North Texas Specialty Physicians v. FTC

PRICE-FIXING/FTC

North Texas Specialty Physicians v. FTC, No. 06-60023 (5th Cir. May 14, 2008)

A multi-specialty physician group appealed an order of the Federal Trade Commission which found that certain activities of the group, primarily the use of non-risk, fee-for-service agreements between payors and individual physicians, constituted horizontal price-fixing in violation of the Federal Trade Commission Act. The Fifth Circuit Court of Appeals upheld the FTC’s order.

On appeal, the group argued that it was actually a single entity, that its actions were not the actions of individual physicians, and that it had a right to refuse to deal with payors without violating the antitrust laws. The U.S. Court of Appeals, Fifth Circuit rejected that argument. The court noted that antitrust liability does not depend upon a particular business structure in finding that a group’s status as a "memberless" nonprofit organization did not foreclose a finding of concerted action by the physicians. The court rejected the group’s argument that the FTC should have applied a full-blown rule of reason analysis to its practices, finding the FTC was justified in applying an "inherently suspect" analysis, which is similar to an abbreviated rule of reason analysis. The court also noted that the group failed to establish that one of its primary justifications for the contracts, namely the quality of the professional service that its members provide, had been enhanced by the price restraints.