Supreme Court Takes Bite out of Dental Board Regulations
The U.S. Supreme Court takes the Bite out of the Powers of the North Carolina Board of Dental examiners to regulate Teeth Whitening and shines a light on this type of Boards limitations.
The decision in North Carolina Board of Dental Examiners v. Federal Trade Commission dealt a setback to an increasingly common form of regulation. In this case, the dental board tried to exclude non-dentists from the market for teeth-whitening services after dentists complained about the low prices non-dentists charged for teeth whitening.
It sent threatening letters to non-dentists who offered teeth-whitening services and even encouraged mall operators to kick out kiosks used for teeth whitening. We have all seen at the mall the massage therapists, finger nail salons and teeth whitening kiosks. The board, who issued regulations prohibiting teeth whitening by non-dentists, argued that it was immune or protected from antitrust laws since it was delegated the authority by the state legislature. Dentists wanted to regulate teeth whitening so it could keep the highly profitable treatment in its practice areas.
State action antitrust immunity
Since 1943, certain forms of state action (regulators) have been immune or protected from the antitrust laws. Antitrust laws are meant to encourage and promote competition in business for the benefit of the consumer. Accordingly, state legislatures may pass laws, knowingly or even unwittingly, which have anticompetitive effects. In this case the Board attempted to regulated this practice and protect it practice and profits from non-licensed competitors. Several important Supreme Court cases since then have addressed the doctrine of state action immunity and helped to define its principals, particularly as it applies to actions of board that are not part of the state legislatures. The Attorneys At Wallace & Graham P.A. in Salisbury NC at 1-800-849-5291 would be happy to discuss this opinion with you should you have any questions regarding its application to your situations.
The Dental Board
In North Carolina, the legislature delegated regulation of dentists to a dental board. By state law, practicing dentists must fill a majority of the seats on the dental board.
This type of “self-regulation” is common among state licensing boards and has a natural tendency to protect dentist interests and profits from being infringed upon by non-dental businesses.’ Members of this type of board made up primarily of active dentists frequently try to keep insiders in, keep outsiders out, and prop up the actions and profits of the Dental profession. A broad range of modern professions fall under professional licensing boards, including not just doctors, lawyers, and dentists, but also interior designers, real estate agents, floral designers, and hair braiders.
The dental board’s actions were not supervised by any state officials from North Carolina other than the members of the dental board itself. On these facts, the FTC took action against the dental board.
No immunity for the dental board controlled by dentists
The Supreme Court, on February 25, 2015 affirmed the lower court and ruled that the dental board is not immune from the antitrust laws. The Court’s opinion explained its findings and ruled that even though the dental board is an agency of the state, its actions must still be supervised by the state in order to enjoy antitrust immunity. Words alone do not make a board immune from lawsuit or challenges to its authority. The “formal designation given by the States” does not itself create immunity.
In North Carolina the board is controlled by market participants (active dentists who want to protect their practices) in the same occupation that the board regulates. The Court stated that “when a State empowers a group of active market participants to decide who can participate in its market, and on what terms, the need for supervision is manifest.” This will keep self-dealing and protective action to a minimum.
Which agencies get antitrust immunity?
The requirement of state supervision announced in today’s opinion applies to agencies “controlled by active market participants.” Actions taken by boards with no involvement from market participants may not have to satisfy that requirement. The opinion also identifies some factors concerning adequate state supervision. For example, the state supervisor must actually review the substance of the agency’s actions and have the power to overrule or modify the actions.
The Attorneys at Wallace & Graham P.A. in Salisbury NC at 1-800-849-5291 would be happy to discuss this opinion with you should you have any questions regarding its application to your situations.
The dissent disagreed and would have ruled that the Dental Board is an agency that is a state actor and thus immune or protected from Challenge
Justice Samuel Alito, joined by Justices Antonin Scalia and Clarence Thomas, dissented or disagreed with the majority. They noted that the practice of self-regulation by dentists in particular predates the Sherman Act in the 1800s. There is nothing new or novel about it. Justice Alito then explains that the agency should get immunity as a state actor because North Carolina made the active decision and designated the dental board as a state agency. He reasons courts should not wade into determining whether a state agency is sufficiently independent to get immunity without being actively supervised by another state official or entity.
Please feel free to call the Attorneys at Wallace & Graham P.A. for any questions about this opinion or for any other legal question you may have. If you want more information about the NC Dental Board action you can read the entire opinion at WWW.SUPREMECOURT.GOV The opinion is cited as NORTH CAROLINA STATE BOARD OF DENTAL EXAMINERS v. FEDERAL TRADE COMMISSION CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 13–534. Argued October 14, 2014—Decided February 25, 2015
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