UNITED STATES OF AMERICA

BEFORE FEDERAL TRADE COMMISSION

IN THE MATTER OF THE MAINE HEALTH ALLIANCE, A CORPORATION AND WILLIAM R. DIGGINS, INDIVIDUALLY

FTC File No. 021-0017

COMMENTS OF CITIZENS FOR VOLUNTARY TRADE
Proposed Consent Agreement Announced July 19, 2003 Comments Filed August 18, 2003

Pursuant to the Federal Trade Commission’s publication of a proposed consent agreement in the above-captioned matter1, Citizens for Voluntary Trade, a Virginia nonprofit corporation, files the following comments. I The Maine Health Alliance (MHA) is a nonprofit corporation composed of approximately 325 physicians and eleven hospitals doing business in northeastern Maine. William R. Diggins is MHA’s executive director and, according to the FTC, served as the Alliance’s principal negotiator with third-party payors in the healthcare market. The FTC’s complaint details MHA’s efforts to collectively negotiate on behalf of its physician and hospital members with third-party payors during a period extending from about 1996 to 2002. The complaint alleges numerous contracts negotiated between MHA and payors violated section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45, because MHA’s actions coerced the payors into paying Alliance members higher fees than other physicians and hospitals in Maine. The complaint also alleges MHA’s members failed to “engage in any significant form of financial risk sharing or clinical integration,” that would justify collective negotiating activities. Consequently, the proposed
1

68 Fed. Reg. 43,515-43,517 (July 23, 2003).

IN THE MATTER OF MAINE HEALTH ALLIANCE AND WILLIAM R. DIGGINS Comments of Citizens for Voluntary Trade

consent order forbids MHA from collectively negotiating in the future absent FTC-approved “risk sharing,” and permits payors to terminate existing contracts with MHA. The proposed order extends these prohibitions to William Diggins individually, and the order itself will continue in force for twenty years, until approximately August 2023. II A The FTC’s legal argument for seeking relief in this case turns on the definition of “coercion”. The Commission defines coercion here to prohibit the voluntary association of MHA members for their mutual benefit when such association affects the economic interests of “consumers,” here meaning third-party payors who administer Health Maintenance Organizations (HMOs) in the State of Maine. Because HMOs were not guaranteed certain price levels for physician services, the FTC infers illegal conduct by the physicians under 15 U.S.C. § 45, which broadly prohibits “unfair” methods of competition. The FTC considers physician collective negotiating coercive, thus “unfair” and illegal. This definition, however, ignores the plain meaning of coercion for the sake of improperly expanding the Commission’s ability to regulate the healthcare market, both in Maine and throughout the nation. In paragraph 38 of the complaint, the FTC expressly defines its application of coercion to this case:
To exert pressure on and coerce these payors to agree to the Alliance terms, Alliance physician and hospital members informed such payors that they would not negotiate individually, and told the payors to contract for the Alliance members’ services only through the Alliance. As a result of the collective conduct, the Alliance has successfully obtained contracts on behalf of its physicians and hospitals with these payors on terms demanded by the Alliance.

By this reasoning, the FTC considers it coercive for individuals to exercise their economic rights through a voluntary cooperative agreement. This implies individual rightsûsuch as the right to contractûare lost under the antitrust laws when individuals seek to exercise their rights jointly. This implication is borne out in the complaint, which clearly states doctors and hospitals may individually contract with HMOs without legal penalty.

