Anti-Trust & The Internet- An Interview With US Dept. Of Justice Lawyer, Joseph Miller
by Dr. John Riolo
Joseph Miller is the Assistant Chief of the Litigation I section of the Antitrust Division, US Department of Justice, where he oversees civil investigations in a wide range of industries, including insurance, health care, and consumer products. Prior to joining the Justice Department, Mr. Miller practiced antitrust law at Collier, Shannon, Rill & Scott, and as a staff attorney with the Federal Trade Commission. Mr. Miller received his B.A. from Emory University in 1986 and his J.D. from George Mason University School of Law in 1991.
Disclaimers:
Whenever attorneys from the Department of Justice agree to interviews or speaking engagements, the following disclaimer is required. The views expressed here in this interview are his own and not necessarily the views of the Anti-trust Division or the Department of Justice.Mr. Miller is interviewed by Dr. John Riolo, "The Insider."
Riolo: Welcome Mr. Miller! As the main or keynote speaker, if you will, in our series on Anti-trust and the Internet, perhaps it might be best if I summarize some of the points from our previous guests and you can comment or we can take it from there. See http://www.youradvocateonline.com/anti_trust_intro.html
Most professionals and experts in this area have mentioned that anti-trust behavior is very serious business that can result in civil and or criminal liability. It is costly at best. It involves basically two things: 1) price fixing or getting together with one or more nonaffiliated members of the same or similar profession and talk about fees with the intent or implication that fees would be kept artificially high. And, 2) activities that would be considered boycotts again by non affiliated providers where XYZ managed care company lowered their rates and providers got together to agree not to sign or to dis-enroll from their managed care company. Anything you wish to add to that?
Miller: Price fixing and boycotts are both examples of agreements in restraint of trade. You used the term nonaffiliated which is an interesting and correct way to capture the concept. So any time someone who is not part of an integrated practice group agrees with another provider, or if one integrated practice group agrees with a separate group, and the agreement affects competition it has the potential to be illegal. The two most common ways to break the law are price fixing and collective agreements not to deal, sometimes called boycotts.
Riolo: This series is looking this type of potential anti-trust activity that mostly takes place on the internet. So when we talk about non affiliated providers we mean providers who are not part of the same practice or business entity. If these individuals should join Internet discussion groups or listservs they are not nonaffiliated in terms of our discussion. Would that be an example of what we are talking about?
Miller: Right.
Riolo: That notwithstanding, it is not too difficult to find nonaffiliated mental health professionals doing just that on the Internet. They are comparing fees with each other and calling for boycotts of managed care companies. The problem, according to Bryant Welch, See http://www.youradvocateonline.com/welch_highlights.html one of our other guests in this series, is that the reaction many therapists have to managed care seems to be part of the difficulty. Our anger and frustration may be understandable. To us it seems like it is the managed care companies that are fixing prices. We cannot understand why we are forbidden and they seem to do so all the time. Can you comment on that frustration that many of us feel?
Miller: Sure. The frustration you describe is common, and not limited to mental health professionals. Providers often complain to us that the managed care plans are lowering reimbursement rates and generally taking money out of their pockets, and that the providers should therefore aggregate some market power and do it back to the managed care plans, or something along those lines.
That is a dangerous line of reasoning. Aggregating market power through an agreement with a competitor (without offsetting efficiencies) is likely to be illegal, and it is not a defense to say that the victim has some pre-existing market power, so its only fair. Managed care companies tend to be larger in terms of revenues and resources than the provider groups that make up their networks, and I think the size disparity influences the perception of fairness.
Keep in mind that having or possessing market power is not illegal, but rather the way you obtain or maintain the market power can get you into trouble. If you obtain market power through internal growth or efficiency, exercising the market power is generally OK under the law, but if you obtain market power through an agreement with a competitor you are probably in trouble. So, the same boycott-type conduct undertaken by a managed care organization would also be illegal if one MCO agreed with another non-affiliated MCO to lower reimbursement rates or boycott a provider group, the same rules would apply.
Let me also point out that we recently sued United Health when they tried to purchase Pacific Care. The suit was settled at the same time it was filed, but one of the counts was that the merger would give them Monoposony power. We alleged that the transaction would give United the power to lower physician reimbursement in a couple of geographies. So it not permissible for managed care companies to do obtain market power through agreement any more than it is for providers. In other words, the element of unfairness that you and your colleagues perceive is not 100% accurate. In that sense the rules apply equally to everyone.
Riolo: OK, I did not know that. I had been under the impression that the insurance industry and Baseball enjoyed exemptions for most of the managed care legislation.
Miller: Insurance companies do have limited immunity for some things that are the business of insurance. Its a complicated piece of law under the McCarran Ferguson Act, and a little beyond the scope of the discussion today.
