In a unanimous opinion issued on May 14, 2008, the U.S. Court of Appeals for the Fifth Circuit affirmed a 2005 Federal Trade Commission decision that North Texas Specialty Physicians, an association of independent competing physicians and physician groups located in the Fort Worth, Texas area, engaged in horizontal price-fixing that was not related to any procompetitive efficiencies. The Court therefore affirmed the FTC's decision that the association's conduct violated Section 5 of the Federal Trade Commission Act.

In September 2003, the FTC issued an administrative complaint charging the group with unlawfully restraining competition. The group negotiated both capitation contracts and non-risk contracts, but only activities with regard to non-risk contracts were challenged by the FTC. The FTC charged the group with violating federal law by negotiating agreements among its participating physicians on price and other terms, refusing to deal with payors except on collectively agreed-upon terms and refusing to submit payor offers to participating doctors unless the terms of the offers complied with the group's minimum fee standards. The FTC also charged the group with illegally polling its members as to the minimum rates they would accept and with discouraging payors and participating physicians from negotiating directly with one another. A payor wishing to achieve a contract price below the association's minimum rates would have to submit its offer to the association, negotiate with the association and wait until the association communicated to its physicians that such negotiations were unsuccessful before the payor would be able to negotiate with the physicians directly. Accordingly, even though the association could not bind physicians to particular contracts, its practices interfered with payors seeking lower fees, while narrowing the choice of physicians for patients. The FTC alleged that the group's arrangements resulted in no increase in clinical integration.

The association declined to enter a consent decree with the FTC and fought the allegations through the administrative process and then with an appeal to the Fifth Circuit. In an initial decision filed in November 2004, an administrative law judge upheld the FTC's complaint, finding that the group of physicians restrained trade by conspiring to fix prices in certain contracts. The association appealed the decision to the full FTC, which issued its decision and order in December 2005, affirming the decision that the group illegally fixed prices in its negotiations with payors. The FTC asked the group to cease and desist from engaging in such conduct. The group appealed this decision to the Fifth Circuit.

The appeals court agreed with the FTC that the association's system amounted to price restraint, resulting in anticompetitive effects, and that the group of physicians failed to articulate how the quality of professional services was enhanced by the price restraint. The Court concluded that, based on the case record, the FTC properly condemned the conduct as horizontal price-fixing that was unrelated to procompetitive efficiencies, without the need for a full blown market analysis. According to the Court, such an abbreviated or quick-look analysis under the rule of reason has been found appropriate when an "observer with even a rudimentary understanding of economics could conclude that the arrangements in question would have an anticompetitive effect on customers and markets." The Court went on to say that such an analysis is appropriate when the "great likelihood of anticompetitive effects can easily be ascertained." The Fifth Circuit asked the FTC to modify its demand that the group not deal, refuse to deal or threaten to refuse to deal with any payor, finding this remedy overly broad and internally inconsistent.

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