneous, since the 
price-setting behavior itself is no longer taking place. At the very 
least, the DOJ should explain why Mountain's ``messenger model'' claim 
is false, why Mountain's actions still warrant the charges and remedy 
set forth in the complaint.
---------------------------------------------------------------------------

    \11\ Compl. ] 14.
---------------------------------------------------------------------------

B. Jurisdictional Issues

    The next problem with the complaint is the government's assertion 
of jurisdiction. On the one hand, the complaint's description of 
Mountain's actual business activities described commerce occurring 
exclusively within North Carolina.\12\ But on the other hand, the 
government forcefully claims that Mountain's actions fall under 
interstate commerce, which is a predicate for the DOJ to bring action 
under the Sherman Act.\13\ It is unclear whether the alleged misconduct 
fell within the sphere of interstate commerce. Thus, it is possible the 
DOJ has not met its burden to establish federal jurisdiction in this 
case.
---------------------------------------------------------------------------

    \12\ Compl. ] 2.
    \13\ Section 1 of the Sherman Act, 15 U.S.C. 1, only applies to 
``trade or commerce among the several States, or with foreign 
nations.''
---------------------------------------------------------------------------

    Mountain is a professional corporation organized under North 
Carolina law. It is registered with North Carolina's commissioner of 
insurance as a ``preferred provider organization,'' a tightly regulated 
form of physician network. Generally, regulation of health care and 
health insurance providers occur at the state level. If Mountain were 
to operate in another state, it would be subject to that jurisdiction's 
separate rules for health care and health insurance regulation. Since 
Mountain only operates in counties comprising western North Carolina 
\14\, it is only subject to North Carolina regulation. This raises the 
question of whether state officials would be more competent to assess 
the legality of Mountain's operations than the DOJ, but we will address 
that point later. For purposes of assessing this Court's jurisdiction, 
it is only relevant to determine whether the alleged crimes involved 
interstate commerce.
---------------------------------------------------------------------------

    \14\ See Compl. ] 5.
---------------------------------------------------------------------------

    The government claims Mountain's contract--the products of the 
illegal fee schedule--included arrangements with ``business located 
outside North Carolina.'' \15\ What is unclear is the precise identity 
and nature of these businesses. The government admits Mountain's 
doctors only render services within North Carolina boundaries.\16\ The 
businesses receiving these services only do so within North Carolina. 
At all times, these intrastate transactions are conducted under the 
careful regulatory eye of North Carolina officials. Thus, the DOJ is 
asserting jurisdiction here solely because some of the businesses--and 
we don't know how many--Mountain provides services to may be organized 
outside of North Carolina.
---------------------------------------------------------------------------

    \15\ Id.
    \16\ Compl. ] 2.
---------------------------------------------------------------------------

    At a minimum, some of the contracts Mountain entered into were 
wholly intrastate affairs; that is, Mountain provided services to 
businesses organized and doing business only in North Carolina. These 
arrangements are not the proper subject of a federal antitrust 
proceeding, but may be actionable under state law. In any case, the 
DOJ's complaint may not cover such acts, at least not under the Sherman 
Act. The complaint fails to distinguish and identify the character or 
Mountain's clients, however, and we are thus left with an incomplete 
picture.
    The DOJ is overextending its reach here, at least so far as the 
complaint covers all contracts Mountain entered into, whether 
intrastate or interstate in

[[Page 44579]]

character. Furthermore, it's also unclear whether the contracts 
Mountain entered into with businesses organized outside North Carolina 
actually involved overt acts of interstate commerce. If these contracts 
were between Mountain and subsidiary offices wholly operating within 
North Carolina, these contracts too might fall outside the reach of the 
Sherman Act.
    In any case, there is a fundamental ``public interest'' question 
here as to whether the DOJ should be acting in a case where state 
authorities posses a more direct, not to mention more developed, 
interest in the alleged misconduct. Regulation of private health care 
networks remains largely a state affair, and the DOJ's actions here 
infringe upon the state's traditional sphere of influence. This should 
be a factor the Court takes notice of in reviewing the complaint and 
proposed Final Judgment.

C. Marketplace Description and Analysis

    The complaint provides little useful information regarding the 
marketplace for health care services in western North Carolina. 
Instead, the government offers a highly generalized description of how 
physicians relate to managed care companies:

    Physicians frequently contract with managed care purchasers. 
These contracts establish the terms and conditions, including price, 
under which physicians will render care to the enrollees of managed 
care purchasers. In negotiations with managed care purchasers, 
physicians frequently agree to charge rates lower than their 
customary rates, in order to gain access to the managed care 
purchaser's enrollees. As a result of this lower rate, such 
contracts often lower the managed care purchasers' cost, and 
therefore lower the cost of health care for their enrollees.\17\
---------------------------------------------------------------------------

    \17\ Compl., ] 6.

    There are two unproven statements in this claim. The first is that 
physicians always seek access to the greatest number of patients for 
the lowest compensation. The second is that lower physician costs 
equals lower costs for managed care customers. Both of these statements 
are possibly true, but in the absence of clear and convincing evidence, 
they cannot simply be taken as axiomatic. The complaint includes no 
supplemental information that would support either claim in the context 
of this case. There is no description of the actual market for health 
care services in western North Carolina; for example, the complaint 
tells us nothing of who Mountain is competing with, the structure of 
fees in the market before and after Mountain's incorporation, or the 
structure of managed care contracts with individual consumers. 
Additionally, the complaint makes no effort to assess whether 
physicians prefer to accept more patients at a lower per capita 
reimbursement, or whether they've individually expressed a preference 
to see fewer patients at a non-discounted rate.
    The complaint states that Mountain's network provided ``access to 
substantially all of the physicians in Asheville and the surrounding 
counties.''\18\ While this is true, the access was apparently not 
exclusive. As noted above, Mountain denies they were ever an exclusive 
network: ``[P]roviders are free to participate with any network or plan 
they choose. Your employer does not have to contract with Mountain 
Health Care in order for you to see those providers.'' \19\
---------------------------------------------------------------------------

    \18\ Compl., ] 8.
    \19\ ``Myths and Facts about Mountain Health Care.''
---------------------------------------------------------------------------

    The government believes Mountain acted as an exclusionary monopoly, 
unreasonably controlling the marketplace. But once again, Mountain 
denies this, arguing they faced more than ample competition: 
``Employers in the Western North Carolina market place are contracted 
with many different health plans. Mountain Health Care members make up 
an average of only 8% of our providers patient base, and the 
overwhelming majority of Mountain Health Care providers participate 
with other plans'' \20\ (emphasis added). Clearly, Mountain's operation 
did not leave consumers without other options.
---------------------------------------------------------------------------

    \20\ Id.
---------------------------------------------------------------------------

    There is simply no evidence which refutes Mountain's description of 
the marketplace as competitive, non-exclusionary, and otherwise free of 
coercive influence. In the absence of such proof, Mountain's denials 
should be taken at face value, since the government has the burden of 
establishing its case by a preponderance of the evidence, not the other 
way around. Having failed to meet this burden, the government's 
complaint is defective simply because they have not demonstrated the 
marketplace itself suffered from any anti-competitive effects arising 
from Mountain's activities.

D. Anti-Competitive Effects

    Despite not proving any defects in the marketplace, the government 
nevertheless insists Mountain's actions harmed consumers in western 
North Carolina. The complaint alleges three specific harms: 
unreasonable restraint of price competition, denying the ``benefits of 
free and open competition'' to managed care companies and their 
enrollees, and forcing consumers to pay higher prices for physician 
services.\21\ None of these allegations have merit.
---------------------------------------------------------------------------

    \21\ Compl., ] 17.
---------------------------------------------------------------------------

    As discussed above, the government never demonstrates that 
Mountain's fee schedule was exclusive. Mountain's own denial suggests 
the fee schedule was nothing more than a loose coordination of 
independent operators. The schedule did not cover office charges, and 
any patient was free to obtain services from a Mountain physician 
without going through the network.\22\ Thus, it is unreasonable for the 
government to define Mountain's fee schedule as a ``restraint'' on 
price competition, since no actual restraint existed.
---------------------------------------------------------------------------

    \22\ ``Myths and Facts about Moutain Health Care''.
---------------------------------------------------------------------------

    Next, on the question of whether Mountain denied consumers the 
``benefits of free and open competition,'' it is unclear precisely what 
``benefits'' are at issue. The government alludes to the fact that 
consumers faced higher prices for physician services as the result of 
Mountain's actions. But that statement appears to be false. Mountain's 
prices apparently varied little between 1994, when the network was 
incorporated, and 2002, when the government filed the complaint. 
Indeed, as Dr. Buie noted, ``Managed care organizations have taken a 
hard line with payment to physicians, either decreasing payments or 
holding them steady during the last 10 years.'' \23\ Mountain was in 
the same boat as every other physician network as this respect. While 
it is true that premiums paid by enrollees of managed care plans have 
increased substantially in the past decade, even the government 
attributes that primarily ``on larger increases in the indices for 
prescription drugs and hospital services,'' \24\ not higher physician 
reimbursements.
---------------------------------------------------------------------------

    \23\ Id.
    \24\ Id. (citing Modern Healthcare, Jan. 21, 2003).
---------------------------------------------------------------------------

    Finally, on the issue of whether consumers paid unreasonably higher 
prices to Mountain physicians, there is once again a lack of evidence, 
or even a proper standard to judge evidence. The complaint does not 
reveal how much Mountain charged under its fee schedule, how much non-
Mountain providers charged, or how much Mountain providers charged 
prior to joining the network. Furthermore, there's no indication of 
what the government's standard is for assessing price levels. We have 
no indication as to what price levels are acceptable,

[[Page 44580]]

either for physicians nationally or for those located within the 
western North Carolina marketplace. Without evidence or standards, the 
complaint's assertion that the physicians increased prices unreasonably 
is simply arbitrary and capricious.

E. Request for Relief

    Since the complaint's requested relief was essentially obtained 
through the proposed Final Judgment, we will reserve commentary on this 
subject until Part IV. However, since the analysis above demonstrates 
the government's complaint is defective in nearly every aspect, the 
Court could simply dismiss the complaint for failure to state a claim 
entitling the government to obtain relief.\25\
---------------------------------------------------------------------------

    \25\ See Fed. R. Civ. Proc. 54(c).
---------------------------------------------------------------------------

Part II: Historical Background

A. Origins of Government Intervention in Healthcare

    The case against Mountain ultimately has little to do with 
enforcing the Sherman Act and everything to do with protecting the 
federal government's intrusive role in the healthcare market. Indeed, 
if the DOJ actually believed in the type of free market they claim to 
be protecting here, they would be seeking to protect Mountain's right 
to exist rather than destroy it. But as things stand, the government 
maintains a direct interest in destroying Mountain, and in general 
preventing physicians from collectively bargaining with managed care 
companies. This interest is not genuinely motivated by antitrust 
concerns, but by simple budget politics.
    In 1965, Congress brought an end to the free market that 
successfully served Americans for most of the republic's history. That 
year, Congress created Medicaid and Medicare, two programs designed to 
finance healthcare for the indigent and elderly, respectively.\26\ The 
original concept was for the government to simply pay the bills for 
medical expenses while not interfering with physicians and the services 
they provided. This concept soon proved unworkable.
---------------------------------------------------------------------------

    \26\ See 42 U.S.C. 1395, et seq.
---------------------------------------------------------------------------

    The core problem with Medicaid and Medicare was the divorcing of 
demand for services from the ability to pay. Once health care became 
free for certain individuals, these folks were able to spend 
indiscriminately. Recognizing this problem (but refusing to admit 
defeat), Congress responded by imposing arbitrary cost controls on 
Medicare and Medicaid. Originally, the two programs paid ``reasonable 
costs'' of services chosen and provided by physicians. But following 
passage of several amendments in 1983, Medicare and Medicaid switched 
to a payment system based on DRGs, or ``diagnosis-related group.'' This 
change was intended to lower government spending on health care.
    The DRG approach is precisely the kind of non-market price fixing 
the government now accuses Mountain of. A DRG divides all medical 
problems into a set number of categories, and then assigns a fixed, 
arbitrary fee for each ``diagnosis,'' a figure that supposedly 
represents the average cost for treating the problem. A health care 
provider gets only the fixed DRG amount, regardless of actual work 
performed. This means that for the provider to make a profit, he must 
incur costs below the DRG rate.
    The DRG approach is used not just under Medicare and Medicaid, but 
in privately owned insurance programs as well. Because the government's 
1965 interventions led to an exponential rise in health care costs, 
Congress decided to encourage a DRG approach in private insurance by 
passing the HMO Act of 1973. HMOs, or health maintenance organizations, 
exist as comprehensive prepaid insurance plans, where providers accept 
a DRG-like fixed rate for medical services irrespective of actual 
costs. Prior to 1969, the only HMO of significant stature was Kaiser 
Permanente, which relied on labor unions compelling their members to 
join.\27\ Today, of course, HMOs are the dominant provider of private 
health insurance coverage in the United States.
---------------------------------------------------------------------------

    \27\ Scott Holleran, ``What You--and Your Employer--Probably 
Don't Know About Your Health Plan,'' (Jan. 1999) (available online 
at http://www.afcm.org/historyofhmos.html).
---------------------------------------------------------------------------

    The rise of HMOs derives not from their popularity in the market, 
but from the 1973 law. Congress essentially rigged the market in favor 
of HMOs, giving them generous subsidies, and expanding tax incentives 
for employers that enrolled their employees in HMOs. The government's 
encouragement made HMOs a dominant force in the health care marketplace 
independent of the need to fairly compete for customers.
    Indeed, it is difficult to imagine HMOs succeeding in a genuinely 
competitive free market. The DRG-based approach HMOs use is entirely 
incompatible with America's capitalist ideals. Customers generally 
don't voluntarily pay for what they know to be inferior service. Yet 
HMOs only profit by forcing costs below the level at which optimum 
customer service can be provided. The economic principle is egalitarian 
rather than capitalist: it's more important for an HMO to serve 
everyone than to serve everyone well. In the absence of government 
encouragement, few customers would voluntarily subscribe to this theory 
when it comes to something as essential to their life as health care.
    Despite all of the government's interference, health care costs 
continue to rise. Rather than admit fault, the government prefers to 
scapegoat others for the shortcomings of Medicare, Medicaid, and 
managed care. Physicians are by far the easiest target. In DRG-based 
models, physicians are effectively stripped of their power to deal one-
on-one with their patients, thus subjecting all medical judgments to 
the whims of government bureaucrats and HMO administrators, few of whom 
have any actual knowledge or experience in health care. At the same 
time, physicians have found their incomes restricted by non-market 
forces, namely the arbitrary DRG levels that bear little if any 
relation to actual supply and demand. Despite this, the government 
promotes the theory, at issue in this case, that it's the physicians 
that are acting illegally by trying to increase their income and their 
control over how they provide medical care. According to the DOJ's 
thinking, it is more important for the HMOs and government insurance 
programs to be protected from their own errors than to permit 
physicians even a minimal ability to defend their professions and 
personal livelihoods.

