The MacNeil/Lehrer Report; FTC and the Professions

ROBERT MacNEIL: Good evening. A long, drawn-out political battle is about to reach its climax in Washington. It is between one of the country's most powerful lobbying groups, the American Medical Association, and an arm of the federal government that's been under fire for alleged overzealous behavior, the Federal Trade Commission. At issue is whether the FTC has the right to regulate the business practices of doctors and other professionals. The doctors say no, the FTC should stick to policing the business world. The FTC says medicine and the professions are businesses, and have often engaged in price-fixing and other anti-competitive practices. Congress is being asked to referee. It will soon decide whether all licensed professionals, like doctors, lawyers, dentists, nurses and psychologists, should be exempt from FTC regulation. Today the head of the AMA, Dr. James Sammons, met in Washington with his top lieutenants from around the country to map strategy for a final assault on the powers of the FTC. Tonight, for the first time, a head-on debate between Dr. Sammons and the chairman of the FTC, James Miller. Jim?

JIM LEHRER: Robin, what began as the FTC versus the doctors has now become vice-versa. The government agency has been filing complaints against doctors since the mid-1970s, alleging unfair business practices that restrict competition and keep prices high. There was the state medical society in Michigan, charged with conspiring to fix fees and control payments of Blue Cross/Blue Shield. In Brownfield, Texas, five physicians were taken to task for allegedly threatening to boycott a local hospital emergency room if the hospital hired another doctor. In Florida, a local medical society was accused of trying to prevent their members from advertising their fees and services. The big one was a 1975 charge against the AMA alleging too much restriction of advertising and on the right of doctors to participate in pre-paid medical care plans. It went all of the way to the Supreme Court where, in a split decision, the FTC was upheld earlier this year. And it's since then that the vice-versa -- the doctors versus the FTC -- has built up steam, leading to the legislation that would exempt doctors and other professionals from FTC jurisdiction. Leading that effort, as Robin said, is the executive vice president and chief executive officer of the AMA, Dr. James Sammons, formerly a family physician in Baytown, Texas. Doctor, why shouldn't the FTC have jurisdiction over you and other professionals?

Dr. JAMES SAMMONS: Well, Jim, there is a branch of the federal government that does have jurisdiction over us in antitrust matters, and that is the Department of Justice. And the antitrust division at the Department of Justice has historically fulfilled that obligation. It has, indeed, pursued a number of litigations against the AMA as well as other professional organizations. It is not necessary that the Federal Trade Commission attempt to do something that the United States Justice Department is already doing. In addition to being duplicative, it is clearly incredibly expensive both to the taxpayers of this country as well as to the patients of this country in terms of the AMA, certainly, because they are the people who ultimately pay this bill with both tax dollars and with their payments of charges to doctors across the country. It's already being done. There is no void out there; there never was. There is not one scintilla of evidence to indicate that the Congress of the United States ever intended the Federal Trade Commission to enter into this arena. As a matter of fact, in the last Congress a bill was introduced by a former member of Congress to provide this coverage by the Federal Trade Commission, and the House of Representatives turned it down by a rather large margin. So the problem here is the intrusion of the Federal Trade Commission into an arena that is the province, and appropriately so, of the United States Justice Department.

LEHRER: Specifically, what has the FTC done that annoys you so?

Dr. SAMMONS: Well, one of the things it has done that annoys me so is that it embarks on fishing expeditions that cost incredible sums of money without truly apprising the prople that are to be fished as to what it is that they're looking for.

LEHRER: An example, sir?

Dr. SAMMONS: An example is what Chairman Miller's Boston office has just done to the medical society in Maine; at the time when everyone is talking about trying to resolve these matters amicably, his Boston office issues a subpoena for incredible numbers of records, gives them two weeks to comply; half of their staff is on vacation; they ask for an extension for 30 days and it is refused. That really is not quite the way that government should operate, is it?

LEHRER: Well, what about some of the specifics that I mentioned? Are you suggesting that the FTC should not have moved against those five Brownfield, Texas, physicians?

