Abuse of Occupational Licensing Authority Can Run Very Deep

by Lewis Goldfarb

In Alabama, Even Burial Service Regulations Were Restrictive

Ms. Sheila Champion, founder of the Good Earth Burial Ground in Hazel Green, Alabama, sued that state, challenging a law limiting the sale of caskets to licensed funeral directors. The State was also requiring her to first attend a mortuary college, serve a two-year apprenticeship, build a funeral home and pay thousands of dollars for a license before she could legally offer her products and services.

Those restrictions may not seem unreasonable, except for the fact that Ms. Champion was attempting to sell biodegradable caskets, including burial services, for under $2,000; dramatically less than the $8,500 typical cost of the same service. She was also seeking to serve the interests of those consumers who care about the sustainability of the Earth’s natural resources.

Ms. Champion’s lawsuit is the latest in a growing number of challenges to state licensing rules that unreasonably stifle competition by exceeding legitimate state interests in protecting consumers from incompetence and fraud by service providers.

In the past year alone, class actions and other lawsuits challenged licensing requirements that:

  • Prohibit physicians in Texas from performing diagnoses from remote locations via webcams;
  • Impose a supplementary, subjective screening test on hearing aid specialists that no one passes on the first attempt in Tennessee;
  • Prohibit a computer services company from offering a service that enables construction lien holders to prepare and file construction liens via computer in Ohio;
  • Prohibit non-physicians from having an ownership interest in pain clinics in Mississippi despite the fact that all medical services are performed by physicians only;
  • Prohibit a massage therapist from providing therapeutic rubdowns for horses without first obtaining a veterinary degree and becoming a licensed veterinarian in Arizona.The motivation behind such anticompetitive forces is, in part, a product of basic human nature, commonly referred to as the “gangplank theory”: When members of a profession or vocation are called on to determine who gets to play and under what rules, the outcome is often tilted in favor of those already on the field.
  • In Ms. Champion’s case, however, pushing back on overly restrictive laws was well worth the effort. Largely as a result of her lawsuit, on May 2, 2016, Alabama Governor Robert Bentley signed a bill lifting the restrictions on who can sell funeral supplies and merchandise, enabling Ms. Champion to continue her business.
  • The stated rationale for all of these restrictions on access to vocations is the need to protect consumers. Unfortunately, that objective often serves as a shield to mask the enactment of excessive laws and regulations that block access to those entrepreneurs seeking to take their first step up the economic ladder.  The impact of these restrictions is often particularly harsh on lower income workers who may not be able to pay the additional educational requirements or the fees required to obtain a license.