Private Credentialing of Health Care Personnel: An Antitrust Perspective—Part One

Clark C. Havighurst; Nancy M. P. King

doi:10.1017/S009885880000928X

Private Credentialing of Health Care Personnel: An Antitrust Perspective—Part One

Published online by Cambridge University Press: 24 February 2021

Clark C. Havighurst and

Nancy M. P. King

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Clark C. Havighurst: Affiliation:
Duke University
Nancy M. P. King: Affiliation:
Program on Legal Issues in Health Care, Duke University

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Abstract

This Article explores the antitrust and other implications of private credentialing and accrediting programs in the health care industry. Although such programs are usually sponsored by powerful competitor groups, they serve the procompetitive purpose of providing useful information and authoritative advice to independent decision makers. Part One examines the risk that credentialing will sometimes be unfair to competitors and deceive consumers. Its survey of common-law, antitrust, and regulatory interventions to correct such unfairness and deception seeks to determine the degree of oversight to which credentialing and similar activities have been and should be subjected. In recommending that judicial or regulatory scrutiny should be limited to discovering whether standards and practices have a rational relation to a procompetitive purpose, the Article argues that greater intrusion into credentialing schemes would be inconsistent with market theory and first amendment values and would discourage line-drawing efforts that stimulate competition and facilitate consumer choice. By emphasizing throughout that personnel certification and institutional accreditation embody ideology and opinion as well as factual information, Part One sets the stage for the argument in Part Two that antitrust law can and should be used to contest the dominance of a single ideology of health care and to facilitate the development of alternative sources of consumer information. The Article’s overall thesis is that, whereas the quality of advice given to the public about health care personnel and similar matters should not be closely regulated, neither should the supply of competing information and opinion be artificially curtailed.

Type: Articles
Information: American Journal of Law & Medicine , Volume 9 , Issue 2 , Summer 1983 , pp. 131 - 201

DOI: https://doi.org/10.1017/S009885880000928X [Opens in a new window]
Copyright: Copyright © American Society of Law, Medicine and Ethics and Boston University 1983

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Footnotes

†

Preparation of this article was supported by Grant No. HS 04089 from the National Center for Health Services Research, U.S. Department of Health and Human Services.

Part Two of this Article (hereinafter cited as Part Two) will appear in Volume 9, Number 3 of the American Journal Of Law & Medicine.

References

¹ This conception of health care and of the health care industry has begun to take hold in recent years as a result of changes in antitrust law, disappointment with command-and-control regulation, and new policy thinking. See generally Market Reforms In Health Care (J. Meyer ed. 1983); Havighurst, C., Deregulating The Health Care Industry(1982)Google Scholar; A New Approach To The Economics Of Health Care(M. Olson ed. 1981); Symposium, Market-Oriented Approaches to Achieving Health Policy Goals 34 Vand.L. Rev. 849 (1981)Google Scholar; Enthoven, A., Health Plan: the Only Practical Solution To the Soaring Cost Of Medical Care(1980)Google Scholar; The Spiraling Costs of Health Care—Rx: CompetitionBus. Wk.,Feb. 8, 1982, at 58.

² For a classic discussion of manpower licensure, see Friedman, M. ,Capitalism And Freedom,ch. 9 (1962).Google Scholar

³ For example, the boycott, the sanction most typically employed in such private regulation, is a per se violation of the antitrust laws. See infra notes 137-50 and accompanying text.

⁴ The distinction is easily obscured. For example, in American Soc'y of Mechanical Eng'rs v. Hydrolevel Corp., 456 U.S. 556, 570 (1982), Justice Blackmun, speaking of the appellant certifying body, stated:

ASME wields great power in the Nation’s economy. Its codes and standards influence the policies of numerous States and cities, and, as has been said about “so-called voluntary standards" generally, its interpretations of its guidelines “may result in economic prosperity or economic failure, for a number of businesses of all sizes throughout the country “ H.R. Rep. No. 1981, 90th Cong., 2d Sess., 75 (1968). ASME can be said to be “in reality an extra-governmental agency, which prescribes rules for the regulation and restraint of interstate commerce.. . ."

The latter quotation of famous language from Fashion Originators’ Guild v. FTC, 312 U.S. 457, 465 (1941), is inapposite precisely because the appellant in that case, unlike ASME, was a combination of manufacturers that had not merely stated its opinion about its competitors’ products but had engaged in a boycott of retailers of unapproved merchandise. The term regulation, or self-regulation, like the legal rule against its implementation by an “extra-governmental agency,” is appropriately applied only to collective activity involving the exercise of coercive power. See infra text accompanying notes 138-50. The analysis in this Article, and antitrust law generally, treats the provision of information, without coercive sanctions, as desirable, procompetitive activity. See, e.g., infra note 75. For further discussion of the Hydrolevel case, see infra text accompanying notes 164-65.

⁵ A significant feature of this Article is that it deals with the less fully explored of the two features that most sharply distinguish the health care marketplace from other markets. Antitrust analysts and the courts now appear to understand fairly well how a market featuring third-party payment for services might be efficiently competitive, see, e.g. Joskow, P., Cont Rolling Hospital Costs: The Role Of Government Regulation 21-31 (1981)Google Scholar; Havighurst, & Hackbarth, , Private Cost Containment 300 New Eng. J. Med. 1298 (1979)CrossRef Google Scholar PubMed, and how competition in such a market might be restrained. See, e.g.Arizona v. Maricopa County Medical Soc'y, 102 S. Ct. 2466, 2477-78 (1982); Medical Arts Pharmacy of Stamford, Inc. v. Blue Cross and Blue Shield of Connecticut, 675 F.2d 502, 506-07 (2nd Cir. 1982). They have had much less opportunity, however, to appreciate the significance of consumer ignorance in markets for complex professional services and the consequent desirability of any program that supplies consumers with information and opinion regarding the relative merits of competing individuals and institutions. There has also been little recognition of the ways in which competitors can create market power by collectively controlling information or of the value of antitrust law in preserving markets as forums for testing competing ideologies and for ensuring that consumers’ diverse preferences and values are well served.

⁶ See American Soc'y of Mechanical Eng'rs v. Hydrolevel Corp., 456 U.S. at 570, quoted in supra note 4. See generally Bureau Of Consumer Protection, Federal Trade Commission, Standards And Certification (1983) (hereinafter cited as FTC Staff Report); Science Policy Research Division Of The Congressional Research Service Of The Library Of Congress, Report To The Subcommittee On Sience, Research And Development Of The House Committee On Science And Astronautics, Voluntary Industrial Standards In The United States (1974); Wachtel, , Product Standards and Certification Programs 13 Anti Trust Bull. 1 (1968)Google Scholar; Hummel, , Antitrust Problems of Industrial Codes of Advertising, Standardiza tion, and Seals of Approval 13 Antitrust Bull. 607 (1968).Google Scholar

⁷ In industrial settings it is common for certifying bodies to apply standards set by other organizations. See FTC Staff Report ,supra note 6, at 23-26. In health personnel credential- ing, the certifiers generally set their own standards, except insofar as they require completion of educational programs accredited by others.

⁸ See infra notes 52-55 and accompanying text.

⁹ Phi Beta Kappa is a private credentialing body supported by its members but administered through educational institutions.

¹⁰ Trademarks serve to identify the origin of a product, to guarantee constancy of quality on repeat purchases, and to facilitate advertising of the product. 3 Callman, R., The Law Of Unfair Competition, Trademarks And Monopolies § 17.01 (4th ed. 1983)Google Scholar. The law also recognizes collective trademarks and certification marks that signify, in addition to quality standards, such characteristics as place of origin (e.g., Florida oranges) or type of producer (e.g., a trade or marketing association). See Note, The Collective Trademark: Invitation to Abuse 68 Yale L.J. 528 (1959). See also infra note 204 and accompanying text.

¹¹ Some credentialers might deny drawing such invidious distinctions. See infra note 30 and text accompanying note 207.

¹² See Council On Postsecondary Accreditation, The Balance Wheel For Accreditation 2 (1981); Seldon, W. & Porter, F., Accreditation: Its Purposes And Uses (1977)Google Scholar; Center For Occupational Education ,N.C. State Univ., Perspectives On Accreditation Of Postsecondary Occupational Education (1970); Oulahan, , The Legal Implications of Evaluation and Accreditation 7 J. L. & Educ. 193, 198 (1978)Google Scholar; Finkin, , Federal Reliance on Voluntary Accreditation: The Power to Recognize as the Power to Regulate 2 J. L. & Educ. 339, 341-42 (1973).Google Scholar

¹³ In the area of product certification, the American National Standards Institute serves as a voluntary national clearinghouse for the approval and promulgation of standards devel oped and used by most of the major product testing and certification organizations. See generally FTC Staff Reports ,supra note 6, at 16; Congressional Service report supra note 6, at 28-31. The U.S. Department of Commerce also sponsors the development of and recognizes standards set by private bodies. See 15 C.F.R. § 10 (1983).

¹⁴ The Office of Postsecondary Education in the United States Department of Education publishes a list of approved accrediting bodies; an institution must be accredited by an approved body in order for it or its students to receive federal funds. See 34 C.F.R. § 603 (1982); Finkin, , Reforming the Federal Relationship to Educational Accreditation 57 N.C.L. Rev. 379 (1979)Google Scholar. Finkin disputes the secretary’s authority to do more than merely publish a list of “nationally recognized" accreditors of adequate reliability; the secretary’s requirements for recognition are highly regulatory, however.

¹⁵ The Council on Postsecondary Accreditation (COPA) is a private national accreditor which was formed in 1975 from a merger of two predecessor organizations, the National Commission on Accreditation and the Federation of Regional Accrediting Commissioners of Higher Education.

¹⁶ On early proposals for separately licensing specialists, see Stevens, R. , American Medicine and the Public Interest 164-68 (1971)Google Scholar. This book is the definitive history of specialization in the medical profession.

¹⁷ The twenty-three boards are Allergy and Immunology, Anesthesiology, Colon and Rectal Surgery, Dermatology, Emergency Medicine, Family Practice, Internal Medicine, Neurological Surgery, Nuclear Medicine, Obstetrics and Gynecology, Ophthalmology, Or thopedic Surgery, Otolaryngology, Pathology, Pediatrics, Physical Medicine and Rehabilitation, Plastic Surgery, Preventive Medicine, Psychiatry and Neurology, Radiology, Surgery, Thoracic Surgery, and Urology. ABMS Annual Report & Reference Handbook 58 (1982) (hereinafter cited as ABMS Handbook).

The members of each board are selected “from nominees designated by the board’s sponsoring organizations.” Id. at 77. Each board was of course originally established by one or more prominent specialty societies in the field. See R. Stevens ,supra note 16.

The members of the ABMS are representatives of the boards and “five national organizations concerned with graduate medical education and specialty practice,” plus three public members. Public members have one vote each, non-board representatives two, and the boards a number based on the number of certifications issued in the last five years (always at least two). ABMS Handbook ,supra at 36. Since there are 23 boards, it is fair to say that the ABMS is controlled by the boards.

¹⁸ For example, certification in maxillofacial surgery, nutrition, hypnosis, and genetics and a number of laboratory certifications are available to certain nonphysician professionals as well as to physicians. The nature, quality, and importance of non-ABMS boards appear to vary greatly. Many non-ABMS entities granting special recognition to physicians and others are not certifying boards per se but are professional groups whose admission standards may make membership a valuable distinction. See infra text accompanying note 45. A few are true examining boards. See infra note 19.

¹⁹ The prime exception is the American Board of Abdominal Surgery (ABAS). In the 1960s, the ABAS waged a fierce and ultimately unsuccessful battle for recognition by the ABMS. The ABAS, which closely resembles the ABMS boards in its structure, functions, and objectives, currently has about 1900 diplomates. 1 Encyclopedia Of associations § 8, p. 877 (D. Akey, ed., 17th ed. 1983). This is less than half the number of surgeons certified by the ABMS-affiliated American Board of Thoracic Surgery. At the time the ABAS was seeking recognition, it had almost 2300 surgeons in its founders’ group alone and constituted a powerful challenge to the domain of the American Board of Surgery (ABS), many of whose diplomates practice primarily abdominal surgery. At that time the boards of Thoracic Surgery and Colon and Rectal Surgery, both of which certify surgeons who perform abdominal procedures, were subsidiaries of the ABS rather than independent boards, so the ABAS’s attempt to achieve primary board status was especially threatening. On this history, see R. Stevens ,supra note 16, at 333-39.

Another non-ABMS board that models itself on the ABMS boards is the American Board of Nutrition (ABN), which certifies both Ph.D.s and M.D.s, the former in Human Nutrition and the latter in either Human or Clinical Nutrition. Most physicians obtain the clinical certification, and since one of its prerequisites is prior certification or eligibility for certification in an ABMS board primary specialty, almost all physicians with ABN certification hold an ABMS certification as well. Most are academic physicians. See American Board Of Nutrition, Directory Of Diplomates In Human Nutrition Sciences and Clinical Nutrition (1981).

²⁰ Physicians specialize for many reasons, many of which are distinguishable from their reasons for seeking certification. Foremost, of course, is scientific and professional interest in a particular area of specialty practice. Other reasons relate to the nature and organizational aspects of specialized practice: shorter and more regular working hours, consultant status, more interesting problems, better patient selection, and so forth. See R. Stevens ,supra note 16, at 43-49.

