Exchanging Telemedicine Blows – Texas Medical Board’s Turn
On December 14, 2015, the United States District Court for the Western District of Texas refused to dismiss antitrust claims filed by a telemedicine provider against the state’s medical board, alleging that certain board regulations were anticompetitive and imposed to protect state-licensed physicians against competition from telemedicine providers. Filed in the wake of the United States Supreme Court’s 2015 decision in North Carolina State Board of Dental Examiners v. FTC, this case signals a growing trend of antitrust lawsuits challenging actions of state licensing boards. Now, TMB has filed a brief with the U.S. Court of Appeals or the Fifth Circuit asking for a lawsuit brought by telemedicine provider Teladoc Inc. to be dismissed due to “state action immunity.” State action gives state entities immunity from federal antitrust laws in some circumstances.
Plaintiffs, Teladoc, Inc., Teladoc Physicians, P.A., and several individual physicians (jointly, Teladoc), are the largest telehealth service provider in the country. Teladoc employs board-certified physicians and utilizes telecommunication technologies to provide healthcare services without the traditional in-person office visit or hospital setting. Telehealth providers are generally available all day, every day, for a fraction of the cost of a visit to a physician’s office, urgent care center or hospital emergency room.
Teladoc sued the Texas Medical Board (TMB) challenging a recently introduced TMB rule requiring a face-to-face physical examination in order to establish a physician-patient relationship. According to Teladoc, TMB’s face-to-face requirement was prompted by Texas physicians’ complaints about competition and effectively blocked Teladoc’s business model. TMB filed a motion to dismiss Plaintiffs’ claims, relying on the so-called state action immunity defense, a defense commonly invoked by state entities as a shield to antitrust scrutiny. The Supreme Court’s recent decision in North Carolina State Board of Dental Examiners made clear that state licensing boards controlled by active market participants are not immune from antitrust claims unless they are “actively supervised” by the state. TMB argued that it was actively supervised because its decisions are subject to judicial review by Texas courts, the State Office of Administrative Hearings, and the Texas Legislature. The Court denied TMB’s motion to dismiss the complaint, finding that TMB was not actively supervised by the state.
Teladoc is expected to file its response brief in the case in August.