Dr. SAMMONS: No, I'm suggesting that if there was a problem in Brownfield, Texas, that the Department of Justice and its antitrust arm certainly had all of the statutory right. The attorney general of the state of Texas has not been asleep. He certainly has legislative powers in the state of Texas. There are a number of areas from which this sort of appropriate regulation can be carried out without adding still another new branch of the federal government.

LEHRER: Is it true that the thing that really annoys you is the 1975 advertising thing against you all? You're still smarting over that, are you not, sir?

Dr. SAMMONS: Well, I've spent seven years and about $5 million needlessly because what we were accused of had not happened at all. They used old data, refused to accept the appropriate data; even a justice in the court of appeals pointed out to them that their data was old and incorrect, and we have tried to point out that the question here is not whether or not a doctor advertises. AMA has never forbidden advertising. The first yellow section of the telephone directory took care of that many years ago. The problem her is you cannot separate a third-party interference in an ethical process without jeopardizing quality of care.

LEHRER: Say that again? A third-party in an ethical process --

Dr. SAMMONS: Yes, and that's precisely what --

LEHRER: Is that what the FTC is?

Dr. SAMMONS: The Federal Trade Commission is a third party injecting itself in an ethical process --

LEHRER: Well, Doctor --

Dr. SAMMONS: Yes.

LEHRER: Let me ask you this. Is it your position that the doctors of America are not engaging in anti-competitive practices -- price-fixing, all these things -- that have been alleged?

Dr. SAMMONS: Jim, it is my contention that the vast majority of doctors in this country are not engaging in all of those things that have been alleged, but nobody but a complete idiot would say that 100% of anything, including the clergy, lawyers, television-casters, whatever, they don't engage in anything, you know. Sure, of course. I'm sure that there must be. But if there are, then the appropriate branch of the federal government to handle this is the United States Justice Department.

LEHRER: Thank you. Robin?

MacNEIL: On the other side is James Miller, President Reagan's appointee as chairman of the FTC. Chairman Miller has made a name for himself as a strong advocate of reducing regulations on business. When he appeared on this program last March, he defended his plans to restrict FTC activities in many areas. Chairman Miller, if you want to restrict the activities of the FTC, why aren't you with the AMA in exempting the professions?

Chairman JAMES MILLER: Robin, it seems to me that there are two major issues here. The first issue is whether the laws of the United States are going to apply to some or to all. It seems to me that if the legislation that is at issue here goes into effect, there would be, inadvertently, perhaps, established a privileged class. Some would be subject to the laws everyone else has to observe, and physicians and dentists and lawyers and others would not have to observe those laws. The second issue, and more specifically, the question is whether lawyers and doctors and dentists and others will be immune from the laws against fraud and deception that now apply. They would be completely exempt from this. The Justice Department doesn't handle that. The second point is whether they would be immune or exempt from FTC enforcement of laws against price-fixing, boycotts, kickbacks, and other anti-competitive activity. Now, I don't think that's right for America. Now, Dr. Sammons says that, really, the Department of Justice can look at that and the state attorneys general. I think that is incorrect. The Department of Justice has already indicated that it opposes the exemption that is being proposed by the physicians. Also, importantly, Robin, 49 of the 50 state attorneys general have opposed the effort by physicians and others to seek an exemption. They think that the result would be to hamstring our activities and perhaps their activities as well. I have here today a letter from the state attorney general of the state of Maryland, and he says -- and I'm quoting from his letter -- "The argument raised by proponents of this legislation, that state occupational licensing boards will guard against anti-competitive activities, is totally unrealistic."

MacNEIL: Well, let me ask you, what are examples -- give us a couple of examples of where FTC intervention was necessary in your view because either the Justice Department or the state authorities neglected these cases.

Mr. MILLER: Well, there was a case in Pittsburgh in 1979 where the Federal Trade Commission intervened to prevent doctors from preventing denying hospital privileges to other physicians that were engaged in HMOs.

MacNEIL: Those are health maintenance organizations.