Riolo: Now the other issue is that despite all of this and what the experts say, many of my colleagues consider these (antitrust provisions) to be minor violations if at all. I know colleagues who have said that this is like a traffic violation. Others have said that the chances of you (The Justice Department ) going after a bunch of insignificant social workers or other mental health providers are negligible. So they say, why are you being such an alarmist, John?
Miller: Thats simply factually incorrect. We only know the numbers that come to our attention. We dont know those numbers compared to the universe (of all possible violations), but we do get complaints from managed care companies and others. There are lots of people with motivation to complain about such things.
The amount of commerce involved is a factor in deciding how much of scarce federal resources are to be used for such investigations, but The Federal Trade Commission does a lot of this, mostly concerning physicians. We (at DOJ) do it too. Therefore it is a real mistake to think that one can fly under the radar. The FTC has about 25 orders against physician groups doing this kind of thing. That is they are not affiliated or part of the same economic unit but dealing with managed care companies.
Riolo: What is the distinction between when the Department of Justice gets involved vs. the Federal Trade Commission? What are the differences?
Miller: The Department of Justice (DOJ) and the Federal Trade Commission (FTC) share responsibility of enforcement of the civil antitrust laws. The Justice Department has exclusive responsibility for criminal enforcement. If its a civil violation either the FTC or the DOJ may investigate and if warranted, challenge the conduct or transaction. Generally, the agency with greater expertise in a product or geographic area will investigate the potential violation. For instance, The FTC has an order against social workers dating back to the early 90s so that expertise would influence which agency investigated a potential violation.
Riolo: I have a very vague recollection of that.
I want to clarify the Per Se vs. Rule of Reason concepts. According to Robert Goff, one of our panelists, the Per Se violations are actions that would lead to a reduction in marketplace competition. There does not need to be an agreement to dis-enroll, just an action/effort to obtain collective action leading to a dis-enrollment. There need not be a proof of harm to be a violation, the act itself is the violation, even if unsuccessful.
Miller: Thats basically correct. A per se violation means that the agreement itself is the illegal act, and is reserved for practices that are so plainly anticompetitive that a full market inquiry would not be helpful to evaluate its effect on competition. A rule of reason violation requires proof that the agreement had a detrimental effect on competition.
Riolo: Now this has come up in relation to internet listservs. Basically among the rationales I have heard in defense such discussions is that we are not often successful even if we called for a boycott. It has been said to get a bunch of mental health practitioners to agree on anything is like herding cats. However even if the action is not successful it could still be a problem. Is that right?
Miller: Well there are some important and subtle legal distinctions that I want to walk you through so that we are all talking about the same thing, starting with the difference between a Per Se violation and a Rule of Reason violation. Per Se is from the Latin which means in and of itself. The agreement is the illegal act. The general rule is the Rule of Reason which means you have to weigh the pro competitive benefits with the anti-competitive risks and see if on balance the consumers will be better off.
The Per Se is a carve out of the Rule of Reason which says that some things are so pernicious and so clearly anti-competitive that you dont have to go through a full market analysis to say that they are bad. The Per Se violation means the agreement of itself is the illegal act, you dont have to go beyond that or prove that it led to these bad results or effects. So it correct in that sense. But it is not correct to say that an attempted agreement is per say illegal. You still need an agreement to violate the law.
Under the law its fairly easy to reach an agreement. Its not what you might think of as a written contract. It is simply meeting of the minds as perceived by a fact finder for that individual trial. So you dont need somebody saying Lets do this and someone else saying I agree to that. It can be more subtle and it possibly could be inferred from actions.
Riolo: So if somebody said I think we should all leave XYZ MCO and someone else said, Right on, would that be close?
Miller: That would be up to a judge or jury, whomever was charged with fact finding in the proceeding. But, yes, this is the type of communication that could constitute an agreement, or constitute the initial steps in reaching one. Keep in mind, as well, that what starts in an internet chat room might continue in other venues. So, this type of exchange, if that is all that occurred, might not be a problem. The reason practitioners should be very careful about this type of public invitation to boycott, is that it could lead to more deliberate and potentially unlawful actions.
Riolo: However here is the interesting thing that comes up. The reality is whenever a managed care company lowers their rates; any number of us may independently choose to drop out.
Miller: Independent action is generally legal in that situation.
Riolo: How would one connect that to a particular collective action or do you have to?
Miller: Just to be clear, we would have to first make a decision to open an investigation, which generally requires at least some evidence of collective action. So if we are assuming an open investigation, we would collect evidence on whether the actions were undertaken collectively. We have authority to get all their documents related to the potential violation, such as e-mails and meeting notes. We would also take their depositions. If you find that they dropped this plan at the same time and did it as individual actions not in agreement with anybody else that doesnt violate the law. But it doesnt mean that it wont get investigated.
Riolo: And since the issues I am talking about involve the internet I would imagine that one of the easiest things any investigator, be it at the DOJ or FTC, would do is to subpoena the emails or posts. I mean if there is a smoking gun it doesnt go away. Its on servers all over the place.
