I
107TH CONGRESS
2D SESSION
H. R. 3897
To ensure and foster continued patient safety and quality of care by clarifying
the application of the antitrust laws to negotiations between groups
of health care professional and health plans and health care insurance
issuers.
IN THE HOUSE OF REPRESENTATIVES
MARCH 7, 2002
Mr. BARR of Georgia (for himself, Mr. CONYERS, Mr. NORWOOD, Mr.
HOEFFEL, Mr. GANSKE, Mr. NADLER, and Mr. WELDON of Florida) in-
troduced the following bill; which was referred to the Committee on the
Judiciary
A BILL
To ensure and foster continued patient safety and quality
of care by clarifying the application of the antitrust
laws to negotiations between groups of health care pro-
fessional and health plans and health care insurance
issuers.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; FINDINGS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Health Care Antitrust Improvements Act of 2002’’.
(b) FINDINGS.—Congress finds the following:
(1) A large number of Americans receive their
health care coverage from managed health care
plans. This represents a 10-fold increase over the
last 20 years.
(2) The market power of insurance companies
has increased tremendously since the early 1990’s.
Since 1995, there have been 321 announced man-
aged care mergers and acquisitions. This unprece-
dented consolidation has provided health plans with
significant leverage over health care professionals
and patients in determining the scope, coverage, and
quality of health care in this country.
(3) Health plans, because of the concentration
and exertion of market and economic power, system-
atically and improperly manipulate the practice of
medicine through such mechanisms as inappropri-
ately making medical necessity determinations,
down-coding and bundling, knowingly denying and
delaying payment, and engaging in a variety of prac-
tices that may affect the continuity and quality of
patient care.
(4) In 1992, Congress considered legislation ad-
dressing various antitrust issues within the health
care industry that were problematic for health care
providers and patients. Most of the legislation was
incorporated into the revised Statements of Anti-
trust Enforcement Policy in Health Care, issued by
the Department of Justice and the Federal Trade
Commission in August 1996. While the ‘‘safe har-
bor’’ guidance for physicians contained in the State-
ments was a good first step in addressing this mar-
ket imbalance, it does not provide adequate param-
eters for the roughly 54 percent of self-employed and
small physician group practices to interact, share in-
formation, and effectively and fairly negotiate with
health plans.
(5) The intent of the antitrust laws is to en-
courage competition and protect the consumer, and
the current per se standard for enforcing the anti-
trust laws in the health care field frequently does
not achieve these objectives.
(6) An application of the rule of reason to
health care professionals’ business activities and
interactions with health care plans will tend to pro-
mote both competition and high-quality patient care.
(7) An application of the rule of reason to
health care professionals’ business activities and
interactions with health plans will not change the
professionals’ ethical duty to continue to provide
medically necessary care to their patients.
SEC. 2. APPLICABILITY OF RULE OF REASON STANDARD.
In any action under the antitrust laws challenging the
efforts of 2 or more physicians or other health care profes-
sionals to negotiate with a health plan, the conduct of such
physicians or health care professionals shall not be deemed
illegal per se, but shall be judged on the basis of its rea-
sonableness, taking into account all relevant factors affect-
ing competition, including patient access to health care,
the quality of health care received by patients, and con-
tract terms or proposed contract terms.
SEC. 3. AWARD OF ATTORNEY’S FEES AND COSTS OF SUIT.
Notwithstanding sections 4(a) and 16 of the Clayton
Act (15 U.S.C. 15(a), 26), in any action under the anti-
trust laws brought against a health care cooperative ven-
ture based on its negotiations with a health plan, the court
at the conclusion of the action shall include an attorney’s
fee in the award of costs to a substantially prevailing
plaintiff only if the defendant’s conduct during litigation
of the claim was frivolous, unreasonable, without founda-
tion, or in bad faith.
SEC. 4. NOTIFICATIONS UNDER ANTITRUST LAW FOR
HEALTH CARE COOPERATIVE VENTURES.
(a) NOTIFICATIONS.—
(1) SUBMISSION
OF
NOTIFICATION
BY
VEN-
TURE.—Any party to a health care cooperative ven-
ture (acting on behalf of such venture) that intends,
or has begun, to negotiate with a health plan may
file with the Attorney General of the United States
a written notification disclosing—
(A) the identities of the parties to such
venture, and the name and address of each
agent representing such venture;
(B) the identity of each health plan with
which such venture is or may be negotiating;
and
(C) the general nature and objectives of
the negotiations.
