Interstate Commerce & Professional Licensing

A recent lawsuit filed in New Jersey Federal Court is challenging the constitutionality of state medical licenses and their impact on the practice of medicine across state lines.  A Radiation Oncologist from Harvard Medical School and the Chair of Neurosurgery at the University of Pittsburgh, along with several New Jersey patients, filed suit against the New Jersey Board of Medical Examiners (NJBME) arguing New Jersey licensure laws unfairly restrict the practice of specialized medicine across state lines.  The legal theories being waged against the NJBME – violations of the commerce clause of the Constitution, as well as the 1st and 14th amendments – have the potential to reform state licensure law across the country, as well as the clinical management of your out-of-state patient population at UVA Health. 

Dr. Shannon MacDonald, a Radiation Oncologist at Mass General, began treating 9-year old “J.A.” from New Jersey in 2009 for an aggressive brain tumor.  Dr. MacDonald is known for her expertise in pediatric oncology and proton therapy, a critical component of the patient’s treatment.  Previously, J.A. had been seeing a New Jersey provider for his care, but due to the severity and complexities associated with his tumor, his New Jersey providers felt he needed the expertise of someone from an outside academic medical center.

Dr. MacDonald treated J.A. for several years where he routinely traveled with his parents from New Jersey to Boston to receive treatment.  During the pandemic, Dr. MacDonald began to provide telemedicine services to J.A.  The family found the convenience of telemedicine attractive as it reduced burdensome costs and travel.  However, when New Jersey’s licensure waiver laws were pulled back in 2022, Dr. MacDonald was no longer permitted to treat J.A. via telemedicine without a New Jersey medical license.  Moreover, if she did provide telemedicine services without a license, she would be subject to criminal and monetary penalties.  As a result, Dr. MacDonald and her physician colleague, as well as J.A.’s parents and the Pacific Legal Foundation (PLF), filed suit against NJBME in December 2023.

Alleged Constitutional Violations

On behalf of Dr. MacDonald and the other plaintiffs, attorneys with the PLF are arguing the licensure laws of New Jersey unfairly restrict interstate commerce.  The Dormant Commerce Clause of the U.S. Constitution provides state laws are unconstitutional if either 1) the state laws discriminate against out-of-state interests; or 2) they place an excessive burden on interstate commerce and do not serve any great local need.  The intent of the Clause is to promote unrestricted interstate commerce.  The PLF argument goes as follows: by placing undue burdens on both out-of-state physicians, as well as New Jersey patients who may be unable to find local specialized healthcare services, New Jersey’s licensure laws violate both the Commerce Clause as well as the Privileges and Immunities Clause as parents should have the fundamental right to direct the lawful medical care of their children, and those same rights should be enjoyed regardless of the state in which one may reside.  The licensure laws also violate First Amendment rights, they argue, as they prohibit the free speech between potential and existing patients via telemedicine and out-of-state providers who may hold a unique and specialized expertise. Many legal scholars believe PLF’s strongest argument is with the Commerce Clause and assert specialized telemedicine services should be available to all patients, especially ones in rural areas, and that existing state licensure laws place an undue burden on residents of those states who could otherwise access the care they may need virtually. 

Difference of Opinions

Predictably, healthcare providers, state regulators and associations like the American Medical Association have differing opinions on what licensure reform should look like. Dr. MacDonald and her like-minded colleagues believe licensure laws are outdated and unnecessarily punish both patients (due to a lack of access to individualized, specialized care), as well as providers (due to criminal and monetary penalties in the face of ostensible ethical and professional obligations to treat their patients, regardless of physical location).  In Dr. MacDonald’s Wall Street Journal opinion article, she concluded: “As a doctor, I want to provide the proper care for my patients no matter where they are, and I shouldn’t have to risk losing my license – or jail time – to do so.  Because states have failed to modernize physician licensure, it’s time for the courts to weigh in.” [1]

New Jersey regulators argue their aim is to provide safe and effective healthcare to the residents of New Jersey, as well as enforce state laws specifically designed to uphold such standards.  Moreover, they believe states should be permitted to establish their own healthcare standards.  New Jersey’s telemedicine law currently provides: “Any health care provider who uses telemedicine or engages in telehealth while providing health care services to a patient [in New Jersey] shall” be licensed as a health care provider in New Jersey. [2]  In its argument for why the licensure laws do not violate the Dormant Commerce Clause, the State’s primary argument is that it does not singularly discriminate against non-resident providers as it requires both non-resident and resident providers to be properly licensed.  The State further argues that it has a “distinctly non-protectionist aim” by ensuring the health and safety of its citizens; there is no competitive or economic incentive for New Jersey in its enforcement of the laws, it contends.  Finally, it argues the alleged First Amendment violation is false as the State does not dictate what can or cannot be said between a provider and a patient, thus remaining “content-neutral.”[3]

The American Medical Association (AMA), as set forth in a May 2023 brief addressing emerging state models of physician licensure flexibilities for telehealth, appears to take a more traditional and practical approach to the issue.[4]  While the AMA supports state medical and regulatory boards, it also recognizes the rising costs and inconveniences associated with the practice of medicine across multiple state lines.  As such, the AMA’s preference is to, among others, 1) require providers to be licensed in the state where the patient receives services; 2) require such providers to be subject to that state’s laws; 3) encourage those states that are not part of the Interstate Medical Licensure Compact (or similar compacts as it relates to other specialties) to join the Compact; and 4) in a nod to continuity of care, permit non-resident providers to be able to provide telemedicine services if there is a pre-existing and ongoing provider-patient relationship and a previous in-person visit, and the care is incident to an existing care plan or one that is being modified.  Practically speaking, the AMA uses the example of an out-of-state college student continuing to seek the services of their local pediatrician or psychiatrist.  For reference, the AMA brief even proposes model language in support of this perspective.

Current State of Physician Licensure

Forty-two states currently participate (at varying levels) in the Interstate Medical Licensure Compact (Compact).[5] The purpose of the Compact is to provide an expedited pathway for physicians licensed in a member state to obtain a full license to practice in another member state.  As of this writing, Virginia does not participate at any level in the Compact.  Recently, Maine, New York and North Carolina have introduced legislation and are working towards membership in the Compact. 

Virginia and Hawaii (a member of the Compact, as well) also offer licensure by endorsement, which is an alternative to the streamlined licensing approach offered by the Compact.  In Virginia, an out-of-state physician who has held a valid license continuously in another state for at least five years immediately prior to applying may apply for licensure by endorsement.[6]  While the application process is different compared to the more traditional licensing process, an endorsed licensee has the same rights and responsibilities as one traditionally licensed.

Lastly, many states have adopted telemedicine licenses.  These limited use, or sometimes referred to as special purpose, licenses permit a licensed out-of-state physician to register with another state and provide certain telemedicine services to the patients of that state. The terms and restrictions of these telemedicine licenses vary from state-to-state, and aside from generally permitting an out-of-state physician to treat patients via telemedicine capabilities, no two licenses are the same. Currently, 21 states have some form of a telemedicine license, including Texas and West Virginia, two states covered by PLT.[7]

What’s Next?

The New Jersey lawsuit is still in its infancy, and it will likely be another year or two before it reaches a resolution.  While the repercussions of a favorable ruling on the part of Dr. MacDonald and the other plaintiffs could have significant and long-lasting implications on national licensure laws, for now, each state’s regulations and licensure laws are in full force and effect.  In order to “practice medicine” virtually on a patient located outside of Virginia, all clinicians need to be properly licensed in that outside jurisdiction.  Please call Piedmont Liability Trust if you have any questions or concerns.