FTC Staff Comment Before the Virginia State Board of Dentistry Concerning Proposed Regulations to Broaden Permissible Advertising

FEDERAL TRADE COMMISSION
WASHINGTON. D. C. 20580.
BUR£AU or
OONSUMEIl PaOTECI1ON
-; 	COMMISSION
APPROVED .~~
Anril 	3, 	1986
Nancy 	T. 	Feldman
Executive 	Director
Virginia 	State 	Board 	of 	Dentistry
517 	West 	Grace 	Street
P.O. 	Box 	27708
Richmond 	VA 	23261
Dear 	Ms. 	Feldman:
The 	Federal 	Trade 	Commission's 	BUieaus 	of 	Consumer
Protection, 	Economics, 	and 	Competition 	are 	pleased 	to 	offer
comments 	in 	response 	to 	your 	invitation 	of 	February 	3, 	1986, 	for
public 	comments 	on 	the 	regulations 	that 	the 	vi 2ginia 	Board 	of
Dentistry 	proposes 	to 	adopt 	on 	April 	11, 	1986.
As 	you 	are 	aware, 	we 	submitted 	comments 	in 	1984 	to 	Richard
Morrison, 	Regulatory 	Review 	Coordinator, 	and 	in 	1985 	to 	Ralph
Axselle, 	Chairman 	of 	the 	Governor's 	Regulatory 	Reform 	Advisory
Board, 	concerning 	laws 	and 	regula§ions 	governing 	a 	number 	of
professions, 	including 	dentistry. 	In 	the 	interest 	of 	brevity,
we 	will 	incorporate 	by 	reference 'portions 	of 	those 	letters 	as
noted 	below.
1 	These 	comments 	represent 	the 	views 	of 	the 	Bureaus 	of 	Consumer
Protection, 	Economics, 	and 	Competition 	of 	the 	Federal 	Trade
Commission 	and 	do 	not 	necessarily 	represent 	the 	views 	of 	the
Commission 	or 	any 	individual 	Commissioner. 	The 	Commission,
however, 	has 	authorized 	the 	submission 	of 	these 	comments.
2 	Our 	comments 	are 	directed 	only 	to 	those 	provisions, 	both
regulatory 	and 	statutory, 	that 	deal 	with 	advertising, 	trade
names, 	commercial 	practices, 	or 	prepaid 	dental 	plans. 	We 	offer
no 	opinion 	on 	the 	legality 	or 	desirability 	of 	other 	portions 	of
the 	proposed 	regulations.
3 	Letter 	to 	Richard 	Morrison 	from 	Carol 	T. 	Crawford, 	Director,
Bureau 	of 	Consumer 	Protection, 	August 	21, 	1984 	(hereinafter
referred 	to 	as 	"Morrison 	letter"), 	and 	letter 	to 	Ralph 	Axselle
from 	Carol 	T. 	Crawford, 	Director, 	Bureau 	of 	Consumer 	Protection,
May 	22, 	1985 	(hereinafter 	referred 	to 	as 	"Axselle 	letter").
Co?ies 	of 	both 	letters 	are 	attached.

Ms. 	Nancy 	T. 	Feldman 	-2-
The 	Board 	of 	Dentistry, 	in 	response 	to 	this 	regulatory
review 	process, 	is 	proposing 	new 	regulations 	that 	will 	broaden
the 	scope 	of 	permissible 	advertising 	by 	dentists. 	While 	these
regulations 	represent 	a 	significant 	improvement 	over 	the 	existing
rules, 	they 	still 	contain 	troublesome 	provisions 	regarding 	the
offer 	of 	discounts 	and 	fee 	advertising 	for 	nonroutine 	services.
The 	adoption 	of 	these 	provisions, 	without 	the 	modifications
discussed 	below, 	could 	have 	significant 	anticompetitive 	effects.
Finally, 	we 	again 	draw 	the 	Board's 	attention 	to 	a 	number 	of
statutory 	restrictions 	on 	the 	use 	of 	trade 	names, 	the 	commercial
practice 	of 	dentistry, 	and 	the 	functioning 	of 	prepaid 	dental
plans 	in 	Virginia. 	We 	believe 	the 	statutory 	restrictions
discussed 	below 	may 	impede 	competition 	and 	we 	therefore 	urge 	the
Board 	to 	consider 	making 	recommendations 	to 	the 	Legislature 	for
appropriate 	changes 	in 	these 	statutes.
Advertising 	Regulations
The 	proposed 	regulations 	eliminate 	provisions 	in 	earlier
versions 	of 	the 	regulations 	that 	prohibited 	advertising 	of
statistical 	data, 	information 	on 	past 	performance,
representations 	of 	quality, 	and 	the 	use 	of 	testimonials,
showmanship 	or 	puffery. 	As 	noted 	in 	our 	earlier 	comments 	and
incorporated 	by 	reference 	herein 	(Morrison 	letter 	at 	pp.2-3 	and
Axselle 	letter 	at 	pp.9-l0), 	the 	removal 	of 	these 	prohibitions
will 	allow 	the 	dissemination 	of 	nondeceptive 	information 	that
will 	aid 	consumers 	in 	their 	choice 	of 	dental 	services. 	The 	Board
also 	rejected 	previously 	proposed 	regulation 	4.6.B.2, 	which 	would
have 	required 	disclosure 	of 	the 	time 	period 	an 	advertised 	fee
would 	be 	in 	effect, 	if 	the 	offer 	was 	good 	for 	less 	than 	ninety
days. 	We 	agree 	with 	the 	Board's 	decision 	because 	disclosure
requirements 	increase 	advertising 	costs 	and 	should 	be 	imposed
only 	where 	necessary 	to 	avoid 	deception.
Proposed 	regulation 	4.4.A. 	("Practice 	Limitation") 	allows
dentists 	who 	limit 	their 	practices, 	but 	who 	are 	not 	Board-
eligible 	or 	ADA-certified 	specialists, 	to 	advertise 	the 	fact 	that
their 	practice 	is 	limited, 	provided 	that 	they 	state 	in 	addition
t~at 	they 	are 	general 	dentists. 	This 	regulation-represents 	a
substantial 	improvement 	over 	the 	former 	prohibition 	contained 	in
Rule 	7.A.2.d 	on 	any 	statements 	that 	implied 	specialization 	where
a 	dentist 	was 	not 	a 	certified 	specialist. 	Athough 	we 	are 	not
convinced 	that 	the 	disclosure 	requirement 	is 	necessary 	to 	avoid
deception, 	the 	proposed 	disclosure 	may 	not 	be 	unduly 	burdensome
and 	permits 	dentists 	to 	promote 	the 	whole 	range 	of 	services 	they
are 	licensed 	to 	perform.
,
j
I
II
I

Ms. 	Nancy 	T. 	Feldman 	-3-
The 	proposed 	regulations 	contain 	two 	provisions 	that 	we
objected 	to 	in 	our 	earlier 	comments 	and 	that 	we 	continue 	to
believe-viII 	have 	anticompetitive 	effects. 	First, 	proposed
regulation 	4.4.C. 	allows 	offers 	of 	discounts 	only 	when 	the
nondiscounted 	price 	also 	is 	stated 	in 	the 	advertisement. 	As
noted 	in 	our 	earlier 	comments 	and 	incorporated 	by 	reference
herein 	(Morrison 	letter 	at 	p.3 	and 	Axselle 	letter 	at 	p.lO), 	there
is 	nothing 	inherently 	deceptive 	in 	advertising 	a 	discount 	without
stating 	the 	nondiscounted 	price. 	Moreover, 	such 	a 	requirement
effectively 	bans 	ac.ross-the-board 	discounts 	and 	imposes 	increased
costs 	on 	dentist~ who 	advertise 	discounts. 4 	As 	a 	result,
dentists 	are 	less 	likely 	to 	offer 	discounts, 	thereby 	lessening
price 	competition 	and 	increasing 	the 	likelihood 	that 	consumers
will 	pay 	higher 	prices 	for 	dental 	services. 	Therefgre, 	we 	urge
the 	Board 	to 	consider 	eliminating 	this 	requirement.
Second, 	proposed 	regulation 	4.4.E. 	limits 	fee 	advertising 	to
certain 	listed 	and 	defined 	routine 	dental 	services. 	When 	this
rule 	was 	first 	proposed 	as 	rule 	4.6.E. 	we 	outlined 	its
potentially 	harmful 	effects 	and 	we 	incorporate 	those 	comments 	by
reference 	herein 	(Axselle 	letter 	at 	pp.ll-l2). 	We 	continue 	to
believe 	that 	this 	regulation 	will 	deter 	the 	advertising 	of 	fees
for 	new 	or 	innovative 	techniques 	and 	will 	result 	in 	the 	use 	of
terminology 	that 	may 	be 	confusing 	and 	not 	easily 	understood 	by
consumers.
I
i
I
I
4 	Such 	requirements 	may 	also 	pose 	constitutional 	problems. 	In
New 	York, 	a 	federal 	district 	court 	found 	that 	the 	First 	Amendment
rights 	of 	a 	pharmacist 	were 	violated 	by 	state 	rules 	that
effectively 	banned 	the 	offer 	of 	across-the-board 	discounts 	for
prescription 	drugs. 	South 	Ogden 	CVS 	Store, 	Inc. 	v. 	Ambach, 	493
F.Supp. 	374 	(S.D.N.Y. 	1980).
5 In 	a 	situation 	involving 	similar 	restrictions 	on 	the
advertising 	of 	discounts, 	the 	Federal 	Trade 	Commission 	filed 	a
complaint 	against 	and 	ultimately 	negotiated 	a 	consent 	agreement
with 	the 	Louisiana 	State 	Board 	of 	Dentistry. 	As'part 	of 	the
agreement, 	the 	Board 	was 	ordered 	not 	to 	prohibit 	dentists 	from
advertising 	the 	availability 	of 	discounts. 	The 	Order 	further
provided 	that 	the 	Board 	could 	find 	discount 	advertising 	to 	be
fraudulent, 	false, 	or 	deceptive 	if 	the 	price 	advertised 	as 	a
discount 	were 	in 	fact 	the 	usual 	price 	charged 	by 	the 	dentist 	or
if 	the 	dentist 	failed 	to 	provide 	the 	same 	quality 	and 	components
of 	service 	at 	the 	discounted 	price 	that 	are 	normally 	provided 	at
the 	regular 	or 	nondiscounted 	price.

