North Carolina State Board of Dental Examiners v. Federal Trade Commission
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FTC Encourages VA to Adopt Proposed Rule Preempting State Laws to Allow Advanced Practice Registered Nurses to Provide Services Without Physician Oversight

On July 25, 2016, the Federal Trade Commission (FTC) submitted comments to the Department of Veterans’ Affairs (VA) supporting a proposed rule only affecting VA facilities that would authorize Advanced Practice Registered Nurses (APRNs) to provide primary health care services without the mandatory supervision of physicians, regardless of state or local laws, with limited exceptions. Currently, APRNs in the employ of the VA are subject to VA requirements as well as various regulations on a state-by-state basis, with physician supervision required in over half of the states. Under Proposed Rule RIN 2900-AP44, APRNs that meet VA standards would have the authority to provide a described list of services without such physician supervision.

While the FTC acknowledged the important role of federal and state legislators in determining the “best balance of policy priorities,” the FTC has expressed skepticism of state laws requiring physician supervision. They have noted that such requirements “may raise competition concerns because they effectively give one group of health care professionals the ability to restrict access to the market by another competing group of health care professionals, thereby denying health care consumers the benefits of greater competition.” In fact, the FTC argued that physician supervision requirements may increase the cost of services that APRNs could provide, and by relaxing such requirements, consumers “may gain access to services that would otherwise be unavailable.” This increased access could also address shortages in access to primary and specialty care. As the FTC noted, the US has current and projected health care workforce shortages, particularly in primary care physicians, and the VA has emphasized the need to provide care to veterans in rural areas who have limited access to specialty services, some of which APRNs could provide.

Additionally, the FTC commented that the proposed rule could yield information about models of health care delivery. Under the current system, the VA’s use of APRNs is limited by state regulation. By preempting the state requirements, the FTC argued that the VA would be free to “innovate and experiment with models of team-based care.”

Interestingly, the proposed rule only applies within the scope of VA employment, which falls outside of “competition in the private sector” for which the FTC acknowledged it is typically concerned. But in this instance, the FTC concluded that the VA’s actions could positively impact competition in the health care service provider markets by encouraging entry that could “broaden the availability of health care services” outside of the VA’s system.

This is another example of antitrust regulators’ interest in occupational licensing and competition concerns generally. Just as this letter encourages competition between physicians and nurses for certain health care services, last month, US Department of Justice (DOJ) and FTC jointly submitted a letter encouraging competition between lawyers and non-lawyers in the provision of legal services in North Carolina. We previously analyzed that letter, and other important developments in occupational licensing that have occurred since February 2015, when the Supreme Court affirmed an FTC decision not to apply state action antitrust immunity for [...]

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DOJ and FTC Encourages Competition Between Lawyers and Non-Lawyers in the Provision of Legal Services in Comments on North Carolina “LegalZoom” Bill

On June 10, 2016, the US Department of Justice (DOJ) and the Federal Trade Commission (FTC) jointly submitted a letter recommending that the North Carolina General Assembly limit the definition of the “practice of law” only to activities for which “specialized legal knowledge and training” is demonstrably necessary to protect consumers.  The regulators argue that if such a definition were applied to North Carolina House Bill 436, presently under consideration, it would promote competition between lawyers and non-lawyers in the provision of legal-related services. (more…)

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LegalZoom and the North Carolina Bar Settle Antitrust Dispute

In the latest development from a number of antitrust lawsuits filed against state regulatory boards, Inc. signed a consent agreement with the North Carolina State Bar (State Bar) to settle a $10.5 million lawsuit.  LegalZoom had alleged multiple violations of federal antitrust laws, including a Section 1 claim that the State Bar had collectively refused to deal with the online legal services provider by refusing to register its prepaid legal services.

Under North Carolina law, the State Bar is tasked with registering prepaid legal services plans, which provide plan-holders access to licensed attorneys to provide legal advice and services.  A plan that is not registered may not be sold in North Carolina, nor can licensed attorneys in North Carolina provide services under a plan that is not registered.  LegalZoom attempted to register  its legal services plans with the State Bar, but the State Bar refused, claiming that LegalZoom’s plans did not meet the N.C. State Bar requirements for registration.  LegalZoom then filed a lawsuit, and the parties ultimately reached the settlement at present, which will allow LegalZoom to offer its plans in North Carolina.

