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Henry v. North Carolina Acupuncture Licensing Board

United States District Court, M.D. North Carolina

January 30, 2017

ELIZABETH HENRY, et al., Plaintiffs,
v.
NORTH CAROLINA ACUPUNCTURE LICENSING BOARD, et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          OSTEEN, JR., District Judge

         This matter comes before the court on three motions - one by Plaintiffs and two by Defendants. Defendants move for a stay pending state court resolution of a related case (Doc. 20) and move to dismiss the Amended Complaint (Doc. 22). Plaintiffs move for leave to file a surreply to Defendants' motion to dismiss (Doc. 33). The motions have been fully briefed and are now ripe for adjudication. For the reasons that follow, Defendants' motion to stay the proceedings will be denied, Defendants' motion to dismiss will be granted in part and denied in part, and Plaintiffs' motion for leave to file a surreply will be denied.

         I. FACTS AND PROCEDURAL HISTORY

         The following facts are drawn from the Amended Complaint, (Amended Complaint (“Am. Compl.”) (Doc. 19)), and are presented in the light most favorable to Plaintiffs. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         A. The Parties

         The parties bringing the present lawsuit (referred to throughout as “Plaintiffs”) are as follows: Dr. Elizabeth Henry and Dr. Aart Schulenklopper are licensed physical therapists who currently perform a practice called “dry needling” for their patients. (Am. Compl. (Doc. 19) ¶¶ 7, 37.) Dr. Eileen Carter and Dr. Shondell Jones “are physical therapists who want to [perform dry needling] but are afraid to do so.” (Id. at 7.) Finally, “Jan Burkhard-Catlin and Lindsay Purrington are professional ballet dancers whose job performance depends on [dry needling] . . . .” (Id.)

         The primary Defendant in this case is the North Carolina Acupuncture Licensing Board (“the Acupuncture Board”), which is the “state agency charged with regulating the practice of acupuncture.” (Id. ¶ 15.) The Amended Complaint further names Emmylou Norfleet, M. Cissy Majebe, Karen Vaughn, Chester Phillips, and Marc Cutler as Defendants, all of whom are members or directors of the Acupuncture Board and all of whom practice acupuncture. (Id. ¶¶ 16-20.) The Amended Complaint also names Vikki Andrews as a Defendant. Dr. Andrews is a member of the Acupuncture Board but is not a licensed acupuncturist. (Id. ¶ 21.) The court refers to the above-mentioned parties (collectively) throughout as the “Acupuncture Board Defendants.”

         B. Background

         According to Plaintiffs, dry needling is “[a] commonly used intervention for treating myofascial trigger point pain, ” during which “physical therapists insert needles into trigger points (taut bands in the muscles) to relieve patients' pain or dysfunction.” (Am. Compl. (Doc. 19) ¶¶ 30-31.) Plaintiffs allege that dry needling is effective for a number of medical purposes and that physical therapists in North Carolina have performed dry needling safely for decades. (Id. ¶¶ 33-37.) The North Carolina Physical Therapy Board (“Physical Therapy Board”) “is the only North Carolina state regulatory agency charged with regulating physical therapists” and in December of 2010, “expressly determined that dry needling is within the scope of [the] practice of physical therapy in North Carolina. (Id. ¶¶ 39-40.)

         In contrast, Plaintiffs allege that “[a]cupuncture has its origins in ancient Chinese Daoist philosophy and religion.” (Id. ¶ 46.) Plaintiffs alleges that acupuncturists base their practice on the flow of “Qi” throughout a patient's body, which practitioners manipulate by inserting needles at “Ashi points, ” which are based on “energy meridians” in the hope “that the technique will cause the individual's energy flow to rebalance.” (Id. ¶¶ 47-48.) Because acupuncture purports to address the same pain as dry needling, “acupuncturists in North Carolina -including the acupuncturists who serve on the Acupuncture Board - compete with North Carolina physical therapists who perform dry needling.” (Id. ¶ 51.)

         “In April 2011, the Acupuncture Board requested an Advisory Opinion from the North Carolina Attorney General on whether dry needling was within the scope of [the] practice of physical therapy or, alternatively, was a form of acupuncture.” (Id. ¶ 43.) “In December 2011, the North Carolina Attorney General's Office opined that the Physical Therapy Board had the authority to determine that dry needling is within the scope of practice of physical therapy.” (Id. ¶ 44.)

         Pivotally, “[s]ome consumers in the relevant market prefer dry needling by physical therapists over Ashi point needling” for a number of reasons, including the fact that some insurance plans cover dry needling while none cover acupuncture. (Id. ¶¶ 54-56.) As a result, Plaintiffs allege that “[i]n recent years, the number of licensed physical therapists in North Carolina who offer dry needling has grown, ” inspiring Defendants' anticompetitive and unconstitutional conduct. (Id. ¶ 5.)

         C. Challenged Conduct

         The North Carolina Association of Acupuncture and Oriental Medicine (“Acupuncture Association”) is the trade association to which acupuncturists practicing in North Carolina belong, including Defendants. (Id. ¶ 66.) “Beginning in 2010, the Acupuncture Association pressured the Acupuncture Board to use its governmental power to suppress competition from physical therapists.” (Id. ¶ 67.)

         On June 29, 2012, the Acupuncture Board and the Acupuncture Association formed a committee to create a “position statement” regarding the Acupuncture Board's tentative stance on dry needling which would be “distributed online.” (Id. ¶ 75.) At the same meeting, the Acupuncture Board noted that it “[had] not received a formal complaint . . . regarding the practice of dry needling by a physical therapist.” (Id. ¶ 76.)

