High court wary about dental board's antitrust exemption

Comments from U.S. Supreme Court justices last week suggested skepticism toward North Carolina's defense of its state dental board in a case that could force changes on state healthcare regulatory boards across the country.

The issue in North Carolina Board of Dental Examiners v. Federal Trade Commission is whether practicing professionals who serve on state regulatory boards should be exempt from federal antitrust laws and allowed to restrict low-cost providers of similar services. Specifically, the justices are considering whether the dental board in North Carolina, composed mostly of practicing dentists, should have been able to tell non-dentists to stop offering teeth-whitening services in mall kiosks.

The non-dentists charge less than dentists for the service. The plaintiffs argue that the board's attempt to stop them violates antitrust laws. Lawyers for the board counter that its members should be immune from antitrust law because the board is a state agency.

It's common for states to establish regulatory boards consisting of members of the profession being regulated. Critics say these boards sometimes make decisions that limit competition from other providers that could drive down healthcare costs. The justices seemed to be looking for the Obama administration to propose a policy that would let them set limits on antitrust exemptions for state boards without jeopardizing states' ability to regulate professionals.

The Federal Trade Commission deemed the dental board's actions an illegal suppression of competition that was upheld by the 4th U.S. Circuit Court of Appeals. The FTC said the board should not be immune because North Carolina did not actively supervise the board's actions. The board appealed the 4th Circuit ruling, arguing that it does not need to be actively supervised by the state.

The American Medical Association and the American Dental Association filed a friend-of-the-court brief supporting the state board's position.

During oral arguments last week in the North Carolina case, some justices expressed reservations about the board's arguments. “Why should there be an antitrust exemption for conduct that is not authorized by state law?” said Justice Ruth Bader Ginsburg. “This board was issuing a whole bunch of cease-and-desist orders. They had no authority to do that.”

Justice Sonia Sotomayor questioned giving the dentists on the board an antitrust exemption “when they have a self-interest that's inherent in their occupation.”

An attorney 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 responded that “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.”

On the other hand, Justices Stephen Breyer and Antonin Scalia expressed reservations about limiting states' ability to have professionals regulate their peers. Breyer said it makes sense for brain surgeons to regulate other brain surgeons and decide who can practice brain surgery in a state. “I don't want a group of bureaucrats deciding that,” he said.

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,” Phoenix antitrust attorney Eric Fraser wrote in an article posted on SCOTUSblog. Or it could rule that board actions are exempt only if they're supervised by the state.

Matthew Cantor, an antitrust lawyer with Constantine Cannon in New York City, predicted the court would continue to allow boards to make decisions concerning competing services as long as the state has established a process for challenging board decisions. He argued that allowing practicing professionals to serve on such boards and restrict services delivered by competitors could lead to higher prices for consumers.

But the AMA and the ADA contended in their amicus brief that federal antitrust laws “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.”

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