Ms. 	Nancy 	T. 	Feldman 	-4-
Thus, 	we 	urge 	the 	Board 	to 	reconsider 	our 	previous 	comments 	agd
recommend 	that 	the 	Board 	eliminate 	proposed 	regulation 	4.4.E.
Finally, 	Virginia 	Code 	Section 	54-187(7), 	which 	bans 	claims
of 	superiority, 	appears 	to 	prohibit 	at 	least 	some 	nondeceptive
advertising. 	We 	continue 	to 	encourage 	the 	Board 	to 	recommend, 	at
the 	appropriate 	time, 	statutory 	revision 	of 	this 	provision. 	In
the 	meantime, 	we 	urge 	the 	Board 	to 	interpret 	this 	provision 	to
allow 	the 	greatest 	possible 	amount 	of 	nondeceptive 	advertising
that 	is 	consistent 	with 	the 	statute.
Trade 	Names
The 	proposed 	regulations 	do 	not 	address 	the 	use 	of 	trade
names 	by 	dentists. 	We 	recognize 	that 	Section 	54-184 	of 	the
Virginia 	Code, 	which 	prohibits 	dentists 	from 	practicing 	under 	a
name 	other 	t~an 	their 	own 	or 	that 	of 	dentists 	operating 	a
partnership 	or 	professional 	corporation, 	may 	restrict 	the 	Board's
actions 	in 	this 	area. 	For 	the 	reasons 	discussed 	in 	our 	earlier
comments 	and 	incorporated 	by 	reference 	herein 	(Morrison 	letter 	at
p.5), 	we 	believe 	that 	the 	use 	of 	trade 	names 	can 	lead 	to
significant 	benefits 	for 	consumers, 	and 	we 	continue 	to 	encourage
the 	Board 	to 	recommend 	the 	modification 	or 	repeal 	of 	Section 	54-
184.
Commercial 	Practice
As 	noted 	in 	our 	previous 	comments 	and 	incorporated 	by
reference 	herein 	(Morrison 	letter 	at 	pp.4-8 	and 	Axselle 	letter 	at
p.13), 	we 	have 	concerns 	about 	Virginia's 	statutory 	ban 	on
employment, 	partnership, 	and 	other 	business 	relationships 	between
dentists 	and 	other 	persons 	(Va. 	Code 	Sections 	54-146 	and 	54-183)
and 	the 	ban 	on 	dentists 	leasing 	space 	from 	commercial
establishments 	(Va. 	Code 	Section 	54-147.1). 	We 	believe 	these
prohibitions 	hinder 	the 	development 	of 	high-volume, 	lower-priced
practices 	that 	may 	be 	able 	to 	reduce 	costs 	through 	economies 	of
scale, 	and 	encourage 	the 	Board 	to 	recommend 	the 	modification 	or
repeal 	of 	these 	statutory 	provisions.
6 	Proposed 	regulation 	4.4.D. 	("Retention 	of 	Bro~dcast
Advertising") 	requires 	that 	"a 	pre-recorded 	copy 	of 	all
advertisements 	on 	radio 	or 	television 	must 	be 	retained 	for 	a 	six-
month 	period 	following 	the 	final 	appearance 	of 	the
advertisement." 	It 	is 	unclear 	from 	this 	language 	if 	the 	Board
intends 	to 	prohibit 	any 	broadcast 	that 	is 	not 	prerecorded--a
restriction 	that 	we 	would 	oppose. 	If 	the 	Board's 	intention 	is 	to
guarantee 	that 	copies 	of 	all 	advertising 	be 	preserved 	in 	a 	form
that 	allows 	the 	Board 	to 	review 	advertising 	where 	necessary, 	this
can 	be 	done 	without 	requiring 	that 	the 	material 	be 	prerecorded.
Therefore, 	we 	suggest 	that 	the 	Board 	clarify 	the 	language 	in 	this
provision 	by 	deleting 	the 	word 	"pre-recorded."

Ms. 	Nancy 	T. 	Feldman
Prepaid 	Dental 	Plans
-5-
As 	discussed 	in 	our 	previous 	comments 	and 	incorporated 	by
reference 	herein 	(Morrison 	letter 	at 	pp.7-8 	and 	Axselle 	letter 	at
pp.13-l4), 	we 	also 	have 	concerns 	about 	several 	statutory
restrictions 	affecting 	prepaid 	dental 	plans. 	Section 	38.2-898
requires 	that 	a 	majority 	of 	the 	board 	of 	directors 	of 	a 	prepaid
dental 	plan 	be 	dentists. 	Such 	a 	requirement 	prevents 	consumers
and 	others 	from 	establishing 	and 	operating 	such 	plans 	in
competition 	with 	provider-controlled 	plans. 	Such 	lay 	boards 	are
capable 	of 	obtaining 	the 	necessary 	professional 	expertise 	without
relinquishing 	control 	of 	the 	board 	to 	dentists.
Section 	38.1-903 	requires 	that 	subscribers 	to 	a 	dental 	plan
"have 	free 	choice 	of 	any 	participating 	dentist." 	If 	this
provision 	is 	interpreted, 	as 	it 	is 	in 	some 	states, 	to 	require
that 	participation 	be 	open 	to 	any 	licensed 	provider, 	it 	may
prevent 	plans 	from 	offering 	lower-cost 	programs 	that 	may 	involve
some 	limitations 	on 	a 	subscriber's 	choice 	of 	providers.
Section 	38.1-904 	limits 	the 	ability 	of 	the 	Insurance
Commission 	to 	license 	more 	than 	one 	plan 	in 	the 	same 	geographical
area. 	This 	provision 	does 	not 	appear 	to 	serve 	any 	substantial
public 	interest 	and 	could 	be 	used 	to 	protect 	established 	plans
from 	new 	market 	entrants, 	thereby 	lessening 	competition 	and
increasing 	the 	likelihood 	of 	higher 	prices 	for 	subscribers.
Section 	38.1-909 	forbids 	dental 	plans 	from 	engaging 	in 	any
other 	business. 	This 	restriction 	may 	unnecessarily 	prevent 	plans
from 	diversifying 	and 	offering 	their 	subscribers 	additional
products 	or 	benefits 	packages. 	Subject 	to 	appropriate 	regulatory
oversight, 	diversified 	dental 	plans 	may 	be 	able 	to 	compete 	more
effectively 	and 	to 	offer 	better 	services 	to 	the 	public.
We 	believe 	that 	all 	of 	these 	restrictions 	on 	prepaid 	dental
plans 	may 	reduce 	competition 	in 	the 	market 	for 	dental 	services
and 	tend 	to 	raise 	prices 	above 	the 	level 	that 	would 	otherwise
prevail, 	without 	providing 	any 	countervailing 	public 	benefit.
Thus, 	we 	continue 	to 	encourage 	the 	Board 	to 	support 	the 	removal
of 	these 	restrictions.
Conclusion
The 	Board 	has 	made 	significant 	strides 	in 	removing
unnecessary 	restraints 	on 	advertising 	by 	dentists 	and 	we 	support
these 	changes. 	However, 	we 	continue 	to 	have 	serious 	reservations
with 	proposed 	regulations 	regarding 	the 	offer 	of 	discounts 	and
fee 	advertising 	for 	nonroutine 	services. 	If 	adopted 	with,the
modifications 	discussed 	above, 	these 	regulations 	could 	result 	in
real 	and 	substantial 	benefits 	to 	the 	public. 	They 	would 	permit
I
I
II
I
I
I

Ms. 	Nancy 	T. 	Feldman 	-6-
the 	public 	to 	have 	access 	to 	a 	wider 	range 	of 	truthful
information 	about 	the 	availablity 	of 	dental 	services. 	They 	also
would 	help 	to 	stimulate 	valuable 	competition 	among 	dentists 	and,
in 	the 	process, 	improve 	the 	efficiency 	with 	which 	dental 	services
are 	delivered, 	while 	still 	protecting 	the 	public 	from 	false 	or
deceptive 	advertising.
4:~r~Y'g r£e~
Amanda 	B. 	Pedersen
Actin9 	Director
Enclosures
I
IIi
I
I

._ 	t
BlJ1l£AV OF
CONSUMER PRon:CTIO~
~EOERAL TRADE:· COMMISSION
WASHINGTON. O. C. 20580
August 	21,.1984
Mr. 	Richard 	Morrison
Department 	of 	Health 	Regulatory 	Boards
Commonwealth 	of 	Virginia
517 	West 	Grace 	Street
P.O. 	Box 	27708
Richmond, 	VA 	23261
Dear 	Mr. 	Morrison:
COMMISSION
APPROVED
·The 	Federal 	Trade 	Commission's 	B~reausof Consumer
Protection, 	Economics 	and 	Competition 	are 	pleased 	to 	respond 	to
your 	invitation 	to 	assist 	you 	in 	your 	regulatory 	review 	of 	the
virginia 	State 	Boards 	of 	Dentistry 	and 	Medicine, 	and 	to 	provide
comments 	conce~ning the 	effects 	of 	various 	restrictions 	on 	health
professionals. 	In 	these 	comments 	we 	address 	the 	following
points: 	(1) 	restrictions 	on 	advertising 	by 	dentists 	and
physicians, 	(2) 	restrictions 	on 	the 	business 	practices 	of 	these
professionals, 	including 	corporate 	employment, 	commercial
locations, 	and 	trade 	name 	practice 	and 	(3) 	restrictions 	on 	the
formation 	and 	operation 	of 	prepaid 	dental 	plans.
The 	Federal 	Trade 	Commission 	seeks 	to 	promote 	the 	national
policy 	of 	encouraging 	competition 	among 	members 	of 	licepsed
professions 	to 	the 	maximum 	extent 	compatible 	with 	othe~
legitimate 	state 	and 	federal 	goals. 	For 	several 	years; 	the
Commission 	has 	been 	investigating 	the 	effects 	of 	restrictions 	on
the 	business 	practices 	of 	professionals, 	including 	optometrists,
dentists, 	lawyers, 	physicians 	and 	others. 	Our 	goal 	is 	to
identify 	and 	seek 	the 	removal 	of 	such 	restrictions 	that 	impede
competition, 	increase 	costs 	and 	harm 	consumers 	without 	providing
countervailing 	benefits. 	The 	Commission 	has 	also 	been
investigating 	the 	effects 	of 	other 	restrictions 	affecting 	health
care 	delivery 	and 	has 	sought 	to 	identify 	restrictions 	that 	may
limit 	competition 	and 	harm 	consumers 	without 	providing
1 	These 	comments 	represent 	the 	views 	of 	the 	Bureaus 	of 	Consumer
Protection, 	Economics 	and 	Competition 	of 	the 	Federal 	Trade
Commission 	and 	do 	not 	necessarily 	represent 	the 	views 	of 	the
Federal 	Trade 	Commission 	or 	any 	individual 	Commissioner. 	The
Federal 	Trade 	Commission, 	however, 	has 	reviewed 	these 	comments
and 	has 	voted 	to 	authorize 	their 	presentation.
2 	We 	have 	found 	no 	similar 	restrictions 	in 	the 	regulations 	of
the 	virginia 	Boards 	of 	Pharmacy 	or 	Nursing, 	also 	currently 	being
reviewed 	by 	your 	Department.
I
I
II
i
III

