implications for regulators from scotus anti-trust ruling presentation by david a. swankin president...
TRANSCRIPT
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Implications for Regulators
From SCOTUS Anti-Trust Ruling
Presentation by David A. SwankinPresident and CEOCitizen Advocacy Center
September 18, 2015
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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.”
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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
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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?
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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
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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.
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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.
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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.
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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.
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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).
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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.
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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).
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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.
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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
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Speaker Contact Information
Citizen Advocacy CenterDavid A. Swankin, President and CEO1400 16th Street NWSuite #101Washington, DC [email protected]