Judge won't throw out Teladoc's antitrust case, says state actor immunity doesn't apply

By Jonah Comstock
01:29 pm

The judge in the case of Teladoc versus the Texas Medical Board has denied the board’s motion to dismiss the suit, responding to each of three claims that the suit was invalid, originally made in September. In the process, Judge Robert Pitman settled the issue of “active supervision”, a highly salient point in the case.

In April, Teladoc sued the Texas Medical Board, alleging that a 2010 rule requiring doctors to have an in-person or face-to-face visit with a patient in order to prescribe medication, is in violation of antitrust laws and serves to restrict competition from telemedicine companies. 

The Board petitioned to have the case thrown out for three different reasons: that the four-year statute of limitations for antitrust cases had expired since the passing of the 2010 rule; that the state actor immunity they were claiming was an immunity to suit; and that certain claims Teladoc made with regards to the Commerce Clause, which asserted that the board’s rules illegally limited interstate commerce, were unfounded.

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On the question of the statute of limitations, the court ruled that “a continuous course” of alleged anticompetitive conduct from the Board had occurred since 2010 and was encompassed in the challenge, therefore the statue of limitations doesn’t apply. As to the third claim, about the Commerce Clause, the judge concluded that Teladoc’s claims were substantial enough to be adjudicated on their merits in the actual suit.

Pitman’s ruling on the second claim, about state actor immunity, was the most interesting part of the decision. Not only did he rule that the immunity was not an immunity to suit but was instead an active defense that would have to be proved in court, he also ruled that the board doesn't meet the criteria for immunity.

As we've reported previously, the suit leans heavily on a recent Supreme Court ruling, North Carolina Board of Dental (NCBD) Examiners vs Federal Trade Commission, which 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 (or “actively supervised”) by full-time agents of the state.

The Supreme Court made the question of active supervision out to be the main test of whether the state actor defense was applicable, so it’s notable that Pitman didn’t shy away from that question at this early stage in the case.

“[T]he Supreme Court has made abundantly clear that the ‘mere presence of some state involvement or monitoring does not suffice’,” he wrote. “Rather, active supervision ‘requires that state officials have and exercise power to review particular anticompetitive acts of private parties and disapprove those that fail to accord with state policy. Absent such a program of supervision, there is no realistic assurance that a private party’s anticompetitive conduct promotes state policy, rather than merely the party’s individual interests.’ … Accordingly, the Court finds the TMB has failed to show the active supervision required to merit dismissal on the basis of state action immunity.”

This initial victory bodes well for Teladoc, though it doesn’t seal the deal by any means. Pitman ruled that the Texas Medical Board isn’t immune to anti-trust action, but will still have to rule on whether the board has, in fact, engaged in anti-competitive activity.

“We are very pleased with the court’s decision and the growing wave of support of telehealth,” Teladoc CEO Jason Gorevic said in a statement. “This ruling is only the latest in a string of legal victories for us in Texas, in federal and state courts. As a champion for patient access to affordable, high quality healthcare, we view this decision as a major victory for consumers. We’re also optimistic that this decision will lead the TMB to reconsider its attempts to block patient access to telehealth.”


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