Doctors Targeted

 FTC Aims at Scope Limits 

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Cover Story – August 2012

Tex Med. 2012;108(8):18-23.

By Ken Ortolon  

Licensing and regulating physicians and other health professionals traditionally has been the role of state governments. But the powerful Federal Trade Commission's (FTC's) decision to insert itself into issues regarding which health care professionals can provide certain services worries state licensing boards and organized medicine.

In November 2010, the FTC warned the Alabama State Board of Medical Examiners that a proposed rule to block certified registered nurse anesthetists from performing interventional pain management services could be construed as anticompetitive behavior that might be subject to further FTC inquiry.

Last year, FTC officials sent letters to Texas legislators encouraging them to pass laws expanding scope of practice for advanced practice nurses.

And in June 2010, the FTC acted against the North Carolina State Board of Dental Examiners over a rule that only licensed dentists could whiten teeth. That led to a FTC cease-and-desist order last December preventing the North Carolina dental board from enforcing its rule.

Some groups, such as the Robert Wood Johnson Foundation, argue that state licensing laws and regulations prevent some allied health practitioners from practicing to the full extent of their training. But American Medical Association and Federation of State Medical Boards (FSMB) officials are concerned that these and other recent FTC actions constitute a pattern of interference with state health profession regulations that could hamper state licensing boards' ability to protect the public.

And some Texas Medical Association officials fear the FTC's actions may have more to do with a political agenda than with consumer protection.

On May 17, AMA weighed in on the North Carolina case, currently under appeal in a federal appeals court. An amicus brief by the Litigation Center of the AMA and State Medical Societies contends that state licensing boards' actions are exempt from antitrust challenges under the "state action doctrine." The brief further argues that clinical expertise should be the basis for decisions about health care licensing and matters of public safety, both of which fall outside the FTC's expertise. TMA was a founding member of the AMA Litigation Center.

"Safeguarding public health and patient safety are the primary purposes of the state statutes authorizing licensing boards to regulate health care professionals," said then-AMA President Peter W. Carmel, MD. "It is crucial that licensing boards carry out the responsibilities assigned to them by state legislatures without being intimidated by federal overreach from the FTC."    

 Meddling in State Business    

FTC action against state health professional licensing boards is not new, but most past actions have revolved around complaints regarding limits on advertising. Since the 1980s, the FTC has acted against at least six state licensing boards for restraining competition by limiting advertising by health care professionals.

But in 2003 the FTC began looking at scope of practice when it alleged the South Carolina State Board of Dentistry illegally restricted dental hygienists' ability to provide preventive dental services, including cleanings, sealants, and fluoride treatments, on site to children in South Carolina schools. The board had adopted a rule requiring dentists to examine schoolchildren before a dental hygienist could clean their teeth.

In 2007, the board agreed to a consent order with the FTC to resolve the allegations. The board agreed to publicize its support for a state legislative policy preventing it from requiring examination by a dentist before a hygienist cleans teeth in public health settings and to give the FTC written notice before adopting any other rule or taking any disciplinary action related to dental hygienists' services in public heath settings.

In addition to the 2010 North Carolina and Alabama cases, the FTC recently sent letters to legislators in Texas and several other states warning against passing laws that might restrict the scope of practice of allied health practitioners. Other FTC letters urged state lawmakers to pass scope expansion laws. Besides Texas, state legislatures in Florida, Georgia, Kentucky, Louisiana, Missouri, Maine, North Carolina, and Tennessee received the FTC letters.

In a May 2011 letter to state Sens. Rodney Ellis (D-Houston) and Royce West (D-Dallas), the directors of the FTC Office of Policy Planning, Bureau of Economics, and Bureau of Competition urged passage of two bills that would have granted advanced practice nurses in Texas full independent practice without physician supervision. Senators Ellis and West has asked the FTC to comment on the bills.

The FTC officials cited an Institute of Medicine (IOM) report that raised concerns with restrictive state scope-of-practice laws. The report, according to the letter, recommended that the FTC review existing and proposed state regulations concerning advanced practice nurses and urge states with "unduly restrictive" regulations "to amend them to allow advanced practice registered nurses to provide care to patients in all circumstances in which they are qualified to do so."

Dan Finch, TMA's director of legislative affairs, says the FTC letter to Texas came late in the 2011 legislative session and provided no momentum for either of the scope-of-practice bills in question. Both failed to pass.

"But it adds a measure of federal involvement in state licensure laws that we don't see very often," he said. "In that sense, it can be a rather onerous new front. And, it is an indication to us that we will see these arguments made again in the 2013 session." 

The Big Chill 

Officials at both AMA and FSMB are closely watching recent FTC actions and express serious concerns about the impact continuing enforcement against so-called "anticompetitive behavior" could have on the ability of state boards to protect patient safety. 

"This is something that is very concerning to those of us who support state-based regulation, and our fear is that it really undermines the ability of these boards to carry out their statutory mandate to protect the public," said Lisa Robin, chief advocacy officer for FSMB.

Ms. Robin adds that most state licensing boards have limited budgets, and defending themselves against FTC action could drain what few resources they have.

"The North Carolina dental board has spent a lot of resources to defend itself," she said.

What's even more concerning, says Austin anesthesiologist Joseph Annis, MD, is the "chilling effect" FTC action could have on the willingness of state licensing boards to carry out their duties.

Dr. Annis, a member of the AMA Board of Trustees, says AMA attorneys believe members of these boards could be individually liable for triple damages in subsequent civil lawsuits should the FTC find them guilty of restraining competition.

