Dental boards still dominated by insiders 10 years after SCOTUS case from NC

Ten years after the US Supreme Court handed down an antitrust ruling against North Carolina’s dental board, similar boards across the country have done little to respond to the high court’s decision. That’s a key finding in a new report the Pacific Legal Foundation released Wednesday.

“Failing to reform state licensing boards is not just bad policy; it exposes these boards to serious legal risk,” PLF attorney Joshua Polk said in a news release. “Instead of heeding the Supreme Court’s ruling, states have ignored it and doubled down on anti-competitive practices. It’s time for courts to reaffirm NC Dental and for advocates of economic liberty to demand accountability.”

The case North Carolina Board of Dental Examiners v. FTC focused on a dispute over teeth-whitening services.  

“The board insisted that teeth-whitening services could not be provided legally without a dental license from the state, thus requiring people providing teeth-whitening services to go to dental school, which can take months and cost thousands of dollars,” according to the PLF report.

The dental board sent more than 40 cease-and-desist letters to people who offered teeth-whitening services without a dental license in North Carolina. Letters also targeted shopping malls where the teeth whitening took place.

“State law required six of the eight board seats to be held by licensed dentists and one of the eight board seats to be held by a licensed dental hygienist — professionals who also offer teeth-whitening services, who may see unlicensed providers as competitors, and who could have an interest in excluding such competitors from the dental profession,” PLF authors wrote.

In a 6-3 ruling on Feb. 15, 2015, the US Supreme Court determined that the dental board’s actions violated federal antitrust laws.

“In NC Dental, the Supreme Court held that ‘a state board on which a controlling number of decisionmakers are active market participants in the occupation the board regulates’ could be in violation of federal antitrust laws,” according to the PLF report. “The logic was simple: if a majority of seats on a licensing board are filled with those who are already licensed and actively engaged in the profession — in other words, those who have an incentive to use their power as a board to keep out and punish competitors — then that board does not necessarily possess the federal antitrust immunity that other government entities enjoy.”

“Ten years later, almost all state dental licensing boards are in violation of the standards set by the Supreme Court in NC Dental,” the report added. “Dental boards are at least 60 percent dominated by ‘active market participants’ in all 50 states. The average seat share for active market participants is around 85 percent. In other words, more than four of every five board seats are held by licensed dental professionals.”

No state has changed its laws in the last decade to decrease control of dental boards by “active market participants,” PLF authors reported. Georgia, Michigan, and North Dakota all increased the number of active market participants since the NC Dental ruling, while Texas increased the percentage of active market participants on its board when it reduced overall membership.

Eight states require their governor to appoint board members from names submitted by a state or national dental association,

“[S]tate regulatory boards are often controlled by parties that would tend to benefit financially from raising barriers to new competition,’ PLF authors wrote. “Using this state-granted privilege, board members who are themselves industry incumbents can deny opportunities to prospective providers by raising barriers to entry or exercising enforcement authority to quash innovation. Restricting entry in turn reduces the supply of services, which increases costs for customers and decreases consumer choice.”

“Given the percentage of seats that are required by law to be filled with licensed dental service providers, all state dental boards risk antitrust liability today in light of NC Dental,” according to the report.

“If states want to reduce the antitrust liability of their licensing boards, they should reduce the dominance of active market participants, whether by reducing the number of seats they hold, by reducing the power the boards have, or by initiating legislative or executive oversight,” the PLF report concludes.

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