B. Origins of Physician Antitrust Prosecutions

    For more than 80 years, the Sherman Act was not applied to the 
activities of physicians, attorneys, and other so-called ``learned'' 
professions. In passing the Sherman Act, Congress's target was alleged 
industrial trusts, such as Standard Oil and the railroads. But in 1975, 
the U.S. Supreme Court extended the Sherman Act's reach to independent 
professionals in Goldfarb v. Virginia State Bar.\28\ There, the Court 
was asked to examine whether a minimum fee schedule for legal services 
constituted illegal price fixing, notwithstanding the fact a state bar 
itself prescribed the schedule.
---------------------------------------------------------------------------

    \28\ 421 U.S. 773 (1975).
---------------------------------------------------------------------------

    A unanimous Court ruled against the bar, holding that the Sherman 
Act contained no exception for specific professions, even those 
regulated by state governments. At the same time, however, the Court 
noted: ``In holding that certain anticompetitive conduct by lawyers is 
within the reach of the Sherman Act we intend no diminution of the 
authority of the State to regulate

[[Page 44581]]

its professions.'' \29\ This is noteworthy because while the Court was 
mindful of protecting the federal government's exclusive authority to 
regulate interstate commerce, the justices also made it quite clear the 
states did not surrender their professional regulatory powers. In the 
context of the case against Mountain, this is a point worth 
emphasizing, since the DOJ's actions here trample on North Carolina's 
ability to supervise and regulate physicians and medical organizations, 
while not advancing a genuine interest related to interstate commerce.
---------------------------------------------------------------------------

    \29\ 421 U.S. at 793.
---------------------------------------------------------------------------

    Seven years after Goldfarb, the Supreme Court made its first--and 
to date only--major decision related to antitrust prosecution of 
physician organizations. In Arizona v. Maricopa County Medical 
Society,\30\ a divided Court \31\ held that a maximum-fee schedule 
adopted by a physician group was per se unlawful under Section 1 of the 
Sherman Act. The majority explicitly rejected any call to put the 
Medical Society's actions in proper context, citing the circular nature 
of the per se rule:
---------------------------------------------------------------------------

    \30\ 457 U.S. 332 (1982).
    \31\ The case was decided by a 4-3 vote, because Justices 
Blackmun and O'Connor were recused.

    The respondents' principal argument is that the per se rule is 
inapplicable because their agreements are alleged to have 
procompetitive justifications. The argument indicates a 
misunderstanding of the per se concept. The anticompetitive 
potential inherent in all price-fixing agreements justifies their 
factual invalidation even if procompetitive justifications are 
offered for some. Those claims of enhanced competition are so 
unlikely to prove significant in any particular case that we adhere 
to the rule of law that is justified in its general application. 
Even when the respondents are given every benefit of the doubt, the 
limited record in this case is not inconsistent with the presumption 
that the respondents' agreements will not significantly enhance 
competition.\32\
---------------------------------------------------------------------------

    \32\ 457 U.S. at 351.

    In dissent, Justice Powell preferred to actually look at the facts, 
---------------------------------------------------------------------------
and concluded:

    The medical care plan condemned by the Court today is a 
comparatively new method of providing insured medical services at 
predetermined maximum costs. It involves no coercion. Medical 
insurance companies, physicians, and patients alike are free to 
participate or not as they choose. On its face, the plan seems to be 
in the public interest.\33\
---------------------------------------------------------------------------

    \33\ Id. at 357.

    The situation in Maricopa is not dissimilar from this case. Like 
Maricopa, no coercion was involved, and the fee schedule arrangement--
to the extent one actually exists here--is wholly voluntary. And if the 
government were to go to trial in this matter, they would almost 
certainly use a per se standard in analyzing Mountain's actions. In 
doing so, the government would be able to obtain a judgment against 
Mountain without having to prevent any substantial evidence as to the 
actual context of Mountain's operations or their effect on the 
marketplace; the government would only need to demonstrate that prices 
were fixed in some manner to prevail. Yet, as Justice Powell warned us 
in Maricopa, this approach often works against the supposed intent of 
---------------------------------------------------------------------------
the antitrust laws:

    It is settled law that once an arrangement has been labeled as 
``price fixing'' it is to be condemned per se. But it is equally 
well settled that this characterization is not to be applied [457 
U.S. 332, 362] as a talisman to every arrangement that involves a 
literal fixing of prices. Many lawful contracts, mergers, and 
partnerships fix prices. But our cases require a more discerning 
approach. The inquiry in an antitrust case is not simply one of 
``determining whether two or more potential competitors have 
literally `fixed' a `price.' * * * [Rather], it is necessary to 
characterize the challenged conduct as falling within or without 
that category of behavior to which we apply the label `per se price 
fxing.' That will often, but not always, be a simple matter.'' 
Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 
U.S. 1, 9 (1979).
    Before characterizing an arrangement as a per se price-fixing 
agreement meriting condemnation, a court should determine whether it 
is a `` `naked restrain[t] of trade with no purpose except stifling 
of competition.' '' United States v. Topco Associates, Inc., 405 
U.S. 596, 608 (1972), quoting White Motor Co. v. United States, 372 
U.S. 253, 263 (1963). See also Continental T.V., Inc. v. GTE 
Sylvania Inc., 433 U.S. 36, 49-50 (1977). Such a determination is 
necessary because ``departure from the rule-of-reason standard must 
be based upon demonstrable economic effect rather than * * * upon 
formalistic line drawing.'' Id., at 58-59. As part of this inquiry, 
a court must determine whether the procompetitive economies that the 
arrangement purportedly makes possible are substantial and 
realizable in the absence of such an agreement.\34\
---------------------------------------------------------------------------

    \34\ Id. at 361.

    In Maricopa, the Medical Society's purpose was not to stifle 
competition, but to contain rising medical costs. Here, there is no 
evidence which suggests Mountain's intentions were to stifle or impair 
competition. Instead, Mountain's principal function was to provide 
patients and insurers with access to a broad network of health care 
providers. Superficially, at least, this would seem to be ``pro-
competitive.'' But once again, there is substantial evidence to suggest 
the government's actions in cases like Maricopa and Mountain are about 
something other than antitrust.

C. The DOJ-FTC ``Statements''

    In the years following Goldfarb and Maricopa, the DOJ and FTC 
developed substantial experience going after physician organizations. 
The DOJ has filed five civil claims against physician groups since 
1991, all of which have resulted in consent orders. None of these cases 
involved a remedy as drastic as the one imposed here on Mountain--
outright dissolution--although in 1983, a preferred provider 
organization did dissolve on the eve of DOJ action. There is no record 
of any DOJ or FTC complaint against a physician group proceeding to 
trial, judgment, and appeal. Thus, there is no controlling precedent 
from the Supreme Court or any court of appeals on the constitutionality 
of the specific policies used by the government in reviewing and 
prosecuting physician activities.
    The major policy at issue is the FTC-DOJ Statements of Antitrust 
Enforcement Policy in Health Care (``Statements''). The Statements were 
adopted by joint action of the FTC and DOJ Antitrust Division in 
September 1993, and revised by the agencies in 1994 and 1996. Congress 
never enacted the Statements into law, and thus these policies remain 
nothing more than the opinion of the FTC and the DOJ's Antitrust 
Division.
    In physician network cases, the critical policy is Statement 8, 
which effectively labels all networks owned by nominally competing 
physicians as per se illegal. Statement 8 says these networks are only 
legal under the Sherman Act if the physicians ``share substantial 
financial risk.'' As lawyers at the firm representing Mountain before 
this Court noted in 1996: ``It is this requirement that has generated 
the most controversy. This is so not because the concept of sharing 
risk is unusual in the context of a legitimate joint venture. Instead, 
the controversy stems from the fact that the enforcement statements 
`approve' only two forms of risk sharing: capitation and 
withholds.''\35\ Capitation means physicians are paid a fixed amount 
per month for each consumer enrolled in a given health plan; withholds 
means the payer keeps a certain percentage of a physician's 
reimbursement unless certain cost

[[Page 44582]]

containment goals, such as reducing particular procedures. Physician 
networks have no choice under Statement 8 but to employ one of these 
two methods, despite the fact that both capitation and withholds 
substantially increase physician risks without providing any actual 
benefit to physicians or health care consumers.
---------------------------------------------------------------------------

    \35\ Bruce R. Stewart and E. John Steren, ``Will New Guidelines 
Clarify Role of Antitrust Law in Health Care?'' Legal Backgrounder, 
Vol. 11, No. 23 (June 21, 1996).
---------------------------------------------------------------------------

    If physicians don't wish to share risk under Statement 8, but still 
want to negotiate with insurance companies through a network, the 
doctors must turn to Statement 9, which authorizes the ``messenger 
model'' described earlier. The messenger, as the name implies, is not 
supposed to be a negotiator, but a one-way courier of information from 
insurance companies to independent physicians. Or, put another way, 
``the messenger acts essentially as a mute and blindfolded delivery boy 
between the payer and each physician in the network.''\36\
---------------------------------------------------------------------------

    \36\ Id.
---------------------------------------------------------------------------

    Statements 8 and 9 create an unworkable marketplace where 
physicians possess no genuine bargaining power. The three tools at the 
physicians' disposal--capitation, withholding, and messengering--are 
insufficient in dealing with HMOs on a level playing field. The 
government is well aware of this, and maintains these options precisely 
for that reason. After all, HMOs are government-sponsored entities that 
would perish in a truly free market. The only way to maintain the HMO's 
viability is to eliminate the ``threat'' of concerted physician action. 
That's what Statements 8 and 9 are designed to accomplish, and they've 
done so quite effectively, albeit at the expense of the government's 
integrity in enforcing its own laws.
    In the context of this case, it must be repeated that Mountain 
claimed to employ the messenger model system set forth in Statement 9. 
This claim is never addressed, because the government intentionally 
omitted this fact from its compliant. In past cases, however, the 
government claimed that even though a network employed a messenger 
model, it did so incorrectly. This means the government itself--which 
is composed of antitrust lawyers, not health care professionals--
subjectively decided they didn't like the look of things. In most 
recent prosecutions of physician networks, the defendant argues they 
were following the best available legal advice in employing the 
messenger model. Yet in every case, this advice did not save them from 
the government, which changes the rules in mid-game when they don't 
like a particular result.

