As a licensed dental professional, it’s understandable to expect that your state’s laws — especially those that govern your licensure, scope of practice, and professional protections — would take precedence in your day-to-day practice. After all, your license is issued by your state dental board, and your ability to treat patients legally is governed by state-level regulations.

So why, then, do federal laws sometimes override your state’s protections, particularly when it comes to dental insurance and reimbursement? Why are you, a state-licensed provider, subject to federal mandates that may nullify your state’s consumer safeguards, such as non-covered service laws?

This confusion is common — and unfortunately, the answer lies in the structure of the U.S. legal system, the way insurance is regulated, and the federal protections given to certain types of insurance plans.

Understanding the Federal vs. State Law Hierarchy

The U.S. operates under a dual-sovereignty system, meaning both state and federal governments have authority — but federal law is supreme when there is a direct conflict.

When it comes to dental practice:

• Your clinical practice is regulated by the state.

• But insurance regulation — especially employer-sponsored or federally subsidized plans — often falls under federal law.

This means that even though your dental license is state-issued, if you accept insurance or deal with certain types of plans, you may be subject to federal preemption.

What Is ERISA and Why Does It Override State Law?

The Employee Retirement Income Security Act of 1974 (ERISA) is the key piece of federal legislation responsible for this conflict. ERISA governs self-funded employer-sponsored health and dental plans — typically offered by larger companies.

• ERISA preempts state laws that “relate to” these plans.

• That means state protections, like non-covered service laws, prompt payment laws, or even fee balance restrictions, do not apply to ERISA plans.

So when you treat a patient with an ERISA-governed dental plan, your state law may say you're allowed to charge for a non-covered service, but the plan may legally deny that, and you’ll have limited recourse.

But I’m Licensed by the State — Shouldn’t That Offer Protection?

It’s true: your professional conduct, licensure, and scope of practice are governed by state law. However:

• Insurance is not practice law — it’s contract law and benefits administration.

• When you submit a claim to an ERISA plan, you're stepping into the federal regulatory space, regardless of where your license was issued.

This doesn’t mean you’re practicing federally — it means that certain payment and processing rules are governed at the federal level, not state.

What About Non-Covered Service Laws?

Many states have enacted non-covered service legislation, which prevents insurance companies from dictating fees for services they don’t cover.

But here’s the catch:

• These protections apply only to fully insured plans regulated by the state.

• They do not apply to self-funded or ERISA plans, which are exempt due to federal preemption.

So, while your state may have passed a law protecting your right to set your own fees for uncovered services, that law doesn’t apply to all the plans your patients may have.

Why This Creates Confusion (and Frustration)

It’s no surprise that dentists — and their patients — are often frustrated when:

• The insurer says “we follow federal ERISA rules,”

• Even though the dentist’s state laws say otherwise.

This is especially painful when state laws are designed to protect providers and patients, but federal preemption effectively erases those protections for a significant portion of the insured population.

What Can Dentists Do?

While you can’t override federal law, you can:

1. Understand which plans are ERISA and which are not
   Ask: Is this plan self-funded or fully insured? (This affects whether state law applies.)

2. Educate your patients
   Let them know that not all dental plans are created equal, and that state-level protections may not apply to their employer-sponsored plan.

3. Advocate for legislative reform
   Work with organizations like the ADA or your state dental association to push for greater transparency, accountability, and parity in how dental benefits are regulated.

4. Review your PPO contracts carefully
   Some participating provider agreements include clauses that voluntarily extend pricing restrictions, even beyond what state or federal law requires.

Final Thoughts

Yes, it's frustrating. Dentists are uniquely positioned in the healthcare system — licensed by states, but impacted daily by federal insurance rules they didn’t opt into. While you rightly expect that your state's laws should govern your business, the federal framework of insurance regulation (especially ERISA) often says otherwise.

Until stronger protections are in place or federal preemption is reined in, the best defense is education, documentation, and advocacy.

Benjamin Tuinei

Founder - Veritas Dental Resources, LLC
Phone: 888-808-4513

Services:
PPO Fee Negotiators | PPO Fee Negotiating | Insurance Fee Negotiating
Insurance Credentialing | Insurance Verifications

Websites:
www.VeritasDentalResources.com | www.VerusDental.com