         Around this same time, Acupuncture Board members began editing the Wikipedia page for “dry needling” to reflect their contention that dry needling is a form of acupuncture. (Id. ¶ 77.) The Acupuncture Board would later instruct one of its members to continue editing the “dry needling” Wikipedia page in accordance with their goals. (Id. ¶ 80.)

         In or around September, 2012, the Acupuncture Board posted its publication entitled “Dry Needling is Intramuscular Manual Therapy is Acupuncture” (“the Publication”) on its website, on various social media platforms and on other relevant websites or blogs under the control of its members. (Id. ¶¶ 81-85.) The Acupuncture Board also edited the “dry needling” Wikipedia page to reflect the Acupuncture Board's conclusion and to include a link to the Publication. (Id. ¶ 84.)

         The Publication, after concluding that dry needling is acupuncture, continued that “physical therapists performing dry needling in North Carolina” were:

• engaging in a misrepresentation of the skill set included in the scope of practice of physical therapists in North Carolina;
• confusing the public as to who may provide Acupuncture safely;
• undermining the General Assembly;
• subject to being legally enforced to discontinue these actions; and
• endangering the public.

(Id. ¶ 82) (internal quotation marks omitted).

         From October of 2012 to August of 2013, the Acupuncture Association and the Acupuncture Board experienced a number of disagreements regarding the appropriate manner of handling “those who are guilty of dry needling.” (Id. ¶¶ 87-103.) The Acupuncture Association persistently pressed the Acupuncture Board to take more “vigorous” action, while the Acupuncture Board stressed the fact that it only had jurisdiction over “licensed acupuncturists” as well as the need for justification outside “professional protectionism, ” citing the lack of complaints from anyone other than licensed acupuncturists. (Id. ¶¶ 88-89.) Without patient complaints, the Acupuncture Board ultimately acceded to the Acupuncture Association's demands that it move forward with the cease-and-desist letters. (Id. ¶¶ 90-98.) The Acupuncture Association's Executive Director, displeased with the delay in sending the cease-and-desist letters, had two of the Acupuncture Board's members replaced. (Id. ¶¶ 99-100.) In a June 17, 2013 email, one of the outgoing board members made reference to the Acupuncture Association's “professional protectionist position and turf war agenda.” (Id. ¶ 100.)

         Around August of 2013, the Acupuncture Board sent cease-and-desist letters (“the Letters”) to a number of physical therapists who advertised dry needling. (Id. ¶ 104.) The Letters:

• ordered the targets to immediately “CEASE AND DESIST” providing dry needling services;
• attached a copy of the Publication
• stated that by engaging in dry needling, the target may be engaging in illegal billing procedures and could be subject to further action by the North Carolina Department of Insurance; and
• stated that practicing acupuncture without a license was a Class 1 misdemeanor.

(Id. ¶ 106.) Dr. Henry and Dr. Schulenklopper were among the physical therapists to receive the Letters at their offices. (Id. ¶ 109.) Dr. Carter and Dr. Jones, who had plans to enter the relevant market, heard about the Letters and decided not to enter the market “because they did not want to subject themselves to ‘unauthorized practice' allegations by the Acupuncture Board or the costs of defending against allegations of that kind.” (Id. ¶ 111.)

         On December 5, 2014, the Acupuncture Board “revised and republished the Publication on its website. . . . [A]nd . . . disseminated it again to third parties.” (Id. ¶ 112.) Further, on January 8, 2015, “Dr. Majebe e-mailed a number of her contacts and solicited them to call CBS headquarters in New York about a television program featuring a physical therapist performing dry needling.” (Id. ¶ 113.) “On January 7, 2015, the Acupuncture Association e-mailed all of its acupuncturist members” in an attempt to raise $25, 000 for the stated goal of “[stopping] dry needling.” (Id. ¶ 115.)

         On September 2, 2015, the Acupuncture Board filed a “verified complaint against the Physical Therapy Board in Wake County Superior Court (‘the [State] Lawsuit').” (Id. ¶ 116.) The State Lawsuit seeks a “declaration that dry needling by licensed physical therapists constitutes the unlawful practice of acupuncture, ” a “permanent injunction requiring the Physical Therapy Board to advise its licensees that dry needling is not within the scope of physical therapy practice” and “a judgment authorizing the Acupuncture Board to notify physical therapists not licensed to practice acupuncture in North Carolina to cease and desist from doing so.” (Id. ¶ 117.) The Acupuncture Board later amended the State Lawsuit to name Dr. Henry and Dr. Schulenklopper, seeking a permanent injunction against them. (Id. ¶ 124.) Plaintiffs allege that, for reasons of sovereign immunity and nonexhaustion, the State Lawsuit is “in bad faith and for an improper purpose.” (Id. ¶ 127.)

         D. The Relevant Market

         Plaintiffs allege that “[t]he relevant market in which to evaluate the conduct of the Acupuncture Board is the combined market for dry needling services and Ashi point needling services in North Carolina.”[1] (Id. ¶ 52.) Specifically, “[t]here are approximately 500 licensed acupuncturists in North Carolina” and “approximately 200 physical therapists in North Carolina who currently offer dry needling.” (Id. ¶ 57.)

         E. Relief Sought

         Plaintiffs assert two causes of action, designated in the Amended Complaint as Counts. Count 1 alleges a violation of Section 1 of the Sherman Act, under 15 U.S.C. § 1. (Am. Compl. (Doc. 19) at 44.) Count 2 alleges a violation of ...


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