Are US Regulatory Boards Unfairly Limiting Competitors? Telehealth Implications of Recent Supreme Court Ruling

Telehealth Implications of Recent Supreme Court RulingA United States Supreme Court decision in March challenged the commonly-held belief that state regulatory boards hold ultimate power to exert influence over an industry’s competitors. Does this case and others like it now open the door to telehealth innovation?

MobiHealthNews reported the recent Supreme Court ruling in North Carolina Board of Dental Examiners v. Federal Trade Commission, which examined the actions of North Carolina’s Board of Dental Examiners, which had been sending cease-and-desist letters to non-dentists who offer teeth whitening services in their state. That board consists of members who are private practitioners. The Federal Trade Commission (FTC) heard the case and decided that the Board’s actions violated the Sherman anti-trust laws, which prohibit anti-competitive practices such as price-fixing and limits on who can enter the industry. The dental board then argued that it was protected by the “state actor defense.” The Supreme Court concluded that medical boards comprised of private professionals are not exempt from federal anti-trust regulations unless they are directly overseen by full-time agents of the state in a 6-3 ruling in February, 2015.

This ruling has far-reaching implications for the ability of state medical or other professional boards to prevent telehealth companies from offering their services in various states. While state boards have been seen as the gatekeepers whose job it is to keep out the “bad apples,” many boards have also stalled the adoption of technological solutions that could help millions of Americans who otherwise cannot get the professional service they need. As we at TMHI have discussed in several of our monthly webinars, state boards have been struggling with antiquated, contradictory laws that be diametrically opposed from state to state.

States are All Over the Map

While groups such as the Association of State and Provincial Psychology Boards (ASPPB) and the Federation of State Medical Boards (FSMB) have made notable headway with active groups model acts for their Boards to consider, others have done little of any note. In what some groups consider reactionary actions to stop the proliferation of technology, some boards have even written more restrictive policies. On the other hand, some states have taken action with laws specifically addressing technology and or telehealth. California is a leader in this area, with statements not only related to various disciplines, but also with statements for consumers. , some states have issued policy statements that later become adopted as state law without undergoing comment periods or other common practices before codifying laws. Some states also seem to be focused on issues other than consumer protection, such as turf wars that may go back for decades.

Implications for Telehealth

While the details of the North Carolina dental board have little to do with technology or telehealth, the board is made up of practicing dentists. Herein lies the problem. As the MobiHealthNews reported the following statements by Stuart Gerson, a member of Epstein Becker Green and former acting Attorney General of the United States:

A long time ago, the courts crafted the so-called state actor defense, which tolerates what otherwise would be anticompetitive activity in the name of some dedicated state police power interest — generally health, welfare, safety of the population… It’s easy to declare that if you’re a board. But the nut of the NCDB case is, in order to avail themselves of the state action defense, the board not only has to be duly constituted, but the activity that it is involved in needs to be directed by the state. There has to be what’s called ‘active supervision’. And that’s what the Supreme Court made clear.

The precedent set by Supreme Court in the North Carolina teeth whitening case supports the position taken by many new telehealth companies who claim that state boards are imposing unwarranted requirements. The MobiHealthNews article continued:

I don’t know of a specific case [of litigation]. We have clients in our firm in that space, none of them has felt the need, at least yet, to commit to litigation. But I think it’s a plausible threat, depending on the state… I think where a state medical board is doing nothing more than excluding a particular type of delivery, there is a vulnerability under the North Carolina dental case .… That’s not to say that a medical board can’t pass reasonable standards for care, practice standards if you will. But they would have to apply to everyone. They couldn’t be applied on a discriminatory basis unless there was some reason for it. The idea of eliminating a class of competition just for the case of doing it would not be OK. That’s the lesson of the North Carolina case.

In February, we reported that one such company actually obtained a restraining order against the state of Texas: Teladoc Wins Restraining Order Against Texas Medical Board. 

American Telemedicine Association

As the leading organization advancing telehealth in the United States, the American Telemedicine Association was quick to take a supportive stance toward the Supreme Court decision. The ATA’s CEO, Jonathan Linkous, agreed with Gerson:

That the case law doesn’t gut medical boards’ power completely, but it does make it hard for them to get away with regulating away potential competition. As a result of this, we’re not going to let anybody go in to do brain surgery, but when you start restraining certain people from coming in and providing services, when there doesn’t seem to be any good reason except that you’re protecting your profession, that’s at the heart of this. It didn’t have a direct impact on telemedicine, but the implications can be drawn that questions will be raised about any effort by a medical board to restrain trade only to physicians or only [to certain] types of services.

Implications for Behavioral Health

Many of the services we’ve reviewed in the TMHI blog have been chipping away at the status quo for almost two decades. Where is line? The ultimate answer has to be considered from the perspective of the consumer to answer this question, and this question primarily: Which treatment strategies are both safe and effective?

We probably all can agree that something needs to be done to bring relief to the millions of Americans (and billions of people worldwide) who have no hope of er seeing the inside of a clinician’s office. Many new solutions are being designed through technology, but many mistakes are also being made. 

Regulatory Boards have the difficult job of deciding who is responsible enough to warrant the public’s trust. As we’ve been reporting in our last several newsletters, many states are passing legislation that expands telehealth opportunity. The MobiHealthNews article cited above concluded with a comment that, “…both Linkous and Gerson hold that boards run by entrenched doctors pose at least a potential threat to innovators.” It cited this comment from Gerson:

Changes in the status quo threaten people who are wedded to the status quo,” Gerson said. “So if you have a board in a particular state made up of certain kinds of old school physicians who are unwilling to accept the possibility that there are alternative methods of delivery that are as good or better than what they are familiar with, then there’s gonna be a problem.

What’s your opinion on this issue of the current status of regulatory boards? Please comment below.

(BTW, join me at ATA 2015 for more in-depth, person-to-person discussions of this nature. I’ll be there a as speaker for a total of two panels and participant from May 2-5, 2015. ATA Conference details are here.)

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