The Federal Trade Commission deemed the board's actions as illegal suppression of competition – a conclusion upheld by the 4th U.S. Circuit Court of Appeals. The FTC said the board should not be immune from antitrust laws because North Carolina did not actively supervise the board's actions.
The board argued that it does not need to be actively supervised by the state. Nationwide, it's common for states to establish regulatory boards consisting of members of the profession being regulated.
Some of the Supreme Court justices Tuesday seemed leery of the board's arguments.
“One puzzle in this case: Why should there be an antitrust exemption for conduct that is not authorized by state law? The objection here was that this board was issuing a whole bunch of cease and desist orders. They had no authority to do that, no authority at all,” said Justice Ruth Bader Ginsburg.
Justice Sonia Sotomayor also questioned what about the state's treatment of the board should make it exempt from antitrust.
“How is the state going to be any different in giving that group of private actors a pass on antitrust litigation that—when they have a self-interest that's inherent in their occupation?” Sotomayor asked.
Hashim Mooppan, a lawyer for the board, argued that because the board members swore an oath to the state to enforce state law, they're acting in the state's interest, not their own.
But Justice Anthony Kennedy said an oath might not be enough.
“But the concern is that there is no state policy if the state simply says we—you take an oath and then you do what you want,” Kennedy said. “And if the board says we think what's good for dentistry is good for … North Carolina, our cases say that's not enough because you're pursuing your self-interest.”
At the same time, however, the justices seemed concerned about the other side's argument that allowing practicing dentists to be members of the board creates conflicts of interest.
Justice Stephen Breyer said that might make sense in some professions, such as for railroads or truckers, but not for others, such as neurologists. He said, in that case, it makes sense for neurologists to regulate other neurologists, such as by deciding who can practice brain surgery in a state.
“I don't want a group of bureaucrats deciding that,” Breyer said. “I would like brain surgeons to decide that.”
Justice Antonin Scalia echoed that sentiment when responding to an argument by Matthew Stewart, a lawyer for the respondent.
“Really, really? You are going to have a review board composed of non-neurologists deciding de novo whether a particular person should be admitted or a particular rule should be adopted?” Scalia asked. “I don't want that. I want a neurologist to decide it.”
Scalia also said he finds it “hard to believe” that each individual board member's financial interests would be significantly affected by the board's decisions.
It's a case that's already received significant attention from industry trade groups and state governments. More amicus briefs, however, have been filed in support of the FTC's position than the board's.
At this point, the court could rule that actions by state agencies are exempt from antitrust laws as long as the state has a “clearly articulated anticompetitive policy,” according to the SCOTUS Blog. Or, it could rule that such board's actions are only exempt if they're actively supervised by the state. There are also options in the middle.
Matthew Cantor, an antitrust lawyer with Constantine Cannon in New York City, said he believes the court will continue to allow boards to make such decisions as long as there are state processes to challenge those decisions with evidence-based arguments.
Cantor said he believes the FTC had it right, and allowing practicing professionals to sit on such boards and make such decisions could ultimately lead to higher prices for patients and consumers.
“By not having the more bright line rule advocated by the FTC, I think you're creating an environment that could cause trouble, could cause harm to consumers and patients by not eviscerating any conflict of interest,” Cantor said.
The American Medical and American Dental associations, however, filed a brief in support of the board. They argued that subjecting such boards to antitrust laws could harm public health.
“The federal antitrust laws were not enacted, and should not be permitted, to subvert medical and dental decisions by duly constituted state boards regarding what they believe to be in the best interests of patients and the public,” according to the brief.
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