Cardsystems Solutions, Inc.

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IN THE MATTER OF CARDSYSTEMS SOLUTIONS, INC.

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATIONS OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-4168; File No. 052 3148 Complaint, September 5, 2006 – Decision, September 5, 2006 This consent order relates to personal information collected from and about consumers by respondent CardSystems Solutions Inc. and its successor, Solidus Networks, Inc., doing business as Pay By Touch Solutions. The companies provide merchants with products and services used in “authorization processing” – obtaining approval for credit and debit card purchases from banks that issued the cards. CardSystems stored personal information on its computer network and failed to employ reasonable and appropriate security measures to protect the information. The order requires CardSystems and Pay By Touch to establish and maintain a comprehensive information security program in writing that is reasonably designed to protect the security, confidentiality, and integrity of personal information they collect from or about consumers. The security program must contain administrative, technical, and physical safeguards appropriate to their size and complexity, the nature and scope of their activities, and the sensitivity of the personal information collected. In addition, the order requires the respondents to obtain periodic assessments and reports from a qualified, objective, independent third-party professional, certifying, among other things, that they have in place a security program that provides protections that meet or exceed the protections required by this order, and their security program is operating with sufficient effectiveness to provide reasonable assurance that the security, confidentiality, and integrity of consumers’ personal information has been protected. Additional provisions relate to reporting and compliance. Participants For the Commission: Molly Crawford, Lara Kaufman, and Alain Sheer.

For the Respondent: W. Stephen Cannon, Constantine Cannon.

VOLUME 142 Complaint COMPLAINT The Federal Trade Commission, having reason to believe that CardSystems Solutions, Inc. (“respondent”) has violated the provisions of the Federal Trade Commission Act, and it appearing to the Commission that this proceeding is in the public interest, alleges:

1. Respondent CardSystems Solutions, Inc. is a Delaware corporation with its principal office or place of business at 6390 East Broadway, Tucson, Arizona 85710.

2. The acts and practices of respondent as alleged in this complaint have been in or affecting commerce, as “commerce” is defined in Section 4 of the Federal Trade Commission Act. VIOLATIONS OF THE FEDERAL TRADE COMMISSION ACT 3. Respondent provides merchants with products and services used to obtain authorization for credit and debit card purchases (“card purchases”) from the banks that issued the cards (“issuing banks”). Last year, respondent provided authorization processing for card purchases totaling at least $15 billion for approximately 119,000 merchants. In connection with these activities, respondent uses the Internet and a web application program (“web application”) to provide information to client merchants about authorizations that have been performed for them, and to provide information to prospective merchants about the services offered.

4. To obtain approval for a card purchase, merchants typically use respondent’s services to: collect information from the card’s magnetic stripe, including, but not limited to, customer name, card number and expiration date, a security code used to verify electronically that the card is genuine, and certain other information (collectively, “personal information”); format the CARDSYSTEMS SOLUTIONS, INC. 1021 Complaint information into an authorization request; and transmit the request to respondent’s authorization processing computer network. From there, respondent transmits the request to a computer network operated by or for a bank association (such as Visa or Mastercard) or another entity (such as American Express), which transmits it to the issuing bank. The issuing bank receives the request, approves or declines the purchase, and transmits its response to the merchant over the same computer networks used to process the request. The response includes the personal information that was included in the authorization request the issuing bank received.

5. Since 1998, respondent has stored authorization responses for up to thirty (30) days in one or more databases on its computer network. Each day, these databases contain as many as several million authorization responses.

6. Respondent has engaged in a number of practices that, taken together, failed to provide reasonable and appropriate security for personal information stored on its computer network. Among other things, respondent: (1) created unnecessary risks to the information by storing it in a vulnerable format for up to 30 days; (2) did not adequately assess the vulnerability of its web application and computer network to commonly known or reasonably foreseeable attacks, including but not limited to “Structured Query Language” (or “SQL”) injection attacks; (3) did not implement simple, low-cost, and readily available defenses to such attacks; (4) failed to use strong passwords to prevent a hacker from gaining control over computers on its computer network and access to personal information stored on the network; (5) did not use readily available security measures to limit access between computers on its network and between such computers and the Internet; and (6) failed to employ sufficient measures to detect unauthorized access to personal information or to conduct security investigations.

VOLUME 142 Complaint 7. In September 2004, a hacker exploited the failures set forth in Paragraph 6 by using an SQL injection attack on respondent’s web application and website to install common hacking programs on computers on respondent’s computer network. The programs were set up to collect and transmit magnetic stripe data stored on the network to computers located outside the network every four days, beginning in November 2004. As a result, the hacker obtained unauthorized access to magnetic stripe data for tens of millions of credit and debit cards. 8. In early 2005, issuing banks began discovering several million dollars in fraudulent credit and debit card purchases that had been made with counterfeit cards. The counterfeit cards contained complete and accurate magnetic stripe data, including the security code used to verify that a card is genuine, and thus appeared genuine in the authorization process. The magnetic stripe data matched the information respondent had stored on its computer network. In response, issuing banks cancelled and reissued thousands of credit and debit cards. Consumers holding these cards were unable to use them to access their credit and bank accounts until they received replacement cards. 9. As set forth in Paragraphs 6, 7, and 8, respondent’s failure to employ reasonable and appropriate security measures to protect personal information it stored caused or is likely to cause substantial injury to consumers that is not offset by countervailing benefits to consumers or competition and is not reasonably avoidable by consumers. This practice was, and is, an unfair act or practice.

10. The acts and practices of respondent as alleged in this complaint constitute unfair or deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act.

CARDSYSTEMS SOLUTIONS, INC. 1023 Decision and Order THEREFORE, the Federal Trade Commission this fifth day of September, 2006, has issued this complaint against respondent. By the Commission, Commissioner Harbour recused. 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 the Respondent and its successor corporation, Solidus Networks, Inc., doing business as Pay By Touch Solutions, having been furnished thereafter with a copy of a draft Complaint that the Bureau of Consumer Protection proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge the Respondent with violation of the Federal Trade Commission Act, 15 U.S.C. § 45 et seq;

The Respondent, its attorney, its successor corporation, its attorney, and counsel for the Commission having thereafter executed an Agreement Containing Consent Order (“Consent Agreement”), an admission by the Respondent and its successor corporation of all the jurisdictional facts set forth in the aforesaid draft Complaint, a statement that the signing of said Consent Agreement is for settlement purposes only and does not constitute an admission by Respondent or its successor corporation that the law has been violated as alleged in such Complaint, or that the facts as alleged in such Complaint, other than jurisdictional facts, are true, and waivers and other provisions as required by the Commission’s Rules; and VOLUME 142 Decision and Order The Commission having thereafter considered the matter and having determined that it has reason to believe that the Respondent has violated the said Act, and that a Complaint should issue stating its charges in that respect, and having thereupon accepted the executed Consent Agreement and placed such Consent Agreement on the public record for a period of thirty (30) days, and having duly considered the comments filed thereafter by interested persons pursuant to Section 2.34 of its Rules, now in further conformity with the procedure described in Section 2.34 of its Rules, the Commission hereby issues its Complaint, makes the following jurisdictional findings and enters the following Order: 1. Proposed respondent CardSystems Solutions, Inc. is a Delaware corporation with its principal office or place of business at 6390 East Broadway, Tucson, Arizona 85710. Solidus Networks, Inc, doing business as Pay By Touch Solutions, is a Delaware corporation with its principal office or place of business at 101 2nd St Ste 1500, San Francisco, California 94105.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the Respondent and Solidus Networks, Inc., and the proceeding is in the public interest.

ORDER DEFINITIONS For purposes of this order, the following definitions shall apply:

1. “Personal information” shall mean individually identifiable information from or about an individual consumer including, but not limited to: (a) a first and last name; (b) a home or other physical address, including street name and name of city or town; (c) an email address CARDSYSTEMS SOLUTIONS, INC. 1025 Decision and Order or other online contact information, such as an instant messaging user identifier or a screen name that reveals an individual’s email address; (d) a telephone number; (e) a Social Security number; (f) credit or debit card information, including card number, expiration date, and data stored on a card’s magnetic stripe; (g) a persistent identifier, such as a customer number held in a “cookie” or processor serial number, that is combined with other available data that identifies an individual consumer; or (h) any other information from or about an individual consumer that is combined with (a) through (g) above. 2. Unless otherwise specified, “respondent” shall mean CardSystems Solutions, Inc. and its successors and assigns, including Solidus Networks, Inc., officers, agents, representatives, and employees.

I.

IT IS ORDERED that respondent, directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, marketing, promotion, offering for sale, or sale of any product or service, in or affecting commerce, shall, no later than the date of service of this order, establish and implement, and thereafter maintain, a comprehensive information security program that is reasonably designed to protect the security, confidentiality, and integrity of personal information collected from or about consumers. Such program, the content and implementation of which must be fully documented in writing, shall contain administrative, technical, and physical safeguards appropriate to respondent’s size and complexity, the nature and scope of respondent’s activities, and the sensitivity of the personal information collected from or about consumers, including:

A. the designation of an employee or employees to coordinate and be accountable for the information security program. VOLUME 142 Decision and Order B. the identification of material internal and external risks to the security, confidentiality, and integrity of personal information that could result in the unauthorized disclosure, misuse, loss, alteration, destruction, or other compromise of such information, and assessment of the sufficiency of any safeguards in place to control these risks. At a minimum, this risk assessment should include consideration of risks in each area of relevant operation, including, but not limited to: (1) employee training and management; (2) information systems, including network and software design, information processing, storage, transmission, and disposal; and (3) prevention, detection, and response to attacks, intrusions, or other systems failures.

C. the design and implementation of reasonable safeguards to control the risks identified through risk assessment, and regular testing or monitoring of the effectiveness of the safeguards’ key controls, systems, and procedures. D. the evaluation and adjustment of respondent’s information security program in light of the results of the testing and monitoring required by subparagraph C, any material changes to respondent’s operations or business arrangements, or any other circumstances that respondent knows or has reason to know may have a material impact on the effectiveness of its information security program. II.

IT IS FURTHER ORDERED that, in connection with its compliance with Paragraph I of this order, respondent shall obtain initial and biennial assessments and reports (“Assessments”) from a qualified, objective, independent third-party professional, using procedures and standards generally accepted in the profession. The reporting period for the Assessments shall cover: (1) the first CARDSYSTEMS SOLUTIONS, INC. 1027 Decision and Order one hundred and eighty (180) days after service of the order for the initial Assessment, and (2) each two (2) year period thereafter for twenty (20) years after service of the order for the biennial Assessments. Each Assessment shall:

A. set forth the specific administrative, technical, and physical safeguards that respondent has implemented and maintained during the reporting period; B. explain how such safeguards are appropriate to respondent’s size and complexity, the nature and scope of respondent’s activities, and the sensitivity of the personal information collected from or about consumers; C. explain how the safeguards that have been implemented meet or exceed the protections required by Paragraph I of this order; and D. certify that respondent’s security program is operating with sufficient effectiveness to provide reasonable assurance that the security, confidentiality, and integrity of personal information is protected and has so operated throughout the reporting period.

