American College of Obstetricians and Gynecologists

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In THE MATTER OF THE AMERICAN COLLEGE OF OBSTETRICIANS AND GYNECOLOGISTS CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket C-2855. Complaint, Dec. 14, 1976 --- Decision, Dec. 14, 1976 Consent order, requiring a Chicago, IIl., professional association, among other things to cease publishing, promulgating and participating in the development of relative value scales which have the effect of establishing prices for medical and surgical services. Respondent is required to permanently cancel, repeal, abrogate and withdraw any and all relative value scales heretofore developed or disseminated and send copies of this order to association members and certain third-party payers together with a request for the return of all copies of relative value scales. Appearances For the Commission: Lawrence E. Gray and Edward W. Abramowitz. For the respondent: Paul G. Gebhard, Vedder, Price, Kaufman & Kammholz, Chicago, Ill.; and James M. Nicholson, Nicholson & Carter, Washington, D.C.

COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act, as amended, 15 U.S.C. 41, et. seg., and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that The American College of Obstetricians and Gynecologists has violated the provisions of Section 5 of said Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charges as follows:

PARAGRAPH 1. Respondent, The American College of Obstetricians and Gynecologists (““ACOG”), is a corporation organized, existing and doing business under and by virtue of the laws of the State of Illinois, with its principal office and place of business located at 1 East. Wacker Dr., Chicago, Illinois.

Par. 2. ACOG has approximately 12,500 members, or “Fellows,” who are elected from the ranks of those physicians who have completed satisfactory postgraduate training and who have limited their professional activities to obstetrics and/or gynecology for the five years immediately prior to their application for membership. The Fellows elect the officers and district chairmen who constitute the Executive Board which manages the affairs of ACOG. Decision and Order 88 F.T.C.

Par. 8. Obstetrician-gynecologists are licensed physicians who specialize in medical and surgical treatment of women, particularly with relation to the processes of human reproduction. They are generally engaged in the private practice of medicine and surgery and derive substantial portions of their professional income from fees for medical and surgical treatment charged directly to patients or to insurers.

Par. 4. The acts and practices of ACOG are in or affect commerce as “commerce” is defined in the Federal Trade Commission Act. Par. 5. In 1971 and again in 1974, ACOG prepared, published, and circulated to its members and others a document entitled “Relative Value Studies” which sets forth in non-monetary units comparative numerical values to surgical and medical procedures and other services performed by obstetrician-gynecologists. Each value is convertible into a monetary fee by the application of a dollar conversion factor to the basic unit.

Par. 6. The preparation, publication, and circulation by ACOG of Relative Value Studies have the effect of establishing, maintaining, or otherwise influencing the fees which obstetrician-gynecologists charge for their professional services and are in violation of Section 5 of the Federal Trade Commission Act, as amended. DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondent named in the caption hereof, and respondent having been furnished thereafter with a copy of a draft of complaint which the Bureau of Competition proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondent with violation of Section 5 of the Federal Trade Commission Act; and The respondent and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by respondent of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondent of the charges in Paragraph Six of the complaint or that the law has been violated, and waivers and other provisions as required by the Commission’s Rules; and The Commission having considered the agreement and having provisionally accepted same and placed it on the public record for a period of sixty (60) days, and having duly considered the comments filed thereafter by interested persons pursuant to Section 2.34 of the Commission’s Rules, now in further conformity with the procedure THE AMERICAN COLLEGE OF OBSTETRICIANS & GYNECOLOGISTS 957 955 Decision and Order provided by Section 2.84 of its Rules hereby issues its decision in disposition of the proceeding against the above-named respondent, makes the following jurisdictional findings, and enters the following findings and order:

1. Respondent, The American College of Obstetricians and Gynecologists (“ACOG”), is a corporation organized, existing and doing business under and by virtue of the laws of the State of Illinois, with its principal office and place of business located at 1 East Wacker Dr., Chicago, Illinois.

