U.S. Jury Indicts 3 Tucson Dentists on Price-Fixing Charge

WASHINGTON â€”  In the first criminal crackdown on alleged medical price-fixing in more than 50 years, a federal grand jury indicted three dentists and two dental corporations Wednesday on charges of conspiring to fix co-payment fees of four prepaid dental plans in Tucson.

The indictment marked the first charges to result from a new investigative emphasis placed on the burgeoning health care industry by the head of the Justice Department’s antitrust division, James F. Rill.

“Price fixing among competitors is a crime,� Rill said in announcing the grand jury’s action. “Doctors enjoy no immunity from this well-settled rule: When professionals fix prices, they will be pursued and prosecuted for the crime.�

Federal criminal antitrust charges were last brought in the medical field in 1938 when the Justice Department charged the American Medical Assn., the Medical Society of the District of Columbia and others with conspiring to boycott physicians who worked for a prepaid group health organization. That prosecution was upheld by the Supreme Court in 1943.

In Wednesday’s action, the grand jury charged three dentists, Drs. Aaron L. (Lanoy) Alston, Ronald D. Walker and Richard B. Meyer, and dental corporations operated by Alston and Walker, with a conspiracy in violation of the Sherman Act’s ban on unreasonable restraint of trade. The allegedly illegal activity began in May, 1987, and continued until Wednesday.

The defendants are alleged to have conspired with others to fix and raise the co-payment fees paid by members of four prepaid dental plans. Co-payments are fees required to be paid by plan members to dentists who provide services covered under the plan’s schedule of benefits.

A dentist who decides to become a provider for a plan receives a monthly payment for each employee who is a member of the plan and has selected that dentist. The dentist receives the monthly payment, regardless of whether the member of the plan requires dental care.

Only Meyer could be reached for comment Wednesday. He said, “There are some injustices here,� but added that he could not comment further, on instructions from his lawyer.

The grand jury charged that the defendants agreed on higher co-payment fees to be paid to them and to co-conspirators by the members of four prepaid dental insurance plans. The indictment accused them of agreeing on and submitting identical letters demanding that the plans pay the higher fees, and then pressuring three of the plans to raise the fees.

The indictment did not specify the amount of the fees or the increase allegedly generated by the dentists’ demands.

The four plans involved are Employers Dental Services, Associated Health Plans, Calzona Dental Plans and Safeguard Health Plans.

Safeguard is located in Anaheim and received substantial amounts of premiums from employers outside of California with whom it had contracted to provide dental insurance coverage for Tucson employees, according to the indictment.

The maximum penalty for an individual convicted under the Sherman Act is three years in prison and a minimum fine of $250,000. For corporations, the maximum punishment would range from a $1-million fine to an amount twice the monetary gain the corporation derived from the crime or two times the loss suffered by victims.

The emphasis being placed on health care investigations by Rill is in line with President Bush’s State of the Union pledge to gain control of soaring health care costs.

Rill, in an interview last week, said the $60-billion-a-year health care industry is “an extraordinarily large part of the economy,� noting that it is a field where “costs have escalated rapidly.�

Another factor in the decision to step up antitrust enforcement in the medical field, Rill said, is that it has only been during the last 10 to 15 years “that it has become clear that antitrust is fully applicable to the professions.