FTC Drills Alabama Licensing Board for Anti-Competitive Scheme Targeting Teledentistry
The FTC challenged a licensing scheme that it says limited consumer choice and excluded new providers.
Alabama's dental regulators have agreed to drop an anti-competitive scheme that blocked teledentistry services in the state.
As part of a consent agreement announced Tuesday, the Federal Trade Commission (FTC) said the Board of Dental Examiners of Alabama would stop enforcing rules that limited "consumer choice and excluded new providers" offering braces and other teeth alignment services.
Those rules were crafted in 2017, after startups like SmileDirectClub began operating in Alabama. According to the FTC, the board took steps to stop the expansion of "firms providing clear aligners in Alabama through a teledentistry model" by amending its rules to ban dental hygienists and other medical professionals from performing the scans that are necessary to ensure proper fitting of the alignment devices. Previously, licensed dentists were allowed to supervise the scans from a remote location. Under the new rules, they would have to be on-site when the scans were done.
Over the next two years, the board delivered cease-and-desist letters to providers who offered those services without on-site licensed dentists.
"The actions of the Dental Board have deprived consumers in Alabama of low-price, convenient options for teeth alignment treatment without any legitimate justification or defense," the FTC argued in a complaint against the board. Those actions, the commission says, "unreasonably restrained competition" and violated federal law.
The case is a sequel to the FTC's 2015 victory at the U.S. Supreme Court in a case challenging anti-competitive behavior by a similar board in North Carolina. In that instance, the North Carolina Board of Dental Examiners sent cease-and-desist letters to kiosks offering teeth whitening services. The practice of whitening teeth, the board declared, could only be done by licensed dentists.
When that case ended up before the U.S. Supreme Court, the justices ruled that licensing boards controlled by a majority of "active market participants" could not make deliberately anti-competitive rules—unless those boards were "actively supervised" by some other element of state government. As a result of that ruling, licensing boards enforcing anticompetitive rules could be sued for violating federal antitrust laws.
The ruling opened up a new legal avenue for challenging overbearing licensing boards that limit economic opportunities by blocking competition in certain professional fields. It was a resounding defeat for overreaching state regulation and "the culmination of 15 years of effort" Maureen Ohlhausen, then-chair of the FTC, told Reason shortly after the ruling.
That case laid the groundwork for the more recent actions in Alabama, where six of the board's seven members are required by law to be licensed, actively practicing dentists. And the board's actions are not "reviewed or approved by any neutral state officials with the power to veto or modify" its decisions, the FTC found.
Under the terms of the consent agreement struck between the FTC and the Alabama dental board, the board does not admit to violating any laws or to engaging in the alleged anti-competitive behavior. But, going forward, the board has agreed to stop requiring on-site supervision by licensed dentists of the alignment scans necessary for teledentistry services.
That should give residents of Alabama—some 1.8 million of whom live in areas deemed to have a shortage of dental professionals and could clearly benefit from a greater supply of teledentistry services—something to smile about.
