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No smiles at Dental Board

Federal appeals court rules that when professionals regulate their own industries, they may be liable to antitrust claims

A 4th U.S. Circuit Court of Appeals ruling in a dispute over teeth whitening has exposed just about every occupational regulatory board in the Carolinas, including the N.C. State Bar, to federal antitrust attacks.

The court’s unanimous three-judge panel affirmed a Federal Trade Commission finding that the  N.C. State Board of Dental Examiners violated antitrust law by using cease-and-desist letters to drive cheaper non-dentist teeth whitening services from the state.

The decision of first impression, which is expected to have widespread ramifications if it stands, has already sparked much speculation about whether licensing boards will have to change the way they operate to avoid antitrust violations.

Former N.C. deputy attorney general Hampton Y. Dellinger called the May 31 opinion a “wake-up call to state legislatures and oversight boards composed principally of members of the profession being regulated.”

“It raises issues that people had not thought about in a long time, if ever, about how these boards are selected, where they should be housed, and if they should be under the auspices of a state agency,” said Dellinger, now a litigator and appellate lawyer at Boies, Schiller & Flexner in Washington, D.C. “Given the extent to which it could upend the way a lot of boards have operated for a long time, it’s a major decision and one that the public sector will be dealing with for quite a while.”

’Private consortium of dentists’

The dental board had claimed immunity under the so-called “state action doctrine,” which was defined in the landmark 1943 U.S. Supreme Court decision Parker v. Brown to exempt state occupational board actions from federal antitrust scrutiny.

But the 4th Circuit determined that the board was not entitled to the shield because it was acting as a private entity when it went after the non-dentist teeth whitening industry. The conclusion was based on the board being made up primarily of licensed dentists who are elected by colleagues and not actively supervised by the state.

Those facts left the court with “little confidence that the state itself, rather than a private consortium of dentists, chose to regulate dental health in this manner at the expense of robust competition for teeth whitening services,” Judge Barbara Milano Keenan wrote in a separate concurring opinion.

The ruling, said FTC attorney Imad D. Abyad, “puts on notice boards like [the dental board] that in order to get the exemption they have to satisfy the active supervision prong of the exemption.” He added that a few states, including California, have created departments to supervise regulatory boards.

While the FTC was celebrating what many consider to be a big win, the dental board’s attorney, Noel L. Allen of Allen, Pinnix & Nichols in Raleigh, found the decision to be “unusual” and “disturbing at some levels.”

In Allen’s view, the court should have focused on the board having a duty to protect the public from unlicensed dentists, instead of its members being licensees of the profession they were regulating.

“This does portend some negative things with regard to the expertise that you’d get with licensees being on boards,” he said of the ruling.

A blizzard of briefs 

Two dozen regulatory and licensing boards hailing from all five states within the 4th Circuit had filed briefs supporting the dental board. One group, the N.C. Board of Pharmacy, warned that if the court agreed with the FTC, as it did, “virtually any decision by a professional regulatory board would be subject to a motive-based antitrust attack. That type of litigation would undermine the ability of state agencies to protect the public.”

What this all means for the state bars in the Carolinas remains unclear, though it appears that the ruling bodes ill for the N.C. State Bar, which is similar to the state dental board in that most of its members are licensees and it issues cease-and-desist letters for unauthorized practice. One of those letters has spurred an ongoing fight with, which has accused the bar of anticompetitive and monopolistic activity.

Bar counsel Katherine E. Jean wrote in an email that while the bar was “aware of the decision and considers it interesting” it was too soon to discuss the possible implications.

The S.C. Bar may be less affected, however, as regulation of lawyers in the Palmetto State is handled by the Supreme Court, rather than by lawyers themselves.

After a cursory reading of the opinion, S.C. Bar president Alice F. Paylor doubted that it would “have any big impact,” because the state’s Supreme Court handles all disciplinary and unauthorized practice actions.

“We have no authority to tell somebody to quit practicing law,” she said. “There’s no control. There’s no input or anything. The court is a state actor whereas the bar is not.”

Jay Campbell, executive director of North Carolina’s pharmacy board, also was still studying the ruling, but said at least one thing is already clear: State boards composed of elected practitioners in the field they’re regulating are now subject to antitrust violations.

“I don’t know if I’d describe the immediate effects as apocalyptic,” he said, “but it certainly means that boards need to be more attentive in carrying out regulatory functions in a way focused solely on public protection.”

While the dental board was still contemplating its next move, many, including Campbell, anticipate that the high-stakes fight will end up with the U.S. Supreme Court.

“At this point,” he said, “I don’t think the case is closed.”

The 37-page decision is N.C. Board of Dental Examiners v. Federal Trade Commission, (Lawyers Weekly No. 13-01-0557). The full text of the ruling can be found at

Follow Phillip Bantz on Twitter @NCLWBantz



Case name: N.C. State Board of Dental Examiners v. Federal Trade Commission

Court: 4th Circuit U.S. Court of Appeals

Judge: Dennis Shedd, with James Wynn Jr. joining and Barbara Milano Keenan concurring separately

Attorney for FTC: Imad D. Abyad (Washington, D.C.)

Attorney for defendant: Noel L. Allen (Raleigh)

Issue: Can a state agency that regulates the practice of dentistry overturn a FTC finding that the agency’s efforts to shut down teeth whitening services performed by non-dentists constituted unfair competition and violated federal antitrust law?

Holding: No. Because the board is primarily composed of licensed dentists elected by their professional groups and is not actively supervised by the state is acting as a private entity and thus is not exempt from federal antitrust laws under the state action doctrine.

Potential effect: These types of regulatory boards, which are common throughout the Carolinas, will be subject to federal antitrust laws, at least until they are actively supervised by the state. These boards will likely have to consider changing the way they operate and bringing on more non-licensed members.


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