FOR IMMEDIATE RELEASE                                          AT
THURSDAY, FEBRUARY 20, 1997                        (202) 616-2771
                                               TDD (202) 514-1888


  JUSTICE DEPARTMENT REACHES SETTLEMENT WITH RHODE ISLAND DENTAL
  INSURER THAT PROHIBITS AGREEMENTS THAT DISCOURAGE DISCOUNTING


            Settlement Means Lower Dental Care Prices
               and More Choices for Rhode Islanders
                                 

     WASHINGTON, D.C. -- The Department of Justice reached a
settlement today with Rhode Island's largest dental care insurer
that prohibits the insurer from discouraging dentists from
offering discounts on dental care.  As a result of the
settlement, Rhode Islanders will pay less for their dental care,
and have access to a wider choice of dental insurance
alternatives.

     The settlement with Delta Dental of Rhode Island would
resolve a lawsuit originally filed in February 1996 in U.S.
District Court in Providence, Rhode Island.  The suit accused
Delta Dental of discouraging competition from lower-cost dental
insurance plans. 

     Delta Dental, which is headquartered in Providence, used a
provision in its contracts with dentists known as a "most favored
nation" clause that required any dentist caring for patients
insured by Delta to charge those patients no more than the
dentist charged any other patient, whether insured or not.

     "Delta Dental's most favored nation clause sharply limited 
dentists' incentive to discount their fees and impaired entry and
competition from other dental insurance plans," said Joel I.
Klein, Acting Assistant Attorney General in charge of the
Department's Antitrust Division.  "We were prepared to introduce
evidence proving that some lower-cost plans had tried to do
business in the state and had been unable to expand because of
the most favored nation clause."

     Almost all dentists in Rhode Island receive a significant
share of their income from Delta, and these dentists were
unwilling to accept a cut in that income in order to sign with
other types of plans that offer fewer dentists but also lower
costs.  The clause also discouraged Rhode Island dentists from
offering fees lower than Delta's to individual, uninsured
patients.

     Delta, which collects about $48 million a year in premiums,
covers about 40 percent of Rhode Islanders who have dental
insurance.  More than 90 percent of the state's dentists in
active practice have signed Delta contracts with the most favored
nation clause.  

     Klein said that the clause severely restricted the ability
of competing plans to attract and retain enough dentists to serve
those insured by them.

     The settlement follows an October 1996 decision by District
Judge Raymond Pettine, denying Delta's motion to dismiss the
Department's case.  Delta had argued that Ocean State Physicians
Health Plan, Inc. v. Blue Cross & Blue Shield of Rhode Island,
decided by the First Circuit Court of Appeals in 1989, held that
most favored nation clauses are almost always legal under the
antitrust laws.  Judge Pettine's opinion rejected this
contention.  

     In view of Judge Pettine's opinion, the Department believes
that this case--in addition to removing a barrier to competition
among providers of dental care and dental insurance in Rhode
Island--has made it clear that Ocean State does not legalize most
favored nation clauses with anticompetitive effects.  Judge
Pettine's decision stands with several other recent court
decisions from around the country recognizing that these clauses
may be anticompetitive and illegal in some circumstances.

     "The suit has clarified an important area of antitrust law
by showing that most favored nation clauses are not always legal
under the antitrust laws, but rather must be analyzed based on
their effects," Klein said.

     "This administration remains committed to making dental
care, as well as other types of health care, available and
affordable to all Americans.  As a result of the Department of
Justice's successful prosecution of this suit, Rhode Island
consumers will have access to a wider choice of dental insurance
alternatives, including discounted plans and other managed care
options, and will also receive the benefits of increased price
competition among Delta panel dentists," Klein added.

     The consent decree filed with the court today would, if
approved by the court, settle the suit, eliminate the most
favored nation clauses, and prevent Delta from engaging in other
actions that would limit future discounting by its participating
dentists.  The proposed consent decree, if approved by the court,
would be in effect for 10 years.

     As required by the Tunney Act, the proposed consent decree
will be published in the Federal Register, along with the
Department's competitive impact statement.  Any person may submit
written comments concerning the proposed decree during the 60-day
comment period to Gail Kursh, Chief, Health Care Task Force, U.S.
Department of Justice, Antitrust Division, 325 7th Street, N.W.
Washington, D.C.  20530.  Telephone: 202/307-5799.

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