South Carolina State Board of Dentistry; Analysis of Agreement Containing Consent Order to Aid Public Comment, 35049-35052 [E7-12323]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 72, Number 122 (Tuesday, June 26, 2007)]
[Notices]
[Pages 35049-35052]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-12323]


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FEDERAL TRADE COMMISSION

[Docket No. 9311]


South Carolina State Board of Dentistry; Analysis of Agreement 
Containing Consent Order to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment describes both the allegations in the complaint and 
the terms of the consent order--embodied in the consent agreement--that 
would settle these allegations.

DATES: Comments must be received on or before July 19, 2007.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``South Carolina State Board, Dkt. No. 9311,'' 
to facilitate the organization of comments. A comment filed in paper 
form should include this reference both in the text and on the 
envelope, and should be mailed or delivered to the following address: 
Federal Trade Commission/Office of the Secretary, Room 135-H, 600 
Pennsylvania Avenue, NW., Washington, DC 20580. Comments containing 
confidential material must be

[[Page 35050]]

filed in paper form, must be clearly labeled ``Confidential,'' and must 
comply with Commission Rule 4.9(c). 16 CFR 4.9(c) (2005).\1\ The FTC is 
requesting that any comment filed in paper form be sent by courier or 
overnight service, if possible, because U.S. postal mail in the 
Washington area and at the Commission is subject to delay due to 
heightened security precautions. Comments that do not contain any 
nonpublic information may instead be filed in electronic form as part 
of or as an attachment to email messages directed to the following 
email box: consentagreement@ftc.gov.
    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. All timely and responsive public comments, whether filed 
in paper or electronic form, will be considered by the Commission, and 
will be available to the public on the FTC website, to the extent 
practicable, at www.ftc.gov. As a matter of discretion, the FTC makes 
every effort to remove home contact information for individuals from 
the public comments it receives before placing those comments on the 
FTC website. More information, including routine uses permitted by the 
Privacy Act, may be found in the FTC's privacy policy, at https://
www.ftc.gov/ftc/privacy.htm.
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    \1\ The comment must be accompanied by an explicit request for 
confidential treatment, including the factual and legal basis for 
the request, and must identify the specific portions of the comment 
to be withheld from the public record. The request will be granted 
or denied by the Commission's General Counsel, consistent with 
applicable law and the public interest. See Commission Rule 4.9(c), 
16 CFR 4.9(c).

FOR FURTHER INFORMATION CONTACT: Gary H. Schorr (202) 326-3063, Bureau 
of Competition, Room NJ-7264, 600 Pennsylvania Avenue, NW., Washington, 
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DC 20580.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec.  3.25(f) 
of the Commission Rules of Practice, 16 CFR 3.25(f), notice is hereby 
given that the above-captioned consent agreement containing a consent 
order to cease and desist, having been filed with and accepted, subject 
to final approval, by the Commission, has been placed on the public 
record for a period of thirty (30) days. The following Analysis to Aid 
Public Comment describes the terms of the consent agreement, and the 
allegations in the complaint. An electronic copy of the full text of 
the consent agreement package can be obtained from the FTC Home Page 
(for June 20, 2007), on the World Wide Web, at https://www.ftc.gov/os/
2007/06/index.htm. A paper copy can be obtained from the FTC Public 
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW., Washington, 
DC 20580, either in person or by calling (202) 326-2222.
    Public comments are invited, and may be filed with the Commission 
in either paper or electronic form. All comments should be filed as 
prescribed in the ADDRESSES section above, and must be received on or 
before the date specified in the DATES section.

