July 01, 2012

 

 AVMA files brief in trade restriction case

​State, national groups oppose FTC ruling

 

 
Posted on June 20, 2012
 
 
The AVMA is among eight medical associations contending in a recently filed brief that state professional boards should not be subject to Federal Trade Commission scrutiny of possible anti-competitive practices.

The North Carolina State Board of Dental Examiners is appealing an FTC ruling that the board acted beyond its statutory authority and harmed competition when it attempted to restrict who could perform teeth whitening services. The eight medical organizations filed the brief in May supporting the North Carolina board, which is arguing its case before the United States Court of Appeals for the Fourth Circuit, and opposing the FTC ruling.

The AVMA, American Dental Association, American Association of Dental Boards, American Association of Orthodontists, American Osteopathic Association, American Academy of Pediatric Dentistry, American Academy of Periodontology, and Federation of State Medical Boards jointly filed the brief.

Another brief filed by the American Medical Association and medical associations of the four states in the Fourth Circuit—North Carolina, South Carolina, Virginia, and West Virginia—indicates that affirming the FTC ruling “would greatly impede state regulation of the practice of medicine, with a devastating impact on public health, at least within the Fourth Circuit and perhaps nationally.”

Associations of professional boards for pharmacists, social workers, chiro¬practors, massage therapists, and funeral directors also are among those that have filed briefs in favor of the North Carolina dental board.
 

FTC alleges actions “anti-competitive”

FTC documents indicate the North Carolina dental board had, since 2006, sent 47 cease-and-desist letters to 29 lay individuals who were offering whitening services or selling teeth whitening equipment without dentist involvement. Some of the letters indicated selling whitening products or services without a dentist’s involvement was a misdemeanor. The agency also found that the board discouraged property managers from renting to whitening service providers and arranged for the North Carolina Board of Cosmetic Art Examiners to publish on its website a notice that teeth whitening is dentistry and that unlicensed practice is a misdemeanor.

In June 2010, the FTC filed an administrative complaint that accused the board of acting outside its authority by discouraging nondentists from opening teeth whitening businesses and by sending cease-and-desist letters that weren’t authorized or supervised by the state. The agency also released a statement that month accusing the board of acting in an “anti-competitive conspiracy” that violated federal law by excluding nondentists from the marketplace.

An administrative law judge delivered an initial ruling in favor of the FTC in July 2011, and, in December 2011, the FTC issued a similar final ruling that prohibited the board from sending cease-and-desist orders or otherwise telling nondentists that they aren’t allowed to provide teeth whitening products or services. The ruling states that the board can still take action against nondentist teeth whiteners through state courts, where the board could argue that particular whitening services must be provided by dentists.

The FTC also ruled that the board must contact every person who had received a previous notice or cease-and-desist letter and provide an explanation that the prior letter was only the board’s opinion and not a legal determination, the latter of which could only come from a court.

The order was stayed in February 2012 pending appeal.
 

Agency exemption is core of arguments

The dental board has argued in court filings that Congress never authorized the Federal Trade Commission to use its antitrust enforcement power to pre-empt state statutes or regulate state restrictions on matters beyond prices and commercial speech. However, the FTC had ruled that, because the board is controlled by practicing dentists, its conduct would have needed more active supervision by the state for it to have claimed an exemption from antitrust laws.

In a February 2011 filing before a U.S. district court, the board contended its actions have been subject to supervision and review by courts and the state’s Joint Legislative Administrative Procedure Oversight Committee. The board had hoped the U.S. district court would rule that the board’s actions were outside the FTC’s jurisdiction and end the then-ongoing administrative proceedings, but the district court judge dismissed the case in May 2011.
The board filed its appeal to the Fourth Circuit court in late June 2011, a few weeks before the initial ruling in favor of the FTC.

The brief filed for the AVMA contends that the FTC lacks jurisdiction over the board because it is a state agency rather than a person, partnership, or corporation that would be subject to FTC authority.

The medical associations further argued that an appellate court, rather than the FTC, would need to decide whether the dental board has authority to send cease-and-desist letters. They also argued that courts have held that active state supervision isn’t required for state agencies to claim antitrust immunity.

“In essence it would amount to a requirement that the state supervise itself,” the brief states.