PHYSICIAN UNIONS
The antitrust laws have long exempted from scrutiny the collective bargaining activities of employees with employers. This labor exemption from the antitrust laws, however, applies only to employees, not to independent economic actors such as self-employed physicians in independent practice. Recently, an increasing number of physicians have been joining unions and other organizations hoping to increase their bargaining leverage with health plans.
Competitive concern: Unions can provide various useful services that are valuable to their members, and may collectively bargain for employed physicians. However, antitrust issues arise when a union (or any other organization) attempts to negotiate on behalf of otherwise competing, non-employee physicians.
Delaware Case
On August 12, 1998, the Division filed a civil case in U.S. District Court in Wilmington, Delaware against the Federation of Physicians and Dentists, a physician union, for orchestrating a boycott to extract artificially high fees for independent competing orthopedic surgeons in Delaware. The complaint alleges that in 1996 and 1997 nearly all of the orthopedic surgeons in Delaware joined the Federation, and thereafter acted in concert through the Federation to resist the efforts of Blue Cross of Delaware to reduce the fees Blue Cross paid to them. By the end of 1997, nearly all of the members of the Federation rejected a Blue Cross fee proposal and terminated their contracts with Blue Cross.
The Federation purported to be operating as a third-party messenger. If properly implemented, with adequate safeguards against collusion, a third-party messenger system should not lead to a messenger negotiating on behalf of competing independent physicians or enhancing the bargaining leverage of such physicians. When properly implemented, third-party messenger arrangements may facilitate the contracting process, reduce transaction costs, and thus, ultimately benefit consumers.
Here, however, the Federation's messenger system facilitated, rather than safeguarded against, collusion. The Federation encouraged the physicians to refuse to negotiate with Blue Cross except through the Federation, and ultimately nearly all of the physicians terminated their contracts with Blue Cross. U.S. v. Federation of Physicians and Dentists, Inc., 98-475 (D.Del. 8/12/98).