Each Assessment shall be prepared and completed within sixty (60) days after the end of the reporting period to which the Assessment applies by a person qualified as a Certified Information System Security Professional (CISSP) or as a Certified Information Systems Auditor (CISA); a person holding Global Information Assurance Certification (GIAC) from the SysAdmin, Audit, Network, Security (SANS) Institute; or a similarly qualified person or organization approved by the Associate Director for Enforcement, Bureau of Consumer Protection, Federal Trade Commission, Washington, D.C. 20580. Respondent shall provide the initial Assessment, as well as all: plans, reports, studies, reviews, audits, audit trails, policies, VOLUME 142 Decision and Order training materials, and assessments, whether prepared by or on behalf of respondent, relied upon to prepare such Assessment to the Associate Director for Enforcement, Bureau of Consumer Protection, Federal Trade Commission, Washington, D.C. 20580, within ten (10) days after the Assessment has been prepared. All subsequent biennial Assessments shall be retained by respondent until the order is terminated and provided to the Associate Director of Enforcement within ten (10) days of request. III.

IT IS FURTHER ORDERED that respondent shall maintain, and upon request make available to the Federal Trade Commission for inspection and copying, a print or electronic copy of each document relating to compliance, including but not limited to:

A. for a period of five (5) years: any documents, whether prepared by or on behalf of respondent, that contradict, qualify, or call into question respondent’s compliance with this order; and B. for a period of three (3) years after the date of preparation of each biennial Assessment required under Paragraph II of this order: all plans, reports, studies, reviews, audits, audit trails, policies, training materials, and assessments, whether prepared by or on behalf of respondent, relating to respondent’s compliance with Paragraphs I and II of this order for the compliance period covered by such biennial Assessment.

IV.

IT IS FURTHER ORDERED that respondent shall deliver a copy of this order to all current and future principals, officers, directors, and managers, and to all current and future employees, agents, and representatives having managerial responsibilities CARDSYSTEMS SOLUTIONS, INC. 1029 Decision and Order relating to the subject matter of this order. Respondent shall deliver this order to such current personnel within thirty (30) days after service of this order, and to such future personnel within thirty (30) days after the person assumes such position or responsibilities.

V.

IT IS FURTHER ORDERED that respondent shall notify the Commission at least thirty (30) days prior to any change in the corporation that may affect compliance obligations arising under this order, including, but not limited to, a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor corporation; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this order; the proposed filing of a bankruptcy petition; or a change in either corporate name or address. Provided, however, that, with respect to any proposed change in the corporation about which respondent learns less than thirty (30) days prior to the date such action is to take place, respondent shall notify the Commission as soon as is practicable after obtaining such knowledge. All notices required by this Paragraph shall be sent by certified mail to the Associate Director, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, Washington, D.C. 20580.

VI.

IT IS FURTHER ORDERED that respondent shall, within one hundred and eighty (180) days after service of this order, and at such other times as the Commission may require, file with the Commission an initial report, in writing, setting forth in detail the manner and form in which it has complied with this order. VOLUME 142 Decision and Order VII.

This order will terminate on September 5, 2026, or twenty (20) years from the most recent date that the United States or the Federal Trade Commission files a complaint (with or without an accompanying consent decree) in federal court alleging any violation of the order, whichever comes later; provided, however, that the filing of such a complaint will not affect the duration of: A. any Paragraph in this order that terminates in less than twenty (20) years;

B. this order’s application to any respondent that is not named as a defendant in such complaint; and C. this order if such complaint is filed after the order has terminated pursuant to this Paragraph.

Provided, further, that if such complaint is dismissed or a federal court rules that respondent did not violate any provision of the order, and the dismissal or ruling is either not appealed or upheld on appeal, then the order will terminate according to this Paragraph as though the complaint had never been filed, except that the order will not terminate between the date such complaint is filed and the later of the deadline for appealing such dismissal or ruling and the date such dismissal or ruling is upheld on appeal. By the Commission, Commissioner Harbour recused. CARDSYSTEMS SOLUTIONS, INC. 1031 Analysis to Aid Public Comment ANALYSIS OF CONSENT ORDER TO AID PUBLIC COMMENT The Federal Trade Commission has accepted, subject to final approval, a consent agreement from CardSystems Solutions Inc. (“CardSystems”) and its successor, Solidus Networks, Inc., doing business as Pay By Touch Solutions (“Pay By Touch”). The consent agreement has been placed on the public record for thirty (30) days for receipt of comments by interested persons. Comments received during this period will become part of the public record. After thirty (30) days, the Commission will again review the agreement and the comments received, and will decide whether it should withdraw from the agreement and take appropriate action or make final the agreement’s proposed order. According to the Commission’s proposed complaint, CardSystems provides merchants with products and services used in “authorization processing”– obtaining approval for credit and debit card purchases from banks that issued the cards. Last year, it processed about 210 million card purchases, totaling more than $15 billion, for more than 119,000 small and mid-size merchants. In the course of processing these credit and debit card purchases, CardSystems collected and stored personal information about consumers, including card number and expiration date and other information, from magnetic stripes on the cards. Pay By Touch acquired CardSystems’ assets on December 9, 2005, at which time CardSystems ceased doing business. Pay By Touch uses CardSystems’ former employees, equipment, and technology to process transactions for the same merchants CardSystems served. The Commission’s proposed complaint alleges that CardSystems stored personal information on computers on its computer network and failed to employ reasonable and appropriate security measures to protect the information. The complaint alleges that this failure was an unfair practice because it caused or was likely to cause substantial consumer injury that was VOLUME 142 Analysis to Aid Public Comment not reasonably avoidable and was not outweighed by countervailing benefits to consumers or competition. In particular, CardSystems engaged in a number of practices that, taken together, failed to provide reasonable and appropriate security for personal information stored on its computer network. Among other things, it: (1) created unnecessary risks to the information by storing it; (2) did not adequately assess the vulnerability of its computer network to commonly known or reasonably foreseeable attacks, including but not limited to “Structured Query Language” injection attacks; (3) did not implement simple, low-cost, and readily available defenses to such attacks; (4) failed to use strong passwords to prevent a hacker from gaining control over computers on its computer network and access to personal information stored on the network; (5) did not use readily available security measures to limit access between computers on its network and between such computers and the Internet; and (6) failed to employ sufficient measures to detect unauthorized access to personal information or to conduct security investigations.

The complaint further alleges that several million dollars in fraudulent purchases were made using counterfeit copies of credit and debit cards that contained the same personal information CardSystems had collected from the magnetic stripes of credit and debit cards and then stored on its computer network. After discovering the fraudulent purchases, banks cancelled and reissued thousands of these credit and debit cards, and consumers holding these cards were unable to use them to access credit and their own bank accounts.

The proposed order applies to personal information from or about consumers that CardSystems and Pay By Touch (as CardSystems’ successor) collect in connection with authorization processing. The proposed order contains provisions designed to prevent them from engaging in the future in practices similar to those alleged in the complaint.

CARDSYSTEMS SOLUTIONS, INC. 1033 Analysis to Aid Public Comment Part I of the proposed order requires CardSystems and Pay By Touch to establish and maintain a comprehensive information security program in writing that is reasonably designed to protect the security, confidentiality, and integrity of personal information they collect from or about consumers. The security program must contain administrative, technical, and physical safeguards appropriate to their size and complexity, the nature and scope of their activities, and the sensitivity of the personal information collected. Specifically, the order requires CardSystems and Pay By Touch to:

$ Designate an employee or employees to coordinate and be accountable for the information security program. $ Identify material internal and external risks to the security, confidentiality, and integrity of consumer information that could result in unauthorized disclosure, misuse, loss, alteration, destruction, or other compromise of such information, and assess the sufficiency of any safeguards in place to control these risks.

$ Design and implement reasonable safeguards to control the risks identified through risk assessment, and regularly test or monitor the effectiveness of the safeguards’ key controls, systems, and procedures.

$ Evaluate and adjust their information security program in light of the results of testing and monitoring, any material changes to their operations or business arrangements, or any other circumstances that they know or have to reason to know may have a material impact on the effectiveness of their information security program.

Part II of the proposed order requires that CardSystems and Pay By Touch obtain within 180 days, and on a biennial basis thereafter, an assessment and report from a qualified, objective, independent third-party professional, certifying, among other VOLUME 142 Analysis to Aid Public Comment things, that: (1) they have in place a security program that provides protections that meet or exceed the protections required by Part I of the proposed order, and (2) their security program is operating with sufficient effectiveness to provide reasonable assurance that the security, confidentiality, and integrity of consumers’ personal information has been protected. Parts III through VII of the proposed order are reporting and compliance provisions. Part III requires CardSystems and Pay By Touch to retain documents relating to their compliance with the order. Part IV requires dissemination of the order now and in the future to persons with responsibilities relating to the subject matter of the order. Part V requires them to notify the Commission of changes in their corporate status. Part VI mandates that CardSystems and Pay By Touch submit compliance reports to the FTC. Part VII is a provision “sunsetting” the order after twenty (20 ) years, with certain exceptions. This case is similar to the recent FTC cases against BJ’s Wholesale Club and DSW Inc., which also involved alleged failures to secure credit and debit card information. As in those cases, CardSystems faces potential liability in the millions of dollars under bank procedures and in private litigation for losses related to the breach.

The purpose of this analysis is to facilitate public comment on the proposed order. It is not intended to constitute an official interpretation of the proposed order or to modify its terms in any way.

NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1035 Complaint IN THE MATTER OF NEW CENTURY HEALTH QUALITY ALLIANCE, INC., AND PRIME CARE OF NORTHEAST KANSAS, L.L.C., AND ELIZABETH GALLUP, M.D., J.D., STEVEN BUIE, M.D., THOMAS ALLEN, M.D., AND G. ROBERT POWERS, M.D., AND ASSOCIATES IN FAMILY MEDICINE, P.A., BRIARCLIFF MEDICAL ASSOCIATES, P.C., COLLEGE PARK FAMILY CARE CENTER, P.A., FAMILY HEALTH GROUP, CHARTERED, FAMILY MEDICAL GROUP, P.A., HICKMAN MILLS CLINIC, INC., KANZA MULTISPECIALTY GROUP, P.A., LANDMARK MEDICAL CENTER, INC., MICHAEL E.

MONACO, M.D. D/B/A SELECT HEALTHCARE, P.A., KENNETH NORTON, M.D., P.A., OVERLAND PARK FAMILY HEALTH PARTNERS, P.A., QUIVERA INTERNAL MEDICINE, L.L.C., SEAPORT FAMILY PRACTICE, P.C., SHAWNEE FAMILY CARE, P.A., STATLAND CLINIC, LTD., SUNFLOWER MEDICAL GROUP, P.A., UNITED MEDICAL GROUP, L.L.C., AND KIMBERLY M. WIRTHS, M.D., P.A.