, 	Mr'1 Ri 7hard. Mor rison
...~
l" ,~
-2-
countervailing 	benefits. 	In 	offering 	these 	comments, 	we
acknowledge 	that 	we 	are 	not 	in 	a 	position 	to 	offer 	advice 	on 	what
minimum 	level 	of 	quality 	of 	care 	the 	states 	should 	require.
For 	some 	time, 	the 	Commission 	has 	been 	concerned 	about
pUblic 	and 	private 	testrictions 	which 	limit 	the 	abil~ty of
professionals 	to 	engage 	in 	nondeceptive 	advertising. 	Studies
have 	shown 	that 	prices 	for 	professional 	goods 	and 	services 	ire
lower 	where 	advertising 	exists 	than 	where 	it 	is 	prohibited.
Studies 	have 	also 	shown 	that 	while 	advertising 	leags 	to 	lower
prices 	it 	does 	not 	lead 	to 	lower 	quality 	services. 	Therefore,
to 	the 	extent 	that 	nondeceptive 	advertising 	is 	restricted, 	higher
prices 	and 	a 	decrease 	in 	consumer 	welfare 	may 	well 	result. 	For
this 	reason, 	we 	believe 	that 	only 	false 	and 	deceptive 	advertising
should 	be 	prohibited. 	Any 	other 	standard 	is 	likely 	to 	suppress
the 	dissemination 	of 	potentially 	useful 	information 	and 	may 	well
contribute 	to 	an 	increase 	in 	prices.
Several 	provisions 	of 	virginia 	law 	appear 	to 	ban 	the
dissemination 	of 	nondeceptive 	information. 	Va. 	Code 	S54-187(7)
(1982) 	bans 	advertising 	claims 	of 	superiority 	by 	dentists 	and
S54-3l7(3) 	bans 	~laims of 	superiority 	by 	physicians. 	These
provisions 	would 	appear 	to 	prohibit 	at 	least 	some 	nondeceptive
claims 	and 	therefore, 	at 	the 	appropriate 	time, 	you 	may 	wish 	to
consider 	recommending 	any 	appropriate 	statutory 	revision. 	In
addition, 	we 	would 	urge 	you 	to 	interpret 	these 	provisions 	to
avoid 	prohibiting 	nondeceptive 	advertising 	to 	the 	extent
possible. 	Some 	of 	the-dental 	regulations 	which 	we 	discuss 	below
-- 	for 	example, 	the 	provisions 	prohibiting 	all 	quality 	claims 	--
e.g., 	In 	re 	American 	Medical 	Association, 	94 	F.T.C. 	701
aff'd, 	638 	F.2d. 	443 	(2d 	Cir. 	1980), 	aff'd 	memo 	by 	an
divided 	court, 	455 	U.S. 	676 	(1982).
Bureau 	of 	Economics, 	Federal 	Trade 	Commission, 	Effects 	I)f
Restrictions 	on 	Advertising 	and 	Commercial 	Practice 	in 	the
Professions: 	The 	Case 	of 	Optometry 	(1980) 	(discussed 	at 	page 	9
below); 	J. 	Cady, 	Restricted 	Advertising 	and 	Competition: 	The
Case 	of 	Retail 	Drugs 	(1976); 	McChesney' 	Muris, 	The 	Effects 	of
Advertisin 	on 	the 	ualit 	of 	Le 	al 	Services, 	65 	A.B.A.J. 	1503
); 	MurlS 	'Me 	esney, 	A vertlslng 	an 	t 	e 	price 	and 	Quality
of 	Legal 	Services: 	The 	Case 	for 	Legal 	Clinics, 	1979 	Am. 	B.
Found. 	Research 	J. 	179 	(1979).
Bureau 	of 	Economics, 	Federal 	Trade 	Commission, 	Effects 	of
Restrictions 	on 	Advertising 	and 	Commercial 	Practice 	in 	the
Professions: 	The 	Case 	of 	Optometry 	(1980) 	(discussed 	at 	page 	9
below); 	Benham 	and 	Benham, 	Re 	ulatin 	throu 	h 	the 	Professions: 	A
Perspective 	on 	Information 	Contro, 	J. 	L. 	, 	Econ. 	4 	975);
Benham, 	The 	Effects 	of 	Advertising 	on 	the 	Price 	of 	Eyeglasses, 	15
J. 	L. 	, 	Econ. 	337 	(1972).
5

Mr. 	Richard 	Morrison~~
\ 	. ,..- -3-
Board 	of 	Dentistry 	Rule 	7.A.4.a. 	bans 	advertising 	of 	any
statistical 	data 	or 	other 	information 	relating 	to 	past
performance 	which 	could 	be 	interpreted 	as 	a 	representation 	of
superiority 	or 	quality. 	Quality 	information, 	as 	well 	as 	price
and 	availability 	information, 	is 	important 	to 	consumers 	because
consumers 	ordinarily 	seek 	lower 	prices 	for 	a 	given 	level 	of
quality 	and 	higher 	quality 	for 	a 	given 	price. 	Nondeceptive
statistical 	data 	or 	other 	data 	on 	past 	performance 	may 	be
particularly 	valuable 	in 	assessing 	quality 	because 	they 	provide
consumers 	with 	objective, 	factual 	information. 	Of 	course,
incomplete 	data 	that 	mislead 	consumers 	into 	believing 	that 	past
results 	are 	more 	favorable 	than 	they 	really 	are 	could 	be 	banned
as 	deceptive. 	.
Rule 	7.A.4.c. 	also 	bans 	representations 	regarding 	quality,
including 	implications 	of 	quality 	and 	statements 	of 	opinion.
This 	section 	might 	be 	interpreted 	to 	prohibit 	the 	dissemination
of 	much 	truthful 'information, 	including 	statements 	about 	a
practitioner's 	office 	equipment, 	personnel 	or 	techniques.
Truthful 	claims 	about 	a 	practitioner's 	background, 	training 	or
experience, 	which 	may 	be 	very 	useful 	to 	consumers 	in 	choosing 	a
practitioner, 	may 	also 	be 	banned 	by 	this 	rule. 	Statements 	of
opinion, 	which 	could 	also 	be 	nondeceptive 	in many 	cases, 	are 	also
banned.
Rule 	7.A.2.d. 	prohibits 	advertising 	which 	states 	or 	implies
that 	a 	dentist 	is 	a 	certified 	or 	recognized 	specialist 	other 	than
as 	permitted 	by 	the 	American 	Dental 	Association 	(ADA). 	We 	are
concerned 	that 	this 	Rule 	may 	be 	broadly 	interpreted 	to 	prohibit,
for 	example, 	advertising 	of 	denture 	services 	as 	implying 	that 	the
practitioner 	is 	a 	specialist 	in 	the 	area 	of 	prosthodontics, 	or
advertising 	of 	root 	canals 	as 	implying 	that 	the 	practitioner 	is 	a
specialist 	in 	the 	area 	of 	endodontics, 	thus 	effectively
prohibiting 	dentists 	from 	advertising 	many 	of 	the 	services 	they
routinely 	perform.
Rule 	7.A.2.f. 	requires 	disclosure 	of 	the 	original 	price
whenever 	a 	discount 	is 	advertised. 	This 	has 	been 	interpreted 	in
policy 	Statement 	114 	to 	prohibit 	advertising 	which 	states 	·call
and 	ask 	about 	our 	family, 	student 	and 	senior 	citizen
discounts.· 	Since 	it 	is 	impractical 	t'state 	in 	an 	advertisement
the 	regular 	prices 	of 	all 	the 	hundreds 	of 	services 	a 	dentist
provides, 	this 	rule 	implicitly 	bans 	all 	advertising 	of 	discounts
unless 	only 	a 	few 	specific 	services 	are 	advertised. 	Thus, 	this
rule 	wouid 	prohibit 	dissemination 	of 	coupons 	entitling 	the 	bearer
to 	a 	percentage 	discount 	on 	all 	of 	a 	dentist's 	services, 	as 	well
as 	advertising 	of 	discounts 	on 	all 	services 	to 	certain 	groups.
Truthful 	discount 	price 	advertising 	such 	as 	these 	examples 	would
likely 	be 	particularly 	useful 	to 	consumers. 	We 	are 	aware 	of 	no
evidence 	that 	such 	advertising 	is 	inherently 	misleading 	to
consumers. f
I
If

· 	~, 	Ri~hard Morrison 	~ 	-4-
7
~ule 	7.A.4.d., 	which 	prohibits 	"showmanship, 	puffery,"
"slogans," 	and 	so 	on, 	in 	effect 	prohibits 	dentists 	from 	using
nondeceptive 	advertising 	and 	marketing 	techniques 	commonly 	used
by 	other 	providers 	of 	goods 	and 	services •. These 	techniques 	are
used 	by 	advertisers 	to 	attract 	and 	hold 	consumers' 	attention;
they 	help 	to 	communicate 	the 	message 	more 	effectively 	to
consumers. 	Such 	techniques 	do 	not 	appear 	to 	be 	inherently
deceptive 	and 	prohibiting 	them 	may 	well 	decrease 	the
effectiveness 	of 	advertising, 	resulting 	in 	higher 	costs 	and
possibly 	less 	frequent 	advertising. 	In 	addition, 	the 	vagueness
of 	this 	provision 	may 	chill 	nondeceptive 	advertising 	in 	general.
The 	statutes 	and 	regulations 	governing 	dentists 	and 	several
statutory 	provisions 	governing 	physicians 	also 	contain 	provisions
that 	prohibit 	certain 	forms 	of 	commercial 	practice. 	The 	Virginia
Code 	prohibits 	employment 	of 	dentists 	by 	lay 	corporations 	and
bans 	associations 	and 	partnerships 	between 	dentists 	and 	other
persons 	for 	the 	performance 	of 	dental 	services. 	These
restrictions 	prohibit, 	for 	example, 	partnerships 	between 	dentists
and 	physicians 	or 	other 	professionals 	who 	might 	provide
complementary 	health 	care 	services 	in 	a 	single 	office, 	as 	well 	as
associations 	between 	dentists 	and 	lay 	persons 	or 	business
corporations. 	Such 	restrictions, 	which 	limit 	the 	availability 	of
equity 	capital 	for 	professional 	practices, 	may 	well 	increase 	the
cost 	of 	capital 	to 	professional 	firms 	and 	hinder 	the 	development
of 	high-volume 	practices 	that 	may 	be 	able 	to 	reduce 	costs 	through
economies 	of 	scale.
The 	v~rginia Code 	also 	prohibits 	both 	dentists 7 and
physicians 	from 	practicing 	their 	professions 	as 	lessees 	of 	any
commercial 	or 	mercantile 	establishment. 	These 	provisions 	prevent
physicians 	and 	dentists 	from 	locating 	their 	offices 	inside
commercial 	establishments 	such 	as 	drug 	or 	department 	stores, ,
where 	they 	can 	establish 	and 	maintain 	a 	high 	volume 	of 	patients
because 	of 	the 	convenience 	of 	such 	locations 	and 	because 	of 	a
high 	level 	of 	"walk-in" 	patients. 	This 	higher 	volume 	may, 	in
turn, 	allow 	professional 	firms 	to 	realize 	economies 	of 	scale
which 	can 	be 	passed 	on 	to 	consumers 	in 	the 	form 	of 	lower
prices. 	Restrictions 	on 	leasing 	from 	commercial 	establishments
may, 	therefore, 	hinder 	the 	development 	of 	such 	high-volume,
lower-priced 	practices.
6 	Va. 	Code 	S54-146, 	S54-183 	(1982). 	Dentists 	even 	appear 	to 	be
prohibited 	from 	hiring 	lay 	persons 	to 	manage 	their 	dental
businesses. 	Va. 	Code 	S54-l46 	(1982). 	This 	appears 	to 	be 	an
unnecessary 	restriction 	on 	the 	ability 	of 	dentists 	to 	hire
persons 	with 	business 	expertise 	to 	handle 	the 	non-professional
aspect 	of 	a 	dental 	office.
Va. 	Code 	S54-147.1 	(1982).
8 	Va. 	Code 	S54-278.1 	(1982).
I
I
III

