Virginia Academy of Clinical Psychologists v. Blue Shield of Virginia

624 F.2d 476
Brief Filed: 7/79
Court: United States Court of Appeals for the Fourth Circuit
Year of Decision: 1980

Read the full-text amicus brief (PDF, 767KB)

Issue

Whether a health insurance company's refusal to provide direct payments to clinical psychologists for outpatient psychological services rendered to the company's subscribers unless those services were ordered, supervised and billed by a physician violated the Sherman Act and Virginia's "freedom of choice" legislation

Index Topics

Antitrust; Psychologists' Scope of Practice/Reimbursement for "Mental Health" Services

Facts

An antitrust action was brought by Virginia Academy of Clinical Psychologists against Blue Shield claiming that its refusal to provide direct payments to clinical psychologists for outpatient services rendered to Blue Shield subscribers — unless those services were ordered, supervised and billed by a physician — violated Section 1 of the Sherman Act and was contradictory to "freedom of choice" legislation recently passed by the Virginia legislature affording consumers the opportunity to choose among qualified health care providers. The district court held that, regardless of the freedom of choice statute, the refusal of Blue Shield to reimburse psychologists for services except as a result of physician referral and supervision was not a boycott and any other rights that Virginia psychologists might have under the Sherman Antitrust Act were not legally enforceable under the McCarran-Ferguson exemptions to the Sherman Act. VACP appealed to the U.S. Court of Appeals for the Fourth Circuit.

APA's Position

APA's amicus brief argued that: (1) by refusing to reimburse clinical psychologists for outpatient psychological services rendered to Blue Shield subscribers unless their services were ordered, supervised by and billed through a physician, the defendants had engaged in a group boycott against psychologists — a per se violation of Section 1 of the Sherman Act; (2) because the defendant's collective refusal diminished price competition between psychiatrists and psychologists, it was facially illegal; (3) the district court finding of non-competition was erroneous and invalid as a matter of law under a "rule of reason" analysis since psychiatrists and psychologists are in competition as providers of psychotherapy services to similar patient populations; (4) as a result of defendant's policy, effective competition for psychiatrists from licensed non-physician health care providers had been delayed and obstructed in Virginia; and (5) if allowed to stand, the district court's decision would have serious adverse implications for effective delivery of mental health care services not only in Virginia, but in the nation as a whole.

Results

The Fourth Circuit overturned the lower court's decision, citing "uncontradicted evidence" of an antitrust violation by defendants, under Section 1 of the Sherman Act's "rule of reason" analysis. It held that psychiatrists and psychologists do compete as a matter of law and that Blue Shield's refusal to directly reimburse psychologists for psychotherapy provided to policy holders was not protected from scrutiny as the "business of insurance" and thus, constituted a restraint of trade. Additionally, the court emphasized the benefits of "open competition" on the quality and expense of mental health services. Blue Shield's petition for writ of certiorari to the U.S. Supreme Court was denied.