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATIONS OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-4169; File No. 051 0137 Complaint, September 29, 2006 – Decision, September 29,2006 This consent order addresses allegations that New Century Health Quality Alliance, Inc., and Prime Care of Northeast Kansas, as well as certain officials VOLUME 142 Complaint and members of New Century or Prime Care, entered into, orchestrated, and implemented agreements to fix prices and other contract terms on which their physician practice members would deal with health plans. The order prohibits the respondents from entering into, or facilitating, any agreement between or among any physicians: (1) to negotiate with payors on any physician’s behalf; (2) to deal, not to deal, or threaten not to deal with payors; (3) regarding on what terms to deal with any payor; or (4) not to deal individually with any payor, or to deal with any payor only through an arrangement involving New Century or Prime Care. The order also prohibits the respondents from facilitating exchanges of information between or among physicians concerning whether, or on what terms, to contract with a payor. For three years, New Century and Prime Care are required to notify the Commission before entering into any arrangement to act as an agent on behalf of any physicians with payors regarding contracts or before participating in contracting with health plans on behalf of a qualified risk-sharing joint arrangement, or a qualified clinicallyintegrated joint arrangement. Also, for three years, named New Century and Prime Care officials may not (1) negotiate or act as an agent on behalf of any physician or medical group practice that participates or has participated in either New Century or Prime Care or (2) advise any physician or medical group practice that participates in or has participated in either New Century or Prime Care on contracts, offers, contract terms, conditions, or requirements for dealing with any payors. In addition, for three years, both New Century and Prime Care are required to distribute the complaint and order (1) to all physicians who have participated, currently participate, or express interest in participating in New Century or Prime Care; and (2) to payors that have negotiated contracts with or that contract in the future with New Century or Prime Care.

Participants For the Commission: Ellen Connelly, David M. Narrow, and Anne R. Schenof.

For the Respondent: George E. Leonard, Shugart, Thomson & Kilroy, PC.

COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act, as amended, 15 U.S.C. § 41 et seq., and by virtue of the authority vested in it by said Act, the Federal Trade Commission NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1037 Complaint (“Commission”), having reason to believe that New Century Health Quality Alliance, Inc. (“New Century”), Prime Care of Northeast Kansas, L.L.C. (“Prime Care”), Elizabeth Gallup, M.D., J.D., Steven Buie, M.D., Thomas Allen, M.D., and G. Robert Powers, M.D., Associates in Family Medicine, P.A., Briarcliff Medical Associates, P.C., College Park Family Care Center, P.A., Family Health Group, Chartered, Family Medical Group, P.A., Hickman Mills Clinic, Inc., Kanza Multispecialty Group, P.A., Landmark Medical Center, Inc., Michael E. Monaco, M.D., d/b/a Select Healthcare, P.A., Kenneth Norton, M.D., P.A., Overland Park Family Health Partners, P.A., Quivera Internal Medicine, L.L.C., Seaport Family Practice, P.C., Shawnee Family Care, P.A., Statland Clinic Ltd., Sunflower Medical Group, P.A., United Medical Group, L.L.C., and Kimberly M. Wirths, M.D., P.A., hereinafter sometimes collectively referred to as “Respondents,” have violated Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues this Complaint stating its charges in that respect as follows: NATURE OF THE CASE 1. This matter concerns an agreement among competing physicians to refuse to deal, except on collectively determined terms, including price terms, with Humana Health Plan, Inc. (“Humana”), and with others offering coverage for health care services (“payors”) in the Kansas City area, which includes areas in both Missouri and Kansas. The physicians orchestrated this behavior with and through their respective independent practice associations (“IPAs”), New Century and Prime Care, and through activities undertaken jointly by New Century and Prime Care. RESPONDENTS 2. New Century, a not-for-profit corporation established in 1998, is organized, existing, and doing business as an IPA under and by virtue of the laws of the State of Kansas, with its principal VOLUME 142 Complaint address at 5799 Broadmoor, Suite 104, Mission, Kansas 66202. New Century consists of 16 medical practices with a total of approximately 87 primary care physicians who treat patients in the Kansas City area.

3. Prime Care, a for-profit limited liability company established in 1996, is organized, existing, and doing business as an IPA under and by virtue of the laws of the State of Kansas, with its principal address at 5799 Broadmoor, Suite 104, Mission, Kansas 66202. Prime Care consists of nine medical practices with a total of approximately 40 primary care physicians who treat patients in the Kansas City area.

4. In 2002, New Century and Prime Care combined their Board meetings, offices, and administrative staff and operations. New Century and Prime Care voted to formally merge into a single entity, effective January 1, 2005. However, New Century and Prime Care did not complete a merger or formal restructuring that consolidated the two, legally distinct, organizations. 5. New Century and Prime Care took actions in furtherance of the agreements and actions hereinafter alleged to be unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act, through the following officials (hereinafter referred to as “Respondent Officials”), among others: a. Elizabeth Gallup, M.D., J.D., is New Century’s President. In that capacity, she directly participated in the conduct regarding Humana and other payors that is described and challenged as unlawful in this Complaint. Her principal address is 236 Arapahoe Circle, East, Lake Quivera, Kansas 66217.

b. Steven Buie, M.D., who was New Century’s Chairman of the Board from 1999 through 2004. During that time, and in that capacity, he directly participated in the conduct regarding Humana and other payors that is described and NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1039 Complaint challenged as unlawful in this Complaint. His principal address is 11201 Colorado Avenue, Kansas City, Missouri 64137.

c. Thomas Allen, M.D., who is, and has been, New Century’s Chairman of the Board since January 1, 2005. During that time, and in that capacity, he directly participated in the conduct regarding Humana and other payors that is described and challenged as unlawful in this Complaint. His principal address is 4601 West 109th Street, #212, Overland Park, Kansas 66211.

d. G. Robert Powers, M.D., who is, and has been, Prime Care’s Chairman of the Board. In that capacity, he directly participated in the conduct regarding Humana that is described and challenged as unlawful in this Complaint. His principal address is 2040 Hutton, #102, Kansas City, Kansas 66109. 6. Each of the following is a for-profit medical practice that is in the business of providing professional medical services, including physician services, to patients for a fee (hereinafter referred to as “Physician Practice Respondents”): a. Associates in Family Medicine, P.A., whose principal address is 8940 State Avenue, Kansas City, Kansas 66112; b. Briarcliff Medical Associates, P.C., whose principal address is 5400 North Oak Trfwy., Suite 200, Kansas City, Missouri 64118;

c. College Park Family Care Center, P.A., whose principal address is 11755 West 112th Street, Overland Park, Kansas 66210;

d. Family Health Group, Chartered, whose principal address is 12330 Metcalf, Suite 500, Overland Park, Kansas 66213;

VOLUME 142 Complaint e. Family Medical Group, P.A., whose principal address is 8101 Parallel Parkway, Suite 100, Kansas City, Kansas 66112;

f. Hickman Mills Clinic, Inc., whose principal address is 11201 Colorado Avenue, Kansas City, Missouri 64137; g. Kanza Multispecialty Group, P.A., whose principal address is 1428 South 32nd, Kansas City, Kansas 66106; h. Landmark Medical Center, Inc., whose principal address is 8800 N.W. 112th Street, Kansas City, Missouri 64153;

i. Michael E. Monaco, M.D., d/b/a Select Healthcare, P.A., whose principal address is 5701 West 119th Street, Suite 345, Overland Park, Kansas 66209;

j. Kenneth Norton, M.D., P.A., whose principal address is 8901 W. 74th Street, Suite 333, Shawnee Mission, Kansas 66204;

k. Overland Park Family Health Partners, P.A., whose principal address is 6740 West 121st Street, Overland Park, Kansas 66209;

l. Quivera Internal Medicine, L.L.C., whose principal address is 10601 Quivera Road, Suite 210, Overland Park, Kansas 66215;

m. Seaport Family Practice, P.C., whose principal address is 140 Westwoods Drive, Liberty, Missouri 64068; n. Shawnee Family Care, P.A., whose principal address is 5949 Nieman, Shawnee, Kansas 66203;

NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1041 Complaint o. Statland Clinic, Ltd., whose principal address is 5701 West 119th Street, Suite 240, Overland Park, Kansas 66209; p. Sunflower Medical Group, P.A., whose principal address is 5555 West 58th Street, Mission, Kansas 66202; q. United Medical Group, L.L.C., whose principal address is 5701 State Avenue, Suite 100, Kansas City, Kansas 66102; and r. Kimberly M. Wirths, M.D., P.A., whose principal address is 8675 College Boulevard, Suite 100, Overland Park, Kansas 66210.

THE FTC HAS JURISDICTION OVER RESPONDENTS 7. At all times relevant to this Complaint, New Century and Prime Care, acting separately or in concert, and acting through Respondent Officials, among others, have been engaged in the business of negotiating or attempting to negotiate contracts with payors for the provision of physician services on behalf, and for the pecuniary benefit, of their members, including the Physician Practice Respondents.

8. Except to the extent that competition has been restrained as alleged herein: (a) the Physician Practice Respondents that are members of New Century, are now, and have been, in competition with each other and with other members of New Century for the provision of physician services in the Kansas City area; (b) the Physician Practice Respondents that are members of Prime Care, are now, and have been, in competition with each other and with other members of Prime Care for the provision of physician services in the Kansas City area; and (c) the Physician Practice Respondents that are members of Respondent New Century and the Physician Practice Respondents that are members of Respondent Prime Care, are now, and have been, in competition with each other and with other members of New Century or Prime VOLUME 142 Complaint Care for the provision of physician services in the Kansas City area.

9. All Respondents are “persons, partnerships, or corporations” within the meaning of Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 44. 10. The general business practices of all Respondents, including the acts and practices alleged herein, are in or affect “commerce” as defined in the Federal Trade Commission Act, as amended, 15 U.S.C. § 44.

OVERVIEW OF PHYSICIAN CONTRACTING WITH PAYORS 11. Individual physicians and physician group practices contract with payors of health care services and benefits, including insurance companies, Blue Cross and Blue Shield plans, health maintenance organizations (HMOs), preferred provider organizations (PPOs), self-insured employers, and others, to establish the terms and conditions, including price terms, under which the physicians will render their professional medical services to the payors’ subscribers or covered employees and dependents. Physicians and physician group practices entering into such contracts often agree to accept lower compensation from payors in order to obtain access to additional patients made available by the payors’ relationship with the covered individuals. These contracts may reduce payors’ costs and enable them to lower the price of insurance or of providing health benefits, thereby resulting in lower medical costs for covered individuals. 12. Physicians and physician group practices sometimes form or participate in financially integrated joint ventures to provide physician services under agreements with payors willingly seeking such arrangements. Under such arrangements, the physicians and physician group practices may share financial risks and rewards based on their collective success in achieving pre- NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1043 Complaint established targets or goals regarding aggregate utilization and costs of the services provided to covered individuals. 13. Other than through their participation in integrated joint ventures, and absent anticompetitive agreements among them, otherwise competing physicians and physician group practices unilaterally decide whether to enter into contracts with payors to provide services to individuals covered by a payor’s programs, and what prices they will accept as payment for their services pursuant to such contracts.

