FTC alleges Hickory doctors fixed prices in four counties

12/25/2003

Associated Press

The Federal Trade Commission has accused a health organization and 10 of its member physicians of illegal price-fixing and unfairly restricting competition among doctors in a four-county area.

The organization and doctors said they've followed the commission's guidelines and cooperated with its investigators.

The FTC issued the complaint Monday and announced it Wednesday.

It says Piedmont Health Alliance Inc. and 10 doctors on the organization's board of directors have directed Piedmont's collective agreements since 1993 on prices that members demanded from patients and their insurers, HMOs and other third-party buyers of health benefits.

The doctors are Peter Bradshaw, Daniel Dillon, David Harvey, John Kessel, Gregory Rosenfeld, Robert Yapundich and William Lee Young III of Hickory; Andrews Deekens of Morganton; Sanford Guttler of Granite Falls; and James Thompson of Lenoir.

Because the agreements involved about 450 area physician shareholders and Piedmont subcontractors, the FTC alleges they effectively killed any price competition among doctors in Catawba, Burke, Caldwell and Alexander counties — a violation of federal laws against unfair restraint of trade.

Sharon J. Alvis, PHA's chief executive officer, said the organization "is caught up in one of the most aggressive investigations aimed at physician organizations in FTC history."

Alvis said the FTC's allegations are without merit, and that the organization is reviewing the complaint to determine how it will respond.

Commission members set a hearing for March 22 at FTC offices in Washington, at which Piedmont and the doctors can answer the commission's allegations before a judge. If the judge sides with commission members, they can order the organization to dissolve its collective agreements.

Dillon, chairman of the PHA board, said the organization has been cooperative with the FTC.

"We stand behind what we have done, and feel that our approach is in the best interest of patients and in the best interest of the community," Dillon said.

Frye Regional Medical Center and its parent company, Tenet Healthcare Corp., have settled FTC charges relating to PHA activities.

Hunt Shuford, the chief financial officer for two Hickory industries and chairman of Piedmont's employer advisory board, maintains PHA's agreements have helped keep health-care costs in check.

"Here is a situation where all of the key stakeholders — employers, physicians, patients and hospitals — are pleased with the arrangement," Shuford said in a statement. "So just who is the FTC protecting?"