In Re Michigan State Medical Society

101 F.T.C. 191 (1983)

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Nature of the Case

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Facts

D is a corporation formed pursuant to the laws of the State of Michigan. D is a professional association for Michigan physicians. Over 80 percent of medical doctors practicing in Michigan are members of D. D is organized for the purposes of guarding and fostering its members' material interests and insuring that its members receive fair remuneration for services rendered. D engages in activities that further its members' pecuniary interests. D furthers its members' pecuniary interests by engaging in lobbying and legislative activity. D actively and intensively lobbied for proposed legislation that increased Medicaid payments to physicians; which lowered the cost of professional liability insurance; which prevented chiropractors from obtaining state licensure status and which reduced physicians' state income tax liability. D lobbied energetically in 1975 and later to obtain higher reimbursement for physicians' services under the Medicaid program. D also furthers its members' pecuniary interests by pursuing its legislative objectives through the Michigan Doctors Political Action Committee (MDPAC). Organized by D, and still closely affiliated with it, MDPAC complements D's legislative efforts by contributing money to political campaigns in order to elect 'friendly legislators.' D cannot contribute money to support political candidates but MDPAC can and does contribute to political campaigns. Blue Cross and Blue Shield of Michigan (BCBSM) is a third-party payer for health care services. Drs. were not satisfied with BCBSM's financial reimbursement policies and practices. By statute, BCBSM is required to have a majority of Michigan physicians enrolled as participating physicians in order to offer service benefits to subscribers. BCBSM seeks to encourage as many physicians as possible to formally participate. D and BCBSM were at serious odds on a number of issues. D came to the realization that BCBSM was not interested in negotiating or compromising with D. D’s members were urged to join in a concerted campaign against BCBSM to compel BCBSM to modify its position. Members were asked to draft a nonparticipation notice to BCBSM and to send it to D so D could use them in negotiations. The letters and powers of attorney gave D the right to departicipate Michigan physicians from BCBSM and Medicaid if an impasse was reached in negotiations, and the Division of Negotiations and the MSMS Council determined that departicipation was warranted. A majority of Michigan physicians executed proxies and submitted them to D. D informed BCBSM of its new power and mobilized it against BCBSM. The Michigan Attorney General's response to D’s threat to exercise Medicaid nonparticipation proxies in 1976 was to declare that it was going to initiate an antitrust action against D. D refused to back down from its previous position. If the lawsuit had been pursued, the Attorney General would have orchestrated the demise of the entire Michigan Medicaid program as the majority of Michigan physicians would have withdrawn from the program individually. P charged D with engaging in unfair methods of competition and unfair acts and practices in violation of Section 5 of the Federal Trade Commission Act, 15 U.S.C. §45. The ALJ held that D’s activities were an unlawful restraint of trade in violation of §1 of the Sherman Act. D appealed to the Federal Trade Commission.