NEW CENTURY’S AND PRIME CARE’S OPERATION 14. Since their formation, New Century and Prime Care each have entered into contracts with payors for and on behalf of their respective member medical practices, under which New Century and Prime Care received capitation payments from the payors in exchange for the medical practices’ agreement to provide their professional medical services to persons covered by the contracting payors. The capitation contracts provided to payors, in addition to the physicians’ services, an insurance guarantee component that all covered physician services needed by persons covered under a payor’s program would be provided by the contracting IPA’s members for the predetermined capitation charge, regardless of the actual quantity or type of covered services needed and provided.

15. The member medical practices’ participation in New Century and Prime Care, and their offering of their services through the IPAs’ capitation contracts, was not, however, the physicians’ exclusive or even primary method of selling their professional medical services. Rather, the medical practices also continued to sell their medical services individually, on a fee-forservice basis, outside of New Century and Prime Care, to individual patients and through contracts individually entered into between the medical practice and payors. VOLUME 142 Complaint ANTICOMPETITIVE CONDUCT 16. At various times from 1999 to 2005, certain payors decided that they no longer wished to purchase both physician services and the insurance guarantee component jointly provided by the IPAs’ member medical practices through New Century’s and Prime Care’s capitation contracts. Those payors sought to contract solely for the professional medical services of the individual members of New Century and Prime Care on a fee-forservice basis. During that time (and presently) New Century’s and Prime Care’s physician members offered and sold their professional medical services on a fee-for-service basis to payors and individual patients who did not deal with them through New Century or Prime Care.

17. New Century and Prime Care, each acted in conspiracy with their respective member medical practices, including the Physician Practice Respondents, both as combinations of their respective members and together as a combination of the two organizations’ collective members. The purpose of the conspiracies was to prevent payors who previously had capitation contracts with one or both of the IPAs from terminating those contracts and dealing directly with the IPAs’ individual medical practices to purchase or contract for their professional medical services. Through their joint agreements and actions, New Century and Prime Care, and New Century’s and Prime Care’s members, including the Physician Practice Respondents, and often acting through Respondent Officials, restrained competition by, among other things, having their members agree to refrain, and in fact refrain, from dealing individually or contracting with payors, other than on a capitation basis through New Century and Prime Care, and by engaging in collective negotiations over terms, including price terms, and conditions of dealing with payors regarding the individual member medical practices’ professional medical services.

NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1045 Complaint 18. Respondents conducted their anticompetitive activities on two levels. First, the member medical practices of New Century and Prime Care, including the Physician Practice Respondents, agreed to refuse to deal, and refused to deal, with payors regarding payors’ offers of fee-for-service contracts with each individual physician practice. Rather, the physicians agreed to deal, and only would deal, with the payors through New Century and Prime Care, and only on terms, including price terms, that were collectively agreed upon through New Century and Prime Care. Second, New Century and Prime Care joined together to increase the bargaining power of the two IPAs with payors, and to attempt to force Humana and other payors to accept the terms of dealing jointly agreed upon through New Century and Prime Care on behalf of their combined membership. 19. The Physician Practice Respondents acted affirmatively to further the anticompetitive actions undertaken on their behalf by New Century and Prime Care, by engaging in one or more of the following actions: (a) participating in the adoption or implementation of anticompetitive policies or actions by New Century or Prime Care through their representatives’ participation in meetings and decisions of the New Century or Prime Care Boards; (b) participating in closing their medical practices to new Humana patients, as orchestrated by New Century and Prime Care, in order to coerce Humana into contracting through New Century and Prime Care on the physicians’ collectively determined terms; (c) sending or distributing notices to their Humana patients, or otherwise informing them, of the patients’ impending loss of their primary care physicians due to termination of the physicians’ contracts with Humana, as orchestrated by New Century and Prime Care, in order to encourage patients to pressure Humana to contract with New Century and Prime Care on the physicians’ collectively determined terms; and (d) refusing to deal individually with Humana, and informing Humana that they only would deal with Humana collectively through New Century or Prime Care.

VOLUME 142 Complaint EARLY CONTRACT NEGOTIATIONS WITH PAYORS 20. New Century and Prime Care began operations as two separate legal entities, and thereafter entered into separate risksharing contracts with payors, including Humana, Cigna, and Mid America Health Care Plans, Inc. (“Mid America”). 21. Beginning as early as 2000, New Century physicians attempted to prevent MidAmerica from changing from a risksharing contract to a non-risk-sharing, fee-for-service, contract with New Century physicians, by refusing to deal with Mid America except through New Century, and by threatening to terminate Mid America if it did not agree to a risk-sharing contract with the physicians through New Century. These tactics succeeded, and Mid America agreed to the risk-sharing contract that the physicians, acting through New Century, demanded. 22. After succeeding in their efforts to prevent Mid America from obtaining a fee-for-service arrangement, the New Century physicians employed similar tactics in their 2001 negotiations with Cigna. Cigna also sought to change its contractual relationship with the physicians in New Century from a risksharing contract to a fee-for-service reimbursement plan. The New Century physicians were concerned that a fee-for-service reimbursement plan would result in their experiencing a significant drop in their payments from Cigna. To prevent Cigna from making this contractual change, the New Century physicians agreed to refuse, and did refuse, to contract with Cigna except through a group contract with New Century, and threatened to terminate the then-existing contract with Cigna if it continued its efforts to switch to fee-for-service reimbursement for the physicians’ services. However, as of mid-2005, New Century did not have any contract with Cigna.

23. In 2002, New Century and Prime Care joined forces to bargain with payors. When New Century again found itself in a contract dispute with Mid America, Prime Care agreed to help NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1047 Complaint New Century by negotiating together with New Century. New Century and Prime Care united because they realized that acting together would give them more leverage in their negotiations with payors. Together, New Century and Prime Care represented approximately 125 primary care physicians in the Kansas City area NEGOTIATIONS WITH HUMANA 24. Humana, a health maintenance organization (HMO), is a payor that does business in the Kansas City area, which includes Wyandotte County, Kansas, Johnson County, Kansas, and other counties and areas. Humana offers the only Medicare HMO program in Wyandotte County and has approximately 5,000 enrollees in its program there. Prime Care physicians represent approximately 95% of Humana’s primary care physician network in Wyandotte County. Humana also offers one of the two Medicare HMO programs in Johnson County. New Century physicians represent approximately 50% of Humana’s primary care physician network in Johnson County. New Century and Prime Care were aware that without at least a substantial portion of the Prime Care and New Century physicians in its networks, Humana would have an insufficient number of primary care physicians to be able to offer its Medicare HMO programs in either Wyandotte or Johnson counties. New Century and Prime Care used this information to attempt to coerce Humana into accepting their contract demands. New Century and Prime Care physicians also represented a substantial portion of Humana’s primary care physician network for its commercial lines of business in the Kansas City area.

25. Humana had been providing coverage to enrollees in the Kansas City area under its various programs, including its Medicare HMO program, in part through separate full capitation risk contracts with New Century and Prime Care. In 2004, however, Humana decided to eliminate all risk contracting in the Kansas City area, and to contract with individual physicians and VOLUME 142 Complaint physician group practices on a fee-for-service basis. Humana first informally notified New Century and Prime Care of its intention to eliminate its risk contracts with them. Subsequently, by letters dated September 1, 2004, and sent to New Century and Prime Care, Humana provided the formal notification, required by its contracts with each, to exercise its option to terminate each of those contracts without cause, effective December 31, 2004. However, those contracts required the New Century and Prime Care member medical practices to continue treating Humana patients for 180 days after a contract termination, or, based on the date notification was given, until June 30, 2005. The contract provided that the physicians would be paid on a fee-for-service basis for services rendered during this period. 26. The physicians in New Century and Prime Care wanted to continue contracting with Humana only through New Century and Prime Care, and on the terms of their previous capitation contracts with Humana. They did not want to contract directly with Humana on a fee-for-service basis, because they believed that Humana would offer lower payments than those the physicians previously had received under the capitation contracts. 27. On September 2, 2004, New Century and Prime Care sent a joint letter toHumana, signed by Drs. Buie and Powers in their capacities as chairmen of the two organizations. The letter informed Humana that New Century’s and Prime Care’s physicians would not negotiate with Humana on an individual basis, and would continue to contract with it only on a joint basis through New Century and Prime Care. In this letter, New Century and Prime Care also threatened that, unless Humana agreed to a contract by October 1, 2004, they would begin notifying patients covered by Humana, and the Medicare HMO program, who used New Century and Prime Care physicians that those physicians would withdraw from Humana’s provider network. New Century and Prime Care sent copies of this letter to various executives at Humana, as well as to their member medical practices. NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1049 Complaint 28. New Century and Prime Care previously had used similar tactics in their 2001-2002 contract negotiations with Humana. At that time, those tactics succeeded in preventing Humana from eliminating its risk contracts and implementing individual, nonrisk contracts with physicians or medical practices. New Century and Prime Care used their prior success to encourage the physicians in their member medical practices to remain resolute, and to stick together through New Century and Prime Care, in their ongoing 2004 and 2005 dealings with Humana. 29. Almost immediately after sending Humana the September 2, 2004, letter, New Century and Prime Care embarked on a multifaceted public relations campaign, which included media advertisements geared toward employers and patients covered by Humana, flyers and letters to patients, meetings with employers, and communications with insurance brokers. This campaign was designed to pressure Humana to contract with New Century’s and Prime Care’s physicians through the IPAs, and on their desired terms. To prevent Humana from contracting individually with their member medical practices, including the Physician Practice Respondents, New Century and Prime Care together repeatedly urged their member medical practices not to meet individually with Humana representatives, and to refer all calls from Humana to the designated New Century and Prime Care representatives. 30. In early 2005, as part of the campaign to put pressure on Humana to accede to their contracting demands, New Century and Prime Care prepared draft letters for their member medical practices to send to their patients to warn them of an impending likely loss of their primary care physicians under their Humana coverage, and blaming Humana for the impending disruption in their care. New Century and Prime Care recommended that the letters be put on each medical practice’s letterhead, and then have the practice either send copies to its Humana patients, or distribute it to patients at the practice’s offices. At least seven of New Century’s and Prime Care’s approximately 25 member medical practices sent such letters to their Humana patients, and other VOLUME 142 Complaint member medical practices may have distributed the letters to patients or posted the letters in their offices. The following Physician Practice Respondents sent letters based on the drafts prepared by New Century and Prime Care to at least some of their Humana patients:

College Park Family Care Center, P.A.;

Kanza Multispecialty Group, P.A.;

Landmark Medical Center, Inc.;

Seaport Family Practice, P.C.;

Statland Clinic Ltd.;

Sunflower Medical Group, P.A.; and United Medical Group, L.L.C.

31. In early December of 2004, New Century and Prime Care presented Humana with a proposed letter of agreement for a new contract, which included, in addition to continued payment by capitation for Humana’s Medicare HMO business, a 30% increase in the reimbursement to physicians under the commercial capitation part of the contract. By letter of December 10, 2004, Humana rejected this proposal, and reiterated its desire only to contract individually and directly with the physicians and medical practices in New Century and Prime Care. 32. New Century and Prime Care were aware of Humana’s need to have their physicians in its provider network in order for Humana to be able to offer its products for sale in the Kansas City area, and were aware of the disruption that would occur to patients covered under Humana programs if the New Century and Prime Care physicians did not contract with Humana. New Century and Prime Care expressed such awareness both to their members in Board meetings and memoranda, and to Humana in letters.