This case—and others filed against medical boards, veterinary boards, or state bar associations, to name a few examples—follow from the U.S. Supreme Court’s decision earlier this year in North Carolina State Board of Dental Examiners v. Federal Trade Commission, 574 U.S.___ (Feb. 25, 2015).  Prior to that decision, state regulatory boards often claimed state-action immunity from antitrust liability.  Under the state-action doctrine, the conduct of states acting in their sovereign capacity is shielded from federal antitrust scrutiny.  In North Carolina State Board of Dental Examiners, the Supreme Court reasoned that conduct by state regulatory boards that are controlled by active participants in the profession the board regulates does not constitute exercise of the state’s sovereign power, unless the board is subject to active supervision by the state.  Therefore, such state agencies do not receive state-action immunity and are subject to the federal antitrust laws. Here, LegalZoom used the Supreme Court’s decision in North Carolina State Board of Dental Examiners to argue that the State Bar was subject to federal antitrust laws, claiming the board was controlled by active market participants and was not actively supervised by the state.  While the parties’ settlement meant that this specific question was never resolved, the lawsuit highlights a trend in antitrust claims filed against state regulatory boards.

We previously analyzed North Carolina State Board of Dental Examiners shortly after the decision came down. As this blog has previously pointed out, “many states regulate professions and occupations through boards controlled by experienced, active practitioners in the fields they regulate.  Any state or quasi-state entity composed, in whole or in part, of market participants should take careful note of this case and examine the entity’s structure, composition and operations to assess whether its market participants have “control.”  If they do, then the entities and their states must consider changes, either to eliminate the market participants’ controlling role [...]

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Supreme Court: State Agencies Controlled by Active Market Participants Must Have Active State Supervision to Qualify for Antitrust Immunity

The Supreme Court of the United States’ recent ruling in North Carolina State Board of Dental Examiners v. Federal Trade Commission held that in order for a state agency controlled by active market participants to receive federal antitrust immunity under the state-action doctrine, that agency must be actively supervised by the state. State licensing boards and other agencies that include market participants should take careful note of the decision’s potentially wide-reaching effects.

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FTC Wins NC Dental State Action Case

by Daniel Powers

On May 31, the Federal Trade Commission (FTC) recorded yet another victory in its continuing efforts to limit the scope and application of antitrust immunity under the state action doctrine.  The Fourth Circuit ruled that the North Carolina State Board of Dental Examiners’ efforts to block non-dentists from providing teeth-whitening services was not entitled to antitrust immunity because the Board’s activities were not actively supervised by the state.  North Carolina State Board of Dental Examiners v. Federal Trade Commission, Case No. 12-1172 (4th Cir. May 31, 2013).

The case focused on the activities of the North Carolina state agency, which is composed of several practicing dentists, a dental hygienist and a consumer representative.  The Board licenses dentists in the state and is otherwise empowered to take disciplinary measures against licensees.  Beginning in approximately 2003, in response to complaints from dentists practicing in the state, the Board opened numerous investigations into teeth-whitening services provided by non-dentists.  As a result of these investigations, the Board issued dozens of cease-and-desist letters to such service providers and sought to restrict the market to licensed dentists by other means.

The Board’s activity attracted the attention of the FTC, which issued an administrative complaint in 2010 charging that the Board violated the FTC Act by acting to exclude non-dentist teeth whiteners from the market in North Carolina.  A trial on the merits before an administrative law judge found the Board had violated the Act.  On appeal, the FTC affirmed and entered a final order enjoining the Board from, among other things, continuing to unilaterally issue extra-judicial orders to teeth-whitening services in North Carolina.  The Fourth Circuit’s decision came in response to the Board’s petition for review of the FTC’s order.

The Board maintained that it was a state entity created to regulate the practice of dentistry, which encompassed the teeth-whitening services.  Under the state action doctrine, private parties may claim immunity from the antitrust laws if they act according to a “clearly articulated and affirmatively expresses state policy,” and their behavior is “actively supervised by the State itself.”  California Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc. (445 U.S. 97, 105 (1980).  Municipalities and sub-state entities benefit from a less restrictive test.  Such entities must act pursuant to a “state policy to displace competition with regulation or monopoly public service.”  FTC v. Phoebe Putney Health System, Inc., 133 S. Ct. 1003, 1010 (2013).  These entities are not required to demonstrate the “active state supervision” required under the two-prong Midcal test because with such entities there is little danger that their activities involve a private anti-competitive activities. Town of Hallie v. City of Eau Claire, 471 U.S. 34, 47 (1985).

Relying on its status as a state entity, the Board maintained that it was not subject to the “active supervision” prong required under Midcal.  The FTC countered that entities like the Board, regulatory bodies made up of market participants, were subject to the stricter Midcal test.  The FTC focused on the need to [...]

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