²¹ By 1973, over 83% of all physicians were self-proclaimed specialists. Wechsler, H. ,Handbook Of Medical Specialties 13-14 (1976)Google Scholar. However, by 1980, only about 53% of all physicians were certified specialists. American Board Of Medical Specialties (ABMS), Directory Of Medical Specialties vii (20th ed. 1981) (hereinafter cited as ABMS Directory). Of office-based physicians responding to a 1980 survey, 75% were certified by at least one ABMS board—an increase from two-thirds in 1977. Owens, , How Much is Board Certification Worth? Med. econ. ,Jan. 10 , 1983, at 59.Google Scholar

²² See Sabshin, Levit, & Mueller, , Trends in Graduate Medical Education and Specialty Certification 290 New Eng. J. Med. 545 (1974)Google Scholar; H. Wechsler ,supra note 21, at 35. Certification apparently enhances income. A 1981 survey shows that, although certified specialists have practice expenses some 35 percent higher than those of uncertified specialists, they neverthe less net a median income before taxes that is 34 percent higher than that of their uncertified counterparts (an increase in the income gap from 22 percent in 1976). Owens,supra note 21, at 59-60.

²³ Lerner, H., Manpower Issues and Voluntary Regulation In the Medical Specialty System 169 (1974).Google Scholar

²⁴ See supra note 21; H. Shuchman, Self Regulation In the Professions 206-09 (1981).

²⁵ Moore, & Lang, , Board-Certified Physicians in the United States: Specialty Distribution and Policy Implications of Trends During the Past Decade 304 New Eng. J. Med. 1078, 1083 (1981).CrossRef Google Scholar PubMed

²⁶ A conjoint board, such as Allergy and Immunology or Nuclear Medicine, is sponsored by at least two other approved specialties. Emergency Medicine is a “modified" conjoint board—that is, one sponsored by five or more other boards. Candidates for certification by a conjoint board must undergo some training in at least one of the sponsoring specialties, see ABMS Handbook ,supra note 17, at 77, but only the conjoint board of Allergy and Immunology requires prior certification in a sponsoring specialty. Interestingly, the primary boards of Thoracic Surgery and Colon and Rectal Surgery, both formerly subsidiaries of the American Board of Surgery, require prior certification or examination by that board. In contrast, the American Board of Family Practice, though sponsored by five primary boards, is not considered a conjoint board.

²⁷ See ABMS Handbook ,supra note 17, at 76-79.

²⁸ See generally ABMS Directory ,supra note 21, which lists some of the certification requirements for each specialty board.

²⁹ See ABMS Handbook ,supra note 17, at 29-30 (figures illustrating interdependent relationships); R. Stevens supra note 16, at 389-92 (history).

³⁰ For a notable exception, see infra text accompanying note 196. A recent ABMS discus sion group addressing the meaning of certification reported that “most boards appear to recognize that their evaluation processes are inadequate to assure that certification promises, in practice, either competence or excellence.” ABMS Rec. 10 (October 1982). In their official statements, the ABMS and the individual boards do not claim that a diplomate is necessarily a better practitioner than an uncertified specialist in the field but claim nevertheless that board certification indicates either competence or excellence. Typical examples of the board’s dis claimers are the following:

Certification . . . recognizes excellence in the discipline of internal medicine. . . . The Board does not intend either to interfere with or to restrict the professional activities of a licensed physician because the physician is not certified. . . .

American Board Of Internal Medicine, Policies and Procedures 2 (July 1982).Google Scholar

Board certification in a medical specialty is evidence that a physician’s qualifications for specialty practice are recognized by his peers. It is not intended to define the requirements for membership on hospital staffs, to gain special recognition or privileges for its diplomates, to define the scope of specialty practice, or to state who may or may not engage in the practice of the specialty.

American Board Of Thoracic Surgery, Booklet Of Information 9 (Jan. 1982)Google Scholar. There is no consensus among the boards as to whether certification evidences only competence or instead signifies excellence. The American Board of Dermatology, in an apparent contradiction, asserts both that it is dedicated to “the primary purpose of protecting the public by establishing and maintaining high standards of training, education and qualifications" of dermatologists and that its objective is “to provide assurance that a diplomate of the Board possesses the knowledge and skills essential for the provision of competent care.” American Board Of Dermatology, Booklet Of Information 4 (Jan. 1982)Google Scholar (emphasis added).

³¹ One canvass of the few available studies suggests that the amount and nature of postgraduate professional training is more determinative of clinical competence than is the ability to pass a certification exam and that practice in a teaching hospital may be more closely related than specialty certification to satisfactory clinical performance. Williamson, , Validation by Performance Measures in ABMS, Conference On Extending the Validity Of Certification 21-25 (1976).Google Scholar

³² The boards that require recertification and continuing medical education (CME) are Emergency Medicine, Surgery, Thoracic Surgery, and Family Practice. Emergency Medicine will not administer mandatory recertification exams until 1990; Surgery and Thoracic Surgery will not begin until 1986. The American Board of Family Practice, established in 1969, pioneered temporary certification by issuing only 7-year certificates to its diplomates; the first mandatory Family Practice recertification exam was given in 1975. In 1976 the boards of Surgery and Thoracic Surgery, which theretofore had issued lifetime certificates, began to issue only 10-year certificates, and the new American Board of Emergency Medicine, which was approved in 1979, began by issuing only 10-year certificates. ABMS Handbook ,supra note 17, at 56.

³³ See H. Shuchman ,supra note 24, at 201-09; ABMS Handbook ,supra note 17, at 56. CME offerings are various and requirements are not usually rigorous. Moreover, the relevance of CME to physician competence is tenuous at best. See H. Shuchman ,supra note 24, at 239-41; Lewis, & Hassanein, , Continuing Medical Education—An Epidemiologic Evaluation 282 New Eng J. Med. 254 (1970).CrossRef Google Scholar PubMed

³⁴ See ABMS Handbook ,supra note 17, at 54 (“The ABMS recognizes that the methods and procedures employed in recertification may differ from those used in the initial certification process.”). The 95-98% passing rate on recertification examinations, voluntary and mandatory, may be thought too high to ensure competence. See H. Shuchman ,supra note 24, at 201. Moreover, the percentage of specialists who seek voluntary recertification is quite low; for example, the American Board of Internal Medicine certifies between 3000 and 4000 new diplomates every year, see ABMS Handbook ,supra note 17, at 50-51, but in its three recertification exams in 1974, 1977, and 1980 it has only recertified a total of 7,245—perhaps 20% of those eligible for recertification. See Meskauskas, & Webster, , The American Board of Internal Medicine Recertification Exam 82 Ann. Internal Med. 577 (1975)CrossRef Google Scholar; Letter from George D. Webster, M.D., Vice President, ABIM (July 29, 1983).

³⁵ The founders of the early specialty boards usually grandfathered themselves in without examination. See R. Stevens ,supra note 16, at 318-19, 327. More recently, new boards have required an examination for all members but, for a limited period, have allowed established practitioners to sit for the exam without completing the formal training required of new entrants into the field. See ABMS Directory ,supra note 21, at 155-56, 2086, 2412, 3976; 1 Lewin and Associates, Report To the Federal Trade Commission, Competition Among Health Practitioners: The Influence Of the Medical Profession On the Health Man Power Market III—51-54, 62-64 (1981) (hereinafter cited as Lewin Report).

³⁶ The American Board of Pediatrics now requires three years of clinical training in general pediatrics; before 1978, only two were required. ABMS Directory ,supra note 21, at 2412. The American Board of Otolaryngology required a four-year residency until 1981, when it instituted a five-year requirement. Id. at 2086. The American Board of Colon and Rectal Surgery has since 1980 required candidates to first pass the American Board of Surgery qualifying exam; before 1980, the qualifying exam was not required. Id. at 155-56. In 1976, the American Board of Thoracic Surgery began to require that candidates attend an “approved" thoracic surgery program. Id. at 3976. Some boards also require documentation of precertification experience in handling a certain operative case load; the number of required cases increases periodically. In general, the first “Essentials" for approved residencies, which appeared in the 1930s, required two to three years of graduate education in each specialty. Most residencies are now at least four years in length, with some surgical residencies being six or seven years long. AMA 82nd Annual Report on Medical Education in the U.S. 248 J. A.M.A. 3225, 3232 (1982). Obviously, the curriculum and examinations for each specialty have changed as well in ways less readily measurable.

³⁷ The grandfathering problem is further discussed in Part Two, Section VLB.

³⁸ ABMS Handbook ,supra note 17, at 37.

³⁹ The Essentials for ABMS approval of new boards require that each represent “a distinct and well-defined field of medical practice,” based on advances in either scientific medicine or health services delivery./rf. at 77. See R. Stevens ,supra note 16, at 335-37, 339-42, for application of this requirement to proposed new specialties.

⁴⁰ See supra note 26.

⁴¹ For example, Internal Medicine offers ten “special certificates,” Pediatrics offers six, and Obstetrics and Gynecology and Surgery both offer three; certification by the offering board is of course a prerequisite for special certification in any subspecialty. Boards issuing more than one type of general certification include Psychiatry and Neurology (five), Preventive Medicine (four), Radiology (three), and Pathology (three), which also offers special certification in eight subspecialties. ABMS Handbook ,supra note 17, at 48-49.

⁴² Many of the special and general certification categories within a given specialty might easily have been treated as independent specialties were it not for accidents of history and the power of the already established boards. For example, critical care medicine, a new subspecialty offered separately by four primary boards, see id. could presumably have been offered instead by a conjoint board or a new primary board similar to Family Practice. For evidence of the ABMS attempt to stem the proliferation of subspecialty certifications, see id. at 45-47 (policy statement on the significance of certification, discussing subspecialization).

⁴³ For discussion of the ongoing conflict between generalism and specialism, see generally R. Stevens supra note 16, esp. at 33-55, 115-16, 124. See also Part Two, Section V.B.2.

⁴⁴ Joint Commission On Accreditation Of Hospitals, Accreditation Manual For Hospitals 1983-96 (1982). The JCAH is a private accrediting body that sets and applies voluntary standards for the accreditation of hospitals and other health-related institutions. Governed by representatives of the American College of Surgeons, the American College of Physicians, the American Hospital Association, the AMA, and the American Dental Association, the JCAH is the successor to the American College of Surgeons’ hospital standardization program, begun in the early part of the century. Nearly all hospitals of significant size are JCAH-accredited, and such accreditation is deemed to meet federal requirements for participation in Medicare. JCAH standards are not minimum standards; thus, it is possible for an accredited hospital to be only “in substantial compliance.” See id. at ix-xii; R. Stevens supra note 16, at 87, 91-92, 119; Affeldt, , Voluntary Accreditation in Regulating Health Care: the Struggle For Control 182 (A. Levin ed. 1980)Google Scholar. See also infra note 77.

⁴⁵ The informational value of membership in a specialty society depends upon its re quirements, which in turn determine the number of practitioners admitted. Because board certification is expected ultimately to encompass virtually all practitioners see supra notes 23-25 and accompanying text, the selectivity of ACS, ACP, and similar organizations is likely to become increasingly important as a basis for distinguishing among physicians. Board certification is a prerequisite for ACS membership, whereas ACP “Fellowship" requires membership in other specialty societies, publications, and other evidence of substantial scholarly achievement. Both Colleges also require testimonials from other Fellows as to the applicant’s personal and professional ethics and character. See American College Of Physicians, Biographical Directory Of the American College Of Physicians xii (1979)Google Scholar; American College of surgeons ,1983 Yearbook 1029, 1046 (listing requirements and number of fellows). Probably no more than one-third of those specializing in internal medicine and related primary care specialties are ACP Fellows, and the percentage of ACS Fellows among surgical specialists is probably no more than half. See American Medical association, profile of medical practice 135 (1981) (Table 1, grouping Physician Masterfile 1981 data into 9 specialty categories.)

⁴⁶ Moore & Lang, supra note 25, at 1083, assert that “the ultimate pass rate [which includes those who pass on retakes] is close to 95% for graduates of United States medical schools,” nearly all of whom now seek certification. See supra note 22 and accompanying text. The 95% estimate differs from the pass rates released annually by individual boards, which usually range from 60-80% but include foreign medical graduates (FMGs) as well as U.S. graduates. It also differs from the ultimate pass rate found by the American Board of Obstetrics and Gynecology, which recently determined that, by September 1981, 19% of those (including FMGs) who had first attempted certification in 1976 had failed to achieve it (though 36% of those aspirants were scheduled for a further retake). In addition to the unsuccessful 19%, 16.3% of eligible candidates had dropped out of the process, perhaps only temporarily, before or after Part I of the two-part examination. Most Candidates Successful The A.B.O.G. Diplomate (Sept. 1981). Adding to the softness of these data is the fact that the boards generally require candidates, after some number of failures or the passage of some length of time, to complete further training and reapply as new candidates.

⁴⁷ See supra text accompanying note 11.

⁴⁸ State licensing laws vary greatly and are sometimes quite narrow, with the result that educational and certification programs may teach, test, and certify competence in areas outside the lawful scope of practice of nonphysician health personnel in some jurisdictions.

⁴⁹ For example, the physician assistant (PA) examination is currently open to graduates of PA, MEDEX, and nurse practitioner training programs and to persons who have been independently (“informally”) trained. See Glazer, D., National Commission on Certification of Physician’s Assistants: A Precedent in Collaboration in The New Health Professionals 86, 88-89 (A. Bliss, E. Cohen eds. 1977).Google Scholar

⁵⁰ Some nurse practitioner specialties employ this form of certification. There is no national certification examination for nurse practitioners, and training programs vary greatly in content and length, ranging from three months to two years. SeeSultz,Henry & Correll, Nurse Practitioners: An Overview of Nurses in the Expanded Rolein The New Health Professionals ,supra note 49, at 9-18.

