Reconciliation of the Sherman Act with federal health-planning legislation: Implied antitrust immunity in the health care field

• Author: Mark W. Pennak,Ray S. Bolze
• DOI: 10.1177/0003603X8402900204
• Date: 01 June 1984
• Published date: 01 June 1984
• Subject Matter: Article

The Antitrust Bulletin/Summer

1984

Reconciliation

of

the Sherman Act

with federal health-planning

legislation: implied antitrust

immunity in the health care field

BY RAY S. BOLZE* and MARK W. PENNAK**

I. Introduction

225

Since the Supreme

Court

opened the "learned professions" to

liability under the antitrust laws in Goldfarb v. Virginia State

Bar,1more antitrust actions have been brought in the health care

area

than

during the entire prior history

of

the Sherman Act.

Following Goldfarb, the Supreme Court also largely foreclosed to

professionals the argument that anticompetitive measures were

justified in the name

of

self-regulation

of

aprofession. The Court

has narrowly construed the requirements for total exemption

from the antitrust laws provided by federal regulatory statutes'

••

Partner, Howrey

and

Simon, Washington, D.C.

Department

of

Justice, Civil Division, Appellate Staff.

AUTHORS'

NOTE: This article was written while Mr. Pennak was in

private practice and does not necessarily reflect the views or position

of

the Department

of

Justice. The authors acknowledge the assistance

of

Ralph

A.

Finizio.

421 U.S. 773 (1975).

2National Gerimedical Hosp. & Gerontology Center v. Blue

Cross, 452 U.S. 378 (1981), held that the National Health Planning and

Resources Development Act

of

1974 (1974 Planning Act) did not create

blanket immunity from the antitrust laws for action taken pursuant to

it.

(0 1984by Federal Legal Publications, Inc.

226 The antitrust bulletin

and

aplurality in Arizona v, Maricopa County Medical Society'

has emphatically rejected the argument that the special competi-

tive considerations

of

the health care industry precluded applica-

tion

of

traditional per se rules condemning price-fixing. The

federal antitrust agencies have also shown a burgeoning interest

in the health care

area.'

At the Department

of

Justice and the

457 U.S. 332 (1982).

4See, e.g., J. Gelman, Competition and Health Planning, An

Issues Paper (FTC, Bureau

of

Economics Apr. 1982) (Competition

rarely will allocate resources properly. HSAs created under the 1979

Planning Act can encourage competition while ensuring the availability

of

accessible, cost-effective care in their planning areas); A. Lipsky, The

Antitrust Division's Role in Health Antitrust Policy and Enforcement,

Remarks before the ABA Section

of

Antitrust Law and Forum Commit-

tee on Health Law Joint Program on Antitrust and the Health Care

Industry, Washington, D.C. at 3 (Sept. 25, 1981) ("There is no self-evi-

dent reason why the prohibitions on private cartel activity should not

apply with all their traditional force to activities in the health care

industry"); W. Lazarus, E. Levine &L. Lewin, Competition Among

Health Practitioners (Feb. 1981) (prepared for the FTC); A. Palmer,

The

Antitrust Status

of

the Professions: Lessons from the FTC Im-

provements Act

of

1980, Remarks before the Annual Antitrust Update,

Allegheny County Bar Association, Pittsburgh, Pa. at 4-5 (Sept. 24,

1980) ("I see no reason why

...

concerted refusals to deal by doctors

should be any more protected than the same behavior engaged in by

widget manufacturers or dealers"); M. Pertschuk, The FTC

and

Health

Care: The Role

of

Competition, Speech before the National Journal

Health Conference, Washington, D.C. at 2 (June 7, 1979) ("Even taking

the special characteristics

of

the health care market into account, there

is reason to believe

that

increased price competition could work to

achieve greater efficiency and control costs").

Antitrust enforcement agencies have begun for the first time to

scrutinize hospital mergers under the standards

of

section 7

of

the

Clayton Act. See In re Hosp. Corp.

of

America, [1979-1983 Transfer

Binder]

TRADE

REG.

REP.

(CCH) , 21,946 (FTC 1982) (Clayton Act §7

challenge to hospital acquisitions); United States v. Hospital Affiliates

Int'l,

Inc., 1980-81 Trade Cas. (CCH) , 63,721 (E.D. La. 1980) (prelim-

inary injunction against hospital merger); In re American Medical Int'l,

Inc., No. 9158 (FTC July 27, 1983) (initial decision) (hospital merger);

D.O.J.

press release (Oct. 31, 1983) announcing suit to stop the

acquisition

of

Modesto City Hospital by National Medical Enterprises,

Inc.

(Footnote continued on following page)