D. Constitutional Analysis of the DOJ's Antitrust Policies

    At a fundamental level, the prosecution of Mountain represents the 
latest attack in a full-scale war against physicians and their basic 
individual rights. The government's legal premise is shaky at best, 
since they're arguing in favor of a nebulous concept of ``consumer 
rights'' despite the complete absence of evidence that any consumer was 
harmed in a legal sense. But beyond that, the government's moral 
premise is far more troubling. In order to accept the government's 
argument that Mountain violated the antitrust laws, this Court must 
also subscribe to the notion that Mountain's physician shareholders are 
serfs of the HMO's (and by extension the government), since these 
doctors possess no individual rights whatsoever when it comes to 
fulfilling their economic self-interest.
    By dissolving Mountain, the government seeks to deprive the 
physician shareholders of any ability to negotiate fairly with 
insurance companies. This makes it for more likely the physicians will 
surrender greater amounts of their professional autonomy just to ensure 
a steady paycheck from week-to-week. In turn, this leads to an economic 
relationship not unlike ancient feudalism, where the procedures 
generate wealth which is unjustly appropriated by feudal lords whose 
only claim to the wealth is the benefit of political power and 
patronage. HMOs do not earn their wealth through production, but 
through the appropriate of wealth generated by physicians. The 
government serves to facilitate the HMOs through policies such as this 
antitrust prosecution. The goal isn't to protect consumers, but to deny 
wealth to its rightful owners.
    This feudal model will only continue to escalate in the absence of 
judicial intervention. And such intervention is warranted on 
constitutional grounds, for one of several independent reasons. First, 
the government is using antitrust policy in a manner that denies basic 
rights to some citizens but not others. Physicians aren't just treated 
differently than HMOs; doctors are also treated differently than almost 
every other class of professional in this country. Labor unions enjoy 
exemptions from antitrust laws, not because their acts are less likely 
to violate the antitrust laws, but because unions are politically well-
connected in a way that physicians are not. While one could argue this 
is simply the nature of a democracy, the Constitution prohibits the 
federal government from distinguishing rights among arbitrarily 
selected classes of individuals. The Privileges and Immunities Clause 
of Article IV, the Due Process Clause of the Fifth Amendment, and the 
Ninth and Tenth amendments all provide ample support for the equality 
of physicians to every other class of American citizen.
    Furthermore, Congress lacks any affirmative power to provide for 
the kind of professional destruction imposed by the DOJ in this case 
and others like it. The Commerce Clause of Article I extends only to 
interstate commercial acts. Mountain's actions, by the DOJ's own 
evidence, were wholly intrastate in their actual character, despite the 
alleged tangential effects on commerce outside of North Carolina. 
Beyond that, the Tenth Amendment recognizes North Carolina's 
sovereignty over the regulation of health care matters, a point not 
challenged by the DOJ in this case.
    Ultimately, the government's case against physician networks like 
Mountain has more to do with moral values than legal judgments. The 
DOJ's position is that physicians enjoy no basic right to economically 
benefit from their skills--at least not when such benefits might hamper 
the government's efforts to ensure the triumph of HMOs in the private 
insurance market. This contradicts the very principles at the heart of 
the Constitution and the Declaration of Independence, which hold the 
individual right to life, liberty, property, and pursuit of happiness 
as paramount to any policies that force individuals--such as 
physicians--to sacrifice their rights for the sake of others.

Part III: Recent Cases

A. OGMC of Napa Valley

    The Center for the Advancement of Capitalism (CAC)\37\ first filed 
comments on behalf of a physician organization in May 2002, in the 
matter of Obstetrics & Gynecology Medical Corporation of Napa Valley 
(OGMC),\38\ an FTC complaint against a six-physician network in 
California.\39\ Like Mountain, OGMC was accused of injuring HMOs and 
health care consumers by attempting to collectively bargain for higher 
fees. And like the proposed settlement here, OGMC agreed to dissolve. 
Additionally, the individual OGMC physicians agreed to a variety of

[[Page 44583]]

restrictions on their personal conduct for a period of 20 years.
---------------------------------------------------------------------------

    \37\ The Center for the Advancement of Capitalism is a nonprofit 
corporation that generally promotes the moral basis of capitalism. 
While CVT officials have discussed this case with CAC, this comment 
letter reflects only the viewpoints of CVT.
    \38\ FTC File No. 011-0153.
    \39\ The six physicians were named individually by the FTC in 
addition to their professional corporation.
---------------------------------------------------------------------------

    CAC submitted timely and extensive comments to the FTC's complaint 
and proposed settlement. CAC offered four principal arguments: First, 
OGMC's alleged collective bargaining did not violate the FTC Act, 15 
U.S.C. 45, et seq.; second, the FTC's action against OGMC was per se 
unconstitutional under the Privileges and Immunities Clause\40\ and the 
Fourteenth Amendment; third, the forced dissolution of OGMC would 
actually harm competition; and finally, that the proposed settlement 
itself was contrary to the public interest. CAC's comments offered 
extensive analysis and proof in support of its arguments, and 
consequently expected the FTC to seriously consider the comments prior 
to entering its final order against OGMC.
---------------------------------------------------------------------------

    \40\ U.S. Const., art. IV, 2.
---------------------------------------------------------------------------

    That did not happen. Not only did the FTC fail to seriously 
consider CAC's comments, they effectively failed to acknowledge or 
consider them at all. On May 17, 2002, the FTC announced the adoption 
of a final consent order against OGMC after a comment period elapsed in 
which ``no comments were received'' or considered by the Commission. 
This despite the fact CAC's comments were submitted to the FTC four 
days before the stated deadline. Upon further inquiry, FTC officials 
admitted their error in neglecting to consider CAC's comments. However, 
FTC officials then proceeded to lie to both CAC officials and OGMC's 
counsel, falsely claiming CAC's comments were both considered and taken 
into account in formulating the final order.
    In documents obtained by CVT through the Freedom of Information Act 
(FOIA), FTC officials acknowledge they failed to initially consider 
CAC's comments, but prior to service of the final order on OGMC, the 
Commission belatedly considered and voted on a reply to CAC's comments. 
This is inconsistent with the statements of OGMC counsel, however, who 
addressed the issue to FTC counsel in a letter dated two months after 
the settlement was approved:

    The final Order, however, does not reflect the receipt of 
[CAC's] comments, nor does it address any of the substantive points 
that the Center made in the comments. If the facts are as a 
representative of the Center has described them to use, we believe 
that, at a minimum, our clients' procedural due process rights have 
been violated and, potentially, their substantive due process 
rights.\41\
---------------------------------------------------------------------------

    \41\ Letter from Glenn Stover to Jeffrey Klurfeld, Director, FTC 
Western Regional Office 1-2 (July 17, 2002).

    According to the FOIA documents received, the FTC denied that any 
violation of OGMC's rights occurred, yet the Commission has never fully 
explained the discrepancy between the public statement that no comments 
were received and the contrary representations made to CAC. CVT and CAC 
are currently pursuing a FOIA appeal to obtain additional information 
on this issue.
    Procedural shenanigans aside, the substantive problem was that the 
reply CAC finally received from the FTC contained little substantive 
refutation of CAC's comments. The government made no attempt to 
seriously address the constitutional, practical, and ethical arguments 
raised. Instead, the FTC cited a broad disagreement with CAC's 
philosophy opposing antitrust. While that disagreement was already 
understood by CAC, the comments at issue addressed the government's 
specific conduct in prosecuting OGMC and physician groups generally. To 
that argument, the FTC could only muster a broad evasion.

    The analysis that the Commission issued when it accepted the 
consent agreement for public comment provides a detailed basis for 
this determination, through its extensive discussion of both the 
complaint and the consent order. Moreover, with respect to [CAC's] 
concerns about the complaint allegations, it is important to note 
the consent order is the product of a negotiated settlement between 
the Commission and the respondents.\42\
---------------------------------------------------------------------------

    \42\ Letter from Benjamin I. Berman, FTC acting secretary, to 
S.M. Oliva 2 (May 30, 2002).

    As is the case with Mountain, the FTC's complaint and analysis of 
their settlement with OGMC provided little useful information for the 
public to disseminate in analyzing the proposed order. Instead, the FTC 
offered a series of unproven assertions against the defendants, and 
expected the public to accept them at face value without even minimal 
scrutiny. Furthermore, the government's argument that the settlement 
was the product of ``negotiation'' with OGMC is disingenuous at best. 
As is the case here, the settlement forced the network's dissolution. 
In general, one rarely finds a party to a negotiation committing 
suicide as part of a mutual exchange. Indeed, as we will discuss below, 
the process used by the government in obtaining consent orders from 
physician groups is anything but a genuine ``negotiation.''

B. The Colorado Cases

    Following on their triumph in Napa Valley, the FIC's attention next 
turned to three settlements with physician groups in the Denver area. 
While nobody was forced to dissolve, FTC officials did manage to 
substantially hamper several small businessmen in the greater Denver 
area in the name of protecting competition.
    The FTC's chief target in the Denver cases was Marcia Brauchler, 
the president of Physician's Ally, Inc., a healthcare management 
consulting firm. Brauchler is an unusual monopolist, as her annual 
income is approximately $33,000, less than most government employees 
earn. Physician's Ally is run out of Brauchler's home, and consists of 
herself and a single part-time assistant.\43\
---------------------------------------------------------------------------

    \43\ Unless noted otherwise, all information regarding the case 
against Marcia Brauchler can be attributed to a series of telephone 
and e-mail interviews CVT conducted with Ms. Brauchler.
---------------------------------------------------------------------------

    Despite her modest operation, the government considered Brauchler a 
dangerous threat to competition because of her work consulting two 
physician groups, Aurora Associated Primary Care Physicians (AAPCP) and 
Physician Integrated Services of Denver (PISD), which each consisted of 
about 40 physician-owners.
    AAPCP and PISD both operated under the federal government's 
``messenger model'' requirements, with Brauchler as the third-party 
messenger. As far as she, the doctors, and her attorneys were 
concerned, their operation was perfectly consistent with the DOJ-FTC 
guidelines. Then one day in June 2001, Brauchler received a letter from 
the FTC announcing they had launched an investigation of her, AAPCP, 
and PISD. FTC staff immediately demanded more than 13,000 pages of 
documents, most of which Brauchler produced using a rented photocopier 
in her living room.
    Four months after submitting these documents, the FTC informed 
Brauchler that she had the option of settling immediately or facing a 
full-scale investigation and administrative trial. Brauchler was not 
informed of the actual charges against her, and the FTC said no 
complaint had been prepared. Nevertheless, the FTC would push for a 
consent order in the absence of any formal charges.
    Despite the government's repeated characterization of the consent 
order process as a ``negotiation,'' Brauchler's experience provides a 
more accurate picture. In November 2001, Brauchler was told the FTC 
would prepare a proposed settlement, send it to her counsel for reivew, 
and then expect her approval. Brauchler was repeatedly promised an 
opportunity to see the actual complaint against her, but the

[[Page 44584]]

FTC would continually delay this, first promising the complaint in 
January 2002, then March, before finally delivering it in April, after 
Brauchler had agreed to a settlement.
    The settlement itself was the product of coercion. The FTC simply 
presented a proposal and expected it to be accepted without 
discusssion. Brauchler describes a January 2002 ``negotiation'' between 
her attorney and FTC staff attorney Paul Nolan as follows:

    Paul was seeing red flags. Management was strongly behind the 
staff recommendation in this case, that there wasn't a long window 
for negotiations, and that the FTC would not accept much less than 
was in the initial settlement offer. The FTC staff, according to Mr. 
Nolan, was hearing some ``noise'' that they should start issuing 
subpoenas if they sensed that there was any ``backsliding'' on 
PISD's willingness to settle essentially on the terms set forth in 
the settlement offer. Mr. Nolan gave a short list of non-negotiable 
items * * * The FTC had no interest in setting up a regulatory 
framework that would allow PISD to continue in operation as it 
strove to achieve the necessary levels of integration to permit 
collective bargaining. Mr. Noland said the FTC would be responsive 
to very narrow proposals of a technical nature, but not to 
significant substantive changes. Mr. Noland offered that the FTC 
viewed the proposed settlement as a vanilla-type order.\44\
---------------------------------------------------------------------------

    \44\ E-mail interview with Marcia Brauchler (Jan. 23, 2003).

    Nolan added that should the FTC be required to conduct a full 
investigation, ``there would be more incentive to pursue disgorgement 
of the profits derived from the antitrust violation.'' In other words, 
if Brauchler and PISD asserted their right to a trial, the FTC would 
seek to punish them by demanding ``disgorgement'' of profits in 
addition to the other proposed remedies. Keep in mind, the profits 
Brauchler allegedly earned from these ``antitrust violations'' amounted 
to little more than $30,000 per year, while the alleged victim of her 
actions included some of the nation's largest health maintenance 
organizations.
    The process Brauchler describes is not, we believe, atypical. At 
the same time her cases were being ``settled,'' another Colorado-based 
physician consultant R. Todd Welter, was also facing the FTC's wrath. 
Like Brauchler, Welter is a self-employed management consultant. Like 
Brauchler, he was forced to sign a consent order ``with a gun to my 
head.''\45\ Welter and Brauchler were both innocent victims of an FTC 
witch-hunt designed to placate HMO complaints.
---------------------------------------------------------------------------

    \45\ CVT conducted multiple telephone interviews with Mr. 
Welter, and any statements of fact in this section should be 
attributed to these interviews.
---------------------------------------------------------------------------

    As a result of the consent order he signed, Welter lost substantial 
share of his business revenue. What's notable about the Welter case is 
that the FTC apparently fabricated key facts of its complaint. The FTC 
claimed that eight physician networks that were clients of Welter were 
organized by him into a negotiating bloc called ``Professionals in 
Women's Care'' or PIWC. In interviews with PIWC, however, Welter 
maintained that PIWC was nothing more than the name of a common folder 
he kept certain clients in; there was never any effort made to 
collectively bargain on behalf of the PIWC unit.
    What all three Colorado cases have in common is the government's 
insistence that HMOs--multi-billion dollar corporate entities--were the 
victim of small physician consulting firms. This is patently absurd on 
its face. In reality, the government decided to punish these 
consultants and their physician clients for rejecting the HMOs proposed 
contracts, which the physicians viewed as reimbursing them far below 
the market value for their services. It was solely a policy question, 
not a legal one. The government used antitrust law to decide the 
outcome of a private negotiation, just as the DOJ is prosecuting 
Mountain now because the government would prefer to see HMOs expand 
their network within North Carolina.
    CVT filed extensive public comments in the Welter case. The FTC 
barely acknowledged receipt of these comments, refusing to answer the 
substantive arguments raised by CVT. Consequently, CVT filed a follow-
up letter with the FTC asking a series of specific questions about the 
Welter case and the government's general policy on health care. To 
date, CVT has received no reply.

