News: CJ Exclusives

Feds Rule State Dental Board Illegally Stifled Competition

You don’t need to be a dentist to whiten teeth, FTC says

In early December, the Federal Trade Commission voted that the North Carolina Board of Dental Examiners had stifled competition illegally by excluding non-dentists from providing teeth-whitening services or products to consumers.

The commission’s Final Order upholds (with minor changes) a July 2011 decision by Chief Administrative Law Judge D. Michael Chappell that requires the dental board to “cease ordering non-dentists to stop providing teeth whitening products or services.” The order also requires the board “to stop informing non-dentist teeth whitening providers and certain other persons that it is illegal for non-dentists to perform teeth whitening products or services.”

Over the past decade, cosmetic teeth whitening has become increasingly popular and more widely available at day spas, mall kiosks, salons, and other non-dental office settings. State regulators have stepped up enforcement actions against non-dentists for what regulators consider practicing dentistry without a license.

The conflict pitting dentists against non-dentists and federal regulators against state regulators stems from a disagreement over what constitutes the practice of dentistry and raises a number of constitutional questions that legal experts say are likely to end up before the U.S. Supreme Court.

The eight-member dental board was created by the General Assembly to regulate the practice of dentistry. The board has justified tougher enforcement by pointing to a subsection of state law that defines practicing dentistry as including the removal of “stains, accretions, or deposits from human teeth.” In the board’s view, teeth whitening is deemed a dental treatment that can be provided only by a state-licensed dentist.

Entrepreneurs, however, say they are being targeted unfairly and forced out of business for applying the same teeth-whitening products that are sold over the counter as cosmetics. Consumers can purchase the products — which are approved for use by the Food and Drug Administration — online or in stores and apply to their teeth at home without a prescription or professional supervision.

Joyce Osborn, president and founder of the Alabama-based Council for Cosmetic Teeth Whitening, a trade association, told Carolina Journal that the issue is not about public health or safety, or even a concern that non-dentists are motivated only by financial self-interest, as the N.C. dental board asserts. Osborn says dentists want to maintain a lucrative monopoly and protect their own revenues from lower-cost competitors. Dentists charge as much as $300 to $700 per treatment, whereas some non-dentists offer the service for less than $100.

Osborn, who invented and markets an FDA-cleared teeth-whitening system, says she’s battled the N.C. dental board and other state boards for several years. “That’s why I founded the council,” Osborn said, “to inform and help members on issues of safety, training, best practices, and appropriate marketing.”

The council’s website says cosmetic teeth whitening has become an $11 billion industry in less than a decade and “is one of the world’s fastest growing market segments.”

Constitutional issues

The FTC’s complaint against the N.C. dental board is the first of its kind in the nation. It contends that the practice of allowing professions and occupations to be regulated solely by state occupational licensing boards comprised of a majority of the licensees of the profession is anti-competitive and exclusionary because those members have a financial conflict of interest. When members of such a licensing board enforce the state’s Dental Practice Act, they are engaging in a conspiracy that violates federal antitrust laws.

A.P. Carlton, Jr., an attorney with Raleigh law firm Allen & Pinnix, represents the state dental board. He said the legal theory underpinning the FTC’s action “has never been judicially tested.”

In February 2011, the dental board filed a lawsuit against the FTC in the U.S. District Court for the Eastern District of North Carolina, seeking to dismiss the antitrust action on grounds that the FTC is violating a nearly 70-year-old Supreme Court doctrine known as “state action immunity.”

This doctrine states that the bona fide actions of state agencies, such as the dental board, are held to be immune from liability under federal antitrust laws. Moreover, the commission has little authority to determine the scope of its own jurisdiction outside of the Commerce Clause unless Congress gives it that power.

The board’s case was dismissed on other grounds, but Carlton said the case is being appealed to the 4th U.S. Circuit Court of Appeals.

Jeanette Doran, executive director of the North Carolina Institute for Constitutional Law, told CJ that this case could allow the courts to redefine what constitutes interstate commerce. Doran views the teeth-whitening issue as clearly one of interstate commerce if using current jurisprudence. Other interesting questions hinge on the scope of court decisions and whether the ultimate decision in the teeth-whitening case is broad enough to affect other state monopolies.

Doran said she sees no reason why licensing boards could not be reconfigured to give consumers or other non-practitioners a majority of the positions, so long as all members received expert advice and testimony.

In a document prepared for the 2011 Annual Meeting of the American Association of Dental Boards, Carlton warned dentists that the dispute between the state dental board and the FTC is not about teeth whitening but rather is the “FTC’s attempt to alter state constitutional authority and state legislated public policy without any constitutional and congressional authority of its own.”

Should the FTC’s actions be upheld, Carlton said all 2000 state-mandated occupational licensing boards throughout the country will be at risk of having general federal jurisdiction over state boards by overturning state-mandated “occupational and professional peer regulation and review.”

Paul Sherman, an attorney at Institute for Justice, a libertarian public interest law firm, says there has been “an explosion” in occupational licensing. “Fifty years ago, fewer than 5 percent of individuals needed a state license to practice their occupation or profession, but that figure is 30 percent and growing,” Sherman said.

In Connecticut, Sherman said the State Dental Commission ruled in June that individuals other than a licensed dentist who offered teeth-whitening services, even if the customers applied the product to their own teeth, are committing a crime punishable by up to five years in jail or $25,000 in civil penalties. The Institute for Justice has filed a lawsuit on behalf three entrepreneurs to challenge that ruling.

Sherman said the only difference between what non-dentist teeth-whitening providers are doing and what a consumer can do at home is the setting. Consumers still apply the products to their own teeth; they’re just doing it in a clean, comfortable setting.

Restricting non-dentists from providing these services “merely serves to enrich the dentists, not protect the public,” Sherman told CJ.

Carlton said that in some cases the customers aren’t applying the products to their own teeth, but that third parties are doing so and that violates state law. He also said expert dental opinion universally holds that teeth-whitening without a dental exam is a health risk.

Carlton said the one non-dentist consumer member of the N.C. dental board has said he believes the board was trying to protect the public, not stifle competition.

Now that the full FTC has issued its Final Order, Carlton said the board is considering whether to appeal that decision. If so, the appeal would be to the 4th Circuit.

Karen McMahan is a contributor to Carolina Journal.