Chiropractic Antitrust Suit: Unreasonable Restraint of Trade

Memorandum Opinion and Order:
Liability of the American Medical
Association (AMA) and Dr. Sammons

2. Unreasonable Restraint of Trade

The next question is whether the boycott or conspiracy constituted an unreasonable restraint of trade under Section I of the Sherman Act. To answer this question, I have undertaken a rule of reason analysis.

The relevant market was the provision of health care services to the American public on a nationwide basis, particularly for the treatment of musculoskeletal problems. As noted by the Court of Appeals, some medical physicians (such as orthopedic surgeons, internists, and general practitioners) are in direct competition with chiropractors in this market. Medical physicians and chiropractors are interchangeable for the some purposes. Consumers seek both medical physicians and chiropractors for the some complaints, principally back pain and other neuromusculoskeletal problems, and both groups render services for the treatment of those complaints. Competition between medical physicians and chiropractors was recognized by Dr. Joseph A. Sabatier, a member of the Committee on Quackery and a former defendant in this case, as early as 1964. At one point, Dr. Sabatier stated, “it would be well to get across that the doctor of chiropractic is stealing (the young medical physician’s) money.”

The AMA’s intent is clearly relevant to the rule of reason analysis. The boycott was intended to contain and eliminate the entire profession of chiropractic. Whether or not the elimination of competition per se was consciously intended, that was the natural result of an intent to destroy a competitor. The AMA’s market power is also relevant. Members of the AMA constitute a substantial force in the provision of health care services in the United States. They constitute a majority of medical physicians, and a much greater portion of fees paid to medical physicians in the United States is paid to AMA members.

Given the substantial market power of AMA members and the specific intent of the AMA, a substantial adverse effect on competition is evident. [The matter is so clear that in 1979 an AMA lawyer agreed that a medical organization that engages in activities calculated to professionally ostracize any member who voluntarily engages in any kind of a professional relationship with a chiropractor is in restraint of trade, and a general boycott against all doctors of chiropractic is indefensible.] Despite the fact that the number of chiropractic schools, the number of chiropractors, and the number of patient visits to chiropractors grew during the boycott, I accept the Committee on Quackery’s admissions that the boycott was successful. These admissions were not mere puffery. The success of the boycott is shown in part by the adverse reaction of various medical societies to the AMA’s modification of its anti -chiropractic policy in 1977 and the AMA’s settlement of some chiropractic lawsuit in the late ’70s and early ’80s. Many medical physicians individually criticized the AMA for ameliorating its policy. This shows substantial support for the boycott. It was also clear to me from the testimony, particularly of the older medical physicians, that medical physicians acted in conformity with Principle 3. A principle of medical ethics is inherently a forceful mandater of conduct. No honest professional wants to risk the stigma of being labeled unethical. As the Court of Appeals noted, the fact that the AMA never sanctioned or disciplined a member for violation of Principle 3 is not controlling. Enforcement was not necessary to obtain compliance with the boycott.

The anti -competitive effects of the boycott were generally conceded by the defendants’ expert, William J. Lynk of Lexecon Inc. Some of the anti-competitive effects acknowledged by Mr. Lynk include the following: it is anti-competitive and it raises costs to interfere with the consumer’s free choice to take the product of his liking; it is anti-competitive petit to prevent medical physicians from referring patients to a chiropractor; it is anti -competitive to impose higher costs on chiropractors by forcing them to pay for their own x-ray equipment rather than obtaining x-rays from hospital radiology departments or radiologists in private practice; and it is anti-competitive to prevent chiropractors from improving their education in a professional setting by preventing medical physicians from teaching or lecturing to chiropractors. Mr. Lynk agreed that in an economic sense a boycott such as the one described by plaintiffs raises the costs of chiropractic services and creates inefficiencies and economic dislocations. Obviously, Mr. Lynk did not concede the existence of the boycott but agreed that these would be anti -competitive effects that would flow from such a boycott. I have also considered the fact that, as conceded by Mr. Lynk, there are substantial barriers to the entry of new chiropractors into the field, such as substantial education requirements. These barriers increase the likelihood that the boycott had a substantial adverse effect on competition.

The Court of Appeals in Wilk, which reviewed substantially the same boycott evidence, concluded:

Through such mechanisms, individual physicians were discouraged from cooperating with chiropractors in: patient treatment, because referrals were inhibited by defendants’ activities; research; and educational activities, such as sharing clinical experience and research results. Chiropractors were denied access to the hospital facilities they considered necessary to practice their professions. Medical doctors were discouraged from aiding chiropractors in interpreting electrocardiograms. Requests by individual plaintiffs to use laboratory and x-ray facilities were not granted; requests for hospital in-patient privileges were similarly denied. Referrals from medical doctors were reduced. Public demand for chiropractic services was negatively affected. 719 F.2d at 214.

The defendants argue that all of this evidence is not enough — that the plaintiffs must specifically prove an impact on price and output. The cases do not support that position. As Professor Areeda recently noted in his article “The Rule of Reason — a Catechism on Competition,” 55 Antitrust Low Journal, 571 (1986), the Supreme Court has held that the purpose of the inquiry into market definition and market power is to determine whether an arrangement has the potential for genuine adverse effects on competition. If there is actual proof of adverse effects, then the plaintiffs need not prove market definition and market power. The Supreme Court in Federal Trade Commission v. Indiana Federation of Dentists, 106 S. Ct. 2009, 2019 (1986), stated that “the inquiry into market power is but a surrogate for detrimental effects.”

The AMA relies on Mr. Lynk’s conclusion that the boycott had pro-competitive effects that would have outweighed the anticompetitive effects. Mr. Lynk’s theory is that the boycott constituted nonverbal communication which informed consumers about the differences between medical physicians and chiropractors, and that this had a pro-competitive effect. I reject this opinion as speculative. Mr. Lynk neither conducted nor read any studies regarding the efficacy of such nonverbal communications. He neither conducted nor read any surveys of consumer opinion to determine whether consumers were confused about the difference between medical physicians and chiropractors. I sow no evidence of any such confusion during the trial. Mr. Lynk’s opinion does not accord with common sense. A nationwide conspiracy intended by its participants to contain and eliminate a licensed profession cannot be justified on the basis of Mr. Lynk’s personal opinion that it was pro-competitive, nonverbal communication to consumers.

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