Earlier this year, the United States Supreme Court determined that the North Carolina State Board of Dental Examiners (Board) unreasonably restrained trade in violation of antitrust law as a result of its attempt to restrict non-licensed individuals from providing teeth whitening services. A controlling number of the Board’s members were practicing dentists, and thus considered active market participants in the occupation regulated by the Board. The Court noted that that Board’s actions in serving cease and desist letters to non-licensed professionals was an anti-competitive and unfair method of controlling competition with respect to whitening services, considering the market participant status of its members. For this reason, Federal antitrust concerns arose and the Board was not protected by sovereign immunity, a benefit typically afforded to government agencies, as its actions were not actively supervised by the state.
Prior to the Court’s decision, professional licensing boards received sovereign immunity without active supervision, as the agencies were formed by the state and their actions were considered the state’s own. With respect to the North Carolina Board, the Court found that, “If a State wants to rely on active market participants as regulators, it must provide active supervision.” The Court’s determination that active supervision is required in these instances may have substantial implications for state licensing boards that are comprised of active licensed professionals.
Fundamentally, the decision by the Board to limit the ability of unlicensed individuals to provide dental services was an exercise in controlling the corporate practice of medicine (CPOM). The CPOM, as barred in a number of states, including New Jersey, prevents a business from practicing medicine or employing a licensed professional to provide patient care. The prohibition on the CPOM is based in public policy concerns, as corporate control of a practitioner may impede on the physician’s independent medical judgment. However, in light of the Supreme Court’s decision, state professional boards may be at risk for scrutiny with respect to their actions in controlling the behavior of unlicensed individuals, which may now be viewed as anticompetitive in nature.
While we have yet to see how zealously this decision will be relied upon with respect to state boards’ regulation of medicine, as opposed to dentistry, the decision presents the potential for lawsuits against government agencies with respect to matters that ultimately concern state governance and patient safety. If you have questions, contact Frier Levitt to speak with one of our attorneys.
