By: Kathleen “Kitty” Juniper, Esq.
The Case: North Carolina State Board of Dental Examiners v. Federal Trade Commission, argued to the Supreme Court of the United States, October 14, 2014.
State professional regulatory boards frequently limit the entry of new, affordable products or service providers (collectively referred to as “products”) into the health care market by interpreting the laws as requiring that a licensed professional sell or be involved with furnishing the product. Relying upon scope of practice infringement arguments, these board determinations often are made by applying outdated laws that do not address and did not contemplate the advanced-technologies that enable the new products.
The board members making these decisions most often are licensed professionals practicing in the industry they are regulating, whose revenues and livelihoods may be negatively affected by the new products. Despite the fact that manufacturers and distributors can point to studies showing that the products result in no consumer harm, board members may vote to exclude the products without proper examination of the product’s health and safety issues and the application of the underlying regulation.
For the most part, a state board’s anti-competitive conduct has been protected from federal antitrust actions due to the state-action exemption making board members immune from antitrust liability. On October 14, 2014, the United States Supreme Court heard oral argument in a case that could affect that immunity.
In North Carolina State Bd. Of Dental Exam’rs v. Federal Trade Commission, the North Carolina State Board of Dental Examiners (“State Board”) appealed a Fourth Circuit Court of Appeals decision that upheld the Federal Trade Commission’s (“FTC”) finding that the State Board engaged in anticompetitive conduct that violated Section 5 of the FTC Act. The State Board, comprised of practicing dentists, sent letters to the non-dentist teeth whitening providers demanding that they cease and desist from providing the whitening services, which according to the State Board, constituted the practice of dentistry. The result was that the non-dentist whitening services, which were less expensive than those provided by the dentists, were excluded from the North Carolina markets.
Interestingly, it appears that the State Board did not investigate whether the whitening services provided by the non-dentists resulted in any harm or benefit to the public before sending the letters. Likewise, the State Board did not consider that, like many health products recently developed, the products to which they applied the laws were not anticipated at the time the legislation was enacted.
Various Supreme Court watchers have commented that the Court seemed unclear during oral argument regarding how to appropriately limit the state action immunity. On one hand, the Court sounded reluctant to allow financially interested professionals to determine the fate of their competitors where the licensed professionals stand to lose financially. On the other hand, the Court does not want to discourage professionals from lending their expertise and serving on professional regulatory boards.
If the Court limits the state action immunity, manufacturers of new health care products that are safe and affordable for consumers may find it easier to make their products available to the public without having to distribute them through professionals, which frequently drives up the costs to consumers.
Various amici briefs were filed by state entities and professional associations (including from California, the California Optometry Association) on behalf of the State Board. Consumer advocates, nurse anesthesiologists, antitrust experts and other product innovators lined up behind the FTC.
The FTC’s final order and the Fourth Circuit Court of Appeals opinion can be found at http://www.ftc.gov/enforcement/cases-proceedings/north-carolina-state-board-dental-examiners.
The Supreme Court’s oral argument and associated documents can be found at http://www.scotusblog.com/case-files/cases/north-carolina-board-of-dental-examiners-v-federal-trade-commission/