33. On February 18, 2005, the Boards of Directors of New Century and Prime Carejointly decided to encourage their member medical practices to contact Humana and inform it that NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1051 Complaint they were closing their practices to new Humana patients. This was done, at least in part, to eliminate Humana’s ability to market its products, thereby putting pressure on Humana to contract with New Century and Prime Care on the physicians’ collectively determined desired terms. In February and March, 2005, New Century and Prime Care sent draft letters to all their member medical practices for use in notifying Humana that they were closing their practices to new Humana patients. New Century and Prime Care encouraged the physician practices to send the letters to Humana. The following Physician Practice Respondents, accounting for more than 100 of New Century’s and Prime Care’s approximately 125 total physicians, sent such letters to Humana closing their practices to new Humana patients: Associates in Family Medicine, P.A.;

Briarcliff Medical Associates, P.C.;

College Park Family Care Center, P.A.;

Family Health Group, Chartered;

Hickman Mills Clinic, Inc.;

Kanza Multispecialty Group, P.A.;

Landmark Medical Center, Inc.;

Michael E. Monaco, M.D., d/b/a Select Healthcare, P.A.; Overland Park Family Health Partners, P.A.; Quivera Internal Medicine, L.L.C.;

Seaport Family Practice, P.C.;

Statland Clinic Ltd.;

Sunflower Medical Group, P.A.;

United Medical Group, L.L.C.; and Kimberly M. Wirths, M.D., P.A.

34. Throughout late 2004 and early 2005, Humana repeatedly attempted to contractdirectly with the individual New Century and Prime Care member medical practices. These efforts were unsuccessful. New Century and Prime Care Board meeting minutes reported on Humana’s failure to obtain such individual contracts or arrange for physician alternatives, and noted Humana’s increasing frustration at the situation. New Century VOLUME 142 Complaint and Prime Care attributed Humana’s lack of success in obtaining individual contracts to “the leverage the physicians have as a unified group.” The following Physician Practice Respondents, when contacted by Humana, refused to deal individually with Humana, and referred the Humana representatives to New Century and Prime Care for contract discussions: Briarcliff Medical Associates, P.C.;

Family Health Group, Chartered;

Family Medical Group, P.A.;

Landmark Medical Center, Inc.;

Michael E. Monaco, M.D., d/b/a Select Healthcare, P.A.; Kenneth Norton, M.D., P.A.;

Overland Park Family Health Partners, P.A.; Quivera Internal Medicine, L.L.C.;

Seaport Family Practice, P.C.; and Sunflower Medical Group, P.A.

35. Humana was able to sign an individual contract with one New Century member medical practice consisting of three physicians. However, this group, Shawnee Family Care, P.A., immediately rescinded its agreement with Humana after discussions with New Century and Prime Care officials. 36. On April 1, 2005, New Century and Prime Care together filed a lawsuit against Humana in Kansas state court for breach of contract regarding Humana’s termination of its capitation contracts with New Century and Prime Care, and seeking a preliminary injunction against that termination. Humana removed the case to federal district court for the Western District of Missouri and, on May 7, 2005, filed a counterclaim alleging federal and state antitrust law violations by New Century and Prime Care, acting as representatives of their member medical practices. After Humana had filed its antitrust counterclaim, and the Federal Trade Commission commenced an investigation of the actions of New Century and Prime Care, New Century’s and Prime Care’s member medical practices began to cease their NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1053 Complaint concerted refusal to deal with Humana, and began to deal individually with Humana regarding its contract offers to them. RESPONDENTS’ CONDUCT IS NOT LEGALLY JUSTIFIED 37. Respondents’ joint refusal to deal and negotiation of fees and other competitivelysignificant terms, and the agreements, acts, and practices described above, have not been, and are not, reasonably related to any efficiency-enhancing integration among the physician members of New Century and Prime Care, or between New Century and Prime Care and their respective members, including the Physician Practice Respondents. RESPONDENTS’ ACTIONS HAVE HAD, OR COULD BE EXPECTED TO HAVE, SUBSTANTIAL ANTICOMPETITIVE EFFECTS 38. Respondents’ actions described in paragraphs 15 to 35 of this Complaint have had, have tended to have, or if successful would have had, the effect of restraining trade unreasonably and hindering competition in the provision of physician services in the Kansas City area in the following ways, among others: a. unreasonably restraining price and other forms of competition among physicians whose medical practices are members of New Century, among physicians whose medical practices are members of Prime Care, and between New Century and Prime Care, and their respective medical practice members;

b. increasing prices for physician services; c. depriving payors, including insurers and employers, and individual consumers, of the benefits of competition among physicians; and VOLUME 142 Complaint d. depriving consumers of the benefits of competition among payors.

39. The combination, conspiracy, acts, and practices described above constitute unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45. Such combination, conspiracy, acts, and practices, or the effects thereof, are continuing and will continue or recur in the absence of the relief herein requested. WHEREFORE, THE PREMISES CONSIDERED, the Federal Trade Commission on this twenty-ninth day of September, 2006, issues its Complaint against Respondents New Century Health Quality Alliance, Inc., Prime Care of Northeast Kansas, L.L.C., Elizabeth Gallup, M.D., J.D., Steven Buie, M.D., Thomas Allen, M.D., G. Robert Powers, M.D., Associates in Family Medicine, P.A., Briarcliff Medical Associates, P.C., College Park Family Care Center, P.A., Family Health Group, Chartered, Family Medical Group, P.A., Hickman Mills Clinic, Inc., Kanza Multispecialty Group, P.A., Landmark Medical Center, Inc., Michael E. Monaco, M.D., d/b/a Select Healthcare, P.A., Kenneth Norton, M.D., P.A., Overland Park Family Health Partners, P.A., Quivera Internal Medicine, L.L.C., Seaport Family Practice, P.C., Shawnee Family Care, P.A., Statland Clinic Ltd., Sunflower Medical Group, P.A., United Medical Group, L.L.C., and Kimberly M. Wirths, M.D., P.A.

By the Commission.

NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1055 Decision and Order DECISION AND ORDER The Federal Trade Commission (“Commission”), having initiated an investigation of certain acts and practices of New Century Health Quality Alliance, Inc. (“New Century”), Prime Care of Northeast Kansas, L.L.C. (“Prime Care”), Elizabeth Gallup, M.D., J.D., Steven Buie, M.D., Thomas Allen, M.D., G. Robert Powers, M.D., Associates in Family Medicine, P.A., Briarcliff Medical Associates, P.C., College Park Family Care Center, P.A., Family Health Group, Chartered, Family Medical Group, P.A., Hickman Mills Clinic, Inc., Kanza Multispecialty Group, P.A., Landmark Medical Center, Inc., Michael E. Monaco, M.D., d/b/a Select Healthcare, P.A., Kenneth Norton, M.D., P.A., Overland Park Family Health Partners, P.A., Quivera Internal Medicine, L.L.C., Seaport Family Practice, P.C., Shawnee Family Care, P.A., Statland Clinic Ltd., Sunflower Medical Group, P.A., United Medical Group, L.L.C., and Kimberly M. Wirths, M.D., P.A. (hereinafter collectively referred to as “Respondents”), and Respondents having been furnished thereafter with a copy of the draft of Complaint that counsel for the Commission proposed to present to the Commission for its consideration and which, if issued, would charge Respondents with violations of Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45; and Respondents, their attorney, and counsel for the Commission having thereafter executed an Agreement Containing Consent Order to Cease and Desist (“Consent Agreement”), containing an admission by Respondents of all the jurisdictional facts set forth in the aforesaid draft of Complaint, a statement that the signing of said Consent Agreement is for settlement purposes only and does not constitute an admission by Respondents that the law has been violated as alleged in such Complaint, or that the facts as alleged in such Complaint, other than jurisdictional facts, are true, and waivers and other provisions as required by the Commission’s Rules; and VOLUME 142 Decision and Order The Commission having thereafter considered the matter and having determined that it had reason to believe that Respondents have violated said Act, and that a Complaint should issue stating its charges in that respect, and having accepted the executed Consent Agreement and placed such Consent Agreement on the public record for a period of thirty (30) days for the receipt and consideration of public comments, now in further conformity with the procedure described in Commission Rule 2.34, 16 C.F.R. § 2.34, the Commission hereby issues its Complaint, makes the following jurisdictional findings, and issues the following Order: 1. Respondent New Century is a not-for-profit corporation, organized, existing, and doing business as an independent practice association (“IPA”) under and by virtue of the laws of the State of Kansas, and its principal address is 5799 Broadmoor, Suite 104, Mission, Kansas 66202. 2. Respondent Prime Care is a for-profit limited liability company, organized, existing, and doing business as an IPA under and by virtue of the laws of the State of Kansas, and its principal address is 5799 Broadmoor, Suite 104, Mission, Kansas 66202.

3. Respondent Elizabeth Gallup, M.D., J.D., an individual, is New Century’s President. Her principal address is 236 Arapahoe Circle, East, Lake Quivera, Kansas 66217. 4. Respondent Steven Buie, M.D., an individual, was New Century’s Chairman of the Board from 1999 through 2004. His principal address is 11201 Colorado Avenue, Kansas City, Missouri 64137.

5. Respondent Thomas Allen, M.D., an individual, is New Century’s current Chairman of the Board. His principal address is 4601 W. 109th Street, #212, Overland Park, Kansas 66211.

NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1057 Decision and Order 6. Respondent G. Robert Powers, M.D., an individual, is Prime Care’s Chairman of the Board. His principal address is 2040 Hutton, #102, Kansas City, Kansas 66109. 7. Respondent Associates in Family Medicine, P.A., is a Medical Group Practice that participates in Respondent Prime Care. Its principal address is 8940 State Avenue, Kansas City, Kansas 66112.

8. Respondent Briarcliff Medical Associates, P.C., is a Medical Group Practice that participates in Respondent New Century. Its principal address is 5400 North Oak Trfwy., Suite 200, Kansas City, Missouri 64118.

9. Respondent College Park Family Care Center, P.A., is a Medical Group Practice that participates in Respondent New Century. Its principal address is 11755 West 112th Street, Overland Park, Kansas 66210.

10. Respondent Family Health Group, Chartered, is a Medical Group Practice that participates in Respondent New Century. Its principal address is 12330 Metcalf, Suite 500, Overland Park, Kansas 66213.

11. Respondent Family Medical Group, P.A., is a Medical Group Practice that participates in Respondent Prime Care. Its principal address is 8101 Parallel Parkway, Suite 100, Kansas City, Kansas 66112.

12. Respondent Hickman Mills Clinic, Inc., is a Medical Group Practice that participates in Respondent New Century. Its principal address is 11201 Colorado Avenue, Kansas City, Missouri 64137.

