Federation of Physicians and Dentists Consents to Judgment in Delaware Sherman Act Case

On October 22, 2001, the Department of Justice submitted a proposed final judgment settling its antitrust suit against the Federation of Physicians and Dentists. The Government had alleged that the Federation violated the Sherman Act by coordinating and negotiating third party payer contract pricing on behalf of member orthopedic surgeons in Delaware. CA 98-475 D.Del.

The Federation and its member physicians allegedly coordinated a response to attempts by Delaware insurance payers to bring physician fees in line with those paid in neighboring regions. According tot he Government, this coordination included agreements by the physicians to deal with payers exclusively through the Federation and concerted efforts to resist negotiation with payers, eventually leading to the cancellation of service contracts by many member physicians.

The Final Judgment requires the Federation to limit its dealings with payers nationally on behalf of member physicians to true "messenger model" activity: communicating factual information about proposed payer contracts to individual physicians. The Federation and its member physicians may not facilitate agreements designed to set uniform contract provisions or fees; nor may they facilitate the sharing of competitively sensitive information between competing physicians. For the first five years following the Judgment, the Federation must notify physicians and insurance payers that 1) they are permitted to bargain without using the Federation as a messenger and 2) it is prohibited from negotiating contracts on behalf of physicians. The Judgment contains provisions protecting both the Federation's activities organizing employee physicians and the bargaining practices of physicians belonging to bona fide risk sharing arrangements.

Crowell & Moring attorneys have worked on behalf of managed care company clients in a number of states that have encountered questionable activities by the Federation.