Federal Trade Commission v. Indiana Federation of Dentists

PETITIONER: Federal Trade Commission
RESPONDENT: Indiana Federation of Dentists
LOCATION: Hardwick's Apartment

DOCKET NO.: 84-1809
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the Seventh Circuit

CITATION: 476 US 447 (1986)
ARGUED: Mar 25, 1986
DECIDED: Jun 02, 1986

ADVOCATES:
Bruce W. Graham - on behalf of the respondent
Marcy J.K. Tiffany - on behalf of the petitioner

Facts of the case

Question

Media for Federal Trade Commission v. Indiana Federation of Dentists

Audio Transcription for Oral Argument - March 25, 1986 in Federal Trade Commission v. Indiana Federation of Dentists

Warren E. Burger:

We will hear arguments next in the Federal Trade Commission against Indiana Federation of Dentists.

Ms. Tiffany, I think you may proceed whenever you are ready.

Marcy J.K. Tiffany:

Mr. Chief Justice, and may it please the Court, this case involves a conspiracy by Indiana dentists to refuse ex-rays requested by group dental health care insurers.

The insurers needed the ex-rays to detect instances of fraudulent claims and overtreatment of dental patients.

Their goal was to contain the cost of the insurance programs they were administering, a goal that was shared, indeed, insisted upon by those who were footing the bill for the programs, the employers, and unions who had negotiated the dental benefits.

The attitude of the dentists toward this cost containment effort was best summed up in the words of Dr. David McClure, one of the chief organizers of the conspiracy here.

Dr. McClure characterized the situation as, and I quote,

"economics war where the name of the game is money. "

And like all wars, this one had its victims.

Here they were the patients, the consumers, who were deprived of the benefits of the cost containment efforts of the insurance companies.

The dentists' response to the insurance companies' cost containment efforts should not be surprising, since from their perspective cost containment essentially means fewer dollars for the dentists.

To again quote Dr. McClure,

"Management, government, labor, and the insurance industry are determined to reduce the cost of the dental health dollar at the expense of the dentist. "

Now, a third party payer faces a difficult problem with respect to cost containment.

In the normal purchase transaction the individual consumer has an interest in making sure that he is not paying for more than he needs.

However, when an insurer is picking up the tab, consumer self-interest tends to coincide with that of the seller, which is to say, get as much as possible cut of the insurance company.

Thus, the responsibility is left to the plan administrator for finding some way of making sure that it is paying only for services that are covered under the contract.

In this case the dentists were well aware that the ex-rays were needed for this purpose.

To quote Dr. McClure yet again,

"The fight for ex-rays will continue, because this is the only way insurance companies can control their costs. "

The fight began with the Indiana Dental Association, which is composed of 85 percent of all licensed dentists in the state of Indiana.

This group organized the boycott, and did so very effectively.

They adopted a set of principles of acceptability which specified that insurance plans requiring ex-rays to be submitted would not be acceptable.

They distributed a form letter to their members to give to the patients saying that they would not provide the ex-rays.

They also initiated a pledge--

Byron R. White:

That was the extent of their boycott, wasn't it, just not providing the ex-rays?

Marcy J.K. Tiffany:

--That was the extent of the boycott.

They refused to provide the ex-rays.

They initiated a pledge campaign for dentists to agree in writing that they would abide by the IDA's principles of acceptability.

Byron R. White:

They didn't refuse to serve patients that were covered by these health plans?