Mr. MILLER: That's right. Health maintenance organizations. There have been cases where we have taken on deception by companies that allege that they will allow you to reduce weight or cause you to reduce a certain amount of weight, other companies that have had proposals to implant hairs and grow hair -- that would be good for me, I'm sure. But the problem was that they were using -- they were using certain kinds of chemicals that were harmful. These things we would take issue with. And, interestingly, very recently there has come to light a lot of tension about the use of electronic devices to cause weight loss and that sort of thing and to change lines on faces. Interestingly, when the -- when the plastic surgeons heard of this, they didn't go to the Justice Department. They didn't go to the states. They came to us and asked us whether this was a fraudulent practice.

MacNEIL: What about Dr. Sammons' charge that the FTC getting into these things embarks on fishing expeditions which cost incredible amounts of money, and he just gave an example from the state of Maine?

Mr. MILLER: Well, I don't think that's the case. It does cost both the public sector and the private sector when we engage in looking at anti-competitive activities. But I would ask Dr. Sammons that if he were really sincere about the Department of Justice and the state attorneys general enforcing the antitrust laws, I would ask why his house of delegates, just a few months age, passed resolutions that would propose cutting back on the antitrust authority the Justice Department would have over the physicians, and cutting back on the authority that the state authorities would have over medical professions.

MacNEIL: We'll give Dr. Sammons a chance to answer that in a moment. What about Dr. Sammons' point -- the AMA, he says, has never forbidden advertising, and that you are just a third party improperly injecting yourself into what he calls an ethical process?

Mr. MILLER: Well, Robin, that was litigated in the 1975 case. The AMA -- as you accurately reported, the Federal Trade Commission was concerned about restraints that the AMA had on advertising of physician services, and so -- but the AMA said before an administrative law judge that they didn't do this, and the administrative law judge said that they did. They said that before the commission, and the commission said they did. And they said that before the courts, and the courts said they did. So we have the judgment of a long series of procedures here that the AMA engaged in -- and at each stage along the line, the courts and the commission said that they did engage in restraint of trade in terms of advertising.

MacNEIL: Well, thank you. Jim?

LEHRER: Dr. Sammons, okay. Chairman Miller says that if you all are so keen on letting the Justice Department and the states' attorneys general do this, why in the world did your house of delegates vote to reduce their jurisdiction?

Dr. SAMMONS: We were voting to reduce the Federal Trade Commission's jurisdiction, Jim. That's a little literal translation. Let me respond, though, to an allegation that he's made here, and that is that the AMA was guilty as charged of all of the things that they claim. The truth of the matter is, that's not so. When you look at the record --

LEHRER: Wait. Let's take one thing at a time. Are you saying your house of delegates did not vote to reduce the jurisdiction of the Justice Department and the states' attorneys --

Dr. SAMMONS: Not in the sense -- not in the sense that Jim is talking about.

LEHRER: Well, let's clear that up.

Mr. MILLER: Now, that's incorrect. I'm not a lawyer, but the lawyers at the commission tell me, and the reading of the resolution is quite clear, that it says that it would remove some of the authority that the Justice Department and the state attorneys general have over the medical profession; this despite the fact that representatives from AMA testified before Congress that they were perfectly happy to have the Justice Department continue to enforce the antitrust laws as they are.

Dr. SAMMONS: And my lawyers will interpret that -- I'm not an attorney, either, and my lawyers will interpret that totally differently. The question here is --

LEHRER: But one more question. You would just as soon, though, that the Justice Department and the attorneys general out in the states did not enforce the antitrust laws too vigorously against you, right?

Dr. SAMMONS: No. If we are guilty of violations of the antitrust laws, then we should be no more exempt than anyone else. And when Chairman Miller implies that what we're asking for here is an exemption from the antitrust laws, that is totally incorrect. We would support totally the application of antitrust laws against any professional who is guilty of violating the law. That's not the question.

