A federal appeals court yesterday upheld a landmark 1979 Federal Trade Commission decision that barred the American Medical Association from restricting its members from advertising and competing for patients.
By a 2-to-1 ruling, the 2nd Circuit Court of Appeals in New York, affirmed with modification the October 1979 complaint the FTC issued against the AMA, the nation's largest medical organization, which last year had more than 200,000 members.
Although the AMA's leadership body, the House of Delegates, voted in July to adopt a new code which lifted a ban on "soliciting" patients -- in other words advertising -- the court decision is a significant victory for the FTC, which has been attacked by professional groups for its actions forcing them to lift restrictions on advertisng practices. An AMA official said the group's lawyers had not yet studied the appeals court decision.
The AMA, the Connecticut State Medical Society and the New Haven County Medical Society petitioned the court for review, arguing that as a nonprofit corporation, the Ama was not subject to FTC jurisdiction.
"The record satisfies us that the petitioners serve both the business and nonbusiness interests of their member physicians," wrote Judge Dudley Bonsal in the majority opinion.
Further, the AMA said that the FTC action, ordering a lifting of contract restrictions, constituted prior restraint under the First Amendment. c
In addition, the opinion noted that the AMA had asked the FTC to disqualify Chairman Michael Pertshuck from the case on the grounds that he had pejudged the lengthy FTC proceedings. But the appeals court said that Pertschuk's statements do not "approach the appearance of impropriety . . . Nor do we find that [he] prejudged the facts and the law in this case before hearing it."
But the majority opinion said that, in light of the AMA's contention that the FTC order is overly broad, the agency's order would be modified by adding words "except for professional peer review of fee practices of physicians." That wording apparently would permit the medical associations to act if, for example, some doctors were charging excessive fees.