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The FTC’s theory is that individuals must lose their rights when they band together to increase their economic power, because such economic power is inherently and inevitably coercive. An HMO, in the FTC’s view, lacks the necessary economic power to countermand the economic power of MHA. Thus, to preserve market “competition”, it is necessary to curtail MHA’s economic power through force, in this case the FTC’s proposed order. By taking this action, the FTC claims it has removed a coercive element from the marketplace, allowing for greater competition. The FTC clearly does not make the proper distinction between economic and political power, and by extension the proper definition of coercion. Indeed, as we understand it, coercion defines the difference between economic and political power, as writer-philosopher Ayn Rand explained in the early 1960s:
[E]conomic power is exercised by means of a positive, by offering men a reward , an incentive, a payment, a value; political power is exercised by means of a negative, by the threat of punishment, injury, imprisonment, destruction.2 (Emphasis in original)

Political power, as defined above, is thus coercive. More importantly, only political power is coercive; those possessing only economic power cannot, by definition, coerce others. Consider the nature of MHA’s relationship to the HMOs it allegedly coerced. MHA possessed something of valueûphysician and hospital servicesûthat the HMOs sought for their use. The HMOs presented an offer to MHA’s members, who in turn collectively presented a counter-offer. The resulting negotiations represented the efforts of both parties to influence the other into accepting certain terms of providing medical services for a fee. This entire process was a purely intellectual exercise. By the FTC’s own admission, MHA used purely non-forceful means to advance its arguments. The complaint describes MHA’s supposedly illegal activities with such verbs as “urging”, “facilitating”, “discouraging”, and “warning”.3 What the complaint does not describe, however, is any instance of MHA threatening or using physical force against any HMO. The

2

Ayn Rand, “America’s Persecuted Minority: Big Business”, in Capitalism: The Unknown Ideal at 46 (Sugnet, 1967). 3 Complaint at para. 29.

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absence of such force, actual or implied, means MHA’s actions were not coercive, and thus not illegal. The only coercive party to MHA’s dealings with HMOs is the FTC. Through the proposed order, the Commission seeks to coerce MHA’s members into renouncing their right to collectively negotiate with HMOs and other payors. In doing so, the FTC uses its political power to benefit HMOs and payors at the expense of physicians. That the FTC twists this reality by labeling MHA’s actions coercive only adds insult to injury. B Further undermining the FTC’s coercion argument is the behavior of the “victimized” HMOs and payors. Given the years of abuse suffered by the HMOs, one would expect to find some evidence of legal action prior to the FTC’s involvement. But the record contains no such evidence. Instead, the FTC’s complaint and other filings indicate the HMOs signed, executed, and in some cases renewed contracts now ruled invalid as a matter of antitrust policy by the FTC. This begs the question: Did the HMOs know they were victims of illegal activity, and if so, when did they know it? Take the 1996 contract between MHA and NYLCare Health Plans of Maine. The FTC claims this contract was the product of illegal coercion because MHA negotiated compensation levels that were “substantially higher” than what the Commission claims is the appropriate market rate. The FTC presents no evidence of NYLCare taking legal action to protect itself from MHA’s coercion at the time the contract was signed. In fact, NYLCare not only completed its duties under the contract, but when NYLCare was acquired by Aetna in 1998, the contract continued in force, and it remains in effect to this day while Aetna and MHA negotiate a new arrangement. At no point, as far as we can tell, has Aetna taken private action to void its MHA contract on the grounds of coercion. If the FTC’s reading of the law is correct, there should be no question the 1996 contract is void as a matter of common law, since a coerced party cannot give voluntary consent to enter into a contract. Thus, the FTC believes NYLCare, and its successor Aetna, were under coercion for nearly seven years until the Commission came along and put a stop to MHA’s illegal negotiating activities. The implication is that Aetna was

