Public Health Law Map - Beta 5 - Medical and Public Health Law Site

funds, and less recourse for a physician caught in a conflict. A physician dealing with
one of these funds, or any other insurer that may be captive of an adverse party,
should hire his or her own counsel to monitor the defense attorney’s work.
4. Antitrust Issues in Managed Care
MCO costs for physician services decrease as MCOs gain market power; that is, as
the MCOs attain economies of scale. Once MCOs become established in a market,
they become an almost irresistible force. In most markets, patient lives are divided
between several managed care organizations. However, MCOs seldom compete in
terms of the contracts they offer physicians. They may compete on the price they will
pay for buying practices, but they hold the line on the contractual rights of the
physicians delivering medical care services.
The cost of a practice is a one-time expenditure, but the costs and terms of physician
contracts are long-term expenses that are key to the survival of MCOs. In many
communities, physician contracts used by competing MCOs have identical terms.
Although this might be parallel action based on similar needs, there also may be
substantial collusion to ensure that no plan undermines the others by granting
physicians substantially greater rights. In other businesses this would be an antitrust
violation. MCOs are legally considered insurance companies, however, and they
have McCarron-Ferguson immunity from federal antitrust laws. [15 U.S.C. § 1011
(1996).] They cannot be sued for most antitrust activities.
Unfortunately, physicians do not have the same immunity. Independent physician
groups and local medical societies must be alert to potential antitrust violations.
Independent contractor physicians who band together to resist cram- down contracts
from MCOs can be held to have engaged in a group boycott or other violations of the
Sherman Antitrust Act. Such groups have been prosecuted by the FTC. This limits
collective action by physicians to those that are employees of an MCO. Physicians
who are MCO employees can unionize by following National Labor Relations Board
(NLRB) standards. Once in an NLRB- certified union, they can strike or take other
actions. Independent contractor physicians cannot unionize to gain the protection of
the NLRB. For independent contractor physicians, the only avenue for collective
action is to petition their state legislatures and Congress for statutory protections.
Such collective action to petition the government for redress is protected under the
Noerr- Pennington doctrine as a form of political speech. [Eastern R.R. Presidents
Conf. v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961); United Mine Workers v.
Pennington, 381 U.S. 657 (1965).]
A major problem for physicians who are trying to band together to bargain more
effectively with MCOs has been the lack of both common law and regulatory
guidance. In 1996, the Department of Justice and the Federal Trade Commission
issued guidelines on medical care mergers and joint operating agreements. [United
States Department of Justice & Federal Trade Commission, Statements of Antitrust
Enforcement Policy in Health Care sec. B1, Statement 8 (August 1996).] Although
some commentators have seen these as greatly expanding physician’s right to take
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