A federal appeals court, in a rare ruling on healthcare marketing, said the California Dental Association violated federal antitrust laws by restricting advertising among its members and, thereby, restrained trade among dentists.
Although the case is limited to the Sacramento, Calif.-based association of 15,000 dentists, the judicial system is sending another strong warning to professional trade groups that limits on advertising won't be tolerated and healthcare providers don't enjoy any special protection under antitrust laws as they pertain to advertising.
"Restrictions on advertising and marketing by professional associations have to be narrowly tailored," said Mark Horoschak, who was assistant director of the Federal Trade Commission's healthcare division at the time the FTC sued the dentists. He's now in private practice in Charlotte, N.C.
If no one advertises, the market may not develop to be more competitive, denying consumers the benefits of competition, according to the ruling by the 9th U.S. Circuit Court of Appeals in San Francisco. A three-judge panel ruled in favor of the FTC by a 2-1 vote.
CDA restrictions included limits on price advertising, such as a prohibition on announcements of across-the-board discounts and statements touting low prices.
It's only the second time such an advertising antitrust case involving healthcare providers has made it to federal court. In most cases, healthcare associations have lifted their restrictions on members in out-of-court settlements with the agency.
The first case involved the Chicago-based American Medical Association, which restricted most forms of advertising by its member physicians. The FTC sued the AMA in 1975, and the commission issued its order in 1979 requiring the AMA to lift the restrictions. The FTC's case was upheld in federal court.
The FTC filed its initial complaint against the CDA in 1993. An administrative law judge sided with the FTC, and the agency ordered the association to lift its restrictions on member advertising.
The CDA appealed to the five FTC commissioners, but they affirmed the judge's ruling last year in a 4-1 vote. The CDA then appealed to the 9th Circuit, which heard arguments in the case earlier this year.
In an Oct. 24 ruling, the three-judge panel affirmed that the various advertising restrictions were illegal.
The CDA's attorney said the AMA and CDA situations are different, and that his association intends to appeal.
"In the AMA case, the ethical provisions precluded all forms of advertising," said attorney Peter Sfikas. He said the CDA only intended to institute guidelines that would discipline a member dentist if they published an advertisement that is false or misleading.
"If you look at any California telephone directory you will see dentists do advertise and they do so quite extensively," Sfikas said.
He said the CDA plans to ask all 19 judges of the 9th Circuit to reconsider the panel's decision. He said the association also may appeal to the U.S. Supreme Court.