Mr:t 	Richard 	Horr ison ,
• 	r"'~' -5.-
virginia 	law 	also 	prohibits 	dentists 9 	from 	practicing 	under
a 	trade 	name •. 	Trade 	names 	can 	be 	virtually 	essential 	to 	the
establishment 	of 	large 	group 	practices 	and 	chain 	operations 	which
can 	offer 	lower 	prices. 	Trade 	names 	are 	chosen 	because 	they 	are
easy 	to 	remember 	and 	because 	they 	can 	convey 	useful 	information
such 	as 	the 	location 	or 	other 	characteristics 	of 	a 	practice.
Over 	time, 	a 	trade 	name 	can 	also 	come 	to 	be 	associated 	with 	a
certain 	level 	of 	quality, 	service 	and 	price, 	thus 	facilitating
consumer 	search. 	Without 	trade 	names, 	larger 	practices 	must 	use
lengthy 	and 	difficult-to-remember 	names 	that 	include 	the
individual 	names 	of 	all 	the 	practitioners 	or 	owners 	of 	a
practice, 	and 	that 	communisate 	less 	information, 	as 	currently
required 	by 	Virginia 	law. 	The 	name 	of 	the 	practice 	also 	has 	to
be 	changed 	periodically 	as 	memqers 	join 	or 	leave 	the 	firm,
contributing 	to 	consumer 	confusion. 	Thus, 	without 	convenient 	and
enduring 	trade 	names, 	development 	of 	high-volume, 	low-price
practices 	becomes 	more 	difficult.
Restrictions 	such 	as 	these 	on 	the 	business 	practices 	of
professionals 	can 	reduce 	competition 	in 	health 	care 	markets 	by
preventing 	the 	formation 	and 	development 	of 	innovative 	forms 	of
professional 	practice 	that 	may 	be 	more 	efficient, 	provide
comparable 	quality, 	and 	offer 	competition 	to 	traditional
providers. 	For 	example, 	in 	a 	case 	challenging 	various 	ethical
code 	provisions 	enforced 	by 	the 	American 	Medical 	Association
(AMA), 	the 	Commission 	found 	that 	AMA 	rules 	prohibiting 	physicians
from 	working 	on 	a 	salaried 	basis 	for 	a 	hospital 	or 	other 	lay
institution 	and 	from 	entering 	into 	partnerships 	or 	similar
relationships 	with 	non-physicians 	unreasonably 	restrtined
competition 	and 	thereby 	violated 	the 	antitrust 	laws. 	The
Commission 	concluded 	that 	the 	AHA's 	prohibitions 	kept 	physicians
from 	adopting 	more 	economically 	efficient 	business 	formats 	and
that, 	in 	particular, 	these 	restrictions 	precluded 	competition 	by
organizations 	not 	directly 	and 	completely 	under 	the 	control 	of
physicians. 	The 	Commission 	also 	found 	that 	there 	were 	no
countervailing 	procompetitive 	justifications 	for 	these
restrictions.
Proponents 	of 	such 	restrictions 	claim 	that 	they 	are
necessary 	to 	maintain 	a 	high 	level 	of 	quality 	in 	the 	professional
services 	market. 	For 	example, 	they 	claim 	that 	employee-employer
and 	other 	relationships 	between 	professionals 	and 	non-
9 	Va. 	Code 	S54-l84 	(1982). 	Va. 	Code 	S54-3l7 	(1982) 	prohibits
physicians 	from 	practicing 	under 	a 	false 	or 	assumed 	name. 	Many
states 	interpret 	such 	language 	to 	prohibit 	trade 	name 	usage.
11 	In 	re 	American 	Medical 	Association, 	94 	F.T.C. 	701 	(1978)~
aff'd, 	638 	F.2d. 	443 	(2d 	Cir. 	1980), 	aff'd 	memo 	by 	an 	equally
oivlded 	court, 	455 	U.S. 	676 	(1982).
10 Va. 	Code 	S54-l84 	(1982).
II
I
1
II

~r. 	Klcnara 	Morrlson
professionals 	will 	result 	in 	lay 	interference 	in 	the 	professional
judgment 	of 	licensees, 	thus 	causing 	a 	decline 	in 	quality. 	They
assert 	that_lay 	corporations 	such 	as 	chain 	retailers 	would 	be
undUly 	concerned 	with 	profits,-not with 	the 	quality 	of
professional 	care. 	Allegedly, 	while 	such 	firms 	might 	offer 	lower
prices, 	they 	might 	also 	encourage 	their 	professional 	employees 	to
cut 	corners 	in 	order 	to 	maintain 	profits. 	The 	public 	would
suffer 	doubly, 	according 	to 	those 	who 	favor 	restrictions, 	because
professionals 	who 	practice 	in 	traditional, 	non-commercial
settings 	would 	be 	forced 	to 	lower 	the 	price 	and 	quality 	of 	their
services 	in 	order 	to 	compete.
The 	Federal 	Trade 	Commission's 	Bureaus 	of 	Economics 	and
Consumer 	protection 	have 	issued 	two 	studies 	that 	provide 	evidence
that 	restrictions 	on 	commercial 	practice 	of 	optometry 	--
including 	restrictions'on 	the 	business 	relationships 	between
optometrists 	and 	non-optometrists, 	on 	commercial 	locations 	and 	on
trade 	name 	uf~ge 	-- 	are, 	in 	fact, 	harmful 	to 	consumers. 	The
first 	study, 	conducted 	with 	the 	help 	of 	two 	colleges 	of
optometry 	and 	the 	chief 	optometrist 	of 	the 	Veterans
Administration, 	compared 	the 	price 	and 	quality 	of 	eye
examinations 	and'eyeglasses 	across 	cities 	with 	a 	variety 	of 	legal
environments. 	Cities 	were 	classified 	as 	markets 	where
advertising 	was 	present 	if 	there 	was 	advertising 	of 	eyeglasses 	or
eye 	exams 	in 	local 	newspapers 	or 	"yellow pages." 	Cities 	were
classified 	as 	markets 	with 	chain 	optometric 	practice 	if 	eye
examinations 	were 	available 	at 	large 	interstate 	optical 	firms.
Since 	restraints 	on 	corporate 	practice 	of 	optometry, 	commercial
locations 	and 	trade 	name 	usage 	necessarily 	restrict 	the
operations 	of 	chain 	optometric 	firms, 	the 	study 	provides
important 	information 	on 	the 	likely 	effects 	of 	such 	restrictions.
The 	study 	found 	that 	prices 	charged 	in 	1977 	for 	eye
examinations 	and 	eyeglasses 	were 	significantly 	higher 	in 	cities
without 	chains 	and 	advertising 	than 	in 	cities 	where 	advertising
and 	chain 	firms 	were 	present. 	The 	average 	price 	charged 	by
optometrists 	in 	the 	cities 	without 	chains 	and 	advertising 	was
33.6% 	higher 	than 	in 	the 	cities 	with 	advertising 	and 	chains
($94.46 	versus 	$70.72). 	Prices 	were 	approximately 	17.9% 	higher
as 	a 	function 	of 	the 	absence 	of 	chains; 	the 	remaining 	price
difference 	was 	attributed 	to 	the 	absence 	of 	advertising.
The 	data 	also 	showed 	that 	the 	quality 	of 	vision 	care 	was 	not
lower 	in 	cities 	where 	chain 	optometric 	practice 	and 	advertising
were 	present. 	The 	thoroughness 	of 	eye 	examinations, 	the 	accuracy
of 	eyeglass 	prescriptions, 	the 	accuracy 	and 	workmanship 	of
eyeglasses, 	and 	the 	extent 	of 	unnecessary 	prescribing 	were, 	on
average, 	the 	same 	in 	both 	types 	of 	cities.
12 	Bureau 	of 	Economics, 	Federal 	Trade 	Commission, 	Effects 	of
Restrictions 	on 	Advertising 	and 	Commercial 	Practice 	in 	the
professions: 	The 	Case 	of 	Optometry 	(1980).

The 	second 	study 	compared 	the 	cost 	and 	quality 	of 	cosmetic
contact 	lens 	f±)ting 	by 	various 	types 	of 	eye 	care
professionals. 	This 	study 	was 	designed 	and 	conducted 	with 	the
assistance 	of 	the 	major 	national 	professional 	associations
representing 	ophthalmologists, 	optometrists 	and 	opticians. 	Its
findings 	are 	based 	on 	examinations 	and 	interviews 	of 	more 	than
500 	contact 	lens 	wearers 	in 	18 	urban 	areas.
The 	study 	found 	"that 	there 	were 	fe~, 	if 	any, 	meaningful
differences 	in 	the 	quality 	of 	cosmetic 	contact 	lens 	fitting
provided 	by 	ophthalmologists, 	optometrists, 	and 	opticians. 	The
study 	also 	showed 	that, 	on 	average, 	"commercial" 	optometrists 	--
that 	is, 	optometrists 	who 	worked 	for 	a 	chain 	optical 	firm 	or
advertised 	heavily 	-- 	fitted 	contact 	lenses 	at 	least 	as 	well 	as
other 	fitters, 	but 	charged 	significantly 	lower 	prices.
These 	studies 	provide 	evidence 	that 	restrictions 	on
employment, 	partnership, 	or 	other 	relationships 	between
professionals 	and 	non-professionals, 	on 	commercial 	locations 	and
on 	trade 	name 	usage 	tend 	to 	raise 	prices 	above 	the 	levels 	that
would 	otherwise 	prevail, 	but 	do 	not 	seem 	to 	raise 	the 	quality 	of
care 	in 	the 	vision 	care 	market. 	Although 	these 	studies 	deal
specifically 	with 	restrictions 	on 	the 	practice 	of 	optometry, 	the
results 	may 	be 	applicable 	to 	analogous 	restrictions 	in 	other
areas, 	such 	as 	medicine 	and 	dentistry.
We 	also 	have 	reviewed 	Chapter 	27, 	Title 	38.1 	of 	the 	virginia
Code, 	relating 	to 	Plans 	for 	Future 	Dental 	or 	Optometric 	Services,
and 	have 	identified 	several 	provisions 	that 	appear 	to 	be
unnecessarily 	restrictive 	or 	whose 	anticompetitive 	effects 	may
outweigh 	any 	benefits 	to 	the 	public.
Va. 	Code 	Section 	38.1-898 	requires 	that 	a 	majority 	of 	the
board 	of 	directors 	of 	a 	prepaid 	dental 	plan 	be 	dentists. 	It 	is
not 	apparent 	what 	public 	benefit 	results 	from 	req~!ring provider
control 	of 	all 	plan 	boards, 	as 	this 	section 	does. 	We 	are
unaware 	of 	any 	reason 	why 	consumers, 	entrepreneurs, 	and 	others
should 	not 	also 	be 	permitted 	to 	establish 	and 	operate 	such 	plans
in 	competition 	with 	provider-controlled 	plans. 	Such 	lay 	boards
can 	certainly 	obtain 	the 	necessary 	professional 	expertise 	without
having 	providers 	control 	the 	plan's 	board 	of 	directors.
Section 	38.1-903 	requires 	that 	dental 	or 	optometric 	service
plan 	subscribers 	have 	"free 	choice 	of 	any 	participating 	dentist
or 	optometrist." 	Some 	states 	interpret 	such 	clauses 	to 	require
13 	Bureaus 	of 	Consumer 	Protection 	and 	Economics, 	Federal 	Trade
Commission, 	A Comparative 	Analysis 	of 	Cosmetic 	Contact 	Lens
Fitting 	by 	Ophthalmologists, 	Optometrists, 	and 	Opticians 	(1983).
14 	The 	antitrust 	laws 	do 	not 	normally, prohibit 	provider 	control
of 	prepaid 	health 	care 	plans.

