Texas, Telemedicine, and the Supreme Court’s Impact on Both

Telemedicine sometimes consists of a simple doctor-patient phone call.
Telemedicine sometimes consists of a simple doctor-patient phone call.
Telemedicine is expanding throughout the United States and the world.

The state of Texas, however, has issued rulings that have pulled the reins in on telemedicine expansion there. In April, the Texas Medical Board, which has always required that doctors “establish a relationship” with patients before making diagnoses or prescribing drugs, got more specific about what it meant by establishing a relationship with patients.

Telemedicine has been practiced in Texas for years. According to the Texas Medical Board’s April ruling, doctors cannot establish a relationship via email, texting, video chat, or by phone. Further, Texas has other limitations on telemedicine visits. The new ruling is scheduled to go into effect in June.

While the Texas Medical Association backs the Texas Medical Board in its ruling, a number of other Texas groups have expressed displeasure. Specifically, the Texas Association of Business CEO Bill Hammond spoke out against the ruling, saying, “This proposal is bad for business, bad for health care, bad for consumers.” With employers and consumers looking to technology to help keep healthcare costs under control, the Texas Association of Business believes the new ruling unfairly restricts competition.

North Carolina Dental Board v. FTC

A new ruling by the United States Supreme Court may affect whether the Texas Medical Board ruling sticks or not. The court ruled in North Carolina Dental Board v. FTC that state licensing boards made up of active professionals (like practicing dentists or doctors) are not immune to antitrust lawsuits unless they are “actively supervised” by the state.

The North Carolina Dental Board, which is primarily composed of practicing dentists, wanted to stop non-dentists in shopping malls from offering teeth-whitening services. But the Supreme Court said they were not immune to antitrust laws because the board isn’t actively supervised by the state of North Carolina.

In other words, the Sherman Act is relevant to conduct by licensing boards, and states cannot put markets under the unsupervised control of members of a licensed profession. In Texas, 12 of the Medical Board’s 19 members are doctors. A telemedicine company called Teladoc, which opposed the Medical Board’s April ruling, says that the Board is not “actively supervised” by the state of Texas or its legislature.

Is the Texas Medical Board Actively Supervised?

The Texas Medical Board asserts that it is supervised by the state. Spokeswoman Megan Goode says that the board “is subject to continuous oversight and review by the governor and Legislature. There are a number of standard reporting requirements for all Texas state agencies, plus all go through sunset review, audits, etc.”

Not so, says Dr. William Sage, who is a professor at the University of Texas School of Law. He says that the Medical Board’s ruling is analogous to the North Carolina case, and that he doubts the Board would meet the Supreme Court’s standards for being “actively supervised” by the state. Other public interest law professors think that most state medical boards wouldn’t be able to clear the bar set by the Supreme Court ruling.

Critics of the Texas Medical Board say that there’s a clear conflict of interest when active market participants are able to make decisions about competitors – specifically putting up barriers to competitors’ entrance into the market.

Supreme Court Justice Anthony Kennedy wrote in the 6-3 majority opinion that “active supervision” requires that whoever is doing the supervising must review the substance of any anticompetitive decision, and must have the power to veto or change that board’s decisions so that they line up with state policy. Further, the supervisor cannot be an active market participant. The decision about the Dental Board in North Carolina could have far-reaching effects.

Teladoc’s Lawsuit Against the Texas Medical Board

Teladoc, which is based in Dallas, sued the Texas Medical Board over its ruling restricting telemedicine through its strict definition of how doctor-patient relationships are established. The company contends that the requirement that physicians meet patients in person before being allowed to treat them remotely violates antitrust laws. Teladoc says that effectively preventing use of technology that allows remote doctor-patient interactions infringes upon its ability to compete in Texas.

The courts will decide if the Texas Medical Board has gone too far in restricting telemedicine.
The courts will decide if the Texas Medical Board has gone too far in restricting telemedicine.

The Board, in response sent out a press release that denied the new rules were restrictive to telemedicine, but rather balanced convenience and safety for Texas healthcare consumers. They say that the new rules only prohibit physicians treating a completely unknown patient through telemedicine. But Teladoc is built on a business model of remote doctor-patient interaction and says that the Board’s ruling unfairly penalizes them, because the Board sees them as a competitive threat.

Why a Case About Teeth Whitening Could Affect Telemedicine

So how does a case concerning teeth whitening in North Carolina have possible ramifications for telemedicine in Texas? The details of the case don’t have anything to do with telemedicine, or even technology for that matter. But the Supreme Court ruled that the North Carolina Dental Board’s practice of sending cease-and-desist letters to teeth whitening practitioners who weren’t dentists was a violation of the Sherman Act, which prohibits anti-competitive practices including price-fixing and guilds that regulate who can enter an industry.

In many states, state licensing boards are the biggest barriers to interstate telemedicine. And usually those licensing boards are made up of practicing doctors who, many believe, would naturally be threatened by the emergence of telemedicine companies like Teladoc. The recent Supreme Court ruling could give companies like Teladoc more ammunition in their fight against what they believe to be an unfair competitive burden. The legal precedent could make telemedicine companies more likely to sue. Whether it would work or not would depend on whether state medical board regulations had a purpose other than restricting new forms of competition.

Teladoc’s lawsuit is asking for a court injunction to prevent the Texas Medical Board’s ruling from going into effect. The company is confident, saying that Texas courts have ruled in favour of Teladoc on multiple other occasions.


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