LEHRER: He went further than that, Dr. Sammons. He said that you all are seeking to become a privileged class, that all of you --

Dr. SAMMONS: Well, that's totally wrong. You see, our privileged class is that we want to continue to serve the public, and everything that the Federal Trade Commission has done up to this point, as it applies to medicine, carries with it a very strong implication of a disruption of quality care in this country.

LEHRER: Everything the FTC has done?

Dr. SAMMONS: Everything they have done because of the implications of the far-reaching aspect -- we're speaking now of the AMA -- of the far-reaching aspects of what they have attempted to do.

LEHRER: That's a serious charge, Chairman Miller.

Mr. MILLER: That is, and it's incorrect. In the particular case you cited, the Florida case, the restrictions on advertising there would not allow a physician to advertise in this Florida community that the physician would accept Medicaid as payment for his services. Also, it would not allow a physician to advertise that the physician could speak Spanish for the Hispanic community. Now, how, Dr. Sammons, is that a restraint on the quality of care?

Dr. SAMMONS: The AMA did not impose that. The AMA has no control over the state medical society beefing up the jurisdictional requirement --

LEHRER: But you're saying the FTC should not have moved against the Florida people?

Dr. SAMMONS: No, no. I qualified it earlier, and I told you as far as the AMA case is concerned, everything they've done, and some of the things which they claim to be the proudest of. For example, they make great issue of the eyeglass business. Well, the fact of the matter is that was remanded back. They made a great issue --

LEHRER: Well, wait a minute. Wait a minute. Explain the eyeglass thing, Chairman Miller, from the FTC point of view.

Mr.MILLER: The eyeglass case was one where the FTC investigated the provision of eyeglass services and took issue with rules that were imposed by medical associations, and even some states, that would not allow a person who paid for a prescription for corrective lenses to go out and price-shop for those lenses. As a result of that, the price of lenses has fallen considerably. But that --

LEHRER: As a result of the FTC action?

Dr. SAMMONS: It was remanded, right?

Mr. MILLER: Well, it was remanded, but it was remanded for a different reason.

Dr. SAMMONS: Yeah, indeed it was.

Mr. MILLER: That was before I came there.

Dr. SAMMONS: That's true. I'm not holding you responsible for that, but the fact is, it was remanded. And the other one is the generic drug business. And by the time that the FTC who suddenly went on a fishing expedition about generic drugs finally got around to writing some sort of regulations or proposals, every state in the union's legislature had resolved the issue. So this is nonsense.

LEHRER: But you just said a moment ago that this is actually hurting the delivery of medical services in this country.

Dr. SAMMONS: Absolutely. As far as the AMA is concerned --

LEHRER: Well, now, how does it hurt --

Dr. SAMMONS: Some of the provisions -- some of the provisions in the administrative law judge's ruling -- and we'll come to that, because that is a real problem in terms of the judicial process in this country -- but some of those provisions do prevent the medical societies at the local level, the state level, or the AMA, for that matter, from being the patient's advocate in fee disputes. There is a great deal of limitation, in spite of some of the nice language -- but there's a great deal of limitation over how strongly medical societies can police fraudulent advertising -- misleading, if not fraudulent. There is a great deal of loss to the American public here, because the public has no other great advocate that is knowledgeable in medical matters, and the ability of state societies and county societies and local societies has been injured, greatly.

LEHRER: How do you see the role of the medical societies in this? As the advocate for the patient?

Mr. MILLER: Well, they're two very different things. I think what the Federal Trade Commission should be looking at are business practices, not making second judgments about medical matters. Dr. Sammons has his doctorate in medicine; I have my doctorate in economics, and I'm trying to practice economics here, not medicine. We should look at the business practices. We at the Federal Trade Commission do have expertise in restraints of trade, and when we see restraints in trade, we see fraud and deception, we ought to be able to go look at those things.

Dr. SAMMONS: Jim --

LEHRER: Your position -- Go ahead.

Mr. MILLER: The health care industry is nearly 10% of the gross national product. Consumers have a lot at stake here.

LEHRER: And your position is that many of these things that you're policing, or all the things you're policing are the business side of medicine and not the medical side of medicine?

