• Physicians Should Beware Illegal Conspiracies when Dealing with Hospitals
  • January 16, 2015
  • Law Firm: Holland Hart LLP - Denver Office
  • Physicians and other providers must beware illegal conspiracies when taking coordinated action to obtain payment from hospitals. On December 1, 2014, the State of Idaho Office of the Attorney General reached settlements with four physicians who were investigated for their actions during on-call pay negotiations with Madison Memorial Hospital in Rexburg, Idaho.

    According to the Attorney General’s press release, the hospital’s on-call policy required physicians to provide unpaid on-call coverage for the emergency department as a condition of receiving privileges. Several doctors jointly sought to negotiate changes to the policy and notified hospital administrators that they would no longer provide on-call coverage until the hospital agreed to pay them. The Attorney General asserted that the physicians’ coordinated response violated the Idaho Competition Act.

    Both federal and state laws prohibit agreements between competitors that restrain trade. At issue in Rexburg was the Idaho Competition Act which prohibits conspiracies “between two or more persons in unreasonable restraint of Idaho commerce.” See Idaho Code § 48-104. Examples of unreasonable restraint include price fixing, allocating or dividing markets, and boycotting or refusing to deal. Attorney General Lawrence Wasden said, “[a]t issue for my office in this investigation is using anticompetitive tactics to bring about change in the marketplace.” The investigation did not consider the merits of paying physicians for on-call services. According to the Attorney General’s press release, the investigation into the matter is ongoing.

    In 2010, the Department of Justice (“DOJ”) and Idaho Attorney General filed a civil antitrust lawsuit against the Idaho Orthopaedic Society alleging two antitrust conspiracies. In the first alleged conspiracy, orthopedists purportedly agreed to collectively boycott treating patients covered by workers’ compensation insurance in order to increase the rates. In the second alleged conspiracy, orthopedists purportedly agreed to threaten their contracts with Blue Cross of Idaho in order to obtain better contract terms. A settlement was reached among the parties.

    Physicians should keep antitrust rules in mind when collaborating with other physicians over items such as price or contracts. While there are certainly benefits of collaboration, actions such as banding together to fix prices, collectively boycotting payors or contracting parties, or refusing as a group to deal with certain payers or vendors are generally considered per se illegal unless the providers can demonstrate sufficient financial or clinical integration so as to benefit the marketplace. The DOJ/FTC have issued Antitrust Guidelines establishing certain “safety zones” for coordinated activity; outside of those zones, however, coordinated activity among competitors may draw antitrust scrutiny as the Idaho physicians learned.