⁵¹ See, e.g. Public Health Service, Credentialing Health Manpower 7-11 (1977)Google Scholar. The trend toward limiting diversity is evident in many professions. For example, nursing educators have long worked toward standardizing and increasing nursing education requirements. See Dolan, The New York State Nurses Association Proposal: Who Needs It?, 2 J. Health Pol., pol'y & L. 508 (1978); 2 Prof. reg. news 9 (Nos. 4-5, Nov.-Dec. 1982). (“By 1987, a baccalaureate degree in nursing or science will become a requirement for entry into schools of nurse anesthesia. The profession’s accrediting agency, the Council on Accreditation of Nurse Anes thesia Programs/Schools, announced the new requirement after surveying all 145 nurse anesthesia program directors, who concurred that the bachelor’s degree was an appropriate prerequisite for entry.”). Similarly, beginning in 1987, the certifying examination for physicians’ assistants will no longer be open to persons with informal independent training or to graduates of some currently approved nurse practitioner programs. National Commission On Certification Of Physicians’ Assistants, Announcement Of the 1982 National Certifying Examination For Primary Care Physician’s Assistants 5 (1982). For an interesting critique of a similar standardization movement in the accounting profession, see Miller, & Davidson, , Accreditation: Two Views J. Acer. March, 1978, at 56, 61.Google Scholar

The existence of alternative pathways to certification within one credentialing program may be a sign of healthy diversity if the paths are truly equivalent or if appropriate gradations are established. Cf. Part Two, Section VLB. Diversity may also be reflected in the existence of more than one program for credentialing personnel in a single field. Such competition in credentialing is also generally regarded, however, as an unfortunate departure from the monolithic ideal. See Part Two, Sections V.A. and V.B.2.

⁵² See Lewin Report ,supra note 35, at 111-26-33; see also AMA 82nd Annual Report, supra note 36, at 3328 (listing medical organizations sponsoring AMA-recognized allied health professions). Medical dominance is most likely when the nonphysician professionals are dependent under licensure laws upon physician supervision or referral. Thus, the certification process for physician assistants, who are not themselves licensed but practice under the license of a supervising physician, is dominated by the affected medical specialties. See Lewin Report ,supra note 35, at III—33-35.

⁵³ See AMA, Allied Health, Education, Directory (10th ed. 1981).

⁵⁴ For example, institutions offering nurse training programs are approved by state or regional accreditors, but the programs themselves may also seek accreditation from the National League for Nursing. See Finkin, supra note 14, at 383.

⁵⁵ The AMA cooperates, through CAHEA, in the accreditation of over 3,000 educational programs, at more than 1,700 institutions, for the 26 allied health professions it recognizes. AMA 82nd Annual Report, supra note 36, at 3288.

⁵⁶ See Lewin Report ,supra note 35, at III—38-41. Although the standards set by the two accreditors differ, most schools seek both accreditations. See discussion in Part Two, Section VI.E.

⁵⁷ AMA, supra note 53, at 9.

⁵⁸ See Study Of, Accreditation, Of Selected Health Education Programs (SASHEP), Commission Report 13 (1972) (“Both structurally and functionally, the processes of accreditation and certification are linked by strong operational and organizational ties, and are welded together by the common denominator of professional sponsorship and control.”). See also Part Two Sections V.A. and V.B.2.

⁵⁹ See National Commission, For, Health Certifying Agencies, Criteria For Approval Of Certifying Agencies (mimeo 1978). The NCHCA developed as a direct result of the U.S. Health Service’s manpower credentialing studies in the 1970’s, which culminated in its 1977 recommendations that a national health certification system be established. See Public Health, Service ,supra note 51.

⁶⁰ See supra note 14.

⁶¹ It does so, for example, in nursing, law, physical therapy, and medical laboratory personnel training. See Council On, Postsecondary, Accreditation ,supra note 12, at 19-23. On the Department of Education’s policy, see infra note 199 and accompanying text.

⁶² Claims of unfairness or deception based on the distinctions drawn between certified and uncertified personnel are to be distinguished from those that might be made if all holders of a credential were not required to meet similar standards. Although the practice of grand fathering might be challenged on the basis that it allows practitioners with different demon strated competences to hold identical credentials, Part Two, Section VLB. proposes that it be challenged on a different basis. That discussion develops the view that concerted action drawing even questionable distinctions is more compatible with competition than efforts that obscure distinctions that may in fact exist.

⁶³ See Schwartz, & Wilde, , Intervening in Markets on the Basis of Imperfect Information: A Legal and Economic Analysis 127 U. Pa. L. Rev. 630 (1979).CrossRef Google Scholar

On the general question whether ignorance disables consumers, see S. Rottenberg, Introduction in Occupational Licensure, And, Regulation 7 (S. Rottenberg ed. 1980):

Probably market processes operate in such a way that the assumption of informational asymmetry is rarely fulfilled. Nonspecialized buyers turn out to be not so ignorant of the qualitative properties of commodities and services as they seem to be. They seek out informational surrogates that serve them well. They acquire information by repeatedly purchasing certain commodities; for infrequently purchased commodities, they are informed by the experience of kinfolk, friends, and neighbors. Sellers of complex commodities have market incentives to inform buyers of the qualities of products and services they themselves offer and of those offered by their competitors. Buyers are further informed by inference by the length of life of firms making offers, because it is reasonable to assume that firms with a long life have survived the consensual judgment of the market about the quality of the commodities they offer for sale; shops with professional staffs of buyers serve as surrogate information agents of consumers; and tort law that imposes liability on producers and sellers to “make whole" those whom they harm gives sellers incentives to produce goods and services of a quality that does not fall below some given standard.

For a comparable analysis of consumer information problems in health care markets see C. Havighurst ,supra note 1, at 78-83. An interesting but highly inconclusive model of a professional services market has been developed by Plott & Wilde, Professional Diagnosis vs. Self-Diagnosis: An Experimental Examination of Some Special Features of Markets with Uncertainty in 2 Research In, Experimental, Economics 63 (1982). The authors conjecture that the experimental market they created failed to fail, despite buyers’ reliance on sellers for all their information, because sellers were competitively motivated to provide good information to the actively searching buyers.

⁶⁴ Other motives for credentialing efforts include the lower information costs and the achievement of economies of scale in production (education) that accompany standardization. The issuance of valuable credentials may also induce individual participation in a program that has larger purposes, thus overcoming free rider problems that tend to limit the effective ness of competitor groups as political forces or cartels. See infra note 174.

⁶⁵ Public interest and consumer groups sometimes compile directories of information about local physicians, and some effort has been made to disseminate morbidity and mortality statistics for different surgical procedures at different hospitals. See ICF, Inc., Selected Use Of Competition By Health Systems Agencies ,ch. 5, App. D (1976). This information is difficult to gather because providers are often reluctant to cooperate. See, e.g. Public Citizen Health Research Group v. DHEW, 668 F.2d 537 (D.C. Cir. 1981); Public Citizen Health Research Group v. Commission on Medical Discipline, 573 F.2d 863 (4th Cir. 1978); Health Sys. Agency v. Virginia State Bd. of Medicine, 424 F. Supp. 267 (E.D. Va. 1976).

⁶⁶ See Pauly, & Satterthwaite, , The Pricing of Primary Care Physicians’ Services: A Test of the Role of Consumer Information 12 Bell J. Econ. 488 (1981)CrossRef Google Scholar, arguing, contrary to simple theory, that physicians have more market power in markets where they are numerous than where they are few, because of the consumer’s greater difficulty in getting comparative information.

⁶⁷ See generally Posner, R., Regulation, Of, Advertising by the FTC 4-9 (1973)Google Scholar; Posner, E. & PErlman, H., Legal, Regulation, Of the competitive process 67-74 (2d ed. 1979)Google Scholar; Nelson, , Advertising as Information 82 J. Pol. econ. 213 (1961)Google Scholar. The ensuing analysis applies principles set forth in these references. For further development of the argument, see Part Two, Section V.B.

⁶⁸ See generally supra notes 63-65; Pauly, Is Medical Care Different? in Competition In, The, Health Care Sector: Past, Present, and Future 19 (FTC 1978). Physicians act as con sumer agents in making referrals and in choosing their associates in a group practice or on a hospital medical staff. Hospitals and other institutional providers such as Health Maintenance Organizations (HMOs) also have opportunities to act as sophisticated employers of personnel. The extent of the reliance on credentials by such decision makers is unknown, but undoubtedly credentials are seldom the sole criterion and often may not be a minimum prerequisite. For the argument that third parties may perform poorly as consumer agents, see infra text accompanying notes 77-80.

⁶⁹ The second factor that operates to discourage the making of false claims about products is the cost to the seller of developing a reputation for dishonesty. . . . Even if the seller does not depend upon repeat customers, prospective customers may hear about his fraud from his former customers and be deterred from patronizing him. False advertising in these situations will be extremely costly to the seller in the long run.

Conversely, fraud may be attractive to two kinds of sellers. The first is one who sells a product (or service) whose effectiveness is so uncertain that consumers may not detect false claims about its performance even in the long run—as with providers of medical care.

R. Posner ,supra note 67, at 5. Cf Darby & Kami, Free Competition and the Optimal Amount of Fraud 16 J. L. & Econ. 67 (1973), discussing how the provision of difncult-to-evaluate (“credence”) products and services can be privately monitored and controlled to reduce fraud.

For example, warranties and service contracts (which are analogous to capitation payment systems in financing health care) integrate diagnosis and repair in ways that help reduce the seller’s incentives for fraud. These and other market monitoring devices, including the seller-client relationship, seller provision of service departments, and franchising, appear more effective in fraud control than government intervention.

⁷⁰ See Part Two, Section V.C.2.

⁷¹ R. Posner ,supra note 67, at 6; Pitofsky, Beyond Nader: Consumer Protection and the Regulation of Advertising 90 Harv. L. Rev. 661, 666 (1977).

⁷² Of course, where a self-certified group of professionals enjoys a substantial degree of monopoly power, there exists, by hypothesis, no close competitors who can be counted on to dispute its unwarranted claims of superiority. In such a case, the primary hope must be for competition to break out within the monopolistic group itself as individuals and subsets of providers within the group seek to differentiate themselves from their supposed peers. Part Two suggests some antitrust initiatives that will improve the prospects for such competition.

⁷³ Part Two, Section V.B., refutes the arguments for restricting the flow of information concerning health care personnel.

⁷⁴ See infra note 107 and accompanying text. Cf. FTC Staff Report supra note 6, at 27-34, 247, referring to “the restraint on market forces that [industrial] standards can cause due to reliance by buyers, government regulatory agencies, and others.” This statement is criticized infra in text accompanying note 156.

⁷⁵ See supra note 4 and accompanying text. A failure to maintain the crucial distinction between voluntary and mandatory standards appears in the FTC staff’s recent study of industrial standards, which states that, “where reliance on a particular standard or seal is significant, noncompliance becomes so competitively disadvantageous from the point of view of producers that voluntary standards become mandatory.” FTC Staff Report supra note 6, at 34. In the absence of a privately imposed sanction, however, see infra text accompanying notes 138-50, it remains open to a disadvantaged competitor or competitor group to respond in kind, offering counterevidence to change the minds of those honoring the credential or standard in question. Although the seller must overcome his customers’ skepticism and the goodwill possessed by his competitors, the market still operates as it is supposed to do. Under these circumstances, the presumption should be against interfering. See also Rickards v. Canine Eye Registration Found., 704 F.2d 1449 (9th Cir. 1983) (upholding dismissal of common-law and antitrust claims against an independent body whose recognition of credentials issued by the American College of Veterinary Ophthalmologists deprived the plaintiffs, uncertified veterinarians, of certain business); Vest v. Waring, 1983 Trade Cas. (CCH) ¶ 65,410 (N.D. Ga. 1983) (allegation of conspiracy by university- and government-affiliated ophthalmologists to monopolize the performance of a new type of surgery for severe near sightedness by officially designating the procedure as “experimental" and declaring it unethical for ophthalmologists to perform the procedure outside the framework of a proposed clinical trial; independent decisions by insurance companies not to pay for, and by hospitals not to permit performance of, experimental procedure cited as proof of monopoly).

⁷⁶ Even though governmental decisions (building codes, for example) may sometimes be wrong, they are never irreversible. The selling effort needed to persuade a governmental body to change its mind is not fundamentally distinguishable from that needed to win a large customer having ties to a competitor.

⁷⁷ Private insurers and government financing programs sometimes refuse to reimburse consumers for services provided by uncertified personnel or reimburse for such services at a lower rate. On private insurers, see sources cited infra note 78. Medicare generally does not pay nonphysicians directly but reimburses their employers (physicians or institutions). When DHHS regulations address the services of nonphysicians, they frequently require certification or its effective equivalent. E.g. 42 C.F.R. § 481.2(b), (d) (1982) (nurse practitioners and physician assistants employed in subsidized rural health clinics). For a federal government report expressing a positive yearning for a definitive private credentialing system on which it could rely in deciding whom to pay for services to federal beneficiaries, see Public Health, Service ,supra note 51 (quoted as encouraging Sherman Act violations in Part Two, Section VI.D.). The rate of reimbursement for physician services sometimes varies according to the credentials of the physician, in both private and government plans. See, e.g. Michigan Academy of Family Physicians v. Blue Cross and Blue Shield, 502 F. Supp. 751 (E.D. Mich. 1980) (Medicare carrier’s policy of paying certified specialists more than uncertified specialists held inconsistent with Medicare Act).

Hospitals frequently hire only certified nonphysician personnel for certain jobs. See, e.g. Veizaga v. National Bd. for Respiratory Therapy, 1979-1 Trade Cas. (CCH) ¶ 62,496 (N.D. 111. 1979). JCAH standards require hospitals to employ only personnel who are certified, eligible for examination, or graduates of accredited programs for certain positions (JCAH, supra note 51, at 90, 137, 155) and permit other positions to be filled by persons having specified credentials or “the documented equivalent training and experience" (id. at 123, 147, 156, 166, - 167, 172). Where certification is not required, the difficulty of determining what constitutes equivalent training and experience and the likelihood of inviting closer JCAH scrutiny may induce a hospital to require certification. For the position of the JCAH on physician specialty certification, see supra text accompanying note 44.