2. The Federal Trade Commission has jurisdiction over the subject matter of this proceeding and over the respondent, and the proceeding is in the public interest.

ORDER I A. The term “relative value scale” means any list or compilation of surgical and/or medical procedures and/or services which sets forth comparative numerical values for such procedures and/or services, without regard to whether those values are expressed in monetary or non-monetary terms.

B. The term “ACOG” means the American College of Obstetricians and Gynecologists.

C. The term “effective date of this order” means the date of service of this order.

I] It is ordered, That ACOG, its successors, or assigns, and its officers, agents, representatives and employees, directly or through any corporation, subsidiary, division, or other device, shall: A. Cease and desist from directly or indirectly initiating, originating, developing, publishing, or circulating the whole or any part of any proposed or existing relative value scale(s); B. Cease and desist from directly or indirectly advising in favor of or against the use of, or contributing to the wnole or any part of any proposed or existing relative value scale(s); provided, however, that nothing contained herein shall prohibit ACOG from furnishing testimony to any government body, committee, or instrumentality, or from furnishing to any third party or government body, committee, or instrumentality such information as may be requested; to the extent, however, that such information or testimony may bear directly or indirectly on compensation levels for obstetrical or gynecological services or procedures, it shall be limited to historical data, free of Decision and Order 88 F.T.C.

editing or interpretation, and shall be completely described as to methodology;

C. Permanently cancel, repeal, abrogate, and withdraw any and all relative value scales which it has heretofore developed, published, circulated, or disseminated;

D. Within thirty (30) days after the effective date of this order, distribute by first class mail a copy of the Commission’s complaint and order in this matter, as well as a letter, in the form shown in Appendix “A” to this order, to each of its Fellows and to each of the third-party payers and others listed in Appendix “B” to this order, instructing such third-party payers and others to return to ACOG all copies of ACOG relative value scales in their possession. Il It is further ordered, That ACOG shall notify the Commission at least thirty (30) days prior to any proposed change in its organization which might affect compliance obligations under this order, such as, but not limited to, dissolution, the emergence of a successor corporation, and the creation and/or dissolution of subsidiaries. IV It is further ordered, That ACOG shall, within sixty (60) days after the effective date of this order, file with the Commission a written report showing in detail the manner and form of its compliance with each of the provisions of the order.

Vv Nothing in this order shall be construed to exempt The American College of Obstetricians and Gynecologists from complying with the antitrust laws or the Federal Trade Commission Act. The fact that any activity is not prohibited by this order shall not bar a challenge to it under such laws.

APPENDIX A (ACOG LETTERHEAD) TO: Recipients of ACOG Relative Value Studies As you may be aware, the FTC has been investigating various components of health care, including relative value scale activities of ACOG. The Executive Board of the College no longer desires to continue such activities and has discontinued them. It has entered into THE AMERICAN COLLEGE OF OBSTETRICIANS & GYNECOLOGISTS 959 955 Decision and Order an agreement with the Federal Trade Commission to formalize the discontinuance of its relative value scales. This agreement resulted in the issuance by the Federal Trade Commission on [date] of a complaint and the entry of a consent order which requires, in essence, that ACOG:

(a) stop publishing and participating in development of relative value scales;

(b) withdraw the relative value scales it has already published; (c) distribute a copy of the complaint and consent order to every ACOG relative value scale recipient; and (d) instruct all recipients of ACOG’s relative value scales to return them to ACOG.

The complaint alleges basically that ACOG’s relative value scales have the effect of influencing fees charged by obstetrician-gynecologists. The consent agreement with the FTC states that it is for settlement purposes only and does not constitute an admission by the College of the charges in the complaint or that the law has been violated.

In accordance with the provisions of the FTC’s order, you are to cease using and to return all copies of any College relative value scale in your possession.

The proper mailing address is:

American College of Obstetricians and Gynecologists 1 East Wacker Drive Chicago, Illinois 60601 Attention:

Copies of the F.T.C.’s complaint and order are enclosed. Sincerely, President APPENDIX B Commissioner; Deputy Assistant Secretary for Medical Services Administration Health Resources and Programs Social and Rehabilitation Service Department of Defense Department of Health, Education, and Washington, DC 20301 Welfare 330 C Street, S.W.

