Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Licensing board allegedly suppressed competition for pain management medical practices, (Apr 27, 2015)

By Linda O’Brien, J.D., LL.M.

A state medical licensing board has engaged in activity to suppress competition by enacting regulations that exclude non-physicians from owning pain management medical practices and requiring such clinics to register and obtain certification before they begin operation, according to a complaint filed in the federal district court in Jackson, Mississippi (Axcess Medical Clinic v. Mississippi State Board of Medical Licensure, April 24, 2015).

The Mississippi State Board of Medical Licensure—the state agency responsible for the licensure of medical and osteopathic physicians, podiatrists, physician assistants, radiologist assistants, and acupuncturists—is comprised on nine practicing physicians. Fitzhugh Lee Neal, Jr., a licensed physician, and Kenneth Charles Knight, a non –physician, own and operate medical clinics in Louisiana, including Axcess Medical Clinic.

The complaint states that Axcess Medical Clinic opened in 2010 and was granted a privilege tax license to conduct business as a medical office. The clinic was formed in accordance with the Mississippi Business Corporation Act, which allowed any person to be shareholder and did not impose any legal limitations on persons who may be shareholders of the corporation. In reliance on state law, Knight entered into numerous contracts necessary for the operation of Axcess, which is a clinic that treats patients suffering from chronic pain.

In March 2011, the Board amended its rules and regulations to require any clinic that is considered a pain management clinic to be owned by a hospital or licensed physician. The rule also required that a pain management clinic must register with the Board before it began operation. Owners of a clinic who were not physicians were not eligible for certification. The Board failed to respond to Knight’s request that Axcess be given “grandfather” consideration, since it was already in operation, and Knight was forced to divest his majority interest in Axcess without compensation so Dr. Neal could become its majority owner, according to the complaint.

The complaint also alleges that Dr. Neal submitted an application for renewal of the clinic registration from the Board in June 2012. In response, the Board requested additional information relative to Dr. Neal’s training, as well as tax returns necessary to indicate proof of ownership. In May 2013, Dr. Neal was notified that he was to appear before the Board to “show cause” why the Board should not deny his registration application. During the hearing, Dr. Neal was accused of practicing pain management without the proper qualifications and instructed to reduce the percentage of pain management patients to below 50 percent of his total number of patients. When the Board failed to issue the registration certification, Axcess was forced to temporarily close and lost a significant portion of its patient base when it later reopened.

The Board has significant market power to set policies and professional standards regarding the medical practice of physicians. It has engaged in activity to suppress competition and deprive consumers of choice by promulgating regulations that exclude non-physicians from owning pain management medical practices and requiring such clinics to register and obtain certification before they begin operation, Axcess charged. The Board’s rules wrongfully separate physicians whose practice include pain management patients but whose patient population falls under an arbitrary 50 percent limit and a physician whose patient population exceeds 50 percent. The treatment of patients requiring pain management does not differ depending upon the number of patients seen by the physician. There is no rational basis for this rule, the complaint states.

The complaint alleges that the pain management restrictions do not apply equally to physicians who treat similar patients. As a result of the Board’s anticompetitive conduct, medical clinic owners, like Knight, have been forced to divest their ownership interests, close their clinics, or have been excluded from the market altogether.

The plaintiffs assert claims for violations of Section 1 of the Sherman Act. The action seeks declaratory and injunctive relief, treble damages, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 3:15-cv-00307-WHB-JCG.

Attorneys: Randall E. Day, III (Mitchell Day Law Firm) for Axcess Medical Clinic, Inc., Kenneth Charles Knight, and Fitzhugh Lee Neal, Jr.

Companies: Axcess Medical Clinic, Inc.; Mississippi State Board of Medical Licensure

News: Antitrust MississippiNews