A Virginia physician group has agreed to dissolve its managed-care contracting organization to settle charges that it was a sham company that engaged in price-fixing conspiracies against payers.
Under a proposed consent agreement with the Federal Trade Commission, the group and its seven physician directors also agreed not to collectively negotiate with managed-care plans in the future.
The settlement represents only the third time that the FTC has required physicians to dissolve an organization to settle price-fixing charges.
Typically, physician organizations that perform other legitimate functions are permitted to stay together as long as they stop negotiating with payers, said Rendell Davis, the FTC's lead investigator in the case.
But in cases where the organization's primary function is joint negotiations, the FTC seeks a stronger remedy, Da-vis said.
The FTC said Physicians Group of Danville, Va., was formed specifically by its 55 physician members in 1986 to deal collectively with managed-care plans. The agency said the physicians engaged in price-fixing conspiracies from 1988 through 1993 against two managed-care plans that sought to enter the Pittsylvania County, Va., and Danville markets. One insurer dropped its plan, while the other had its plan delayed.
In addition to the FTC settlement, the group also settled similar charges with Virginia by agreeing to pay the state $170,000.
Under the federal and state settlements, the group admits to no violation of state or federal antitrust laws.
The group said it settled to "avoid unnecessary, protracted, distracting and costly litigation."
The proposed consent agreement with the FTC is subject to a 60-day public comment period before becoming final.