Anti-competitive Behavior of the Wisconsin Chiropractic Association - Essay Example

Anti-competitive Behavior of the Wisconsin Chiropractic Association Since the foundation of the Federal Trade Commission (FTC) in 1914, it has gradually established various policies in ensuring consumer protection. The FTC functions as an agent in advancing consumers’ interests by actively enforcing anti-competition (or anti-trust) federal and state laws, by establishing policy and research tools through workshops and conferences, and by creating “practical and plain-language educational programs for consumers and businesses in a global marketplace with constantly changing technologies” (Federal Trade Commission, 2008). The FTC functions as an equalizer between the vulnerable consumers and the wealthy and powerful businessmen and corporations. It serves as a monitoring agency in the regulation of commodity prices. It also serves to protect businesses from each other by giving all of them fair and equal opportunities to trade their wares in the consumer market. Public policy considerations against anti-competitive behavior revolve around keeping the prices of commodities and services affordable to the public while still achieving a high level of quality in goods and services. The FTC monitors the consumer market for possible violations in anti-competition and anti-trust policies. This monitoring is done with the help of the consumers. Consumers are encouraged to report unfair competition practices of businesses and industries. Through the FTC, many industries are encouraged and motivated to produce high-end goods and services while still making them available to the consumer at affordable prices. The public has the right to expect an assortment of choices in their goods and services. It also has the right to be protected against businessmen and corporations who may take it upon themselves to agree about prices in order to manipulate the market. The public has the right to be protected against monopolies. Monopolies restrict the public’s right to avail of similar products traded by other companies. This practice restricts the participation of industries in similar trading lines controlled by more dominant corporations. The FTC helps guard against this practice. The conduct of the Wisconsin Chiropractic Association (WCA) was deemed as anti-competitive behavior by the FTC because the organization and its director, Russell Leonard, plotted to increase the prices of chiropractic treatments to equal those being charged by osteopaths. The WCA, starting in January, 1997 conducted a series of workshops and seminars to explain the new insurance billing codes which was being introduced by the Federal Health Care Financing Administration. Through these seminars, the WCA and its director encouraged their members to increase their chiropractic treatment charges. Leonard and the WCA revealed to their members the average prices being charged by osteopaths in different regions. Leonard also suggested to WCA members that they should check the fees of osteopaths in their areas in order to determine their own charges. The WCA also recommended to its members that they should question insurers who pay chiropractors less than osteopaths. According to the FTC they “conspired to fix prices for chiropractic services and to boycott the Gundersen Lutheran Health Plan (Gundersen) to obtain higher reimbursement for chiropractic services in and around La Crosse, Wisconsin” (Shapiro, 2000). Leonard also told their members that they could increase their fees based on the new billing code without being refused by insurers because there was no firm precedence to base customary chiropractic charges on. He also allegedly threatened lawsuits on insurers who refused to agree to their new rates. The WCA violated the anti-competitive law when it urged its members to increase their fees in order to establish a new and higher data base for the cost of chiropractic treatments. The FTC also deemed the WCA guilty of anti-competitive behavior when they boycotted insurers in order to gain higher reimbursements for their services. The actions of the WCA are considered anti-competitive behavior because, by conspiring with each other, these chiropractors were able to manipulate the market in order to obtain higher rates for their services. According to the FTC (2000), their actions prevented competition among chiropractors, divested the consumer public of the advantages of competition among chiropractors, fixed and increased the fees for chiropractic treatment, manipulated the conditions by which chiropractors dealt with third-party insurers, and “deprived consumers of the benefits of managed care”. The unfortunate consequence for their actions is that many insurance carriers were forced to increase their reimbursement fees while passing this burden to the patients. Higher rates for reimbursement demanded by chiropractors meant higher insurance costs for the consumer public. The WCA agreed to settle the charges against them by agreeing to pay $62,500. The settlement agreement also prevented the WCA from conducting any fee surveys until June 30, 2002 (Dynamic Chiropractor, 2002). And for five years thereafter, the WCA was allowed to conduct fee surveys only if they complied with the safe harbor provisions regarding