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March 8, 2000
The Honorable Henry Hyde
Chairman, House Judiciary Committee
U.S. House of Representatives
Washington, D.C. 20515
Dear Chairman Hyde:
On behalf of the National Conference of State Legislatures (NCSL), I would like to take this opportunity to express some concerns regarding H.R. 1304, the Quality Health-Care Coalition Act of 1999. NCSL has no formal position on this legislation, but I feel compelled to comment on the concerns we have regarding the preemption of state antitrust laws and the absence of a federal structure for continued oversight and regulation.
Under the National Labor Relations Act, health professionals who are "independent contractors," as opposed to employees, are prohibited from collective bargaining with employers. H.R. 1304 would exempt health care professionals from this prohibition by providing that health care professionals, even independent contractors, be treated as employees for the purpose of negotiations with health plans regarding contract terms related to the provision of health care items or services. States that choose to provide a similar exemption to health care professionals are required by the state action doctrine to provide significant oversight to a process of exempting individuals from federal and state antitrust laws.
The state action doctrine evolved from the 1943 Supreme Court decision in Parker v. Brown, 317 U.S. 341 (1943). The case considered whether state governmental entities and employees could be liable for federal antitrust violations. Through state sovereignty, states have been able to take action that would exempt certain activities from federal antitrust statutes. The doctrine was later expanded by the Supreme Court in 1980 with the California Retail Liquor Dealers Association v. Midcal Aluminum, Inc., 445 U.S. 97 (1980), to include exempting from federal antitrust laws, the activities of private parties that are undertaken to implement state policy. The State activities and actions of private parties acting on behalf of a state may be exempted from federal antitrust laws, provided the action is: (1) pursuant to a clearly articulated and affirmatively expressed policy by the state to supplant competition with regulation; and (2) subject to active state supervision.
While H.R. 1304 preempts state and federal antitrust laws, it fails to establish federal requirements to replace the "active state supervision" requirements currently in place. Last year Texas enacted a law that would permit joint negotiating by physicians. This year legislation is pending in seventeen states (Alaska, Arizona, California, Connecticut, Delaware, Florida, Hawaii, Illinois, Michigan, Missouri, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Tennessee, West Virginia and in the
city council of the District of Columbia). The Texas law and the pending proposals include significantly more guidance than is contemplated in H.R. 1304. The Texas law and most of the pending proposals permit competing providers to jointly negotiate only where the health benefit plans has substantial market power and has affected or threatens to adversely affect the quality and availability of patient care.
NCSL would urge you to not preempt state law. If state law were preempted in H.R. 1304, thereby avoiding the requirements of the state action doctrine, NCSL would urge you to consider changes to H.R. 1304 that would establish similar oversight and guidance at the federal level. Enclosed for your information is a side-by-side comparison of H.R. 1304 and the Texas law. Also enclosed for your information is a brief summary of the proposals pending in the states that includes the providers included and whether the legislation defines "substantial market power." I hope this information proves helpful as you deliberate on this very important issue. Please call Joy Johnson Wilson or Marla Rothouse in the NCSL Washington Office at 202/624-5400 if you have any questions or if you need additional information.
Sincerely,
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Paul Mannweiler
House Republican Leader, Indiana
President, NCSL |
cc: Members, House Judiciary Committee
The Honorable Tom Campbell
Enclosures
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