Family Practice Settlement
DOJ vs. Family Practice Residency
In May, the Department of Justice (DOJ) settled a civil suit against the Association of Family Practice Residency Directors (AFPRD). Based in Kansas City, Missouri, and established in 1989, the AFPRD has 427 members representing about 95 percent of all U.S. family practice residency program directors. The suit alleged that the AFPRD used its ethical rules to restrict competition among its members in attracting residents to their programs.
According to the DOJ complaint, the AFPRD violated the Sherman Act by issuing guidelines governing recruiting of prospective residents by family practice residency programs. In the late 1980's competition increased among family practice residency programs to attract senior medical students and residents already in other programs to fill vacancies. Residency programs began to directly solicit first-year residents in other programs, sometimes without the knowledge of the other program, and started to offer economic incentives (e.g., bonuses, loan forgiveness, housing allowances, moonlighting permission and payments, moving expenses) to attract students and residents. Because residents all earned in the same salary, these incentives were the only economic way programs had to differentiate themselves. Sometimes these incentives were offered before the yearly "Match" conducted by the National Resident Matching Program.
In 1990, the AFPRD began to receive complaints from some of its members about the competitive practices of other programs. As a way of eliminating the increasing competition among its members, the AFPRD developed and disseminated "Guidelines on the Ethical Recruitment of Family Practice Residents." The guidelines represented an agreement among the member programs to limit competition by (1) not directly soliciting residents from other residencies; (2) not offering contracts to applicants who were residents in other programs without the knowledge of the other program director; (3) making all incentives and other benefits offered to one applicant available to all applicants; (4) and not providing any incentives before the Match.
The Guidelines were approved and distributed to AFPRD members and endorsed by other organizations concerned with family medicine and resident recruiting. To ensure compliance, AFPRD responded to all reported violations of the Guidelines by contacting both the complainant and the alleged violator. Where a violation was found, program directors were so informed.
Since AFPRD distributed the Guidelines, the DOJ charged that competition among the residency programs to attract students and residents was significantly reduced, so that the terms and conditions of employment for the residents were less than they could have obtained with free competition.
The proposed settlement requires AFPRD to withdraw the anti-competitive provisions from the Guidelines and requires it to publicize the terms of the final judgment and maintain a formal antitrust compliance program.
This case is the fifth antitrust suit filed by the DOJ against an association in the last two years and the first involving an organization connected to medical education or residency programs. While the settlement affects only AFPRD, it illustrates the type of activities that the DOJ will challenge when an association attempts to regulate competitive behavior among its members.
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