FTC Staff Comment to the Hon. Harry Hill Concerning Missouri H.B. 529 and S.B. 232 to Restrict Dentist Advertising
us-ftc-advocacy-filings-a3545ebca095744541ef2c0e9a31edffFTC Staff Comment to the Hon. Harry Hill Concerning Missouri H.B. 529 and S.B. 232 to Restrict Dentist AdvertisingAdvocacy Filing
Matter Number
P874678
Suit" 1437 5' r.lIt Monroe Street ChicaIlO. lUinoll ~ Area Code 312 353-8156 The Honorable Harry Hill State Representative State Capitol Jefferson City, MO 65101 Dear Mr. Iiill: May 13, 1987 - ,~- .;.- . ~- '::~MiSSIDN AUTHORIZEO The Federal Trade Commission staff is pleased to have this- opportunity to respond to your letter of March 3, 1987, - . i requesting our comments on House Bill 529 and Senate Bill 212. These bills would restrict advertising by dentists. We recognize and support Missouri's interest in preventing deceptive advertising practices by dentists, but we believe that HB 529 and SB 232' would adversely affect consumer welfare by limiting the disse~in~tion of truthful, non-deceptive information about Missouri dentists and their services. We therefore recommend that neither of these bills be enacted. For similar reasons, we also urge Missouri to reconsider its existing statutory pro- visions that restrict dentists in advertising their areas of specialization. 1.,- INTEREST· AND EXPERIENCE OF THE FEDERAL TRADE COMMISSION our"interest in this legislation stems from the Commission's mandate to enforce the antitrust and consumer protection laws of the United States. Section 5 of the FTC Act prohibits unfair methods of competition, and unfair or deceptive acts or practices •• In enforcing this statute, the Commission staff has gained substantial experience in analyzing the impact of vari~u6 restraints on competition and the costs and benefits to consumers 0& such re8traint8.~; 1 ~he views presented in this letter are those of the Chicago Regional Office and Bureaus of Competition, Consumer Protection, and Economics and are not necessarily those of the Commission itself. The Commission has, however, voted to authorize the staff to present these comments. TOTAL P. 1~
'J , ! The Honorable Harry Hill Page 2 i. ... ~ For several years, the Commission .has -been -investigating the effects of public and private restrictions on the business practices of dentists, optometrists, lawyers, physicians, and other state-licensed professionals. Over the past few years, the Commission staff has submitted numerous written comments to state boards of dentistry analyzing the effects on consumer welfare ~f various regulations governing advertising and other practices. In addition, as part of the Commission's efforts to foster competition among licensed professionals more generally, we have examined the effects of public and private restrictions that limit the ab~lity of professionals to en0age in nondeceptive advertising. ~tudies in other professional areas suggest that prices for professional goods and services are lower where .' <. 2 3 See, e.g., Letter to Ms. Nancy T. reldman, Executive Director, Virginia State Board of Dentistry (April 23, 1987) i Letter to Mr. R.B. Thompson, Executive Director, Kentucky Board of Dentistry (Nov. 21, 1986); Letter to Ms. Nancy T. Feldmarl, Executive Director, Virginia State Board cf Dentistry (April 2, 1986); Letter to Mr. H. Fred Varn, Executive Director, Florida Board of Dentistry (Nov. 6, 1985); Letter to Mr. Dale J. Forseth, Executive Secretary, Minnesota Board of Dentistry (Sept. 23, 1985); Letter to Mr. Robert J. Siconolfi, Executive Secretary, New Jersey State BODrd of Dentistry (March 19, 1985). See, e.g., In re American Medical Associaton, 94 F.T.C. 701 . (1979), afftd, 638 F.2d 443 (2d Cir. 1980), aff'd memo by an egually divided Court, 455 U.S. 676 (1982). The thrust of the AMA decision -- "that broad bans on advertising and soliciting are inconsistent with the nation's public policy" (94 F.T.C. at 1011) -- is consistent with the reasoning of recent Supreme Court decisions involving professional regulations. See,~ e.g., Zauderer v. Office of Disciplinary Counsel of t~. Supreme Court of Ohio, 471 U.S. 626 (1985) (holding that an attorney may not be disciplined for soliciting legal business ( through printed advertising containing truthful and nondecep- tive information and advice regarding the legal rights of potential clients or for using nondeceptive illustrations or pictures); Bates v. State Bar of Arizona, 433 U.S. 350 (1977) (holding a state supreme court prohibition on advertising invalid under the First Amendment and' according great impor- tance to the role of advertising in the efficient functioning of the market for professional services); and Virginia State Board of Pharmacy v. Virginia Citizens Council, 425 U.S. 748 (1976) (holding a Virginia prohibition on advertising by pharmacists invalid). ---------- ._----_ .... ---
