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September 2015 | www.cmsdocs.org

practice management Court agreed with Teladoc’s claims that the anti-competitive effect of the new rule will be “increased prices, reduced choice, reduced access, reduced innovation, and a reduced overall supply of physician services.”

Given the prohibitive effect of the new rule on providing patients with greater access to quality care, the Court concluded that the amendment would negatively impact consumers. While the medical board offered as its pro-competitive justification for the new rule that it will improve the quality of care, the Court found the board’s evidence to be anecdotal and outweighed by the evidence Teladoc put forward.

In its June motion to dismiss, the board asserted that when it adopted the new rule it was acting as sovereign with multiple layers of oversight and that sovereign oversight immunizes the board from federal antitrust law. The board’s detailed basis for its assertion of immunity has become critically important to its defense, since the district court judge made clear that without a successful claim of sovereign immunity the board is likely to lose to Teladoc.

Both the regulator and the business have a lot at stake. Despite the ongoing litigation in Texas, Teladoc’s initial public offering surged in early trading the morning of its July 1 launch, rising 60% from $19 per share to almost $31.

The market’s reaction was strong even though Teladoc has made plain that requiring in-person physical examinations as a precondition for medical services will disable the company’s business model. Teladoc has also made plain that losing the lawsuit in Texas will likely destroy its business.

The implications for physician regulators are also significant. If they are not able to successfully assert sovereign immunity as state actors, many of their existing rules will be subject to similar challenges and the way they go about regulating medicine will need to fundamentally change. For regulators unaccustomed to anticompetitive lawsuits, the scope of potential risk is vast. Yet the potential risk is no less jarring than the existing risk–a federal judge may soon order that their rules negatively impact competition when the board is struggling to do what it thinks is right to protect the public in the new world of ever-expanding telemedicine opportunities.

“The Illinois Insurance Code now prohibits a health insurer that provides coverage for telemedicine services from requiring inperson contact between a health care provider and a patient.”

Julian Rivera is a partner in the Health, Life Sciences and Education Unit of the Husch Blackwell, LLP, law firm. His practice includes the representation of health care providers and technology companies in business, regulatory and litigation matters. He can be reached at Julian.Rivera@ HuschBlackwell.com.

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