(2) SUBMISSION OF INFORMATION ON CHANGES
TO VENTURE.—A health care cooperative venture for
which a notification is in effect under this section
shall submit information on any change in the mem-
bership of the venture not later than 90 days after
such change occurs.
(3) PUBLICATION
OF
NOTIFICATION.—Except
as provided in paragraph (4), not later than 30 days
after receiving a notification with respect to a health
care cooperative venture under paragraph (1), the
Attorney General shall publish in the Federal Reg-
ister a notice with respect to such venture that iden-
tifies the parties to the venture, the name and ad-
dress of each agent representing the venture, and
generally identifies the purpose and planned activity
of the venture. Prior to its publication, the contents
of the notice shall be made available to the agents
of the venture.
(4) RESTRICTION ON DISCLOSURE OF OTHER
INFORMATION.—All information submitted pursuant
to notification and all information and documentary
material obtained by the Attorney General in the
course of any investigation with respect to a poten-
tial violation of the antitrust laws by the health care
cooperative venture shall be exempt from disclosure
under section 552 of title 5, United States Code,
and shall not be made publicly available by any
agency of the United States to which such section
applies except in a judicial proceeding in which such
information and material are subject to any protec-
tive order.
(5) WITHDRAWAL OF NOTIFICATION.—Any per-
son who files a notification pursuant to this section
may withdraw such notification before a publication
by the Attorney General pursuant to paragraph (3).
(6) NO
JUDICIAL
REVIEW
PERMITTED.—Any
action taken or not taken by the Attorney General
with respect to notifications filed pursuant to this
subsection shall not be subject to judicial review.
(7) RESTRICTIONS
ON
ADMISSIBILITY
OF
IN-
FORMATION.—
(A) IN
GENERAL.—Any information dis-
closed in a notification submitted under para-
graph (1) and the fact of the publication of a
notification by the Attorney General under
paragraph (3) shall only be admissible into evi-
dence in a judicial or administrative proceeding
for the sole purpose of establishing that a party
to a health care cooperative venture is entitled
to the protections described in subsection (b).
(B) ACTIONS OF ATTORNEY GENERAL.—
No action taken by the Attorney General pursu-
ant to this subsection shall be admissible into
evidence in any judicial or administrative pro-
ceeding for the purpose of supporting or an-
swering any claim under the antitrust laws.
(b) PROTECTIONS FOR VENTURES SUBJECT TO NO-
TIFICATION.—
(1) IN GENERAL.—
(A) PROTECTIONS DESCRIBED.—The pro-
visions of paragraph (2) shall apply with re-
spect to any action under the antitrust laws
challenging conduct within the scope of a notifi-
cation which is in effect pursuant to subsection
(a)(1).
(B) TIMING OF PROTECTIONS.—The pro-
tections described in this subsection shall apply
to a venture, and any party to such venture
that has made a notification under subsection
(a)(1) as of the postmarked date of the notifica-
tion.
(2) LIMITATION
ON
RECOVERY
TO
ACTUAL
DAMAGES AND INTEREST.—Notwithstanding section
4 of the Clayton Act, any person who is entitled to
recovery under the antitrust laws for conduct that is
within the scope of a notification filed under sub-
section (a) shall recover only the actual damages
sustained by such person and interest calculated at
the rate specified in section 1961 of title 28, United
States Code, for the period beginning on the earliest
date for which injury can be established and ending
on the date of judgment, unless the court finds that
the award of all or part of such interest is unjust
under the circumstances.
SEC. 5. TYING ARRANGEMENTS.
Any rule, policy, agreement, or other action of a
health plan that has the effect of requiring a health care
professional to participate in a product, all products, or
product lines offered by the health plan in order to partici-
pate in a particular product or product line, shall be con-
strued to be an illegal tying arrangement under the anti-
trust laws unless the health plan demonstrates that it
lacks market power in the market for the tying product
or product lines.
SEC. 6. DEMONSTRATION PROJECTS ALLOWING HEALTH
CARE PROFESSIONALS TO NEGOTIATE WITH
HEALTH PLANS.
