Dental licensing board’s monopoly power challenged by U.S. Supreme Court

The Supreme Court case of North Carolina Board of Dental Examiners v. FTC is, in some ways, a watershed in terms of judicial resistance to monopolization of health care practices by a licensing board.

The Case

In technical legal terms, the Court in this case reviewed whether the North Carolina Board of Dental Examiners could be treated as a “private” actor for federal antitrust law purposes, because the Board’s members are also “market participants” who took action to restrain trade against non-dentists.

The case arose out of the Federal Trade Commission (FTC) complaint regarding the Board’s efforts to stop non-dentists from offering teeth-whitening services. The FTC complained that the Board, composed mainly of practicing licenses, exceeded its authority by sending cease-and-desist letters to the dentists’ competitors. The FTC maintained that this was an antitrust violation or attempt to monopolize a part of the dental industry.

The U.S. Court of Appeals (4th Circuit) agreed with the FTC, holding that the dental board was a private actor, selected by market participants to protect their own interests, and thus could be legally held to violate the antitrust laws.

The U.S. Supreme Court upheld the 4th Circuit’s decision, holding that the dental board was not actively supervised by the state and therefore its actions were unlawfully anticompetitive.

The Implications

The dissenting opinion, led by Justice Alito, points out that dental boards, like medical and other regulatory boards, are dominated by healthcare industry professionals such as dentists and medical doctors. And, such boards do tend to protect their members’ interests. So it is no surprise that the dental board went after unregulated teeth whitening competitors of dentists. As such, the move to quell competition should not be seen as unlawful, according to the dissent.

But the majority opinion (which is the rule of law) holds the opposite view: that the dental board’s actions are anti-competitive and unlawful.

The broader implication of this decision is that after all these years of medical and and psychology board dominance of their respective professions, we may begin to see courts imposing limits on activities by healthcare regulatory boards that are regarded as anti-competitive.

If we take the trend a bit deeper, there may be a backlash against strong medical board enforcement against competitive actors. This is a huge area of enforcement, currently.

For example, medical boards are carefully scrutinizing arrangements between a medical services organization (MSO) or medical management (or dental management) organization, and a professional medical corporation (or medical or dental practice). Here, boards in states such as California, zealously guard boundaries between management companies and medical service corporations.

For example, the corporate practice of medicine rule prohibits unlawful intrusion by MSOs into clinical practice. Boards rigorously enforce this rule, together with its sister rule, the legal prohibition against fee-splitting.

If courts begin to regard such rules and the way they are enforced as anti-competitive, this could create a more open, free market and a deeper blurring of the lines between administrative, medical practice management activities on one hand, and clinical activities on the other.

While the winds of judicial change may be in the direction of greater freedom for healthcare ventures that also involve medical doctors, dentists, or psychologists, current rules are still tough on the unwary.

The best move is to contact an experienced healthcare lawyer for legal advice before bringing consumer products to market in the health and wellness industry.

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Michael H Cohen Healthcare & FDA Lawyers

Contact our healthcare law and FDA attorneys for legal advice relevant to your healthcare venture.

Showing 2 comments
  • Kurt Othmer
    Reply

    Thank you for this wonderful article. In my field of EEG Biofeedback, there has been a recent spat of cease and desist letters from licensing boards in several states. The added wrinkle is that most of those letters were sent to professionals licensed in other healthcare disciplines. I suspect this ruling will be quite useful in these cases.

    • Michael H Cohen
      Reply

      Kurt, thanks for your continued encouragement and good words, as well as innovation in the field. – Michael

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