Washington, DC 20201 Commissioner of Social Security Directorate Department of Health, Education, OCHAMPUS Decision and Order 88 F.T.C.

and Welfare ~ Department of Defense 6401 Security Boulevard Washington, DC 20301 Baltimore, MD 21235 National Association of OCHAMPUS Blue Shield Plans Department of Defense 211 East Chicago Avenue Denver, CO 80240 Chicago, IL 60611 Health Application Systems Blue Cross of Southern California 1683 Bayshore Highway Box 27747 Burlingame, CA 94010 4777 Sunset Boulevard Los Angeles, CA 90027 Blue Cross and Blue Shield of Alabama Blue Cross of Northern California 930 S. 20th Street 1950 Franklin Street Birmingham, AL 35298 Oakland, CA 94659 Blue Cross of Arizona, Inc. Blue Shield of California 821 W. Indian School Road 2 North Point Box 18466 San Francisco, CA 94118 Phoenix, AZ 85002 Arizona Blue Shield Medical Colorado Hospital Service - BC Service 244 University Boulevard 821 W. Indian School Road Denver, CO 80206 Box 13466 Phoenix, AZ 85002 Arkansas Blue Cross and Blue Colorado Medical Service, Inc.-BS Shield, Inc. 244 University Boulevard 601 Gaines Street Denver, CO 80206 Box 2181 Little Rock, AR 72203 Connecticut Medical Service, Connecticut Blue Cross, Inc. Inc. Box 504 221 Whitney Avenue 870 Bassett Road New Haven, CT 06509 North Haven, CT 064738 Blue Cross and Blue Shield of Delaware, Hawaii Medical Service Association Ine. 1504 Kapiolani Boulevard 201 W. 14th Street Box 860 Box 1991 Honolulu, HI 96808 BS Wilmington, DE 19899 Group Hospitalization, Inc. BC Blue Cross of Idaho, Inc. 550 12th Street, S.W. 1501 Federal Way Washington, DC 20024 Box 7408 Boise, ID 88707 Medical Service of the District North Idaho District Medical of Columbia BS Service Bureau, Inc. BS 550 12th Street, S.W. 1602 21st Avenue THE AMERICAN COLLEGE OF OBSTETRICIANS & GYNECOLOGISTS 961 Washington, DC 20024 Blue Cross of Florida, Inc.

582 Riverside Avenue Box 1798 Jacksonville, FL 32201 Blue Shield of Florida, Inc.

582 Riverside Avenue Box 1798 Jacksonville, FL 32201 Blue Cross of Georgia/Atlanta Inc.

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2357 Warm Springs Road Box 1520 Columbus, GA 31902 Blue Shield of Georgia/Atlanta Inc.

1010 West Peachtree St., N.W.

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2857 Warm Springs Road Box 1520 Columbus, GA 31902 Blue Shield of Iowa Liberty Building Des Moines, IA 50807 Kansas Hospital Service Association, Inc.

1188 Topeka Avenue Box 239 Topeka, KS 66601 Kansas Blue Shield 1183 Topeka Avenue Box 239 Topeka, KS 66601 Decision and Order Box 1106 Lewiston, ID 88501 Illinois Hospital and Health BC Service, Inc.

227 N. Wyman Street Rockford, IL 61101 Hospital Service Corporation-BC 233 North Michigan Avenue Box 1864 Chicago, IL 60601 Illinois Medical Service - BS 233 North Michigan Avenue Chicago, IL 60601 Blue Cross of Indiana 120 W. Market Street Indianapolis, IN 46204 Mutual Medical Insurance Inc. BS 120 W. Market Street Indianapolis, IN 46204 Blue Cross of Iowa Liberty Building Sixth Street & Grand Avenue Des Moines, IA 50307 Blue Cross of Michigan 600 Lafayette E.