..,. '.-~ The Honorable Harry Hill Page 3 advertising exists than where it is restricted or prohibited. 4 Although some concern has been voiced that advertising may lead to lower quality services, the empirical evidence suggests that the quality of services provided by firms that advertise is at least as h~gh as, if not higher than, that of firms that do not advertise. Therefore, to the extent that truthful and nondeceptive advertising is restricted, higher prices and a decrease in consumer welfare are likely to result. For this reason, we believe that only false or deceptive advertising should be prohibited. Any other standard is likely to suppress the dissemination of potentially useful information and may- contribute to an increase in prices. I1. ANALYSIS OF ADVERTISING RESTRAINTS CONTAINED IN HB 529 AND SB 232 A. Current Law , Missouri law currently prohibits a general dentist from stating that he or she is a "specialist" or from using the phrase "limited to the specialty of" unlese the dentist holds a Missouri specialist certificate and license. Those dentists who do not meet these criteria are further prohibited from using terms 4 5 6 Cleveland Regional Office and Bureau of Economics, Federal Trade Commission, Improving Consumer Access to Legal Services: The Case for Removing Rescrictions on Truthful Advertising (1984); Bureau of Economics, Federal Trade Commission, Effects of Restrictions on Advertising and ~ Commercial Practice on the Professions: The Case of Optometry (1980); Benham and Benham, Regulating Through th-e Professions: A Perspective on Information Control, 18 J.L. & Econ. 421 (1975); Benham, The Effects of Advertising on the Price of Eyeglasses, 15 J.L. & Econ. 337 (1972). Bureau of Economics, Federal Trade Commission, Effects of Restrictions on Advertising and Commetcia1 Practice in the Professions: The Case of Optometry (1980); Muris and McChesney, Advertising and the Price and Quality of Legal Services: The Case for Legal Clinics, 1979 Am. B. Found._ .. Research J. 179 (1979). See also, Cady, Restricted Advertising and Competition: The Case of Retail Drugs (1976); McChesney and Muris, The Effects of Advertising on the Quality of Legal Services, 65 A.B.A.J. 1503 (1979). Mo. Rev. Stat. S 332.321(2) (14) (e) (19B4).
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The Honorable.Harry Hill
Page 4
denoting state-recognized specialties in their advertisements
unless they ~lso state that they are not licensed in Missouri as
specialists. In addition, Missouri dentists may not advertise
any terms denoting or implying any specialty areas whigh are not
recognized by the American Dental Association ("ADA"). These
provisions impose extensive restrictions on dentists who wish to
advertise one or more specific areas of dentistry. In light of
the analysis that follows, we recommend that Missouri consider
whether le~s restrictive provisions might adequately protect
consumers.
We believe it is important that a dentist with expertise or
experience in specific areas be allowed to communicate t~at. ;
expertise to the public. In our view, only specialization clafms
that are deceptive, such as a claim that falsely states or
implies that a dentist is a specialist, need be prohibited.
Dentists should be free to make truthful, nondeceptive claims
that they concentrate in a particular field of dentistry, that
their .p"ractice is limited to a particular area, or to otherwise
truthfully advertise their expertise in a particular area of
dentistry regardless of whether they have a specialist
certificate and license.
B. Proposed section 332.321(2) (14) (e) would significantly
expand the current restraints
Under HB "5~9 and 58 232, false, misleading or deceptive
advertisements or solicitations would include, but not be limited
to:
[a]ny announcement in any form including the
terms "specialist" or "specializing in", or
toe phrases "limited to the specialty of" or
"?ractice limited to", or other like or
slmilar terms or phrases unless each person
named in conjunction with the term or phrase,
or responsible for the announcement, holds a
.-
7
8
9
I d. at § 3 3 2 • 3 21 ( 2) (14) (f). Sec t ion i3 3 2 . 321 ( 2) (14) (f) 0 f
Missouri's current la>'l is Section 332.321(2) (14) (g) of
HB 529 and SB 232.
rd. at § 332.321(2) (14) (g). This section would become
5332.321(2) (14) (i) in HB 529 and SB 232.