⁷⁸ Cf. Virginia Academy of Clinical Psychologists v. Blue Shield, 469 F. Supp. 552 (E.D. Va. 1979), aff'd in part and rev'd in part 624 F.2d 476 (4th Cir. 1980), cert, denied 450 U.S. 916 (1981) (physician-dominated Blue Shield plan discriminated against plaintiff psychologists). For other examples of such third-party discrimination, see Lewin Report ,supra note 35, ch. V; Bureau Of, Competition ,FTC, Medical Participation, In, Control Of Blue Shield and Certain Other Open-Panel Medical Prepayment Plans 157-75 (1979). On the conflict of interest between staff physicians and applicants for hospital staff privileges, see infra notes 92-95 and accompanying text.

⁷⁹ Not only are competitiveness and cost-consciousness often weak in information-poor health care markets, but quality-of-care judgments are difficult as well. It thus seems probable that some decision makers err on the side of overspending and overcaution regarding credentials, preferring certified personnel for reasons not based on an independent assess ment of certification’s value. Cf. Havighurst, & Blumstein, , Coping with Quality/Cost Tradeoffs in Medical Care: The Role of PSROs 70 Nw. U.L. Rev. 6, 9-30 (1975)Google Scholar (noting how distorted incentives in the health care market give rise to a “quality imperative,” such as might induce the attribution of unwarranted significance to credentials). Medical-legal problems, exacer bated by the scarcity of other objective indicators by which good care can be distinguished from bad, may also induce appointment or employment of only certified individuals as a way of avoiding imputations of negligence. Indeed, even lower prices may not encourage employment of uncertified personnel because economizing choices may have negative quality implications. Such “defensive" medical practice—that is, a propensity to incur unjustified costs to reduce exposure to malpractice liability—has been widely reported, though not well documented. See, e.g. Project, The Medicare Malpractice Threat: A Study of Defensive Medicine 1971 Duke L.J. 939-48.

⁸⁰ Indeed, attention to such incentives is an important element in current policy moves to strengthen health sector competition. See supra note 1 and sources cited therein.

⁸¹ See generally Havighurst, , Decentralizing Decision Making: Private Contract versus Professional Norms in Market Reforms, In, Health Care: Current Issues, New Directions, Strategic Decisions 22 (J. Meyer ed. 1983).Google Scholar

⁸² Fifteen jurisdictions currently appear willing to scrutinize to some extent the membership or credentialing decisions of private associations, the staff privilege decisions of private hospitals, or both. Excluding those cases dealing with hospital privileges, which raise somewhat different issues, see infra text accompanying notes 92-95, standards or procedural practices have actually been invalidated in only three jurisdictions. California: Hackethal v. California Medical Ass'n, 138 Cal. App. 3d 435, 187 Cal. Rptr. 811 (1982); Pinsker v. Pacific Coast Soc'y of Orthodontists, 1 Cal. 3d 160, 460 P.2d 495, 81 Cal. Rptr. 623 (1969), subsequent opinion 12 Cal. 3d 541, 526 P.2d 253, 116 Cal. Rptr. 245, (1974) (procedures inadequate). New Jersey: Falcone v. Middlesex County Medical Soc'y, 34 N.J. 582, 170 A.2d 791 (1961); Higgins -v. American Soc'y of Clinical Pathologists, 51 N.J. 191, 238 A.2d 665 (1968) (substantive standards invalid). Texas: Hatley v. American Quarterhorse Ass'n, 552 F.2d 646 (5th Cir. 1977) (procedures inadequate). Cases in the remaining twelve jurisdictions (Alaska, Arizona, Florida, Hawaii, Illinois, Michigan, New Hampshire, New York, Ohio, Oregon, Vermont, and the District of Columbia) either have not dismissed challenges out of hand or, after review, have left the challenged procedure or standards intact. See cases cited in Note, Judicial Intervention in Admissions Decisions of Private Professional Associations 49 U. Chi. L. Rev. 840, 842, 854-55 (1982); cases cited infra notes 83 and 86.

At one time, private health care institutions, particularly hospitals, were thought to be potential candidates for judicial scrutiny under constitutional due process and equal protection doctrine because they displayed certain indicia of “state action.” Such civil rights theories lost their earlier force, however, after Jackson v. Metropolitan Edison Corp., 419 U.S. 345 (1974). See Modaber v. Culpeper Memorial Hosp., 674 F.2d 1023 (4th Cir. 1982). Public hospitals are, of course, subject to constitutional strictures, and these create presumptions and rights that contrast sharply with those that we find, and regard as appropriate, in cases involving only private parties. See, e.g. Stern v. Tarrant County Hosp. Dist., No. CA 4-80-281-E (N.D. Tex., June 6, 1983) (public hospital’s requirement of AMA-approved residency training excluded comparably qualified osteopaths and was held to deny equal protection).

The interventions discussed here are to be distinguished from judicial review of association decisions (usually expulsions from membership) where it is claimed that defendant failed to follow its own bylaws, thus breaching its contract with the plaintiff; such cases do not turn on common-law due process notions but on the nature and extent of a contractual obligation.

⁸³ Marjorie Webster Junior College v. Middle States Ass'n of Colleges and Secondary Schools, 432 F.2d 650, 655 (D.C. Cir.), cert, denied 400 U.S. 965 (1970), citing Falcone v. Middlesex County Medical Soc'y, 34 N.J. 582, 170 A.2d 791 (1961) (applying the former “economic necessity" test), and Pinsker v. Pacific Coast Soc'y of Orthodontists, 1 Cal. 3d at 166, 460 P.2d at 499, 81 Cal. Rptr. at 627 (applying the latter “practical necessity" test). The Falcone test has been applied in most of the cases, but with varying degrees of restrictiveness. E.g. Treister v. American Academy of Orthopaedic Surgeons, 78 111. App. 3d 746, 396 N.E.2d 1225 (1979), appeal denied 79 111. 2A630 (1980). A number of hospital privileges cases have relied on Falcone to support intervention, without recognizing a possible distinction between denial of privileges at a single hospital and a membership requirement affecting access to all area institutions. See, e.g. Silver v. Castle Memorial Hosp., 53 Hawaii 475, 497 P.2d 564, cert. denied 409 U.S. 1048 (1972); Greisman v. Newcomb Hosp., 40 N.J. 389, 192 A.2d 817 (1963); Davidson v. Youngstown Hosp. Ass'n, 19 Ohio App. 2d 246, 250 N.E.2d 892 (1969).

⁸⁴ For comprehensive discussions of the common law of associations, see Chafee, , The Internal Affairs of Associations Not for Profit 43 Harv. L. Rev. 993 (1930)CrossRef Google Scholar; Developments in the Law—Judicial Control of Actions of Private Associations 76 Harv. L. Rev. 983 (1963). Compare Note, Exclusion from Private Associations 74 Yale L.J. 1313 (1965) (advocating expansion of judicial involvement), with Note, supra note 82 (criticizing trend toward greater public accountability for private groups).

⁸⁵ In fact, the seminal case extending judicial scrutiny to the decisions of professional entities, Falcone v. Middlesex County Medical Soc'y, 34 N.J. 582, 170 A.2d 791 (1961), relied for its rationale on James v. Marinship Corp., 25 Cal. 2d 721, 155 P.2d 329 (1944), a case approving scrutiny of the membership standards of unions with closed-shop agreements. Cf. Bernstein v. Alameda-Contra Costa Medical Ass'n, 139 Cal. App. 2d 241, 293 P.2d 862, 869 (1956) (“[T]here is no fundamental difference between a medical association [and] a labor union".).

⁸⁶ The leading case is Greisman v. Newcomb Hosp., 40 N.J. 389, 192 A.2d 817 (1963). Among the cases following it are Storrs v. Lutheran Hosp. and Homes Soc'y of Am., Inc., 609 P.2d 24 (Alaska 1980); Peterson v. Tucson Gen. Hosp., 114 Ariz. 66, 570 P.2d 186 (1976); Silver v. Castle Memorial Hosp., 53 Hawaii 475, 497 P.2d 564, cert, denied 409 U.S. 1048 (1972); Bricker v. Sceva Speare Memorial Hosp., Ill N.H. 276, 281 A.2d 589, cert, denied 404 U.S. 995 (1971); Davidson v. Youngstown Hosp. Ass'n, 19 Ohio App. 2d 246, 250 N.E.2d 892 (1969).

⁸⁷ 34 N.J. 582, 170 A.2d 791 (1961)

⁸⁸ Id. at 597, 170 A.2d at 799. The notion that “virtual monopoly" supplies a warrant for regulating a private business has ancient roots. See Munn v. Illinois, 94 U.S. 113 (1876).

⁸⁹ On entry regulation by “certificate of need,” see e.g. Havighurst ,supra note 1; Symposium, Certificate-of-Need Laws in Health Planning 1978 Utah L. Rev ,1.

⁹⁰ The common law’s historic policy against overbroad contractual covenants in restraint of trade protects both the interest of the restrained individual in plying his trade and the public’s interest in obtaining his services. Nordenfelt v. Maxim Nordenfelt Guns & Ammunition Co., 1894 A.C. 535, 565; Mitchel v. Reynolds, 1 P.Wms. 181, 24 Eng. Rep. 347 (K.B. 1711). The willingness of common-law courts to interfere with private contracts in defense of such interests would seem to be a precedent for similar limited interference in the affairs of private associations, which, as horizontal combinations of competitors, present particular dangers. There are some signs that similar policies underlie common-law rules that have been applied to membership and hospital staff issues. See Willis v. Santa Ana Community Hosp. Ass'n, 58 Cal. 2d 806, 810, 376 P.2d 568, 570, 26 Cal. Rptr. 640, 642 (1962) (“There is an established principle at common-law that an action will lie where the right to pursue a lawful business, calling, trade, or occupation is intentionally interfered with either by unlawful means or by means otherwise lawful when there is a lack of sufficient justification.”); Handler, M., Cases, And, Materials On Business Torts 584-674 (1972)Google Scholar; Developments in the Law, supra note 84, at 1040-45 (finding close resemblance between antitrust concerns and the tort of interference with economic relations as applied to association activity affecting nonmembers).

⁹¹ See cases cited supra note 82. The only exception appears to be Ezekial v. Winkley, 20 Cal. 3d 267, 572 P.2d 32, 142 Cal. Rptr. 418 (1977) (physician dismissed from surgical residency at private hospital held to have extensive due process rights despite clear lack of competitor bias on employer hospital’s part). See also Blatt v. Univ. of Southern Cal., 5 Cal. App. 3d 935, 85 Cal. Rptr. 601 (1970) (court refused to review allegedly arbitrary failure to elect plaintiff to the Order of the Coif, but because of insufficient effect on plaintiff’s livelihood rather than lack of competitor relationship between educational institution and its students).

⁹² See generally Annot., 37 A.L.R.3d 645 (1971).

⁹³ Changing methods of hospital reimbursement, see, e.g. Prospective Payments for Medicare Inpatient Hospital Services, 48 Fed. Reg. 39,752 (Sept. 1, 1983) (interim final DRG regulations), increasing price competition among hospitals, the increasing supply of physicians, and the continued growth of proprietary hospitals all promise to make hospital decisions on matters concerning medical staff privileges more independent in the future. See, e.g. Falk, , The Challenge of Change 57 Hosp. 92, 98 (April 1 , 1983)Google Scholar; Feldstein & Roehrig, Medical Staff: Closed vs. Open Staffing—What’s at Stake? 56 Hosp. 97 (July 16, 1982).

⁹⁴ E.g. Guerrero v. Burlington County Memorial Hosp., 70 NJ. 344, 360 A.2d 334 (1976).; Davis v. Morristown Memorial Hosp., 106 N.J. Super. 33, 254 A.2d 125 (1969). See also Walsky v. Pascack Valley Hosp., 145 N.J. Super. 393, 411, 367 A.2d 1204, 1214 (1976). (“[T]he only significant effect of continuing the closure of staff appointments is to confine control of the institution’s beds to its existing medical staff and to enhance their economic interests at the expense of other qualified physicians whose patients are excluded .... If there were any credible evidence that the continuation of the moratorium contributed or was related to the quality of patient care at PVH, this court would be both obliged and eager to sustain it.”).

⁹⁵ See, e.g. Dos Santos v. Columbus-Cuneo-Cabrini Medical Center, 684 F.2d 1346 (7th Cir. 1982); Centeno v. Roseville Community Hosp., 107 Cal. App. 3d 62, 167 Cal. Rptr. 183 (1979); Lewin v. St. Joseph Hosp., 82 Cal. App. 3d 368, 146 Cal. Rptr. 892 (1978); Blank v. Palo Alto-Stanford Hosp. Center, 234 Cal. App. 2d 377, 44 Cal. Rptr. 572 (1965) and cases cited therein. See also Annot., 74 A.L.R.3d 1268 (1976). But see Hyde v. Jefferson Parish Hosp. Dist. No. 2, 686 F.2d 286 (5th Cir. 1982), cert, granted 51 U.S.L.W. 3649 (U.S. Mar. 7, 1983) (No. 82-1031), where a hospital’s decision to grant an exclusive contract to the plaintiff anesthesiologist’s competitor was held actionable as a tying arrangement because the hospital shared in the profits of the contractor. Whatever the merit of this holding, in the absence of such a horizontal relationship with the plaintiff physician, the hospital’s decision should certainly be binding.

⁹⁶ As later discussion makes clear, judicial reluctance to interfere with credentialing activities may spring in part from a desire not to encroach upon first amendment freedoms. See infra text accompanying notes 213-22.

⁹⁷ Thus, there is better justification for the application to certifiers and accreditors of common-law rules against discrimination by enterprises that purport to serve the general public. For a discussion of the “common calling" concept, see Burdick, The Origin of the Peculiar Duties of Public Service Companies (pt. 1), 11 Colum. L. Rev. 514 (1911). On the doubtful value of the public utility analogy, however, see supra text accompanying notes 84-89.