Analysis of Agreement Containing Consent Order to Aid Public Comment

    The Federal Trade Commission has accepted for public comment an 
agreement to a proposed consent order with the South Carolina State 
Board of Dentistry. The purpose of this analysis is to facilitate 
public comment on the proposed order. The analysis is not intended to 
constitute an official interpretation of the agreement and proposed 
order, or to modify their terms in any way. The proposed consent order 
has been placed on the public record for 30 days to receive comments by 
interested persons. Comments received during this period will become 
part of the public record. After 30 days, the Commission will review 
the agreement and the comments received, and will decide whether it 
should withdraw from the agreement or make the proposed order final.
    The proposed consent order has been entered into for settlement 
purposes only and does not constitute an admission by the Respondent 
that it violated the law or that the facts alleged in the complaint, 
other than the jurisdictional facts, are true.

The Challenged Conduct

    The Commission's complaint, issued September 12, 2003, charges the 
South Carolina State Board of Dentistry with unlawfully restraining 
competition in the provision of preventive dental care services in 
South Carolina, in violation of Section 5 of the Federal Trade 
Commission Act. The Board is a state regulatory agency that licenses 
and regulates dentists and dental hygienists. The nine-member Board 
includes seven practicing dentists, six of whom are elected by the 
dentists in their local area.
    The complaint alleges that the Board illegally restricted the 
ability of dental hygienists to provide preventive dental services 
(cleanings, topical fluoride treatments, and application of dental 
sealants) in school settings. The South Carolina legislature in 2000 
eliminated a statutory requirement that a dentist examine each child 
before a hygienist may perform preventive care in schools, in order to 
address concerns that many schoolchildren, particularly those in low-
income families, were receiving no preventive dental services. In July 
2001, however, the Board adopted an emergency regulation that re-
imposed the dentist examination requirement that the legislature had 
eliminated. As a result of the Board's action, a hygienist-owned 
company known as Health Promotion Services, which had begun sending 
hygienists to schools to provide preventive services under written 
protocols from a supervising dentist, had to change its business model 
and was able to serve far fewer patients.
    By operation of South Carolina law, the emergency regulation 
expired after six months, in January 2002. By that time, the Board had 
published a proposal to adopt the dentist examination requirement as a 
permanent regulation. However, after a state administrative law judge 
concluded that the Board's proposed regulation was unreasonable and 
contravened state policy, the Board did not proceed with the permanent 
regulation.
    The South Carolina legislature subsequently enacted legislation in 
May 2003 that expressly provides that dentist examination requirements 
applicable in some settings do not apply to dental hygienists' 
provision of preventive care services delivered in public health 
settings under the direction of the state health department. The new 
statute also added a provision stating that a dentist billing for 
services provided by a dental hygienist under such an arrangement was 
``clinically responsible'' for the delivery of those services. Because 
in South Carolina dental hygienists cannot bill the state Medicaid 
program directly, this new provision would plainly apply to school-
based preventive dental care programs. Aside from the general concern 
that the Board might once again defy a legislative change, there was 
evidence in Board minutes suggesting that the Board might interpret the 
``clinically responsible'' language in the new statute to require that 
a licensed dentist examine a patient and provide a treatment plan in 
all settings, whether private dental offices or public health 
locations.

Post-Complaint Proceedings

    Shortly after the complaint issued, the Board moved to dismiss the 
case, asserting that its actions were exempt from the antitrust laws by 
virtue of the state action doctrine. That doctrine, first articulated 
by the Supreme Court in Parker v. Brown, 317 U.S. 341 (1943),

[[Page 35051]]