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powerless to stop MHA’s reign of terror, and that no remedy short of FTC prosecution could vindicate the HMO’s rights. This theory of ongoing coercion holds water only if the FTC can demonstrate Aetna was in fact powerless against MHA. By this, we mean that MHA had to have acted in such a manner as to completely negate Aetna’s ability to act on its own volitional judgment with respect to the contract negotiations. For example, if MHA threatened to employ physical force against Aetna if they failed to sign a new contract, that would constitute coercion. The record, however, contains no evidence of such threats of force, and no evidence that Aetna was not capable of thinking for itself and acting upon their own judgments at any time during the period they were under contract with MHA. Quite the contrary, all evidence suggests Aetna and MHA engaged in vigorous negotiations that, by the FTC’s account, led to a “stalemate” in 1999 that remains unresolved. The very fact Aetna has reached an impasse with MHA suggests the Alliance does not enjoy any coercive power in this relationship. As further proof of MHA’s power, or lack thereof, the FTC provides the example of Harvard Pilgrim Health Care. In 1999, as part of Harvard Pilgrim’s attempt to establish an HMO product in Maine, the company entered negotiations with MHA to purchase physician and hospital services. When the negotiations reached an impasse over compensation terms, the FTC states, Harvard Pilgrim ended negotiations and abandoned their effort to enter the market. This is hardly the act of a coerced party. If MHA maintained coercive power, it could have simply forced Harvard Pilgrim to sign a contract on the physicians’ and hospitals’ terms. That Harvard Pilgrim was able to act on its own judgmentûnamely that MHA wasn’t worth the price they soughtûclearly demonstrates that the free market worked in this situation, as coercion, or physical force, did not enter into the equation. None of this suggests HMOs are happy that they have to deal with MHA. HMOs would prefer to deal with physicians and hospitals individually, since such circumstances give the HMOs greater economic power to affect market outcomes. But the inability of the HMOs to convince MHA to accept lower compensation does not, by any objective standard, constitute coercion or illegal action on the part of the Alliance. As Objectivist philosopher Leonard Peikoff explains, one party’s

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regret in entering a contract does not retroactively render the other party a coercer:
[A] man may be disappointed by others. Rightly or wrongly, he may be unable to persuade them to agree with his ideas or to satisfy his desires. But disappointment does not attack his body or negate his mind; it is not an indication that he has been coerced. A man cannot properly say: “Since no one will pay me a larger salary, my boss forces me to take this job at five thousand dollars per year.” No employer is obliged to confer wealth or jobs on this individual; no one owes him a living. Nor, in a free society, can anyone stop him from looking further, from improving his skills, or from working to start his own enterprise. If an employer who offers a certain salary tells him to take it or leave it, for whatever reason (including desperate poverty), that is the opposite of force. It is an instance of a voluntary relationship between the men, an instance of trade.4

Aetna and Harvard Pilgrim were understandably disappointed by their respective efforts to deal with MHA’s members both collectively and individually. But in the end, neither HMO was entitled to obtain MHA’s services on anything but mutually agreeable terms. The fact that MHA’s members chose to act collectively does not, in any way, alter the voluntary nature of the relationship with the HMOs.5 Trade is trade, regardless of the composition of the particular parties. Contracts are not invalid merely because a party a group rather than a lone individual. III A The FTC places great emphasisûindeed the weight of its entire caseûon the fact MHA’s members obtained higher compensation through collective negotiation than other Maine healthcare providers did negotiating individually. In the FTC’s mind, MHA harmed competition simply by acting to raise price levels. For example, the FTC alleges Aetna paid MHA physicians 10%-20% more for HMO subscribers than to non-Alliance
4 5

Leonard Peikoff, Objectivism: The Philosophy of Ayn Rand at 319 (Meridian, 1993). According to the FTC, the Maine Bureau of Insurance requires any HMO operating in the state to include enough physicians and hospitals to provide patients with timely access from their residences. See Complaint at para. 18. While this requirement undoubtedly contributed to the frustration of HMOs in dealing with MHA, the Alliance cannot, as a matter of law and common sense, be held responsible for a “restraint of trade” imposed by the state.

