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September 2000
Volume 64 |
Number 9
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| ASA Antitrust
Suit 1975-1979: United States of America (Plaintiff) v. The
American Society of Anesthesiologists, Inc. (Defendant)
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Jess B. Weiss, M.D.
The ASA Relative Value Guide (RVG), as currently published, is
a resource-based RVG, in contrast to other specialty charge-based
fee schedules. It has evolved from the anesthesia formula devised
in 1953 by a group of California anesthesiologists, led by Joseph
H. Failing, M.D., for the original California Relative Value Study
(RVS).1 This formula took into account anesthesia risk,
surgical problems, technical skills required and time. Each of
the first three factors were assigned unit values from one to
four, while time units ranged from one to 18 for times of 30 to
300 minutes.
In 1961, the ASA House of Delegates directed its Committee on
Economics to construct an RVG, and in 1962, it approved the first
RVG based on the California RVS. Since then, the RVG has been
reviewed and revised essentially annually since 1970, up to and
including the current 2000 edition.
Why did ASA create and disseminate the 1962 RVG? Did this have
an anticompetitive purpose or effect of raising, fixing, maintaining
or stabilizing anesthesia fees, as eventually charged by the federal
government? Or was creation of the ASA RVG a lawful response to
the increasing significance of third-party payers, intended to
facilitate determination of fees by the individual anesthesiologist
or group?
The impetus for the ASA RVG is clear. During the 1950s, the National
Association of Blue Shield Plans, military insurance (Champus)
and various private insurance companies all had requested ASA
to develop a method to enable them to evaluate anesthesia charges
and to predict their costs. Additionally, these insurers needed
to separate anesthesia costs from hospital charges as well as
accumulate statistics upon which rates and extent of coverage
could be based. ASA's RVG responded to these needs, but questions
soon arose whether this action was legally permissible.
During the 1960s and early 1970s, several medical associations
developed relative value scales or guides. These included the
American College of Obstetricians and Gynecologists, the American
College of Radiologists, the California Medical Association, the
Illinois Podiatry Society and the American Dental Association.
The climate for relative value documents began to change, however,
with the issuance in 1975 of a decision by the Supreme Court,
holding that the learned professions were, with limited exception,
just as subject to the federal antitrust laws as were commercial
enterprises. Soon thereafter, relative value guides came under
broad attack by the Federal Trade Commission, which charged that
they represented conspiracies to fix prices for medical services.
In time, all of the named associations, other than ASA, agreed
to consent orders with the FTC, under the terms of which they
agreed to cease publication of their guides.
In a quirk of fate, the FTC did not pursue ASA and its guide,
but instead the Justice Department "the other federal antitrust
enforcement agency – brought suit against ASA in 1975,
2-4 alleging anticompetitive purpose and effect in "per
se" (that which speaks for itself) violation of the price-fixing
prohibitions of the Sherman Act.5 Based on advice of
its then legal counsel, John Lansdale, Jr., ASA decided to fight
the allegations. Document discovery in the case, dating back to
the 1940s, resulted in enormous cost to the Society – not
to mention the expenditure of countless hours of ASA officer and
staff time in preparation for the lawsuit.
As if the Justice Department case was not enough, the FTC in
1977 filed a proposed complaint against ASA, claiming that its
membership standards "which then prohibited membership by
most employed physicians" also violated the antitrust laws.
In this case, ASA chose "again on the advice of counsel"
to negotiate a consent order, but the terms of that order preserved
the right of a physician to choose whatever method of compensation
for services he or she preferred and, further, the right of ASA
to advocate on physician compensation issues. Approval of this
consent order required a special meeting of the House of Delegates
and in time led to a restructuring of the organic documents of
most of ASA's component societies.
The trial of the Justice Department’s lawsuit over the RVG was
held before District Judge Kevin T. Duffy in New York City, beginning
on November 20, 1978, and ending on December 4, 1978. In the course
of six actual days of trial, nine witnesses appeared on behalf
of ASA, including former ASA Presidents Richard Ament, M.D., Nicholas
G. DePiero, M.D., and myself and President-Elect John S. Hattox,
Jr., M.D. Expert testimony on the history of the development of
the specialty of anesthesiology was given by Emanuel M. Papper,
M.D., then Dean of the School of Medicine at the University of
Miami. Herman M. Somers, M.D., Professor of Politics and Public
Affairs at Princeton University, testified as to the economics
of the practice of medicine. Other ASA witnesses were Presley
H. Chalmers, M.D., of Houston, Texas; Lyman D. Covell, M.D., of
the Spring Anesthesia Group in Los Angeles, California; and Dale
C. Baker, of Pennsylvania Blue Shield. In addition, more than
250 documents were submitted as evidence to support ASA’s position
that its development and publication of the RVG was primarily
a response to the rise and needs of the third-party payment system
and was not intended to constitute and did not result in an agreement
as to actual charges that anesthesiologists would make for their
services to patients.6,7
On June 22, 1979, Judge Duffy issued his decision, finding that
the RVG did not violate the antitrust laws and ordering the government
suit dismissed. The core of his decision is found in the concluding
paragraph of the 40-page opinion:
I must conclude after a careful review of all the evidence and
assessment of the testimony adduced that plaintiff has simply
failed to meet its burden of proof. It has demonstrated neither
an agreement to adhere to a pricing formula nor any concrete anti-competitive
effect on the market for anesthesia services by virtue of the
use of the ASA RVG. I find its attempt to rely on a per se analysis,
without consideration of the unique circumstances surrounding
the anesthesiology profession and the adoption of relative value
guides, to be much too narrow an approach to the problem at hand.
Moreover, when the evidence is analyzed under the Rule of Reason,
it is clear that defendant is entitled to judgment in its favor.
Of interest is that on August 23, 1979, while ASA was waiting
to be informed as to whether the Justice Department would appeal
this verdict, ASA was served with a new subpoena from the FTC
to produce more documents related in general to nurse anesthesia.
This investigation was kept open for several years, but was eventually
closed without the agency making any allegations against the Society.
Just prior to the opening of the second meeting of the House
of Delegates in San Francisco, California, on October 24, 1979,
I was able to announce as then ASA President that ASA's successful
defense of its RVG against the U.S. Department of Justice antitrust
suit would not be appealed.
It is appropriate at this time to acknowledge the magnificent
effort to defend ASA made by its legal counsel on the case John
Lansdale and Rickard Pfizenmayer. Perhaps the sweetest victory
of all was their success in requiring the government to pay ASA's
court costs of $5,000 a paltry sum compared to the $500,000 expended
by ASA in its defense, but satisfying nonetheless.
Jess B. Weiss, M.D., is Associate
Professor of Anesthesiology, Harvard Medical School, Cambridge,
Massachusetts, and Emeritus Vice-Chair, Anesthesia Department,
Brigham and Women's Hospital, Boston, Massachusetts. He was ASA
President in 1979.
References:
- Failing JH. Anesthesiology. 1957; March-April:18:344-348.
- Weiss JB. Has the FTC overplayed its hand in trying to control
your fees? Legal Aspects of Medical Practice. 1980; February:8:29-31.
- Weiss JB. The anesthesiologist’s experience. The Internist.
1987; March:283-316.
- Weiss JB. December 1978; President’s Bulletin; 1-2.
- Weiss JB. November 1978, President’s Bulletin; 1-2.
- Defendant's trial memorandum. 1979:1-37.
- Defendant's supplemental trial memorandum. 1979:1-19.
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