⁹⁸ Failure to certify would have to be treated as implied disparagement to be actionable. See Advance Music Corp. v. American Tobacco Co., 268 A. D. 707, 53 N.Y.S.2d 337 (1945), rev'd 296 N.Y. 79, 70 N.E.2d 407 (1946). On the common-law tort of trade libel or disparagement, see generally E. Kitch & H. Perlman ,supra note 67, at 85-116; M. Handler ,supra note 90, at 584-632. A potentially important product disparagement case awaiting decision by the Su preme Court is Bose Corp. v. Consumers Union, 692 F.2d 189 (1st Cir. 1982), cert, granted 51 U.S.L.W. 3774 (No. 82-1246) (Apr. 25, 1983), in which a manufacturer of a stereo speaker system sued Consumer Reports for a disparaging review of its product. The petition for review challenges the scope of appellate review of the trial court’s finding that the defendant, not competitor-controlled, was guilty of actual malice and thus unprotected by the first amend ment under the doctrine of New York Times v. Sullivan, 376 U.S. 254 (1964). For further discussion of the application of common law tort theory to credentialers, see infra note 100.

⁹⁹ Prosser, W., Handbook, Of, The law Of Torts 798 (4th ed. 1971)Google Scholar. “[D]efamatory language is actionable without special damage when it contains an imputation upon one as an individual, or in respect of his office, profession or trade, but is not actionable when it is merely in disparagement of . . . the quality of the articles which he manufactures or sells, unless it occasions special damage. . . .” Victor Safe & Lock Co. v. Deright, 147 F. 211, 212-13 (8th Cir. 1906).

¹⁰⁰ The cases do not seem to differentiate sharply between actions by competitors andthose by noncompeting groups, despite some suggestive language. See generally M. Handler supra note 90, at chs. 6 and 7; Developments in the Law, supra note 84, at 1005, 1040-42. Noncompetitors have been treated as potentially subject to tort liability. See, e.g. Mayfair Farms, Inc., v. Socony Mobil Oil Co., 68 N.J. Super. 188, 172 A.2d 26 (1961); Advance Music Corp. v. American Tobacco Co., 296 N.Y. 79, 70 N.E.2d 401 (1946). The latter decision applied the theory that all intentional infliction of damage states a cause of action, even if not falling within traditional theories of tort liability, after a lower court had refused to find unfair competition because the defendant was not plaintiffs competitor. Advance Music Corp. v. American Tobacco Co, 268 A. D. 707, 53 N.Y.S.2d 337 (1945).

Because a certifying body would rarely be identifiable as a horizontal combination of competitors, consumers would not be alerted to the need for skepticism regarding its certifications. For this reason, a competitor group’s trade libel taking this form should probably not be granted the same leeway as is usually allowed a single competitor’s “puffing" of his product in comparison to others. On “puffing,” see, e.g., Smith-Victor Corp. v. Sylvania Electric Prod., Inc., 242 F. Supp. 302, 308 (N.D. 111. 1965). Cf. Prosser, Injurious Falsehood: The Basis of Liability 59 Colum. L. Rev. 425, 439 (1959). In addition, a threshold requirement of substantial impairment of professional opportunities would seem appropriate as an extension of the common-law requirement that special damages be proved in disparagement actions. See supra note 99. And in the absence of affirmative representations concerning the plaintiff, it would seem wrong to treat such a case as one of defamation rather than disparagement.

¹⁰¹ 432 F.2d 650 (D.C. Cir.), cert, denied 400 U.S. 965 (1970).

¹⁰² See infra text accompanying note 206.

¹⁰³ For Judge Bazelon’s forceful expression of the closely analogous view that the profit motive undermines the integrity of broadcast journalism, see Bazelon, , FCC Regulation of the Telecommunication Press 1975 Duke L.J. 213, 229-34.CrossRef Google Scholar

¹⁰⁴ See infra quotation in text accompanying note 205. Cf Sherman College of Straight Chiropractic v. United States Comm'r of Educ, 493 F. Supp. 976 (D.D.C. 1980), discussed infra notes 199 and 205.

¹⁰⁵ 34 N.J. 582, 170 A.2d 791 (1961).

¹⁰⁶ The facts in Falcone were not clear-cut in this regard because Dr. Falcone had earned an M.D. degree from an AMA-approved foreign institution by combining his D.O. degree with seven months of resident study. Thus, although he could not meet the society’s require ment of four years at an AMA-approved medical school, he may have been philosophically indistinguishable from a typical M.D.

¹⁰⁷ “[T]he extent to which deference is due to the professional judgment of the association will vary both with the subject matter at issue and with the degree of harm resulting from the association’s action.” 432 F.2d at 655-56 (footnotes omitted). For further discussion of this sliding scale standard of scrutiny, see infra notes 208-10 and accompanying text.

¹⁰⁸ Higgins v. American Soc'y of Clinical Pathologists, 51 N.J. 191, 238 A.2d 665 (1968).

¹⁰⁹ Other courts have also recognized the value of private differentiation among competing goods and services. In Roofire Alarm Co. v. Underwriters’ Laboratories, Inc., 188 F. Supp. 753 (E.D. Tenn. 1959), the plaintiff sought to compel defendant to test its fire alarm, but the court, in refusing to impose any such duty at common law, stated:

By limiting its approval of devices and by directly or implicitly indicating that unapproved devices may be less desirable to buyers of such devices, it [Underwriters’ Laboratories, Inc.] has made its approval a desirable and financially rewarding goal. To require it to approve a device, and to lower, or change, its standards would, to some degree, decrease the desirability of the goal. It is not a function of the courts to interfere with the internal workings of corporations in exercising their discretion within legal limits.

In Maceluch v. Wysong, 680 F.2d 1062 (5th Cir. 1982), the court refused to invalidate on constitutional grounds a Texas medical licensing scheme that distinguished by title between D.O. and M.D. licenseholders while applying the same licensure requirements to both and awarding identical practice privileges. Plaintiff D.O.s sought to use the M.D. designation, but the court found philosophical differences between the two schools, id. at 1066, and observed: "Evidently, the market cares about the distinction. Courts should not end the dissemination of information reasonably perceived by the legislature to be useful to the functioning of the market, whether the Court thinks the market is correct in any normative sense.” Id. at 1069.

¹¹⁰ Falcone was arguably such a case, in view of the local hospitals’ policy of excluding nonmembers of the medical society.

¹¹¹ For example, a private association that, at some risk and expense, had built a program offering valuable services to its members could reasonably close its membership to those who had not contributed to its success. See infra note 153.

¹¹² 12 Cal. 3d 541, 526 P.2d 253, 116 Cal. Rptr. 245 (1974).

¹¹³ Id. at 553, 526 P.2d at 262, 116 Cal. Rptr. at 254.

¹¹⁴ Falcone v. Middlesex County Medical Soc'y, 34 N.J. at 598, 170 A.2d at 800.

¹¹⁵ Pinsker v. Pacific Coast Soc'y of Orthodontists, 12 Cal. 3d at 558, 526 P.2d at 256, 116 Cal. Rptr. at 250.

¹¹⁶ For examples of minimal scrutiny in constitutional inquiry and the use of the familiar rational relationship test, see , e.g. New Orleans v. Dukes, 427 U.S. 297 (1976); San Antonio Indep. School Dist. v. Rodriguez, 411 U.S. 1 (1973).

¹¹⁷ See Pinsker v. Pacific Coast Soc'y of Orthodontists, 12 Cal. 3d at 544-45, 551-56, 526 P.2d at 256, 259-64, 116 Cal. Rptr. at 248, 251-56. A requirement of procedural fairness also serves the useful purpose of revealing, and facilitating scrutiny of, substantive requirements. Cf. Silver v. New York Stock Exch., 373 U.S. 341, 362-63 (1962).

¹¹⁸ E.g. Hatley v. American Quarterhorse Ass'n, 552 F,2d 646 (5th Cir. 1977); Pinsker v. Pacific Coast Soc'y of Orthodontists, 12 Cal. 3d 541, 526 P.2d 253, 116 Cal. Rptr. 245 (1974). See also Dietz v. American Dental Ass'n, 479 F. Supp. 554 (E.D. Mich. 1979). Procedures have also been found deficient in cases dealing with expulsion from professional associations. E.g. Virgin v. American College of Surgeons, 42 111. App. 2d 352, 192 N.E.2d 414 (1963), and in numerous hospital staff privileges cases. E.g. Ezekial v. Winkley, 20 Cal. 3d 267, 572 P.2d 32, 142 Cal. Rptr. 418 (1977); Ascherman v. St. Francis Memorial Hosp., 45 Cal. App. 3d 507, 119 Cal. Rptr. 507 (1975); Silver v. Castle Memorial Hosp., 53 Hawaii 475, 497 P.2d 564, cert. denied 409 U.S. 1048 (1972).

¹¹⁹ Antitrust law protects “competition, not competitors.” Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 488 (1976); Brown Shoe Co. v. United States, 370 U.S. 294, 320 (1961). This simple formulation conceals a great deal of fundamental doctrinal disagreement, however. See infra note 128.

¹²⁰ This may have been the case, for example, in Hatley v. American Quarterhorse Ass'n, 552 F.2d 646 (5th Cir. 1977), where the court invoked the “breathing space" notion espoused in Silver v. New York Stock Exch., 373 U.S. 341 (1962), to approve under the antitrust laws a degree of associational discretion that it then found excessive at common law. See infra text accompanying note 163.

¹²¹ 15 U.S.C. §§ 1-7 (1976).

¹²² Affirming a judgment for the defendant standard-setting bodies, the court in Eliason Corp. v. National Sanitation Found., 614 F.2d 126, 130 (6th Cir.), cert, denied 449 U.S. 826 (1980), stated, “NSF and NSFT [its testing subsidiary] are independent organizations and are not dominated or controlled by manufacturers of any one product. They are not in direct competition with the plaintiff and have no intent to exclude plaintiff from competition.” See also Roofire Alarm Co. v. Royal Indemnity Co., 202 F. Supp. 166, 168 (E.D. Tenn. 1962), offd 313 F.2d 625 (6th Cir.), cert, denied 373 U.S. 949 (1963) (granting defendant’s motion for summary judgment on plaintiffs claim of refusal to certify its fire alarm). The FTC staff anticipates little trouble, however, in finding concerted action where an independent body, such as the American National Standards Institute (see supra note 13), invites competitors to participate in industrial standard setting. FTC Staff Report supra note 6, at 245-47, 280-1. On the strength of its view, the staff proposed a trade-regulation rule applicable, without any specific showing, to independent as well as competitor-controlled bodies. In American Soc'y of Mechanical Eng'rs v. Hydrolevel Corp., 456 U.S. 556, 571 (1982), an independent standard- setting body was held liable on agency principles for antitrust violations by its officials, whose role was described as follows: "Many of ASME’s officials are associated with members of the industries regulated by ASME’s codes. Although, undoubtedly, most serve ASME without concern for the interests of their corporate employers, some may well view their postions with ASME, at least in part, as an opportunity to benefit their employers. When the great influence of ASME’s reputation is placed at their disposal, the less altruistic of ASME’s agents have an opportunity to harm their employers’ competitors through manipulation of ASME’s codes."

¹²³ 432 F.2d at 654-55.

¹²⁴ Although the putative “learned professions" exemption was laid to rest in Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975), there have been occasional signs, though no Supreme Court holdings, that courts might defer to professionalism in some situations. See Havighurst, The Contributions of Antitrust Law to a Procompetitive Health Policy in Market Reforms, In, Health care ,supra note 1, at 295, 296-306. In Arizona v. Maricopa County Medical Soc'y, 102 S. Ct. 2466 (1982), the Court suggested that “public service or ethical norms" might be regarded with equanimity. However, it had already made clear that such norms were to be evaluated only in terms of their effects on competition: “[B]y their nature, professional services may differ significantly from other business services, and, accordingly, the nature of the competition in such services may vary. Ethical norms may serve to regulate and promote this competition, and thus fall within the Rule of Reason.” National Soc'y of Professional Eng'rs v. United States, 435 U.S. 679, 696 (1978). Although this language may permit a professional organization to argue that its actions, by correcting a “market failure,” allow the market to more nearly approximate competitive results, it leaves no room for pure public- interest defenses or a claim of noncommercial purpose.

¹²⁵ Rather than serving as a defense, noncommercial purpose has sometimes been cited as a basis for employing the rule of reason and not a per se rule. E.g. Kreuzer v. American Academy of Periodontology, 558 F. Supp. 683 (D.D.C. 1983); Veizaga v. National Bd. for Respiratory Therapy, 1977-1 Trade Cas. (CCH) H 61,274 (N.D. 111. 1977). These holdings probably amount to nothing more than a recognition of possible procompetitive justifications for concerted action and a rejection of the implications of the misplaced boycott characteriza tion. For two cases seemingly embracing noncommercial purpose as a defense for a true restraint of trade, see Nara v. American Dental Ass'n, 526 F. Supp. 452 (W.D. Mich. 1981) (distinguishing Goldfarb and Professional Engineers as dealing with clearly economic issues and upholding ADA regulations precluding the advertisement of “unrecognized" dental special ties as noncommercial and in the public interest, though the conflict of interests seems clear); Selman v. Harvard Medical School, 494 F. Supp. 603, 621 (S.D.N.Y.), affd 636 F.2d 1204 (2nd Cir. 1980) (“Academic admissions criteria may well have a purely incidental effect on the commercial aspect of the medical profession. They are, however, non-commercial in nature.”) Both cases seem wrong on the point in question. On Nara see Part Two, Section V.B.2. In Selman the focus was on the wrong market altogether. The medical schools’ agreement on admission polices was a naked restraint in the market for education but was probably exempt as a political protest against government’s attempt to influence the schools’ admissions criteria. Cf. Missouri v. NOW, 620 F.2d 1301 (8th Cir.), cert, denied 449 U.S. 842 (1980) (boycott to induce legislative action not subject to Sherman Act).

Another aberrant case, Wilk v. AMA, 1983-2 Trade Cas. (CCH) ¶ 65,617 (7th Cir. 1983), though too recent for discussion here, is discussed in Part Two, Section V.C.I.

