Earlier this week, the U.S. Department of Justice ("DOJ") and the
Commission ("FTC") filed an amicus brief with the Fifth Circuit stating
that the Texas Medical Board's (the
"Board") appeal was inappropriate and the Court does not
have jurisdiction over the appeal. But the government did not stop
there. The brief goes on to argue that if the Court does in fact
find that it has jurisdiction, it should affirm the district
court's order denying the Board's motion to dismiss and
allow the case to proceed.
The Government's Interests
The DOJ and FTC, both responsible for enforcing federal
antitrust laws, assert that they have a "strong interest"
Whether interlocutory orders refusing
to dismiss an antitrust claim under the state action doctrine are
immediately appealable under the collateral order doctrine;
Proper application of the state
Because of these interests, they urge the Court to (1) dismiss
the appeal for lack of jurisdiction, and (2) if the Court finds
jurisdiction, reject application of the state action doctrine
because the active supervision requirement of the doctrine is not
Lack of Jurisdiction
The government argues that an order denying a motion to dismiss
an antitrust claim under the state action doctrine does not satisfy
the narrow requirements of the collateral order doctrine (which
allows interlocutory appeal of an order that would otherwise be
"effectively unreviewable" on appeal). They explain
State action is a defense to antitrust liability predicated on
the absence of any indication in the text or history of the Sherman
Act that Congress sought to condemn state-imposed restraints of
trade. Unlike qualified or sovereign immunity, the state action
doctrine does not create a right to avoid trial...and thus does not
satisfy the requirement that an order rejecting its application be
"effectively unreviewable" on appeal from a final
judgment. Orders denying a state action defense also do not qualify
for review under the collateral order doctrine because state action
issues are not completely separate from the merits of the
underlying antitrust action."
State Action Doctrine Not Satisfied
With regard to the state action doctrine itself, the government
If this Court does find that it has jurisdiction, however, it
should hold that the state action doctrine does not shield the
[Board's] rules from federal antitrust scrutiny because the
[Board] did not carry its burden to show active supervision. There
is no evidence that any disinterested state official reviewed the
[Board] rules at issue to determine whether they promote state
regulatory policy rather than the [Board] doctors' private
interests in excluding telehealth – and its lower prices
– from the Texas market. The legislative and judicial review
mechanisms cited by the [Board] do not satisfy the 'constant
requirements of action supervision.'"
Why is this important?
This amicus brief is particularly noteworthy because the FTC has
worked for a number of years to narrow the application of the state
action doctrine. In the last few years, they have succeeded in
doing so through two recent Supreme Court cases. FTC v. Phoebe
Putney Health System, Inc. narrowed the state action doctrine
and essentially its application to political subdivisions of
states, holding that "clear articulation" requires that a
state not only permit the conduct at issue, but also affirmatively
contemplate displacing competition in order for the challenged
anticompetitive effects to be attributed to the state. North
Carolina State Board of Dental Examiners vs. FTC made clear
that the antitrust laws would apply to — and the state action
exemption would not protect — activities of state agencies or
boards made up of market participants, absent active state
supervision of the Board's challenged conduct. The
Teladoc case is the first litigated case testing the
parameters of the active supervision requirement as recently
established in North Carolina Dental Examiners.
Check out our
recent blog post for a complete update on the issues involved
in the Teladoc case against the Board.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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