(a) 
ESTABLISHMENT
OF
DEMONSTRATION
PROJECTS.—The Attorney General, in accordance with
the recommendations of the advisory committee appointed
under subsection (b), shall establish demonstration
projects (in this section referred to as ‘‘projects’’) under
which health care professionals in the States designated
as project sites may act together to jointly negotiate con-
tracts and agreements with health plans to provide health
care items and services for which benefits are provided
under such health plans. Projects shall be established for
the purpose of testing various options in the health care
market to allow negotiations and agreements by health
care professionals that will enhance efficiency, quality, and
availability of health care, while promoting competition in
the health care market.
(b) ADVISORY COMMITTEE.—(1) Not later than 180
days after the date of the enactment of this Act, the Attor-
ney General shall appoint an Advisory Committee on
Health Plan Negotiations to advise the Attorney General
with respect to the carrying out of the Attorney General’s
functions under this section. The duties of the Advisory
Committee shall include, but not be limited to, providing
recommendations regarding implementation and design of
projects and monitoring and reporting on the impact of
projects as required under subsection (e).
(2) The Advisory Committee shall consist of 13 mem-
bers, appointed without regard to the civil service laws.
Seven members shall be representatives of health care pro-
fessional organizations, 2 of whom shall be self-employed
physicians (allopathic or osteopathic). The remaining
members shall have expertise in health care quality, eco-
nomics, or insurance, but at least 1 of such remaining
members shall be a representative of consumers.
(3) The Attorney General shall furnish to the Advi-
sory Committee an executive secretary and such secre-
tarial, clerical, and other services as may be necessary to
conduct its business, and may call upon other agencies of
the Government for statistical data, reports, and other in-
formation which will assist the Advisory Committee in the
performance of its duties.
(4) Members of the Advisory Committee, while serv-
ing on business of the Advisory Committee (inclusive of
travel time), shall be entitled to receive the daily equiva-
lent of the annual rate of basic maximum rate of pay pay-
able from time to time under section 5376 of title 5,
United States Code, for each day and, while so serving
away from their homes or regular places of business, may
be allowed travel expenses, including per diem in lieu of
subsistence, in the same manner as provided in section
5703 of title 5, United States Code, for individuals in the
Government employed intermittently.
(5) The members shall serve until submission of the
report pursuant to subsection (e)(2), at which time the
Advisory Committee shall terminate. A vacancy arising in
the Advisory Committee shall be filled in the same manner
as the original appointment is made. A majority of mem-
bers shall constitute a quorum, and action shall be taken
only by a majority vote of those present and voting.
(c) APPLICATION FOR STATES TO PARTICIPATE IN
PROJECTS.—
(1) IN
GENERAL.—Not later than 180 days
after appointment of the Advisory Committee, the
Attorney General shall establish, taking into consid-
eration the recommendations of the Advisory Com-
mittee, an application process that shall allow health
care professional organizations to apply for 1 or
more States to be designated as a site for 1 project
to be implemented under subsection (d). Such health
care professional organizations shall be permitted a
3-month period to submit applications. At the end of
the 3-month application period, the Attorney Gen-
eral shall have 3 months to designate not fewer than
6 States in which projects shall be implemented re-
gardless of the number of applications submitted.
(2) CRITERIA FOR SELECTION.—The Attorney
General shall determine the States to be designated
in accordance with the recommendations of the Advi-
sory Committee, and taking into account the level of
managed care penetration in the particular State, as
well as other factors that demonstrate a need to ad-
dress unfair negotiations, based upon factual infor-
mation submitted by the applicants or otherwise
found by the Advisory Committee. The designated
States shall represent an appropriate environment
for a study on the imbalance in contractual negotia-
tions between health care providers and health
plans.
(d) PROJECT IMPLEMENTATION.—
(1) IN GENERAL.—Not later than 18 months
after the date of the enactment of this Act the At-
designated under subsection (c), the following
provisions shall apply to projects in such States:
(i) IN
GENERAL.—Notwithstanding
the antitrust laws, any health care profes-
sionals may act jointly to negotiate and
enter into contracts and agreements with
health plans to provide health care items
and services for which benefits are pro-
vided under such health plans.