rests on the Court's holding that the Sherman Act was not intended to 
``restrain a state or its officers or agents from activities directed 
by its legislature.'' The Board also argued that the 2003 statute made 
it legally impossible for it to resume its challenged conduct and 
therefore rendered the case moot.
    In a July 2004 opinion, the Commission rejected the Board's state 
action arguments.\2\ As the Commission's opinion explains, the Board's 
claim to automatic state action protection by virtue of its status as a 
state agency is contrary to well-established Supreme Court 
precedent.\3\ Furthermore, the Board failed to establish an essential 
element of the state action defense, because it was unable to show that 
its challenged conduct was undertaken pursuant to a clearly articulated 
policy of the legislature to displace competition with regard to the 
delivery of preventive dental care in schools. Neither the Board's 
general authority to regulate, nor its claims about the meaning of the 
state legislature's 2000 statutory revisions, demonstrated the 
requisite clear articulation to bring the challenged conduct within the 
protection afforded by the state action doctrine. On the contrary, the 
policy expressed by the legislature's elimination in 2000 of the 
statutory requirement for a dentist examination before dental 
hygienists could provide preventive services in schools was one 
favoring such competition, in order to increase access to critically 
important oral health care. Finally, because the Board failed to make a 
threshold showing of a legislative policy to displace the type of 
competition that it is charged with suppressing, its final argument, 
that any conflict with the 2000 statute was merely an error of state 
law and of no federal antitrust significance, failed as well.
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    \2\ In the Matter of South Carolina State Board of Dentistry, 
138 F.T.C. 229, 230 (2004), available at https://www.ftc.gov/os/
adjpro/d9311/040728commissionopinion.pdf and https://www.ftc.gov/os/
decisions/docs/Volume138.pdf.
    \3\ See, e.g., Southern Motor Carriers Rate Conf., Inc. v. 
United States, 471 U.S. 48, at 57, 60-61 (1985).
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    The Board filed an appeal with the United States Court of Appeals 
for the Fourth Circuit seeking an interlocutory review of the 
Commission's state action ruling. The Commission moved to dismiss the 
appeal, arguing that the ruling did not fall within the narrow class of 
``collateral orders'' that fall outside the general rule that 
interlocutory orders are not immediately appealable court of appeals 
agreed and dismissed the appeal for lack of jurisdiction. In its May 
2006 decision in South Carolina State Board of Dentistry v. F.T.C., 455 
F.3d 436 (4\th\ Cir. 2006), the court of appeals rejected the position 
of some other circuits, which have upheld interlocutory appeals from 
the denial of a claim of state action protection on the theory that the 
state action exemption is an immunity from suit:

     [W]e cannot conclude that Parker creates an immunity from suit. 
The Parker doctrine did not arise from any concerns about special 
harms that would result from trial. Instead, Parker speaks only 
about the proper interpretation of the Sherman Act. 455 F.3d at 444.

    With respect to the Board's arguments that the 2003 statute made it 
impossible for the Board to resume the challenged conduct, the 
Commission's July 2004 ruling rejected the Board's claim that the 
statute compelled dismissal of the complaint as a matter of law. 
Instead, it held the Board's motion to dismiss in abeyance pending 
discovery on factual issues relating to the risk of recurrence of the 
challenged conduct.\4\ As noted in the Commission's decision, the very 
premise of the alleged violation in this case is that the Board flouted 
a statutory directive designed to promote competition and increase 
access to preventive dental services. Moreover, the complaint also 
alleges particular facts with regard to the Board's interpretation of 
language added by the 2003 statute that raise a significant risk of 
recurrence.
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    \4\ Administrative agencies are not subject to the 
constitutional requirement of a ``case or controversy'' that limits 
the jurisdiction of Article III courts, but instead exercise 
discretion in deciding whether to hear cases that might be 
considered moot. See, e.g., R.T. Communications, Inc. v. FCC, 201 
F.3d 1264, 1276 (10\th\ Cir. 2001); Tenn. Gas Pipeline Co. v. Fed. 
Power Comm'n, 606 F.2d 1373, 1380 (D.C. Cir 1979).
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    During the pendency of the Board's appeal on state action, the 
Commission stayed discovery in the case. The stay expired in January 
2007, after the Supreme Court denied the Board's petition for 
certiorari seeking review of the appellate court's dismissal of the 
appeal, thereby clearing the way for discovery on the issues delegated 
to an FTC administrative law judge.