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physicians in northeastern Maine. The FTC claims it is illegal for MHA to obtain higher prices than other physicians, but the Commission never defines any precise boundaries of conduct. For instance, the FTC never establishes the “competitive” price level for physicians, although the complaint suggests the Commission expects all physicians and hospitals in a given market to adhere to the average compensation level of all providersûin other words, the lowest possible compensation level acceptable to payors. This viewpoint of “price competition” is hardly consistent with free market principles, and it reflects a misunderstanding, perhaps deliberate, by the FTC as to the nature of prices. The law of supply and demand is familiar to even a layperson with little economic training. A market price is determined by the mutual agreement of a buyer and seller, each acting according to their own judgments as to the value of a good or service. From a moral standpoint, supply and demand restates a key principle of individual rights: no man can demand that which he cannot trade for using his own supply. Or, as Leonard Peikoff once stated, “a man’s supply is his demand”. In this case, the FTC assigns itself the power to overrule market forces, notably the supply-and-demand principle, because the Commission disagrees with the market’s judgment. The FTC believes the HMOs are entitled to a lower price than that which they agreed to with MHA. This belief does not derive from a superior understanding of the market, or indeed any knowledge of the economic structure of northeastern Maine’s healthcare industry, but rather from the FTC’s static view of how markets should operate. Here, the Commission’s view is that physicians and hospitals should operate at or near a financial loss, while HMOs and third-party payors should enjoy whatever profits they wish. To that end, the FTC dictates that price levels for physician services must fall upon the demand of payors, and that any act by service providers to raise (or even maintain) existing price levels should be condemned as per se illegal. Consider the choices afforded MHA’s members by the FTC. The Commission says physicians have two options under the antitrust laws: negotiate individually with payors or enter a “risk sharing” arrangement amenable to FTC standards. The illusion is that the FTC is acting reasonably by affording providers a choice. In reality, neither option is rational, for both place coercive burdens on physicians that are irrational.

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IN THE MATTER OF MAINE HEALTH ALLIANCE AND WILLIAM R. DIGGINS Comments of Citizens for Voluntary Trade

In the case of individual negotiations, the FTC conveniently ignores the fact that HMOs are afforded special legal privileges and benefits that physicians and hospitals do not enjoy. Indeed, HMOs themselves are government creations, a product of congressional policies that subsidize the HMO industry and give strong incentives to consumers, through their employers, to enroll in these managed care programs. The result is a consumer collective that possesses substantial power, not because of economic influence, but political influence. Against this power, individual physicians generally, and correctly, view their own economic power as insignificant, leading them to join HMOs and accept lower compensation than they would be able to obtain in the absence of government sponsorship of HMOs. The FTC, however, deliberately ignores the political sponsorship of HMOs, instead limiting its market analysis to the efforts by physicians to rationally and lawfully increase their economic power to combat the HMOs’ political advantage. As for “risk sharing,” the FTC argues they will accept physician collective negotiating if, and only if, providers engage in “significant” sharing of financial risk or “clinical integration”. There is no legal basis for the FTC to arbitrarily impose such a requirement on healthcare providers. Neither the Constitution nor the antitrust laws condition the exercise of economic rights on a particular level of risk sharing or integration. But even if the FTC had this power, its definition of “risk sharing” here is far too vague to survive constitutional muster. Under existing FTC policy statements (really the opinion of staff attorneys), physicians can share risk through capitation, withholds, or alternatively through the “messenger model”. None of these options are viable, and the FTC is well aware of that fact. Capitation forms the basis of most HMO contracts. Under this system, the payor gives the provider a fixed fee per patient, regardless of the actual cost of services. Thus, the providerûthe physician or hospitalûassumes the risk that the patient will cost more or less than the fixed fee. This also assumes the provider’s overhead and administrative costs will not consume an inordinate amount of the revenues generated. If this system sounds problematic, that’s because it is. Capitation is a leading cause of financial distress among physician groups, as described in this example from Dr. Vern S. Cherewatenko, a former member of Washington State’s largest physician group:

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IN THE MATTER OF MAINE HEALTH ALLIANCE AND WILLIAM R. DIGGINS Comments of Citizens for Voluntary Trade

