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Texas Medical Board Seeks State Action Immunity Protection in Fifth Circuit Brief

On June 17, the Texas Medical Board (“Board”) filed a brief with the Fifth Circuit Court of Appeals reiterating that the Board’s rulemaking processes are protected under the state action immunity doctrine, noting that the case could significantly impair state agencies in carrying out their governmental functions. The Board’s brief is the most recent action in the Teldoc case that has dragged on for almost two years and left little certainty for those who provide telemedicine services in the State.

As we previously reported, it all began when the Texas Medical Board issued an emergency proposed rule clarifying that physicians must perform a face-to-face or in-person physical examination of a patient prior to issuing a prescription or risk sanctions for unprofessional conduct. Teladoc, whose business model is based on providing health care services via telephone and without a face-to-face or in-person physical examination, sued the Texas Medical Board, alleging that the proposed rule violated antitrust laws. Late last year, a federal district court denied the Texas Medical Board’s motion to dismiss, finding that the Board is not entitled to state action immunity because its actions are not actively supervised by the state.

In Friday’s brief, the Board argued that the state action immunity doctrine applies to the Board’s official rulemaking.  In order for the Board to receive immunity from antitrust liability under the state action immunity doctrine, the challenged conduct must be “pursuant to a clearly articulated and affirmatively expressed state policy to replace competition with regulation.” In addition, the State must actively supervise the conduct with “procedures that suffice to make it the State’s own.”

First, the Board asserted that the clear articulation requirement was plainly met because Texas law directs the Texas Medical Board to license physicians and take disciplinary action when they fail to comply with professional standards and also specifically directs the Board to ensure that patients using telemedicine receive quality care. Under Fifth Circuit precedent, the Board argued, the requirement is fulfilled when state regulations clearly articulate a policy to displace unbridled competition with a system of regulation and enforcement of professional standards of care.

Second, in response to the district court’s finding that the Board’s actions are not actively supervised by the state, the Board asserted that it had in fact met the “flexible and context-dependent” active supervision requirement. It argued that the Board was much more likely to faithfully implement State policy, as opposed to acting as an active market participant pursuing private interests.  Specifically, (1) the Governor appoints Board members, as opposed to members being elected by other physicians; (2) the Governor has the power to remove Board members; and (3) the Board’s regulatory mission is broad and the Board’s physician members come from a wide array of practice types. Additionally, the Board argues that other aspects of Texas law further reduce the risk that the Board’s actions are not actively supervised by the State, including Texas’s sunshine and ethics laws, the Board members’ oaths to the State, and the Texas Legislature’s reporting requirements for sunset review and other purposes.  These factors minimized the risk that the Board would “forego its official mandate and act with only a private purpose.”  The Board noted that “finding a lack of active supervision in this context would not only intrude on the State’s sovereignty and alter the balance of cooperative federalism, but lead to several other negative consequences.”

For the time being, telemedicine providers in Texas can continue to practice under the prior regulations, which do not explicitly require an initial face-to-face or in-person examination prior to prescribing drugs.  However, telemedicine providers both inside and outside of Texas should continue to closely follow the Teladoc case as the case could have future repercussions for both state medical boards and telemedicine providers as they grapple with using telemedicine technologies to enhance patient care while balancing the need for patient safety.

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Dionne Lomax

Carrie Roll