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NC dental board appeal denied

Richmond, Va—The 4th U.S. Circuit Court of Appeals, in a case arising from a Federal Trade Commission enforcement proceeding, issued an opinion May 31 holding that the North Carolina Board of Dental Examiners, in issuing cease and desist orders against certain purveyors of teeth cleaning, had violated the federal antitrust laws by engaging in an unreasonable restraint of trade.

In so ruling, the federal appellate court denied the board's petition for review of a 2011 FTC order finding that the board violated the federal antitrust laws "by engaging in unfair competition in the market for teeth-whitening services in North Carolina." The opinion is posted online.

In reaching its decision, the court found that the board's actions did not fall within the exception to antitrust law that protects conduct by states or state agencies, noting that the actions were not adequately authorized or supervised by the state itself. "At the end of the day, this case is about a state board run by private actors in the marketplace taking action outside of the procedures mandated by state law to expel a competitor from the market," the court concluded. The court relied in part on the fact that the members of the board were elected by the dental community and not appointed by the governor.

"An important part of the court's findings was that actions by a health board made up of health professionals could be viewed as collective acts by a group of competitors," said Craig Busey, ADA general counsel. "Frankly, we are disappointed in the court's failure to recognize that professional boards created by the state in accordance with state mandates are in fact state agencies acting on state authority. We are concerned that this ruling may discourage dental or medical boards from fulfilling their state-appointed mission for fear of intervention by the FTC."

 "On the other hand," said Mr. Busey, "there is a strong indication that the court's determination was highly fact intensive and may be strictly limited to the facts of this case. The court cited several facts, including that the board was represented by private counsel and that the state had never intervened in the proceedings on the board's behalf, in support of finding that the board was not an agency of the state."

"Moreover," he continued, "the court was careful to note that 'our decision today hardly sounds the death knell for federal/state balance the board posits' and that 'there is no federalism issue.' Finally, it stated, 'Despite these actions [by the board], if the board was actively supervised by the state, it would be entitled to the [state action] exemption.'"

In light of this discussion, dental boards and other health boards may wish to review this decision to avoid the circumstances that led to the court's conclusion and to identify what actions or steps they might take to ensure that their actions fall within the state action exemption, Mr. Busey said. In its best light, this case may serve as a road map for professional health boards to conduct themselves in a manner that would avoid antitrust scrutiny or FTC intervention.

The dental board may elect to challenge this decision, which was issued by a three-judge panel, in two different ways. It may petition the 4th Circuit for a "rehearing en banc," meaning a rehearing before all of the judges who sit on the 4th Circuit Court of Appeals, or it may seek review of the decision by the U.S. Supreme Court through a writ of certiorari. If it chooses the latter, the board has 90 days from the date of the opinion in which to ask the U.S. Supreme Court to review the case, although that court is not required to accept the appeal.