¹²⁶ See Havighurst, , Professional Restraints on Innovation in Health Care Financing 1978 Duke L.J. 303, 349-53.CrossRef Google Scholar

¹²⁷ See generally Areeda, P. & Turner, D. , Antitrust, Law 1111 231-32 (1980).Google Scholar

¹²⁹ See supra note 119. “[T]hough there is a sense in which the exclusion of any competitor reduces competition, it is not the sense of competition that is relevant to antitrust law .... The policy of competition is designed for the ultimate benefit of consumers rather than of individual competitors . . . .” Marrese v. American Academy of Orthopaedic Surgeons, 706 F.2d 1488, 1497 (7th Cir. 1983). Antitrust law appears to be in the midst of a transition away from an era during which, at some expense to efficiency, it softened competition and enforced fairness in business dealings between large and small firms. Though the revolution is very far from being complete, consumers’ interests, as served by efficiency and vigorous competition, are an increasingly dominant focus. The watershed case, looking with a less jaundiced eye on vertical restrictions on dealers’ freedom, was Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36 (1977). The intellectual struggle for the soul of antitrust doctrine has been vigorous. See,e.g. Turner, R., The, Antitrust, Paradox: A Policy At, War, With itself (1978)Google Scholar; Posner, R., Antitrust, Law: An Economic Perspective (1976)Google Scholar; Sullivan, , Book Review, 75 Colum. L. Rev. 1214 (1975)CrossRef Google Scholar; Bowman, Bork,Blake, & Jones, , The Goals of Antitrust: A Dialogue on Policy 65 Colum. L. Rev. 363 (1965)Google Scholar. See also infra note 209.

¹²⁹ See generally Klors’ Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207 (1959); P. Areeda & D. Turner ,supra note 127, at H1I 314, 331.

¹³⁰ On the showing required to satisfy the interstate commerce requirement, compare Crane v. Intermountain Health Care, Inc., 637 F.2d 715 (10th Cir. 1980) with Western Wastes Sys. v. Universal Waste Control, 616 F.2d 1094 (9th Cir.), cert, denied 449 U.S. 869 (1980), offering opposing interpretations of the Supreme Court’s articulation of the requirement in McLain v. Real Estate Bd. of New Orleans, 44 U.S. 232, 242, 246 (1980).

¹³¹ See supra notes 119 and 128.

¹³² 706 F.2d at 1495. An earlier opinion, 692 F.2d 1083 (7th Cir. 1982), was withdrawn and a revised opinion was issued by the same panel following the granting of a motion for rehearing en banc which was then overruled. However, after the issuance of the new opinion, rehearing en banc was again granted (July 19, 1983).

¹³³ Seldom are the judicial personalities involved in a decision of as much interest as in this case. Judge Richard A. Posner, formerly of the University of Chicago Law School, has a considerable reputation for his strong antitrust views. E.g. Posner supra note 128; R. Posner & F. Easterbrook, Antitrust, Law (2d ed. 1981). The dissentingjudge, who believed that the trial court had exercised sound discretion, was Justice Potter Stewart, recently retired from the U.S. Supreme Court.

¹³⁴ Cf. supra discussion of the Pinsker case in text accompanying note 112. Perhaps if the plaintiffs in Marrese had alleged such an agreement, they would have been allowed access to the records that might prove it.

¹³⁵ See Olson, M. ,The, Logic, Of Collective Action: Public Goods and the Theory Of Groups (1967)Google Scholar, which shows how “selective incentives" are used to facilitate collective action in markets with numerous competitors. See infra note 174.

¹³⁶ Such theory as there is suggests that professional organizations, assisted by govern ment regulation and other policies, have been quite successful in using social pressures, professional relationships, and professional ideology to discourage competitive behavior. See, e.g. Berlant, J., Profession, And, Monopoly (1975)CrossRef Google Scholar; Freidson, E., Profession, Of, Medicine: A Study Of, The, Sociology Of Applied Knowledge (1971)Google Scholar; Freidson, E.,Professional, Domi, Nance: the Social Structure Of Medical Care (1970)Google Scholar; Lipscomb, A, Political Economic Theory of the Dental Care Market 72 Am. J. Pub. health 665 (1982)CrossRef Google Scholar PubMed. See also Starr, P., The, Social, Transformation Of American Medicine (1983).Google Scholar

¹³⁷ Obviously, no important competition in standard setting and certification is elimi nated, because the individual collaborators would be unlikely to engage in those activities independently. Part Two, Section VI.E., however, calls attention to situations where the formation of a joint venture for such purposes can and should be challenged. It also em phasizes, in Section VI.C, that, although standard setting itself is lawful, agreements to adhere to set standards are illegal restraints. However subtle this distinction may be in practice, its theoretical basis is clear.

¹³⁸ United States v. Chicago Bd. of Trade, 246 U.S. 231, 238 (1918), quoted in National Soc'y of Professional Eng'rs v. United States, 435 U.S. 679, 691 (1978).

¹³⁹ See, e.g. St. Paul Fire & Marine Ins. Co. v. Barry, 438 U.S. 531, 541-45 (1978).

¹⁴⁰ Most of the cases applying a per se rule have in fact invoved a boycott targeted at a competitor, however. E.g. Klor’s Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207 (1959); Fashion Originators’ Guild v. FTC, 312 U.S. 457 (1941); AMA v. United States, 130 F.2d 233 (D.C. Cir. 1942), aff'd 317 U.S. 519 (1943). For a starding recent departure from the usual per se rule against boycotts aimed at competitors, see Wilk v. AMA, 1983-2 Trade Cas. (CCH) 1 65,617, discussed in Part Two, Section V.C.I. This court, like many commentators and other lower courts, fails to identify the collective nature of the decision and the coercive nature of the sanction, rather than the social desirability of the action taken, as the true issue presented by a true boycott.

¹⁴¹ 364 U.S. 656 (1961).

¹⁴² Id. at 659.

¹⁴³ Sullivan, L., Handbook, Of, The law Of Antitrust 243-44 (1977).Google Scholar

¹⁴⁴ See, e.g. FTC Staff Report supra note 6, at 248-49; Gellhorn, E. , Antitrust, Law, And economics 190-204 (2d ed. 1981)Google Scholar; Bauer, , Professional Activities and the Antitrust Laws 50 Notre Dame, Law. 570 (1975)Google Scholar; Virginia Academy of Clinical Psychologists v. Blue Shield, 624 F.2d 476, 484 (4th Cir. 1980), cert, denied 450 U.S. 916 (1981).

¹⁴⁵ Cf. St. Paul Fire & Marine Ins. Co. v. Barry, 438 U.S. 531 (1978), which reviews precedents in the course of defining “boycott" as used in the McCarran-Ferguson Act, 15 U.S.C. § 1013(b) (1976). For references which negotiate the terminology traps fairly successfully, see Ponsoldt, Industry Self-Regulation: An Analysis Integrating Non-boycott Sherman Act Principles 55 S. Cal. L. Rev. 1 (1981); Nurse Midwifery Assocs. v. Hibbett, 549 F. Supp. 1185 (D.C. Tenn. 1982).

¹⁴⁶ United States Dental Inst. v. American Ass'n of Orthodontists, 396 F. Supp. 565, 580-81 (N.D. 111. 1975).

¹⁴⁷ Veizaga v. National Bd. for Respiratory Therapy, 1979-1 Trade Cas. (CCH) ¶ 62,496 (N.D. 111. 1979). Proof of such a conspiracy from conscious parallelism would of course be difficult, since each hospital is likely to have sound business reasons for requiring credentials. Cf. Interstate Circuit v. United States, 306 U.S. 208 (1939).

¹⁴⁸ 1979-1 Trade Cas. (CCH) at H 76,904. Cf. Veizaga v. National Bd. for Respiratory Therapy, 1977-1 Trade Cas. (CCH) 11 61,274 (N.D. 111. 1977), an earlier opinion where the court, writing before the Supreme Court’s decision in Professional Engineers reached the same conclusion by establishing a rule of reason analysis for all noncommercial activities undertaken by professional organizations.

¹⁴⁹ E.g. Eliason Corp. v. National Sanitation Found., 614 F.2d 126, 129 (6th Cir.), cert. denied 449 U.S. 826(1980); Paralegal Institute, Inc. v. American Bar Ass'n, 475 F. Supp. 1123, 1128 (E.D.N.Y. 1979), affd 622 F.2d 575 (2nd Cir. 1980).

¹⁵⁰ See supra notes 4 and 75 and accompanying text. If competitors circulate information and opinion as a way of facilitating their own parallel refusals to deal, a conspiracy to boycott can be inferred. Compare Eastern States Retail Lumber Dealers’ Ass'n v. United States, 234 U.S. 600 (1914) with Cement Mfrs. Protective Ass'n v. United States, 268 U.S. 588, 604 (1925). See also Havighurst, supra note 124, at 345-46.

¹⁵¹ 326 U.S. 1 (1945).

¹⁵² See id.; United States v. Terminal R.R. Ass'n, 224 U.S. 383 (1912); Gamco, Inc. v. Providence Fruit & Produce Bldg., Inc., 194 F.2d 484 (1st Cir.), cert, denied 344 U.S. 817 (1952). See also Department Of, Justice, Antitrust Division, Antitrust Guide Concerning Research Joint Ventures (1980), which helpfully suggests separating three questions: the legality of (1) the joint venture itself, (2) its internal arrangements affecting competition among its sponsors, and (3) its affects on competition resulting from denying “essential facilities" to competitors. Questions in the last two categories require judicious application of the less-restrictive-alternative principle discussed critically infra in text accompanying notes 154-59.

¹⁵³ It is not unreasonable to impose such sharing requirements in cases where the available benefits seem attainable only by organizing on a scale so large as to preclude the existence of competing joint ventures. On the other hand, care should be taken not to invoke the “essential facilities" doctrine in situations where the initial enterprise involved significant risk taking or innovative skill; otherwise, a rule opening access would benefit and encourage free riders. Because credentialing and similar activities involve little risk taking and give rise to few free-rider problems, the analogy seems a sound one. But see supra note 111 and accompanying text. The “essential facilities" cases seem to reflect the kind of limited scrutiny that is suggested herein. See Kissam, Government Policy Toward Medical Accreditation and Certification: The Antitrust Laws and Other Procompetitive Strategies 1983 Wis. L. Rev. 1, 69 n.359.

¹⁵⁴ FTC Staff Report supra note 6, at 242-88.

¹⁵⁵ Id. at 252-61.

¹⁵⁶ Id. at 247-48. See supra note 74.

¹⁵⁷ Case law recognizes that independent parallel conduct in response to information does not constitute a restraint of trade. See Cement Mfrs. Protective Ass'n v. United States, 268 U.S. 588 (1925); Maple Flooring Mfrs. Ass'n v. United States, 268 U.S. 563 (1925); McCann v. New York Stock Exch., 107 F.2d 908 (2nd Cir. 1939).

¹⁵⁸ Areeda, P., The, Rule, Of Reason In Antitrust Analysis: General Issues 9 (Federal Judicial Center 1981)Google Scholar.

¹⁵⁹ “[T]hose objecting to a restraint can frequently imagine a less restrictive alternative. An alternative formula is perhaps clearer in calling only for rather gross comparisons between the course chosen by the parties and the other courses of action that might have been chosen. Some courts ask only that the challenged restraint be reasonably necessary to achieve a legitimate objective.” Id. at 10. Such a test was applied, though perhaps too rigorously, in United States v. Realty Multi-List, Inc., 629 F.2d 1351 (5th Cir. 1981).

¹⁶⁰ 373 U.S. 341 (1962).

¹⁶¹ For suggestions of the contrary view that procedural defects alone violate the law, see, e.g. McCreery Angus Farms v. American Angus Ass'n, 379 F. Supp. 1008 (S.D. 111. 1974) (indefinite suspension of plaintiff from defendant association for alleged violation of blood typing bylaw preliminarily enjoined, apparently because of procedural inadequacies alone, although court alludes, perhaps incorrectly, to group boycott by defendant); FTC Staff Report ,supra note 6, at 262-70; Webber, Kissam, Bigus, & Holzgraefe, , Antitrust and Hospital Privileges: Testing the Conventional Wisdom 70 Calif. L. Rev. 595, 648-50 (1982)Google Scholar (arguing, as do many others, that a hospital awarding staff privileges is bound under the antitrust laws to provide fair procedures).

¹⁶² Unless conduct amounting to a per se violation appears, public injury—that is, actual harm to competition—must be proved, see supra text accompanying notes 120-22, and obvi ously cannot be established by showing only that procedures were unfair. On the other hand, where a true boycott exists but is arguably not a per se violation because ancillary to an overriding procompetitive purpose, a Silver-type procedure requirement would seem appro priate. See 373 U.S. at 348-49 (suggesting that action otherwise illegal can be justified by statute “or otherwise”); Denver Rockets v. All-Pro Management., 325 F. Supp. 1049, 1064-65 (CD. Col. 1971). Thus, a sports league (such as was involved in Denver Rockets) that blacklists (boycotts) a player for gambling in order to preserve the league’s appearance of integrity would be liable for failing to provide fair procedures even if it could prove that the player was a true disgrace and not just a convenient scapegoat sacrificed for the good of the game. Because denial of certification could never be a naked restraint justifying a presumption of competitive harm, however, it is unlikely (despite suggestive general language in Silver 373 U.S. at 365-66 n.18) that a disappointed but clearly unqualified applicant would be allowed treble damages (as was the plaintiff in Silver) simply because of inadequate procedures.

¹⁶³ 373 U.S. at 360. This notion of “breathing space" in antitrust cases, occasioned by a reluctance to impose treble damages, suggests that room exists for granting prospective relief under common-law principles in certain cases where antitrust liability is denied. See supra note 120 and accompanying text.

¹⁶⁴ 456 U.S. 556 (1982).

¹⁶⁵ Id. at 579 (Powell, J., dissenting).