C. System Health Providers

    At around the same time Welter's case was settled, the FTC also 
announced a similar deal with a substantially larger group of 
physicians in Texas, System Health Providers. CVT's comment letter in 
this case described the situation as follows:

    The facts of this care are fairly simple. Genesis Physicians 
Group consists of ``approximately'' 1,250 physicians practicing 
medicine in the ``eastern part of the Dallas-Fort Worth metropolitan 
area.'' In 1995, GPG formed System Health Providers, a medical 
management company. Since 1998, GPG has been the sole owner of SHP 
stock.
    From 1996 to 1999, GPG engaged in collective bargaining with 
insurance companies on behalf of its members. These actions were 
taken under ``risk-sharing arrangements'' where, presumably, some 
clinical and financial integration of the member physicians' 
practices took place. These arrangements were consistent with 
Federal Trade Commission policy, which permits collective bargaining 
only under ``risk-sharing'' arrangements.
    GPG's risk-sharing activities failed miserably. They resulted in 
``significant losses'' to the physicians, and the risk-sharing 
entity formed by GPG was forced to file for bankruptcy protection in 
1999. Thereafter, GPG and SHP began to engage in collective 
bargaining via non-risk-sharing arrangements. In other words, the 
physicians maintained their individual practices while using a 
common agent to negotiate with HMOs and other insurance companies. 
This practice is prohibited by the FTC, because it is considered per 
se illegal price fixing. Consequently, the FTC began its 
investigation of GPG and SHP, resulting in the consent agreement now 
before the public record.\46\
---------------------------------------------------------------------------

    \46\ Comments of Citizens for Voluntary Trade 2-3 (Sept. 18, 
2002) (FTC File No. 011-0196).

    Not only were SHP's physicians punished, they were punished for 
attempting to maintain the economic viability of their practices. 
Despite uncontroverted evidence that the business models outlined in 
Statements 8 and 9 of the FTC-DOJ policies failed, the government 
maintained they worked. Rather than face a grievous policy error, the 
government decided to continue blaming physicians.
    One interesting note from the FTC's complaint against SHP was this 
explanation of how the marketplace for healthcare was supposed to work, 
at least in the government's opinion:

    Medicare's Resource Based Relative Value System (``RBRVS'') is a 
system used by the United States Centers for Medicare and Medicaid 
Services to determine the amount to pay physicians for the services 
they render to Medicare patients. The RBRVS approach provides a 
method to determine fees for specific services. In general, it is 
the practice of payors in the Dallas area to make contract offers to 
individual physicians or groups at a fee level specified in the 
RBRVS, plus a markup based on some percentage of that fee (e.g., 
``110% of 2001 RBRVS'').\47\
---------------------------------------------------------------------------

    \47\ Complaint, In re System Health Providers, Inc., and Genesis 
Physicians Group, Inc., ] 10.

    This is a curious, but telling statement. If the goal of antitrust 
policy is to promote free competition, than it should not matter 
whether HMOs use RBRVS in negotiating their private contracts with 
physicians. It also shouldn't matter whether physicians adopt RBRVS as 
the baseline for their own reimbursement demands. After all, in a true 
market economy, prices are always set by the market actors, not an 
outside third-party. Yet here the third-party--the federal government--
is

[[Page 44585]]

arbitrarily imposing price levels on private industry. This further 
proves the claim that the government's antitrust prosecutions of 
doctors are motivated by a desire to ultimately protect Medicaid and 
Medicare from potentially cost-raising actions by physicians asserting 
their economic rights.

D. Conclusions Based on Recent Cases

    While the Court cannot reexamine the government's actions in the 
prior cases discussed above, it is essential that the Court take 
judicial notice of how the government conducted these cases, and how 
their policy judgments are affecting the administration of justice. The 
cases CVT participated in gave us a clear sense that the government is 
not acting in good faith when they pursue physician networks and their 
consultants in antitrust proceedings. Quite the opposite, government 
ethics seem to go the way of the Spanish Inquisition when it comes to 
health care policy and antitrust.
    Comparisons to the Inquisition may seem overwrought, but in fact 
the parallels are ominous. The government, much like Torquemada, is on 
a persistent quest to pursue and punish heresy against doctrine, 
despite the fact that the underlying dogma is grounded in the complete 
absence of fact. Much of the antitrust consent decree process is 
shielded from public view in secret proceedings where the public (and 
generally the defendants) are unable to obtain a complete understanding 
of the facts and arguments. The minute the government's policy is 
called into question, they immediately hide behind dogma or some 
similarly irrational pronouncement of faith in antitrust doctrine.
    This has certainly been CVT's experience in submitting comment 
letters. Despite repeated, comprehensive, and respectful attempts to 
gain some insight into the government's antitrust policies and consent 
decree process, the DOJ and FTC offer little more than token 
consideration and general platitudes. Both agencies hide behind the 
Constitution, claiming our arguments amount to nothing more than a 
constitutional challenge to the Sherman Act itself. While it's true 
that the Sherman Act is unconstitutional in CVT's judgment, the issue 
in these cases, and before this Court today, is whether the 
government's application of the Sherman Act to the exercise of 
individual rights by physicians is legal and constitutional. This 
question has never been substantively addressed by a federal court, 
because if it were, CVT maintains these prosecutions would immediately 
cease. No rational judge would uphold the government's nonsensical and 
unconstitutional efforts to impose the will of a handful of bureaucrats 
on the nation's health care system.
    At a minimum, the government should demonstrate some accountability 
by answering CVT's comments in a careful, rational, and thoughtful 
manner. This would only benefit the public by providing insight into 
both the government's enforcement policies as well as the consent order 
process. As things currently stand, however, the government comes off 
as an arrogant entity that can't be bothered to explain basic facets of 
policies that impact a significant sector of the American economy.

Part IV: Analysis of the Proposed Final Judgment

A. The Competitive Impact Statement

    Turning to the Competitive Impact Statement, the government makes 
little effort to actually enhance the public's understanding of the 
complaint or the proposed judgment. Instead, the CIS largely repeats 
the unproven and unfounded allegations of the complaint. This approach 
is not surprising. Even supporters of the government's antitrust 
policies, such as American Antitrust Institute president Albert Foer, 
have expressed dismay at the DOJ's lack of candor in past cases: ``The 
[Justice] Department has traditionally been reluctant to say a great 
deal in its CIS disclosures, presumably because it risks disclosure of 
confidential information, adds to the staff's workload, and opens up 
the door to additional inquiry.''\48\ While this may explain the lack 
of insight from the CIS in this case, it does not justify or excuse the 
government's failure to uphold their public interest mandate under 
Tunney Act.
---------------------------------------------------------------------------

    \48\ Letter from Albert A. Foer to Roger W. Fones 2 (Dec. 27, 
2002) (available at http://antitrustinstitute.org/recent2/223a.pdf).
---------------------------------------------------------------------------

    As we noted with the complaint, the CIS makes no serious or 
credible effort to describe the marketplace Mountain competes in, or 
how specific customers and individuals within that market were affected 
by alleged Sherman Act violations. The CIS repeats the complaint's key 
thesis: ``The physician reimbursement rates that have resulted from 
Mountain Health Care's negotiations with managed care purchasers are 
higher than those which would have resulted from individual 
negotiations with each competing independent physician or medical 
practice that participates with Mountain Health Care.\49\'' Yet once 
again, there is nothing in the CIS that proves this statement. The DOJ 
could have presented a complaint from a managed care purchaser, a 
comparison of fees between Mountain and non-Mountain contracts, or even 
a basic economic analysis of the marketplace. The DOJ provided none of 
this. As a result, it is impossible to credibly show the complaint's 
allegations possess even a basic level of credibility.
---------------------------------------------------------------------------

    \49\ CIS, 68 FR 1,478, 1,480 (Jan. 10, 2003).
---------------------------------------------------------------------------

    The DOJ will likely take the position, in response to this 
criticism, that they need not prove any basic facts regarding their 
case, because to do so would amount to a trial, something which the 
proposed Final Judgment seeks to avoid. Certainly we can understand the 
interests of judicial economy require the Court not waste its time 
proving allegations that both parties have stipulated to. But at the 
same time, the Tunney Act requires a finding that the proposed Final 
Judgment is in the ``public interest.'' This should mean the 
defendant's mere acquiescence to the government's position need not be 
the final word. Indeed, given that Mountain openly questioned the 
government's recitation of the facts, we suggest the court has an 
obligation to conduct some proceedings in order to show the government 
advanced their complaint and CIS in good faith.
    For example, the DOJ asserts in the CIS that no ``determinative 
materials or documents'' considered by the government in ``formulating 
the proposed Final Judgment.''\50\ Under the Tunney Act, such documents 
must be released if they exist. Curiously, in almost all antitrust 
settlements, the DOJ claims no such ``determinative'' documents exist. 
This is yet again proof that the government seeks to avoid any genuine 
scrutiny or accountability for their actions. In 1982, just a few years 
after the Tunney Act's passage, a federal judge concluded the DOJ was 
not doing its best to act in good faith where ``determinative'' 
documents were concerned:
---------------------------------------------------------------------------

    \50\ CIS, 68 FR at 1,481.

    The Court simply cannot accept an interpretation of legislation 
that permits the government to assert in 172 out of 188 cases that 
it considered neither documents nor any other materials 
determinative in reaching its conclusion to enter into a consent 
decree.\51\
---------------------------------------------------------------------------

    \51\ U.S. v. Central Contracting Co., 537 F. Supp. 571, 577 
(E.D. Va. 1982).

    The Tunney Act does not require full disclosure of the DOJ's files, 
but it does require a good faith review. Only action by the Court can 
effectively remedy the government's failure to disclose

[[Page 44586]]

``determinative'' documents, since in a case such as this one, the 
DOJ's mere assertion that no such documents exist is insufficient. As 
---------------------------------------------------------------------------
noted by the district court in 1982:

    The need for scrutiny is important in any case, but judicial 
scrutiny is perhaps more important in a run-of-the-mill case on 
which public attention is not focused and where abuse may escape 
unnoticed than in a ``big case'' where public interest supplements 
the court's scrutiny. If the Court in this case doesn't scrutinize 
there will be no independent scrutiny.\52\
---------------------------------------------------------------------------

    \52\ Id. at 575.

    From a public standpoint, the case against Mountain is not a ``big 
case,'' at least not from a national perspective. And sadly, in the 
majority of antitrust settlements, there is ``no independent 
scrutiny.'' This seems part of the government's design. By targeting 
small businesses which lack the resources to force the government to 
trial (or even discovery), the DOJ is able to build a track record of 
antitrust victories. This is not just important from a political 
standpoint--impressing congressional appropriators--but from a judicial 
one. The courts become far more perceptive towards antitrust 
prosecution once the government establishes ``expertise'' in a given 
field, such as physician networks. What few courts realize, however, is 
that this experience is built on a foundation of coercion and fraud. 
The government wins by never facing any serious scrutiny, and this is 
contrary to the intent and language of the Tunney Act.

B. The Proposed Remedy

    Even if the government could prove its antitrust allegations 
against Mountain, the remedy contained in the proposed Final Judgment 
is completely inconsistent with antitrust law. The settlement requires 
``the complete and permanent dissolution of Mountain Health Care as an 
on-going business entity'' and the termination of ``all preexisting 
contracts with payers,'' all within either 120 days of the filing of 
the DOJ's complaint against Mountain, or 10 days after this Court 
enters the final judgment, whichever is later.
    The function of the antitrust laws--at least in theory--is to 
restore competition lost, not to impose punitive remedies on antitrust 
offenders. In this case, the dissolution of Mountain and the 
termination of its contracts constitute a punishment, rather than a 
restoration of competition. For this reason alone, the proposed Final 
Judgment must be rejected.
    In Napa Valley, the FTC required OGMC to dissolve. That case, 
however, only involved a small network encompassing a single specialty, 
and OGMC was already planning to dissolve their cooperative arrangement 
prior to the FTC's action. In this case, Mountain was not planning to 
dissolve, and its network provides far more comprehensive services to 
its customers.
    In most of the prior antitrust cases discussed above, the 
government generally obtained remedies short of dissolution. These 
remedies took the forms of injunctions restricting the physicians' 
ability to jointly negotiate with payers and insurers. While these 
remedies were equally illegal and unjustified, they do demonstrate the 
excessive nature of the required dissolution of Mountain. The DOJ could 
simply have adopted conduct restrictions similar to those in the 
Colorado cases or System Health Providers. This would have, in theory, 
satisfied the government's antitrust concerns while not substantially 
disrupting the health care market in North Carolina.
    Indeed, the government's arrogant disregard for Mountain's 
consumers is galling. By requiring Mountain to terminate their existing 
contracts, the DOJ manages to violate the rights of thousands of 
individuals, not just Mountain's shareholders. Based on the documents 
presented by the government, it's safe to assume these customers were 
never consulted as to what they wanted, or even if they had any problem 
with Mountain in the first place. Despite the government's assertion 
that antitrust laws are about protecting consumers, there is not a 
single piece of evidence that demonstrates consumer interest was ever 
taken into account here.
    Finally, there is nothing in the government's filings that prove 
its main argument justifying this remedy--dissolving Mountain will 
lower consumer health care costs. The entire history of government-
sponsored managed care tells us that higher costs are solely a function 
of government intervention and interference in the free market, and 
that collective bargaining action by physicians have no substantial 
impact on what ultimate consumers--patients--actually pay. According to 
the Congressional Budget Office, which studied the physician collective 
bargaining issue in 1999, allowing physicians the right to jointly 
negotiate with HMOs would only increase consumer premiums by about 1.9% 
annually. This is hardly a figure that justifies the massive government 
regulation imposed by this proposed Final Judgment. The government also 
never takes into account the fact that Mountain's physicians, like most 
doctors nationally, are facing continued reductions in HMO and federal 
insurance reimbursements. Indeed, Mountain argues their doctors have 
not experienced significant fee increases in more than 10 years. In no 
other marketplace would the government penalize individuals for seeking 
a pay raise once every decade. Of course, in no other industry does the 
government so blatantly tip the scales in favor of one side as they do 
with managed care providers.