My charge for a 10-minute patient visit was $79. The insurance companies typically reimbursed $43. Costs of collection were anywhere from $5 to $20 depending on the staff time, billing system, etc. All doctors know they don't get reimbursed the full amount they charge for a visit, but most doctors completely overlook what it costs to collect even the discounted reimbursement. By our calculation, then, I was actually being reimbursed $23 for a $79 office visit charge! Add in the overhead for the exam room (the national average is $30), and we discovered we were losing about $7 on each of the 75,000 patients we were seeing annually! We could not cut our overhead any further--we had been doing that for the past two years (cheaper photocopy paper, lessfancy patient info, fewer nurses, fewer receptionists, no more "pantry stocking," and so on). We were running as lean as we could . . . practically on bare bones. In April 1998, we looked again at the $80,000-a-month loss, concluding we both were destined to be bankrupt in six months. Looking around the country to see if we were alone in our struggle, we were alarmed to find doctors everywhere were beginning to file bankruptcy in increasing numbers.6

The FTC is well aware of the problems of capitation and clinical integration. In two complaints filed during the past year against physician groups in Texas, the FTC conceded that the groups faced bankruptcy under capitation, leading them to switch to a non-integrated model similar to that of MHA. The result of the groups’ decision to protect their economic interests was FTC prosecution for illegal “collective negotiating”. The undisputed fact that the groups could not make financial “risk sharing” work made no difference to the FTC. Nor, it should be noted, has the FTC produced any evidence that “risk sharing” such as capitation ever actually works under practical market conditions.7 The other option given to physician groups, the “messenger model”, also suffers the fatal flaw of being impossible to implement under actual market conditions. The model itself has never been objectively defined by the FTC, which takes a “we
6

Vern S. Cherewatenko, “The SimpleCare Story,” Capitalism Magazine (accessed online at http://capmag.com/article.asp?ID=1509) (March 26, 2002). 7 “Withholds” is the other form of FTC-approved risk sharing. Under this system, the payor withholds a predetermined amount of the provider’s fees unless certain costcontainment objectives are met. Since this produces the same problems as capitation, we need not discuss withholds at great length here, except to note that many state governments have banned the practice, despite the FTC’s endorsement.

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know a messenger model when we see it” approach to deciding ex post facto whether a provider group’s actions fall within the model’s protection. Many of the recent FTC prosecutions, in fact, arose from a difference of opinion over what constituted a proper application of the messenger model. The model itself, to the extent its defined, requires physicians to enter a negotiation with payors completely deaf, dumb, and blind. The “messenger” is a one-way conduit of information from payors to providers, with providers required to remain clueless as to the activities of their colleagues. Such a model is the equivalent of forcing physicians to negotiate individually, which suffers from the problems discussed above. B Physicians and hospitals are not the only parties injured by the FTC’s policies. Customers, the group the FTC claims it protects, are injured just as much, if not more so, by cases like the one against MHA. In this context, we define “customers” not as the third-party payorsûthe only group the FTC is actually protectingûbut the ultimate purchasers of healthcare services, namely the patients. Customers do not benefit from the government’s arbitrary restraint of physician rights, and indeed customers do not benefit from the entire third-party payor system in healthcare. There is no other free market where a third-party assumes the primary responsibility for providing a basic consumer good or service. Unlike insurance, which allows customers to pool risk to protect against an extraordinary event, healthcare is a routine service rationed by a party that is neither the customer nor the producer. Adding to this strange arrangement is the government’s role in supporting the third-party rationer, or payor, through policies designed to discourage traditional market relationships between the customers and producers. In a normal market, the producer earns profits by providing a valuable service at a reasonable price. In contrast, third-party payors in healthcare, especially HMOs, profit by withholding service from consumers while paying providers less than they could earn in a free market. An HMO has a major incentive, backed by government policy, to ration care for individual patients in the name of preserving a minimal level of care for all patients enrolled in the plan. Such policies encourage “lowest