Mr.- 	Richard 	Mor rison
that 	participation 	be 	open 	to 	any 	licensed 	provider. 	If 	this
section 	is 	interpreted 	in 	this 	way, 	it 	in 	fact 	could 	restrict 	the
choices 	available 	to 	consumers. 	Mandating 	free 	choice 	of
provider 	in 	all 	prepayment- programs 	prevents 	plans 	from-offering,
and 	subscribers 	from 	freely 	and 	voluntarily 	choosing 	to 	enroll
in, 	programs 	that 	may 	limit 	subscriber 	choice 	of 	provider. 	Such
plans, 	in 	turn, 	may 	lower 	program 	costs 	by 	selecting 	less
expensive-or-more 	quality-conscious 	providers, 	and 	may 	generate
competitive 	pressure 	on 	all 	providers 	to 	control 	costs 	or 	raise
quality. 	This 	concept 	is 	evident 	in 	both 	health 	maintenance
organizations 	("HMOS") 	and 	the 	recent 	emergence 	of 	preferred
provider 	organizations 	("PPOs"). 	As 	you 	know, 	Virginia 	was 	one
of 	the 	first 	!Sates 	to 	pass 	legislation 	authorizing 	PPO
arrangements, 	and 	the 	mandatory 	free 	choice 	provision 	of
Section 	38.1-903 	may 	be 	at 	odds 	with 	the 	purpose 	and 	intent 	of
that 	more 	recent 	statute. 	In 	its 	case 	against 	the 	American
Medical 	Association, 	the 	Commission 	found 	that 	the 	origin 	and
history 	of 	the 	medical 	profession's 	insistence 	on 	this 	type 	of
provision 	for 	prepayment 	plans 	"makes 	clear 	that 	the
purpose 	•.• 	is 	primarily 	the 	anticompetitive 	one 	of 	suppressing
the.activii~es o~ competitors, 	not 	solicitude 	for 	the 	rights 	of
pat~ents.n
Section 	38.1-904 	denies 	the 	Insurance 	Commission 	discretion
to 	license 	more 	than 	one 	plan 	in 	a 	given 	geographic 	area 	if
"licensing 	more 	than 	one 	plan 	for 	the 	same 	geographical 	area 	will
not 	promote 	the 	public 	welfare." 	While 	we 	do 	not 	know 	how 	this
provision 	in 	fact 	has 	been 	applied 	or 	will 	be 	applied, 	it 	could
be 	used 	to 	protect 	current 	market 	participants 	from 	competition
from 	new 	market 	entrants, 	or 	at 	least 	to 	discourage 	such 	n~w
entry, 	and 	would 	not 	appear 	to 	serve 	any 	substantial 	public
interest.
Section 	38.1-909 	provides 	that 	dental 	plans 	subject 	to 	this
chapter 	"shall 	not 	engage 	in 	any 	other 	business,· 	with 	the
exception 	of 	governmental 	health 	care 	programs. 	This 	restriction
may 	unnecessarily 	prevent 	plans 	from 	diversifying 	and 	offering
their 	subscribers 	additional 	products 	or 	benefits 	packages 	that
may 	be 	more 	convenient 	and 	desirable. 	For 	example, 	many
commercial 	insurers 	have 	offered 	coverage 	packages 	to 	employers
that 	include 	accident 	and 	health 	insurance, 	dental 	benefits, 	life
insurance, 	workers' 	compensation 	coverage, 	and 	even 	pensions 	and
annuities. 	Permitting 	dental 	plans 	to 	diversify 	to 	meet 	market
demands 	-- 	subject, 	of 	course, 	to 	appropriate 	regulatory
oversight 	-- 	may 	allow 	them 	to 	compete 	more 	effectively 	and
better 	meet 	the 	needs 	of 	the 	public.
16 	In 	re 	American 	Medical 	Association, 	94 	F.T.C. 	701, 	1015
(1979), 	aff'd, 	638 	F.2d 	443 	(2d 	Cir. 	1980), 	aff'd 	mem. 	by 	an
equally 	divided 	Court, 	455 	U.S. 	676 	(1982).
15 	S.8. 	110, 	Chap. 	464, 	1983 	Session 	(effective 	July 	1, 	1983). 	I
i

\'
In 	conclusion, 	thank 	you 	for 	your 	willingness 	to 	consider
our 	comments. 	We 	are 	enclosing 	copies 	of 	the 	studies 	referred 	to
in 	our 	comments. 	Please 	let 	us 	know 	if 	we 	can 	be 	of 	any 	further
assistance.
Sincerely,
~T~//It
Carol 	T. 	Crawford
Director
Enclosures
(Sent 	out 	separately 	by 	DHL) .
i
III

".
.....
FEDERAL TRADE COMMISSION
WASHINGTON. D. C. 20580
BUIl£AU OF .
CONSUMEll PROTEcnON 	May 	22, 	1985
The 	Honorable 	Ralph 	L. 	Axselle, 	Chairman
Governor's 	Regulatory 	Reform 	Board
General 	Assembly 	Building
Commonwealth 	of 	Virginia
910 	Capitol 	Street
Richmond, 	VA 	23219
Dear 	Mr. 	Chairman:
The 	Federal 	Trade 	Commission's 	Bureaus 	of 	Consumer
Protection, 	Economics, 	and 	Competition 	are 	pleased 	to 	respond 	to
the 	invitation 	of 	Richard 	D. 	Morrison, 	Regulatory 	Review
Coordinator, 	to 	assist 	you 	in 	the 	ongoing 	review 	of 	health
professio~al regulatory 	boards 	by 	the 	Commonwealth 	of
Virginia. 	As 	you 	are 	aware, 	we 	submitted 	comments 	last 	year 	to
Mr. 	Morrison,concerning 	laws 	and 	regulations 	governing 	the
professio2s 	of 	Dentistry, 	Medicine, 	Optometry, 	and 	Veterinary
Medicine. 	Our 	previous 	~omments focused 	on 	(1) 	restrictions 	on
advertising 	by 	theie 	professionals, 	(2) 	restrictiu&~ on 	the
business 	practices 	of 	these 	professionals, 	includi~~' ~orporate
employment, 	business 	relationships 	between 	professi·j"als 	and 	non-
professionals, 	commercial 	locations,'and 	trade 	name 	usage, 	and
(3) 	restrictions 	on 	the 	formation 	and 	operation 	of 	prepaid 	dental
and 	optometric 	plans. 	Our 	previous 	comments 	also 	addressed 	both
statutory 	and 	regulatory 	provisions 	covering 	all 	three 	of 	these
areas. 	Finally, 	our 	previous 	comments 	discussed 	in 	some 	detail
the 	negative 	effects 	that 	restrictions 	on 	nondeceptive
advertising 	and 	commercial 	practices 	can 	have 	on 	consumers 	and
competition. 	.
We 	are 	now 	commenting 	on 	the 	regulatory 	changes 	that 	have
been 	proposed 	by 	the 	Boards 	governing 	these 	professions. 	In
offering 	these 	comments, 	our 	goal 	continues 	to 	be 	to 	identify 	and
seek 	the 	removal 	of 	such 	restrictions 	that 	impede 	competition,
increase 	costs, 	and 	harm 	consumers 	without 	providing
countervailing 	benefits. 	While 	we 	also 	direct 	these 	comments 	to
the 	Regulatory 	Boards, 	we 	urge 	the 	Reform 	Board 	to 	consider 	our
1 	These 	comments 	represent 	the 	views 	of 	the 	Bureaus 	of 	Consumer
Protection, 	Economics, 	and 	Competition 	of 	the 	Federal 	Trade
Commission 	and 	do 	not 	necessarily 	represent 	the 	views 	of 	the
Commission 	or 	any 	individual 	Commissioner. 	The 	Commission,
however, 	has 	authorized 	the 	submission 	of 	these 	comments.
2 	We 	submitted 	separate 	comments 	on 	the 	regulations 	of 	the 	(1)
Boards 	of 	Dentistry 	and 	Medicine, 	dated 	August 	21, 	1984, 	and 	(2)
Boards 	of 	Optometry 	and 	Veterinary 	Medicine, 	dated 	September 	14,
1984. 	Copies 	of 	both 	comments 	are 	attached.

. ' 	.)'.. ,
Bon. 	Ralph 	L. 	Axselle 	-2-
views 	when 	it 	recommends 	to 	the 	Governor 	the 	position 	he .Sh~uld
take 	when 	he 	makes 	final 	comments 	to 	the 	Regulatory 	Boards.
We 	will 	first 	provide 	a 	brief 	overview 	of 	our 	previous
comments, 	the 	Boards' 	responses 	thereto, 	and 	provisions 	in 	the
proposed 	regulations 	that 	we 	believe 	continue 	to 	present
potential 	problems. 	In 	an 	attachment, 	we 	then 	discuss
individually 	and 	in 	detail 	each 	Board's 	proposed 	regulations.
While 	this 	format 	leads 	to 	some 	repetition 	because 	of 	similar
provisions 	proposed 	by 	several 	Boards, 	we 	believe 	that 	each 	Board
will 	find 	it 	easier 	to 	read 	the 	comments 	that 	apply 	to 	it
separately.
One 	of 	the' primary 	issues 	that 	our 	previous 	comments
addressed 	was 	restraints 	on 	nondeceptive 	advertising. 	We 	listed
statutory 	and, regulatory 	provisions 	that 	appeared 	to 	restrict
nondeceptive 	advertising 	by 	dentists, 	physicians, 	optometrists,
and 	veterinarians, 	and 	we 	urged 	their 	removal. 	In 	response, 	the
Board 	of 	Vet~rinary Medicine 	proposed 	the 	removal 	of 	many 	of 	the
restrictions. in 	this 	area, 	the 	Board 	of 	Optometry 	also 	proposed
simplifying 	the 	rules 	governing 	advertising, 	and 	the 	Board 	of
Dentistry 	proposed 	the 	elimination 	of 	certain 	restrictions. 	The
Board 	of 	Medicine 	stated 	that 	it 	would 	take 	our 	comments 	under
advisement. 	.
Potential 	problems 	remain, 	however. 	Neither 	the 	Board 	of
Optometry 	nor 	the 	Board 	of 	Medicine 	has 	recommended 	removal 	of
statutory 	restrictions 	that 	appear 	to 	prohibit 	some 	types 	of
nondeceptive 	advertising. 	Moreover, 	the 	Board 	of 	Dentistry 	has
proposed 	new 	regulations 	that 	appear 	to 	go 	beyond 	prohibiting
false 	and 	deceptive 	advertising, 	and 	impose 	additional
unnecessary 	burdens 	on 	nondeceptive 	advertising.
The 	second 	major 	issue 	that 	we 	addressed 	in 	our 	previous
comments 	involved 	restrictions 	on 	commercial 	practice, 	including
corporate 	employment, 	commercial 	locations, 	and 	trade 	name
usage. 	Again, 	the 	Board 	of 	Veterinary 	Medicine 	proposed 	the
removal 	of 	those 	restrictions 	contained 	in 	its 	regulations. 	In
addition, 	the 	Board 	of 	Optometry 	proposed 	to 	allow 	some 	trade
name 	usage.
Potential 	problems 	remain 	in 	this 	area, 	too, 	however.
Although 	many 	of 	the 	commercial 	practice 	restrictions 	are
statutory, 	none 	of 	the 	Boards 	recommended 	any 	changes 	to 	existing
statutory 	prohibitions 	on 	commercial 	practice 	by 	optometrists,
dentists, 	and 	physicians. 	(No 	such 	restrictions 	governing
veterinarians 	exist.) 	Further, 	the 	Board 	of 	Optometry's 	proposed
3 	We 	note 	that 	we 	are 	not 	in 	a 	position 	to 	offer 	advice 	on 	what
minimum 	level 	of 	quality 	of 	care 	the 	states 	should 	require.
I
I
II
I
I

., ' ....
Bon. 	Ralph 	L. 	Axselle 	-3-
regulations 	governing 	trade 	nam€~usage appear 	to 	go 	beyond 	what
is 	necessary 	to 	prevent 	deception 	and 	may 	unduly 	burden 	trade
name 	usage.
Thank 	you 	for 	your 	willingness 	to 	consider 	our 	comments.
Please 	let 	us 	know 	if 	we 	can 	be 	of 	any 	further 	assistance.
I
Sincerely,
Ct....a('~
Carol 	T. 	CIa~~' 	r
Director
Attachments

.,.	·~ .
REPORT 	Of'-THE 	BUREAUS·OF
CONSUMER 	PROTECTION, 	COMPETITION, 	AND 	ECONOMICS
OF 	THE 	FEDERAL 	TRADE 	COMMISSION
TO 	THE
COMMONWEALTH 	OF 	VIRGINIA
GOVERNOR'S 	REGULATORY 	REFORM 	BOARD
ON
REVIEW 	OF 	REGULATIONS 	PROPOSED 	BY
THE 	BOARD 	OF 	OPTOMETRY
THE 	BOARD 	OF 	DENTISTRY
THE 	BOARD 	OF 	VETERINARY 	MEDICINE, 	and
THE 	BOARD 	OF 	MEDICINE
May 	22, 	1985
These 	comments 	represent 	the 	views 	of 	the 	Bureaus 	of 	Consumer
Protection, 	Economics, 	and 	Competition 	of 	the 	Federal 	Trade
Commission 	and 	do 	not 	necessarily 	represent 	the 	views 	of 	the
Commission 	or 	any 	individual 	Commissioner. 	The 	Commission,
however, 	has 	authorized 	the 	submission 	of 	these 	comments.

