South Carolina Board of Dentistry Settles Charges That it Restrained Competition in the Provision of Preventive Care by Dental Hygienists

The Federal Trade Commission today announced a consent order settling charges brought in September 2003 that the South Carolina State Board of Dentistry unlawfully restrained competition in violation of Section 5 of the FTC Act by adopting a rule that required a dentist to examine every child before a dental hygienist could provide preventive care – such as cleanings – in schools. The Board adopted the rule in 2001, after the South Carolina legislature had eliminated a statutory requirement that a dentist examine each child before a hygienist could perform preventive dental care in schools.

The Board is a state regulatory agency, composed primarily of practicing dentists, that licenses and regulates dentist and dental hygienists. The FTC alleged that the Board’s anticompetitive conduct led to fewer children receiving preventive dental care in schools – particularly economically disadvantaged children. As a result of legislation enacted by the South Carolina legislature in 2003, the Board no longer requires a dentist to examine each child before a hygienist’s exam in a public health setting. The consent order requires the Board to publicly announce its support for the current state policy – that hygienists can provide such care in public health settings without a dentist’s examination – and to notify the Commission before adopting rules or taking other actions related to preventive dental services provided by dental hygienists in public health settings.

“As this case reflects, state regulatory boards that restrict competition in ways not contemplated by state law are subject to the antitrust laws,” said Jeffrey Schmidt, Director of the FTC’s Bureau of Competition. “This case is important because it protects access to preventive dental services for children – especially those from low-income families – in schools.”

Terms of the Consent Order

The Commission’s consent order has two main features. First, it requires the Board to affirm and publicize its support for the state legislative policy that prevents the Board from requiring a dentist examination as a condition of dental hygienists providing dental care in public health settings. The order requires the Board to post the announcement on its website and publish it in its newsletter, as well as to distribute it to every licensed dentist and dental hygienist in South Carolina, as well as to new licensees for the next three years. It also requires the Board to send the announcement to all school district superintendents within the state. The Board’s announcement supporting the legislative policy can be found in Appendix A of the consent order on the FTC’s website. Second, to prevent similar anticompetitive conduct in the future, the order requires the Board to provide written notice to the Commission prior to the promulgation of any proposed or final rule, regulation, policy, issuance of a formal complaint in a disciplinary action, or other action of the Board, relating to the provision of preventive dental services by dental hygienists in public heath settings.

Based on various factors particular to this case, the Commission has determined that it is not necessary to include a “cease and desist” provision that directly prohibits the Board from resuming its past conduct. Thus, the order will increase the FTC’s ability to monitor the Board’s future conduct, and is likely to help deter the Board from imposing similar restraints on public health preventive dental care in the future. The order expires in 10 years.

Case History

In 2000, the South Carolina legislature eliminated a statutory requirement that a dentist examine each child before a hygienist could perform preventive dental care in a public health setting. The goal was to allow schoolchildren, particularly those from low-income families, to receive preventive dental care. In July 2001, however, the Board adopted an emergency regulation that re-imposed the dentist examination requirement. As a result of the Board’s actions, a hygienist-owned company that had begun sending hygienists to schools to provide preventive care was forced to change its business model and was able to serve far fewer patients.

The Board’s emergency regulation expired in six months, in January 2002. By that time, however, the Board had published a proposal to adopt the dentist examination requirement as a permanent regulation. After a state administrative law judge ruled that the Board’s proposed regulation was unreasonable and contrary to state policy, the Board abandoned its attempt to make the regulation permanent. The state legislature subsequently enacted legislation in May 2003 expressly providing that examinations by a dentist are applicable in some settings when dental hygienists provide preventive care, but they are not required in public health settings under the direction of the state health department.

In July 2004, the Commission denied the Board’s motion to dismiss the Board’s complaint based on the Board’s assertion that its actions were protected by the state action doctrine. The Commission, however, held the Board’s motion to dismiss in abeyance pending discovery on factual issues relating to the risk of recurrence of the challenged conduct. 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, and the Commission stayed discovery during the pendency of the Board’s appeal on state action. In May 2006, the Court of Appeals dismissed the appeal for lack of jurisdiction. In January 2007, the Supreme Court denied the Board’s petition for certiorari seeking review of the appellate court’s dismissal of the appeal.

The Commission vote approving the complaint and consent order was 5-0. The order will be subject to public comment for 30 days, until July 19, 2007, after which the Commission will decide whether to make it final. Comments should be sent to: FTC, Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, DC 20580.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

Copies of the complaint, consent order, and analysis to aid public comment are available now on the FTC’s Web site. The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust@ftc.gov, or write to the Office of Policy and Coordination, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.