Antitrust Agencies Urge 5th Cir. to Reject Immunity in Teladoc Case

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By Matthew Loughran

Sept. 21 — The Texas Medical Board’s claim of immunity for its rules restricting telemedicine practice should be rejected, a majority of interested parties, including two federal antitrust enforcement agencies, have told a federal appeals court ( Teladoc, Inc. v. Tex. Med. Bd., 5th Cir., No. 16-50017, briefs filed 9/9/16 ).

The case, before the U.S. Court of Appeals for the Fifth Circuit, has garnered the attention of 15 interest groups that have filed friend of the court briefs. Of that number, only two have expressed support for the medical board's position, with the rest either urging the court not to accept jurisdiction in the case, to rule against the board on the merits, or both.

The private antitrust action brought by Teladoc Inc., one of the largest telemedicine providers in the country, is being watched carefully by health-care providers and antitrust attorneys because the outcome could affect the ability of state medical boards to regulate the expansion of telemedicine in their states.

Among the parties that have submitted friend of the court briefs, the Federal Trade Commission and the Department of Justice—the two agencies charged with enforcing the federal antitrust laws—have supported Teladoc and argued that the board shouldn't be immune from antitrust scrutiny.

State Action Immunity

The main issue before the Fifth Circuit is whether the Texas Medical Board should be afforded state action immunity for its decision to implement rules requiring that physicians who prescribe certain medications have an in-person consultation with their patients first.

State action immunity allows state and municipal authorities to avoid investigation and prosecution under the federal antitrust laws for potentially anticompetitive actions taken in pursuit of clearly stated state policies.

The immunity is available for decisions by organizations not directly linked to state government as long as the decision follows a clear state policy and the organization is subject to active supervision by the state.

In December 2015, Judge Robert L. Pitman of the U.S. District Court for the Western District of Texas ruled that the board wasn't immune from the antitrust lawsuit because it hadn't shown that it is actively supervised by the state. The court found the ability of a state court to review the decision was insufficient to qualify as “active supervision” that would trigger the doctrine (241 HCDR, 12/16/15).

The Federation of State Medical Boards and the American Medical Association both disagree in their friend of the court briefs before the Fifth Circuit.

The AMA brief emphasized that the board's rule was created with a public health benefit in mind and that the health and safety regulation of medical practice shouldn't be subject to antitrust liability.

The FSMB in its brief asserted that placing “duly-promulgated rules that are part of a comprehensive regulatory regime” under antitrust scrutiny would “undermine the ability of states to regulate the health professions.”

Both proponents of the board's immunity argued that the appeals court should allow the immunity claim or at least order the district court to take into account the benefits to public health that would come from upholding the board's rule.

Question of Jurisdiction

The Fifth Circuit, however, may not have to reach the question of whether the board can claim immunity because one friend of the court brief questioned whether the appeals court has the authority to hear the appeal.

According to a brief filed by the American Antitrust Institute on June 27, the board has improperly invoked the “collateral order doctrine” in its appeal of the district court's refusal to dismiss the claims.

Under the collateral order doctrine, a party may appeal an order that doesn't conclude the litigation if the order conclusively decides an issue different from the actual merits of the claim that effectively would be unreviewable if the parties waited for a final judgment.

The board claimed that the district court's order creates such a situation because it requires the board to undergo the time and expense of a trial that could be avoided if the Fifth Circuit agrees that it is immune from antitrust scrutiny.

The AAI urged the Fifth Circuit to find that the collateral order doctrine doesn't apply in cases where a denial of state action immunity is at issue.

In response to this brief, the board last month went back to the district court seeking an order that would provide additional grounds for its current appeal. On Aug. 15, Pitman denied that request, finding that the active Fifth Circuit appeal precluded him from entertaining the request (159 HCDR, 8/17/16).

Other friend of the court briefs supporting Teladoc, including the one from the FTC and DOJ, have picked up this thread, asking the Fifth Circuit to dismiss the appeal for a lack of jurisdiction.

To contact the reporter on this story: Matthew Loughran in Washington at mloughran@bna.com

To contact the editor responsible for this story: Peyton M. Sturges at psturges@bna.com

For More Information

The FTC/DOJ brief is at http://src.bna.com/iME.

The FSMB brief is at http://src.bna.com/iMH.

The AMA brief is at http://src.bna.com/iMJ.

The AAI brief is at http://src.bna.com/iMK.

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