Brief of Amici Curiae Texas Professors Specializing in Health Law and Health Policy, Teladoc Inc. v. Texas Medical Board (5th Cir.)

When a majority of a professional licensing board is comprised of active members of the licensed profession, the Supreme Court has instructed lower courts to require active supervision by the state itself before conferring immunity from suit challenging board action under the federal antitrust laws. North Carolina State Bd. of Dental Exam’rs v. FTC, 135 S. Ct. 1101 (2015) (“North Carolina Dental”). The purpose of supervision is to ensure that the board’s actions reflect a sovereign state’s policy decision to reduce or displace competition, for which the state is politically accountable. Here, there was no such supervision or political accountability for the restriction the Texas Medical Board (“Board”) imposed on telehealth providers, and the district court properly denied the Board’s state-action defense. The outcome of this litigation has national importance beyond telehealth because minimally scrutinized, unsupervised physician self-governance – often by state medical boards – exerts significant drag on the U.S. health care system. The affordability of health care for individuals and society, and therefore the efficiency with which it is produced and delivered, are critical health policy goals. Recent assessments from the Institute of Medicine of the National Academies (“IOM”) conclude that the U.S. health care system wastes nearly $1 trillion each year on unnecessary, disorganized, overpriced, badly measured, and sometimes harmful services. One cannot escape the conclusion that the consumer orientation, cost discipline, interoperability, and continuous innovation that are routine in other industries, and that make market competition the desired default position for the private economy, are severely underdeveloped in health care. Although state licensing boards often justify their actions as “patient protection,” it also is indisputable that professional self-regulation is a much less effective guarantor of quality and safety than the medical profession asserts and believes. In two authoritative reports from the early 2000s, the IOM documented systematic failures to deliver care that is safe, effective, patient-centered, timely, efficient, and equitable, resulting among other things in nearly 100,000 avoidable patient deaths every year. The public and its elected representatives do not prefer their health care system to spend excessively and perform poorly. Rather, the U.S. health care system is trapped in a web of professional privilege that prevents it from achieving its goals. Unsupervised self-regulation is a significant, often invisible obstacle to building a health care system that meets the public’s needs and therefore promotes the state’s interests. Physicians aggressively defend their individual and collective authority to serve patients on terms that they themselves establish, even if the result is to increase cost and decrease access to care. The medical profession has enforced its private perception of the public interest for many decades, typically in good faith but limited by preconception, habit, and tunnel vision. Antitrust law plays an important role in advancing consensus health policy goals regarding affordability, quality, choice, and consumer responsiveness. Moreover, the fact that self-regulation of medical practice by state licensing boards and other professional bodies has been so pervasive argues for more, not less, state oversight of potentially anticompetitive conduct. Without active supervision, many policy choices made by the Board remain unidentified or only vaguely described, rendering it impossible for politically accountable state actors such as the governor or legislature to register their opposition. Only a full-throated supervision requirement, as called for by the Supreme Court, can reveal professionally determined constraints on markets as explicit policy options and subject them to meaningful political oversight. The harm to competition is obvious when a group of competitors meets specifically to fix prices while asserting immunity from antitrust liability. Although a licensing board’s unsupervised exclusion of a rival category of providers or its blanket prohibition on a modality of care has effects comparable to a collective refusal to deal, anticompetitive medical self-regulation is often more challenging to disentangle from explicit state law. Yet the cumulative effect of embedding unsupervised private processes – especially those that impede market entry – within a seemingly comprehensive but inadequately specified regulatory framework is to worsen inertia in public policy-making and perpetuate conditions that are both anticompetitive and increasingly inconsistent with democratic preferences.The sky will not fall if the Texas Medical Board is subjected to active supervision requirements. Substantive antitrust law is well-equipped to distinguish between reasonable and unreasonable restraints on trade, and any socially desirable activities of licensing boards that otherwise might be construed as violations of the Sherman Act can be enacted in legislation or administrative regulation and supervised by bona fide state actors. Some Board limitations on medical practice even may be procompetitive, facilitating informed consumer choice and ensuring that effective services are delivered as promised.Moreover, the composition of health professional licensing boards can be sufficiently diversified to reduce the likelihood that physicians or any other single group of licensees can, through either conscious or unconscious bias, subvert bona fide state regulation of medicine and health to serve their own interests. Such a restructuring of licensing board practices not only would avoid the need for active supervision under the North Carolina Dental standard, but also would likely result in a more nimble, consumer-oriented, and innovative approach to professional self-regulation. Therefore, the Board’s state action defense should be denied.