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Recent Development and Implication of Teladoc, Inc. v. Texas Medical Board

What is the case is about?


Teledoc, Inc (“Teladoc”), the plaintiff in this case, is the largest telehealth provider in the nation. ((Stephen Morea, Telehealth Services in the US, IBISWorld, August, 2015, at 25.)) Individuals can register on Teladoc’s web portal and utilize the portal as a platform to request telephone consultation from board certified physicians employed by Teladoc. ((Teladoc, Inc. v. Tex. Med. Bd., 112 F. Supp. 3d 529, 533 (W.D. Tex. 2015)) “Based on medical records and history, reported symptoms, and other information the physicians elicit during the consultation, the physician dispenses medical advice, including referring the registrant to a physician’s office, dentist, or emergency room, and in some cases, prescribing medications.” ((Id.))


Medical practice in Texas is regulated by Chapter 190 of the Texas Administrative Code, which “sets forth disciplinary guidelines for the practice of medicine in Texas.” ((Id.)) On January 16, 2015, the Texas Medical Board (“TMB”), a state agency “statutorily empowered to regulate the practice of medicine in Texas,” issued an emergency ruling amending one of the rules in Chapter 190, Rule 190.8, which previously “required “face-to-face” examination prior to prescription of a dangerous drug or controlled substance” to mandate a “‘face-to-face visit or in-person evaluation’ before a physician can issue a prescription.” ((Id. at 534.)) TMB then engaged in formal rulemaking and adopted this new rule in April 10, 2015. ((Id.))


In response, Teladoc filed the current lawsuit in the Western Texas District Court

on April 29, 2015, asserting that the TMB have committed violation of antitrust law and the Commerce Clause of the Constitution in adopting the New Rule 190.8, and sought for a preliminary injunction preventing the enforcement of the New Rule. ((Id.))  The rationale behind this being that active members on the TMB are licensed physicians in Texas who have incentive to restrict access to telemedicine in order to prevent competition. ((Matthew Loughran, Teladoc Case Could Have Nationwide Effect, Lawyers Say, Bloomberg BNA (Jan. 20, 2016), The district court granted this preliminary injunction on May 29, 2015. ((Teladoc, Inc., 112 F. Supp. 3d at 544.))


TMB then filed an appeal arguing that they have immunity from antitrust liability because of their status as a state actor, but the judge refused to dismiss the case on this ground. ((Matthew Loughran, Teladoc Case Could Have Nationwide Effect, Lawyers Say, Bloomberg BNA (Oct. 19, 2016),


TMB appealed this ruling to the Fifth Circuit under the collateral order doctrine, but recently, they filed a motion to voluntarily dismiss their appeal, and the Fifth Circuit granted this motion on October 17, 2015. ((Id.))  The case will now return to the lower court where the TMB maintains their argument that they are immune from antitrust liability as a state actor. ((Id.))


Why does this case matter?


Telemedicine is a high growth industry with promising potential. Its revenue in 2015 was $645 million with growth expected to increase at an annualized rate of 39.9% to $3.5 billion in the next five years. ((Morea, supra note 1, at 8.))


This growth is driven by multiple factors, including 1) the growth of adults aged 65 ((Id. at 5.)), 2) increase in private insurance due to the Affordable Care Act ((Id. at 9.)), and 3) numerous clinical research that have validated the efficacy of telehealth treatment. ((Id. at 8.))

Telemedicine has a huge potential in terms of cost savings for healthcare providers, by way of reducing hospital visits ((Id.)), as well as the potential to increase quality of care for chronic illness by allowing healthcare providers to gather more information prior to visits, and monitor patient behaviour post visit. ((Laurence C. Baker et al., Integrated Telehealth And Care Management Program For Medicare Beneficiaries With Chronic Disease Linked To Savings, Health Affairs (Sept. 2011), The ability of telemedicine to reach rural areas that currently lack reliable healthcare services also makes telemedicine a great vehicle to address unmet medical needs in the U.S. ((Loughran, supra. note 11.))




Despite of all these benefits, telemedicine has not reached its full potential due to strict regulations that creates barrier to practice or pay for telemedicine care ((Michael Ollove, Can Telemedicine Be The Future Of Health Care?, The Huffington Post (Oct. 27, 2015 12:49 pm), Aside from regulations such as the one enacted by the TMB, other states have enacted rules such as requiring patients be accompanied by a health professional during telemedicine sessions, or enacted rules limiting Medicaid coverage to patients who live a minimum distance from their providers. ((Id.)) Each state’s medical licensure law creates further barriers as they often require doctors to be licensed in every state where they practice medicine, whether digitally or physically. ((Id.)) Even though states, such as Texas, that have been slow to embrace telemedicine law have cited concerns over quality of care as a reason for adopting stringent telemedicine laws, policymakers pushing for telemedicine law reforms have argued that these laws are more often motivated by fear of competition among more traditional practitioners. ((Id.))


The ruling on this case will have a significant impact on the telemedicine industry, as a ruling in favor of Teladoc will provide a spring board for telemedicine providers and lobbying groups to push for repealing stringent telemedicine laws. As regulation remains one of the greatest bottleneck for telemedicine providers, removing this barrier will certainly result in even steeper growth in the telemedicine industry, allowing it to achieve its full potential of meeting medical needs of aging and rural populations.



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