Monday, July 14, 2003

Antitrust News: St. Louis Docs "Settle"

Score another FTC victory in the War Against Doctors:
WASHINGTON (Reuters) - U.S. antitrust enforcers said on Friday they had settled antitrust charges against a group of doctors in St. Louis whom they claimed had inflated prices by bargaining collectively with insurers.

The Federal Trade Commission said the 1,500-member Washington University Physician Network agreed to stop negotiating fees with insurers and preferred provider organizations on behalf of members, a practice that violates antitrust laws.

"This group of St. Louis-area physicians engaged in overt price-fixing," said Joe Simons, director of the FTC's competition bureau. "Its conduct was plainly anticompetitive and harmful to consumers, by forcing up prices in the area."

The settlement also bars the doctors from "facilitating exchanges of information among physicians concerning whether, or on what terms, to contract with (an insurer)."

The St. Louis case marks the 10th time during the last 15 months that the commission has charged doctors groups with conspiring to raise fees in violation of U.S. antitrust laws.
Thankfully for the FTC, Reuters didn't actually report on this story, instead simply repeating the FTC's press release. Had Reuters (or any media outlet) looked at the FTC's statements critically, they would have to answer the following questions:

1. Does physician collective negotiating violate the antitrust laws? Contrary to the FTC's claims, it does not. Physicians have the same basic economic rights as any American to act in their own self-interest when voluntarily deciding what conditions to accept a contract offer. The specific antitrust law the FTC enforces only prohibits "unfair" methods or acts of competition. Under no reasonable standard do the acts of physcians like those at Washington University violate this vague prohibition. Indeed, the FTC Act was not enforced against doctors for decades until the FTC, needing some new business to justify their relevancy, started targeting doctors as victims of opportunity.

2. Were consumers harmed? No. The fact that prices rise does not indicate the presence of criminal activity. Prices rise for many reasons, such as inflation, higher costs, and government regulations. The FTC falsely assumes that any price increase must be due to an illegal conspiracy among producers; in none of the recent physician cases did the FTC consider any other factor that might have led to higher prices. And in any case, physicians have the right to ask for more money. Consumers are not legally entitled to a given price level for medical services. That would, in fact, be price fixing.

3. Can the FTC ban doctors from "facilitating exchanges of information" with each other? No, the First Amendment prohibits the government from banning simple acts of speech. The FTC argues, in contrast, that there's an antitrust exception to the First Amendment that permits censorship of speech that may cause "anticompetitive" behavior. But this is circular reasoning. Under this logic, the government could ban individuals from discussing the legalization of marijuana on the grounds that such speech might lead to individuals advocating a position that is contrary to existing law. Of course, that's not a precise analogy, because the doctors did not violate the law in the first place...

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