13. Respondent Kanza Multispecialty Group, P.A., is a Medical Group Practice that participates in Respondent Prime Care. VOLUME 142 Decision and Order Its principal address is 1428 South 32nd, Kansas City, Kansas 66106.

14. Respondent Landmark Medical Center, Inc., is a Medical Group Practice that participates in Respondent New Century. Its principal address is 8800 N.W. 112th Street, Kansas City, Missouri 64153.

15. Respondent Michael E Monaco, M.D., d/b/a Select Healthcare, P.A., is a Medical Group Practice that participates in Respondent New Century. Its principal address is 5701 West 119th Street, Suite 345, Overland Park, Kansas 66209. 16. Respondent Kenneth Norton, M.D., P.A. is a Medical Group Practice that participates in Respondent New Century. Its principal address is 8901 West 74th Street, Suite 333, Shawnee Mission, Kansas 66204.

17. Respondent Overland Park Family Health Partners, P.A., is a Medical Group Practice that participates in Respondent New Century. Its principal address is 6740 West 121st Street, Overland Park, Kansas 66209.

18. Respondent Quivera Internal Medicine, L.L.C., is a Medical Group Practice that participates in Respondent New Century. Its principal address is 10601 Quivera Road, Suite 210, Overland Park, Kansas 66215.

19. Respondent Seaport Family Practice, P.C., is a Medical Group Practice that participates in Respondent New Century. Its principal address is 140 Westwoods Drive, Liberty, Missouri 64068.

20. Respondent Shawnee Family Care, P.A., is a Medical Group Practice that participates in Respondent New Century. Its principal address is 5949 Nieman, Shawnee, Kansas 66203. NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1059 Decision and Order 21. Respondent Statland Clinic, Ltd., is a Medical Group Practice that participates in Respondent Prime Care. Its principal address is 5701 West 119th Street, Suite 240, Overland Park, Kansas 66209.

22. Respondent Sunflower Medical Group, P.A., is a Medical Group Practice that participates in Respondent New Century. Its principal address is 5555 West 58th Street, Mission, Kansas 66202.

23. Respondent United Medical Group, L.L.C., is a Medical Group Practice that participates in Respondent Prime Care. Its principal address is 5701 State Avenue, Suite 100, Kansas City, Kansas 66102.

24. Respondent Kimberly M. Wirths, M.D., P.A., is a Medical Group practice that participates in Respondent New Century. Its principal address is 8675 College Boulevard, Suite 100, Overland Park, Kansas 66210.

25. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the Respondents, and the proceeding is in the public interest.

ORDER I.

IT IS ORDERED that, as used in this Order, the following definitions shall apply:

A. “Respondent New Century” means New Century Health Quality Alliance, Inc., its officers, directors, employees, agents, attorneys, representatives, successors, and assigns; and the subsidiaries, divisions, groups, and affiliates controlled by it, and the respective officers, directors, VOLUME 142 Decision and Order employees, agents, attorneys, representatives, successors, and assigns of each.

B. “Respondent Prime Care” means Prime Care of Northeast Kansas, L.L.C., its officers, directors, employees, agents, attorneys, representatives, successors, and assigns; and the subsidiaries, divisions, groups, and affiliates controlled by it, and the respective officers, directors, employees, agents, attorneys, representatives, successors, and assigns of each.

C. “Respondent IPAs” means Respondent New Century and Respondent Prime Care, each of which is a “Respondent IPA”.

D. “Respondent Gallup” means Elizabeth Gallup, M.D., J.D. E. “Respondent Buie” means Steven Buie, M.D. F. “Respondent Allen” means Thomas Allen, M.D. G. “Respondent Powers” means G. Robert Powers, M.D. H. “Respondent Officials” means Respondent Gallup, Respondent Buie, Respondent Allen, and Respondent Powers.

I. “Physician Practice Respondents” means Respondent Associates in Family Medicine, P.A., Respondent Briarcliff Medical Associates, P.C., Respondent College Park Family Care Center, P.A., Respondent Family Health Group Chartered, Respondent Family Medical Group, P.A., Respondent Hickman Mills Clinic, Inc., Respondent Kanza Multispecialty Group, P.A., Respondent Landmark Medical Center, Inc., Respondent Michael E. Monaco, M.D., d/b/a Select Healthcare, P.A., Respondent Kenneth Norton, M.D., P.A., Respondent Overland Park Family NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1061 Decision and Order Health Partners, P.A., Respondent Quivera Internal Medicine, L.L.C., Respondent Seaport Family Practice, P.C., Respondent Shawnee Family Care, P.A., Respondent Statland Clinic Ltd., Respondent Sunflower Medical Group, P.A., Respondent United Medical Group, L.L.C., and Respondent Kimberly M. Wirths, M.D., P.A. J. “Respondents” means Respondent IPAs, Respondent Officials, and Physician Practice Respondents. K. “Medical group practice” means a bona fide, integrated firm in which physicians practice medicine together as partners, shareholders, owners, members, or employees, or in which only one physician practices medicine. L. “Participate” in an entity means (1) to be a partner, shareholder, owner, member, or employee of such entity, or (2) to provide services, agree to provide services, or offer to provide services to a payor through such entity. This definition applies to all tenses and forms of the word “participate,” including, but not limited to, “participating,” “participated,” and “participation.”

M. “Payor” means any person that pays, or arranges for payment, for all or any part of any physician services for itself or for any other person, as well as any person that develops, leases, or sells access to networks of physicians. N. “Person” means both natural persons and artificial persons, including, but not limited to, corporations, unincorporated entities, and governments. O. “Physician” means a doctor of allopathic medicine (“M.D.”) or a doctor of osteopathic medicine (“D.O.”). VOLUME 142 Decision and Order P. “Principal address” means either (1) primary business address, if there is a business address, or (2) primary residential address, if there is no business address. Q. “Qualified clinically-integrated joint arrangement” means an arrangement to provide physician services in which: 1. all physicians who participate in the arrangement participate in active and ongoing programs of the arrangement to evaluate and modify the practice patterns of, and create a high degree of interdependence and cooperation among, the physicians who participate in the arrangement, in order to control costs and ensure the quality of services provided through the arrangement; and 2. any agreement concerning price or other terms or conditions of dealing entered into by or within the arrangement is reasonably necessary to obtain significant efficiencies that result from such integration through the arrangement.

R. “Qualified risk-sharing joint arrangement” means an arrangement to provide physician services in which: 1. all physicians who participate in the arrangement share substantial financial risk through their participation in the arrangement and thereby create incentives for the physicians who participate jointly to control costs and improve quality by managing the provision of physician services such as risk-sharing involving: a. the provision of physician services at a capitated rate, NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1063 Decision and Order b. the provision of physician services for a predetermined percentage of premium or revenue from payors, c. the use of significant financial incentives (e.g., substantial withholds) for physicians who participate to achieve, as a group, specified costcontainment goals, or d. the provision of a complex or extended course of treatment that requires the substantial coordination of care by physicians in different specialties offering a complementary mix of services, for a fixed, predetermined price, when the costs of that course of treatment for any individual patient can vary greatly due to the individual patient’s condition, the choice, complexity, or length of treatment, or other factors; and 2. any agreement concerning price or other terms or conditions of dealing entered into by or within the arrangement is reasonably necessary to obtain significant efficiencies that result from such integration through the arrangement.

II.

IT IS FURTHER ORDERED that Respondents, directly or indirectly, or through any corporate or other device, in connection with the provision of physician services in or affecting commerce, as “commerce” is defined in Section 4 of the Federal Trade Commission Act, 15 U.S.C. § 44, cease and desist from: A. Entering into, adhering to, participating in, maintaining, organizing, implementing, enforcing, or otherwise facilitating any combination, conspiracy, agreement, or VOLUME 142 Decision and Order understanding between or among any physicians with respect to their provision of physician services: 1. To negotiate on behalf of any physician with any payor;

2. To deal, refuse to deal, or threaten to refuse to deal with any payor;

3. Regarding any term, condition, or requirement upon which any physician deals, or is willing to deal, with any payor, including, but not limited to, price terms; or 4. Not to deal individually with any payor, or not to deal with any payor other than through Respondent New Century or Respondent Prime Care;

B. Exchanging or facilitating in any manner the exchange or transfer of information among physicians concerning any physician’s willingness to deal with a payor, or the terms or conditions, including price terms, on which the physician is willing to deal with a payor; C. Attempting to engage in any action prohibited by Paragraphs II.A or II.B above; and D. Encouraging, suggesting, advising, pressuring, inducing, or attempting to induce any person to engage in any action that would be prohibited by Paragraphs II.A through II.C above.

Provided, however, that nothing in this Paragraph II shall prohibit any agreement or conduct involving any Respondent: (a) that subject to the requirements of Paragraph IV of this Order, is reasonably necessary to form, participate in, or take any action in furtherance of, a qualified risk-sharing joint arrangement or a qualified clinically-integrated joint arrangement, so long as such NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1065 Decision and Order qualified joint arrangement does not restrict the ability of, or facilitate the refusal of, physicians who participate in it to deal with payors on an individual basis or through any other arrangement; or (b) where such agreement or conduct solely involves physicians in the same medical group practice. III.

IT IS FURTHER ORDERED that, for three (3) years after the date this Order becomes final, for any arrangement under which a Respondent IPA would act as an agent, or as a messenger, on behalf of any physician or any medical group practice with any payor regarding contracts, the Respondent IPA proposing to enter into such arrangement shall notify the Secretary of the Commission in writing (“Paragraph III Notification”) at least sixty (60) days prior to entering into the arrangement for which Paragraph III Notification is required. The Paragraph III Notification shall include the number of proposed physician participants in the proposed arrangement; the proposed geographic area in which the proposed arrangement would operate; a copy of any proposed physician participation agreement; a description of the proposed arrangement’s purpose and function; a description of any resulting efficiencies expected to be obtained through the proposed arrangement; and a description of procedures to be implemented to limit possible anticompetitive effects of the proposed arrangement, such as those prohibited by this Order. If, within fifteen (15) days from the date of the Commission’s receipt of the Paragraph III Notification, a representative of the Commission makes a written request for additional information to the Respondent IPA that provided the Paragraph III Notification then that Respondent IPA shall not enter into the arrangement described in the Paragraph III Notification prior to the expiration of sixty (60) days after substantially complying with such request. Provided, however, that written confirmation reducing the applicable waiting period may be granted, upon request to the VOLUME 142 Decision and Order Bureau of Competition. The expiration of any waiting period described herein without a request for additional information or without the initiation of an enforcement proceeding shall not be construed as a determination by the Commission, or its staff, that a violation of the law, or of this Order, may not have occurred. Receipt by the Commission of any Paragraph III Notification is not to be construed as a determination by the Commission that any action described in such Paragraph III Notification does or does not violate this Order or any law enforced by the Commission.

IV.

