Healthcare Business News

Supreme Court to hear challenge to dental board's autonomy

By Joe Carlson
Posted: March 10, 2014 - 6:00 pm ET

A case that began with kicking cut-rate teeth-whitening services out of North Carolina mall kiosks has become a Supreme Court battle that could limit medical boards' latitude to squeeze lower-cost providers.

State boards of medicine and dentistry are typically immune from federal antitrust laws because states have an inherent role in regulating safe healthcare practices. That's why the North Carolina Board of Dental Examiners felt justified in sending threatening warnings to non-dentists and their landlords, saying that only dentists can use peroxide treatments to remove teeth stains.

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But to the Federal Trade Commission, those warnings sounded like illegal suppression of competition (PDF).

Licensed dentists typically charge double or even triple the prices that non-dentists do for teeth-whitening, and many dentists had complained about the teeth-cleaning operations running out of store fronts, malls and salons. The FTC ordered the North Carolina board to stop sending the warning notices to non-dentists at a time when the teeth-whitening business was booming nationally.

The North Carolina board disagreed and challenged the FTC ruling, but it lost in front of two courts and an administrative law judge. That prompted a call from nationally influential organizations including the American Medical Association, the American Dental Association and the Federation of State Medical Boards to have the Supreme Court take on the case and resolve a split in how appeals courts treat the issue.

Last week, the court granted oral arguments in North Carolina Board of Dental Examiners v. FTC. A date for the case has not yet been set.

“The American Medical Association is grateful that the U.S. Supreme Court has agreed to re-evaluate a case in which the federal government is interfering with the ability of state regulatory boards to protect public health and safety,” AMA President Dr. Ardis Dee Hoven said in a statement about the case. “State regulatory boards acting to fulfill the directives of state law should be free to make decisions on public health issues without fear of second-guessing under the federal antitrust laws.”

While that may be true in general, a three-judge panel with the 4th U.S. Circuit Court of Appeals found that the particular makeup of North Carolina's dental board rendered it a private party, not a subdivision of the state, for the purposes of antitrust law. The distinction meant the board did not enjoy the state's antitrust immunity.

The reason is that the board's six dentists are appointed by other dentists in the state, not by state officials, and the dental board operates with no state oversight. No one working in the governor's office, for example, specifically authorized the warning letters regarding teeth-whitening, and state law doesn't address it.

“This case is about a state board run by private actors in the marketplace taking action outside of the procedures mandated by state law to expel a competitor from the market,” wrote the unanimous three-member panel of judges in 4th Circuit in Richmond, Va., adding, “despite these actions, if the board was actively supervised by the state, it would be entitled to the Parker exemption.”

Parker v. Brown is a 1943 case in which the Supreme Court defined how states are immune from antitrust law under the “state action” doctrine. Last year, the Supreme Court ruled in another healthcare case, FTC v. Phoebe Putney Health System, that state action immunity is generally disfavored unless it's clear that a board is taking steps to enforce the state's agenda.

In the North Carolina case, the question before the Supreme Court is whether the dental board should be treated as a private entity under antitrust law—a question of national significance, doctors say.

“As long as it is permitted to stand, the Fourth Circuit's decision will undermine the traditional role of the states in regulating the professions by subjecting the states to costly and uncertain antitrust litigation,” lawyers wrote for the AMA and the other organizations who filed a friend-of-the-court brief last year urging the Supreme Court to take the case.

Follow Joe Carlson on Twitter: @MHJCarlson

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