Dental Board Case Before SCOTUS Has Far-Reaching Implications

The outcome of a case before the Supreme Court has the potential to extend far beyond teeth whitening and mall kiosks to state regulatory boards governing the actions of physicians, says a healthcare antitrust lawyer observing the case.

It's always risky to predict how the U.S. Supreme Court will rule on a case simply by interpreting a transcript of the oral arguments.

So, let's get started.

On Oct. 14, the high court heard from both sides in North Carolina Board of Dental Examiners v. Federal Trade Commission. The justices are being asked to decide if a state regulatory board is exempt from federal antitrust laws under the state action doctrine if its members are "market participants" elected by other market participants.

The eight-member North Carolina board, which includes six dentists elected by other dentists, had been the subject of a complaint by the FTC in 2010 for violations of the FTC Act after the board banned non-dentists operating in mall kiosks from performing discount teeth-whitening procedures.

Jay L. Levine, a Washington, D.C.-based healthcare antitrust lawyer and disinterested observer of the case, says the high court's ruling is expected early next year, and the implications of the ruling extend far beyond teeth whitening and mall kiosks.

"If the FTC wins and this board is considered a private actor and you'll always need state supervision for such boards, then obviously a lot of regulatory boards that are made up of practitioners of that industry, doctors, lawyers, etc., will need to have active supervision," he says.

"There will need to be some state entity that regulates their activity and that is not made up of people from the industry itself. Does that necessarily mean that a non-neurologist is going to tell a neurologist how to perform a surgery? I highly doubt that. But it may well mean that a non-neurologist, a bureaucrat, or an agency is going to be ruling on a recommendation, let's say, of how many years you need to be in practice to be state certified."

"I don't think it is going to be so terrible because I presume they will take the input of the people in the industry, but that is the logical conclusion if the FTC wins."

If the North Carolina Dental Board prevails, Levine says we can expect that many states will chose to maintain the status quo. "As long as there is a clearly articulated state policy to displace competition, they will be able to do pretty much whatever they want, whether or not that is what the state intended or not, until the state legislature either changes that policy to displace competition or the governor disbands the board."

Dental Board v. FTC
In a lively hour-long discussion, the justices grilled dental board attorney Hashim M. Moopan and FTC attorney Malcolm L. Stewart, deputy solicitor general with the U.S. Department of Justice.

Justice Stephen Breyer told Moopan that "the object of the antitrust laws is to prevent private individuals who compete with each other in business from getting together and making agreements. That kind of interest seems present here."

Moopan had said that the "fundamental key" to the dental board's argument was "not just that they're designated as state officials, but they are charged with a state law duty to enforce state law. They are not acting pursuant to their unfettered private discretion to choose whatever choices maximize their personal profit."

"The fundamental question here is whether federal courts need to second guess these state administrative questions."

Justice Ruth Bader Ginsburg noted that antitrust exemptions fall under federal law, not state law. "The federal law sets the dimensions of what fits within the state action. It's not up to the state to create the state action exemption. It's federal law and what its metes and bounds are are also federal law.

Moopan agreed, but noted that the Supreme Court's previous rulings on the Sherman Antitrust Act "do not apply to the acts of states or their officials when implementing laws directed by the legislature. And absent extraordinary circumstances, I would think that Congress did not intend for federal courts to second-guess whether a public entity is really private."

Breyer asked Stewart if a ruling in favor of the FTC would create a scenario where bureaucrats could overrule brain surgeons on professional credentialing.  
"What the state says is, 'We would like this group of brain surgeons to decide who can practice brain surgery in this state. I don't want a group or bureaucrats deciding that," Breyer said.

Stewart acknowledged that "what is true of the Dental Board of North Carolina could also be true of the neurology or the more general medical board in another state."

That prompted Justice Antonin Scalia to interject: "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? I don't want that. I want a neurologist to decide it."

Misgivings on Display
Levine says the justices displayed misgivings with both sides of the argument.
"They have no desire to give carte blanche to state boards that are comprised of private actors and have them run amok without any active state supervision to fix prices," he says.

"At the same time, Justice Scalia specifically said that he does not want a non-neurologist deciding who can and cannot practice neurology. That analogy got picked up by a number of justices."

"My suspicion is they may split the baby here," Levine says. "It will be interesting to see how they come down as to what determines a private actor or not. They may very well try to articulate a line that whether you're a private actor will depend upon the type of activity you are asked to rule upon."

Levine says the justices may try to articulate a fine point "where you're a private actor if the board's activities essentially rule on what would otherwise be run-of-the-mill competitive activity."

"But if what the board is inherently supervising is something that is not the hallmark of competitive activity, but is really something that is relegated to the states in terms of safety and the like, then I can see the justices articulating a rule that they are not going to second-guess the state legislature's delegation of power to that board."

A ruling on the case is not expected until early 2015.