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U.S. Supreme Court

Arizona v. Maricopa County Med. Soc'y, 457 U.S. 332 (1982)

Arizona v. Maricopa County Medical Society

No. 80-419

Argued November 4, 1981

Decided June 18, 1982

457 U.S. 332


Respondent foundations for medical care were organized by respondent Maricopa County Medical Society and another medical society to promote fee-for-service medicine and to provide the community with a competitive alternative to existing health insurance plans. The foundations, by agreement of their member doctors, established the maximum fees the doctors may claim in full payment for health services provided to policyholders of specified insurance plans. Petitioner State of Arizona filed a complaint against respondents in Federal District Court, alleging that they were engaged in an illegal price-fixing conspiracy in violation of § 1 of the Sherman Act. The District Court denied the State's motion for partial summary judgment, but certified for interlocutory appeal the question whether the maximum fee agreements were illegal per se under § 1 of the Sherman Act. The Court of Appeals affirmed the denial of the motion for partial summary judgment and held that the certified question could not be answered without evaluating the purpose and effect of the agreements at a full trial.

Held: The maximum fee agreements, as price-fixing agreements, are per se unlawful under § 1 of the Sherman Act. Pp. 457 U. S. 342-357.

(a) The agreements do not escape condemnation under the per se rule against price-fixing agreements because they are horizontal and fix maximum prices. Horizontal agreements to fix maximum prices are on the same legal -- even if not economic -- footing as agreements to fix minimum or uniform prices. Kiefer-Stwart Co. v. Joseph E. Seagram & Sons, Inc., 340 U. S. 211; Albrecht v. Herald Co., 390 U. S. 145. The per se rule is violated here by a price restraint that tends to provide the same economic rewards to all practitioners regardless of their skill, experience, training, or willingness to employ innovative and difficult procedures in individual cases. Such a restraint may also discourage entry into the market, and may deter experimentation and new developments by individual entrepreneurs. P. 457 U. S. 348.

(b) Nor does the fact that doctors, rather than nonprofessionals, are the parties to the price-fixing agreements preclude application of the per se rule. Respondents do not claim that the quality of the professional services

Page 457 U. S. 333

their members provide is enhanced by the price restraint, Goldfarb v. Virginia State Bar, 421 U. S. 773, and National Society of Professional Engineers v. United States, 435 U. S. 679, distinguished, and their claim that the price restraint will make it easier for customers to pay does not distinguish the medical profession from any other provider of goods or services. Pp. 457 U. S. 348-349.

(c) That the judiciary has had little antitrust experience in the health care industry is insufficient reason for not applying the per se rule here. "[T]he Sherman Act, so far as price-fixing agreements are concerned, establishes one uniform rule applicable to all industries alike." United States v. Socony-Vacuum Oil Co., 310 U. S. 150, 310 U. S. 222. Pp. 457 U. S. 349-351.

(d) The per se rule is not rendered inapplicable in this case for the alleged reason that the agreements in issue have procompetitive justification. The anticompetitive potential in all price-fixing agreements justifies their facial invalidation even if procompetitive justifications are offered for some. Even when respondents are given every benefit of doubt, the record in this case is not inconsistent with the presumption that respondents' agreements will not significantly enhance competition. The most that can be said for having doctors fix the maximum prices is that doctors may be able to do it more efficiently than insurers, but there is no reason to believe any savings that might accrue from this arrangement would be sufficiently great to affect the competitiveness of these kinds of insurance plans. Pp. 457 U. S. 351-354.

(e) Respondents' maximum fee schedules do not involve price-fixing in only a literal sense. Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U. S. 1, distinguished. As agreements among independent competing entrepreneurs, they fit squarely into the horizontal price-fixing mold. Pp. 457 U. S. 355-357.

643 F.2d 553, reversed.

STEVENS, J., delivered the opinion of the Court, in which BRENNAN, WHITE, and MARSHALL, JJ., joined. POWELL, J., filed a dissenting opinion, in which BURGER, C.J.,and REHNQUIST, J., joined, post, p. 457 U. S. 357. BLACKMUN and O'CONNOR, JJ., took no part in the consideration or decision of the case.

Page 457 U. S. 335

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