[Federal Register Volume 71, Number 146 (Monday, July 31, 2006)]
[Notices]
[Pages 43156-43157]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-12253]


=======================================================================
-----------------------------------------------------------------------

FEDERAL TRADE COMMISSION

[File No. 051 0170]


In the Matter of Puerto Rico Association of Endodontists, Corp.; 
Analysis of Agreement Containing Consent Order To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

-----------------------------------------------------------------------

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

DATES: Comments must be received on or before August 18, 2006.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Puerto Rico Association of Endodontists, 
Corp., File No. 051 0170,'' to facilitate the organization of comments. 
A comment filed in paper form should include this reference both in the 
text and on the envelope, and should be mailed or delivered to the 
following address: Federal Trade Commission/Office of the Secretary, 
Room 135-H, 600 Pennsylvania Avenue, NW., Washington, DC 20580. 
Comments containing confidential material must be filed in paper form, 
must be clearly labeled ``Confidential,'' and must comply with 
Commission Rule 4.9(c). 16 CFR 4.9(c) (2006).\1\ The FTC is requesting 
that any comment filed in paper form be sent by courier or overnight 
service, if possible, because U.S. postal mail in the Washington area 
and at the Commission is subject to delay due to heightened security 
precautions. Comments that do not contain any nonpublic information may 
instead be filed in electronic form as part of or as an attachment to 
email messages directed to the following e-mail box: 
[email protected]. The FTC Act and other laws the Commission 
administers permit the collection of public comments to consider and 
use in this proceeding as appropriate. All timely and responsive public 
comments, whether filed in paper or electronic form, will be considered 
by the Commission, and will be available to the public on the FTC Web 
site, to the extent practicable, at http://www.ftc.gov. As a matter of 
discretion, the FTC makes every effort to remove home contact 
information for individuals from the public comments it receives before 
placing those comments on the FTC Web site. More information, including 
routine uses permitted by the Privacy Act, may be found in the FTC's 
privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

FOR FURTHER INFORMATION CONTACT: Barbara Anthony, Director, and Leonard 
L. Gordon and Theodore Zang, Jr., Attorneys, FTC Northeast Region, New 
York (212) 607-2801, or (212) 607-2816.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec.  2.34 of 
the Commission Rules of Practice, 16 CFR 2.34, notice is hereby given 
that the above-captioned consent agreement containing a consent order 
to cease and desist, having been filed with and accepted, subject to 
final approval, by the Commission, has been placed on the public record 
for a period of thirty (30) days. The following Analysis to Aid Public 
Comment describes the terms of the consent agreement, and the 
allegations in the complaint. An electronic copy of the full text of 
the consent agreement package can be obtained from the FTC Home Page 
(for July 20, 2006), on the World Wide Web, at http://www.ftc.gov/os/2006/07/index.htm. A paper copy can be obtained from the FTC Public 
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW., Washington, 
DC 20580, either in person or by calling (202) 326-2222.
    Public comments are invited, and may be filed with the Commission 
in either paper or electronic form. All comments should be filed as 
prescribed in the ADDRESSES section above, and must be received on or 
before the date specified in the DATES section.

Analysis of Agreement Containing Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted, subject to final 
approval, an agreement containing a proposed consent order with Puerto 
Rico Association of Endodontists Corp. (``PRAE''). The agreement 
settles charges that PRAE violated Section 5 of the Federal Trade 
Commission Act, 15 U.S.C. 45, by orchestrating and implementing 
agreements among endodontist members of PRAE on price and other 
competitively significant terms; refusing or threatening to refuse to 
deal with payors except on collectively agreed-upon terms; and 
negotiating fees and other competitively significant terms with payors 
in contracts for PRAE's member endodontists. Comments received during 
this period will become part of the public record. After 30 days, the 
Commission will review the agreement and the comments received, and 
will decide whether it should withdraw from the agreement or make the 
proposed order final.
    The purpose of this analysis is to facilitate public comment on the 
proposed order. The analysis is not intended to constitute an official 
interpretation of the agreement and proposed order, or to modify their 
terms in any way. Further, the proposed consent order has been entered 
into for settlement purposes only and does not constitute an admission 
by PRAE that it violated the law or that the facts alleged in the 
complaint (other than jurisdictional facts) are true.

[[Page 43157]]

The Complaint

    The allegations of the complaint are summarized below.
    PRAE is a nonprofit corporation, organized, existing, and doing 
business under and by virtue of the laws of the Commonwealth of Puerto 
Rico (``Commonwealth'' or ``Puerto Rico''), with its office and 
principal place of business in San Juan, Puerto Rico.
    PRAE has approximately 30 member endodontists, who are engaged in 
the business of providing professional services to patients throughout 
Puerto Rico. PRAE membership includes all or almost all of those 
professionals who are licensed practicing endodontists in the 
Commonwealth. Except to the extent that competition has been 
restrained, member endodontists of PRAE have been, and are now, in 
competition with each other for the provision of endodontic services.
---------------------------------------------------------------------------

    \1\ The comment must be accompanied by an explicit request for 
confidential treatment, including the factual and legal basis for 
the request, and must identify the specific portions of the comment 
to be withheld from the public record. The request will be granted 
or denied by the Commission's General Counsel, consistent with 
applicable law and the public interest. See Commission Rule 4.9(c), 
16 CFR 4.9(c).
---------------------------------------------------------------------------

