State Board Report
The US Supreme Court on February 25 released its long awaited ruling in Federal Trade Commission v. N.C. State Board of Dental Examiners underscoring the need for States to exercise active supervision of a board if it delegates its regulatory authority to active market participants (see SBR 7/13). The six to three opinion, written by Justice Anthony Kennedy, had Justices Samuel Alito, Antonin Scalia and Clarence Thomas dissenting. The case involved the NC Dental Board’s determining teeth whitening was part of the practice of dentistry and, therefore, their issuing at least 47 official cease-and-desist letters to non-dentists supplying that service. The Board was composed of six licensed dentists engaged in the active practice of dentistry and elected to the Dental Board by the licensed dentists in NC, one dental hygienist elected by the licensed hygienists and one public member appointed by the Governor. There was no mechanism for removal of an elected Board member by a public official.
NASBA Vice President of State Board Relations Dan Dustin wrote to the State Boards: "Our preliminary review of the various procedures followed by State Boards indicates that most member board enforcement activities are already consistent with the Court’s decision. Of course, NASBA will review the UAA and Model Rules to determine if any adjustments might need to be considered through the usual committee process."
In the majority opinion, Justice Kennedy stated: "The States have a sovereign interest in structuring their governments … and may conclude there are substantial benefits to staffing their agencies with experts in complex and technical subjects… There is, moreover, a long tradition of citizens esteemed by their professional colleagues devoting time, energy, and talent to enhancing the dignity of their calling."
Justice Kennedy concluded: "The Sherman Act protects competition while also respecting federalism. It does not authorize the States to abandon markets to the unsupervised control of active market participants, whether trade associations or hybrid agencies. If a State wants to rely on active market participants as regulators, it must provide active supervision if state-action immunity under Parker [v. Brown] is to be invoked."
Many questions are left open under this decision, according to Justice Alito, including: Who is an "active market participant"? "If Board members withdraw from practice during a short term of service but typically return to practice when their terms end, does that mean that they are not active market participants during their period of service?" What is the scope of the market in which a member may not participate while serving on the board? What is a "controlling number?"
NASBA Outside Legal Counsel Noel Allen will discuss the significance of this case and others for Boards of Accountancy at the June Regional Meetings.
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