The U.S. Court of Appeals yesterday suspended Federal Trade Commission rules that allow advertising about eye examination, goods and services and directed the FTC to consider whether a 1977 U.S. Supreme Court decision now makes the rules unnecessary.
The FTC rules, unanimously adopted in May 1978, severely restrict state and local governments, and private associations from imposing limitations on such advertisements.
The appeals court said, however, that since the Supreme Court's decision lifting the ban on lawyer advertisements, several states have changed laws on ophthalmic advertising, diminishing the need for sweeping action by the FTC.
In a 47-page decision, the appeals court left open the key question of whether the FTC overstepped its authority when it approved the rules, preempting state and local laws. The FTC "has at least approached the outer boundries of its authority and may have infringed" on states' rights to regulate their own activities, Judge Carl McGowan wrote for the appeals court.
Richard W. Averill, the executive director of the American Optomertic Association, said yesterday that the court decision suspending the FTC rules "will give everyone a fresh opportunity to keep the FTC from taking over the states' regulatory functions in this field that traditionally belongs to the states rather than to the FTC." The AOA, the American Medical Association and nine states had asked the appeals court to review the Commission's rules.
The associations and the states had argued that the FTC rule-making ignored significant developments in professional advertising since the 1977 Supreme Court decision. The FTC had contended, however, that states could still impose some rules that would effectively discourage ophthalmic advertising.
In his opinion for the court, McGowan noted that -- primarily in response to the Supreme Court's decision -- at least 14 states have revised their laws on information about eye examinations and services, two state attorneys general have said total bans on such advertisements are unconstitutional, and bans in six states have been overturned as a result of lawsuits.
The real controversy left in the FTC rules, McGowan said, is provisions which prohibit the states from requiring certain disclosures in advertisements and imposing other regulations directed at ophthalmic information.
But, McGowan said, there is "scant evidence" at this point to support the FTC's contention that without those prohibitions, the states will make regulations so harsh that they will curtail advertising.
The appeals court noted that in Virginia, for example, where state officials have adopted rigorous disclosure rules for ophthalmic advertising, there is no evidence that advertisers have been deterred. Judges Patricia M. Wald, and U.S. District Court Judge John Garrett Penn, siting on the appeals court by special designation, joined McGowan in his opinion.
The court let stand a portion of the rules which allows consumers to have copies of eyeglass prescriptions, so that prices and services can be compared with those offered by other doctors.
The appeals court, in sending the rules back to the commissionm emphasized that ia "reserved judgment" on whether the FTC has the evidence to support the rules or whether it had properly exercised -- or even has -- the power to preempt state laws.