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common denominator” medicine, which result in inferior service at higher prices for customers, precisely the economic outcome the FTC seeks to avoid in attacking providers. Only the providers have no power to improve service or reduce patient costs, because physicians and hospitals lack political power relative to the thirdparty payors. The government facilitates the growth of anti-provider, anticonsumer managed care payors through a combination of taxcode manipulations and direct intervention, as writer Joseph Kellard explains:
Doctors join HMOs because they fear this government-backed system will eliminate their business if they remain in private practice. Patients are encouraged to join HMOs by their employers, who are compelled to offer health insurance, as government allows tax relief for health care coverage only to businesses, not to individuals. Managed care dominates the market and raises premiums considerably for (self-employed) individuals because the market shrinks for them. The tax code and government intervention on behalf of HMOs forces health insurers to treat everyone as a big collective. HMOs are playing a more prominent role in health care primarily because Medicare's bankruptcy is becoming more apparent. Vascular surgeon Dr. David Loiterman told the Chicago Sun Times that "about 65 percent of his practice is with Medicare patients, but they make up only 12 percent of his income". Such decreased payments to doctors who treat Medicare patients are compensated via "cost-shifting" --that is, the extra cost of treating Medicare patients are imposed on younger, privately funded patients.8

“Cost-shifting” is the principal objective of the government’s healthcare policies, and that includes the FTC’s action against MHA. In a normal market, costs are essentially shared by customers and producers, with differences worked out in the process of negotiating prices. In the third-party payor healthcare market, however, the HMOs shift the entire cost burden to physicians. This obviously harms physicians, as discussed above, but it also distorts the customer’s understanding of actual costs. Since a customer is no longer bound to spend only within his meansûhis supply is no longer his demandûhe demands more services than he could in a free market. This increased demand is met by a limited supply of providers, who lack the ability to
8

Joseph Kellard, “Health Care’s Deterioration,” The American Individualist (accessed online at http://theai.net/health.html) (December 21, 1997).

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reduce the excess demand because of the underlying market distortion. Since the third-party payors essentially control the market, the normal supply-and-demand mechanism fails to operate properly, leaving customers and providers at the mercy of health plan bureaucrats. To put this in additional perspective, consider the system that most emulates the third-party payor market: public education. Government schools function as a monopoly payor, one which exercises force directly over customers, rather than indirectly as with managed care. Customers (parents) are forced to pay into the system, via taxes (premiums) set by the payor (school system), while the payor decides the quality and level of service provided. The providers, teachers, are themselves a governmentsponsored monopoly, since they can force the payor to collectively negotiate compensation and other terms. The result, in most cases, is similar to what we see in healthcare: customers pay more, get less, and lack the options to effectively assert their individual economic interests against government-sponsored interests. Now, the one key difference between healthcare and education is that the providers hold differing amounts of political power. Physicians have none, while teachers have, in many cases, largely unrestricted power. Why, then, should the FTC not stand in the way of physician collective negotiating? After all, would it not lead to the same cost-inefficient abuses seen by teacher unions throughout the country? No, because recognizing the right to negotiate and act in one’s interest does not, as discussed above, confer political power; only force can do that. Teacher unions derive their political power from two main sources: mandatory collective bargaining laws, and laws requiring teachers to join and financially support a union despite their personal interests. If a bare majority of teachers choose to form a union, that union becomes the exclusive bargaining agent for all teachers, and no individual teacher can contract outside the collective bargaining agreement or refuse to pay union dues. This regime, unlike voluntary coalitions such as MHA, relies at all times on government coercion via the labor laws. In this case, MHA does not possess the sort of political power enjoyed by teacher unions. MHA cannot compel any payor to negotiate with it and, as Harvard Pilgrim demonstrated, an HMO can simply walk away from the table. Also unlike a teacher union, an individual physician or can break away and negotiate

