Federal Court Stays Texas Medical Board’s Rule Limiting Telemedicine

Dallas-based telemedicine provider Teladoc won another court battle against the Texas Medical Board on Friday, as an Austin federal court stayed a new rule that would cut its business model out at the knees. It’s not over yet—U.S. District Judge Robert Pitman’s ruling means the medical board’s amendment won’t be enacted until a lawsuit filed by Teladoc is resolved. The new mandate would’ve begun on June 3.

In April, the board passed an amendment to its rules of practice that barred physicians from prescribing drugs or diagnosing an ailment over the phone to patients who they had never met in person. Teladoc’s model pairs a patient with a licensed physician at random, which can be over the phone or via streaming video. It’s a service that isn’t meant to replace a patient’s primary care physician; it’s meant to be there when the family doctor is unavailable.

Jason Gorevic, the company’s CEO, says about half of its patient encounters occur on nights, weekends, and holidays.

The medical board has spent years trying to limit the practice. Proponents say it’s not to gut telemedicine as a whole, but rather to preserve a defined patient-physician relationship. And the board defines said relationship as the two parties engaging in a person-to-person encounter before the physician provides telehealth services. Here are more details about the yearslong battle between the board and Teladoc.

The company sued nearly immediately after the board enacted the rule, arguing that it would effectively kill its model in Texas and violates the state’s antitrust laws. The company also argued that the board, which is primarily composed of physicians, was trying to quash competition. In his ruling, Judge Pitman gives that argument credence, noting that “at least two circuit courts have recognized destruction of a business model may constitute irreparable injury.” Too, the judge says Teladoc’s investors maintain the company’s plans to go public would be kaput if the rule goes into effect, as nearly a quarter of its revenue is generated in Texas alone.

So the rule is on hold until the lawsuit plays out in court.

“Not only is telehealth the wave of the future, but Texas physicians have been treating patients without a prior in-person visit for decades,” Gorevic said in a statement. “We are happy to be able to continue serving Texas citizens, employers and health plans by enabling them to access high-quality care in a cost-effective manner.”

The rule has the support of the Texas Medical Association, and President Tom Garcia told The Texas Tribune that he was “sorely disappointed” with the ruling. On the other end, Teladoc has much of the business community in its corner. The Texas Association of Business has pledged its support, and the service is provided through myriad health plans as well as the more than 38,000 members of the Teacher’s Retirement System of Texas.

Teladoc operates in 48 states and noted nearly 300,000 patient visits in 2014, up from 156,000 the year before.