"Who is going to actually do it [regulate the professions] if the state medical boards are being intimidated and threatened by the Federal Trade Commission?" Dr. Annis asked. He says the mere threat of action from the FTC stopped the Alabama medical board from proceeding with its rule on interventional pain management, a service he says is clearly the practice of medicine.

"Imagine if the Federal Trade Commission can come into the states and say, 'You can't do this.' Who would be willing to regulate anything? You wouldn't be able to regulate any profession, from beauticians to veterinarians."

TMB Executive Director Mari Robinson also expressed concern about the impact FTC interference could have on state licensing boards.

"Certainly, the Texas Medical Board's position is that it is their authority to determine what the practice of medicine in this state is and that this is a state issue. That's particularly related to what can be delegated and how under the current statutes" she said. "Ultimately, it is our state legislature that makes the determination of what the laws will say, and then it's the medical board's job to enforce those laws and create rules around those laws."  

 Where's the Action?  

Also of serious concern is the impact the FTC's actions could have on the state action doctrine. The U.S. Supreme Court created the doctrine in a 1943 decision when it found that Congress had not intended for federal antitrust laws to apply to actions of state governments. Without that exemption from antitrust laws, AMA and FSMB officials say, state regulatory boards could not carry out their functions, which by their very nature are anticompetitive.

"Any sort of licensing at some level could be considered anticompetitive because you are putting some requirements in place for qualifications," Ms. Robin said. "So you are limiting who can do what."

In a white paper prepared for AMA, antitrust lawyer John J. Miles wrote that state governments are ipso facto exempt from antitrust liability as sovereign branches of government. Mr. Miles also wrote that private individuals serving on state licensing boards may also enjoy the state action exemption if their allegedly anticompetitive actions were clearly articulated and affirmatively expressed by the state as state policy and if their challenged actions were actively supervised by the state.

The FTC, however, contends that state licensing boards made up primarily of their own licensees are not necessarily covered by the state action doctrine.

In the North Carolina case, the FTC concluded that the dental board was a regulatory body controlled by licensed dentists who likely had a self-interest in restraining competition. The FTC also found that the state does not actively supervise the board; therefore, state action immunity did not apply.

TMB's Ms. Robinson says the problem for the boards in both North Carolina and Alabama are in the structure of those boards. In contrast to Texas licensing boards, the North Carolina dental board's members are not politically appointed nor confirmed by their legislature. Also, their funding comes directly from fees paid by licensees and is not subject to legislative appropriations.

"That becomes problematic when you start talking about a group having governmental immunity because the question becomes, are you actually the government," Ms. Robinson said, adding "I don't think it was an accident" that the FTC chose to take on those two boards.

She said TMB likely would be in a far different position in defending itself against FTC action because its members are appointed by the governor and confirmed by the Texas Senate, and its budget is appropriated by the legislature.

In his white paper, however, Mr. Miles said the FTC ignored an additional U.S. Supreme Court ruling that rejected treating allegedly self-interested governmental regulatory entities as private parties for purposes of the state action exemption.

"The Supreme Court has not decided explicitly whether the state must actively supervise the actions of state agencies," Mr. Miles wrote, adding that in a 1985 case the court said in cases "in which the actor is a state agency, it is likely that active state supervision would also not be required."  

 Activism vs. Patient Safety 

 While some officials are hesitant to talk publicly about the FTC's motives for its recent actions against state licensing boards, several say privately that the agency is advancing a political agenda, namely cost containment and expanded access in the health care system. 

"I think it's a measure of the activism of the current Federal Trade Commission and the current administration in terms of pressing an agenda that it feels is necessary from the national level in order to implement parts of the Patient Protection and Affordable Care Act [PPACA]," Mr. Finch said. "I don't know if the PPACA is driving it, but certainly there are provisions in the PPACA which favor a more expanded role for nurse practitioners into the practice of medicine. And this is all part of a national advocacy effort by advanced practice nurses in conjunction with the administration."

Nurse practitioners have long sought independent practice but have been unsuccessful in gaining such authority through state legislatures. But support from IOM and groups such as the Robert Wood Johnson Foundation bolsters their arguments.

The IOM report The Future of Nursing: Leading Change, Advancing Health recommends that nurses be able to work to the full extent of their education and training.

Robert Wood Johnson spokesperson Christine Clayton says her group supports the IOM recommendation and is providing technical assistance in 49 states to help implement it.  


While the final outcome of these FTC cases likely will play out in the courts, AMA officials say the FTC overreached its authority. Some in Congress have the same opinion. 

In a March 2 letter to FTC Chair Jonathan Leibowitz, U.S. Rep. Michael Burgess, MD (R-Texas), and four other members of the House Energy and Commerce, Appropriations, and Judiciary committees said the FTC's actions are in "direct conflict" with the legislatively mandated responsibility of the state boards.

"We strongly object to the FTC substituting its judgment for that of state legislatures and the state health agencies they task with responsibility for and that have expertise in patient safety matters," the representatives wrote.

Ms. Robin, of FSMB, says patient safety is the bottom line on this issue, and she questions the FTC's ability to make those determinations.

"I don't believe the FTC is claiming to have expertise in patient safety issues," she said.

"They don't have the jurisdiction, and they don't have the expertise," added Dr. Annis. "The states have the jurisdiction, and the states have the expertise and the infrastructure to evaluate who is qualified to practice medicine, dentistry, or whatever. I don't know if this has become politicized or not, but it's an abuse of their power and a real overreach."

FTC officials declined to be interviewed by Texas Medicine after first requesting the magazine submit written questions. They cited the ongoing litigation in the North Carolina case as their reason for refusing comment.

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