The Texas Medical Board (TMB) has dropped an appeal that had challenged whether national telemedicine company Teladoc could sue over telemedicine restrictions enacted by the board. Both parties will now prepare to argue the merits behind the case in U.S. District Court in Austin, Texas.

TMB plans to vigorously defend its telemedicine rules in court, said Scott Freshour, interim executive director. He did not elaborate on the reasons behind the board’s Oct. 14 vote to withdraw its appeal in the case.

“The regulation of medicine is a right reserved for the states, and the board stands behind and will seek future vindication of its state-action immunity for performing the duties assigned it by the Texas Legislature,” Mr. Freshour said in a statement. “The board’s commitment to the defense of its telemedicine rule and its immunity from federal regulation remains firmly intact.”

TMB withdrew its appeal because it didn’t want to suffer another loss to Teladoc in the courts, said Adam Vandervoort, Teladoc’s chief legal counsel. In a public meeting, a TMB official called the decision to withdraw “purely strategic,” according to Mr. Vandervoort.

This “raises troubling questions about the TMB’s motives in both filing, and subsequently retracting, the appeal,” Mr. Vandervoort said in a statement. “Teladoc and its amicus parties expended substantial resources on defending the appeal, which now will not result in a decision.”

The dispute stems from a medical board rule that requires Texas physicians to conduct a “face-to-face” evaluation before treating a patient via telemedicine. The face-to-face visit can be conducted through telemedicine at an established medical site, but it may not be established through an online questionnaire, e-mail, text, chat, or telephonic evaluation or consultation. In addition, the TMB requires that distant site providers establish a physician-patient relationship, which at a minimum includes: establishing that the person requesting the treatment is in fact who the person claims to be, establishing a diagnosis through the use of acceptable medical practices, discussing with the patient the risks and benefits of various treatment options, and ensuring the availability of the distant site provider or coverage of the patient for appropriate follow-up care.

Teladoc sued the medical board in April 2015 claiming the face-to-face rule violates federal antitrust laws. Teladoc provides access to medical care via phone or interactive video and treats patients for nonemergency conditions. A judge halted the rule’s enforcement until the litigation is resolved.

The TMB requested that a judge throw out the suit, arguing that the board is immune from antitrust liability as a state agency. A district court disagreed and allowed the case to proceed. The board then appealed to 5th U.S. Circuit Court of Appeals to overturn the district court’s decision.

It’s likely that the board’s decision not to pursue the appeal was affected by the recent backing of Teladoc by the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) regarding the application of the state action doctrine, said Paul W. Pitts, a San Francisco health law attorney who has closely followed the case. The doctrine protects the deliberate policy choices of sovereign states to displace competition with regulation or monopoly public service.

In a brief to the 5th Circuit, the DOJ and the FTC urged the appeals court to dismiss the board’s appeal. The agencies called TMB’s telemedicine rules anticompetitive and said the board was not protected by the state action doctrine because requirements under the doctrine were not satisfied. However, the America Medical Association and the Texas Medical Association sided with the TMB, telling the court the entity should be immune from federal antitrust liability.

Aside from the AMA and Texas Medical Association, the Texas board had few allies in the appeals dispute,” Mr. Pitts said in an interview.

“Many interested parties were lining up on the side of Teledoc by filing amici curiae arguing that the 5th Circuit lacked jurisdiction to hear this appeal and that the state action doctrine is not applicable,” he said. “As the market for telemedicine grows rapidly, there is an increasing number of parties with something at stake in this case.”

Now that the appeal has ended, the district court can get back to the primary issue at hand: whether the rule requiring a face-to-face exam can be justified or whether it’s just a means of protecting the traditional physician practice, Mr. Pitts said. The ultimate ruling in the case has broad implications for the practice of telemedicine in Texas and beyond.

“Medical boards in other states are revising their rules to be more accommodating of telemedicine as the use of this approach grows in acceptance around the country.” he said. “The Texas Medical Board is increasingly an outlier in this space. If Teledoc prevails, you can expect to see investors taking another look at the telemedicine space as the Texas market opens up and the role of the state medical board is diminished.”

agallegos@frontlinemedcom.com

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Texas medical board drops appeal against Teladoc