A Body Blow Against Regulatory Boards
Federal and State Perspectives on NC Dental v. FTC
Eric M. Fish
The Licensed Professions
“Occupational Licensing: A Framework for Policymakers” White House 2015
Antitrust Primer

Applicable Statutes




Goal of Statutes



Sherman Act
Clayton Act
FTC Act
Protection of competition
Per Se or Rule of Reason analysis
Violations


Criminal
Civil (Public or Private)
 FTC or DOJ
 State AGs
 Private
Recent FTC Activity in Healthcare

Mergers
 St Luke’s
 Phoebe Putney

Anticompetitive Conduct
 FTC v. Activis
 Cardinal Health

Advocacy
 Comments on pending state
legislation
 Review of state policies

Regulatory Boards
 NC Dental
Historical Development
1943: AMA v. US
1975: Goldfarb
1976: Rex Hospital
1977: Healthcare Antitrust Units
FTC Activity in Health Care
“The FTC should use its flexible
and fact-intensive approach to
antitrust enforcement to
investigate and, where
appropriate, challenge
competitive harms occurring in
health care, technology, and
even health care technology.
There is much that we can do
here, and we have a variety of
tools to do it.”
FTC Commissioner Maureen Ohlhausen - 2015
Trending: Private Actions
“Licensure… almost inevitably becomes a tool in the
hands of a special producer group to obtain a monopoly
position at the expense of the rest of the public.”
“The public [is] deprived of the medical care it wants to
buy and is prevented from buying”
“…the state licensing regulations for many occupations are
creating bottlenecks across the economy, raising the prices
of many goods and services and putting good jobs out of
reach of too many Americans.” – Eduardo Porter 1/27/2015
“Sure, some professions need state licensure, where our
life and safety depends on it. But many simply protect
industries, line state coffers, and contribute to the rising
cost of college.” – Jeffrey Selingo 1/29/2015
Private Rights of Action Against
Regulatory Boards

Must Show
 Antitrust injury: Claimed damages
result from reduced competition or
anticompetitive effect of board
action


Relief
 Injunctive Relief



Antitrust standing: Must be party
most directly injured
Monetary Damages (3x)
Attorneys’ Fees
The “one-off” not usually successful

Ex: Petrie v. VA Medical Board
Disruptive Technology

Uber contends St. Louis Taxi
Commission protecting
entrenched cab industry

Commission required
fingerprinting (a state law)

Uber contends requirement
discriminates against
minorities.
Wallen v. St. Louis
Metropolitan Taxicab
Commission
1:15-cv-01432
Economic Freedom

Defunct pain management clinic
and its owners brought suit
against the Board

Board rules required any pain
clinic be owned by a hospital or
licensed physician

Axcess argued rules were put in
place without active supervision

Lawsuit withdrawn in August 2015
Axcess Medical Clinic
v. Mississippi State
Board of Medical
Licensure
3:15-cv-307
Scope of Practice

Physical Therapists in NC
bring action against NC
Board of Acupuncture

Board sent cease and
desist orders to dry needling
physical therapists

Plaintiffs contend Board is
outside scope of
Acupuncture Board
jurisdiction
Henry v. NC
Acupuncture Licensing
Board
1:15-cv-831
Unlicensed Practice

History




2003: LegalZoom approved
2007-08: Board sends C/D letters
2015: Antitrust Suit filed for $10.5MM
Consent Decree (Oct 2015)



LegalZoom will provide full text of
blank document templates before
customers have to pay
Templates reviewed by licensed NC
attorney
Consumers informed that forms are
not substitute for legal advice
LegalZoom v. NC State
Bar Association
1:15-cv-439
Board Rules and Regulation

History

2010- TMB issues rules addressing
telemedicine
•
•
Define proper physician-patient encounter
Describe how to establish face to face
encounters at distant/remote sites

2011 – TMB letter to Teladoc

2014 – Teladoc state court challenge

2015 – Teladoc files antitrust suit

Teladoc alleges TMB is violating both
the Antitrust laws and the Commerce
Clause

Case developments

Preliminary injunction granted (under
appeal)

Teladoc drops TMB and board
members (individual capacity)
Teladoc v. Texas
Medical Board
1:15-cv-343
Clear Articulation, Actively Supervised

State Boards still can claim immunity, but…
 Must be a clearly articulated policy
 Board must be actively supervised

States Take on Active Supervision
 Oklahoma Governor



All non-rulemaking actions to be submitted to AG
California AG Guidance

Change the composition of boards: not be "the most
effective solution."

Establish office or a committee to review board actions
(likely the Department of Consumer Affairs).