fee surveys of the Statements of Antitrust Enforcement Policy in Health Care as prescribed by the FTC and Department of Justice. In order to show that the association was not involved in anti-trust practices, the WCA agreed to file reports of their meetings and activities for four years following the settlement agreement. The FTC’s decision also prevented the WCA from fixing fees for their services, persuading others to fix their prices, and from generating or supporting any fee schedule for health care services. The WCA was also restricted from: “organizing or engaging in any agreement to negotiate on behalf of any chiropractor or group of chiropractors; or to boycott any payer or provider” (Federal Trade Commission, 2000). The settlement agreement prohibited the WCA from counseling chiropractors to decline or accept terms of participation agreement, or from seeking for or conveying any chiropractor's intentions concerning any participation agreement. The terms of the settlement agreement is similar to the terms made with Leonard. The settlement with Leonard contained a proviso which allowed him to engage in acts which were otherwise prohibited by the order “as long as he is acting as an agent, employee, or representative exclusively for a single provider or payer” (Federal Trade Commission, 2000). The consent agreement entered between the FTC and the WCA was for settlement purposes only; it did not constitute an admission to charges brought against the association. After the consent order was issued and finalized, it effectively carried the force of law as regards future actions for the same charges. The penalty brought against the WCA by the FTC is relatively fair. It penalized them for their anti-competitive behavior and it prevented them from committing the same acts in their future transactions. The fine paid by the association however, seemed to be insufficient to make up for their manipulative and anti-competitive behavior. The monetary penalty should have been higher in order to effectively drive in the message to the association that their actions were unfair and deceitful. Chiropractors already occupy lucrative positions in the health care practice. Money is something they can afford to easily shell out. With about 900 members, the penalty issued them can be easily paid and settled, and it would not have gravely affected their wallets. The duration of time when restrictions are issued upon them is also too short a time to make up for the difficulties they have brought upon insurers and the consumer public. The prohibitions should have been mandated on them for several more years. The point of punishment and penalties is to deter the commission of illegal and morally repugnant practices. The penalties and punishment issued by the FTC on the Wisconsin Chiropractic Association does not sufficiently serve this purpose. After the years upon which the penalty for their actions has already passed, there is a great risk that the association would engage in these same acts again. As was mentioned, this association can afford to pay the penalties for their actions. It was able to earn millions of dollars through their price manipulations. Hence, it is justifiable to conclude that the monetary penalty issued on WCA is not enough to reprimand them for their actions. The vulnerable consumer suffers enough from many healthcare practitioners who take it upon themselves to define the cost of health care. Health care involvement is a very sensitive area which should merit the issuance of stiff penalties and severe punishment from the FTC for violations in antitrust laws. Healthcare is a basic service; people cannot do away with it. Hence, it is an area which should allow for the most competition in order to achieve the lowest prices at the highest possible quality. Violators in antitrust laws in the healthcare services should be severely penalized for their behavior. Only then can we truly achieve fairness and consumer protection. Reference Dynamic Chiropractor. (11 February 2002). Wisconsin association to pay antitrust settlement. Find Articles.com. Retrieved 10 September 2008 from http://findarticles.com/p/articles/mi_qa3987/is_200202/ai_n9039980 Murphy, K. (29 December 2001). Chiropractic Groups Settles Case. Journal Sentinel. Retrieved 10 September 2008 from http://www.jsonline.com/story/index.aspx?id=8518&format=print Shapiro, H. (07 March, 2000). Wisconsin Chiropractic Association and Its Director Agree to Settle FTC Charges of Price-Fixing. Federal Trade Commission. Retrieved 10 September 2008 from http://www.ftc.gov/os/2000/05/wisconsincmp.htm United States of America before Federal Trade Commission In the Matter of The Wisconsin Chiropractic Association, a corporation, and Russell A. Leonard: Agreement Containing Consent Order to Cease and Desist (March 2000). Federal Trade Commission. Retrieved 10 September 2009 from http://www.ftc.gov/os/2000/03/wiscaagree.htm United States of America before Federal Trade Commission In the Matter of the Wisconsin Chiropractic Association, a corporation, and Russell A. Leonard: Decision and Order. Federal Trade Commission (May 2000). Retrieved 10 September 2008 from http://www.ftc.gov/os/2000/05/wisconsin.do.htm Who we are (2008). Federal Trade Commission. 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