Download Approach #1

Implications for Regulators
From SCOTUS Anti-Trust Ruling
Presentation by David A. Swankin
President and CEO
Citizen Advocacy Center
September 18, 2015
Summary of the Supreme Court Decision
• Majority opinion: Kennedy (author), Roberts,
Ginsburg, Breyer, Sotomayor, and Kagan
• Holding: State board on which controlling
number of decision-makers are active market
participants in the occupation the board
regulates must be actively supervised to enjoy
antitrust immunity
• State’s “supervision need not entail day-to-day
involvement in agency’s operation or
micromanagement of its every decision.”
What is Active Supervision
• Test is “flexible and context-dependent”
• State’s “supervision need not entail day-to-day involvement in
agency’s operation or micromanagement of its every decision.”
–
Instead, critical inquiry is whether state’s review mechanisms provide “realistic
assurance” that anticompetitive conduct by non-sovereign actor promotes state
policy – not just the private actor’s individual interests
• Court identified “a few constant requirements of active supervision.”
–
Review of substance, not just procedures, of anticompetitive decision
–
Supervisory power to veto or modify particular decisions to ensure they accord
with state policy
–
Mere potential for state supervision is insufficient
–
The state supervisor may not itself be an active market participant
Dissenting Opinion
• Dissenting opinion: Alito (author), Scalia, and
Thomas
• Dissent identified several questions left
unanswered by the majority:
– What is a “controlling number” of decision makers?
– Who is an “active market participant?”
– What is the scope of the market in which a member
may not participate while serving on a board?
Implications for State Boards
• Options for State Boards going forward
• Refrain from violating the Federal antitrust laws in the first instance
• Minimize/be more cognizant of competitive effects of decisions
• Avoid the need for supervision by limiting active market participants
to minority of board (for example, through the use of retired
professionals)
• Meet active supervision through use of legislative committees,
umbrella state agencies (such as rules review commissions), and
other disinterest state officials
• Have states indemnify board members in case of antitrust damages
Examples of Board Rules or Policies that Could Be
Scrutinized Under Antitrust Laws
• Rules regulating Scope of Practice
–
Rules restricting what services particular types
of licensees may offer.
–
Rules regulating supervision of one type of
licensee by another.
–
Rules restricting how many subordinates a
licensee may employ.
Examples of Board Rules or Policies that Could Be
Scrutinized Under Antitrust Laws (continued)
• Restrictions on advertising or solicitations
–
Rules prohibiting disparagement of competitors.
–
Rules against “poaching” customers.
–
Rules restricting truthful advertising.
–
Rules restricting solicitation.
–
Rules regulating use of specific terms or phrases
in advertising.
Examples of Board Rules or Policies that Could Be
Scrutinized Under Antitrust Laws (continued)
• Price regulation
– Price floors or caps.
– Fee schedules.
– Restrictions on discounting.
Examples of Board Rules or Policies that Could Be
Scrutinized Under Antitrust Laws (continued)
• Restrictions on market participation
–
Rules restricting competitive bidding by licensees.
–
Rules regulating commercial dealings with non-licensees
(e.g. suppliers, third-party payers, etc.)
• Licensing requirements
–
Apprenticeship requirements.
–
Other licensing requirements imposing high burdens on
applicants.
Three Approaches for Addressing “a controlling number of
[a board’s] decision-makers are active participants in the
occupation the board regulates.”
Approach #1
Majority of public members (for example, California non-health
boards).
Approach #2
Mandate “Positive Qualification Criteria” for public members.
Approach #3
Multi-party board membership (all stakeholders, for example
community hospitals).
Addressing “Active Supervision by the
State” Standards identified by the court
-
State overseer must review SUBSTANCE of anti-competitive
decision, not merely the PROCEDURE followed.
-
Must have the power to VETO or MODIFY a particular
decision to assure in accord with state policy.
-
“Mere potential” is not enough; must be active oversight.
-
Overseer must NOT ITSELF be an active market
participant.
Approach #4, #5 and #6
Approach #4
Umbrella Board with Policy Oversight (for example, Washington State).
Approach #5
For Rulemaking, an independent review board (for example, North
Carolina).
Approach #6
For Scope of Practice, all or majority public review body (for example,
Ontario, Canada).
Approach #7 and #8
Approach #7
Make boards ADVISORY only (for instance Nebraska) – authority to
act on board recommendations is vested in a broad based state
health committee appointed by the Governor.
Approach #8
For rulemaking and Scope of Practice, expand the responsibilities
of an established sunset review committee to approve or reject
proposed board rules.
Approach #9 and #10
Approach #9
Require all proposed rules be approved by the state legislature.
Approach #10
Give additional oversight authority to State Attorney General
Speaker Contact Information
Citizen Advocacy Center
David A. Swankin, President and CEO
1400 16th Street NW
Suite #101
Washington, DC 20036
202-462-1174
[email protected]