Miller: Thats right.
Riolo: In terms of complaints, who can file a complaint?
Miller: You mean in court or to come talk to us?
Riolo: Lets say come talk to you.
Miller: Anybody.
Riolo: Anybody. So it doesnt have to be an injured party. It could be just about anyone.
Miller: Just about anybody.
Riolo: I read about the concept of treble damages. First how do you access damages?
Miller: Well at the DOJ we usually ask for injunctive relief, i.e. a court order to stop the behavior. Its private plaintiffs who have standing to sue for damages. The antitrust laws automatically provide for triple damages for a winning plaintiff.
Riolo: So a complaint is not necessarily going to get damages. Right?
Miller: If the government is the plaintiff we generally sue to have the practice stopped. In rare circumstances we or the FTC might ask for disgorgement, which is an equitable remedy to ensure that a wrongdoer does not get to keep his ill-gotten gains, but the general practice is to obtain an order to stop the conduct. However if the government wins an injunction in court after a trial, the victims of the conspiracy might sue for damages. That is the common practice in criminal cases.
Riolo: Now this is actually most recent. On one of these listservs shortly after there was a call for boycotts of a particular MCO one of the list owners stated that she was interested in doing a survey. She asked all the list members to send her in emails their fees for a given procedure code i.e. individual psychotherapy or a CPT code 90806. Now magazines like Psychotherapy Finances conduct such surveys regularly. However if members on a listserv through the list owner collect information on fees and post that information later to the same list members is that a potential problem?
Miller: It can be. Its in a gray area. We (DOJ) and the Federal Trade Commission put out guidelines about fee surveys. There are ways to do it that make it unlikely that it would get prosecuted. Let me give you two ends of the spectrum. If you did it privately in a room with your closest competitors that would look a lot like something that would facilitate price fixing. Thats one end of the spectrum. On the other hand if did it with historical information or historical prices and are at least 3 months old which is want the guidelines suggest and it is collected from enough people so that you cant identify any individual competitor, it is much less likely to be construed as facilitating price fixing.
You can look at the FTCs or the DOJ website for the 1996 Health Care policy statements. Statement 6 of those Guidelines lay out some safe harbors for fee surveys. See http://www.ftc.gov/reports/hlth3s.htm
Riolo: As we conclude is there anything l left out that you would like to add.
Miller: You mentioned something before that I would like to go back to i.e. that providers in general are unhappy with the treatment they are getting with managed care they feel its unfair that these big organizations are depressing their fees from what it used to be. That is a really understandable reaction. But where you have to be careful is to think that justifies illegal activity on the part of the provider. Its not only metal health professionals; it physicians. Its any body they contract with. Its a very typical reaction but the answer is not to get together and refuse to deal with managed care companies who may want to lower your rates.
Riolo: In talking to many colleagues and describe the general principle of anti-trust, they would say we understand that. But in relation to their own behavior they dont see the connection. Some of us seem to have a victim mentality. We feel we have been hurt by managed care and therefore justify a whole bunch of behaviors that, to be blunt, in our right mind we would never do.
Miller: It is also common with health care providers who are providing a valuable service to society to feel that these laws that apply to business might not apply to them. Anti trust is for steel companies, banks. Im doing something good. Im healing people they might say. So what does this have to do with me? Thats a pretty dangerous thought. The anti-trust laws apply to health care professionals even though the services they provide are valuable.
Riolo: Any last remarks?
Miller: I would like your readers to understand that its in their interest to avoid a government investigation, even one where we decline to bring a lawsuit. Investigations require the production of a lot of records, all of which need to be reviewed by counsel, and tend to be very expensive and time consuming. Moreover, you dont know if all your conduct is completely clean even if you think it is. This is a fairly technical area of law and its just the thing that you dont want to happen if you dont need it to happen. So you should really comport yourself in a way that is not going to draw scrutiny.
Riolo: Well this is where I think we need to end. I want to thank you again. I think you have helped all of us better understand these complicated and important issues.
Frankly, If some of my colleagues read this conversation I think it will help them rethink some of their positions regarding calling for boycotts and improve their understanding of anti-trust. Second, it will help consumers. Sadly too many consumers are being used as pawns and bargaining chips between providers and managed care in their business disputes and they dont know it happening and its not fair to them. That is what needs to change.
Miller: The other thing Ill mention is that several of us in the Antitrust Division do go out to groups and trade associations to give talks on these issues to educate. The conversation we are having today is one we do like to point out is that has been part of compliance officers of health care facilities trade groups etc.
Thank you Mr. Miller for a most informative exchange.
To file a complaint with the Department of justice:
E-mail antitrust.complaints@usdoj.gov
Mail :Citizen Complaint Center
Antitrust Division
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http://www.usdoj.gov/atr/contact/newcase.htm#filehttp://www.usdoj.gov/atr/contact/newcase.htm#fileMonoposony is a market situation where a seller can only sell to one buyer.