    In January 2003, PRAE formed a Pre-Payments Committee, which then 
began negotiating with payors on behalf of PRAE members in order to 
secure higher reimbursement rates for PRAE members. By March 2003, the 
PRAE Pre-Payments Committee had met with representatives of two payors 
and convinced those payors to increase the rates paid to PRAE members.
    Also in March 2003, PRAE sent a letter to at least four insurance 
companies requesting a meeting ``with the intention of revising the 
fees paid to Endodontists'' that participate in the insurer's dental 
plan. Thereafter, the Pre-Payments Committee contacted these payors to 
urge them to raise their rates. In one such discussion, the payor 
representative informed the Committee member that the Committee's 
negotiation on behalf of PRAE members was illegal under the antitrust 
laws. In response, the PRAE representative informed the payor that 
other payors had been disinclined to accede to the rate increases 
proposed by the PRAE, and that those payors now were facing potential 
problems with their networks.
    PRAE's efforts to negotiate higher rates from payors for its 
members succeeded. In response to the various efforts of PRAE's Pre-
Payment Committee, in 2003 at least five payors raised the rates that 
they paid PRAE members.
    In early 2004, PRAE's Pre-Payment Committee began a campaign to 
raise rates again, this time by seeking to end the payors' ban on 
balance billing.\2\ PRAE sought this change in contract terms to permit 
its members to raise the prices directly paid by patients and to avoid 
the cost-containment function of a ban on balance billing.
    In furtherance of this plan, in early 2004, the PRAE Pre-Payments 
Committee contacted several payors to request that the payors waive 
their ban on balance billing. The Committee followed those discussions 
with a letter in June 2004, which the Committee sent to at least seven 
payors. The letter urges each payor to eliminate their ban on balance 
billing so that the payor did not have to absorb the price increase 
that the PRAE members desired. The letter states that waiver of the ban 
``could result in all Endodontists in Puerto Rice becoming dental 
participants of your Dental Plan since there would be no financial 
discrepancies. This could be of great usefulness in your marketing 
strategy.'' To emphasize the collective nature of the demand being made 
by the PRAE, and the potential risk to payors of failing to acquiesce 
to that demand, twenty-three members of PRAE co-signed the letter. The 
Pre-Payments Committee followed the letter with repeated phone calls to 
the payors urging an end to ban on balance billing. Thus far, the 
payors pressured by PRAE to end the ban on balance billing have 
resisted the coordinated action of PRAE.
    PRAE engaged in no efficiency-enhancing integration sufficient to 
justify joint negotiation of fees or other terms. By the acts set forth 
in the Complaint, PRAE violated Section 5 of the FTC Act.

The Proposed Consent Order

    The proposed order is designed to remedy the illegal conduct 
charged in the complaint and prevent its recurrence. The proposed order 
is similar to recent consent orders that the Commission has issued to 
settle charges that physician groups engaged in unlawful agreements to 
raise fees they receive from health plans.
    The proposed order's specific provisions are as follows:
    Paragraph II.A prohibits PRAE from entering into or facilitating 
agreements among endodontists: (1) To negotiate on behalf of any 
endodontist with any payor; (2) to deal, refuse to deal, or threaten to 
refuse to deal with any payor; (3) regarding any term upon which any 
endodontist deals, or is willing to deal, with any payor; and (4) not 
to deal individually with any payor or through any arrangement other 
than PRAE.
    Other parts of Paragraph II reinforce these general prohibitions. 
Paragraph II.B prohibits PRAE from exchanging or facilitating the 
transfer of information among endodontists concerning any endodontist's 
willingness to deal with a payor, or the terms or conditions, including 
price terms, on which the endodontist is willing to deal. Paragraph 
II.C prohibits PRAE from attempting to engage in any action prohibited 
by Paragraphs II.A or II.B. Paragraph II.D prohibits PRAE from 
encouraging, pressuring or attempting to induce any person to engage in 
any action that would be prohibited by Paragraphs II.A through II.C.
    Paragraphs III.A and B require PRAE to distribute the complaint and 
order to its members, payors with which it has been in contact since 
the beginning of 2001, and specified others.
    Paragraphs IV, V, and VI of the proposed order impose various 
obligations on PRAE to report or provide access to information to the 
Commission to facilitate monitoring PRAE's compliance with the order.
    The proposed order will expire in 20 years.

    By direction of the Commission.

Donald S. Clark,
Secretary.
---------------------------------------------------------------------------

    \2\ Endodontists entering into contracts with payors often agree 
to accept, as payment in full for services rendered, an agreed upon 
fee from the payor and co-payment from the subscriber. Where such a 
term is included in the payor-endodontist contract, the endodontist 
agrees not to ``balance bill'' the patient for any balance or 
difference between the agreed upon payments and the endodontist's 
desired rate. Agreements not to balance bill reduce the cost of 
endodontic care to patients.
---------------------------------------------------------------------------

 [FR Doc. E6-12253 Filed 7-28-06; 8:45 am]
BILLING CODE 6750-01-P