DOJ Settlement Stops Idaho Orthopedists' Conspiracies to Raise Fees

The Idaho Orthopaedic Society, an orthopedic practice group, and five orthopedists have agreed to end a collusive scheme to drive up physicians' fees that relied on a boycott of care for injured workers, the Department of Justice announced.

"The orthopedists who participated in these group boycotts denied medical care to Idaho workers and caused higher prices for orthopedic services," said Christine Varney, assistant attorney general in DOJ's Antitrust Division. "(This) action seeks to prevent the recurrence of these illegal acts and protects Idaho consumers by promoting competition in the healthcare industry."

DOJ said the orthopedists agreed to coordinate their actions, including denying medical care to injured workers and threatening to withdraw from healthcare plans offered by Blue Cross of Idaho. As a result of these actions, DOJ said the physicians caused the state of Idaho and other healthcare consumers to pay higher fees for orthopedic services.

Named in the civil antitrust suit were: Idaho Orthopaedic Society, Idaho Sports Medicine Institute, and five orthopedists: Timothy Doerr, Jeffrey Hessing, John Kloss, David Lamey, and Troy Watkins. DOJ and the Idaho AG's office also filed a proposed settlement that, if approved by the court, would resolve the lawsuit.

A call on Tuesday to an attorney representing several of the physicians was not immediately returned.

DOJ said the orthopedists engaged in two antitrust conspiracies from 2006 to 2008. In the first conspiracy the orthopedists met and agreed not to treat most patients covered by workers' compensation insurance. They launched the boycott to force the Idaho Industrial Commission to increase the rates paid to orthopedists for treating injured workers. The boycott created a shortage of orthopedists willing to treat workers' compensation patients, causing higher rates for orthopedic services.

In the second conspiracy, all of the defendants, except David Lamey, and other conspiring orthopedists threatened to terminate their contracts with Blue Cross of Idaho to force the insurer to offer better contract terms.

Blue Cross of Idaho spokesman Stewart Johnson said holding down costs is a critical responsibility for health insurers when negotiating payments for services. "We operate in good faith when we negotiate with providers and we were disappointed to learn of the allegations raised by the Department of Justice's Antitrust Division and the Idaho Attorney General's office," Johnson said. The proposed settlement prevents the Idaho Orthopaedic Society and the orthopedists from agreeing with their competitors on fees and contract terms, and also prohibits them from collectively denying medical care to patients, refusing to deal with any payer, or threatening to terminate contracts with any payer.