Fifth Circuit Grants NTSP Emergency Motion for Stay of Final Order
On February 1, 2006, the United States Court of Appeals for the Fifth Circuit ("Fifth Circuit") granted North Texas Specialty Physicians' ("NTSP's") January 26, 2006 Emergency Motion for Stay of Final Order of the Federal Trade Commission Pending Judicial Review ("Motion"). The stay will remain in effect 90 days from the date the petition for review was granted, pending further order of the Fifth Circuit.
The NTSP case is currently on appeal to the Fifth Circuit from an FTC ruling that NTSP had violated the antitrust laws by collectively negotiating with health plans on behalf of its member physicians. Previously, on January 20, 2006, the FTC had agreed to stay enforcement of portions of its order: Paragraph IV.B (generally requiring that NTSP terminate its preexisting contracts) and Paragraph IV.C (generally requiring that NTSP notify physicians of termination requests from payors). The FTC had not agreed to stay the other provisions of the Order: Paragraph II (generally requiring that NTSP refrain from negotiating the terms on which physicians deal with payors, refrain from dealing or refusing to deal with payors, and refrain from exchanging information among physicians regarding dealings with payors); Paragraph III (generally requiring that NTSP notify the FTC before acting as a messenger or agent); Paragraph IV.A (generally requiring that NTSP transmit copies of the Order and Complaint to its employees, physicians and payors ); Paragraph IV.D (generally requiring that NTSP transmit copies of the Order and Complaint to subsequent employees, physicians and payors; and publicize the Order and Complaint); Paragraph IV.E (generally requiring that NTSP file compliance reports); Paragraph IV.F (generally requiring that NTSP notify the Commission of proposed changes to its structure); Paragraph V (generally requiring that NTSP notify the FTC of address changes); Paragraph VI (generally allowing the FTC access to documents and employees) and Paragraph VII (stating a 20 year duration for the Order).
NTSP made a number of factual assertions in support of its motion, including its position that cost-containment and quality improvement processes from its risk contracts will "spill-over" to its non-risk contracts, that payors may contract with its physicians outside of NTSP, and that rates offered by payors to NTSP were equal to or less than those offered to other physicians. NTSP argued that the FTC based its case against NTSP on what NTSP termed the "all-or-nothing principle" (that an independent physician association must be willing to messenger all payor offers), and that when the FTC modified its Opinion regarding this principle, it should have modified its Order accordingly. According to NTSP, the FTC did not adequately consider a Rule of Reason approach in its analysis and failed to fulfill its burden of showing a relevant market. NTSP expressed disagreement with the FTC's treatment of all of NTSP's conduct as "concerted action." NTSP indicated that the FTC's Order prevented NTSP from communicating even "benign" or "objective" information to its patients. According to NTSP, the FTC's failure to stay its "termination notice provision," even though it stayed the "contract termination provision" pending appeal, would cause confusion among patients. (The contract termination provision required NTSP to terminate its non-risk contracts, at the latest, within one year of the effective date of the Order.) Finally, NTSP asserted that the FTC's Order interfered with NTSP's right to commercial free speech and right to contract.
NTSP noted that its contracts affected 13 health plans, 550 physicians and hundreds of thousands of patients. On February 2, 2006, NTSP filed a Petitioner's Reply to Federal Trade Commission's Opposition to Emergency Motion for Stay of Final Order.
For additional information about this Antitrust Development, please contact Toby G. Singer, leader of the Health Care Antitrust Practice.