The Proposed Order

    The proposed order has two central features:
     First, to eliminate the alleged anticompetitive effects of 
the challenged conduct, the proposed order requires the Board to affirm 
and publicize its support for the state legislative policy, now 
embodied in the 2003 amendments to the Dental Practice Act, that 
prevents the Board from requiring a dentist examination as a condition 
of dental hygienists providing preventive dental care in public health 
settings.
     Second, to prevent similar anticompetitive restraints in 
the future, the proposed order requires the Board to give the 
Commission advance notice before adopting rules or taking other actions 
that relate to dental hygienists' provision of preventive dental 
services in a public health setting.
    The Board announcement is set forth in Appendix A of the proposed 
order. That announcement: (1) Expresses the Board's view that the 2003 
statute prevents it from requiring a dentist examination when patients 
receive preventive services from dental hygienists working under 
arrangements with the state health department; and (2) states that the 
Board fully supports this legislative policy.
    In addition to publication on the Board's website and in its 
newsletter, Paragraph III of the proposed order requires the Board to 
distribute this announcement, along with a copy of the Commission's 
complaint and order, to every dentist and dental hygienist holding a 
license to practice in South Carolina (and, for a period of three 
years, to new licensees), and to the superintendent of every school 
district in South Carolina. Widespread publication of this announcement 
is designed to remedy potentially significant chilling effects from the 
Board's past conduct on market participants who might otherwise be 
interested in participating in public health preventive dental care 
programs involving dental hygienists.
    The proposed order's prior notice provision is contained in 
Paragraph II. It requires the Board to give the Commission written 
notice 30 days in advance of adopting proposed or final
    rules, policies, disciplinary and other actions, that relate to the 
provision by dental hygienists of preventive dental services in a 
public health setting pursuant to S.C. Code Ann. Sec.  40-15-
110(A)(10), a provision that governs dental hygienist practice in 
public health settings. The scope of the notice provision includes 
actions that concern dentists' authorizing, supervising, or billing for 
the provision by dental hygienists of preventive dental services in a 
public health setting. This prior notice requirement, which extends 
beyond the re-institution of the restraint contained in the Board's 
2001 emergency regulation, will enhance the Commission's ability to 
monitor the Board's future conduct and take prompt action where 
warranted.

[[Page 35052]]

    The Commission has determined that it is not necessary to include a 
``cease and desist'' provision that directly prohibits the Board from 
resuming the conduct challenged in the complaint. This conclusion rests 
on various factors particular to this case. A key factor is the 
experience in South Carolina since the 2003 changes to the South 
Carolina Dental Practice Act. The new statutory scheme has now been in 
place for nearly four years. Throughout this period, dental hygienists 
have been providing preventive services in schools under an agreement 
with the health department--without an initial examination by a 
dentist--and the Board has not reimposed its previous dentist 
examination requirement. Thus, although the 2003 amendments have not 
eliminated the need for relief in this case, they are a relevant 
consideration in determining the nature and scope of that relief.
    Accordingly, the proposed order takes the statutory change into 
account. First, requiring the Board to distribute the announcement set 
forth in Appendix A to all dentists, dental hygienists, and school 
districts will ensure that interested parties know that the Board has 
formally acknowledged that it is legally barred from resuming the 
conduct challenged in the Commission's complaint. Second, the notice 
requirement of Paragraph II addresses the possibility that the Board 
might attempt to restrain competition in the provision of dental 
hygienist services in public health settings in ways not addressed by 
the 2003 amendments. This notice provision will increase the 
Commission's ability to monitor the Board's future conduct and is 
likely to help deter the Board from imposing restraints on public 
health preventive dental care that are not grounded in the policies 
articulated by the South Carolina legislature.
    As is standard in Commission orders, the proposed order contains 
certain reporting and other provisions that are designed to assist the 
Commission in monitoring compliance with the order.
    The proposed order would expire in ten years.
    By direction of the Commission.

Donald S. Clark,
Secretary.
[FR Doc. E7-12323 Filed 6-21-07: 8:45 am]
BILLING CODE 6750-01-S