•". 	~.,	
. BOARD 	OF 	OPTOMETRY
Our 	previous 	comments 1 	discussed 	several 	statutory
-- .
provisions 	restricting 	advertising 	and 	business 	practices 	that 	we
suggested 	may 	rarm 	consumers. 	The 	Board 	of 	Optometry 	did 	not
-recommend 	any 	statutory 	changes 	but 	did 	propose 	changes 	in 	its
regulations 	that 	would 	simplify 	the 	rules 	governing 	advertising
and 	would 	allow 	some 	use 	of 	trade 	names. 	However, 	some 	of 	the
proposed 	restrictions 	may 	go 	beyond 	what 	is 	necessary 	to 	prevent
deception.
Advertising 	Restrictions
The 	Board 	of 	Optometry 	~as 	proposed 	replacing 	the 	current
list 	of 	advertising 	disclosur~ ~equirements (Regulation 	III) 	with
Section 	3.lG., 	which 	would 	prohibit 	false 	and 	misleading
advertising 	and 	require, 	whenever 	a 	price 	is 	advertised, 	that 	the
advertisement 	state 	what 	goods 	and 	services 	are 	included 	in 	the
price. 	The 	purpose 	of 	this 	provision 	appears 	to .be 	to 	prevent
false 	and 	misleading 	advertising. 	We 	have 	some 	concern, 	however,
about 	the 	proposed 	requirement 	that 	any 	price 	advertisement 	state
what 	goods 	and 	services 	are 	included 	in 	the 	price. 	This
provision 	could 	be 	interpreted 	to 	require 	detailed 	and 	lengthy
disclosures 	that 	are 	not 	necessary 	to 	prevent 	deception 	but
merely 	impose 	extra 	costs 	on 	the 	advertisers, 	costs 	that 	are
1 	Letter 	to 	Richard 	Morrison, 	Department 	of 	Health 	Regulatory
Boards 	from 	Carol 	T. 	Crawford, 	Director, 	Bureau 	of 	Consumer
Protection 	(September 	14, 	1984) 	(hereinafter 	referred 	to 	as 	the
"September 	1984 	comments").
- 	2 	-
I
!
II
I

...
.,. . .-
ultimately 	paid 	for 	by 	consumers. 	For 	example, 	an 	optometrist
who 	wished 	to 	advertise 	a 	price 	for 	an 	eye 	exam 	could 	be 	required
~to-disclose the 	specific 	procedures 	that 	are 	included 	in 	the
exam. 	Further, 	the 	vague 	language 	of 	the 	provision 	could 	chill
legitimate 	advertising 	because 	potential 	advertisers 	might 	be
unsure 	of 	its 	meaning. 	We 	recommend 	that 	the 	Board 	reconsider
the 	need 	for 	this 	provision.
We 	again 	urge 	the 	Board 	to 	recommend 	that 	Virginia 	Code
Sections 	54-388 	(A)(2)(d) 	and 	54-396 	(9)(ii), 	which 	prohibit
claims 	of 	superiority 	and 	advertising 	of 	free 	services, 	be
repealed, 	so 	that 	only 	false 	or 	deceptive 	advertising 	is
prohibited.' 	A prohibition 	of 	false 	advertising 	should 	be
sufficient 	to 	prevent 	deceptive 	claims 	of 	superiu~i~~ and 	of 	free
services. 	As 	noted 	in 	our 	previous 	comments 	(Septe~~er 1984
comments, 	at 	pp. 	2-3), 	these 	code 	provisions 	appear 	to 	restrict
nondeceptive 	advertising, 	thereby 	lessening 	competition 	and
harming 	consumers.
Trade 	Names
The 	Board 	of 	Optometry 	has 	proposed 	removing 	a 	complete 	ban
on 	the 	use 	of 	trade 	names 	(Reg. 	II-D) 	and 	allowing 	their 	use
- 	3 	-
I
II

.~. ~
under 	certain 	circumstances 	(proposed 	Section 	4.1).2 	As 	we
stated 	in 	our 	earlier 	comments 	(September 	1984 	comments, 	at 	p.	. 	.
4), 	the 	use 	of 	trade 	names 	can 	be 	virtually 	essential 	to 	the
establishment 	of 	group 	practices 	and 	chain 	operations 	that 	are
able 	to 	take 	advantage 	of 	economies 	of 	scale 	and 	consequently 	to
offer 	lower 	prices. 	Trade 	names 	can 	also 	minimize 	consumer
search 	costs 	because, 	over 	time, 	a 	trade 	name 	ordinarily 	comes 	to
be 	associated 	with 	a 	certain 	level 	of 	quality, 	service, 	and
price.
Although 	we 	believe 	that 	the 	general 	trend 	of 	the 	proposed
regulations 	may 	well 	benefit 	consumers, 	some 	of 	the 	specific
proposed 	limitations 	may 	~estrict trade 	name 	usage 	more 	than 	is
necessary 	to 	prevent 	decepti0:\. 	For 	example, 	some 	of 	the
restrictions 	appear 	to 	limit 	;~ade name 	usage 	by 	group 	practices
with 	branch 	offices. 	Proposed 	sections 	4.1A.2. 	and 	4.1A.3.
appear 	to 	restrict 	the 	use 	of 	a 	trade 	name 	consisting 	of 	the 	name
of 	one 	or 	more 	of 	the 	optometrists 	in 	the 	practice 	to 	the 	office
where 	the 	named 	optometrists 	practice. 	This 	would 	appear 	to
preclude 	the 	use 	of 	trade 	names 	such 	as 	"Optometric 	Offices 	of
Smith 	and 	Jones," 	and 	possibly 	"Smith 	Optometric 	Clinic" 	at 	all
branch 	offices 	of 	a 	multi-office 	practice. 	One 	of 	the 	important
advantages 	of 	trade 	names 	is 	to 	facilitate 	the 	development 	of
group 	practices 	with 	many 	offices. 	By 	allowing 	employing
doctors' 	names 	to 	be 	used 	only 	at 	those 	offices 	where 	the 	doctors
2 	The 	Board 	has 	proposed 	these 	changes 	in 	the 	regulations 	but
has 	not 	recommended 	a 	change 	in 	Virginia 	Code 	Section 	54-
388(A)(2)(g), 	the 	statute 	that 	bans 	trade 	names.
- 	4 	-
!
i
II
II

·') . .,
actually 	examine 	patients, 	use 	of 	a 	uniform 	trade 	name 	for
multiple 	branch 	offices 	is 	made 	more 	difficult.
We 	understand 	and 	support 	the 	Board's 	desire 	to 	preclude 	the
use 	of 	deceptive 	trade 	names. 	However, 	we 	would 	urge 	the 	Board
to 	evaluate 	whether 	there 	is 	any 	evidence 	that 	the 	use 	of 	trade
names 	such 	as 	·Optometric 	Offices 	of 	Smith 	and 	Jones," 	or 	"Smith
Optometric 	Clinic" 	~re deceptive 	when 	used 	for 	branch 	offices.
Especially 	where 	~ 	number 	~f 	branch 	offices 	are 	advertised 	under
such 	a 	trade 	name, 	it 	seems 	doubtful 	that 	consumers 	would 	assume
that 	they 	would 	be 	examined 	by 	one 	of 	the 	named 	doctors.
Proposed 	Section 	4.1B.9., 	which 	prohibits 	use 	of 	trade 	names
containing 	the 	nam€s 	of 	deceased 	or 	retired 	optometrists, 	also
raises 	some 	concerns 	~~out whether 	such 	trade 	names 	are
inherently 	deceptive 	in 	every 	instance. 	This 	provision 	would
mean 	that 	a 	trade 	name 	such 	as 	"Smith 	Optometric 	Clinic" 	would
have 	to 	be 	changed 	upon 	the 	death 	of 	Dr. 	Smith, 	thus 	preventing
the 	use 	over 	time 	of 	such 	trade 	names, 	although 	they 	may 	be
valuable 	to 	consumers 	because 	they 	have 	come 	to 	be 	associated
with 	a 	certain 	level 	of 	quality 	or 	price. 	Although 	we 	understand
the 	Board's 	concern 	about 	possible 	deception, 	we 	would 	urge 	the
Board 	to 	evaluate 	whether 	there 	is 	any 	evidence 	that 	consumers
are 	actually 	deceived 	by 	such 	usage. 	Law 	firms 	for 	years 	have
used 	trade 	names 	of 	this 	type, 	and 	we 	are 	unaware 	of 	any 	evid~nce
of 	resulting 	deception.
We 	recognize 	that 	the 	Board 	may 	wish 	to 	ensq~e
identification 	and 	accountability 	of 	individual 	practitioners
- 	5 	-

