## Facts

- Arizona sued two county medical societies and two affiliated nonprofit “foundations for medical care” created by physicians to support fee-for-service medicine and offer an alternative to existing health plans.
- Independent physicians (about 1,750 in Maricopa County and 400 in Pima County) participated through the foundations without owning or controlling the foundations’ operations.
- Participating physicians agreed that, for patients covered by certain approved insurance plans, they would accept no more than the foundations’ schedule of “maximum fees” as full payment for listed services.
- The state alleged the maximum-fee schedules were a horizontal price-fixing agreement among competing physicians in violation of § 1 of the Sherman Act.
- Defendants claimed the arrangement was beneficial because it facilitated participation in insured plans, improved predictability, and offered an attractive alternative to other insurance products.

## Issues

1. Whether a horizontal agreement among competing physicians to set maximum fees for specified medical services is per se illegal price fixing under § 1 of the Sherman Act.
2. Whether the challenged maximum-fee arrangement instead requires evaluation under the rule of reason because it involves professional services and asserted consumer benefits.

## Decision

- The Supreme Court reversed the Ninth Circuit.
- The Court held that the physicians’ maximum-fee agreements constituted per se unlawful horizontal price fixing under § 1 of the Sherman Act.
- The Court rejected arguments that professional status or asserted efficiencies justified rule-of-reason treatment for this type of price agreement.
- The case was remanded with directions to treat the agreements as per se illegal.

## Legal Principles

- Horizontal agreements among competitors to fix prices are per se unlawful under Sherman Act § 1, and the per se rule applies to maximum price fixing as well as minimum or uniform price fixing.
- A price ceiling fixed by competitors can restrain competition by limiting price variation and reducing incentives tied to differences in skill, service, or innovation, and it may discourage market entry.
- Professional services are not categorically exempt from antitrust rules prohibiting price fixing; agreements among professionals to set prices may be condemned per se.
- Once conduct is classified as horizontal price fixing subject to the per se rule, asserted procompetitive justifications generally do not prevent liability.

## Conclusion

The Court held that competing physicians’ agreement, implemented through nonprofit foundations, to accept maximum scheduled fees for services to certain insured patients was per se unlawful horizontal price fixing under Sherman Act § 1, and it required no rule-of-reason inquiry into claimed benefits.


Arizona v. Maricopa Cnty. Med. Soc’y, 457 U.S. 332 (1982)