In this letter, we are not commenting upon the general _
merits of states' certifying professionals as specialists;
h .: ---.. ----,.~~.~- .. ------------~-------- ... -~-:~.~~--~ ..._ .... _-.:.,~'~.~~.:l~~~~:~~·~.';:.;::;X;~:~~~~ .. ;.~~~:· _ .... _ ~ • .•-~r. ~ ••_ . r, -"'"- .................: •• , ..~ .. ... ~ The Honorable Harry Hill Page 5 valid Missouri certificate and license evide~Bing that he is a specialist in that area. The bills would prohibit a dentist from truthfully advertising that his or her practice is "limited to" a particular area of dentistry unless he or she holds a valid Missouri dentistry specialist certificate and license. The State of Missouri licenses eYiry dentist to practice in all branches of dentistry. Since Missouri also allows dentists to limit their practice to particular areas of dentistry, these dentist~ should be able to truthfully advertise that their practice is, for ". ~; example, "limited to children's dentistry" or to "cosmetic dentistry" without having to be certified and licensed as a Missouri dental specialist. Dentists may acquire expertise through education, training, or practice in a partiCUlar field even though such development does not lead to certification: By prohi~iting dentists from truthfully advertising their areas of concentration, Missouri would be depriving consumers of useful information that allows them to compare the quality and price of services provided by all legally qualified practitioners general dentists ?s well as specialists. There is no reason to believe that consumers will be misled by the phrase ."practice limited to." While this phrase may be a term' of art among dentists denoting formal certification as a specialist, we are not aware of any evidence indicating that such a phrase means anything more to a consumer than that a dentist has limited his or her practice to a particular area of dentistry. In addition to prohibiting the use of the phrase"practi~e lim~ted to," proposed section 332.321(2) (14) (e) would also expand current law to prohibit dentists from using "other like or .-;' similar terms or phrases" in describing their practice unless they hold a valid Missouri specialist certificate. This provision is troublesome because it is unclear what exactly "other like or similar terms or phrases" might be held to include. For example, would a dentist not certified as aI 10 11 This section, and the sections cited hereinafter, are from HB 529. The language in SB 232 is virtually identical. Th~,_ underlined lanquage is the new language proposed by the two bills that is to amend current Missouri law. Mo. Rev. Stat. § 332.050(2) (1984).
.- ". ,:- ':•.~ ~ "-'....:::.8'.:~- ",.,"'f"., .. '. ~.~."" ... ~ The Honorable Harry Hill Page 6 specialist be able to state that he or she has "twenty years of experience" in a particular field of dentistry? Since the proposed law is unclear, it is likely that some dentists will refrain from advertising out of fear of crossing the vague line of illegality. This provision would further limit the truthful, nondeceptive information that is available to consumers. We are aware that the Missouri Supreme Court recently found the state's present law on specialiSt advertising to be consistent with the First Amendment. 2 HB 529 and 5B 232, however, would appear to result in a significant further- narrowing of dentists' commercial speech. Thus, the prop~sed ~ sections might or might not pass constitutional muster. Yet even if the advertising restrictions contained in these bills were found to be compatible with the First Amendment, we still believe that Missouri consumers would be better served by more narrowly tailored advertising restrictions. c. Proposed section 332.321(2) (14) (f) would appear to prohibit the same advertising practices as previously described proposed section 332.321(2) (14) (e) Under HB 529 and SB 232, false, misleading or deceptive advertisements or solicitations would include, but not be limited to: [a)ny announcement in any form including the terms uspecialist", or "specializing in" or the phrases "limited to the speciaity of" or "practice limited to", or other like or similar terms or phrases unless the area of practice so referred to is a specialty area recognized by the American Dental Association. .- ( We question the need for HB 529 and SB 232's proposed section 332.321(2) (14) (f). Proposed section 332.321(2) (14) (e) would forbid the use of the terms "specializing in," "limited to," or other "like or similar terms or phrases" unless a dentist is a certified specialist under Missouri law. ~ince Missouri only certifies dentists in the specialty areas approved by the American Dental Association for specialty practice, it appears that proposed section 332.321(2) (14) (f) would prohibit the same advertising practices as proposed section 332.321(2) (14) (e). 12 Parmley v. Missouri Dental Board, 719 S.W.2d 745 (1986) (en bane) •
·:'~ ~, -'. ., -: , .. "r '---"-'~,. ,,', ': :,~'::;~: ;7-:~~~~~: .'~:~ ~~~;;t:~?::~H,~~~:~:~)J~;;~:i_,~~~:::';::~~~:;~ -' ."- ~ • "- - "J .- I, '.'~ The Honorable Harry Hill Page 7 Thus, our previous analysis of proposed section 332.321(2) (l4) (e) is also applicable to proposed section 332.321(2) (14) (f). III. ANALYSIS OF MANDATORY DISCLOSURES CONTAINED IN H8 529 AND S8 232 A. Overview As a general matter, we believe that mandatory disclosures often deter advertising. HB 529 and SB 232 impose several new; disclosure requirements that appear burdensome, overlapping, ',ant'.! to some degree confusing. B. proposed section 332.321(2) (14) (h) is unclear and may confuse consumers Under HB 529 and SB 232, false, misleading o~ deceptive advertisements or solicitations would include, but not be limited to: [a]ny announcement of services by a general practitioner which does not state in a prominent manner that the dental practice is one of general dentistry. Said announcement of the general practice of dentistry must be at least as prominent as the announcement of services offered. The meaning of proposed section 332.321(2) (14) (h) is uncleaL- Would dentists not certified as specialists merely be required' to state prominently that they are general dentists, or would th~ be required to state that their actual practice is one of general dentistry? If the latter interpretation is the one that ~. ult!mately prevails, then a Missouri dentist who wishes to advertise and provide only a particular dental service would be forced to advertise that he or she provides and is interested in providing general dental services. Indeed, this provision could ultimately provide a disservice to those consumers who respond under the assumption that the general dentist provides a full range of dental services when in fact the dentist is willing to provide only certain dental services.