IT IS FURTHER ORDERED that for three (3) years from the date this Order becomes final, pursuant to each qualified clinically-integrated joint arrangement or qualified risk-sharing joint arrangement (referred to in this Paragraph IV as “Arrangement”) in which any Respondent is a participant, that Respondent participant shall notify the Secretary of the Commission in writing (“Paragraph IV Notification”) at least sixty (60) days prior to:

A. Participating in, organizing, or facilitating any discussion or understanding with or among any physicians or medical group practices in such Arrangement relating to price or other terms or conditions of dealing with any payor; or B. Contacting a payor, pursuant to an Arrangement to negotiate or enter into any agreement concerning price or other terms or conditions of dealing with any payor, on behalf of any physician or medical group practice in such Arrangement.

Provided, further, however, Paragraph IV Notification shall include the following information regarding the Arrangement NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1067 Decision and Order pursuant to which Respondent intends to engage in the above identified conduct:

a. the total number of physicians and the number of physicians in each specialty participating in the Arrangement;

b. a description of the Arrangement, including its purpose and geographic area of operation;

c. a description of the nature and extent of the integration and the efficiencies resulting from the Arrangement; d. an explanation of the relationship of any agreement on prices, or contract terms related to price, to furthering the integration and achieving the efficiencies of the Arrangement;

e. a description of any procedures proposed to be implemented to limit possible anticompetitive effects resulting from the Arrangement or its activities; and f. all studies, analyses, and reports that were prepared for the purpose of evaluating or analyzing competition for physician services in any relevant market, including, but not limited to, the market share of physician services in any relevant market.

Provided, however, that any Physician Practice Respondent or any Respondent Official, who is participating in an Arrangement solely as participant in a Physician Practice Respondent, may, upon written affirmation, exclude from his, her, or its Paragraph IV Notification any information that is not known by such Physician Practice Respondent or such Respondent Official.

VOLUME 142 Decision and Order Provided, further if, within sixty (60) days from the Commission’s receipt of the Paragraph IV Notification, a representative of the Commission makes a written request for additional information to the Respondent that provided that Paragraph IV Notification, that Respondent shall not engage in any conduct described in Paragraph IV.A or Paragraph IV.B of this Order prior to the expiration of thirty (30) days after substantially complying with such request for additional information, or such shorter waiting period as may be granted in writing from the Bureau of Competition. The expiration of any waiting period described herein without a request for additional information shall not be construed as a determination by the Commission, or its staff, that a violation of the law, or of this Order, may not have occurred. In addition, the absence of notice that the Arrangement has been rejected, regardless of a request for additional information, shall not be construed as a determination by the Commission, or its staff, that the Arrangement has been approved. Further, receipt by the Commission of any Paragraph IV Notification regarding activity pursuant to an Arrangement is not to be construed as a determination by the Commission that any such Arrangement does or does not violate this Order or any law enforced by the Commission;

Provided, further, that Paragraph IV Notification shall not be required prior to engaging in any activity described at Paragraph IV.A or Paragraph IV.B of the Order pursuant to any Arrangement for which Paragraph IV Notification has previously been given.

V.

IT IS FURTHER ORDERED that, for three (3) years from the date this Order becomes final, Respondent Officials, directly or indirectly, or through any corporate or other device, in connection with the provision of physician services in or affecting commerce, as “commerce” is defined in Section 4 of the Federal Trade Commission Act, 15 U.S.C. § 44, cease and desist from: NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1069 Decision and Order A. Negotiating, or acting as an agent or messenger, on behalf of any physician or any medical group practice that participates or has participated in either Respondent IPA with any payor, notwithstanding whether such conduct also is prohibited by Paragraph II of this Order; and B. Advising any physician or medical group practice that participates, or has participated, in either Respondent New Century or Respondent Prime Care, to accept or reject any contract, offer, contract term, condition, or requirement of dealing with any payor, notwithstanding whether such conduct also is prohibited by Paragraph II of this Order. Provided, however, that nothing in this Paragraph V shall prohibit a Respondent Official from: (a) subject to the requirements of Paragraph IV of this Order, forming, participating in, or taking any action in furtherance of a qualified risk-sharing joint arrangement or qualified clinically-integrated joint arrangement so long as such qualified joint arrangement does not restrict the ability or facilitate the refusal of physicians who participate in it to deal with payors on an individual basis or through any other arrangement; or (b) any activity that solely involves physicians in a medical group practice in which the Respondent Official participates.

VI.

IT IS FURTHER ORDERED that each Respondent IPA shall:

A. Within thirty (30) days after the date on which this Order becomes final:

1. send by first-class mail with delivery confirmation or electronic mail with return confirmation, a copy of this Order and the Complaint to:

VOLUME 142 Decision and Order a. every physician who participates, or has participated, in Respondent IPA at any time since January 1, 2000; and b. each current officer, director, manager, and employee of Respondent IPA; and 2. send by first-class mail, return receipt requested, a copy of this Order and the Complaint to the chief executive officer of each payor that has contracted with Respondent IPA for the provision of physician services at any time since January 1, 2000; B. For three (3) years from the date this Order becomes final: 1. Distribute by first-class mail, return receipt requested, a copy of this Order and the Complaint to: a. each physician who begins participating in Respondent IPA, and who did not previously receive a copy of this Order and the Complaint from such Respondent IPA, within thirty (30) days of the time that such participation begins; b. each payor who contracts with Respondent IPA for the provision of physician services, and who did not previously receive a copy of this Order and the Complaint from such Respondent IPA, within thirty (30) days of the time that such payor enters into such contract; and c. each person who becomes an officer, director, manager, or employee of Respondent IPA, and who did not previously receive a copy of this Order and the Complaint from Respondent IPA, within NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1071 Decision and Order thirty (30) days of the time that he or she assumes such position with such Respondent IPA; and 2. Annually publish in an official annual report or newsletter sent to all physicians who participate in Respondent IPA, a copy of this Order and the Complaint with such prominence as is given to regularly featured articles.

C. Notify the Commission at least thirty (30) days prior to any proposed: (1) dissolution of Respondent IPA; (2) acquisition, merger or consolidation of Respondent IPA; or (3) other change in Respondent IPA that may affect compliance obligations arising out of this Order, including but not limited to assignment, the creation or dissolution of subsidiaries, or any other change in Respondent IPA; and D. File verified written reports within sixty (60) days from the date this Order becomes final, annually thereafter for three (3) years on the anniversary of the date this Order becomes final, and at such other times as the Commission may by written notice require. Each report shall include: 1. a detailed description of the manner and form in which the Respondent IPA has complied and is complying with this Order;

2. the name, address, and telephone number of each payor with which the Respondent IPA has had any contact; and 3. copies of the delivery confirmations or electronic mail with return confirmations required by Paragraph VI.A.1, and copies of the signed return receipts required by Paragraphs VI.A.2 and VI.B.1. VOLUME 142 Decision and Order VII.

IT IS FURTHER ORDERED that each Respondent Official shall file a verified written report within ninety (90) days from the date this Order becomes final, annually thereafter for three (3) years on the anniversary of the date this Order becomes final, and at such other times as the Commission may by written notice require. Each report shall include a detailed description of the manner and form in which the Respondent Official filing the report has complied and is complying with this Order. VIII.

IT IS FURTHER ORDERED that each Physician Practice Respondent shall:

A. Within thirty (30) days from the date that this Order becomes final send by first-class mail, return receipt requested, to each physician who participates in such Physician Practice Respondent a copy of the notice specified in Appendix A to this Order;

B. File a verified written report within ninety (90) days from the date this Order becomes final and at such other times as the Commission may by written notice require. Each report shall include:

1. a detailed description of the manner and form in which the Physician Practice Respondent has complied and is complying with this Order; and 2. copies of the signed return receipts required by Paragraph VIII.A of this Order; and C. Notify the Commission at least thirty (30) days prior to any proposed change in the Physician Practice Respondent NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1073 Decision and Order that may affect compliance obligations arising out of this Order.

IX.

IT IS FURTHER ORDERED that, for three (3) years from the date this Order becomes final, each Respondent shall notify the Commission of any change in his, her, or its respective principal address within twenty (20) days of such change in address.

X.

IT IS FURTHER ORDERED that, for the purpose of determining or securing compliance with this Order: A. Each Respondent shall permit any duly authorized representative of the Commission access, during office hours and in the presence of counsel, to inspect and copy all books, ledgers, accounts, correspondence, memoranda, calendars, and other records and documents in the possession, or under the control, of such Respondent relating to any matter contained in this Order; and B. Upon five (5) days’ notice:

1. Each Respondent IPA and each Physician Practice Respondent, in the presence of counsel and without restraint or interference, permit any duly authorized representative of the Commission to interview its officers, directors, employees, agents or representatives, or any participant in any Physician Practice Respondent; and 2. Each Respondent Official shall, in the presence of counsel and without restraint or interference, permit VOLUME 142 Decision and Order any duly authorized representative of the Commission to interview him or her.

XI.

IT IS FURTHER ORDERED that this Order shall terminate on September 29, 2026.

By the Commission.

Appendix A [Letterhead of Physician Practice Respondent] [Date] [Name and Address of Participating Physician] Dear [Participating Physician]:

On [Date], the Federal Trade Commission (“FTC”) issued a complaint and decision and order (“Order”) against New Century Health Quality Alliance, Inc. (“New Century”), Prime Care of Northeast Kansas, L.L.C. (“Prime Care”), and various officials and physician practice members of those organizations, including [Physician Practice Respondent]. Pursuant to Paragraph VIII.A. of the Order [Physician Practice Respondent] must provide you with notice of this Order, and this letter is intended to provide that notice.

The Order is designed to correct illegal conduct described by the FTC in the complaint, which alleges, in part, that New Century, NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1075 Decision and Order Prime Care, certain New Century and Prime Care officials, and certain New Century and Prime Care members violated federal antitrust laws by agreeing to fix prices and other terms on which they would contract with health plans and by refusing to contract with health plans except on collectively determined terms. In short, the Order prohibits New Century, Prime Care, the New Century and Prime Care officials named in the Order, and the New Century and Prime Care physician practice members named in the Order, including [Physician Practice Member], from entering into or facilitating any agreement between or among physicians (1) to negotiate with health plans on any physicians’ behalf, (2) to deal, not to deal, or threaten not to deal with health plans on any physicians’ behalf, (3) regarding on what terms to deal with any health plan, or (4) to not deal individually with any health plan.

Certain legitimate joint-contracting arrangements among competing physicians are exempted from the general prohibition. These arrangements would include, for example, qualified risksharing joint arrangements and qualified clinically-integrated joint arrangements, as defined in the Order. The FTC must still be given prior notification of these arrangements, however. The Order expires in twenty years. A copy is enclosed for your review.

