‘Monopolistic’ licensing boards come under new scrutiny

Supreme Court ruling could weaken boards accused of making it hard to launch businesses

Most professional licensing boards in Ohio are dominated by members of the industries they regulate, opening the door to accusations that they do more to tamp down competition than protect the public.

Those boards are facing new legal scrutiny after a recent U.S. Supreme Court decision found that they can run afoul of antitrust rules by putting industry profits before the public’s interest.

The ruling could open the door to challenges against numerous Ohio boards, including the cosmetology board, dental board, medical board, used car dealers board and others that are dominated by people who work in those industries.

“I think there’s a clock ticking because it won’t be too long before other people figure out that the Supreme Court has handed a big sword to people who are dissatisfied with the decisions of licensing boards,” said state Sen. Bill Seitz, R-Cincinnati.

Seitz said this could be costly to the state — antitrust suits pay triple damages — and could make it hard to get people to serve on boards. It also could invite challenges to board rules.

Since the Supreme Court decision in February, a national alternative medicine group has pushed for an overhaul of the Ohio Board of Dietetics, which the group says is self-serving and prevents qualified nutritionists from plying their trade.

“If you are not part of their trade association, you can’t practice in the state for no health or safety reason,” said Allison Murphy with the Alliance for Natural Health. “They’re just monopolistic.”

The six-member dietetics board includes three licensed dietitians and one dietitian educator, as required by state law. Many, if not most, of Ohio’s boards are set up similarly.

Seitz, an attorney who specializes in antitrust law, is involved in a lawsuit against Tennessee’s hearing instrument board brought by a company alleging the board makes it too hard for new companies to enter the market. They are using the Supreme Court decision in their argument.

Ohio Gov. John Kasich appoints members to most state boards, and officials with his office say they are aware of the issue.

“Members of Ohio’s boards and commissions have expressed concern about potential impacts of the U.S. Supreme Court’s decision on their day-to-day licensing and regulatory activities,” said governor’s office spokesman Joe Andrews.

“The court’s decision affects many states, including Ohio, and we have been communicating with the state’s licensing boards on the implications of this decision so that we can examine options to address the concerns raised by the Supreme Court.”

‘They don’t want the oversight’

Tommy Taneff was appointed to the Ohio Board of Embalmers and Funeral Directors in December. He says he has struggled to get the board to take action against prepaid funeral fraud.

“The guys that are in the industry, they don’t want the oversight. They don’t want to be critiqued or second-guessed or questioned,” said Taneff, a Columbus attorney.

Under Ohio law, five of the seven members of the board are licensed funeral directors.

“I think that when you have the industry people that comprise the majority of a board, there’s going to be pushback, there’s going to be resistance to change,” he said. “So maybe the ultimate solution is that you have a mixture of composition of board members.”

Taneff also is the only representative of the general public on the state cosmetology board, which has faced criticism over the years for its stringent requirements for people wishing to offer natural hair braiding.

This includes Tamara Richardson, whose dream is to own a business in Dayton offering natural hair braiding services. Under Ohio law, she must have a natural hair license to open shop. But she can’t find a place in Dayton that teaches the 450 hours in required classes, and can’t afford the five-figure cost for a full cosmetology education.

Hair braiding, she says, is a long-standing tradition that often is taught in the home and requires no use of chemicals. Richardson would like to offer the service for less money than a full-service spa, and suspects that’s what the cosmetology board is trying to prevent her from moving forward.

“The training is not really necessary,” she said. “We know what we’re doing. It’s what we’ve always done.”

Hair braiding controversy

Jennea M. Dorsey-Gordley, who teaches continuing education for cosmetologists in the area, agreed that it’s a problem that there are no area schools that offer just natural hair braiding license training. But she said doing away with the license would be a mistake.

She remembers doing a scalp inspection for a client and finding a nickel-sized scar on her head. She asked about it.

“She said, ‘I had a staph infection because I let a young lady braid my hair and I guess her utensils were dirty,’ ” Dorsey-Gordley said. “You can die from a staph infection. In cosmetology school, that’s what we learn about.”

The libertarian group Justice Institute has been on the forefront of pushing for deregulating hair braiding, among other industries.

“What you see again and again are licensing boards that are trying to expand the definition of their licensed occupation in order to monopolize greater and greater areas of service in order to take a larger and larger chunk of the market and exclude more and more people from making an honest living without the permission of the government,” said institute attorney Robert Everett Johnson.