. ~. . ,.
practicing 	under 	a 	trade 	name. 	However, 	the 	Board 	has 	already
unduly 	restricting 	nondeceptive 	advertising. 	Section 	4.1B.5.
requires 	conspicuous 	posting 	in 	the 	reception 	area 	of 	the 	names
of 	all 	optometrists 	practicing 	at 	a 	location. 	Sections 	4.lB.7.
and 	8. 	require 	that 	the 	examining 	optometrist's 	name 	appear 	on
the 	patient's 	records 	and 	on 	all 	invoices 	and 	receipts.
Proposed 	Section 	4.lB.2. 	prohibits 	optometrists 	from
practicing 	under 	more 	than 	one 	fictitious 	name. 	It 	is 	unclear
whether 	this 	prohibits 	practicing 	under 	a 	number 	of 	trade 	names
at 	one 	time 	or 	during 	a 	lifetime. 	If 	the 	former, 	this 	would
restrict 	optometrists 	from 	working 	part-time 	for 	more 	than 	one
group 	practice 	using 	a 	trade 	name. 	If 	the 	latter, 	it 	could
. severely 	restrict 	the 	employment 	options 	available 	to
optometrists 	and 	hinder 	the .ability 	of 	large 	group 	practices 	to
recruit 	optometrists. 	We 	believe 	that 	it 	is 	preferable 	for 	the
Board 	to 	proceed 	on 	a 	case-by-case 	basis 	against 	optometrists 	who
use 	trade 	names 	in 	a 	deceptive 	manner 	rather 	than 	to 	issue 	a
broad 	ban 	on 	practicing 	under 	more 	than 	one 	trade 	name.
Proposed 	Sections 	4.lA 	and 	4.lB.3. 	requires 	all
advertisements 	using 	trade 	names 	to 	include 	the 	name 	of 	at 	least
one 	optometrist 	associated 	with 	the 	office. 	While 	this 	is
somewhat 	less 	of 	a 	burden 	than 	requiring 	such 	advertisements 	to
include 	the 	names 	of 	all 	the 	associated 	optometrists, 	it 	would
still 	increase 	the 	costs 	of 	advertising 	without 	necessarily
providing 	information 	that 	would 	help 	consumers 	because 	the 	named
- 	6 	-
I
II
II

optometrist 	would 	not 	necessarily 	examine 	the 	consumer's 	eyes.
This 	requirement 	wou~~:.app~ar. unneces~ary since 	adequa te
professional 	identification 	will 	likely 	result 	when 	the 	consumer
calls 	or 	visits 	the 	office. 	Further, 	the 	Board 	can 	respond 	if
individual 	complaints 	arise 	because 	it 	will 	have 	a 	record 	of 	all
trade 	names 	in 	use, 	along 	with 	the 	responsible 	optometrists.
(See 	Section 	4.18.1.)
Proposed 	S~ction 4.lB.4. 	prohibits 	trade 	names 	that 	do 	not
include 	the 	words 	"optometry" 	or 	"vision" 	or 	reasonably
recognizable 	derivatives 	thereof. 	This 	would 	appear 	to 	preclude
the 	use 	of 	trade 	names 	such 	as 	"Southern 	Contact 	Lens 	Clinic" 	and
other 	nondeceptive 	trade ~ames as 	well. 	Presumably, 	the 	intent
of 	this 	proposal 	i~ 	to 	ensure 	that 	the 	trade 	name 	conveys 	the
fact 	that 	the 	firm 	is 	an 	optometric 	practice. 	However, 	it 	is 	not
clear 	that 	this 	is 	necessary 	since 	most 	advertisements 	would
probably 	convey 	this 	fact 	anyway. 	For 	example, 	this 	fact 	would
likely 	be 	conveyed 	through 	use 	of 	the 	word 	"optometrists" 	in 	the
text 	of 	the 	ad.
Commercial 	Practice 	Restrictions
Lastly, 	we 	would 	urge 	the 	Board 	of 	Optometry 	to 	reconsider
our 	previous 	comments 	concerning 	statutory 	restrictions 	on
business 	relationships 	between 	optometrists 	and 	non-optometrists
(Section 	54-388 	(A)(2)(i») 	and 	on 	employment 	by 	or 	location 	at
commercial 	establishments 	(Sections 	54-388 	(A)(2)(k) 	and 	54-
397.1) 	(September 	1984 	comments , 	at 	pp. 	3-4) 	In 	our 	prev ious
- 	7 	-

comments 	we 	raised 	questions 	about 	the 	potential 	harm 	which 	could
result 	from 	such 	restrictions 	and 	discussed 	evidence 	that
·coriunercial~ pra~ctice" such 	as 	chain 	firms 	may 	benefit 	consumers-~
by 	lowering 	prices 	without 	decreasing 	the 	quality 	of 	service.
Our 	comments 	also 	noted 	that 	several 	of 	the 	statutory 	provisions
governing 	prepaid 	dental 	plans 	(Virginia 	Code 	Section 	38.1-892 	et
seq.) 	appear 	to 	be 	unnecessarily 	restrictive 	or 	have
anticompetitive 	effects 	which 	may 	outweigh 	any 	countervailing
benefits 	to 	the" public. 	In 	its 	report, 	the 	Board 	of 	Optometry
neither 	addressed 	our 	concerns 	nor 	recommended 	any 	statutory
changes. 	We 	urge 	the 	Board 	to 	reconsider 	our 	previous 	comments.
- 	8 	-
i
I
I
I
III

BOARD 	OF 	DENTISTRY
In 	our 	prior 	comments 3 regarding 	the 	Board 	of 	Dentistry 	we
discussed 	a 	number 	of 	statutory 	and 	regulatory 	provisions 	that
appeared 	to 	prohibit 	nondeceptive 	advertising 	or 	place
unnecessary 	burdens 	on 	such 	advertising. 	The 	Board 	has 	proposed
removing 	some 	of 	these 	regulations 	but 	has 	proposed 	several 	new
regulations 	that 	also 	appear 	to 	go 	beyond 	prohibiting 	false 	and
deceptive 	advertising. 	Our 	previous 	comments 	also 	discussed 	the
potential 	harm 	to 	consumers 	that 	could 	result 	from 	several
statutory 	restrictions 	on 	commercial 	practices, 	including 	a 	ban
on 	trade 	name 	usage. 	The 	Board 	did 	not 	recommend 	changes 	to 	any
of 	these 	statutory 	provislons.
Advertising
We 	turn 	first 	to 	the 	areas 	covered 	by 	our 	previous 	comments
regarding 	several 	advertising 	provisions 	(August 	1984 	comments,
at 	pp. 	2-4). 	Our 	previous 	comments 	stated 	that 	Virginia 	Code
Section 	54-187(7), 	which 	bans 	advertising 	claims 	of 	superiority,
appears 	to 	prohibit 	at 	least 	some 	nondeceptive 	advertising. 	Our
comments 	also 	stated 	that 	portions 	of 	Section 	7.A.4. 	of 	the
Board's 	regulation, 	prohibiting 	advertising 	of 	statistical 	data,
information 	on 	past 	performance, 	representations 	of 	quality 	and
3 	Letter 	to 	Richard 	Morrison, 	Department 	of 	Health 	Regulatory
Boards 	from 	Carol 	T. 	Crawford, 	Director, 	Bureau 	of 	Consumer
Protection 	(August 	21, 	1984) 	(hereinafter 	sometimes 	referred 	to
as 	the 	"August 	1984 	comments").
- 	9 	-

,,
showmanship 	or 	puffery, 	appear 	to 	prohibit 	nondeceptive
advertising. 	We 	also 	expressed 	concern 	that 	Section 	7.A.2.d.,
governing 	advertising 	of 	specialties, 	could 	be 	interpreted 	to
prohibit 	nondeceptive 	advertising. 	The 	Board 	supports 	the
elimination 	of 	all 	these 	restrictions. 	We 	believe 	that 	these
proposed 	changes 	will 	benefit 	consumers. 	However, 	some 	of 	the
remaining 	provisions 	as 	well 	as 	some 	of 	the 	new 	proposed
revisions 	appear 	to 	go 	beyond 	what 	is 	necessary 	to 	prevent
deception.
Previously 	we 	stated 	that 	Section 	7.A.2.f., 	which 	requires
disclosure 	of 	the 	original 	price 	whenever 	a 	discount 	is
advertised, 	would 	likely _prevent 	the 	dissemination 	of 	useful 	and
nondeceptive 	price 	information. 	For 	example, 	this 	provision
would 	prohibit 	ads 	stating 	"10% 	off 	for 	senior 	citizens" 	or 	"$10
off 	for 	all 	new 	patients." 	Further, 	since 	it 	could 	be 	very
costly 	to 	state 	in 	an 	advertisement 	the 	regular 	price 	of 	each 	of
the 	hundreds 	of 	services 	a 	dentist 	provides, 	this 	rule 	will
likely 	decrease 	the 	amount 	of 	discount 	price 	advertising 	that
occurs. 	The 	Board 	has 	now 	recommended 	that 	the 	requirements 	of
Section 	7~4.2.f. be 	incorporated 	into 	proposed 	Section 	4.6C., 	and
we 	urge 	the 	Board 	to 	reconsider 	our 	previous 	comments 	on 	this
point 	and 	consider 	eliminating 	this 	requirement.
Proposeo 	Section 	4.6B.2. 	states 	that 	an 	advertisement 	of 	a
fee 	for 	a 	dental 	service 	must 	state 	the 	period 	of 	time 	for 	which
the 	fee 	shall 	be 	in 	effect 	unless 	the 	fee 	is 	in 	effect 	for 	at
least 	90 	days. 	In 	evaluating 	whether 	an 	ad 	without 	such 	a
- 	10 	-
• 	I
I
I

· , .') ."
disclosure 	is 	misleading 	it 	is 	important 	to 	consider 	normal
consumer 	expectations ~bout. the 	effective 	dates 	of 	advertised-.-
prices. 	We 	suggest 	that 	the 	Board 	evaluate 	whether 	consumers
expect 	advertised 	prices 	to 	be 	effective 	for 	at 	least 	90 	days,
especially 	if 	the 	ad 	uses 	terms 	su~h as 	·special 	offer," 	or
I
-introductory 	offer." 	Any 	disclosure 	requirement 	adds 	to 	the
cost 	of 	advertising 	and, 	we 	believe, 	should 	be 	imposed 	only 	where
necessary 	to 	prevent 	deception.
Proposed 	Section 	4.6E. 	limits 	fee.advertising 	to 	certain
listed 	and 	defined 	routine 	dental 	services. 	This 	provision 	would
apparently 	prohibit 	the 	advertising 	of 	fee 	information 	for 	non-
routine 	services, 	includi?g, 	for 	example, 	new 	or 	innovative
techniques 	that 	are 	not 	yet 	widely 	used 	by 	practitioners. 	It
also 	may 	be 	interpreted 	to 	prohibit 	any 	advertisements 	that 	do
not 	state 	specific 	prices 	but 	rather 	use 	terms 	such 	as 	"discount
prices" 	or 	"low 	cost" 	to 	attract 	consumer 	attention 	and
communicate 	a 	message 	effectively. 	Such 	advertising 	is 	not
inherently 	deceptive. 	The 	proposed 	rule 	also 	appears 	to 	require
advertisers 	to 	use 	terminology 	that 	may 	be 	confusing 	and 	not
easily 	understood 	by 	consumers. 	For 	example, 	it 	seems 	to 	require
advertisers 	to 	use 	only 	the 	specific 	terminology 	listed 	in 	the
regulations, 	such 	as 	"prophylaxis" 	to 	describe 	cleaning 	of
teeth. 	It 	also 	seems 	to 	require 	that 	"examination," 	"diagnosis,"
and 	"treatment 	planning" 	be 	advertised 	separately, 	although
diagnosis 	and 	treatment 	planning 	are 	often 	considered 	to 	be 	part
of 	a 	routine'dental 	examination 	and 	consumers 	ma~,not und~rstand
the 	distinction 	between 	these 	terms. 	Such 	requirements 	lfmit 	the
- 	11 	-