Sincerely, [Signatory] VOLUME 142 Analysis to Aid Public Comment ANALYSIS OF CONSENT ORDER TO AID PUBLIC COMMENT The Federal Trade Commission has accepted, subject to final approval, an agreement containing a proposed consent order with New Century Health Quality Alliance, Inc. (“New Century”), Prime Care of Northeast Kansas (“Prime Care”), four current or former officials of New Century or Prime Care, and 18 physician practices that are members of New Century or Prime Care (collectively referred to as “Proposed Respondents”). New Century and Prime Care each are a type of physician joint venture known as an independent practice association (IPA). The New Century and Prime Care IPAs were comprised of competing physician practices in the Kansas City area who came together to jointly offer their services to certain payors who sought to purchase the physicians’ services under capitation payment arrangements. Through the IPAs, the physicians shared financial risk that the services provided under the contracts might exceed the capitation payment from the payor to the IPA. In addition to together offering capitation risk-sharing contracts through the IPAs, each individual physician practice also continued to offer and sell its medical services to individual patients and payors on a fee-for-service basis as the physician practice’s primary method of doing business. At various times, certain payors attempted to purchase the services of the individual physician practices in New Century and Prime Care not as part of the IPAs’ risk-sharing capitation contracts as the payors had done in the past, but rather directly and on an individual fee-for-service basis. Although the physician practices continued to offer their services in competition with one another individually and on a fee-for-service basis in the market to other payors, the physician practices, acting through New Century and Prime Care and their officials, agreed that they would only sell their services to those payors through capitation contracts entered into between the payors and the IPAs. NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1077 Analysis to Aid Public Comment The physician practices did this because they believed that they would receive lower payments under the direct, fee-for-service arrangements than they were making under the capitation contracts with the payors.

The four named officials led New Century’s and Prime Care’s efforts to force the payors to deal through the IPAs in order to obtain access to the services of those physician practices, and actively encouraged the physician practice members of New Century and Prime Care to refuse to deal individually with health plans outside the IPAs. Each of the 18 named physician practices took one or more affirmative actions in furtherance of the illegal agreement alleged in the proposed Complaint. In the absence of market power, jointly offering medical services on a capitation risk-sharing basis through New Century and Prime Care may be lawful and even procompetitive. However, the agreement by the physician members of New Century and Prime Care, respectively, to provide capitation risk contracts through each IPA does not justify their agreements not to deal, or only to deal on collectively determined terms, including price terms, regarding the sale of the individual physician practices’ services outside the joint ventures. The member physicians’ practices have not been fully integrated through either of the IPAs, and the individual physician practices in each IPA continue to compete with each other outside the IPAs in the sale of their services on a fee-for-service basis. Moreover, the offering by each IPA of capitation risk contracts does not justify the agreement of the two IPAs, at various times, to coordinate their actions, and the actions of their physician members, regarding the separate capitation risk contracts that each IPA had with payors. Neither the two IPAs, nor their respective physician memberships, were integrated at all with each other regarding those separate capitation risk contracts. Likewise, the IPAs’ offering of capitation risk contracts, either separately or together, does not justify the two IPAs’ agreement to act together, and their joint actions, regarding the sale of their individual member physician practices’ medical services on a fee-for-service basis outside of the IPAs.

VOLUME 142 Analysis to Aid Public Comment The agreement settles charges that the Proposed Respondents violated Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45, by entering into, orchestrating, and implementing agreements to fix prices and other contract terms on which the physician practice members of the IPAs would deal with health plans. Even though the physician practice members offered their services jointly regarding their capitation risk contracts through the IPAs, they remained competitors in the sale of physician services and their refusals to deal with health plans except collectively and on collectively-determined terms through the IPAs violated Section 5.

The proposed consent order has been placed on the public record for 30 days to receive comments from interested persons. Comments received during this period will become part of the public record. After 30 days, the Commission will review the agreement and the comments received, and will decide whether it should withdraw from the agreement or make the proposed order final. The purpose of this analysis is to facilitate public comment on the proposed order. The analysis is not intended to constitute an official interpretation of the agreement and proposed order, or to modify their terms in any way. Further, the proposed consent order has been entered into for settlement purposes only and does not constitute an admission by Proposed Respondents that they violated the law or that the facts alleged in the complaint (other than jurisdictional facts) are true.

The Complaint The allegations of the Complaint are summarized below. New Century is an independent practice association (“IPA”) that consists of 16 medical practice groups with a total of approximately 87 primary care physicians who treat patients in the Kansas City area. Prime Care also is an IPA, and consists of nine medical practice groups with a total of about 40 primary care NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1079 Analysis to Aid Public Comment physicians who treat patients in the Kansas City area. In 2002, the two IPAs began combining their Board meetings, offices, and administrative staff and operations. They voted to merge into a single entity, effective January 1, 2005, but never completed the steps legally necessary to consolidate. At various times, the physician practice members of New Century and Prime Care, acting jointly through those IPAs and their officials, and with the two IPAs acting either in concert or separately on different occasions, refused to deal with various health plans on any terms except by contracting through the IPAs and on a capitated basis.

Most recently, in 2004 and 2005, the physician practice members of New Century and Prime Care, acting together through the two IPAs and their officials, agreed to refuse to contract, and did refuse to contract, with Humana Health Plan, Inc. (“Humana”) regarding its offers of fee-for-service payment contracts with the individual physician practices. Humana notified New Century and Prime Care of its intention to eliminate its use of capitated arrangements in the Kansas City area, and also notified them of its intention to terminate the separate, preexisting, capitated contracts it had with each IPA. Before the capitated contract terminations were to become effective, Humana attempted to enter into new, individual, fee-for-service contracts with each of the physician practices that were members of New Century or Prime Care. However, New Century’s and Prime Care’s physician members agreed that they would deal with Humana only through their IPAs, acting in concert, and only on terms, including price terms, that were collectively agreed upon by the IPAs’ physician practice members. These demands included, among other things, continued joint contracting, payment by capitation, and a 30% increase in physician reimbursement under one health plan contract. New Century and Prime Care, and their physician practice members, realized that together, with approximately 125 primary VOLUME 142 Analysis to Aid Public Comment care physicians concentrated in certain parts of the Kansas City Area, they would have a better chance of forcing health plans, including Humana, to accept their contract demands. For example, they and their member physician practices were aware that Humana would be unable to offer certain of its programs to customers in the Kansas City area without the New Century and Prime Care physicians under contract as participating providers, and used that information to attempt to coerce Humana to accede to their contract demands.

When Humana objected to New Century and Prime Care’s demands, and refused to contract on a capitated basis or otherwise to deal with New Century or Prime Care in attempting to contract with the physician practices, New Century and Prime Care embarked on a multi-faceted campaign to encourage employers, brokers, and patients to put pressure on Humana to accept the contract terms demanded by the IPAs. Among the actions taken in furtherance of the challenged agreement were that various physician practice members of New Century and Prime Care, with the active encouragement and assistance of New Century and Prime Care officials: notified Humana that they were closing their medical practices to new patients covered by Humana’s programs; mailed or distributed notices to patients covered by Humana programs informing the patients of impending disruption in their physician care due to Humana’s refusal to enter into a contract with the physicians on acceptable terms; and rebuffed efforts by Humana to contract with the individual physician practices, referring Humana back to New Century and Prime Care for all contracting issues. By the acts set forth in the Complaint, the Proposed Respondents violated Section 5 of the FTC Act. The Proposed Consent Order The proposed order is designed to remedy the illegal conduct charged in the Complaint and prevent its recurrence. It is similar to recent consent orders that the Commission has issued to settle NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1081 Analysis to Aid Public Comment charges that physician groups engaged in unlawful agreements to raise fees they receive from health plans. The proposed order’s specific provisions are as follows: Paragraph II.A prohibits the Proposed Respondents from entering into, or facilitating, any agreement between or among any physicians: (1) to negotiate with payors on any physician’s behalf; (2) to deal, not to deal, or threaten not to deal with payors; (3) regarding on what terms to deal with any payor; or (4) not to deal individually with any payor, or to deal with any payor only through an arrangement involving New Century or Prime Care. Other parts of Paragraph II reinforce these general prohibitions. Paragraph II.B prohibits the Proposed Respondents from facilitating exchanges of information between or among physicians concerning whether, or on what terms, to contract with a payor. Paragraph II.C bars attempts to engage in any action prohibited by Paragraph II.A or II.B, and Paragraph II.D proscribes the Proposed Respondents from inducing anyone to engage in any action prohibited by Paragraphs II.A through II.C. As in other Commission orders addressing providers’ collective bargaining with health care purchasers, certain kinds of agreements are excluded from the general bar on joint negotiations. The Proposed Respondents would not be precluded from engaging in conduct that is reasonably necessary to form or participate in legitimate joint contracting arrangements among competing physicians in a “qualified risk-sharing joint arrangement” or a “qualified clinically-integrated joint arrangement.” The arrangement, however, must not facilitate the refusal of, or restrict, physicians in contracting with payors outside of the arrangement. As defined in the proposed order, a “qualified risk-sharing joint arrangement” possesses two key characteristics. First, all physician participants must share substantial financial risk through the arrangement, such that the arrangement creates incentives for the physician participants VOLUME 142 Analysis to Aid Public Comment jointly to control costs and improve quality by managing the provision of services. Second, any agreement concerning reimbursement or other terms or conditions of dealing must be reasonably necessary to obtain significant efficiencies through the joint arrangement.

A “qualified clinically-integrated joint arrangement,” on the other hand, need not involve any sharing of financial risk. Instead, as defined in the proposed order, physician participants must participate in active and ongoing programs to evaluate and modify their clinical practice patterns in order to control costs and ensure the quality of services provided, and the arrangement must create a high degree of interdependence and cooperation among physicians. As with qualified risk-sharing arrangements, any agreement concerning price or other terms of dealing must be reasonably necessary to achieve the efficiency goals of the joint arrangement.

Paragraph III, for three years, requires New Century and Prime Care to notify the Commission before entering into any arrangement to act as an agent on behalf of any physicians, with payors regarding contracts. Paragraph III also sets out the information necessary to make the notification complete. Paragraph IV, for three years, requires the Proposed Respondents to notify the Commission before participating in contracting with health plans on behalf of a qualified risk-sharing joint arrangement, or a qualified clinically-integrated joint arrangement. The contracting discussions that trigger the notice provision may be either among physicians, or between New Century or Prime Care and health plans. Paragraph IV also sets out the information necessary to satisfy the notification requirement.

Paragraph V provides that, for three years, the New Century and Prime Care officials named in the proposed complaint and order may not: (1) negotiate or act as an agent on behalf of any NEW CENTURY HEALTH QUALITY ALLIANCE, INC. 1083 Analysis to Aid Public Comment physician or medical group practice that participates or has participated in either New Century or Prime Care; or (2) advise any physician or medical group practice that participates in or has participated in either New Century or Prime Care on contracts, offers, contract terms, conditions, or requirements for dealing with any payors. Exempted from Paragraph V’s prohibition are the officials’ participation in: (1) certain qualified risk-sharing joint arrangements; (2) certain qualified clinically-integrated joint arrangements; and (3) activities that solely involve physicians in a medical group practice in which the official participates. For three years, Paragraph VI requires both New Century and Prime Care, respectively, to distribute the complaint and order: (1) to all physicians who have participated in the IPAs, who currently participate in the IPAs, or who express interest in participating in the IPAs; and (2) to payors that have negotiated contracts with the IPAs, or that contract with the IPAs in the future. Paragraphs VII, VIII, IX, and X of the proposed order impose various obligations on the Proposed Respondents to report or provide access to information to the Commission to facilitate the monitoring of compliance with the order. Paragraph XI provides that the proposed order will expire in 20 years. VOLUME 142 Complaint