¹⁶⁶ 373 U.S. at 365-66.

¹⁶⁷ 261 F. Supp. 154 (D. Or. 1966), aff'd per curiam 399 F.2d 155 (9th Cir. 1968), cert. denied 393 U.S. 1024(1969).

¹⁶⁸ The FTc staff has proposed a trade regulation rule intended to speed up consideration of complaints about standards. FTC Staff Report ,supra note 6, at 339-44. See infra text accompanying notes 192-94. For the argument that a delay in modifying a questioned design standard should not be considered probative of the standard’s substantive deficiencies, lest standard-setters be deterred from making needed changes, see infra note 224.

¹⁶⁹ See infra text accompanying notes 201-02. See also Congressional Service, Report supra note 6, at 93 (quoting a Justice Department official to the effect that performance standards have less anticompetitive impact than design standards).

¹⁷⁰ See Note, A Suggested Role for Rebuttable Presumptions in Antitrust Restraint of Trade Litigation 1972 Duke L.J. 595.

¹⁷¹ See infra note 224.

¹⁷² It has been suggested that antitrust law has some role in insuring the validity of credentialing examinations, see Weisfeld, & Falk, , Professional Credentials Required 57 Hosp. no. 3, 74 (Feb. 1 , 1983)Google Scholar PubMed, but no court has so held. See Veizaga v. National Bd. for Respiratory Therapy, 1977-1 Trade Cas. (CCH) ¶ 61,274, and 1979-1 Trade Cas. (CCH) ¶ 62,496. In Ronwin v. State Bar of Arizona, 686 F.2d 692 (9th Cir. 1981), cert, granted 51 U.S.L.W. 3825 (U.S. May 16, 1983) (No. 82-1474), the court upheld the plaintiffs complaint and thus permitted him to attempt to prove his claim that the passing rate on bar examinations was determined not on the basis of merit but according to the number of new attorneys the integrated state bar chose to admit to practice each year. A credentialing standard lacking any relation to competence would fail under limited scrutiny. In this case, however, there is a serious question, which the Supreme Court will decide, whether the integrated bar, as a state agency, is subject to antitrust attack or exempt under the state action defense.

A number of cases involving athletics have considered league rules governing the integrity and behavior of players and the acceptability of athletic equipment. Such cases differ from credentialing and similar activities because the organizations involved are not concerned with publishing information but with operating a sports league (a joint venture producing a distinctive product) or setting uniform rules for athletic competition. See Weistart, , Player Discipline in Professional Sports: The Antitrust Issues 18 Wm. & Mary L. Rev. 703, 708-09 (1977).Google Scholar

¹⁷³ Bogus v. American Speech & Hearing Ass'n, 582 F.2d 277 (3d Cir. 1978).

¹⁷⁴ Although membership dues were modest, they were apparently more than was needed to finance the certification program. Indeed, it seems likely that the association was using the lure of certification to overcome the “free rider" problem that all professional associations face—that is, the tendency of some professionals not to contribute to the support of joint activities from which all benefit. See M. Olson ,supra note 135. Although an organiza tion’s efforts to surmount this market failure might seem justifiable, it would not necessarily be wise to foster the success of dominant professional organizations, among whose major ac tivities is the manipulation of political processes in which the opposing consumer interests are usually badly fragmented and poorly represented. See Olson, M., The, Rise, and Decline Of Nations: Economic Growth, Stagflation and Social rigidities (1982)Google Scholar; Stigler, , The Theory of Economic Regulation, 2 Bell J. Of Econ. & Mgt. sci. 3 (1971).CrossRef Google Scholar

¹⁷⁵ The federal enforcement agencies apparently advocate a more intrusive policy than is advocated here. The approach employed by the FTC staff in its recent study of industrial standards is criticized in detail infra note 224. As noted in 45 Antitrust & Trade Reg. rep. (BNA) 277 (Aug. 18, 1983), the Department of Justice has filed a brief as amicus curiae questioning a district court’s refusal to resolve what it regarded as “a philosophical difference of opinion as to what the professional practice of. . . periodontology should entail.” Kreuzer v. American Academy of Periodontology, 558 F. Supp. 683, 686 (D.D.C. 1983). The court’s acceptance of the Academy’s membership requirement of full-time practice in the specialty would easily pass the test suggested herein but was criticized by the Department on the ground that the requirement hampers competition by specialists who choose not to limit their practice and discourages innovation in specialization. It appears, however, that the rigidities that concern the Department do not result so much from the challenged membership requirement as from ethical rules and specialty definitions of the American Dental Association (ADA). See the court’s earlier opinion in Kreuzer 516 F. Supp. 1034, 1038 (D.D.C. 1981). Practices such as the ADA’s may be subject to antitrust challenge under principles developed in Part Two, Sections V.B.2 and VI.D.

¹⁷⁶ Ohio v. Joint Comm'n on Accreditation of Hosps., Civ. Act. No. C-2-79-1158 (S.D. Ohio, filed Dec. 14, 1979).

¹⁷⁷ Virginia Academy of Clinical Psychologists v. Blue Shield, 624 F.2d 476 (E.D. Va. 1979).

¹⁷⁸ As discussion in Part Two, Sections VI.E. and VII.B. shows, however, the state could improve its prospects for relief by adopting a somewhat different legal theory.

¹⁷⁹ See supra note 128 and infra note 209.

¹⁸⁰ Federal Trade Commission Act, § 5, 15 U.S.C. § 45 (1976 & Supp. V 1981).

¹⁸¹ Lewin Report ,supra note 35.

¹⁸² 15 U.S.C. § 57a (a)(1)(B) (1976 & Supp. V 1981). See generally R. Posner ,supra note 67, at 17-29.

¹⁸³ See FTC Staff Report supra note 6; FTC, Proposed Rule, And, Staff report, stan dards and certification (1978).

¹⁸⁴ 15 U.S.C. §§ 44, 45(a)(2) (1976 & Supp. V 1981); Community Blood Bank, Inc. v. FTC, 405 F.2d 1011, 1020-22 (8th Cir. 1969).

¹⁸⁵ The AMA was recently held subject to FTC jurisdiction because it offers financial and business planning services to members and lobbies for legislation it believes would profit them. AMA v. FTC, 638 F.2d 443 (2d Cir. 1980), affd per curiam by an equally divided court 455 U.S. 676 (1982). Although competitor-sponsored credentialing bodies undertake no comparable activities, the undisputable financial advantage that certification confers on their members may be sufficient to establish jurisdiction. See FTC Staff Report supra note 6, at 328-31. Certifiers and accreditors of individuals and institutions at a different level of the market might be somewhat harder to reach.

¹⁸⁶ Section 7 of the Federal Trade Commission Improvements Act of 1980, Pub. L. 96-252, 94 Stat. 374 (1980), limited the Commission’s power to make consumer-protection rules under 15 U.S.C. § 57a(a)(1)(B) (1976 & Supp. V 1981), by prohibiting rules “with respect to the regulation of the development and utilization of the standards and certification ac tivities.” This change was designed to prevent issuance of a rule governing standard setting and certification that the FTC had proposed in 1978 (43 Fed. Reg. 57,269, Dec. 7, 1978). See FTC Proposed Rule, And, Staff Report ,supra note 183.

¹⁸⁷ Proposed legislation limiting the FTC’s jurisdiction over the professions was defeated in the Senate in 1982. 128 Cong. rec. S15069-80 (daily ed. Dec. 16, 1982); Despite AMA Effort, Authority of FTC Remains Unclear Am. med. news ,Jan. 7, 1983, at 1. This setback for the AMA-led campaign for an exemption was widely regarded as decisive, and subsequent proposals were much narrower in scope.

¹⁸⁸ Compromise legislation reported in 1983, H.R. 2790, 98th Cong., 1st Sess. (1983), would affect only the Commission’s consumer-protection authority under 15 U.S.C. §§ 45 and 57(a) (1976 & Supp. V 1981) to police unfair or deceptive acts or practices, not its antitrust power to proscribe unfair methods of competition under 15 U.S.C. § 46(g) (1981). See H.R. Rep. no. 156, 98th Cong., 1st Sess. 3 (1983).

¹⁸⁹ In re Ohio Christian College, 80 FTC 815 (1972). See also, e.g., In re Hearst Magazines, 32 FTC 1440 (1941); National Ass'n of Scuba Diving Schools, FTC Dkt. No. C-3094, Trade Reg. rep. (CCH) ¶ 21,921 (May 18, 1982) (consent order). In addition, numerous consent orders deal with misrepresentations of the accreditation of eduational programs. E.g., In re Angel Orestes Rigoli, 76 F.T.C. 587 (1969).

¹⁹⁰ The Commission has issued several advisory opinions giving general guidelines to product standards and certification programs. See, e.g. 16 C.F.R. §§ 15.96, 15.152, 15.457 (1983). It addressed the matter in greater detail in its 1978 Proposed Rule, And, Staff report ,supra note 183. The only case in which the Commission intervened to overturn a specific standard was In re Soc'y of the Plastics Indus., 84 F.T.C. 1253 (1974) (consent order), where it charged that a laboratory fiammability test and standard were insufficiently related to flam- inability in actual use conditions and therefore unsafe. Although the Commission’s primary focus was on the consumer product safety implications of the standard, the complaint also charged that the standard was misleading because consumers were likely to assume that the ratings related to safety in ordinary use.

¹⁹¹ FTC Staff Report, supra note 6.

¹⁹² Because § 7 of the Federal Trade Commission Improvements Act of 1980 curtailed only the FTC’s authority under § 18 to promulgate rules on standards, see supra note 186, the staff proceeded under § 6(g) of the FTC Act, which the legislative history indicated was not affected and which gives the Commission rulemaking authority over unfair methods of competition. See FTC Staff Report ,supra note 6, at 8, 302-06.

¹⁹³ The FTC staff relies on the Silver case for its conclusion that the Commission can by a trade regulation rule declare that failure to adhere to specified procedures constitutes an antitrust violation. FTC Staff Report ,supra note 6, at 262-70. Earlier discussion has sug gested, however, that Silver does not support the conclusion that procedural defects in credentialing programs are illegal in themselves. See supra note 162 and accompanying text. On the other hand, the Commission’s power to declare a practice an “unfair method of competition" even though it would not be a Sherman Act violation might be used to advantage here. See, e.g. FTC v. Sperry and Hutchinson Co., 405 U.S. 233 (1972); FTC v. Brown Shoe Co., 384 U.S. 316 (1966); FTC v. Motion Picture Advertising Serv. Co., 344 U.S. 392 (1953).

¹⁹⁴ If the pending legislation described supra note 188 is enacted, the Commission will presumably rely solely upon its antitrust powers in the personnel credentialing area as well.

¹⁹⁵ See Letter from Daniel C. Schwartz, Acting Director, Bureau of Competition, FTC, to Edward Aguirre, U.S. Commissioner of Education, Nov. 11, 1976: Statement of Daniel C. Schwartz before the Advisory Committee on Accreditation and Institutional Eligibility, U.S. Office of Education, March 24, 1977.

¹⁹⁶ See Randall, , The FTC and the Plastic Surgeons 299 New Eng. J. Med. 1464 (1978).CrossRef Google Scholar PubMed

¹⁹⁷ Statement of James C. Miller, III, Chairman, FTC, before the Committee on Commerce, Science and Transportation, United States Senate, March 18, 1982. See also FTC, Advertising Substantiation Program, 48 Fed. Reg. 10,471 (March 11, 1983) (request for comments on standards for judging whether advertisers have a reasonable basis for their objective claims).

¹⁹⁸ See supra note 14. The Department of Commerce has a similar program for recogniz ing voluntary bodies engaged in setting industrial standards. See Final Issuance of OMB Circular No. A-119: Federal Participation in the Development and Use of Voluntary Stan dards, 45 Fed. Reg. 4,326 (1980); Federal Interaction with Voluntary Standards Bodies, Procedures, 15 C.F.R. 19 (1983).

¹⁹⁹ According to Finkin, supra note 14, at 400-02, 405, the Department of Education has, since 1969, followed a policy, subject to exceptions, of recognizing only one accreditor in each field. Officials, including former Commissioner Ernest Boyer, testified to the contrary in Sherman College of Straight Chiropractic v. United States Comm'r of Educ, 493 F. Supp. 976, 977, 980 (D.D.C. 1980) (discussed infra note 205), where the court referred to five instances of dual recognition as of 1979. In fact, only four fields—business education, medical assistant training, medical laboratory technician training, and physical therapy programs— had overlapping accreditors. See Office of Education, Nationally Recognized Accrediting Agencies and Associations, 44 Fed. Reg. 4,017 (Jan. 19, 1979). Because the regulations require nationwide acceptance of an accrediting body and its standards, 34 C.F.R. § 603.6 (1981), it may be difficult in practice for a small, philosophically distinct accreditor to gain the requisite acceptance, regardless of whether a policy against recognizing multiple accreditors in fact exists.

²⁰⁰ See Part Two, Section V.A.

²⁰¹ See supra text accompanying note 169.

²⁰² See supra note 31.

