A U.S. Supreme Court ruling against a local dental board that attempted to stop nonprofessionals from whitening teeth could alter state medical boards’ ability to regulate the practice of medicine, some physician groups warn.
The federal high court ruled Feb. 25 that North Carolina’s state board of dental examiners violated federal antitrust laws when it tried to prevent nondentists from offering teeth-whitening services. State professional boards that regulate their competitors are only protected from antitrust scrutiny when supervised by state government, the court said in its 6-3 decision.
The ruling in North Carolina State Board of Dental Examiners v. Federal Trade Commission is disappointing and will have a broad impact on how regulatory boards function nationwide, said Bobby D. White, chief operations officer for the North Carolina Board of Dental Examiners.
“Virtually every professional regulatory board in the country will eventually have to change the way it’s structured, change the way it’s supervised, or change the activities it performs,” Mr. White said in an interview. “And since all of those changes will take time – and often legislative activity – the opinion threatens to massively disrupt professional regulation.”
Federal Trade Commission Chair Edith Ramirez said the decision correctly affirms that a state may not give private market participants unsupervised authority to suppress competition, even if they act through a formally designated “state agency.”
“We are pleased with the Supreme Court’s recognition that the antitrust laws limit the ability of market incumbents to suppress competition through state professional boards,” Ms. Ramirez said in a statement. “We will remain vigilant through our enforcement initiatives and advocacy to safeguard competition and ensure that American consumers benefit from entrepreneurial initiative.”
The ruling stems from a dispute between the North Carolina State Board of Dental Examiners and a group of unlicensed teeth whiteners who were providing services at shopping malls. From 2006 to 2009, the board issued cease-and-desist letters to the nondentists, warning them about a state ban against stain removal by unlicensed practitioners.
The nondentists contacted the FTC, and an administrative law judge found that the board’s conduct constituted an unreasonable restraint of trade. The board argued its conduct was protected from antitrust oversight by the state action doctrine , a legal rule that applies to some state board conduct. The doctrine exempts from federal antitrust scrutiny state agencies that are actively supervised by a state.
But the FTC said the board’s activities fell outside the doctrine because it is made up of market participants – dentists – and is not actively supervised by a sovereign part of the state government. The 4th U.S. Circuit Court of Appeals in 2013 ruled in favor of the FTC, and the dental board appealed to the U.S. Supreme Court.
Physician leaders, including the American Medical Association and the American Academy of Family Physicians, issued a joint brief to the high court in support of the dental board.
If the appellate ruling stands, the decisions of state medical and dental boards will be distorted by considerations of federal competition policy, to the detriment of public health, the AMA said in its brief. In addition, highly qualified practitioners who would otherwise be willing to serve on boards would likely resign or refuse to accept office to avoid personal antitrust exposure, the brief argued.
But in its opinion, the Supreme Court majority said if a state wants to rely on active market participants as regulators, it must provide active supervision to achieve antitrust immunity. The North Carolina Board of Dental Examiners did not have such supervision, the court said.
“When a state empowers a group of active market participants to decide who can participate in its market, and on what terms, the need for supervision is manifest,” the majority justices said in their opinion. “The court holds today that a state board on which a controlling number of decision makers are active market participants in the occupation the board regulates must satisfy active supervision requirement(s) in order to invoke state action antitrust immunity.”
The American Association of Nurse Anesthetists praised the decision, calling it a win for patients’ access to care. The AANA filed a joint brief to the high court in support of the FTC with several other organizations, including the American Nurses Association.
“The AANA and its co-amici had a strong interest in this case, because unnecessary restrictions on the practice of any qualified health care provider limit patient access to quality care, may increase cost, and can compromise the quality of health care delivery,” AANA President Sharon Pearce said in an interview.
“The Supreme Court decision is consistent with the arguments made by the AANA and its co-amici who urged the Supreme Court to affirm the appellate court’s decision for a number of reasons, including concerns that unsupervised state regulatory boards comprised mostly of practicing professionals have the potential of acting in their own economic self-interest by protecting their competitive position in ways not intended or authorized by the state, thus warranting oversight.”
The North Carolina Medical Society said the Supreme Court decision runs contrary to the time-tested regulatory model used nationwide by states to regulate learned professions.
“The decision focuses narrowly on antitrust law, not on the broader and far more important issue of protecting the public through effective regulation of medical practice,” the medical society said.
State medical boards will need to time to analyze the decision and decide how the ruling might affect the way in which they operate, said Dr. Humayun J. Chaudhry, president and CEO of the Federation of State Medical Boards. The FSMB plans to hold a webinar March 5 to address how state medical boards should apply the ruling.
“We recognize the importance of this decision and will now begin to make better sense of it and begin to address the open-ended questions” left by the ruling, he said in an interview. “What kind of impact [the decision has] remains to be seen.”
The AMA expressed disappointment with the decision.
“State medical boards are authorized by state governments to regulate medical licensing and medical practice in the interest of patient safety,” noted AMA President Robert M. Wah in a statement. “The AMA agrees with Justice [Samuel] Alito, speaking for the three dissenting justices, that today’s decision ‘will spawn confusion’ by creating far-reaching effects on the jurisdiction of states to regulate medicine and protect patient safety.
“The AMA will work with other physician groups to secure policy changes to reinforce long-held antitrust protections for activities conducted under state authority to protect patients,” Dr. Wah said.
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