(ii) OVERSIGHT.—(I) If the Attorney
General has reason to believe that 2 or
more health care professionals have jointly
engaged in conduct described in clause (i)
with a health plan, that is intended to sub-
stantially harm both competition and the
quality of health care received by patients,
the Attorney General shall serve upon such
health care professionals a complaint alleg-
ing such conduct.
(II) The complaint shall accompany a
notice of hearing to be held not less than
60 days after the date of service, requiring
the health care professionals to show cause
why an order should not be made directing
them to cease and desist from engaging in
such conduct.
(iii) 
ADMINISTRATIVE
ADJUDICA-
TION.—(I) The Attorney General shall
make a determination of the charge alleged
in the complaint based on the record after
an opportunity for a hearing.
(II) If the Attorney General deter-
mines that such health care professionals
have jointly engaged in conduct described
in clause (i) with a health plan that is in-
tended to substantially harm both competi-
tion and the quality of health care received
by patients, the Attorney General shall
issue and cause to be served upon such
health care professionals, an order reciting
the facts on which the determination is
made and directing such health care pro-
fessionals to cease and desist from engag-
ing in such conduct.
(III) A health care professional ag-
grieved by such determination may com-
mence a civil action in an appropriate dis-
trict court of the United States, not later
than 60 days after receiving such order,
for review of such determination on the
record of the Attorney General.
(IV) As part of the answer to the
complaint, the Attorney General shall file
in such court a certified copy of the record
on which such determination is based. The
findings of fact of the Attorney General
may be set aside only if found to be unsup-
ported by substantial evidence in such
record taken as a whole.
(iv) JUDICIAL REVIEW.—(I) The dis-
trict courts of the United States shall have
jurisdiction to review in accordance with
this subparagraph determinations made
and orders issued under clause (iii).
(II) CONTEMPT.—Failure to obey any
such order may be punished by such courts
as a contempt thereof.
(C) NO
EFFECT
ON
TITLE
VI
OF
CIVIL
RIGHTS ACT OF 1964.—Nothing in this section
shall be construed to affect the application of
title VI of the Civil Rights Act of 1964.
(e) MONITORING AND REPORT.—
(1) MONITORING IMPACT.—During the effective
period of projects implemented under this section,
the Attorney General shall, in accordance with the
recommendations of the Advisory Committee, closely
monitor and measure the impact of projects in each
State on the quality of and access to health care
services, choice of health plans, changes in health
plan enrollment, and other relevant factors. The At-
torney General shall, in accordance with the rec-
ommendations of the Advisory Committee, determine
the criteria for evaluating the impact on the quality
of health care services.
(2) REPORT.—Not earlier than 3 years and not
later than 4 years after commencement of all of the
projects implemented pursuant to subsection (d), the
Attorney General shall submit to the Committee on
the Judiciary of the Senate and the Committee on
the Judiciary of the House of Representatives 1 re-
port on the progress of all of the projects imple-
mented under this section, including a comparison of
the matters monitored under paragraph (1) among
the different designated States and as compared to
the Nation as a whole.
(3) PROJECT TERMINATION.—Unless the report
submitted pursuant to paragraph (2) demonstrates
by factual evidence that consumers have been
harmed by a decrease in quality of or access to
health care services as a direct result of a project
implemented under this section and without any off-
setting benefits, the Attorney General may not ter-
minate such project. Projects that are implemented
under this section and that are not terminated under
this paragraph shall be extended by the Attorney
General to additional States.
SEC. 7. NO APPLICATION TO FEDERAL PROGRAMS.
Nothing in this Act shall apply to negotiations, agree-
ments, or other obligations between health care profes-
sionals and health plans that pertain to benefits provided
under any of the following:
(1) The Medicare Program under title XVIII of
the Social Security Act (42 U.S.C. 1395 et seq.).
(2) The Medicaid Program under title XIX of
the Social Security Act (42 U.S.C. 1396 et seq.).
(3) The SCHIP program under title XXI of the
Social Security Act (42 U.S.C. 1397aa et seq.).
(4) Chapter 55 of title 10, United States Code
(relating to medical and dental care for members of
the uniformed services).
(5) Chapter 17 of title 38, United States Code
(relating to veterans’ medical care).
(6) Chapter 89 of title 5, United States Code
(relating to the Federal Employees’ Health Benefits
Program).
