FOR IMMEDIATE RELEASE                                                    AT
THURSDAY, DECEMBER 15, 1994                                  (202) 616-2771
                                                         TDD (202) 514-1888

            JUSTICE DEPARTMENT STOPS AGREEMENTS THAT INHIBITED
                    VISION CARE DISCOUNTING NATIONWIDE


     WASHINGTON, D.C. -- The Department of Justice acted today to
stop illegal agreements used by a national vision care insurer
that operates in about 42 states and the District of Columbia
that made many optometrists unwilling to cut their prices or
offer discounts on vision care services.  This is the first
challenge of this type of agreement on a national scale by the
Department's Antitrust Division.  
     In a civil antitrust suit and proposed settlement filed in
U.S. District Court in Washington, D.C., Vision Service Plan was
accused of reducing discounting and price competition through a
contract provision known in the industry as a "most favored
nation" clause, that inhibited doctors from reducing their fees
to competing vision care insurance plans and to individual
patients.  
     Vision Service Plan is the nation's largest vision care
insurance plan with annual revenues of more than $500 million.
     In August, the Department filed its first challenge of this
type of agreement, which is common in the health care industry,
in Arizona.
     Agreements that stifle price competition, such as Vision
Service Plan's provision, are likely to be challenged, the
Department warned.
     "This is a case of nationwide importance because it involves
a contract provision that Vision Service Plan has used in
conducting its business in about 42 states plus the District of
Columbia and that likely harmed consumers of vision care services
in all or parts of many of those states," said Anne K. Bingaman,
Assistant Attorney General in charge of the Antitrust Division.  
     "Vision Service Plan's use of the most favored nation clause
facilitated anticompetitive behavior by providing a strong
disincentive to optometrists' discounting of fees for vision care
services and by impairing entry and competition from competing
vision care insurance plans.
     "As a result of the most favored nation clause, vision care
insurance plans that had previously contracted with doctors at
discounts between 20 and 40 percent were no longer able to obtain
discounts at that level," Bingaman added.
     Vision Service Plan, headquartered in Rancho Cordova,
California, carried out the anticompetitive conduct through a
series of agreements with its participating doctors that
contained most favored nation clauses.  Because in all or parts
of many states where Vision Service Plan operates a high
percentage of an area's optometrists participate in the plan, and
because Vision Service Plan's patients account for a significant
part of its participating doctors' professional income, Vision
Service Plan's most favored nation clause inhibited many of its
doctors from discounting and severely restricted the ability of
competing vision care insurance plans to attract and retain
enough doctors to serve their members.
     At the same time the suit was filed, a proposed consent
decree was filed that, if approved by the court, would settle the
suit and eliminate the most favored nation clause and prevent
Vision Service Plan from engaging in other actions that would
limit future discounting by its participating doctors.
     Bingaman said, "This Administration is committed to making
health care available and affordable to all Americans.  As a
result of the Department of Justice's prosecution and settlement
of this suit, consumers will have access to a wider choice of
vision care insurance alternatives, including discount vision
care insurance plans and other managed care options, and will
also receive the benefits of increased price competition among
Vision Service Plan panel doctors for vision care services."
     The proposed consent decree, if approved by the court, would
be in effect for five years.
     As required by the Tunney Act, the proposed consent decree
will be published in the Federal Register, along with the
Department's competitive impact statement.  Any person may submit
written comments concerning the proposed decree during a 60-day
comment period to Gail Kursh, Chief, Professions & Intellectual
Property Section, Antitrust Division, U.S. Department of Justice,
600 E Street, N.W., Room 9300, Washington, D.C. 20530. 
Telephone:  202/307-5799.
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