American Dental Association

Buteru of Competition
FEDERAL TRADE COMMISSION
WASHINGTON. O.C. i(HbO
Peter 	M. 	Sfikas, Esq.
Paterson, Ross, 	Schloerb & 	Seidel
Suite 7300, 	200 East 	Randolph Drive
Chicago, 	Illinois 	60601
Bear 	Mr. 	Sfikas:
Pour 	letter 	of April 	3 0 , 	1985, 	requests 	a staff 	advisory
opinion 	regarding 	the 	legality of proposed 	fee surveys that 	your
client, 	the Araerican Dental Association 	( B l r D A " ) , 	intends 	to
conduct,
According 	to your 	letter, 	the M 	A 	would 	like 	to conduct 	ad
-	hoc 	surveys of 	dentists-ees 	in market 	areas where 	the 	local
dental 	association 	affiliated with 	the ADA 	requests 	it 	to do
so, 	These 	surveys would 	provide 	information 	t o aid 	dental
patients 	or 	dentists 	in .evaluating 	fees of 	dentists 	and/or 	the
level of 	benefits offered by 	third 	party 	payers,. 	Either 	ADA
staff or 	paid 	consultants would 	conduct 	the proposed 	surveys.
Local dentists would 	not 	be 	involved, 	other 	than by 	filling 	out
survey questionnaires. 	You 	state that 	the 	fee data 	generated 	by
the ADA 	surveys would 	not 	be 	released 	generally on a current
basis. 	The data, 	"based 	on a 	range of 	prevailing 	fees 	in a given
area,' 	would, 	however, 	be made 	available 	to patients 	who 	have
reason 	to question 	the fees their 	dentists charged 	for 	specific
procedures 	(as, for 	example, 	when 	an 	insurance company has denied
full reimbursement 	of 	a dentist's 	charges o n 	the stated ground
that the 	invoiced 	fee 	is higher 	than that usual, 	customary, 	or
reasonable 	in the local market). 	The availability of 	such
information, 	you 	assert, 	will aid consumers 	in evaluating 	both
their dentists and 	their 	insurance plans,
In addition 	the 	survey results would 	be 	made 	available, o n
request 	from a specific dentist, 	when 	an 	insurance company
refuses to pay 	that 	dentist's 	fee for 	a particular 	procedure, 	As
currently contemplated, 	the ADA 	staff would 	make 	disclosure 	in
such circumstances 	to the dentist 	so that he or 	she might 	provide
an explanation 	to 	the patient 	or question 	the 	insurance company's
determination. 	Alternatively, 	the ADA 	could 	make 	disclosure
directly 	to the patient 	or 	insurer without 	disclosure 	to the
dentist, 	No party 	-- the dentist, 	the patient, 	or 	the insurer 	--would 	be obligated 	to take any action o n 	the basis of survey
findings.

Peter 	M. 	Sfikas, Esq.
Based 	on the 	information provided 	in your 	letter, 	the
program 	proposed 	does not 	appear 	to involve or 	raise 	significant
antitrust dangers, 	The 	antitrust 	laws generally 	forbid
agreements among competitors or 	their 	agents 	that 	fix, 	formulate,
or 	interfere with 	prices, 	fees, or otherwise 	unreasonably
restrict 	terms of 	trade. 	Depending 	on 	the purpose 	and 	effeceaof
the conduct, dissemination 	of 	information about 	prices 	by 	an
organization of 	competitors, 	especially 	to 	its members, 	can
facilitate or 	constitute 	an 	unlawful agreement 	to set or 	regulate
prices. 	Several aspects of 	the proposed 	conduct, 	however,
indicate that 	it 	is unlikely 	that 	the ADA's 	proposal 	would 	be
used 	to facilitate price 	fixing. 	First, 	the 	survey 	results would
not 	be made 	generally 	available 	to competing 	dentists, 	Second,
the 	fee data 	that would 	be 	distributed 	to consumers 	and 	insurers,
and 	perhaps on occasion 	to specific dentists, 	would 	be 	a 	range o f
fees, 	rather 	than survey results 	regarding 	one 	specific price,
Third, 	the program 	would 	be 	voluntary 	in nature 	-- no party 	is
required 	to take any 	action 	as 	a result of 	the 	survey findings,
Given 	these 	facts, 	and 	in 	light 	of 	the purpose 	of 	the proposal
and 	the generally 	unconcentrated 	nature of 	local dental 	services
markets, 	the proposed 	conduct 	would 	not 	appear 	likely 	to violate
the Federal Trade Commission Act.
Of course, 	if the 	fee 	survey results were, 	despite 	these
factors, to be 	used 	as a vehicle 	for 	an agreement 	t o restrain
competition, 	the program 	would 	raise serious antitrust
concerns. 	If used 	as a 	tool 	for collectively 	affirming 	the 	lI
- 	"legitimacy" of fees that 	fall within 	a particular 	range, 	then 	,the surveys could 	suggest collusion among 	dentists, 	or 	with 	the
ADA, 	on pricing 	policies 	in local communities, 	Similarly,
antitrust concerns would 	be 	raised 	if 	the survey 	results were
used 	to create 	collective pressure 	on third-party 	payers 	to
accept 	particular 	prices 	or 	benchmarks 	for 	reimbursement
schedules. 	In 	this regard, 	the ADA 	should 	be 	particularly
careful should 	it choose 	t o provide 	information directly 	to
insurers on the request 	of 	individual dentists, 	Such conduct
could, 	under 	certain circumstances, create 	the 	implication 	that
the ADA 	is acting 	as a 	representative 	for 	the 	'collectiven 	of 	its
members 	in defining 	usual, 	customary, 	or 	reasonable 	fees.
In sum competition 	in 	local markets 	for 	dental 	services will
apparently be 	adequately protected 	against anticompetitive abuse
of 	the program 	if 	the statistics produced 	through 	the proposed
surveys are treated 	by 	all parties 	solely as a means 	for 	helping
to educate patients, 	third-party 	payers, 	and 	dentists, 	In
implementing 	the program, 	however, 	continued 	care 	should 	be
exercised 	to insure 	that 	the program's 	purpose 	remains 	legitimate
I

Peter M. 	Sfikas, Esq. 	-3-
and 	that 	it does not 	produce 	anticompetitive effects. 	The Bureau
retains 	the right 	to reconsider 	the questions 	involved 	and, 	with
norice 	to the requesting 	party, 	to rescind 	or 	revoke 	its opinion
if 	implementation of 	the proposed 	survey program 	results 	in
substantial anticompetitive effects, 	if 	the program 	is used 	for
improper 	purposes, 	or 	if 	it would 	be 	in the public 	interest 	t o do
so.
Finally, 	as f 	am 	sure you 	are awareo the above 	legal advice
is 	that of 	the Bureau of Competition 	only, 	Under 	the
Commission" 	R u l e s of Practice S 	l.3(c), 	the Commission 	is not
bound 	by 	this advice 	and 	reserves the right 	to rescind 	it 	at 	a
later 	Lime.
Bureau 	of ~ 0 6 p e t i t i o n