APMA News - May/June 2017 - 40

Recent Developments in Supreme Court
Antitrust Litigation and Implications for
State Podiatric Medical Boards

By Joseph W. Jacquot, Esq., Foley & Lardner LLP

tate boards of podiatry and other professional boards
are empowered to adopt regulations that govern the
practice of their respective professions for the health
and safety of patients. In many cases, these regulations may
result in a competitive disadvantage to other health-care providers. For example, a board may be engaging in anticompetitive behavior when its decisions restrict providers' scope of
practice or require supervision or collaboration. As many
practitioners serving on their state boards are aware, a 2015
decision by the US Supreme Court has clarified how federal
antitrust laws apply to the conduct of state boards.

The Supreme Court's NC Dental Board Decision
In North Carolina Board of Dental Examiners v. Federal Trade
Commission, the Supreme Court considered a case involving a
board of dentistry that issued 47 cease-and-desist letters to
non-dentist teeth whitening businesses (including kiosks in
shopping malls) demanding they halt their unlicensed practice of dentistry. The Federal Trade Commission (FTC) sued
the dentistry board, alleging the board's conduct violated
antitrust laws. Specifically, it alleged consumers would be
harmed by increased prices, less access to services, and diminished consumer choice. Although the board argued it acted in the interest of patient safety, evidence in the case
demonstrated that there were underlying competitive motivations by board dentists to protect their profession's
teeth-whiting revenues.
Federal antitrust laws are generally unenforceable against
state entities due to federalism principles under the US constitution. The idea is that states, acting in their sovereign
capacity, may freely regulate health and safety issues within
their states, even when those regulations favor one type of
provider over another or are otherwise anticompetitive.
While there is little doubt that a state's legislature and executive agencies (and their respective enactments and regulations) are cloaked with state action immunity, the NC Dental
Board decision threw cold water on the previously held view
that state professional boards are as well. The Supreme Court
determined, in effect, that members serving on state professional boards are presumed to be acting in their own self-interest rather than the interest of state government and, to
overcome that presumption and enjoy antitrust immunity,
boards must demonstrate they are "actively supervised" by
the state.
40 APMA News May/June 2017

What is Active Supervision?
The Supreme Court provided a bit of guidance on how
active supervision should work. An active supervisor must actually review each board decision, not just be available for
oversight; must review the substance of the decision, not just
the board's procedures; and must have power to veto or modify a board's decision to align it with state policy. The bottom
line is that active supervision cannot be a rubber stamp-the
reviewer must be ready and able to overrule a board.
There are some areas where active supervision would likely not be triggered. For example, if a podiatric board's decision is clearly not anticompetitive (e.g., an individual disciplinary case does not have a market impact), there is no need
for supervision. Likewise, if the number of actively practicing
podiatrists constitutes less than a majority of the board, there
is no apparent self-interest and, therefore, no active supervision requirement. And if a board of podiatry acts in accord
with express statutory authority without much discretion
(e.g., enforcement of a traditional licensing scheme), the
state's historic immunity from antitrust would likely shield
that activity.
The FTC has issued guidelines directed at states regarding
how to implement the NC Dental Board decision. While these
guidelines are not binding, the FTC is foretelling how it will
pursue future enforcement where it finds state boards acting
unsupervised and anticompetitively. The guidelines strongly
suggest best practices for active supervision, such as creating
an evidentiary record and a written report. Yet few states have
required these steps. Instead, the majority of states and their
boards remain exposed to antitrust enforcement anytime regulations may raise consumer costs or impede access to alternative services.

Who is an Active Supervisor?
As most state legislation to implement NC Dental Board
has so far failed, the following array of examples demonstrates
the choices-and the confusion-regarding exactly how to follow the Supreme Court's decision. While Florida's legislature
has taken no action to date, the Florida attorney general issued
a letter to the legislature advising on several options, such as
reducing the number of active market participants on each
board or establishing a legislative review process for all proposed board rules. While the California legislature also has

Table of Contents for the Digital Edition of APMA News - May/June 2017