C. Defining the ``Public Interest''

    The first principle of the Tunney Act is that a proposed settlement 
must be in the ``public interest.'' This term is never defined in the 
act, nor any other statute where it is employed. The Constitution 
certainly never speaks of a ``public interest.'' So we're left to 
divine the phrase's correct meaning.
    The government's definition is simple--the ``public interest'' is 
whatever we say it is. This is why they can impose a remedy, such as 
dissolving Mountain by force, that noboby asked for and that yields no 
particular benefit for anyone aside from the government's lawyers. 
Obviously the Tunney Act rejects this thinking, since it requires the 
Court to actually scrutinize the government's action, rather than 
simply acting as a rubber stamp. The failure of previous courts to 
scrutinize antitrust judgments has, in effect, misled the government 
into believing in their own omnipotence.
    In an individual rights republic like the United States, the more 
appropriate definition of the ``public interest'' is nothing more than 
the aggregate of private interests. Protecting the public from 
violations of individual rights should be the government's paramount 
aim in any case brought under the authority of the United States. In 
this case, as we've aptly demonstrated, the government is initiating a 
violation of Mountain's individual rights rather than protecting the 
rights of Mountain's consumers.
    If every doctor now affiliated with Mountain were to cease 
practicing medicine tomorrow, the managed care companies and consumers 
in western North Carolina would have no recourse. Without any providers 
of medical service, the marketplace would no longer exist. Herein lays 
a fundamental truth that the government refuses to acknowledge--
producers create and define the marketplace, not consumers. Consumers 
can demand all the services they want, but in the end somebody must 
provide those services according

[[Page 44587]]

to mutually agreed upon terms. To do otherwise, as the government 
proposes here, would be to enslave producers to the whims of consumers. 
If that's how the DOJ defines ``public interest,'' then its antitrust 
policies have more in common with Karl Marx and Benito Mussolini than 
they do Thomas Jefferson and Abraham Lincoln.

D. The Court's Powers and Duties

    Finally, the government, through the CIS, asks this Court to take 
to adopt a very selective reading of the Tunney Act in determining its 
role in reviewing the proposed Final Judgment. The DOJ cites case law 
that dissuades the Court from taking an active role in assessing the 
government's case. Citing the D.C. Circuit in United States v. 
Microsoft,\53\ the DOJ argues:

    \53\ 56 F.3d 1148 (D.C. Cir. 1995).
---------------------------------------------------------------------------

    [T]he court's role * * * is limited to reviewing the remedy in 
relationship to the violations the United States alleges in its 
Complaint, and does not authorize the court to ``construct [its] own 
hypothetical case and then evaluate the decree against that case.'' 
* * *the court'' is only authorized to review the decree itself,'' 
and not to ``effectively redraft the complaint'' to inquire into to 
other matters that the United States might have but did not 
pursue.\54\

    \54\ CIS, 68 FR at 1,481.
---------------------------------------------------------------------------

    This position essentially permits the government to present a 
complaint unchallenged without even minimal scrutiny, regardless of the 
actual merits of the government's case. This is not consistent with the 
letter or intent of the Tunney Act. The law gives the Court broad 
discretion to assess every aspect of an antitrust settlement, including 
the complaint, the government's good faith in bringing the case, and 
the impact of the proposed remedies on individual rights and welfare. 
If this Court finds the government's complaint or CIS is defective on 
key questions of fact or application of law, there is nothing in the 
Tunney Act which commands the Court to simply ignore that.
    The legislative history of the Tunney Act supports an expansive 
interpretation. The House Judiciary Committee concluded ``the public 
does have an interest in the integrity of judicial procedures incident 
to the filing of a proposed consent decree by the Justice Department.'' 
The House also concluded: ``Nor is [the Tunney Act] intended to 
authorize techniques not otherwise authorized by law. The legislative 
language, however, is intended to isolate further and, thereby, to 
perclude factors identified as contributing to the rise of the so-
called abuse of ``judicial rubber stamping.'' This hardly sounds like 
commanding language foreclosing the Court's ability to examine the 
government's complaint to ensure that it conforms to actual facts and 
law.
    It must also be pointed out that while the government cites a 
number of precedents in the CIS with respect to the Court's role in 
this proceeding, none of the cases cited emanate from the Supreme Court 
or the Fourth Circuit. Therefore, this Court is not bound to follow 
those decisions. Combined with the lack of any case law on the 
underlying constitutionality of the government's antitrust Statements 
on health care, this Court is well within its rights to act as a court 
of first impression on many of the issues raised in these comments.

Part V: Alternatives to the Proposed Final Judgment

    For any of the numerous independent grounds cited in these 
comments, the Court should reject entry of the proposed Final Judgment 
as inconsistent with the public interest 15 U.S.C. 16(f). The Court 
should also dismiss the complaint with prejudice, given the 
government's failure to set forth any claims that would entitle them to 
relief under the Sherman Act, and because the government omitted 
material facts from the complaint in order to defraud the Court and the 
American people.
    If the Court decides not to dismiss the complaint, than 
alternatively it should order a full trial on the merits. While 
Mountain signed the consent order in large part to avoid a trial, this 
action must be viewed in the context of an antitrust consent decree 
procedure. No actual ``negotiation'' took place, as the government 
obtained all the relief they would have sought at trial. Furthermore, 
Mountain's counsel advised them to settle immediately before even 
permitting some discovery or attempting to actually negotiate with the 
government. In retrospect, Mountain president Ellen Wells told CVT that 
Mountain now regrets signing the consent agreement, and considers the 
proposed Final Judgment a mistake. This Court is certainly not required 
to coddle a defendant's remorse in agreeing to a settlement, but given 
the enormous imbalance in Mountain's bargaining position relative to 
the government, the Court should take appropriate action to ensure the 
interests of justice are not comprised by the government's abuse of 
discretion.
    If the Court were to order a full trial on the merits, the United 
States would likely withdraw the complaint or immediately negotiate a 
more equitable settlement with Mountain. The DOJ has never tested the 
viability of its physician network policies at trial, and we believe 
they're not about to start here. Thus, ordering a trial would likely 
produce a result more conducive to the interests of Mountain and the 
public generally.
    Finally, given the blatant and intentional misconduct of the 
government in prosecuting this case, CVT asks the Court to consider 
imposing sanctions on the United States under Federal Rule of Civil 
Procedure 11. The Court, on its own initiative, may impose sanctions 
against a party when they make representations to the Court which have 
no evidentiary support. In this case, the government made numerous 
allegations, described above, for which there is no evidentiary support 
or where material facts were omitted in order to mislead the Court into 
reaching an erroneous conclusion. Sanctions are certainly warranted, 
either in the form of monetary compensation to Mountain, or in such 
other manner as the Court deems appropriate.

Conclusion

    The government's war on physicians must end. Every day the United 
States spends trying to blame doctors for the failure of three decades 
of government policies is a day that this country moves closer towards 
the complete socialization of health care under central control. While 
the Court is not in a position to make policy pronouncements, this case 
presents a compelling opportunity for the judiciary to defend its 
rightful place in the constitutional order from government 
manipulations. At every turn, in this case and dozens more, the DOJ has 
subverted the integrity of the judicial system by advancing fraudulent 
and unethical antitrust ``settlements'' that amount to nothing more 
than a web of deceit. This pattern simply cannot be allowed to 
continue.
    Mountain Health Care is the innocent victim of the United States' 
failure to protect the individual rights of physicians and consumers. 
Sanctioning the proposed Final Judgment amounts to judicial coercion, a 
rubber-stamping of the government's mob assault on the freedoms and 
liberties of physicians to join together voluntarily to preserve and 
promote their economic self-interest. This is not a valid use of the 
antitrust laws, or any laws propagated by a republican society. 
Rejection of the proposed Final Judgment is the only possible outcome 
that would serve the public interest.

[[Page 44588]]

Appendices to the Public Comments of Citizens for Voluntary Trade

Before: Judge Graham C. Mullen

    Filed: March 7, 2003.

S.M. Oliva,
President, Citizens for Voluntary Trade, 2000 F Street, NW., 
315, Washington, DC 20006, (202) 223-0071, 
[email protected].

Appendix A--Documents From Mountain Health Care's Website

Source: http://www.mountainhealthcare.com/pressrelease.htm.

Mountain Health Care To Dissolve, Liquidate Assets

    Asheville, NC--(Friday, Dec. 13, 2002)--Mountain Health Care 
(MHC), the largest preferred provider health care network in Western 
North Carolina, confirmed today that it has consented to the 
decision by the U.S. Department of Justice (DOJ) to dissolve and 
liquidate its assets. The company hopes to sell its assets to a new 
buyer that will continue to provide physicians' services to the 
community, which includes 22 western North Carolina counties.
    The government Friday filed what's known as a complaint and 
consent decree in U.S. District Court in Asheville, triggering a 
timetable for dissolution in April, 2003.
    According to Todd Guthrie, M.D., chairman and president of the 
board of Mountain Health Care, the filing is a result of two years' 
review of documents and several health care organizations in the 
region as part of an examination of antitrust rules that effectively 
prohibit physicians from operating provider networks. To date, only 
Mountain Health Care is affected by this ruling.
    MHC is privately held, with 401 physician stockholders, and that 
fact alone--not the admission of any unlawful conduct--is a 
substantial reason for the government-ordered closure. ``We are but 
one of numerous physician-owned organizations operating under 
similar business models from across the nation who are facing the 
same situation,'' Guthrie said. ``While we don't find solace in that 
fact, it is important to know that we apparently have not been 
singled out.''
    ``We are terribly saddened and shocked by this news,'' he said. 
``Since 1994, Mountain Health Care has been a vibrant, pro-
competitive force in our community, helping to protect the health of 
nearly 70,000 of our neighbors at reasonable and competitive prices. 
We obviously disagree with the DOJ decision.''
    Mountain Health Care has more than 1,800 providers including 
hospitals, ancillary services, laboratories and primary and 
specialty care providers.
    Chief Executive Officer Ellen M. Wells, said that all 
stockholders, third party administrators and brokers and nearly 300 
employers representing about 70,000 employees, have been notified of 
the government's decision. She said there are no benefits in 
challenging the decision.
    ``According to our attorneys, our only opinion was to go to 
trial against the DOJ, and we were advised that the cost of doing so 
far exceeded an amount we can afford,'' Wells said. ``Simply put, we 
don't have the same resources as Microsoft, for example, which did 
take on the government in protracted legal proceedings. It would be 
ethically and morally wrong for us to pass costly legal expenses on 
to our customers and ultimately to patients,'' she said.
    Wells emphasized that the consent decree filing is not evidence 
of any wrongdoing, rather an agreement to dissolve and sell its 
assets to another owner. ``The reason is that Mountain HealthCare is 
a large, physician-owned network, and government antitrust 
guidelines are complex and permit physicians to own and operate 
networks only under very narrow circumstances. They don't treat 
physician-owned companies like they do others owned, for example, by 
insurance companies. We think this is wrong.''
    Wells also pointed out that the government's antitrust rules for 
networks are not simple. ``The DOJ thought Mountain HealthCare 
network included too many physicians--which we though benefited 
consumers since it gives them more physicians from which to choose, 
as opposed to a smaller, more restrictive network.''
    With respect to sale of its assets, Guthrie said the board has 
already discussed such a sale with a number of potential buyers who 
are interested in doing business in the Asheville areas. ``We hope 
to liquidate our assets to a buyer that will continue to provide 
physicians' and other providers services to our community. In the 
meantime, we will continue to respond to the needs of our 
constituency.'' Guthrie said.
    Guthrie said the review process and identity of potential buyers 
is confidential. ``Mountain HealthCare will maintain high-quality, 
proficient levels of professional service to its network and 
employers until the assets sale process is complete'', Wells said.

