In an effort to avoid the expense of additional discovery and to give the parties an opportunity to settle their dispute over the TMB’s new rules restricting telemedicine services in Texas, the Texas Medical Board (“TMB”) and Teladoc, Inc. (“Teladoc”) filed a joint motion in the U.S. District Court on November 2nd, 2016 requesting that the court defer the scheduling order and stay the litigation proceedings for 150 days. This motion comes about two weeks after the TMB voluntarily dismissed its 5th Circuit appeal of the federal district court’s refusal to dismiss Teladoc’s case against the TMB.
In response to the TMB’s rule changes in 2015, Teladoc filed a lawsuit in federal district court in Austin, arguing that the TMB violated federal antitrust laws in its regulation of telemedicine services in the state. In particular, Teladoc alleged that the TMB was seeking to block Teladoc, and other telemedicine providers, from competing with traditional brick-and-mortar physician practices, resulting in higher prices for patients and less access to physicians. In its lawsuit, Teladoc argued that the TMB acted contrary to the position urged by the vast majority of public commenters to its proposed regulation. Of the public comments received on the proposed rule, 203 of the 206 comments opposed amendments to 22 Tex. Admin. Code 190.8 (the “New Rules”), which was published by the TMB April 10, 2015. Teladoc alleged that the New Rules are discriminatory by practical effect and design because: (i) Teladoc’s business model depends on Teladoc being able to provide telehealth in Texas without a required in-person physical exam prior to treatment; (ii) no local benefits result from the rules given that the current regulatory scheme mandates standards of care dictating when an in-person physical exam is necessary; (iii) the current standard of care permits “on-call” services to patients of other physicians without an in-person physical exam; and (iv) the challenged regulations are, in fact, harmful to the public because they result in reduced access to affordable care. The court granted a preliminary injunction of the New Rules pending a trial on their validity, and then later denied the TMB’s motion to dismiss the suit, concluding that resolution of the legal issues in the case were inherently fact-intensive and that Teladoc’s allegations were sufficient at that point to allow the claim to move forward.
The TMB appealed the court’s decision to deny the TMB’s motion to dismiss the suit, but following submissions of several amicus briefs to the court, including a joint amicus brief between the Department of Justice and the Federal Trade Commission in support of Teladoc’s position, the TMB voluntarily dismissed the 5th Circuit appeal late last month. As a result, the action restarted the district court suit where the judge had ordered the parties to submit a revised joint proposed scheduling order on or before November 8, 2016. The Judge granted the stay on November 4, 2016, which defers the scheduling order and halts further litigation proceedings until April 19, 2017.