Teladoc, Inc. v. Texas Medical Board

September 9, 2016 • Legal Briefs
By Ilya Shapiro and Jayme Weber

Teladoc, Inc. is a health services company that provides access to state‐​licensed physicians through telecommunications technology, usually for a fraction of the cost of a visit to a physician’s office or urgent care center. Teladoc sued the Texas Medical Board—comprised mostly of practicing physicians—because the board took steps to protect the interests of traditional physicians by imposing licensing rules such as requiring the in‐​person examination of patients before telephonic treatment is permitted. Because the board isn’t supervised by the Texas legislature, executive, or judiciary, Teladoc argues that its self‐​dealing violates federal antitrust laws—and the federal district court agreed. The Texas Medical Board has now appealed to the U.S. Court of Appeals for the Fifth Circuit, where Cato filed an amicus brief urging the court to affirm the lower‐​court ruling and protect the fundamental right to earn a living. Our brief argues that the Supreme Court has consistently held that the right to earn a living without unreasonable government interference is guaranteed by the Constitution, and that this protection dates back much earlier, to Magna Carta and the common law. Indeed, the right to earn a living is central to a person’s life and ability to pursue happiness. As Frederick Douglass said in his autobiography, “To understand the emotion which swelled in my heart as I clasped this money, realizing that I had no master who could take it from me—that it was mine—that my hands were my own, and could earn more of the precious coin—one must have been in some sense himself a slave.… I was not only a freeman but a free‐​working man.” Licensing laws, which can be valid if protecting a legitimate public interest, are a tool of the state often employed by private market participants to restrict competition. By creating barriers to entry, existing firms or practitioners mobilize the state to wield monopoly power. This results in higher prices and fewer choices for consumers and diminished opportunities for entrepreneurs and workers. While it may be appropriate to create a regulatory body exempt from antirust laws to achieve a specialized purpose, it’s inappropriate to grant private actors populating a licensing board limitless ability to claim such state‐​action immunity unless they are appropriately supervised by state officials. Without active supervision, private parties may wield state regulatory power purely for their own self‐​interest. The Supreme Court has said that this active supervision standard is “flexible and context‐​dependent,” N.C. State Bd. of Dental Exam’rs v. FTC (2014), but not flimsy and porous. Moreover, there are other ways for states to obtain the specialized knowledge of professionals without creating regulatory bodies that rubber stamp the assertions of active practitioners. Teladoc offers an innovative service that makes obtaining healthcare easier and more affordable. The Fifth Circuit should protect its right to do so and the right of all persons to pursue a trade or career without onerous government‐​backed constraints instituted by private actors.

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