A recent Supreme Court decision could have a profound impact on the ability of state medical boards to prevent telemedicine companies from offering their services, according to some experts familiar with the case.
North Carolina Board of Dental (NCBD) Examiners vs Federal Trade Commission was decided by a 6-3 vote last month. The case ruled that medical boards comprised of private professionals (like practicing doctors and dentists) are not immune to federal anti-trust laws unless they're directly overseen by full-time agents of the state.
The details of the case have nothing to do with digital health, and little to do with any kind of new technology. The dental board in question -- which was made up of a majority of practicing dentists -- had been sending cease and desist letters to non-dentists offering teeth whitening services. The FTC charged that this was a violation of the Sherman anti-trust laws, which prohibit anti-competitive practices like price-fixing or guilds regulating who can enter their industry. But the dental board held that something called "state actor defense" protected them.
"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," Stuart Gerson, a member of Epstein Becker Green and former acting Attorney General of the United States, told MobiHealthNews in an interview. "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."
So what does all this have to do with digital health? Well, in many states the biggest barriers to interstate telemedicine are the state licensing boards, which are generally made up of practicing doctors who, many argue, feel threatened by telemedicine companies. This precedent set by the teeth whitening case gives new legal weight to telemedicine companies who feel that state medical boards put an unfair burden on them.
"What I know is that state medical boards are increasingly interested in telemedicine, and there is at least a threat of undue regulation," Gerson said. "I don’t know of a specific case. 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."
Having a strong legal precedent could make telemedicine companies more likely to sue, or it could make state boards more likely to settle. That said, the case wouldn't be a slam dunk. If a case is brought, it could come down to whether the regulations from the state medical board had any purpose other than to restrict a novel form of competition.
"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," Gerson said. "... 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."
Jonathan Linkous, the CEO of the American Telemedicine Association, echoed Gerson's assessment: 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," he said. "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."
As we reported last week, an increasing number of states are passing legislation that expands telemedicine, and some of those include provisions that specifically require licensing boards to amend their rules. And last summer, the Federation of State Medical Boards proposed an interstate compact that would make it easier for doctors to be licensed in multiple states -- although it would still require them to pay fees for each license. So it's possible that telemedicine companies and state medical boards will resolve their differences without ever going to court. But both Linkous and Gerson hold that boards run by entrenched doctors pose at least a potential threat to innovators.
"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."