Competition Needs To Grow Between Insurance Companies

By M.D. Stephan Buie
Posted: Dec. 30, 2002 11:06 p.m. (Asheville Citizens Times)

    The Citizen-Times reported on Dec. 14 that the U.S. Justice 
Department has ordered Mountain HealthCare to dissolve, based on 
accusations of price fixing. People interviewed in the article 
expressed the hope that dissolving Mountain HealthCare will lead to 
increased competition and lower health-care costs. What people 
outside health care do not understand is that for the last 10 years 
or more physician costs have been controlled by managed care 
companies and have risen at a rate lower than general inflation. The 
competition that is needed is among insurers, and dissolving 
Mountain HealthCare will decrease that competition rather than 
increase it.
    Mountain HealthCare is an association of independent medical 
practices and was set up not to fix prices, but to compete with 
managed care organizations. It is not an insurance company, but 
provides a panel of physicians for insurance companies to contract 
with. It was established with the advice of attorneys who are 
experts in federal antitrust law. It works through a blind messenger 
system, whereby MHC negotiates a rate for services with an employer 
and then sends those rates to each member practice. Each practice 
independently decides whether to accept the rate or to counter 
propose a different rate. All members have been informed that it is 
not legal to consult with other practices about their participation 
or their rates. Employers were free to negotiate with other managed 
care organizations. The physician members also are on panels of 
other managed care organizations. It is not clear to me how this is 
price fixing, but as the article indicates, MHC, unlike Microsoft, 
does not have the money to battle the Department of Justice.
    The article about the Mountain HealthCare dissolution stated, 
``local businesses were socked with premium increases of 30 percent 
or more this year.'' Insurance rates are affected by physician 
costs, hospital costs, drug costs, and the administrative costs of 
the insurance companies, whose major executives have salaries in the 
millions of dollars. Managed care organizations were initially 
created to contain costs and to increase efficiencies in health 
care. They were successful in decreasing costs initially, and 
brought increases down to the rate of general inflation. After they 
cut the fat out of the provider systems, though, it is not clear 
that they have been as effective in trimming their own fat. Their 
methods of controlling costs have led ot greater inefficiencies in 
medical practices, however, in terms of collecting for charges and 
excessive requirements for treatment plans. Managed care 
organizations have taken a hard line with payment to physicians, 
either decreasing payments or holding them steady during the last 10 
years. The individual medical practice has no bargaining power with 
these large companies. It is their way or the highway. If you own a 
business, imagine running that business without a price increase for 
the last 10 years.
    MHC gave local physicians an organization that provided 
employers what they need from a managed care organization but would 
be more responsive to the physicians. In fact, I have often been 
frustrated that MHC was not more responsive to the needs of the 
physicians. Their billing was often as confusing as the managed care 
organizations, but at least they answered the phones when we called.
    More physicians are moving away from enrollment in managed care 
organizations and are demanding cash payment for services. Billing 
for our services has become extremely complex, time-consuming and 
costly. Each managed care organization may have several claim 
centers. If we send our claim to the wrong one, it is rejected 
without explanation. Their claim centers apparently have no cross-
referencing so they can't tell us the correct center to send the 
claim to. The insurance staff in my office have become convinced 
that this confusion is intentional, as the harder it is to collect 
for services, the less the insurance companies have to pay. They do 
not want to make the system work because it is to their benefit for 
it not to work.

[[Page 44589]]

We are spending more and more time chasing less and less money.
    The long-term effect of this will be that insurance will be 
worth less even as one pays more for it. Fewer physicians will be on 
managed-care panels because they cannot afford to and one will have 
to pay out of pocket for one's medical care and submit one's own 
claim for insurance reimbursement. That is already happening in 
several local medical offices. The competition will not be among 
providers but among patients to see who can get medical care. My 
hope is that some type of reform will prevent that, while allowing 
physicians to collect for services provided.
    Stephen Buie, M.D., is a specialist in psychiatry practicing 
with the Pisgah Institute in Asheville. He is also an active member 
of the Buncombe County Medical Society. He lives in Asheville.

Myths and Facts About Mountain Health Care

Posted: January 6, 2003 (Asheville Citizens Times)

    Since the federal government's announcement of a forced 
dissolution of Mountain Health Care a few weeks ago, some of the 
facts of the case have gone unanswered. Here are answers to some of 
the misunderstandings and most commonly-asked questions about this 
issue.
    Myth: Mountain Health Care is an insurance company and/or 
contracts with managed care companies.
    Fact: Mountain Health Care is a fully credentialed network of 
providers (physicians, therapists, nurses and medical laboratories, 
to name a few) which contracts directly with self funded employers 
and fully insured companies. Mountain Health Care does not approve 
or pay claims, and has no contracts with managed care companies.
    Myth: In order for an individual to see a Mountain Health Care 
provider his/her employer must participate with Mountain Health 
Care.
    Fact: Since Mountain Health Care is not an exclusive network, 
providers are free to participate with any network or plan they 
choose. Your employer does not have to contract with Mountain Health 
Care in order for you to see those providers.
    Myth: The Mountain Health Care fee schedule resulted in 
artificially higher reimbursements for physicians.
    Fact: The majority of health plans covering lives in Western 
North Carolina have fee schedules, most of which offer higher total 
reimbursements than Mountain Health Care's fee schedule. In response 
to existing antitrust guidelines, Mountain Health Care has 
transitioned to a messenger model where each payer negotiates 
directly with each physician.
    Myth: Mountain Health Care providers set their office charges 
based on the Mountain Health Care fee schedule.
    Fact: Providers in WNC establish their own office charges. These 
charges apply to all patients seen by the provider regardless of 
their health plan, are set independently and are not shared with 
other providers.
    Myth: All Mountain Health Care providers are company 
shareholders.
    Fact: Of the 1800 participating providers in the Mountain Health 
Care network only 401 physicians have chosen to be stockholding 
members.
    Myth: Mountain Health care has no competition in the Western 
North Carolina market.
    Fact: Employers in the Western North Carolina market place are 
contracted with many different health plans. Mountain Care members 
make up an average of only 8% of our providers patient base, and the 
overwhelming majority of Mountain Health Care providers participate 
with other plans.
    Myth: The federal government discovered the Mountain Health 
Care's fee schedule is so high is has led to higher health care 
costs in Western North Carolina.
    Fact: Premiums have increased in all types of health care plans 
and in most regions across the country; the increase in healthcare 
costs in Western North Carolina is not unusual. There are many 
factors that influence overall health care costs across the nation 
including improved technology, rapidly escalating drug prices, an 
aging population, the trend toward higher jury awards in medical 
malpractice cases and hospital consolidations. Physician fees 
account for less than 22% of total health-care costs and it is 
difficult to see how Mountain Health Care, whose covered lives 
represent only 8% of our providers' patient base, could be held 
primarily responsible for these increases. The January 21 issue of 
Modern Healthcare magazine stated, ``The government blamed the 
acceleration [of health-care costs] on larger increases in the 
indices for prescription drugs and hospital services,'' while MHC's 
prices, with minor exceptions, did not increase between 1994 and the 
present.
    Myth: The doctors who formed Mountain Health Care did so in an 
attempt to secure comparatively higher reimbursement rates.
    Fact: Mountain Health Care was formed to ensure quality, cost 
effective health care for the residents of western North Carolina. 
We hope that our members and all residents of western North 
Carolina, after considering all the facts, understand that the 
existence of Mountain Health Care did not cause your health care 
costs to increase. We also hope you will realize that the forced 
dissolution of Mountain Health Care will in no way lower or 
drastically alter health care costs within the region. Now, as 
always, Mountain Health Care and its participating providers have 
the best interest of our members and community at heart and will do 
all that we can to continue to provide cost effective, quality 
health care to you.

Appendix B

Brief of S.M. Oliva as Amicus Curiae

Statement of Interest

    I, S.M. Oliva, declare that I have no financial interest in this 
case, nor do I have a financial interest in any competitor of 
Mountain Health Care, P.A. The views expressed in this brief are my 
own, and are based on my experience as a public policy analyst in 
the field of antitrust and competition law.

Summary

    In reviewing the Proposed Final Judgment before the Court in 
this case, amicus offers two arguments:
    [sbull] The United States failed to disclose material facts in 
their complaint and Competitive Impact Statement (CIS).
    [sbull] The United States provided insufficient information in 
the CIS regarding the status and role of Mountain Health Care in the 
relevant marketplace, as well as how Mountain's acts directly 
impacted competition in those markets.
    A major purpose of the Tunney Act \1\ is to facilitate public 
comments which may assist the Court in determining whether a 
proposed consent decree is in the public interest. The CIS, in part, 
is supposed to provide the public with an adequate description of 
the ``practices or events'' giving rise to an alleged antitrust 
violation, as well as disclosure of any ``determinative materials or 
documents'' considered by the government in preparing the proposed 
Final Judgment.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. Sec.  16(b)-(h).
---------------------------------------------------------------------------

    In this case, the CIS failed both of these tests. The United 
States took substantial shortcuts in complying with the Tunney Act, 
and in the process failed to fulfill Congress's underlying 
objectives. This Court, however, possesses broad statutory power to 
remedy this situation, by directing the United States to file a 
revised CIS that provides the public--and the Court--with adequate 
information to decide whether the proposed decree is in the public 
interest.

Failure To Disclose Material Facts

    In the complaint, the United States asserts that Mountain 
``organized and directed an effort to develop a uniform fee schedule 
to be used to negotiate and contract for fees for physician 
reimbursement'' \2\ from a number of managed care companies and 
other third-part benefit providers. This fee schedule, according to 
the government, ``unreasonably restrained competition'' in violation 
of section 1 of the Sherman Act.\3\ As a result, the United States 
filed suit to obtain the dissolution of Mountain ``before further 
injury to consumers in North Carolina or elsewhere occurs.'' \4\
---------------------------------------------------------------------------

    \2\ Compl. ] 1.
    \3\ Id.
    \4\ Id.
---------------------------------------------------------------------------

    This ``uniform fee schedule'' is the nexus of the complaint and 
the resulting proposed Final Judgment. So long as Mountain maintains 
this schedule, consumers remain in danger under the Sherman Act. The 
only way to get rid of the schedule, in the government's view, is 
for Mountain to be denied its very existence. Otherwise, this fee 
schedule will continue to run amok, spreading its anti-competitive 
effects throughout western North Carolina.
    But the problem is, the fee schedule the government speaks of 
may no longer be in play. According to statements made to amicus by 
Ellen Wells, Mountain's president and chief executive, Mountain's 
current ``fee schedule'' is nothing more than individual doctors 
informing an independent consultant about their general pricing 
terms. In other words, a third party spoke to Mountain's

[[Page 44590]]

physicians separately, obtained independent fee requests, and passed 
that information along to the managed care companies and other 
payors. At no point, according to Wells, was there an agreement or 
conspiracy among Mountain physicians to create a ``universal'' 
schedule of fixed fees.\5\
---------------------------------------------------------------------------

    \5\ Telephone Interview with Ellen Wells, President of Mountain 
Health Care, P.A. (Jan. 23, 2003).
---------------------------------------------------------------------------

    Not only does this system not violate the Sherman Act, the 
United States expressly endorses this type of ``messenger model'' as 
a safe haven from the general prohibition on independent physicians 
collectively bargaining with payors. According to the 1996 revisions 
to the Department of Justice-Federal Trade Commission Statements of 
Antitrust Enforcement Policy in Health Care:

    Some networks that are not substantially integrated use a 
variety of ``messenger model'' arrangements to facilitate 
contracting between providers and payers and avoid price-fixing 
agreements among competing network providers. Arrangements that are 
designed simply to minimize the costs associated with the 
contracting process, and that do not result in a collective 
determination by the competing network providers on prices or price-
related terms, are not per se illegal price fixing.

    If Mountain's claim, then, is true, and they are employing (or 
transitioning to) a messenger model, there is no need for the 
government's proposed remedy--dissolution of Mountain--because there 
is no illegal behavior taking place. Yet nowhere in the complaint or 
CIS does the United States discuss, or even acknowledge, Mountain's 
claim that they employed a messenger model. The government doesn't 
even offer evidence to refute the claim. Instead, the complaint and 
CIS present a carefully edited, limited recitation of the facts, 
omitting a key detail that might influence the public's analysis of 
the case. In the absence of these disclosures, the public is left to 
incorrectly conclude that Mountain was simply an illegal price-
fixing arrangement among physicians, and that they made no good 
faith efforts to comply with the law.

