The Antitrust Attorney Blog
By Jarod Bona and Aaron Gott
We filed an amicus curiae brief with the U.S. Supreme Court on behalf of We All Help Patients, Inc. in North Carolina State Board of Dental Examiners v. FTC, a federal antitrust case challenging anticompetitive conduct by professional-licensing boards.
Let us tell you a little bit about this interesting case.
The Antitrust Case
The North Carolina Board of Dental Examiners is composed of six licensed dentists, one licensed dental hygienist, and one “public member.” Dentists make a lot of money by offering teeth-whitening services. So when non-dentists started providing teeth-whitening services at a far lower cost, dentists started complaining to the Board about the lower-priced competitors.
Naturally, a Board made up of self-interested private parties had an incentive to do something about it. They began sending cease-and-desist letters to non-dentist teeth whiteners and even went so far as to ask shopping malls to not lease kiosks to teeth whiteners. It wasn’t clear, of course, that North Carolina law limited teeth-whitening services to dentists.
The Board’s actions were, in fact, a conspiracy to restrain trade. The members were competitors that acted in agreement to exclude other competitors. The conspiracy question was not at issue with the US Supreme Court.
The Federal Trade Commission, which has long advocated for “free and unfettered competition as the rule of trade” to protect consumers and economic liberty, issued an administrative complaint against the State Board and ultimately held that the Board engaged in anticompetitive conduct and the state-action immunity doctrine did not apply. The case made its way up through the Fourth Circuit—which agreed with the FTC—and finally to the U.S. Supreme Court.
As this blog has discussed several times, the courts have interpreted the federal antitrust laws as providing a limited exemption from the antitrust laws for certain state and local government conduct. This is called state-action immunity. It is, however, both limited and disfavored.
In a case called California Retail Liquor Dealers Ass’n v. Midcal Aluminum , Inc., the Supreme Court developed two requirements that defendants must show invoke state-action immunity: (1) a clearly articulated state policy authorizing the competitive act, and (2) that the conduct was actively supervised by the state itself.
The question before the Court is whether the active-supervision element applies to the Board—a state agency under North Carolina law, but which is dominated by private interests. The Supreme Court has often said that a state may not immunize anticompetitive conduct from the federal antitrust laws merely by authorizing the conduct of those who violate it. If that were the case, states could easily undermine the “national policy in favor of competition.”
The FTC argues that the active-supervision requirement should apply because the Board is composed of private interests in the same market and thus is likely to act to further its own interests, not just those of the state.
Our Amicus Brief
We filed an amicus brief on behalf of We All Help Patients, Inc., a nonprofit coalition of healthcare providers, consumers, and concerned members of the public who advocate against restrictions on the practice of complementary and alternative medicine (CAM).
We All Help Patients is particularly interested in this case because the medical establishment has a long history of attempting to suppress competition from CAM practitioners, especially chiropractors. Over the years, they have successfully supported the creation of professional-licensing boards run by doctors in private practice and leveraged that power to restrict other occupations from invading their “turf” through scope-of-practice rules, disciplinary proceedings, and threats (much like the cease-and-desist letters issued by the N.C. Dental Board).
We argue in our brief that the active-state-supervision requirement applies to a professional-licensing board comprising self-interested members of the regulated profession based on the “independent centers of decisionmaking” analysis from American Needle, Inc. v. National Football League.
In applying the active-supervision requirement, we argue that mandatory pre-injury approval by the executive or legislature of the state is necessary for the anticompetitive conduct to fairly be attributed to the state as sovereign. We also explain that judicial review of professional-licensing board actions is insufficient to constitute active supervision because this review is limited and deferential.
We conclude by stressing that the Court’s decision upholding the active-supervision requirement is vital to our nation’s global standing in healthcare because state medical boards dominated by medical doctors have reduced competition through scope-of-practice restrictions on complementary-and-alternative-medicine practitioners to the detriment of the public health.
Finally, we’d like to thank Rebecca Furdek, a third-year law student at the University of Minnesota Law School, for her skillful assistance in preparing the brief.
We have substantial experience in writing and filing amicus curiae briefs in state and federal courts. For example, Jarod Bona filed a US Supreme Court amicus brief on behalf of the National Federation of Independent Business (NFIB) a couple years ago in FTC v. Phoebe Putney Health System, Inc. (also involving antitrust and state-action immunity). If you have a company or organization and want your voice heard by an appellate court in a significant case—usually a State Supreme Court or the US Supreme Court—please contact us.