{"id":4452,"date":"2015-12-17T23:59:00","date_gmt":"2015-12-17T23:59:00","guid":{"rendered":"https:\/\/www.healthlawpolicymatters.com\/?p=4452"},"modified":"2021-11-02T23:59:59","modified_gmt":"2021-11-02T23:59:59","slug":"antitrust-suit-continues-to-stymie-new-texas-telemedicine-regulation","status":"publish","type":"post","link":"https:\/\/www.healthlawpolicymatters.com\/2015\/12\/17\/antitrust-suit-continues-to-stymie-new-texas-telemedicine-regulation\/","title":{"rendered":"Antitrust Suit Continues to Stymie New Texas Telemedicine Regulation"},"content":{"rendered":"\n

A federal district court denied the Texas Medical Board\u2019s (the Board) motion to dismiss an antitrust suit filed by a telemedicine company (Teladoc), finding that the Board is not entitled to state action immunity because its actions are not actively supervised by the state.\u00a0\u00a0Teladoc, Inc. v. Texas Medical Board<\/em>, No. 1-15-cv-343 (W.D. Tex Dec. 14, 2015) (order denying motion to dismiss).\u00a0 As we previously\u00a0reported<\/a>, the Board issued an emergency rule in January attempting to amend its telemedicine regulations to mandate a \u201cface-to-face visit or in-person evaluation\u201d prior to a physician issuing a prescription.\u00a0 The Board then engaged in a formal rulemaking to adopt the amendment in April.\u00a0 Teladoc won a preliminary injunction in May, temporarily blocking the implementation of the new rule.<\/p>\n\n\n\n

Telehealth Services and the Proposed Regulation in Texas<\/strong><\/p>\n\n\n\n

Teladoc provides telehealth services, utilizing telecommunications technologies to provide health care services outside the traditional in-person models.  Teladoc services are typically available to individuals whose employer has contracted with the company.  The individuals then register with Teladoc, creating a personal account that includes medical history, medical records, and physician contact information.  Teladoc physicans are board certified and trained to provide treatment and diagnosis via the telephone.  Teladoc physicians can dispense medical advice and prescribe medicines based on the phone consultation with the patient and a review of the patient\u2019s medical history.  According to Teladoc, its services \u201care generally available 24 hours per day, 365 days per year, for a fraction of the cost of a visit to a physician\u2019s office, urgent care center, or hospital emergency room.\u201d  The Board\u2019s new rule would prohibit the issuance of a prescription without an in-person or face-to-face (via video conference) consultation.<\/p>\n\n\n\n

Teladoc\u2019s complaint against the Board alleged that the new regulation violated Section 1 of the Sherman Act and the Commerce Clause.  In its motion to dismiss, the Board argued that plaintiff\u2019s claims are barred by the statute of limitations, that the Board is immune from antitrust liability, and that plaintiff failed to state an actionable claim under the Commerce Clause.  The district court disagreed with the Board.<\/p>\n\n\n\n

State Action Immunity<\/strong><\/p>\n\n\n\n

Earlier this year, the Supreme Court held that the antitrust laws would apply to\u2014and the state action exemption would not protect\u2014activities of state agencies or boards made up of market participants, absent active state supervision of the board\u2019s challenged conduct.  North Carolina State Board of Dental Examiners v. Federal Trade Commission<\/em>, 135 S.Ct. 1101 (2015).  As an initial matter here, Teladoc and the Board disagreed about which party bears the burden of establishing the applicability of state action immunity.  The Board argued that plaintiffs bear the burden of establishing that immunity does not deprive the court of jurisdiction.  Teladoc contended that the state action doctrine is an affirmative defense, thus the Board bears the burden of establishing its applicability.  The district court agreed with Teladoc, holding that it is a defense to be proved by the purported state actor.<\/p>\n\n\n\n

Although the parties agreed that the doctrine requires a showing of active state supervision for the immunity to apply, they parted ways as to whether active supervision exists over the Board\u2019s activities.  In North Carolina State Board, the Supreme Court did not decide whether state supervision existed because it had not been asserted by the board in that case.  However, as noted by the district court, the Supreme Court did state:<\/p>\n\n\n\n

It suffices to note that the inquiry regarding active supervision is flexible and context-dependent. Active supervision need not entail day-to-day involvement in an agency\u2019s operations or micromanagement of its every decision. Rather, the question is whether the State\u2019s review mechanisms provide \u201crealistic assurance\u201d that a nonsovereign actor\u2019s anticompetitive conduct \u201cpromotes state policy, rather than merely the party\u2019s individual interests.\u201d<\/p>

The Court has identified only a few constant requirements of active supervision: The supervisor must review the substance of the anticompetitive decision, not merely the procedures followed to produce it; the supervisor must have the power to veto or modify particular decisions to ensure they accord with state policy; and the \u201cmere potential for state supervision is not an adequate substitute for a decision by the State.\u201d Further, the state supervisor may not itself be an active market participant. In general, however, the adequacy of supervision otherwise will depend on all the circumstances of the case.<\/p><\/blockquote>\n\n\n\n

N. Carolina State Bd<\/em>., 135 S. Ct. at 1116-17 (internal citations omitted).  The Board in Texas argued that it is subject to active state supervision because its decisions are subject to judicial review.  However, the district court found that the review is limited to an inquiry into whether the Board\u2019s decision exceeds its statutory authority.  The district court noted that the review of the validity of a rule is not the same as the evaluation of the policy underlying the rule.  The district court also found that the Board failed to point to any example of judicial review where the validity of a rule was rejected on the grounds that it did not accord with state policy, and further failed to show that the supervisor had the \u201cpower to veto or modify particular decisions to ensure they accord with state policy.\u201d  Id.  The district court thus held that the Board failed to meet the Supreme Court\u2019s active supervision requirement necessary for protection under the state action immunity doctrine.<\/p>\n\n\n\n

Statute of Limitations and the Commerce Clause<\/strong><\/p>\n\n\n\n

The district court held that Teladoc properly brought its action within Texas\u2019 two-year statute of limitations because the Board\u2019s actions\u2014though initiated prior to the two-year window\u2014continued with the April 2015 amendment.<\/p>\n\n\n\n

Teladoc\u2019s Commerce Clause allegation is based on its theory that the new rule discriminates against Texas licensed physicians physically located out of the state.   The district court held that Teladoc\u2019s allegations are sufficient at this early stage of the case, because a Commerce Clause allegation ultimately requires the court to determine \u201cthe nature of the local interest involved, and [] whether it could be promoted as well with a lesser impact on the interstate activities.\u201d<\/p>\n\n\n\n

For now, Texas physicians can continue to practice telemedicine under the prior regulations. However, they should continue to closely watch this case and any future Board actions on the issue.<\/p>\n","protected":false},"excerpt":{"rendered":"

A federal district court denied the Texas Medical Board\u2019s (the Board) motion to dismiss an antitrust suit filed by a telemedicine company (Teladoc), finding that the Board is not entitled to state action immunity because its actions are not actively supervised by the state.\u00a0\u00a0Teladoc, Inc. v. Texas Medical Board, No. 1-15-cv-343 (W.D. Tex Dec. 14, … Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_generate-full-width-content":"","footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/posts\/4452"}],"collection":[{"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/comments?post=4452"}],"version-history":[{"count":2,"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/posts\/4452\/revisions"}],"predecessor-version":[{"id":4454,"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/posts\/4452\/revisions\/4454"}],"wp:attachment":[{"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/media?parent=4452"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/categories?post=4452"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.healthlawpolicymatters.com\/wp-json\/wp\/v2\/tags?post=4452"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}