Mr. MILLER: That's right.

Dr. SAMMONS: Well, Jim, when he says that they should police these things, let me point out to you that they filed suit against the California Medical Association for developing a relative-value schedule to be used in the state of California with the Medicaid program in California because of the incredible amount of time and money that the California Medical would have had to spend. They signed a consent decree. Now Health and Human Services and the department in California want a relative-value schedule. So I don't know what competitive practice is here.

LEHRER: All right. Robin?

MacNEIL: Yes, Dr. Sammons, is medicine not a business?

Dr. SAMMONS: Oh, I'm sure that one could -- sure. The money part of medicine is a business, but the quality, the decision as to what the treatment is, how it's to be given, the circumstances under which it is to be given, that is not a business practice. That is a professional judgment based on the needs of the individual. There is nothing in this country that doesn't have some kind of dollar involved.

MacNEIL: Well, is it your argument, and I think I understand what I have read about the AMA's argument, that your business practice is so closely, inseparably intertwined with the medical-ethical questions, that it cannot be regarded as a business under the jurisdiction of the FTC? Is that your --

Dr. SAMMONS: That is correct, because if there are antitrust violations, that's the Justice Department's activity, but in medicine we're not selling widgets or electronic devices or nor are we selling other things that normally, appropriately fall under the FTC's jurisdiction.

MacNEIL: What is your view of that, Mr. Miller?

Mr. MILLER: Well, my view is that we should have authority in that area, and in fact the courts have held that we do have that authority. And, if that were not the case, we wouldn't be here tonight. I think it important to note, though, that this bill would apply not only to doctors and dentists and lawyers, it would apply to architects and accountants and many other professions. It has ramifications far beyond just this, but it's also opposed by a lot of people. It's opposed by a consortium of 33 providers of services; it's opposed by labor unions, by businesses, by nurses and podiatrists and other professions. We did a count the other day, and there have been a lot of editorials about this issue. And the position of the Federal Trade Commission has been endorsed by The New York Times, The Wall Street Journal, The Washington Post, The Los Angeles Times, The Chicago Sun-Times --

MacNEIL: Excuse me interrupting. I get your drift.I'm just wondering --

Mr. MILLER: But there's not a single editorial in favor of the doctors' position except in their own professional literature.

Dr. SAMMONS: No, no, that's not true, now, Jim.

Mr. MILLER: Is that wrong?

Dr. SAMMONS: Yeah, that is wrong. There have been some other editorials, and it's unfortunate that some of the people to whom you have referred have in fact totally misunderstood the AMA's position. We have been portrayed as asking for an exemption from antitrust --

MacNEIL: Well, how do you explain --

Dr. SAMMONS: -- and that is not the fact. It is just not the fact.

MacNEIL: Go back -- go back to Mr. Miller's other point, Dr. Sammons. How do you explain -- I have the list in front of me -- that so many members of this coalition -- physicians' assistants, chiropractors, dental hygienists, memdical technologists, the Nurses Association, the Psychological Association, Public Health Association -- are against the exemption when they themselves could benefit from it, presumably?

Dr. SAMMONS: Yes, and I don't think they understand the position that they have taken, Bob, because what the facts really are is that their own organizations, their own professions, should in fact be under the same general jurisdiction and supervision of the antitrust division of the Department of Justice. There is a great misunderstanding here on the part of a great many people about what is being sought.What is being sought is to put the Federal Trade Commission back in the business for which it was intended, to take it out of a business for which it was never intended to be in and which it has no expertise in, and to stop some of the abuses, such as the fishing expeditions, the inability to abtain immediate access to the federal courts of the United States, having to appeal the decision of the administrative law judge to the very commission that filed the complaint in the first place. And I can assure you from our own experience, it takes seven years, in this instance, to obtain a judicial review. Win, lose or draw, it takes seven years. That's not the American judicial system.

MacNEIL: Chairman Miller, if you have all that editorial support and all these organizations, some of which I mentioned, how is it that the exemption bill in the House has 220 cosponsors?

