recipients of cease-and-desist letters. The Board appealed and the case went to the U.S. Supreme Court.

The name of the case is North Carolina State Board of Dental Exam- iners v. Federal Trade Commission.

The main issue in the Supreme Court case was whether the Board violated The Sherman Antitrust Act, which, in general, prohibits anti-competitive behavior. The main issue in the case was whether the Sherman Act applied to the Board’s action. Precedent from 1943, a case called Parker v. Brown, had held that states are immune from the Sherman Act “when acting in their sovereign capacity.”

Six judges voted that the FTC was correct and that the Board did not have immunity from the actions regarding teeth whitening. It was an unusual combination, with four liberal judges (Ginsburg, Breyer, Ka- gan, and Sotomayor) and Chief Justice Roberts joining in an opinion authored by Justice Kennedy. Conservative justices Thomas, Scalia and Alito dissented.

The crux of the majority opinion was the majority’s belief that the Board’s actions were anti-competitive and not authorized by the North Carolina legislature. It applied this two-part test for state immunity: (1) the state’s action must “be one clearly articulated and affirmatively expressed as state policy” and (2) “the policy [must be] actively supervised by the state.”

The legal question that received substantial discussion and ultimately decided the case was whether the teeth whitening policy was “actively supervised by the state.” The Court said that the state action exemp- tion to the antitrust law does not apply where the state does not “accept political accountability for the anti-competitive conduct it permits and controls.” That language appears to mean that legisla- ture (as a politically accountable entity through the ballot box) can impose anti-competitive standards by legislation, but that an entity like the Board, which is not politically accountable, cannot. The Court noted that the Board, with six of eight members elected by dentists, was “controlled by active market participants, who possess singularly strong private interests, [and] pose the very risk of self-dealing.” The Court went on to note the “structural risk of market participants’ con- fusing their own interests with the State’s policy goals.” Finally, the Court distinguished most state agencies from the Board, calling it a “specialized board dominated by active market participants.”

WHAT THE DECISION MEANS

The best place to start in discussing the implications of the decision is the dissent. Justice Alito wrote: “States may find it necessary to change the composition of medical, dental and other boards, but it is not clear what sort of changes are needed to satisfy the test that the Court now adopts.” “The Court faults the structure of the North Carolina Board because ‘active market participants’ constitute ‘a con- trolling number of (the) decision makers,’ … but this test raises many questions.”

Much of the initial commentary was along those lines, and bills were introduced in some state legislatures to change the composition of

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boards and restrain their authority. In my judgment, this reaction was too quick and knee-jerk, and a more cautious approach is warranted.

To start, the facts of the case were quite extraordinary, and there is an old saying, “Bad facts make bad law.” I cite the following as extraor- dinary and unusual facts that seemed to significantly influence the Court:

 The legislature had not defined the practice of dentistry to in- clude teeth whitening, and the Board did so on its own.

 The Board did not adopt a regulation or rule on teeth whitening, but acted only in enforcement actions.

 Seven of the eight members were elected by the profession. (I note that in Missouri, Dental Board members are appointed by the governor and subject to senate confirmation.)

 The Board had very limited authority over non-dentists, but ag- gressively regulated them.

 The Board reached out to another Board to encourage action against cosmetologists.

 The Board’s own witness termed the actions a “battle” against non-dentists.

 The Court found that the complaints that triggered the Board’s investigation focused on price not care.

I do not see that the North Carolina decision will cause a major change in the structure or legislative authority of state boards. While the Court noted that there is the potential for a conflict of interest and anti-competitive behavior when a board is controlled by what it called “market participants,” (and that potential occurred in this case) there is no suggestion in the decision that such a structure is per se unlawful. In my judgment, so long as state boards generally act within their authority and in good faith, the North Carolina decision would not apply.

In Missouri, we have not, in my experience, seen the type of behavior that the Court describes in North Carolina. We also have a structural safeguard in that board members are appointed by the governor and confirmed by the senate, not elected by the regulated profession. While the North Carolina case is certainly a cautionary tale for states and board members, it is unclear if there will be a large number of cases nationally or in Missouri. Certainly, some groups and persons who do not favor peer licensing boards like the Missouri Dental Board might attempt to use the North Carolina decision. f

LOWELL D. PEARSON is a partner in the Jefferson City, Mo. office of Husch Blackwell LLP. Husch Blackwell LLP acts as outside general counsel to the MDA. The information contained in this article should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general information purposes only, and readers are urged to consult their own attorney concerning their own situation and any specific legal questions.