United States: Antitrust Immunity For State Agencies Continues To Narrow

Last Updated: December 29 2015
Article by Kenneth W. Field, Alexis S. Gilroy and Michael A. Gleason

In another court decision narrowing state action immunity, a federal district court in Texas has denied the Texas Medical Board's ("TMB") motion to dismiss an antitrust challenge to its new rules on telemedicine providers. Among other things, the TMB argued that it is immune from antitrust liability as a state agency. This case comes on the heels of two recent Supreme Court decisions in FTC v. Phoebe Putney (2013) and North Carolina State Board of Dental Examiners v. FTC (2015) that limited the scope of the state action doctrine. This case continues the trend of courts limiting antitrust immunities and exemptions.

The state action doctrine exempts state entities from federal antitrust scrutiny when there is a clearly articulated state regulatory policy and active state supervision over any private conduct seeking to benefit from immunity. The TMB claimed immunity because its decisions are subject to judicial review by courts, a state administrative body, and the legislature. The court rejected this reasoning, asserting that the state's review of the TMB's rulemaking was not sufficient to qualify for the exemption.


The plaintiff, Teladoc Physicians, provides telemedicine services. Its physicians provide health care services to patients over the Internet and telephone. Teladoc contracts with employers for a per-member subscription fee. As described on the Teladoc website and their briefs, individuals register with Teladoc online or via telephone and provide a medical history, physician information, contact information, medical records, and in some cases photographs. Customers request a medical consultation by logging into Teladoc's web portal or calling a toll-free number. The customer typically then speaks by telephone with Teladoc physicians who have specialized training in treatment and diagnosis. After the consultation, the Teladoc physician may prescribe certain medications, enter notes and findings into the patient's record, and forward the notes to the patient's primary care physician if the patient chooses.

The TMB is an agency of Texas' executive branch with 19 members, 12 of whom were physicians at the time the complaint was filed. In April 2015, the TMB adopted revisions to the Texas Administrative Code that governs the practice of medicine. Specifically, § 190.8(1)(L) ("New Rule 190.8") prohibits prescribing any "dangerous drug or controlled substance" without first establishing a "defined physician-patient relationship." The defined physician-patient relationship must include "a physical examination that must be performed by either a face-to-face visit or in-person evaluation," defined elsewhere in the statute to require that the provider and patient be in the same physical location.

In its lawsuit against the TMB, Teladoc challenged New Rule 190.8 as a violation of Section 1 of the Sherman Act. As the TMB includes physicians, competitors of physician groups whom they regulate, the board's action are subject to Section 1, which prohibits anticompetitive agreements between competitors. TMB moved to dismiss the antitrust claim, arguing that it is immune from the antitrust laws under the state action doctrine.

State Action Antitrust Immunity

To qualify for state action immunity, a defendant must show (1) there is active state supervision over the conduct for which its claims immunity and (2) there is a clearly articulated state regulatory policy. The court here found that that TMB did not satisfy the active supervision requirement and therefore did not address the second factor.

The district court followed the Supreme Court's Dental Examiners case, identifying potential indicia of active state supervision, including the state government's having the ability to review the substance of the anticompetitive decision and the power to veto or modify decisions to ensure they accord with state policy. Citing Dental Examiners, the district court also opined that the "mere potential" for state supervision is not sufficient.

The TMB argued that its rules are voidable by Texas courts and that agency disciplinary actions are subject to judicial review. Rejecting this argument, the district court found that, while Texas courts may review the substance of the rule or action, they can only determine the validity of the rule or action, but lack the power to modify agency decisions or determine whether rules are consistent with state policy. Likewise, the court rejected TMB's argument that the Texas legislature's "sunset review," which evaluates whether there is a continued public need for the state agency, qualified as active state supervision, because legislature has no authority to veto or modify rules.


This case, which follows two recent Supreme Court decisions narrowing the state action doctrine, continues the trend to apply antitrust immunities stringently. Rules enacted by government-sanctioned boards comprised of practicing professionals are likely to face increased antitrust scrutiny. Cases involving state bar associations, veterinary boards, acupuncture licensing boards, and taxicab commissions already are in the courts. Precedents in this area suggest such regulatory boards should include a significant presence of non-practicing professionals and, if that this is not possible, significant oversight mechanisms by the state.

A common theme in these lawsuits challenging state action immunity is the conflict between rules promulgated by state boards involving incumbent competitors and new forms of competition brought by technological advancements. For example, cases in other sectors involve background check regulations for ride-sharing drivers and the provision of online legal services. While the regulatory authorities typically argue that they are protecting consumers and ensuring quality, challengers argue that the incumbent firms are merely shielding themselves from new competition. This conflict is not likely to end any time soon.

The Order on the Motion to Dismiss is available here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Kenneth W. Field
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.