The U.S. Supreme Court has taken up a case that could affect any state body set up in such a way that members of a profession can limit competition in their profession.
The case, North Carolina State Board of Dental Examiners vs. FTC (Case Number 13-534), involves a dispute between the Federal Trade Commission (FTC) and a state body in North Carolina that oversees dentists. The state lets dentists choose the board members, and it requires that a majority of the members of the dental board be dentists in private practice.
Normally, state officials have immunity from federal antitrust actions. The FTC is arguing that antitrust immunity does not apply to the North Carolina dental board, because the state has set the board up in such a way that dentists have the authority to act in their own evident self-interest and limit competition.
The North Carolina case relates directly to dentists, but, in theory, the Supreme Court’s ruling on the case could also affect any boards that regulate insurance agents, real estate agents, cosmetologists or any other groups of state-regulated professionals.
In the health care sector, insurers and many economists have argued that health care providers in some states have set up regulatory systems that limit competition and increase fees. Defenders of those systems contend that, because the health care market is do different from other markets, limiting the number of providers might increase the quality of care and hold down the cost.
The drafters of the Patient Protection and Affordable Care Act (PPACA) tried to increase competition in the health care market by creating the public health insurance system and the new nonprofit, member-owned CO-OP health plans, but they also encouraged consortiums of providers to team up through “accountable care organizations” (ACOs). Critics of the ACOs argue that they may give providers a new tool to join together to increase health care prices.
The Supreme Court heard oral arguments on the North Carolina dental board case earlier this week.
Hashim Mooppan, the lawyer who represented the North Carolina dental board, argues that the federal government is supposed to defer to a state’s sovereign choices concerning how the state structures regulatory agencies, and that the regulatory conduct of public officials who are also market participants cannot be equated with the conduct of private business people.
Moreover, adopting the FTC’s position would force North Carolina to pay for full-time workers to oversee dentists, rather than relying on more affordable part-time public officials, Mooppan said.
Malcolm Stewart, the deputy solicitor general, said the FTC believes North Carolina has set the dental board up in a way that the dentists on the board are clearly there in their capacity as dentists.
Justice Stephen Breyer questioned how much authority a state would want to give non-neurologists over regulation of neurologists. If state says, “‘We would like this group of brain surgeons to decide who can practice brain surgery in this state,’ I don’t want a group of bureaucrats deciding that,” he said. “I would like brain surgeons to decide that.”
Breyer said he doesn’t to see want boards of professionals limiting competition in their professions, but that he also doesn’t want to see medical boards letting unqualified people practice medicine to avoid antitrust suits.
Justice Antonin Scalia also expressed skepticism about the idea of letting the FTC extend a dental board antitrust precedent to fields such as neurology. He questioned whether a board dominated by non-neurologists should make decisions about whether neurologists should be allowed to practice or whether certain rules should be adopted.
“I don’t want that,” Scalia said. “I want a neurologist to decide it.”
See also: FTC sees health mergers as threat.