Mr. MILLER: Well, I think the American Medical Association and other associations that would benefit from this bill have been very persuasive in their arguments, and they have that right under our American system. But Dr. Sammons, in emphasizing that the Justice Department would take this, it should be emphasized also that the Justice Department has said that this would not be a good idea. But beyond that, there are -- the second set of authorities the Federal Trade Commission has is to police fraud and deception, and that would be lost completely if this legislation were to go into effect.

LEHRER: Well, that'd be fine with you, right, Doctor? No policing of fraud and deception?

Dr. SAMMONS: No, absolutely not. As a matter of fact, that was one of the most vigorous complaints that we filed about the FTC action was that their interpretation of the principles of ethics have now made it virtually impossible for us as a profession to exercise the same kind of involvement in rooting out and exposing fraud and deception that we had before.

LEHRER: In other words, what you're saying is that if the FTC, if this bill passes and the FTC is out of it in terms of fraud and deception, that you all will take care of it yourselves?

Dr. SAMMONS: No. Well, yes, along with the Justice Department and the states' attorneys generals and the other normally expected branches of government to enforce the antitrust laws.

LEHRER: No, I'm not talking about antitrust. I'm talking about fraud --

Dr. SAMMONS: And fraud.

Mr. MILLER: But the Justice Department doesn't have any authority in cases of fraud and deception --

Dr. SAMMONS: But the attorney generals sure do, Jim, and it's the fraud and deception that occurs at the local level that impinges on the quality of care of the individual who is not able to interpret that.

Mr. MILLER: But they object to your proposal. They adopt the same position we have.Could I just say, we don't want to get into the quality-of-service issue. I mean, if states establish what is required for admission to medical school, that's their business. If they want to establish standards for specialists, that's their business. We don't want to touch that. But we're going to be looking at -- what I think we should look at is questions of violating the antitrust laws and engaging in fraud and deception. How is our looking at whether hair transplant techniques are causing a great deal of harm or whether there is deception in the advertising about weight loss, how is that crippling your -- you're making this into --

Dr. SAMMONS: That's a totally different -- that's a totally different set of circumstances than the one that you accused us of.It is a totally different set of circumstances from the one that is now present in your brief against us. Sure, there are many things that we would agree with you that the Federal Trade Commission should be involved in and should police.We do not agree with you that your people have either the expertise or the ability to write principles of medical ethics for any of the professions and certainly not in medicine.

Mr. MILLER: We don't want to --

Dr. SAMMONS: That's one that the appeals court threw out on them. But that's where they started from.

Mr. MILLER: We don't want to write principles of ethics for physicians, but Dr. Sammons has said that he agrees that the Federal Trade Commission should have certain responsibilities in this area. But if this provision --

Dr. SAMMONS: In the widgets.

Mr. MILLER: If this provision -- oh, I'm sorry.

Dr. SAMMONS: In the widgets.

Mr. MILLER: Well, I --

Dr. SAMMONS: In the widgets. The ones that make and sell widgets.

Mr. MILLER: But I allege that, as you said earlier, that medical services, the provision of medical services is a business, and that the health care area -- the health care area accounts for about 10% of the gross national product.

Dr. SAMMONS: But that's a specious argument, Jim, about the 10%. If the American people deserve, want and are receiving the finest health care in the world, which they are, and if that costs 10% of the gross national product, then if you don't spend it for their health care, you're going to spend it for something else, that's a totally specious argument in this situation.

Mr. MILLER: Could I say --

LEHRER: We have about five seconds.

Mr. MILLER: We have three Jims here. We do not want to regulate the quality of service, but we have to have the authority to engage in restraints on price fixing and kickbacks and fraud and deception.

LEHRER: We have to leave it there. Robin?

MacNEIL: Dr. Sammons, Chairman Miller, thank you for joining us. Good night, Jim.

LEHRER: Good night, Robin.

MacNEIL: That's all for tonight. We will be back tomorrow night.I'm Robert MacNeil. Good night.