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State Board Report

July 2013

NASBA Legal Counsel Noel L. Allen called to the attention of the State Boards’ representatives the unanimous decision of the U.S. Court of Appeals for the Fourth Circuit, issued on May 31, upholding the Federal Trade Commission’s ruling that the North Carolina State Board of Dental Examiners had engaged in anticompetitive conduct that prevented non-dentists from providing teeth whitening services to NC consumers. At the NASBA Regional Meetings, Mr. Allen said the Dental Board is likely to request a rehearing and the case may ultimately go to the U.S. Supreme Court. It has particular significance for accountancy boards because the Court of Appeals had rejected the Dental Board’s claim that, as an agency of the state, its action was protected from federal antitrust scrutiny by the state action doctrine.

Writing the majority’s opinion, Circuit Court Judge Dennis W. Shedd stated: “…we agree with the FTC that state agencies ‘in which a decisive coalition (usually a majority) is made up of participants in the regulated market,’ who are chosen by and accountable to their fellow market participants, are private actors…”

Circuit Court Judge Barbara Milano Keenan wrote in her concurring opinion that the Board had received reports of non-licensed persons performing teeth whitening without using the proper equipment or practices, and therefore: “Accordingly, in my view, the record supports the Board’s argument that there is a safety risk inherent in allowing certain individuals who are not licensed dentists, particularly mall-kiosk employees, to perform teeth-whitening services.” Despite this, Judge Keenan wrote: “Here, the fact that the Board is comprised of private dentists elected by other private dentists, along with North Carolina’s lack of active supervision of the Board’s activities, leaves us with little confidence that the state itself, rather than a private consortium of dentists, chose to regulate dental health in this manner at the expense of robust competition for teeth whitening services. Accordingly, the Board’s actions are those of a private actor and not immune from the antitrust laws under the state action doctrine.”

Mr. Allen, who had argued the case on behalf of the NC Dental Board, noted that although Judge Keenan had recognized the public protection being provided by the Dental Board in restricting teeth whitening to licensees, that was outweighed by the fact that the majority of the Dental Board’s members were practicing licensees and, consequently, potential competitors of the teeth whitening kiosk operators.

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