²⁰³ This view of certification has been thoughtfully developed by Professor Kissam. See Kissam, supra note 153, at 11 (“Most credentialing standards are thus based upon professional opinion about what constitutes good quality medicine, rather than upon objective data about the impact of these standards on health outcomes”); Kissam, Applying Antitrust Law to Medical Credentialing 7 Am. J.L. & Med. 1, 19 (1981); see also Dolan, , The Law and the Maverick Health Practitioner 26 St. Louis U.L.J. 627 (1981).Google Scholar

²⁰⁴ Indeed, some certifiers already employ collective trademarks and certification marks (see supra note 10) in credentialing. For example, the National Commission on Certification of Physician’s Assistants permits successful examinees to use the designations “Physician Assistant—Certified" and “PA—C,” both of which are registered certification marks. See National Commission On, Certification Of Physician’s Assistants, Announcement Of The Physician Assistant National Certifying Examination 9, 13 (1983).Google Scholar

²⁰⁵ 432 F.2d at 658. See supra notes 101-07 and accompanying text. Similar considerations influenced the decision in Sherman College of Straight Chiropractic v. United States Comm'r of Educ, 493 F. Supp. 976 (D.D.C. 1980), which rejected the plaintiffs challenge to the Commissioner’s recognition, under the program discussed supra notes 14 and 199 and accom panying text, of a chiropractic accrediting body that had refused to accredit plaintiff for philosophic reasons. The court explained: "Plaintiffs themselves emphasize their distinct view of the chiropractic profession. The proper channel for their efforts is to establish their own chiropractic accrediting agency and secure federal recognition for it.” Id. at 980. Although the practical feasibility of attaining recognition for a competing accreditor may be doubtful, see supra note 199, the court appeared to regard such philosophic competition as desirable. For another expression of judicial reluctance to resolve an “intellectual dispute,” see Kreuzer v. American Academy of Periodontology, 558 F. Supp. 683, 686 (D.D.C. 1983) (quoted and discussed supra note 175).

²⁰⁶ Professor Henry Hansmann, in reconceptualizing the foundations of the law of nonprofit corporations, has argued that adoption of the nonprofit form should be viewed simply as a firm’s way of reassuring its patrons that their money is being used to provide services and is not being distributed as profits to investors. See Hansmann, , Reforming Nonprofit Corporation Law 129 U. Pa. L. Rev. 497 (1981)CrossRef Google Scholar; Hansmann, , The Role of Nonprofit Enterprise 89 Yale L.J. 835 (1980)CrossRef Google Scholar. So understood as a competitive strategy, nonprofit firms should rise or fall in competition with for-profits on the basis of their respective ability to attract patronage and capital.

²⁰⁷ See supra note 30 and accompanying text; see also infra text accompanying notes 226-27.

²⁰⁸ See supra note 107 and accompanying text.

²⁰⁹ Comparable presumptions underlie the law’s tolerance for large firms, which are increasingly presumed to have earned their success and allowed to compete without special handicaps. E.g. Berkey Photo, Inc., v. Eastman Kodak Co., 603 F.2d 263 (2d Cir. 1979), cert. denied 444 U.S. 1093 (1980); California Computer Prod., Inc., v. IBM, 613 F.2d 727 (9th Cir. 1979); Telex Corp. v. IBM, 510 F.2d 894 (10th Cir. 1973), cert, denied 423 U.S. 802 (1975). See R. Bork ,supra note 128, at 194; Sullivan, , Monopolization: Corporate Strategy, the IBM Cases, and the Transformation of the Law 60 Tex. L. Rev. 587(1982).Google Scholar

²¹⁰ However, an individual who is treated unfairly by credentialers lacks the same oppor tunity that discriminated-against groups possess to establish an alternative credentialing sys tem. According to the Marjorie Webster court, this fact provides a justification for common-law courts to scrutinize the procedures (as opposed to substantive standards) followed in creden tialing. 432 F.2d at 658.

²¹¹ See Kissam, supra note 153, at 38, 44-48; Kissam, supra note 203, at 18-22;see also Lewin Report,supra note 35, at III—93-94.

²¹² See Havighurst,supra note 126, at 355-60.

²¹³ American Column & Lumber Co. v. United States, 257 U.S. 377 (1921); United States v. American Linseed Oil Co., 262 U.S. 371 (1923). The prohibitions against anticompetitive dissemination of data have stood the test of time. United States v. Container Corp., 393 U.S. 333 (1969).

²¹⁴ Kissam, supra note 153, at 39 n.189 and Kissam, supra note 203, at 3 n.6.

²¹⁵ See, e.g. Breard v. Alexandria, 341 U.S. 622 (1951); Valentine v. Chrestensen, 316 U.S. 52 (1942).

²¹⁶ E.g. Bates v. State Bar of Arizona, 433 U.S. 350 (1977); Virginia State Bd. of Pharmacy v. Virginia Citizens’ Consumer Council, 425 U.S. 748 (1976). See generally note, Constitutional Protection of Commercial Speech 82 Colum. L. Rev. 720 (1982).CrossRef Google Scholar

²¹⁷ See In re RMJ,455 U.S.191,199-200(1982); Friedman v. Rogers, 440 U.S. 1, 11 n.9 (1979); Bates v. State Bar of Arizona, 433 U.S. 350, 383; Virginia State Bd. of Pharmacy v. Virginia Citizens’ Consumer Council, 425 U.S. 748, 771-72 and n.24 (1976).

²¹⁸ E.g. Bates v. State Bar of Arizona, 433 U.S. at 364; Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council, 425 U.S. at 763-65. The emphasis on the rights of listeners in these cases was a logical extension of the analysis in Red Lion Broadcasting Co. v. FCC, 395 U.S. 367 (1969), discussed infra text accompanying notes 220-22.

²¹⁹ Bates v. State Bar of Arizona, 433 U.S. at 376-77 and n.32; Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. at 762-66; Bigelow v. Vir ginia, 421 U.S. 809, 822 (1975).

²²⁰ 395 U.S. 367.

²²¹ The typical commercial speech case pits the rights of the speaker against those who would deny truthful information to consumers because of the chokes that it might induce them to make. In such cases the interests of consumers—their right to receive that information and to make their own choices—are thus aligned with the rights of the speakers, and no issue of conflict between the Sherman Act and the first amendment can arise. Two other kinds of cases present spurious conflicts. In the data dissemination cases, supra note 213, the informa tion was aimed primarily at producers, not consumers, and the consumer interest in maintain ing competition prevailed over the producers’ desire to share information that would facilitate collusion. (On intraprofessional exchanges of information, see Havighurst, supra note 126, at 345-62; Note, Anticompetitive Data Dissemination in the Medical Profession: The Conflict Be tween the Sherman Act and the First Amendment 1980 Duke L.J. 1142.) In the cases that are the focus of the present inquiry, the speakers are powerful professional organizations, and the information they generate in the form of credentials is meant to be used in making indepen dent purchasing and hiring decisions. Thus, the speech itself would seem entitled to some constitutional protection if the antitrust laws were enforced to suppress it. But such informa tion is essentially procompetitive and should not be suppressed as long as it contributes to the making of relevant distinctions. Without more, therefore, credentialing does not create a conflict between the interests of producers and consumers or between the first amendment and the antitrust laws. Of course, if a credentialing effort is obviously or intentionally deceptive or is part of a larger effort to suppress information, the consumer interest should prevail.

²²² 395 U.S. at 390. In a case contrasting sharply with the Red Lion decision, the Supreme Court invalidated a state law requiring newspapers, which enjoy a substantial natural monopoly over the dissemination of news and opinion about local politics, to carry at no cost replies by political candidates to their critical editorials. Miami Herald Publishing Co. v. Tornillo, 418 U.S. 241 (1974). One possible explanation for the seeming inconsistency be-tween the two cases is that newspapers enjoy a historically privileged status under the first amendment. See Bollinger, , Freedom of the Press and Public Access: Toward a Theory of Partial Regulation of the Mass Media 75 Mich. L. Rev. 1 (1976)CrossRef Google Scholar. This explanation of course provides no basis for giving credentialing bodies similar protection if their actions seem a disservice to consumers’ information needs. Another possible distinction might be that the broadcaster’s monopoly, unlike the newspaper’s, was attributable to a government license. Under this theory, those credentialing and similar schemes that are maintained by licensed professionals or that enjoy special governmental recognition could be subjected to substantive regulation without offending the first amendment.

²²³ See supra note 124.

²²⁴ The case studies set forth in FTC Staff Report ,supra note 6, though not fully documented, offer an opportunity to test the rule of limited scrutiny proposed here. Many of the cited complaints questioning the substantive validity of standards concern products that, like the three-ply plywood in the Structural Laminates case, failed to meet design standards but nevertheless met the performance objectives that those design standards were intended to achieve. As argued earlier, see supra text accompanying notes 167-71, unreasonably prolonged adherence to design criteria in the face of evidence of equivalent or better performance bears no reasonable relationship to the standard setters’ legitimate and procompetitive purposes. Thus, assuming that the FTC staffs frequently sketchy facts and judgments are sound and that other legal requirements are also satisfied (e.g., concerted action, supra text accompanying notes 122, 137-50, and injury to competition, supra text accompanying notes 131-33, 151-53), antitrust remedies should have been available in the following cases: testers for electrical grounding (FTC Staff Report supra note 6, at 70-73); plastic pipe in drain, waste, and vent systems (id. at 73-76); and toilet tank valves (id. at 77-82). Other episodes, only briefly summarized, that may be amenable to antitrust action using only limited scrutiny involved automatic plumbing vents, auto headlights, emergency aviation locators, flat electric cable, glass insulators, nonmetallic cable sheathing, plastic water pipes, pipe testing requirements, screw thread gauges, worker safety glasses, and underground heat distribution systems. Id. at 91-95 n.188. A related category of complaints that do not challenge the standards themselves but allege abuse by competitors of their strategic positions within the standards process might be challenged by analogy to the Hydrolevel case, discussed in id. at 82-86. See also id. at 92-93 (computer interface standards held up by computer manufacturers).

However, another group of cases that the FTC staff considered meritorious involved complaints that a dominant standard-setting body had refused to set any standards at all for new products which, though not directly competitive with certified products, were harder to sell without a seal of approval attesting to their safety or effectiveness. E.g. ozone purification systems for swimming pools (id. at 95 n.188); steam cleaning equipment (id. at 181); gas stoves for recreational vehicles (id. at 185 n.324); hot tub heaters (id.). Presumably, a rule of limited scrutiny, while insisting on reasonable openness to competitive products, would not question a decision not to extend certification to unfamiliar fields. As the Marjorie Webster case suggested, a competitive certifying scheme could be established for some of these products. See supra text accompany notes 104, 205.

The FTC staff would also have afforded remedies in a number of instances where the substance of a standard seemed clearly to bear a rational relationship to a procompetitive purpose but some less restrictive alternative had been proposed by an excluded competitor. It appears that these standards would be upheld under a rule of limited scrutiny, which leaves room for such differences of opinion. These various disputes are reminiscent of numerous cost-benefit trade-offs in the health care field, where a range of defensible opinion exists regarding difficult value questions and technical uncertainties and where high industry-set standards, though encouraging demand for the industry’s products, are not indefensible or irrational.

A particularly enlightening example of this class of cases involved standards of the Illuminating Engineers Society (IES) for minimum lighting levels. Experts, relying on studies of worker productivity under varying conditions, argued that the IES footcandle levels were too high. The IES cited other studies showing that productivity benefited from increased lighting. FTC Staff Report ,supra note 6, at 188-96. The FTC staff concluded that “the current IES levels reflect only one side of the issue about which there is a controversy and that side serves the financial interests of IES’s members and supporters.” Id. at 196. Although this dispute seems immune from resolution under a rational basis test, a related complaint about IES standards that might succeed, as an example of undue insistence on design criteria, was lodged by manufacturers of panels that polarize light, who argued that, by reducing glare, their product allowed equal visibility to be obtained at lower footcandle levels. Id. at 109-10, n.217.

Other examples of standards not contestable under a rational basis test include a standard excluding foreign ceramic wall tile that, being thinner than domestic tile, was subject to more breakage but had offsetting virtues (id. at 86-91); unless the balancing of conflicting values could be shown to be irrational or not in good faith, courts and regulators should not second-guess the standard setters'judgment even though their conflict of interests was clear. Similarly, a requirement that certain plumbing devices be accessible for service was alleged by the FTC staff to be unreasonable but did not seem irrational. Id. at 92. Finally, a furnace vent manufacturer argued that safety concerns could be overcome by requiring installation instructions, but the efficacy of that alternative appeared debatable. Id. at 97-104. Because the instruction alternative was in fact finally adopted, the latter case illustrates the risk that too much deference to the original standard, if coupled with too great a willingness to punish delays in approving changes (such as might be invited by our analysis of Structural Laminates and similar cases), could discourage standard setters from ever changing standards that they might eventually conclude were outdated; to solve this problem, ultimate adoption should not be treated as evidence that the original hesitancy was unjustified.

Finally, in those instances where the complaint is only that competitor-set standards are poorly conceived or do not adequately protect consumer interests, an antitrust remedy should not be available without some showing of intentional abuse. In these cases, however, unlike the previous category, a common-law tort action for unfair competition or an FTC action for deceptive practices might be allowable. Numerous examples cited by the FTC staff involved inadequate and therefore deceptive standards. E.g., id. at 109 n.217 (lock standard inadequate against forcible entry); id. at 198 (hard hat standard unsafe); id. at 204 (dangerous rear-discharge lawn mower approved); id. at 231 (dangerous chemicals in crayons certified as nontoxic); id. at 236 (treated wood certified for quality despite possible omission of a vital manufacturing step); id. at 108 n.217 (certifiers allowed inconspicuous disclaimers that undercut value of certification). Similarly, unless a conspiracy to restrict competition is shown, only nonantitrust remedies seem appropriate where testing is alleged to be inadequate or negligently done. See, e.g., id. at 175-81 (inappropriate test of furnace alleged); id. at 171-75 (reconditioned football helmets certified based on sampling nonuniform product), id. at 108 n. 217 (fire extinguishers certified despite clearly inadequate capacity); id. at 200 (safety shoes inadequately tested).

²²⁵ Credentialing by voluntary competitor groups is thus distinguishable from the busi ness practices of dominant firms, which, if lawfully constituted, must not be exposed to unreasonable risks when they undertake to compete aggressively. See supra note 209.

²²⁶ In Marjorie Webster it was clear that there was no boycott. See 432 F.2d at 656 & n.33 (evidencing independent decisions by accredited schools whether to accept plaintiffs grad uates as transfer students).

²²⁷ See supra note 30 and text accompanying note 207.

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Private Credentialing of Health Care Personnel: An Antitrust Perspective—Part One

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