·'.--.
ability 	of 	advertisers 	to 	convey 	their 	message 	as 	effectively 	as
possible 	and 	thus 	may 	have 	a 	chilling 	effect 	upon 	valuable
..~
-	- 	- - ...
adv~rtising. 	The 	requirement 	also 	appears 	to 	impose 	additional
burdens 	on 	advertisers 	that 	are 	not 	imposed 	on 	other 	dentists.
For 	example, 	if 	a 	dentist 	advertises 	"treatment 	planning," 	he 	or
she 	must 	give 	the 	patient 	a 	written 	itemized 	treatment
recommendation 	and 	a 	written 	itemized 	fee 	statement. 	Those
requirements 	are 	not 	imposed 	on 	nonadvertising 	dentists.
In 	our 	view, 	proposed 	Section 	4.6E. 	is 	not 	necessary 	to
prevent 	deceptive 	advertising. 	While 	we 	recognize 	that 	problems
may 	occur, 	we 	suggest 	that 	the 	Board 	respond 	to 	these 	problems 	on
a 	case-by-case 	basis, 	see~ing 	to 	remove 	advertising 	that 	is
actually 	deceptive, 	rather 	than 	through 	broad 	rules 	that 	wou~~
likely 	preclude 	the 	dissemination 	of 	valuable 	nondeceptive
information. 	Thus, 	we 	urge 	tne 	Board 	to 	reconsider 	the 	necessity
of 	proposed 	Section 	4.6E.
Trade 	Names
~
In 	our 	previous 	comments 	we 	also 	discussed 	the 	statutory
prohibition 	on 	trade 	name 	usage 	by 	dentists 	(Virginia 	Code
Section 	54-184) 	and 	pointed 	out 	that 	trade 	names 	can 	be 	essential
to 	the 	establishment 	of 	large 	group 	practices 	and 	chain
operations 	that 	can 	offer 	lower 	prices 	(August 	1984 	comments, 	at
pp. 	5-7). 	While 	the 	Board 	of 	Dentistry 	initially 	proposed 	a
- 	12 	-
.. 	I
I

• 	t ........ P•.•
.
series 	of 	regulations 	that 	would 	permit 	some 	trade 	name 	usage,4
we 	understa~d-that 	it 	now 	recommends 	no 	changes 	to. the 	current
law 	banning 	trade 	name 	usage. 	We 	would 	urge 	the 	Board 	to
reconsider 	our 	previous 	comments.
,
Commercial 	Practice
Our 	previous.comments 	also 	addressed 	several 	statutory
restrictions 	on 	commercial 	practice, 	including 	a 	ban 	on
employment, 	partnership, 	and 	other 	business 	relationships 	between
dentists 	and 	other 	persons 	(Virginia 	Code 	Section 	54-146, 	Section
54-183), 	and 	a 	ban 	on 	leasing 	space 	from 	commercial
establishments 	(Virginia 	Code 	Section 	54-147.1). 	W~ 	raised 	the
question 	whether 	such 	restrictions 	may 	harm 	consumer~ ,·~d
presented 	evidence 	that 	the 	presence 	of 	commercial 	practitioners
such 	as 	chain 	firms 	may 	lower 	prices 	without 	decreasing 	the.
quality 	of 	care 	(August 	1984 	comments, 	at 	pp. 	4-7). 	Our 	comments
also 	noted 	that 	several 	of 	the 	statutory 	provisions 	governing
prepaid 	dental 	plans 	(Virginia 	Code 	Section 	38.1-892 	et 	seq.)
appear 	to 	be 	unnecessarily 	restrictive 	or 	haveanticompetitive
effects 	which 	may 	outweigh 	any 	countervailing 	benefits 	to 	the
publ ic •. 	The 	Board 	of 	Dentistry 	did 	not 	addr ess 	these 	concerns 	in
4 	Those 	rev~s~ons, while 	allowing 	certain 	forms 	of 	trade 	name
usage, 	still 	appeared 	to 	restrict 	unnecessarily 	the 	use 	of 	trade
names. 	See 	our 	comments 	relating 	to 	several 	similar 	provisions
proposed 	by 	the 	Board 	of 	Optometry 	on 	pp. 	3-7, 	supra. 	The 	Board
also 	noted 	that 	a 	statutory 	change 	may 	be 	necessary 	to 	allow
trade 	name 	usage. 	Presumably, 	this 	recommendation 	also 	has 	been
withdrawn.
- 	13 	-

"J' ~.
its 	Report 	and 	did not 	propose 	changes 	to 	these 	statutory
provisions. 	We 	would 	urge 	the 	Boaro--to 	reconsider 	our 	previous 	-
comments.
- 	14 	-
I
II
II!

.~. 	! .. ~•• , 	...
) 	.
BOARD OF 	VETERINARY 	MEDICINE
Our 	previous 	comments s 	regarding 	the 	Board 	of 	Veterinary
Medicine 	discussed 	the 	potentially 	harmful 	effects 	of 	Board 	rules
prohibiting 	veterinarians 	from 	utilizing 	the 	services 	of
solicitors 	(Rule 	Is(I)), 	making 	claims 	of 	superiority 	(Rule
Is(J)), 	entering 	into 	business 	relationships 	with 	non-
veterinarians 	(Rule 	Is{B)), 	and 	leasing 	space 	from 	commercial
establishments 	(Rule 	ls(C)). 	We 	support 	the 	Board's 	decision 	to
propose 	the 	elimination 	of 	all 	of 	these 	rules. 	We 	believe 	that
these 	changes 	may 	well 	benefit 	consumers 	by 	increasing
competition 	and 	lowering ~osts without 	decreasing 	quality.
Commercial 	Practice
The 	Board 	of 	Veterinary 	Medicine 	has 	proposed 	a 	new
regulation 	(Section 	2.3.B.) 	that 	would 	make 	it 	unprofessional
conduct 	for 	a 	veterinarian 	to 	practice 	veterinary 	medicine 	if 	a
non~veterinarian 	has 	the 	right 	to 	control 	the 	professional
judgment 	of 	the 	veterinarian. 	According 	to 	the 	Board, 	the
purpose 	of 	the 	current 	ban 	on 	commercial 	practice 	is 	to 	ensure
that 	the 	professional 	judgment 	of 	a 	veterinarian 	is 	not
compromised 	by 	someone 	who 	is 	not 	a 	veterinarian. 	As 	stated, 	the
purpose 	of 	the 	proposed 	changes 	is 	to 	deal 	directly 	with 	this
5 	Letter 	to 	Richard 	Morrison, 	Department 	of 	Health 	Regulatory
Boards 	from 	Carol 	T. 	Crawford, 	Director 	of 	Consumer 	Protection
(September 	14, 	1984) 	(hereinafter 	sometimes 	referred 	to 	as 	the
"September 	1984 	Comments").
- 	15 	-

" 	, .... .I'" 	..	, .
problem without 	intruding 	upon 	business 	relationships 	·so 	long 	as
-. 	veter inary 	med icine 	is 	practiced 	safely 	and 	well." 	(Bd. 	of
Veterinary 	Medicine, 	Regulatory 	Review 	Report, 	p. 	9.)
While 	we 	recognize 	that 	the 	Board 	may 	consider 	proposed
Section 	2.3.B. 	necessary 	to 	protect 	consumers, 	we 	believe 	that 	a
slightly modified 	version 	of 	this 	provision 	may 	achieve 	the
Board's 	goals 	without 	unnecessarily 	interfering 	with 	business
relationships 	between 	veterinarians 	and 	non-veterinarians. 	As
currently 	drafted, 	Section 	2.3.B. 	might 	be 	interpreted 	to 	prevent
veterinarians 	from 	working 	for 	lay 	employers 	since 	all 	employers
exercise 	coritrol 	over 	the 	work-related 	activities 	of 	their
employees. 	The 	Board 	may- be 	able 	to 	accomplish 	its 	express
purpos,·; 	of 	prohibi ting 	only 	those 	controls 	tha t 	compromise 	the
professional 	judgment 	of 	veterinarians 	by 	recommending 	a 	narrower
rule 	that 	would 	restrict 	veterinarians 	from 	working 	for 	non-
veterinarians 	where 	the 	non-veterinarian 	seeks 	to 	compromise 	the
veterinarian's 	professional 	judgment 	in 	ways 	that 	might 	lower 	the
quality 	of 	care 	rendered 	by 	the 	veterinarian.
Opponents 	of 	comrner~ial practice 	often 	argue 	that 	lay
employers 	will 	compromise 	the 	quality 	of 	care 	in 	an 	effort 	to
increase 	profits. 	However, 	it 	is 	also 	possible 	that 	they 	will
attempt 	to 	ensure 	high 	quality 	in 	an 	effort 	to 	establish 	a 	good
reputation, 	thereby 	increasing 	patronage 	and 	profits 	in 	the 	long
run. 	Our 	study 	regarding 	the 	quality 	of 	cosmetic 	contact 	lens
- 	16 	-
II
II
I
II

...:. ... I r-" .J.... 	•
fittings 	by 	optometrists,6 	discussed 	more 	fully 	in 	our 	previous
comments 	(September 	1984 	comments, 	at 	p. 	6), 	tends 	to 	~upport_the
latter 	argument 	since 	it 	shows 	that 	the 	quality 	of 	commercial
optometrists' 	cosmetic 	contact 	lens 	fittings 	are 	at 	least 	as 	good
as 	those 	of 	noncommercial 	optometrists 	and 	ophthalmologists.
We 	applaud 	the 	Board's 	positive 	response 	to 	our 	previous
concerns. 	We 	urge 	the 	Board 	to 	review 	these 	additional 	comments
and 	consider 	whether 	a 	narrower 	rule 	might 	not 	better 	accomplish
its 	stated 	goal 	of 	not 	intruding 	on 	business 	relationships 	so
long 	as 	veterinary 	medicine 	is 	practiced 	safely 	and 	well.
6 	Bureaus 	of 	Consumer 	Protection 	and 	Economics, 	Federal 	Trade
Commission, 	A Comparative 	Analysis 	of 	Cosmetic 	C6ntact 	L~ns
Fitting 	by 	Ophthalmologists, 	Optometrists, 	and 	Opticians 	(1983).
- 	17 	-

. 	..	, 	.
. 	, 	.,,,,. 	..
BOARD 	OF 	MEDICINE
In 	our 	previous 	comments 7 we 	discussed 	three 	statutory
provisions 	that 	may 	harm 	consumers. 	We 	noted 	that 	Virginia 	Code
Section 	54-317(3), 	which 	bans 	advertising 	claims 	of 	superiority
by 	physicians, 	would 	appear 	to 	prohibit 	at 	least 	some
nondeceptive 	advertising 	(August 	1984 	comments, 	at 	p. 	2). 	We
also 	discussed 	in 	detail 	two 	provisions 	of 	the 	Virginia 	Code,
Section 	54-278.1, 	prohibiting 	physicians 	from 	leasing 	from
commercial 	establishments, 	and 	Section 	54-317, 	which 	may 	be
interpreted 	to 	prohibit 	trade 	name 	usage 	(August 	1984 	comments,
at 	pp. 	4-7). 	Both 	of 	these 	provisions 	may 	harm 	consumers 	by
hindering 	competition 	from 	high-volume, 	lower-priced 	practices.
ln 	its 	Report,8 	the 	Board 	noted 	that 	our 	recommendations 	relating
to 	advertising 	will 	be 	taken 	under 	advisement. 	We 	appreciate
this 	consideration 	of 	our 	comments. 	However, 	the 	Board 	did 	not
recommend 	any 	statutory 	revisions 	and 	we 	would 	urge 	the 	Board 	to
reconsider 	our 	previous 	comments 	regarding 	these 	provisions.
7 	Letter 	to 	Richard 	Morrison, 	Department 	of 	Health 	Regulatory
Boards 	from 	Carol 	T. 	Crawford, 	Director, 	Bureau 	of 	Consumer
Protection 	(August 	21, 	1984) 	(hereinafter 	sometimes 	referred 	to
as 	the 	"August 	1984 	comments.")
8 Board 	of 	Medicine, 	Summary 	of 	Regulations, 	p. 	6.
- 	18 	-