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individually with any payor. MHA can certainly try to persuade a provider to stay within the fold, but ultimately it cannot force any physician or hospital to accept or reject a payor’s offer. Indeed, even if it were legally possible, most physicians and hospitals would likely reject the forced unionism model employed by government school teachers. For one thing, unions tend to emphasize the same kind of “lowest common denominator” approach to compensation that third-party payors do. Few teacher unions, for example, support paying teachers based on the quality of their work; they insist on distinguishing pay only by length of service. Individual economic self-interest is not important to a union, only the collective interest of the aggregate membership. This is precisely the approach physicians seek to rescue their patients (and themselves) from by jointly negotiation with payors. By replacing coercive economic power with voluntary economic power, the healthcare providers seek to restore the role of rational market forces in determining market outcomes. This approach benefits consumers far more than the FTC’s short-term effort to maintain the coercive power of thirdparty payors. IV Beyond the broader fight over the future of the healthcare market, the FTC’s proposed order in this case suffers a far more ordinary, and sadly commonplace, defect. Section III(B) of the proposed order requires MHA and William Diggins to “cease and desist” from “[e]xchanging or facilitating in any manner the exchange or transfer of information among hospitals concerning any hospital’s willingness to deal with a payor, or the terms or conditions, including price terms, on which the hospital is willing to deal with a payor.” This requirement plainly violates the First Amendment, because the government cannot impose prior restraints on ordinary acts of speech. The FTC may believe it necessary to restrain MHA and Diggins from taking any action that might lead to a recurrence of the allegedly illegal conduct described in the complaint. But the exchange of information, an act of speech, cannot itself be classified the underlying illegal activity. The act of collectively negotiating with HMOs is what the FTC aims to prevent. Merely talking about such actions, however, is protected expression, and the FTC exceeds its constitutional authority in imposing such a

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requirement on MHA and Diggins, even in the context of a consent order. The only function of the restriction on exchanging information, it seems, would be to intimidate individual providers into complying with HMO demands more readily in the future. The FTC concedes that individual physicians and hospitals can accept, reject, or negotiate contracts with payors. If that’s true, then it doesn’t matter whether an individual simply expresses his view on a contract to other colleagues that might be negotiating with the same payor. As discussed above, a right is not lost merely because an individual exercises that right in conjunction with others who enjoy that same right. But by forbidding even professional communication, the FTC clearly intends to increase pressure on MHA’s members to simply accept future HMO offers without considering the merits of such proposals. V While MHA and Diggins conceded the FTC’s jurisdiction in this matter as part of the proposed order, we note our concern over the Commission’s decision to exercise concurrent jurisdiction with the Maine Attorney General. Just weeks before the FTC announced its proposed order in this matter, the Attorney General concluded a nearly identical order under the auspices of Maine law, which closely mirrors the federal antitrust language the FTC relies on.9 Given the Attorney General’s actions, it’s difficult to understand the FTC’s need to impose additional relief under color of federal law. While MHA’s actions may have impacted interstate commerce, the affects of their alleged infractions were felt solely in Maine. The FTC should not, as a simple matter of resource allocation, duplicate state antitrust prosecutions where the local authorities have already accomplished the Commission’s objective. VI Finally, the term of the proposed orderû20 years from the order’s final adoptionûis unreasonable and unnecessary. The FTC cannot predict the state of northeastern Maine’s healthcare market in August 2023. Nor would it be reasonable for the FTC to make static assumptions about the market and how MHA’s
9

http://www.maine.gov/ag/press_release_pop_up.php?press_id=160 (July 3, 2003).

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members interact with it over the next two decades. Continuing the proposed order for 20 years serves only to punish MHA, and does nothing to remedy the allegedly anticompetitive acts of the Alliance and its executive director. At a minimum, the FTC should reduce the term of the order to a period of between five and ten years. VII For the numerous independent grounds stated above, CVT requests the FTC reject entry of the proposed consent order as inconsistent with the public interest. Respectfully Submitted, S.M. OLIVA President CITIZENS FOR VOLUNTARY TRADE P.O. Box 66 Arlington, Virginia 22210 (571) 242-1766 Dated: August 18, 2003

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