Federal Trade Commission v. Indiana Federation of Dentists

Background

A small group of Indiana dentists formed an organization that told its members not to send patients’ dental x rays to their insurers when filing claims. Dental insurers use such x rays to review treatment and decide benefits under “alternative benefits” plans that limit payment to the least expensive adequate care. The dentists’ collective “work rule” succeeded in large parts of several Indiana communities, making it hard for insurers to get x rays and forcing insurers to use more costly reviews or abandon their review programs. The Federal Trade Commission charged the dentist group with using the rule to restrain competition and ordered the group to stop; a federal appeals court vacated that order and the Supreme Court agreed to review the case.

Reasoning

The key question was whether dentists’ agreement to withhold x rays unreasonably harmed competition. The Court reviewed the evidence and legal standards and applied the "Rule of Reason," which looks at whether a practice suppresses competition without offsetting benefits. The Court found substantial evidence that where the group dominated local markets, insurers could not obtain x rays in the desired form, reducing competition among dentists over how they deal with insurers. The Court rejected the dentists’ arguments that there was no defined market, no proof of higher costs, or that withholding x rays improved patient care.

Real world impact

The ruling means dental associations and similar professional groups cannot collectively deny information customers seek in order to protect fees or control markets. The FTC may treat such coordinated refusals as unlawful and order groups to cease them. Insurers and patients are more likely to get access to diagnostic materials used in benefit decisions, though the decision does not say how insurers must use that information.