By now, I am sure that you have heard the news about the U.S. Supreme Court’s recent decision regarding North Carolina’s Board of Dental Examiners. If not, let me be the first to summarize this information for you and share my thoughts on potential implications for Pennsylvania’s medical boards.
So, I don’t leave you hanging for too long, the U.S. Supreme Court held that the North Carolina State Board of Dental Examiners (the Board) can invoke state-action antitrust immunity only if it was subject to active supervision by the State.
How did they come to this conclusion, you ask? Good question. A little bit of background will help clarify. So, read on…
Similar to other states, North Carolina’s legislature created their Dental Board to regulate the practice of dentistry in the state. The Board is comprised of six dentists engaged in active practice, one dental hygienist, and one consumer member.
The Board is empowered by the legislature to develop rules and regulations to govern the profession and ensure public safety. Accordingly, the Board has the authority to regulate the practice of all state-licensed dentists. With regard to unlicensed individuals who engage in the unauthorized practice of dentistry, the Board’s authority is limited. They can, however, bring action against unlicensed individuals on behalf of the state.
Shortly after “nondentists” (as the U.S. Supreme Court refers to them) started offering teeth whitening services in 2003, the Board received numerous complaints from practicing dentists. The chief complaint was that nondentists were offering teeth whitening services at a lower price than dentists, thus creating competition. According to the U.S. Supreme Court, “few complaints [from the dentists] warned of possible harm to consumers.”
The Board opened an investigation, in which the dental hygienist and consumer member did not participate. The Board subsequently interpreted the Dental Practice Act as including teeth whitening as “the practice of dentistry” and sent out cease-and-desist letters to the nondentists, threatening criminal liability for providing teeth whitening services (i.e., the unauthorized practice of dentistry). As a result, all nondentists stopped offering the teeth whitening service! (The Court notes that although the Board had other formal procedures for addressing this issue, the Board bypassed the traditional state-sanctioned procedures and sent these letters out instead).
The Federal Trade Commission (FTC) viewed the Board’s actions as a violation of the antitrust laws because of the exclusion of nondentists from the teeth whitening services market in North Carolina. Several court proceedings subsequently ensued.
The case made its way to the U.S. Supreme Court where the Board argued that it was immune from the antitrust law because it was a state actor. The Supreme Court disagreed. The Court held that a two-pronged requirement must be met in order for the antitrust law’s state immunity provision to apply:
(1) the state must have a clear policy to allow the anticompetitive conduct, and
(2) the Board, on which a controlling number of decision-makers are active market participants, must be actively supervised by the state. Active supervision means that state officials must have the power to review particular anticompetitive acts of private parties and disapprove those that fail to accord with state policy.
The Court goes on to outline the requirements for active supervision: (1) the supervisor must review the substance of the anticompetitive decision, not merely the procedures followed to produce it; (2) the supervisor must have the power to veto or modify particular decision to ensure they accord with state policy; the mere potential for state supervision is not an adequate substitute for a decision by the state; and (3) the state supervisor must not itself be an active market participant. The Court notes, however, that the adequacy of supervision will depend on all the circumstances of a case.
What does all of this mean for Pennsylvania’s medical boards?
Well, right now, it appears not much. There are definite differences in North Carolina’s Board structure when compared to Pennsylvania’s medical boards and, as a result, the U.S. Supreme Court’s ruling will likely have little effect in this state.
As you already know, Pennsylvania’s medical boards are comprised of physicians, public members, and other professional regulated by the board (e.g., physical therapists, perfusionists, midwives, etc.); however, the medical boards (and all other professional boards) are actively supervised by the state.
Several state representatives provide oversight and/or participate on the Board: the Commissioner of Professional and Occupational Affairs, Board counsel, the Board administrator, etc.
Board actions, including the development of policy statements, regulations, etc. are reviewed by Board counsel and approved by the Department of State before leaving the Department. In the case of regulations, there is an additional review by the related House and Senate subcommittees, Pennsylvania’s Independent Regulatory Review Commission (IRRC), and the public before regulations are finalized. Pennsylvania’s medical boards can also petition the courts to stop individuals who engage in the unauthorized practice of medicine.
So, Pennsylvania appears to have the appropriate checks and balances in place to allow active-market participants to regulate the practice of medicine without the presumptive taint of anti-competitive practice.
There may, however, be some unintended consequences of the court’s ruling, as there are some provisions contained within that are unclear. We are working with the American Medical Association to decipher potential implications and plan to keep members informed as we learn more.