Teladoc Wins Landmark Preliminary Injunction Against the Texas Medical Board

May 29, 2015

On Friday, May 29, Judge Robert Pitman issued a preliminary injunction in favor of Cleary Gottlieb client Teladoc. Judge Pitman held that Teladoc, one of the nation’s largest telehealth providers, has shown a likelihood of success on the merits of its antitrust claims against the Texas Medical Board. Teladoc is challenging the Board’s new rule prohibiting Texas physicians from treating a patient without a prior in-person physical examination by a physician or other qualified medical provider. The new rule would thus prohibit telehealth services like Teladoc’s that provide patients with convenient access to high-quality, affordable healthcare through remote consultations. Under the preliminary injunction, the Board is enjoined from implementing or enforcing its new rule pending final resolution of Teladoc’s claims.

This is the first decision on a Sherman Act claim against a state licensing board since the Supreme Court’s February 2015 decision in North Carolina Dental Board of Dental Examiners. The Texas Medical Board, which is made up of a majority of licensed physicians, did not contest that it is subject to antitrust scrutiny. Instead, it argued that its new rule would benefit public safety. Judge Pitman rejected the Board’s argument, noting that the courts have “explicitly rejected the notion that improved public safety [is] a sufficient justification for a society of professionals to adopt an anti-competitive policy.”

Judge Pitman also noted that, in any event, Teladoc had “presented significant evidence” undermining the Board’s stated safety justification. As Judge Pitman explained, the available empirical evidence does not support the Board’s claimed safety concerns. To the contrary, the available studies show that “[p]atients who use Teladoc were less likely to have a follow-up visit to any setting, compared to those patients who visited a physician’s office or emergency department.” In addition, Judge Pitman noted that, in light of existing Board rules requiring physicians to perform physical examinations where needed to meet the standard of care, the claimed safety justification for adopting a new rule mandating physical examinations in all cases was “suspect.”

Finally, Judge Pitman found that Teladoc had shown a substantial threat of irreparable injury from the new rule, and that an injunction was in the best interest of the public.