Insufficient Information

    Congress acknowledged, in passing the Tunney Act, that the public 
has an interest in ``the integrity of judicial proceedings'' involving 
proposed antitrust settlements.\6\ To that end, the United States has 
an obligation to disclose enough facts about a case to enable the 
public to form reasoned judgments about the terms of a proposed Final 
Judgment. Of key importance is information that details the 
government's analysis of the marketplace, the competitive problem 
arising thereto, and the selected remedy. Here, we have little to go 
by. The United States insists that ``[t]here are no determinative 
materials or documents'' within the Tunney Act's meaning that warranted 
public disclosure.\7\ Amicus disagrees.
---------------------------------------------------------------------------

    \6\ H.R. Rep. No. 93-1463 (1974), reprinted in 1974 U.S.C.C.A.N. 
6536, 6539.
    \7\ Competitive Impact Statement, 68 FR 1,478, 1,481 (Jan. 10, 
2003).
---------------------------------------------------------------------------

    The complaint and CIS repeatedly argue that Mountain's actions 
illegally ``increased physician reimbursement fees.'' \8\ The complaint 
argues that customers ``have paid higher prices for physician services 
sold through managed care purchasers than they would have paid in the 
absence'' of Mountain's actions.\9\ The CIS further states that 
Mountain's physicians ``have not clinically or financially integrated 
their practices'' in such a way as to justify maintaining their uniform 
fee schedule.\10\
---------------------------------------------------------------------------

    \8\ Compl. ] 14.
    \9\ Compl. ] 17(c).
    \10\ CIS, 68 FR at 1,480.
---------------------------------------------------------------------------

    None of these arguments are supported by evidence, at least not 
evidence that's presented for public review in the complaint or CIS. 
For example, the public knows nothing, from the government's 
disclosures, of the exact nature of the market for physician services 
in western North Carolina. We don't know who Mountain was competing 
with, what prices they were charging, or even how consumer prices fared 
in comparison to neighboring marketplaces. We certainly don't know if 
Mountain's actions actually harmed any consumers. We simply don't know 
much of anything, beyond the government's mere allegation that there 
was a fee schedule, and that it was illegal.
    Once again, amicus faces conflicting information. The United States 
claims that Mountain increased costs and harmed consumers. Mountain's 
Ellen Wells, in contrast, claims to amicus that Mountain's customers 
realized an average 14-20% savings over other service networks. Nothing 
in the complaint or CIS points this out.\11\ Furthermore, there is not 
evidence in the public record that suggests any Mountain customer was 
dissatisfied with their services or costs. Even one consumer complaint 
would provide valuable information to the public on the exact nature of 
the alleged illegal actions. But once again, we're left only with the 
government's word, despite the existence of evidence that refutes key 
points of their argument.
---------------------------------------------------------------------------

    \11\ Telephone Interview.
---------------------------------------------------------------------------

    It's worth noting that the government's lack of disclosure is 
hardly unusual in a Tunney Act proceeding. In the overwhelming majority 
of antitrust settlements, the CIS provides little useful information 
about a case. In one recent proceeding, Albert Foer of the American 
Antitrust Institute noted: ``The [Justice] Department has traditionally 
been reluctant to say a great deal in its CIS disclosures, presumably 
because it risks disclosure of confidential information, adds to the 
staff's workload, and opens up the door to additional inquiry.'' \12\ 
All of these explanations may be applicable in this case, but none of 
them justify withholding relevant and material information from the 
public.
---------------------------------------------------------------------------

    \12\ Letter from Albert A. Foer to Roger W. Fones 2 (Dec. 27, 
2002) (available at http://antitrustinstitute.org/recent2/223a.pdf).
---------------------------------------------------------------------------

    At an absolute minimum, the United States should provide the public 
with enough information to assess the state of the affected marketplace 
at the time the complaint is filed, and also empirical evidence 
demonstrating how the proposed remedy is likely to restore competition 
allegedly lost. The government may consider this an inconvenient 
burden, but the Tunney Act does not contain exceptions for official 
laziness.
    This Court has clear authority to compel government disclosure of 
relevant information. Congress stated as much in the Tunney Act's 
legislative history, noting ``the court must obtain the necessary 
information to make its determination that the proposed consent decree 
is in the public interest.'' \13\ And in one of the few cases where a 
court actually employed its Tunney Act discretion, United States, v. 
Central Contracting Co.,\14\ the district judge emphasized the 
importance of vigorous judicial enforcement of the public's right to 
information:
---------------------------------------------------------------------------

    \13\ H.R. Rep. No. 93-1463, reprinted in 1974 U.S.C.C.A.N. at 
6538 (citing S. Rep. 93-298).
    \14\ 537 F. Supp. 571 (E.D. Va. 1982).

    The need for scrutiny is important in any case, but judicial 
scrutiny is perhaps more important in a run-of-the-mill case on 
which public attention is not focused and where abuse may escape 
unnoticed than in a ``big case'' where public interest supplements 
the court's scrutiny. If the Court in this case doesn't scrutinize 
there will be no independent scrutiny.\15\
---------------------------------------------------------------------------

    \15\ Id. at 575.

    Similarly, this ``run-of-the-mill'' case runs the risk of 
escaping public attention and scrutiny completely. Without timely 
intervention by this Court to procure necessary additional 
information, it is likely the proposed Final Judgment will be 
entered without any serious examination of the government's 
arguments. This would render the Tunney Act effectively worthless in 
safeguarding the public interest.

Conclusion

    The public--and this Court--cannot rely on the complaint and 
CIS, in their present form, to make a proper determination under the 
Tunney Act on whether entry of the

[[Page 44591]]

proposed Final Judgment is in the public interest. The United States 
omitted key facts from the complaint, and failed to disclose 
relevant information that would assist the public in forming 
reasoned judgments about this case. The Tunney Act grants the Court 
ample power to ensure the government's full compliance, and this 
case warrants exercise of that power.
    Accordingly, the Court should direct the United States to file a 
revised complaint and CIS, addressing the objections and concerns 
set forth in this brief. Additionally, the Court should extend the 
public comment period to allow third parties adequate time to review 
the revised disclosures so that they may provide appropriate 
comments to the Court.

     Respectfully Submitted,

    Dated: February 15, 2003.

S.M. Oliva,
2000 F Street, NW., #315, Washington, DC 20006-4217, Tel: (202) 223-
0071, E-mail: [email protected], Amicus Curiae.

The Center for the Advancement of Capitalism

March 10, 2003.

Mr. Mark J. Botti,
Chief, Litigation Section, Antitrust Division, U.S. Department of 
Justice, 1401 H Street, NW., Room 4000, Washington, DC 20530.

Re: Public comments in United States v. Mountain Health Care

    Dear Mr. Botti: Pursuant to the rights of the public under the 
Antitrust Procedures and Penalties Act, 15 U.S.C. Sec.  16(b)-(h), I 
am writing to express the opposition of the Center for the 
Advancement of Capitalism (CAC) \1\ to the proposed Final Judgment 
in the case of United States v. Mountain Health Care, now pending 
before the U.S. District Court for the Western District of North 
Carolina. CAC has reviewed the Competitive Impact Statement and the 
proposed Final Judgment and it finds that the proposed Final 
Judgment undermines the public interest and ought to be rejected by 
the Court.
---------------------------------------------------------------------------

    \1\ The Center for the Advancement of Capitalism is a District 
of Columbia corporation organized in 1998, and exempt from income 
tax under Section 501(c)(4) of the Internal Revenue Code. CAC's 
mission is to present to policymakers, the judiciary and the public 
analyses to assist in the identification and protection of the 
individual rights of the American people. CAC applies Ayn Rand's 
philosophy of Objectivism to contemporary public policy issues, and 
provides empirical studies and theoretical commentaries on the 
impact of legal and regulatory institutions upon the rights of 
American citizens. CAC has no financial interest in the outcome of 
this case, nor has CAC received any compensation from the defendants 
in connection with these comments.
---------------------------------------------------------------------------

1. The Proposed Final Judgment Ordering the Dissolution of Mountain 
Health Care Is Unjustified by the Facts

    The proposed Final Judgment demands the complete dissolution of 
Mountain Health Care on the grounds that it illegally negotiated a 
uniform fee schedule with insurance companies. Such a draconian end 
to a company that has been in existence since 1994 and competently 
and caringly served the health needs of almost 70,000 North 
Carolinians is shocking. It clearly implies that Mountain Health 
Care's mere existence as a physician-owned network of healthcare 
providers is outside the confines of legal behavior under the 
government's interpretation of the antitrust laws, whatever 
Mountain's actual behavior. CAC rejects this implication outright. 
In no way did the government adequately justify its dissolution of 
Mountain Health Care.
    Under FTC-DOJ policy, doctors may collectively bargain with 
health insurance companies by using three methods: capitation, 
withholding, and the messenger model. Capitation requires physicians 
accept a fixed fee per patient regardless of the actual costs of 
treating that patient. Withholding allows the insurer to withhold a 
percentage (20-30% or more) of a physician's reimbursement unless 
some arbitrary goal is met, such as reducing the frequency of a 
particular procedure. The messenger model allows a third-party to 
serve as a one-way conduit from the insurer to the doctors.
    Mountain Health Care maintains that in accordance with the above 
guidelines, it now uses the messenger model in its negotiations. Yet 
nowhere is this critical fact mentioned in the government's 
Competitive Impact Statement. CAC considers this to be a galling and 
relevant omission.

2. The Case Against Mountain Health Care Is an Attempt on the Part of 
the Government To Erode the Rights of Physicians in the Name of Serving 
an Improperly Defined Concept of the ``public interest''

    The ``public interest'' is properly defined by the principle of 
individual rights as expressed in the Declaration of Independence 
and animated by the Constitution. The principle of individuals 
rights is not mere claptrap to be ignored by DOJ lawyers, but the 
organizing principle of legitimate government.
    Yet CAC's observations of the government's antitrust actions in 
health-care lead it to believe that the government is simply 
pursuing a policy of reflexively reducing healthcare costs, even at 
the price of squelching the rights of physicians to pursue their 
legitimate economic interests via institutions able to negotiate on-
par with health insurance companies.
    In effect, current government policies in healthcare uses 
antitrust to obtain the partial socialization of medicine absent 
clear congressional authority, violates the rights of physicians to 
profit from their work, and removes the financial incentive that 
brings most individuals to pursue careers in the healthcare 
industry.
    Yet every attempt CAC has made thus far to point out these 
glaring contradictions in other Antitrust Procedures and Penalties 
Act proceedings has resulted in the government's evasion of CAC's 
core arguments. We hold that even under the nation's system of 
antitrust, the government can not make literal serfs of some of its 
citizens because they seek to pursue their legitimate economic 
interests. Consumers can not possibly benefit from denying 
physicians the right to collectively bargain their fees.

3. The Court Ought To Use Its Authority Under the Antitrust Procedures 
and Penalties Act To Check the Unrestrained Government Incursion 
Against the Rights of Physicians

    CAC notes that the complexities of antitrust proceedings are 
such that few of the government's targets for enforcement can afford 
to offer a full defense of their actions, even as they maintain 
their complete innocence. Mountain Health Care claims that it only 
agreed to the settlement because it has limited assets that preclude 
it from fighting the requisite court battle with the government.\2\ 
CAC's observations of the government's antitrust actions in 
healthcare lead it to believe that the government specifically 
targets those unlikely to offer a defense. While CAC recognizes the 
burden on the accused to defend themselves, we nevertheless consider 
this pattern to be relevant in observing how the government carries 
out its mission of defining and defending the public interest.
---------------------------------------------------------------------------

    \2\ http://www.mountainhealthcare.com/pressrelease.htm on 4/10/
03.
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4. Mountain Health Care's Business Under Review Was Not Interstate 
Commerce

    CAC also observes that Mountain Health Care's conduct as a 
preferred-provider organization took place wholly within North 
Carolina, as outlined in the Competitive Impact Statement. The 
Justice Department's assertion of jurisdiction here is tenuous at 
best.

Conclusion

    Ultimately, CAC's observations of these facts lead it to 
question the appropriateness of the proposed Final Judgment. 
Considering the impact on both Mountain Health Care doctors and 
their patents, CAC believes a substantive review and ultimate 
rejection of the proposed Final Judgment is in order. If the 
Antitrust Procedures and Penalties Act protects the public interest 
from inadequate antitrust settlements, than it is incumbent upon the 
Court to use it to protect the public from excessive antitrust 
settlements. The ``reaches of the public interest'' apply to both 
producers and consumers, and gross injustice toward producers can 
not be held to be in the legitimate interest of consumers.
    CAC believes the government's position is clear and direct: any 
attempt by physicians to advance their own economic rights 
collectively is inherently suspect, if not outright illegal. It 
would be refreshing to see the government's case stand the test of a 
trial, but in that absence, CAC believes the Court still has it 
within its power to challenge the government's brazenly erroneous 
conclusions by rejecting the proposed Final Judgment.

     Respectfully Submitted,

Nicholas P. Provenzo,
Chairman.

February 25, 2003

Mr. Mark J. Botti (via facsimile 202-307-5802),
Chief, Litigation I Section, Antitrust Division, U.S. Department of 
Justice, 1401 H Street, NW., Room 4000, Washington, DC 20530.


