As acknowledged by an opinion issued by the California Attorney General’s office, the Supreme Court’s decision in North Carolina State Board of Dental Examiners v. Federal Trade Commission caught state governments by surprise. Most states have allowed their licensing boards to operate under the assumption that industry members were protected from antitrust suits under the state action immunity doctrine. The California Attorney General outlined some dramatic actions that she felt her State would need to consider. In response to warnings given by the Oklahoma Attorney General, Governor Mary Fallin issued an executive order recognizing that her state industry boards lacked active supervision and therefore, all licensure and prohibition actions were to be submitted to the Attorney General for review and written analysis of possible violation of law. But despite the surprise that state officials might express, there are voices advising that industry boards have long done more damage to competition than good for consumer protection. (See the hyperlinks provided below.) Consequently, supporters of open and competitive markets are forecasting a spike in lawsuits brought against industry boards.
The suppression of preneed by industry boards was once very pervasive, and the fruit of those actions still exist in the form of rules and ‘informal positions’. It has been more than a decade since this author appeared before one of those industry boards on behalf of a client challenging a position regarding proceeds from a guaranteed preneed contract. The board’s position had a very detrimental impact on the sale of preneed contracts, and nothing could be done to change the board’s collective minds. However the board and the client agreed to submit the issue for an independent review by the Attorney General’s office. The board was advised by an associate Attorney General, who framed the board position in a request to her boss. This author then presented the arguments for how the position was arbitrary and a restraint of trade. However, the Attorney General’s office applied a rather unique interpretation of ‘independent review’, and assigned the opinion request to the same attorney that represented the board. The FTC would not tolerate such behavior under the new active supervision guidelines. And, any board action taken in reliance on such a rule or position will be just as suspect.