Modify the powers of the boards themselves to be advisory
only, with any formal action taken by a supervising state
agency.
Alabama

Ceases anticompetitive decisionmaking
FTC Active Supervision Guidance

Active Supervision Not Required
 Prohibitions on Advertising
 Nondiscretionary (ie: educational
requirements)
 Discipline for violation of standards set by
legislature

Market Participant Defined
 A person licensed by the board or who
provides any service in any professional or
occupational sub-specialty that is regulated by
the board.
 Manner of Selection does not matter
 Retirees/On Leave: Active participant
FTC Active Supervision Guidance

Control by Market Participants
 Function of procedure and practice, not
number
 Structure
 Rules/Voting
 Public member level of engagement

Active Supervision
 De Novo Review of Board Action
 Independent investigation
 Not a cursory review
 Documents reasons why
 Must be before action becomes effective
FTC GUIDANCE DOCUMENTS
Marcus Jimison, J.D.
N.C. Medical Board
List of Federal Czars
Anit-Poverty Czar
Bank Bailout (TARP) Czar
Asian Carp Czar
Bird flu czar
Border Czar
Copyright czar
Consumer Czar (Elizabeth Warrant)
Cyber Czar
Drug Czar
Ebola Czar
Health Czar
Middle East Czar
Iran Czar
Regulatory Czar
Technology Czar
War Czar
Weatherization Czar
Now, Occupational Licensing Board Czar
 Disciplinary Cases
 In this context, active supervision may be provided by the administrator
who oversees the regulatory board (e.g., the secretary of health), the
state attorney general, or another state official who is not an active
market participant. The active supervision requirement of the state action
defense will be satisfied if the supervisor: (i) reviews the evidentiary
record created by the regulatory board; (ii) supplements this evidentiary
record if and as appropriate; (iii) undertakes a de novo review of the
substantive merits of the proposed disciplinary action, assessing whether
the proposed disciplinary action comports with the policies and standards
established by the state legislature; and (iv) issues a written decision that
approves, modifies, or disapproves the disciplinary action proposed by
the regulatory board.
What Factors are Relevant to Determine
Active Supervision
The supervisor has obtained the information
necessary for a proper evaluation of the action
recommended by the regulatory board. As
applicable, the supervisor has ascertained
relevant facts, collected data, conducted public
hearings, invited and received public
comments, investigated market conditions,
conducted studies, and reviewed documentary
evidence.
What Factors are Relevant to Determine
Active Supervision
The supervisor has evaluated the substantive
merits of the recommended action and
assessed whether the recommended action
comports with the standards established by the
state legislature.
What Factors are Relevant to Determine
Active Supervision
The supervisor has issued a written decision
approving, modifying, or disapproving the
recommended action, and explaining the
reasons and rationale for such decision.
.
Not Active Supervison
The entity responsible for supervising the
regulatory board is itself controlled by active
market participants in the occupation that the
board regulates. See N.C. Dental, 135 S. Ct. at
1113-14.
Not Active Supervision
 The entity responsible for supervising the regulatory board is itself
controlled by active market participants in the occupation that the board
regulates. See N.C. Dental, 135 S. Ct. at 1113-14.
 A state official monitors the actions of the regulatory board and
participates in deliberations, but lacks the authority to disapprove
anticompetitive acts that fail to accord with state policy. See Patrick v.
Burget, 486 U.S. 94, 101 (1988).
 A state official (e.g., the secretary of health) serves ex officio as a
member of the regulatory board with full voting rights. However, this state
official is one of several members of the regulatory board and lacks the
authority to disapprove anticompetitive acts that fail to accord with state
policy.
Not Active Supervision
 The state attorney general or another state official provides advice to the regulatory
board on an ongoing basis.
 An independent state agency is staffed, funded, and empowered by law to evaluate,
and then to veto or modify, particular recommendations of the regulatory board.
However, in practice such recommendations are subject to only cursory review by the
independent state agency. The independent state agency perfunctorily approves the
recommendations of the regulatory board. See Ticor, 504 U.S. at 638.
 An independent state agency reviews the actions of the regulatory board and approves
all actions that comply with the procedural requirements of the state administrative
procedure act, without undertaking a substantive review of the actions of the regulatory
board. See Patrick, 486 U.S. at 104-05.
Going Forward
 Avoid interstices. Obtain clear statutory authorization
and guidance regarding scope of practice disputes.
 Avoid scope of practice disputes unless completely
necessary.
 Avoid unlicensed practice of medicine cases unless
completely necessary to protect the public health. A
shock the conscience analysis would be a good
barometer to use..