[[Page 44592]]


Re: Public comments in United States v. Mountain Health Care

    Dear Mr. Botti: I am writing to express opposition to the 
proposed Final Judgment in the case of United States v. Mountain 
Health Care, now pending before the U.S. District Court for the 
Western District of North Carolina. The proposed judgment will not 
benefit the public interest, and will actually cause harm to 
consumers by depriving thousands of North Carolina residents of the 
benefits of a comprehensive, stable physician network.
    In my opinion, the Justice Department lacks insights into the 
practices of Mountain's business to understand their good faith 
efforts to comply with the DOJ-FTC Statements of Antitrust 
Enforcement Policy in Health Care and has ignored the ramifications 
of the consent decree being imposed on Mountain. Through personal 
experience with the anti-trust settlement process, the government 
claims that no one operates the messenger model correctly. This 
presumption means physicians, and their advisors, are presumed 
guilty from the beginning of an investigation.
    Also, the anti-trust laws, as they are being applied against 
physician networks, are only helping the parties that the Sherman 
Act was originally intended to protect the public against * * * the 
health plans. The modern day ``robber barons'' are the insurance 
companies, with billions of dollars in profits and unchecked power 
against employers and healthcare providers. Physicians have not 
caused rising healthcare premiums, as the standard FTC-DOJ consent 
language would suggest. In fact, the physician fee schedules from 
insurance carriers, including the largest payor, Medicare, have not 
even kept up with normal inflation, much less medical inflation 
rates since the 1970s.
    The ``excuse'' of per se price fixing in pursuing these 
prosecutions is an attempt by the government to not have to prove a 
case. The fact that physicians, and their advisors, have no 
resources to sustain an FTC-DOJ investigation much less contest a 
settlement offer, should not be a reason for the government to 
continue bullying professionals into settlement after settlement 
without providing a reasonable means for physicians to continue to 
operate a practice in a world dominated by billion-dollar insurers. 
However, the federal government continues chalking up `victories' in 
the arena of physician network dissolution under the guise of 
ridding the world of anti-trust offenders. I've asked repeatedly, 
and have not received an answer, ``Who's been hurt?'' in these 
recent cases pursued by the DOJ and FTC. I ask again, and beg for an 
answer, ``Who's been hurt?'' in this case against Mountain.
    While I'm not happy to have settled anti-trust cases recently, I 
find the inconsistency in the application of the consent decree with 
Mountain disturbing. Why should one physician network be offered an 
opportunity to continue to operate while another is forced to 
disband? In either event, the physicians are forced to operate their 
practices with blinders on, practicing as individuals at the mercy 
of the health plan forced to operate their practices with blinders 
on, practicing as individuals at the mercy of the health plan 
contract offers. In both outcomes the physicians are left with no 
ability to do anything, having ``failed'' at the application of the 
only safe harbor offered by the government--the exclusive messenger 
model. How would one treatment of the organization (continue versus 
disband) affect the members of the patient community differently? 
Dissolution seems to only serve the purposes of exacting a harsher 
punishment.
    The Justice Department has not taken into account the interests 
of actual consumers. Nor have they ever considered the rights of 
Mountain's shareholders and physicians. As citizens of the United 
States, they have an absolute right to freely associate with other 
professionals for their mutual benefit. It is not a crime to act in 
one's economic self-interest, so long as one does not implement 
actual force against other individuals. Since there's no evidence 
Mountain ever initiated force against its customers, there is no 
justification for the extreme remedy provided for in this final 
judgment.
    For these reasons, the Justice Department should withdraw the 
proposed Final Judgment and dismiss its complaint against Mountain.
    Please include these comments in the official record of this 
case, pursuant to the Tunney Act.

     Sincerely,

Marcia L. Brauchler,
Physicians' Ally, Inc., P.O. Box 260661, Littleton, CO 80163-0171, 
(303) 346-2935.
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[[Page 44593]]

[GRAPHIC] [TIFF OMITTED] TN29JY03.000

BILLING CODE 4410-11-C
January 25, 2003.

    Dear Mr. Botti, I am writing to comment about the proposed Consent 
Decree relating to the dissolution of Mountain Health Care. It is 
common

[[Page 44594]]

knowledge among current and former employees that the CEO, Ellen Wells, 
purposely put off changing to Messengering because she was under the 
impression that the DOJ would just disappear. She was also concerned 
that it might reduce the 5% withhold that MHC was charging the 
providers on their claims and jeopardize the collections, thus 
impacting her bonus. She has shown noting but total disrespect for the 
government and total disregard for the employers that contracted with 
MHC for what they thought were discounted rates from physicians. MHC 
deserves to dissolve and Ellen Wells deserves to be named as the 
primary perpetrator of this disaster.

     Sincerely,

Concerned employees

January 26, 2003.

Mr. Mark Botti
Chief Litigation I Antitrust division, United States Dept. of Justice, 
1401 H Street NW., Room 4000, Washington, DC 20530.

    Dear Mr. Botti, If Mountain Health Care did what you say it did, 
why does the company run ads in the newspaper making it sound like it 
is totally innocent of anything? (Please read the ads that I include in 
this letter). I am confused.

     Thank you.

Myths and Facts about Mountain Health Care

    Since the federal government's announcement of a forced dissolution 
of Mountain Health Care a few weeks ago, some of the facts of the case 
have gone unanswered. Here are answers to some of the misunderstandings 
and most commonly-asked questions about this issue.

Myth: Mountain Health Care is an insurance company and/or contracts 
with managed care companies.
Fact: Mountain Health Care is a fully credentialed network of providers 
(physicians, therapists, nurses and medical laboratories, to name a 
few) which contracts directly with self funded employers and fully 
insured companies. Mountain Health Care does not approve or pay claims, 
and has no contracts with managed care companies.

Myth: In order for an individual to see a Mountain Health Care provider 
his/her employer must participate with Mountain Health Care.
Fact: Since Mountain Health Care is not an exclusive network, providers 
are free to participate with any network or plan they choose. Your 
employer does not have to contract with Mountain Health Care in order 
for you to see those providers.

Myth: The Mountain Health Care fee schedule resulted in artificially 
higher reimbursements for physicians.
Fact: The majority of health plans covering lives in western North 
Carolina have fee schedules, most of which offer higher total 
reimbursements than Mountain Health Care's fee schedule. In response to 
existing antitrust guidelines, Mountain Health Care has transitioned to 
a messenger model where each payer negotiates directly with each 
physician.

Myth: Mountain Health Care providers set their office charges based on 
the Mountain Health Care fee schedule.
Fact: Providers in western North Carolina establish their own office 
charges. These charges apply to all patients seen by the provider 
regardless of their health plan, are set independently and are not 
shared with other providers.

Myth: All Mountain Health Care providers are company shareholders.
Fact: Of the 1800 participating providers in the Mountain Health Care 
network only 401 physicians have chosen to be stockholding members.

Myth: Mountain Health Care has no competition in the western North 
Carolina market.
Fact: Employers in the western North Carolina market place are 
contracted with many different health plans. Mountain Health Care 
members make up an average of only 8% of our providers patient base, 
and the overwhelming majority of Mountain Health Care providers 
participate with other plans.

Myth: The federal government discovered that Mountain Health Care's fee 
schedule is so high it has led to higher health care costs in western 
North Carolina.
Fact: Premiums have increased in all types of health care plans and in 
most regions across the country; the increase in health care costs in 
western North Carolina is not unusual. There are many factors that 
influence overall health care costs across the nation including 
improved technology, rapidly escalating drug prices, an aging 
population, the trend toward higher jury awards in medical malpractice 
cases and hospital consolidations. Physician fees account for less than 
22% of total health-care costs and it is difficult to see how Mountain 
Health Care, whose covered lives represent only 8% of our providers' 
patient base, could be held primarily responsible for these increases. 
The January 21, 2002 issue of Modern Healthcare, the industries leading 
business trade journal stated, ``The government blamed the acceleration 
[of health-care costs] on larger increases in the indices for 
prescription drugs and hospital services,'' while Mountain Health 
Care's prices, with minor exceptions, did not increase between 1994 and 
the present.

Myth: The doctors who formed Mountain Health Care did so in an attempt 
to secure comparatively higher reimbursement rates.
Fact: Mountain Health Care was formed to ensure quality, cost effective 
health care for the residents of western North Carolina.

    We hope that our members and all residents of western North 
Carolina, after considering all the facts, understand that the 
existence of Mountain Health Care did not cause your health care costs 
to increase. We also hope you will realize that the forced dissolution 
of Mountain Health Care will in no way lower or drastically alter 
health care costs within the region. Now, as always, Mountain Health 
Care and its participating providers have the best interest of our 
members and community at heart and will do all that we can to continue 
to provide cost effective, quality health care to you.

January 8, 2003.

Mark J. Botti, Chief
Litigation I, Antitrust Division, United States Department of Justice, 
1401 H Street NW., Room 4000, Washington, DC 20530.

    Dear Mr. Botti: In the 16 years I have been in the managed health 
care industry I have never heard anything as ridiculous as the 
accusations made by the DOJ and their decision to shut down Mountain 
Health Care.
    The DOJ's press release states that Mountain Health Care's 
contracting is a practice which resulted in consumers paying increased 
prices to Mountain Health Care's physician members for health care 
services. This is ridiculous. Yes, the MHC physician's have a fee 
schedule, but they also have a fee schedule with Aetna, Cigna, United 
Health Care, BC/BS and the list goes on and on. In no way was the 
physician's reimbursement under the Mountain Health Care fee schedule 
higher than it was under any of the other managed

[[Page 44595]]

care contracts the physician's participated on. Their fee schedule had 
not been changed since the start of the company. In fact, some of the 
fees they were accepting were lower than Medicare & even Medicaid (both 
government agencies).
    The physicians were not the ones benefiting from this; the 
community and people covered by Mountain Health Care were. And whether 
you realize this or not, it was the physician's intent to make sure 
these people had cost effective affordable health care and not that 
their reimbursement was higher. Aside from working in the managed 
health care industry, I also work in a physician's office and I can 
tell you how pleased the average consumer was who came in and presented 
their Mountain Health Care cards at the front desk with their Mountain 
Health Care coverage, not once did I hear a negative word.
    ``The Antitrust Division is committed to ensuring that consumers 
buying health care services receive the benefits of competition,'' is 
the statement your representative made. Having worked in the managed 
health care industry in Western North Carolina for the past 5 years in 
both the PPO side and the Physician side concurrently I can tell you 
that there is plenty of competition going on here.
    Having been a spectator of your ``investigation'' into Mountain 
Health Care and not getting the chance to speak my mind I felt this was 
my only opportunity to finally speak up. It seemed to me that the 
moment your investigators arrived on the scene they were determined to 
shut Mountain Health Care down based upon information and statements 
given to them by the competition and it just took them two years to 
find a way they could make it all sound feasible to the consumers, who 
will be drastically affected by this.
    It is sad that the press has interviewed people who have no working 
knowledge of the healthcare industry for their news articles who make 
statements about how Mountain Health Care disbanding will decrease 
their health insurance costs, because their is no way that is going to 
happen. What is going to happen is the Aetna & Cigna type companies 
will now move in for the kill and know that these small employer groups 
and family run companies will have no choice but to go with their 
costly plans in order to insure their employees and family members. 
This in itself will drive up the cost of healthcare in this region. 
This will actually increase the physician's reimbursements since the 
other company's fee schedule reimbursements are higher than Mountain 
Health Care's was and people will be forced to join those plans or be 
uninsured. This will increase their rates and their out of pocket 
expenses.
    The only people who will benefit from your decision to close 
Mountain Health Care will be the other health care plans and the 
monopolistic PPO set up by the hospital system here in Asheville. What 
you have chosen to do here and the decisions you have made are wrong. 
The DOJ and the judge who signs the order obviously have no idea how 
much damage they will be doing to the people of Western North Carolina 
including myself and my children. The economy here is hurt enough. This 
is only going to make matters worse and I find it hard to believe there 
isn't one individual within the Department of Justice or the government 
who is savvy enough to see this.

     Sincerely,

Janine Mazur,
301 Spartan Heights, Hendersonville, NC 28792.
Mr. Mark J. Botti,
Chief, U.S. Department of Justice, Litigation/Antitrust Division, 1401 
H Street, NW., Room 4000, Washington, DC 20530.

Re: Mountain Healthcare, Asheville, NC

    Dear Mr. Botti: Sometimes there is merit in antitrust action; this 
is NOT one of those times! This decision seems based on emotions, 
circumstantial evidence, hype and superficial information.
    Medical care is costly enough here in Western North Carolina 
without the Department of Justice pushing costs higher by eliminating a 
group that gives quality care, lower rates and many options for 
treatment.
    We should not be wasting our government resources on well-
intentioned ventures but causing unintended consequences.
    I suggest you get an experienced, educated senior official to look 
through the smokescreen, see the real facts and stop the damage to 
Western North Carolina.

     Regards,

Stewart M. Auten,
President.

January 2, 2003.

Mark J. Botti,
Chief, Litigation 1, Antitrust Division, US Dept of Justice, 1401 H St. 
NW., Room 4000, Washington, DC 20530.

    Dear Mr. Botti: Let me relate to you how concerned I am about the 
dissolution of Mountain Health Care. For years our family used various 
insurance companies that our employer contracted insurance for the 
employees. Never have I been more satisfied with a company as I was 
with Mountain Health Care. We received our annual physicals therefore 
cutting down on future expense by the insurance company.
    Please reconsider your actions.

     Thank you,

Mike and Gale Grooms.

January 9, 2003.

    Dear Mr. Botti: Both my wife and I were under Mountain Health Care 
+ we had no complaints. Your people are wrong about charging them with 
price fixing. How can they raise the area medical cost when they have 
only 8% of the area population? It is an honest and well run operation. 
Your action is tyrannical.

     Sincerely,

(Name unreadable)

[FR Doc. 03-19051 Filed 7-28-03; 8:45 am]
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