(7) The Indian Health Care Improvement Act
(25 U.S.C. 1601 et seq.).
SEC. 8. DEFINITIONS.
In this Act, the following definitions shall apply:
(1) ANTITRUST
LAWS.—The term ‘‘antitrust
laws’’—
(A) has the meaning given it in subsection
(a) of the first section of the Clayton Act (15
U.S.C. 12(a)), except that such term includes
section 5 of the Federal Trade Commission Act
(15 U.S.C. 45) to the extent such section ap-
plies to unfair methods of competition; and
(B) includes any State law similar to the
laws referred to in subparagraph (A).
(2) HEALTH PLAN.—The term ‘‘health plan’’
means a group health plan or a health insurance
issuer that is offering health insurance coverage.
(3) GROUP HEALTH PLAN.—The term ‘‘group
health plan’’ means an employee welfare benefit plan
to the extent that the plan provides medical care (in-
cluding items and services paid for as medical care)
to employees or their dependents (as defined under
the terms of the plan) directly or through insurance,
reimbursement, or otherwise.
(4) MEDICAL CARE.—The term ‘‘medical care’’
means amounts paid for—
(A) the diagnosis, cure, mitigation, treat-
ment, or prevention of disease, or amounts paid
for the purpose of affecting any structure or
function of the body;
(B) transportation primarily for and essen-
tial to medical care referred to in subparagraph
(A); and
(C) insurance covering medical care re-
ferred to in subparagraphs (A) and (B).
(5) HEALTH INSURANCE COVERAGE.—The term
‘‘health insurance coverage’’ means benefits con-
sisting of medical care (provided directly, through
insurance or reimbursement, or otherwise and in-
cluding items and services paid for as medical care)
under any hospital or medical service policy or cer-
tificate, hospital or medical service plan contract, or
health maintenance organization contract offered by
a health insurance issuer.
(6) HEALTH
INSURANCE
ISSUER.—The term
‘‘health insurance issuer’’ means an insurance com-
pany, insurance service, or insurance organization
(including a health maintenance organization) that
is licensed to engage in the business of insurance in
a State and that is subject to State law regulating
insurance. Such term does not include a group
health plan.
(7) HEALTH MAINTENANCE ORGANIZATION.—
The 
term 
‘‘health 
maintenance 
organization’’
means—
(A) a federally qualified health mainte-
nance organization (as defined in section
1301(a) of the Public Health Service Act (42
U.S.C. 300e(a)));
(B) an organization recognized under State
law as a health maintenance organization; or
(C) a similar organization regulated under
State law for solvency in the same manner and
to the same extent as such a health mainte-
nance organization.
(8) GROUP HEALTH PLAN, HEALTH INSURANCE
ISSUER.—The terms ‘‘group health plan’’ and
‘‘health insurance issuer’’ include a third-party ad-
ministrator or other person acting for or on behalf
of such plan or issuer.
(9) HEALTH CARE COOPERATIVE VENTURE.—
The term ‘‘health care cooperative venture’’ means 2
or more health care professionals who are engaged
in negotiations with a health plan, including any at-
tempts to enter into negotiations with a health plan,
regarding the provision of health care services to in-
sureds, enrollees, or beneficiaries of a health plan.
(10) HEALTH
CARE
SERVICES.—The term
‘‘health care services’’ means any services for which
payment may be made under a health plan, includ-
ing services related to the delivery or administration
of such services.
(11) HEALTH CARE PROFESSIONAL.—The term
‘‘health care professional’’ means any individual or
entity that provides health care items or services,
treatment, assistance with activities of daily living,
or medications to patients and who, to the extent re-
quired by State or Federal law, possesses specialized
training that confers expertise in the provision of
such items or services, treatment, assistance, or
medications.
(12) HEALTH CARE PROFESSIONAL ORGANIZA-
TION.—The term ‘‘health care professional organiza-
tion’’ means any nonprofit association, society, or
organization whose membership consists of health
care professionals.
(13) PERSON.—The term ‘‘person’’ includes a
State or unit of local government.
(14) STATE.—The term ‘‘State’’ includes the
several States, the District of Columbia, Puerto
Rico, the Virgin Islands of the United States, Guam,
American Samoa, and the Commonwealth of the
Northern Mariana Islands.
Æ