Detroit, MI 48226 Blue Shield of Michigan 600 Lafayette E.

Detroit, MI 48226 Blue Cross and Blue Shield of Minnesota 35385 Blue Cross Road Box 3560 St. Paul, MN 55165 Decision and Order 88 F.T.C.

Blue Cross Hospital Plan Ine. Blue Cross and Blue Shield 8101 Bardstown Road of Minnesota Louisville, KY 40205 2344 Nicollet Avenue Minneapolis, MN 55404 Blue Cross and Blue Shield of Mississippi, Inc.

580 E. Woodrow Wilson Drive Kentucky Physicians’ Mutual, Inc.

8101 Bardstown Road Louisville, KY 40205 Box 1048 Jackson, MS 39205 Blue Cross of Louisiana Blue Cross of Kansas City 10225 Florida Boulevard 3637 Broadway Box 15699 Box 169 Baton Rouge, LA 70815 Kansas City, MO 64141 Hospital Service Association of New Blue Cross Hospital Service, Inc. of Orleans BC Missouri 2026 St. Charles Avenue 1430 Olive Street New Orleans, LA 70180 St. Louis, MO 63103 Maine Blue Cross and Blue Shield Blue Shield of Kansas City 110 Free Street 3637 Broadway Portland, ME 04101 Box 169 Kansas City, MO 64141 Blue Cross of Maryland St. Louis Blue Shield 700 E. Joppa Road 5775 Campus Parkway Box 9836 Hazelwood, MO 63042 Towson, MD 21204 Blue Shield of Maryland, Inc. Blue Cross of Montana 700 E. Joppa Road 8360 10th Avenue S.

Towson, MD 21204 Great Falls, MT 59405 Blue Cross of Massachusetts Montana Physicians’ Service-BS 133 Federal Street 404 Fuller Avenue Boston, MA 02106 Box 1677 Helena, MT 59601 Blue Cross and Blue Shield of Blue Cross of Virginia South Carolina 2015 Staples Mill Road I-20 East at Alpine Road Box 27401 Columbia, SC 29219 Richmond, VA 28279 Blue Cross of Western Iowa and South Blue Cross of Southwestern Virginia Dakota 1212 Third Street, S.W.

Third & Pierce Streets Box 2770 Box 1677 Roanoke, VA 24001 Sioux City, IA 51102 South Dakota Medical Service, Blue Shield of Virginia Inc. 2015 Staples Mill Road 711 N. Lake Avenue Box 27401 Sioux Falls, SD 57104 Richmond, VA 23279 THE AMERICAN COLLEGE OF OBSTETRICIANS & GYNECOLOGISTS 963 955 Decision and Order Blue Cross-Blue Shield of Tennessee 801 Pine Street Chattanooga, TN 37402 Kitsap Physicians’ Service 820 Pacific Avenue Box 339 Bremerton, WA 98310 Blue Cross Hospital Service, Inc.

Commerce Square Box 1343 Charleston, WV 25825 West Virginia Hospital Service Inc.

20th & Chapline Streets Wheeling, WV 26003 Blue Shield of Southern West Virginia, Ine.

Commerce Square Box 1358 Charleston, WV 25325 Morgantown Medical-Surgical Service, Inc.

265 High Street Morgantown, WV 26505 West Virginia Medical Service Inc.

20th & Chapline Streets Box 6246 Wheeling, WV 26003 Associated Hospital Service, Inc.

4115 N. Teutonia Avenue Box 2025 Milwaukee, WI 53201 Wisconsin Physicians’ Service 830 E. Lakeside Street Box 1109 Madison, WI 58701 Surgical Care, The Blue Shield Plan of the Medical Society of Milwaukee County 756 N. Milwaukee Street Milwaukee, WI 53202 Blue Shield of Southwestern Virginia 1212 Third Street, S.W.

Box 2770 Roanoke, VA 24001 Associated Hospitals, Inc.

