Texas licensing agencies review impact of Supreme Court ruling in North Carolina regulatory case

Several Texas licensing and regulatory agencies are reviewing the potential effect on their agencies of a U.S. Supreme Court ruling in a case involving a North Carolina dental board’s effort to stop non-dentists from engaging in teeth whitening.

In February, the Supreme Court held that a state licensing board with a controlling number of active market participants in the occupation the board regulates may invoke state-action antitrust immunity only if the board is actively supervised by the state. In a 6-3 ruling in North Carolina State Board of Dental Examiners v. Federal Trade Commission, the Court said the North Carolina board did not receive active state supervision of its effort to stop non-dentists from engaging in teeth whitening. The board, made up mostly of actively practicing dentists, had argued that it was a state agency and should be protected from litigation under a 1943 Supreme Court case, Parker v. Brown, which granted states and state actors immunity from federal antitrust liability.

Texas licensing agencies respond. At least six Texas licensing agencies undergoing Sunset review, including the Texas State Board of Dental Examiners and the Texas Medical Board, have discussed the Supreme Court ruling in their self-evaluation reports.

Dental board. The Texas dental board said in its report to the Sunset Advisory Commission that 10 of its 15 members are active industry participants as licensed dentists or registered dental hygienists. It noted that the North Carolina board based its cease-and-desist actions on a section of the North Carolina Dental Practice Act that says a person practices dentistry who removes stains, accretions, or deposits from human teeth, which the Texas board said is similar to language in Texas Occupations Code, sec. 251.003. In addressing the issue of active supervision in Texas, the report said it was “unclear whether the appointments process, the Sunset Review process, standard reporting requirements, and other auditing required by the State are sufficient to prove that the Board members and their rulemaking are actively supervised by the State.”

Medical board. The Texas Medical Board, which includes 12 physicians and seven public members, discussed in its report to the Sunset Advisory Commission ways that Texas boards differ from the North Carolina board in their selection of members and level of judicial review. While most members of the North Carolina dental board are elected by other licensed dentists, the report said, members of the Texas Medical Board are gubernatorial appointees confirmed by the Texas Senate. The board said that rules and actions of Texas licensing agencies are subject to state judicial review through the Texas Administrative Procedures Act. The Texas Medical Board also noted that it is involved in an ongoing antitrust claim by a telemedicine company challenging a 2015 board rule.

Other agencies undergoing Sunset review that mentioned the Supreme Court case in their self-evaluation reports include the Texas Board of Nursing, the Texas Board of Veterinary Medical Examiners, the Executive Council of Physical Therapy and Occupational Therapy Examiners, and the Texas State Board of Examiners of Psychologists.

States weigh options. The State and Local Legal Center, which had filed a brief in the Supreme Court case on behalf of the National Governors Association, the National Conference of State Legislatures, and the Council of State Governments, said states have several options for complying with the ruling, including reducing the controlling number of market participants on their boards, forgoing state action immunity, or actively supervising licensing agencies.

The Federal Trade Commission staff in October issued guidance on how states could actively supervise regulatory boards to meet the requirements of the Supreme Court ruling. The staff said that in reviewing active state supervision, it will consider whether the supervisor:

  • has obtained information necessary for a proper evaluation of the action recommended by the regulatory board;
  • has evaluated the substantive merits of the recommended action and assessed whether it comports with the standards established by the state legislature; and
  • has issued a written decision approving, modifying, or disapproving the recommended action.

by Janet Elliott

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