The Supreme Court yesterday let stand a lower court ruling that Virginia Physicians who control the state's two Blue Shield medical plans had conspired to obstruct trade by blocking direct insurance payments to psychologists.
In refusing to hear the case, the high court apparently ended a long dispute over the physician-dominated organization's policy of requiring that payments for therapy by psychologists be billed through psychiatrists, who are medical doctors. Psychologists do not hold medical degrees.
A federal appeals court in Richmond last year sided with the state's psychologists, who claimed to therapists for out-patient mental treatment damaged their ability to compete with medically licensed psychiatrists.
In seeking the high court's review, attorneys for the medical plans argued that the ruling could lead to "extraordinarily far-reaching and deleterious consequences" for similar plans covering some 80 million persons across the country.
Virginia Blue Shield has allowed payments for mental therapy since 1962. The contested policies, however, instituted in 1972 by Blue Shiled of Virginia and Blue Shield of Southwestern Virginia limited such payments to psychologists referred and supervised by medical practitioners.
The two Blue Shield groups adhered to those rules despite a 1973 state law requiring they pay psychologists independently. Psychologists argued that the action amounted to a restraint of trade designed "to stop once and for all the encroachment of nonphysician providers who were working their way into the therapy field."
Last June the 4th U.S. Circuit Court of Appeals agreed, saying that collaboration between the two groups to implement the policies "amounted to no more than an agreement to persist in economically restrictive commercial activity in the face of a state law designed to open up the health care market."
Since then, both plans have begun direct payments. They also are under a court order to make any other payments outstanding since Jan. 1, 1979.
Originally heard by a federal judge sitting in Alexandria, the case was first decided in favor of Blue Shield. Judge D. Dortch Warriner ruled that the policies did not affect interstate trade and would not be bound by federal antitrust laws.
The appellate court overturned Warriner's decision, rejecting Blue Shield's argument that it was protected by laws applying to state-regulated insurance companies on grounds it is not an insurance company in the strict sense but an association of physicians.
There was "uncontradicted evidence's showing enough physician control to raise questions of antitrust violations, the court said.
"The Blue Shield plans are a dominant source of health care coverage in Virginia," it said. "Their decisions as to who will be paid for psychotherapy necessarily dictate, to some extent, which practitioners will be chosen . . . to provide such services."