The recent Supreme Court ruling was a huge win for his group, expanding antitrust rules to include government bodies.

“Instead of getting together to do that in a private capacity you can’t just get together in a government agency and use the government to restrain competition,” he said.

Ohio’s licensing boards maintain that their motivation always has been the public’s safety, though having a board consisting mostly of members of the industry could leave them open to challenges.

Cosmetology board director Christopher Logsdon notes that Ohio law gives his board direct authority to license hair braiding.

“Regulation in the cosmetology industry exists to ensure the safety and well-being of persons that receive services defined under (Ohio law),” he said.

Only 42 hair braiders in Ohio currently have “natural hair styling” licenses. Proposed legislation in the state House and Senate would require hair braiders to register with the state, but not obtain licenses.

The cosmetology board consists mostly of cosmetologists, cosmetology instructors or salon owners.

Local company could benefit

The Supreme Court decision stemmed from the North Carolina dental board cracking down on non-dentists providing teeth whitening services after licensed dentists complained the services were undercutting their business.

In a 6-3 decision, the Supreme Court ruled that when the largest contingent of members on a state licensing board are members of the regulated occupation, they are only immune from antitrust claims if they are acting under direct orders from the state.

Ohio’s dental board allows non-dentists to sell teeth-whitening supplies and supervise someone applying them to their own teeth as long as no one but the consumer puts their hands in the consumer’s mouth.

“We are really trying to make sure that Ohioans are protected and are receiving care from qualified professionals,” said Dental Board Executive Director Harry Kamdar, whose 13-member board includes nine dentists and three dental hygenists.

Dayton-based Maui Whitening operates salon dealerships in 22 states. Company founder Nikki Swisher said she is hopeful the Supreme Court ruling will allow her to expand to other states, often allowing people to whiten their teeth for a fraction of what dentists charge.

She said Ohio has been a model for allowing consumers the freedom to purchase these products, while laying down rules on how the products can be applied. She literally has the rules hanging on the wall of her Centerville salon.

“I think Ohio has done a very nice job in defining what the parameters are,” she said. “There is a line in the sand where we know what not to cross.”

Deregulating nutrition

Ohio Board of Dietetics Director Karen Morrison said her agency is doing its mandated job under state law, which is making sure only licensed dietitians provide nutritional assessments, counseling and education.

“The recent Supreme Court ruling is of interest to the board and we understand some of the potential ramifications,” Morrison said. “The board considers this a priority and is discussing it to maintain compliance with the law and the public’s safety as well.”

The agency’s 2014 annual report notes that it investigated 77 claims of improper practice of dietetics last year, including a personal trainer and alternative medicine practitioner giving nutritional advice.

The report also warns of “unlicensed alternative practitioners” proposing legislation to undermining the board’s authority.

“It is anticipated that continued efforts and agency resources may be necessary to preserve the integrity of the dietetic practice act and the regulatory oversight of medical nutrition therapy practices,” the report states.

The five-member dietetics board consists of three dietitians, one professor who teaches dietetics and one member of the general public.

The Alliance for Natural Health, a national alternative health advocacy group, sent letters to the governor and lawmakers in Ohio and 15 other states saying current rules keeping people from providing nutritional advice without a license violate free speech guarantees and could run afoul of antitrust laws.

‘Don’t enforce … like they used to’

Since the composition of most of these boards is spelled out in state law, protecting boards from monopolistic pitfalls will require a legislative fix.

Sen. Seitz proposed three solutions: reconstruct the boards to reduce industry control; consolidate boards so no one group has a majority; or create an oversight board to review licensing board decisions for these problems.

“The fact of the matter is they dealt us this hand and now we have to work on a solution that does one6 of (these) three things,” he said.

Whatever is done, Pete Bruns hopes licensing boards either ease rules or enforce them uniformally. Bruns is owner of Pete’s Auto Sales in Dayton, and complies with numerous rules from the Ohio Auto Dealers Board. Anyone who sells used cars at retail rates or handles more than five casual sales in a 12-month period must get a license.

The motor vehicles board requires dealers to be bonded, has rules about signage and the layout of lots. But Bruns said rules are rarely enforced.

“There’s so many curbstoners — people that go buy a car and fix it up and sell it on the street. They do it all the time,” Bruns said. “If you buy a car for $500, you can sell it for $600 or $700 to make a profit. I have to tack on $300 just to cover rent, electricty and insurance.

“They don’t enforce everything like they used to.”

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