Texas Medical Board Immune from Antitrust Suit Over Alternative Medicine Services

In an October 20th Order, a federal district court in the Western District of Texas granted a motion, by members of the Texas Medical Board (TMB) and the TMB itself, to dismiss a physician’s Sherman Act claims because the TMB is a state agency entitled to sovereign immunity under the Eleventh Amendment. The court also held that sovereign immunity extended to the individual board members of TMB because they were sued in their official capacities as state officials. In addition, the district court determined that the board members were further protected from plaintiff’s claims for prospective declaratory and injunctive relief due to Parker immunity, also known as state action immunity, and an affirmative defense to anticompetitive behavior, per the Supreme Court’s decision in Parker v. Brown, 317 U.S. 341 (1943).

In January 2017, plaintiff Dr. Allibone filed this lawsuit against TMB and its individual members, alleging Sherman Act antitrust violations along with constitutional and dormant Commerce Clause violations after TMB initiated formal disciplinary proceedings against Dr. Allibone in response to complaints by former patients and a former employee. Dr. Allibone’s antitrust theory posited that defendants conspired to benefit conventional allopathic physicians at the expense of Dr. Allibone and other physicians offering complementary and alternative medicine and integrative medicine services. As a pretext for initiating their conspiracy, Dr. Allibone alleged that the defendants used illegitimate complaints to threaten and recommend formal licensing disciplinary procedures against him and improperly selected conventional medicine practitioners, rather than specialists in the plaintiff’s field, to review complaints against him. Allibone alleged that this anticompetitive behavior damaged his practice, limited consumer choice by restricting complementary and alternative medicine services in Texas, and affected the cost of medical services in Texas.

Dr. Allibone countered the defendants’ argument that they were immune from suit as a state agency and state officials by arguing that TMB exercises full autonomy such that TMB is not a permanent arm of the state entitled to immunity. Relying on several Fifth Circuit cases that it characterized as dismissing claims against TMB based on sovereign immunity, the district court rejected Dr. Allibone’s arguments out-of-hand. In turn, the court found that Eleventh Amendment immunity applied equally to state agencies and state officials when sued in their official capacities.

While the court found that Eleventh Amendment immunity did not extend to Dr. Allibone’s claims for prospective declaratory and injunctive relief, per a rule set out in Ex Parte Young, 209 U.S. 123, 128 (1908), it nevertheless concluded that any “immunity gap” in this respect was covered by Parker state action immunity. Parker immunity requires a party to show (1) that any alleged anticompetitive conduct was taken pursuant to a clearly articulated and affirmatively expressed state policy to displace competition with state regulation, and (2) the state actively supervises the implementation of its policy. Because the Texas statutes granted TMB and its members broad power to regulate medical professionals, it satisfied the first prong of the Parker immunity standard. Moreover, because the State retained active supervision over the TMB’s disciplinary proceedings, as they are conducted before an administrative law judge and are subject to judicial review, the court found that defendants satisfied the second requirement for Parker immunity. In light of its ruling extending immunity to TMB and its board members, the Court declined to consider the merits of the antitrust claims.

TMB is not a stranger to antitrust lawsuits. In 2015 and 2016, TMB was the subject of a lawsuit filed by Teladoc over TMB’s limitations on the use of telemedicine. In that suit, TMB argued it was immune from suit as a state agency, an argument that was rejected by the district court because there was a lack of “active supervision” by the state. TMB appealed this decision but voluntarily dismissed the appeal for what some claimed to be “purely strategic” reasons. A related FTC investigation into whether TMB violated federal antitrust law when it adopted rules restricting telemedicine in the state was recently dropped this summer, in light of the passage last month of a state law removing a contentious restriction that limited the use of virtual diagnosis in most cases unless a doctor had conducted some kind of prior exam, either in person or through a video device.

The Case is Allibone v. Texas Medical Board, et al., 17-cv-00064 in the United States District Court for the Western District of Texas.

This article was originally printed in the ABA “Trades, Sports and Professional Associations” Blog, on November 3, 2017, and is reprinted here with permission.

©2017 by the American Bar Association. Reprinted with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.