Tarrant County Medical Society

Bureau of Competition
FEDERAL TRADE COMMISSION
WASHINGTON, D.C.
~ U % Y11, 1984
Lynn 	C, Perkins, M , D ,
President
Tarrant 	County Medical 	Society
3 8 5 5 	T u l s a 	Way
Fort W ~ t t h pTexas 	76107
T h a n k 	you 	for 	your 	Letter 	d a t e d 	d u n e 	27, 	1981, 	requesting 	a
f o r m a l opinion as 	to w h e t h e r 	t h e 	Insurance 	Review 	Committee8s
p r s ~ o s e df e e 	review program would 	v i o l a t e 	Section 5 of t h e
Federal Trade 	Commission A c t , 	15 U , S , C , 	45,
Given 	its 	l i m i t e d 	resources 	t h e 	Comissian 	can 	issue 	a n
o f f i c i a l 	advisory 	opinion o n l y 	if 	a 	matter 	involves a 	substantial
ear 	n o v e l 	question 	of 	fact 	om 	law oh w h i c h 	there 	is no 	clear 	'
Comission 	or court 	precedent, 	or 	i f issuance sf an 	advisory
o p i n i o n 	would 	serve 	a 	s i g n i f i c a n t 	public 	i n t e r e s t , 	FS"C R u l e s 	sf
P r a c t i c e 	$ 	I e l ( a )(1) 	(a) ( 3 ) . 	The Comaission 	p r e v i o u s l y 	h a s
examined 	t h e 	legal 	issues 	surrounding 	professional 	a s s o c i a t i o n
peer 	review 	0% fees, 	u t i l i z a t i o n , 	and 	q u a l i t y 	of 	care 	i n 	i t s
April 	1 9 8 2 	a d v i s o r y 	s g i n i o n 	l e t t e r 	t o 	t h e 	Iowa 	D e n t a l 	A s s o c i a t i o n
( " I D A " ) 	and 	i n 	its 	May 	1983 a d v i s o r y 	opinion 	Letter 	t o 	t b e 	m o d e
L s l a n d 	PrafessionaL Standards 	Review O r g a n i z a t i o n 	(RRIPSROm), 	I n
A u g u s t 	1983, 	t h e 	B u r e a u 	af 	Competition 	also 	i s s u e d 	a n 	a d v i s o r y
opinion 	t o 	t 3 e 	h e r i e c a n P o d i a t r y 	Association 	( " A P A w ) 	t h a t
a n a l y z e d 	the 	Legality 	of 	APA" 	pprpaosed 	fee 	review program,
T h e 	C s m i s s i o n % 	sopinion 	l e t t e r s 	ta I D A 	and 	ZIPSRO, 	and 	t h e
Bureau" 	spinion 	l e t t e r 	to APA, 	taken 	together, 	p r a v i d c 	a 	fairly
complete 	s t a t e m e n t 	s f 	t h e 	Cammissian" 	a d 	t h e Bureau 	af
Competition" 	aanalysis 	of 	t h e 	i s s u e s 	presented 	by 	psoZessisnaP
association 	peer 	review, 	I believe 	we 	h a v e 	sent 	y o u 	copies 	sf
them p r e v i o u s l y , 	I rn enclosing 	new 	copies sf 	these 	opinion
l s t t e r s 	far 	your 	convenience. 	Tn 	l i g h t 	of 	t h e 	a n a l y s i s 	contained
i n 	t h e 	IDA, 	RZPSRO, 	and 	XPA 	opinion Letters, 	I da 	n o t 	t h i n k 	t h a t
t 3 e 	issuance 	of 	an 	official Commission 	or 	B u r e a u 	s f 	C o m p e t i t i o n
o p i n i o n 	is warnanted 	under 	t h e 	Csmission's 	r u l e s , 	L can,
however, 	g i v e 	you 	g u i d a n c e 	and 	a d v i c e 	o n 	behaLf 	of 	t h e Bureau's
h e a l t h 	ear@ s e c t i o n , 	A s 	I stated 	to you 	i n 	my 	Pcttcr 	on May
% 5 t h , L do 	not 	believe 	t h a t 	operation 	of 	the 	Insurance Review
committee" 	pproposed 	fee 	review 	program, 	as desceiScd, 	would
violate 	Section 	5 - o f 	t h e 	Federal 	Trade 	Commission A c t , 	15 U , S , C ,
5 45, 	I b a s e 	t h i s 	c o n c l u s i o n 	o n 	s e v e r a l 	f a c t s r s ,
F i r s t , 	y o u r 	purpose 	in 	r e - e s t a b l i s h i n g 	the .Insurance Review
Committee 	-- 	t o 	provide 	a 	m e c h a n i s m 	f o r 	t h e 	v o l u n t a r y 	resolution
of 	disputes 	c o n c e r n i n g 	c h a r g e r 	of 	members 	of 	the Tarrant 	C o u n t y
Medical 	Society 	-- does 	n o t 	appear 	to be 	a n t i c o m p e t i t i v e ,

Second, 	t h e 	advisory 	n a t u r e 	o f 	t h e 	program 	makes 	i t 	unlikely 	t h a t
the review process c o u l d 	b e 	used 	e i t h e r 	ts coerce t h e 	parties
i n t o 	adopting 	any 	Tarrant 	C o u n t y Medical 	Saciety 	or 	Insurance
Review 	Cornittee f e e 	s c h e d u l e 	or 	t o 	facilitate 	any 	anticompee
titive conspiracies or 	boycotts, 	T h i r d , 	t h e 	fact that 	the
Insurance Review Cornittee will n o t 	release 	t h e 	r e s u l t s 	of 	its
review 	to 	t h e 	general 	membership 	s h o u l d 	help 	prevent 	t h e
Conunittee" 	d d e c i s i s n s 	from 	effectively 	setting 	fees 	charged
t h r o u g h o u t 	t h e 	county. 	T h u s , 	i f 	the program 	is operated 	as
proposed, 	it 	is 	u n l i k e l y 	t h a t 	the Cornittee" 	f e e 	review program
will 	cause significant 	anticompetitive effects 	i n 	t h e 	physiciansm
services market 	or 	i n 	t h e 	insurance market,
I n 	implementing 	t h e 	proposed 	program, 	you 	s h o u l d 	c o n t i n u a l l y
exercise care 	and 	vigilance 	to i n s u r e 	t h a t 	t h e 	program" 	purpose
remains legitimate and 	t h a t 	i t 	does 	n o t 	produce 	significant a n t i -
competitive effects and 	t h e r e b y 	v i o l a t e 	t h e 	antitrust laws,
You 	s h o u l d 	be 	aware 	t h a t 	t h e 	above 	a d v i c e 	does 	not 	bind
e i t h e r 	t h e 	Comission 	or Bureau 	sf Competition, 	b t h 	t h e 	=
Commission and 	t h e 	B u r e a u 	of 	Competition 	r e t a i n 	t h e 	r i g h t 	to
reconsider 	t h e 	questions 	involved, 	I f 	implementation of 	t h e
proposed 	program 	results 	i n 	s u b s t a n t i a l 	a n t i c o m p e t i t i v e 	effects,
or 	i f 	the program 	is used 	for 	improper 	purposes, 	t h e 	B u r e a u 	or
t h e 	Commission 	may 	take 	s u c h 	a e t i s n 	a s 	would 	be 	i n 	t h e 	public
intarest.
P 	hope 	t h i s 	information h a s 	been 	h e l p f u l 	to 	you.
Sincerely,
A r t h u r 	N, 	Lerner
Assistant Director