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FTC, State Dental Assn. Both Claim Victory in High Court Ruling

May 25, 1999|ROBIN FIELDS | TIMES STAFF WRITER

The Federal Trade Commission can regulate the California Dental Assn. and nonprofit business groups like it for restricting competition, the U.S. Supreme Court ruled Monday.

But the high court did not affirm the FTC's long-standing claim that the California dentists' group illegally prevents its members from advertising discount prices and making quality claims to the detriment of the state's consumers.

The Supreme Court returned that issue for more consideration to the U.S. 9th Circuit Court of Appeals in San Francisco, which upheld the FTC's position two years ago.

Both sides claimed a measure of victory in Monday's split ruling.

The FTC celebrated the court's unanimous confirmation of its authority over groups that help their for-profit members make money.

"We won on that big time," said Debra Valentine, the FTC's general counsel. "We will no longer waste time on pretrial skirmishes about whether we have jurisdiction over these groups."

In recent years, the agency has investigated or filed cases against groups representing pharmaceutical makers, music stores, farm-equipment dealers and translators for international conferences.

Dental association leaders took heart from the Supreme Court's 5-4 decision to have the San Francisco appeals court review whether its rules undermine competition.

"I view it as a statement that the FTC didn't prove its case," said Raoul Renaud, CDA's senior counsel.

Federal regulators have been at odds since 1993 with the professional group that represents 19,000 California dentists.

The FTC charged that CDA rules designed to prevent false or misleading advertisements also prohibited truthful ads, keeping crucial information from California consumers.

The CDA, which includes about 75% of the practicing licensed dentists in the state, forbids ads that tout discounts for seniors or new customers, unless they include exact prices for specific services. The association's code of ethics also restricts vague claims of "quality dentistry" or using the "latest techniques." But the CDA has not been enforcing its rules since the FTC acted in 1993.

"Our position is, if you can't verify it, you shouldn't claim it," Renaud said. "What does a consumer gain from an ad that says a dentist is 'the best' or has 'the lowest prices in town'? He still has to go out and check it."

But the FTC ruled the strictures also prevent dentists from competing with each other on price and hinder patients who want to comparison shop.

"Less information is getting to consumers," Valentine said. "And it's our job to make sure consumers can get enough information to choose quality services at the lowest possible price."

The CDA can censure or oust members who violate the advertising rules, effectively severing their lifeline to referrals and discounts on insurance.

The Supreme Court decided the appeals court needed to do a more in-depth analyses to determine if California dentists and consumers had indeed experienced adverse effects from CDA's policies.

"It seems to us that the CDA's advertising restrictions might plausibly be thought to have a net pro-competitive effect, or possibly no effect at all on competition," Justice David Souter said.

Though CDA officials say the advertising floodgates have not opened up since the FTC's interim order took effect in 1993, halting its enforcement actions, they say more ads with questionable claims have surfaced.

Advertising restrictions may matter more in dentistry than in other areas of medicine because, even in California, fewer patients are in managed-care plans, leaving patients more freedom to pick their own dentists.

"That type of advertising could still have a big impact in dentistry," said James Freed, a clinical professor at UCLA's School of Dentistry. "The reason people advertise is because it works."

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