Anti-trust case before U.S. Supreme Court could impact powers of state medical boards

The U.S. Supreme Court recently heard oral arguments in a case that could impact the powers and composition of state medical licensing boards. The Federal Trade Commission (FTC) is asserting that the North Carolina Board of Dental Examiners – comprised primarily of practicing dentists elected by other practicing dentists – has violated federal anti-trust laws by attempting to exclude non-dentist teeth whitening companies from offering their services. Mark Fleury discusses below how the case (The North Carolina State Board of Dental Examiners v. The Federal Trade Commission) could impact state boards in Rhode Island and Massachusetts.

Q. What prompted the FTC to pursue this case?

A. The North Carolina dental board is an eight-member board created by the state Legislature to regulate the practice of dentistry. Around 2003, non-dental companies and individuals began to provide teeth whitening services to the public. The North Carolina Dental Practices Act states that “a person ‘shall be deemed to be practicing dentistry’ if that person, ‘[r]emoves stains, accretions or deposits from the human teeth.”’ The board issued cease and desist letters barring various non-licensed entities from providing teeth whitening services. The letters indicated that “the sale or use of teeth-whitening products by a non-dentist is a misdemeanor” under North Carolina law. As a result of these letters, the FTC claims the board is attempting to restrict trade in violation of federal anti-trust laws. The 4th U.S. Circuit Court of Appeals agreed with the FTC. (The North Carolina State Board of Dental Examiners v. The Federal Trade Commission, 717 F. 3d 359 (2013).)

Q. What are the key issues?

A. The primary issue in the case is whether the board, as constituted under North Carolina Law, is a public body or private actor for purposes of applying the “state action” doctrine, which exempts states from antitrust laws for certain activities.

The 4th Circuit held that the board is a private actor. As part of its analysis, the court focused on the composition of the board. Six are licensed dentists elected by dentists, one is a licensed dental hygienist elected by dental hygienists, and one is a consumer member appointed by the governor of North Carolina. Because dentists select the greater percentage of the board, and its powers are limited to the regulation of dental licensing and discipline, the court concluded that the board is a private actor not exempt from anti-trust laws, and that the board was protecting its own interests outside the powers granted to it by the state.

The 4th Circuit also noted that the board is not empowered to discipline or handle matters related to an unlicensed individual or entity. If the board suspects someone is practicing dentistry without a license, the court indicated, it can file a lawsuit to enjoin the practice or refer the matter to a district attorney.

The board counters that it was created by the Legislature to protect the public health, safety and welfare, making it a public body immune from anti-trust laws.

Q. How will the Supreme Court case potentially impact medical licensing boards in Massachusetts and Rhode Island?

A. The Supreme Court has a unique opportunity to impact the composition of health boards and other quasi-governmental agencies. In assessing the application of anti-trust laws to the board, the court will most likely need to set a standard on what constitutes a governmental body for purposes of the “state action” doctrine. If the court’s ruling is consistent with lower court findings, states may have to reexamine their selection processes when establishing licensing boards. In Massachusetts and Rhode Island, the licensing boards regulating medical fields are selected by the governor of each state. Each state’s licensing boards include members of the practice and of the general public, an important distinguishing factor when analyzing the potential impact of the Supreme Court’s decision on local licensing boards.

Q. Any other potential local impacts?

A. The court could impact the applicability of federal regulatory laws to the decisions of state medical boards. The lower court has essentially held that the composition of the North Carolina dental board was comprised of too many private, self-interested practitioners. As such, the dental board’s decision was more likely impacted by the members’ personal financial stakes and not necessarily good public policy. The Supreme Court could define what role federal regulatory laws play in decisions made by state-created boards. The court will most likely define what is necessary to preserve an impartial balance for maintaining governmental immunity. If not properly constituted and balanced, state boards could potentially run the risk of FTC oversight of decisions impacting regulation of professions.

Mark is an associate the Providence office of Barton Gilman LLP and focuses his practice on defending medical professionals in professional liability and licensure matters.