401 Federal Street Box 181 Bluefield, WV 24701 Parkersburg Hospital Service, Inc.

203 Union Trust Building Box 1948 Parkersburg, WV 26101 Surgical Service, Inc.

Commercial Bank Building Box 181 Bluefield, WV 24701 Medical-Surgical Service, Inc.

Union National Bank Building Clarksburg, WV 26301 Memphis Hospital Service and Surgical Association, Inc.

85 N. Danny Thomas Boulevard Box 98 Memphis, TN 38101 Group Hospital Service, Inc.

Main at N. Central Expressway Dallas, TX 75201 Group Life and Health Insurance Co.

Main at N. Central Expressway Dallas, TX 75201 Blue Cross of Utah 2455 Parley’s Way Box 270 Salt Lake City, UT 84110 Blue Shield of Utah 2455 Parley’s Way Box 270 Salt Lake City, UT 84110 Blue Cross of Wyoming 4020 House Avenue Box 2266 Cheyenne, WY 82001 Genesee Valley Medical Care, Inc.

41 Chestnut Street Rochester, NY 14647 Blue Shield of Central New York, Inc.

344 S. Warren Street Syracuse, NY 18202 Medical and Surgical Care, Inc.

5 Hopper Street Utica, NY 13501 Blue Cross and Blue Shield of North Carolina P. O. Box 2291 1830 Chapel Hill-Durham Blvd.

Durham, NC 27702 Blue Cross of North Dakota 301 S. Eighth Street Fargo, ND 58102 Blue Shield of North Dakota 301 S. Eighth Street Fargo, ND 58102 Blue Cross Hospital Plan, Inc.

201 Ninth Street, N.W.

Canton, OH 44702 Blue Cross of Southwest Ohio 1351 William Howard Taft Rd.

Cincinnati, OH 45206 Blue Cross of Northeast Ohio 2066 E. Ninth Street Cleveland, OH 44115 Blue Cross of Central Ohio 174 E. Long Street Columbus, OH 48215 Blue Cross of Lima, Ohio 7 Public Square Decision and Order Blue Shield of Wyoming 4020 House Avenue Box 2266 Cheyenne, WY 82001 Medical Mutual of Cleveland, Inc.

2060 E. Ninth Street Cleveland, OH 41115 Ohio Medical Indemnity, Inc.

6740 N. High Street Worthington, OH 43085 Blue Cross and Blue Shield of Oklahoma 1215 S. Boulder Avenue Box 3283 Tulsa, OK 74102 Blue Cross of Oregon 100 S.W. Market Street Box 1271 Portland, OR 97207 Oregon Physicians’ Service 619 S.W. 11th Avenue Box 1071 Portland, OR 97207 Blue Cross of Lehigh Valley 1221 Hamilton Street Allentown, PA 18102 Capital Blue Cross 100 Pine Street Harrisburg, PA 17101 Blue Cross of Greater Philadelphia 1333 Chestnut Street Philadelphia, PA 19107 Blue Cross of Western Pennsylvania 1 Smithfield Street Pittsburgh, PA 15222 Blue Cross of Northeastern Pennsylvania 15 S. Franklin Street Wilkes-Barre, PA. 18701 Pennsylvania Blue Shield Blue Shield Building THE AMERICAN COLLEGE OF OBSTETRICIANS & GYNECOLOGISTS 965 Box 1046 Lima, OH 45802 Blue Cross of Northwest Ohio, Inc.

8787 Sylvania Avenue Box 943 Toledo, OH 43656 Blue Cross of Nebraska Box 3248 Main P.O. Station Omaha, NE 68108 Blue Shield of Nebraska Box 3248 Main P.O. Station Omaha, NE 68103 Nevada Blue Shield 8660 Baker Lane Reno, NV 89502 New Hampshire-Vermont Hospitalization Service - BC 2 Pillsbury Street Concord, NH 03301 New Hampshire-Vermont Physicians’ Service 2 Pillsbury Street Concord, NH 03301 Hospital Service Plan of New Jersey - BC 83 Washington Street Box 420 Newark, NJ 07101 Medical-Surgical Plan of New Jersey - BS 83 Washington Street Newark, NJ 07102 New Mexico Blue Cross and Blue Shield, Inc.

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Albuquerque, NM 87112 Blue Cross of Northeastern New York, Inc.

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344 S. Warren Street Box 271 Syracuse, NY 13201 Hospital Plan, Inc.

5 Hopper Street Utica, NY 13501 Hospital Service Corporation of Jefferson County 158 Stone Street Watertown, NY 13601 Blue Shield of Northeastern New York, Inc.

Box 8650 Albany, NY 12208 Blue Shield of Western New York, Inc.

298 Main Street Buffalo, NY 14202 Chautauqua Region Medical Service, Inc. Decision and Order 1251 New Scotland Road Box 8650 Albany, NY 12208 Blue Cross of Western New York, Ine.

298 Main Street Buffalo, NY 14202 Blue Cross of Washington- Alaska, Ince.

15700 Dayton Avenue, North Seattle, WA 98133 The Indiana State Medical Association 8985 North Meridian Street Indianapolis, IN 46208 Continental Service Life & Health Insurance Company Box 3397 5353 Florida Boulevard Baton Rouge, LA 70821 Blue Cross & Blue Shield of Greater New York 622 8rd Avenue New York, NY 10016 Missouri Medical Service 5775 Campus Parkway Hazelwood, MO 638042 Washington Physicians’ Service 220 West Harrison Street Seattle, WA 98119 New York Life Insurance Company 51 Madison Avenue New York, NY 10010 Prudential Insurance Company of America Prudential Plaza Newark, NJ 07101 Continental Assurance Company CNA Plaza Chicago, IL 60605 Bankers Life Company 306 Spring Street Jamestown, NY 14701 United Medical Service, Inc.

2 Park Avenue New York, NY 10016 California Physicians’ Service P. O. Box 7608 San Francisco, CA 94120 Colorado Medical Service, Inc.

244 University Blvd.

Denver, CO 80206 Connecticut General Life Insurance Company Hartford, CT 06115 Medical Association of Georgia 938 Peachtree Street, N.E.

Atlanta, GA 30809 Mississippi State Medical Association 735 Riverside Drive Jackson, MS 389216 Medical-Surgical Care, Inc.

203 Union Trust Building Box 1948 Parkersburg, WV 26101 Metropolitan Life Insurance Company 1 Madison Avenue New York, NY 10010 The Travelers Insurance Company 1 Tower Square Hartford, CT 06115 Aetna Life Insurance Company 151 Farmington Avenue Hartford, CT 06115 Employers Life Insurance THE AMERICAN COLLEGE OF OBSTETRICIANS & GYNECOLOGISTS 967 955 Decision and Order 711 High Street Des Moines, IA 50307 Nationwide Life Insurance Company 246 North High Street Columbus, OH 43216 Equitable Life Assurance Society of the U.S.

1285 Avenue of the Americas New York, NY 10019 Reliance Insurance Group 4 Penn Center Plaza Philadelphia, PA 19103 Occidental Life Insurance? Company of California Box 2101 Terminal Annex Los Angeles, CA 90054 Blue Shield of Massachusetts, Inc.

188 Federal Street Boston, MA 02106 Nevada State Medical Association 3660 Baker Lane Reno, NV 89502 Company of Wausau 200 Westwood Drive Wausau, WI 54401 Colonial Penn Life Insurance Company 5 Penn Center Plaza Philadelphia, PA 19108 Firemen’s Fund Insurance Company 8333 California Street San Francisco, CA 94118 Zurich Life Insurance Company 111 West Jackson Boulevard Chicago, IL 60604 Mutual of Omaha Insurance Company Dodge at 38rd Street Omaha, NE 68131 Blue Cross of Eastern Ohio, Inc.

2400 Market Street Youngstown, OH 44507 Complaint 88 F.T.C.