If a Texas optometrist co-owns optical shops at several locations, do the Optometry Act's anti-control rules apply to them?

Plain-English summary

Texas law tries to keep the people who sell eyeglasses and contact lenses from leaning on the optometrists who write the prescriptions. The mechanism is article 4552-5.11 of the Texas Optometry Act, which bars any "manufacturer, wholesaler, or retailer of ophthalmic goods" from controlling or trying to control an optometrist's professional judgment, fees, hours, or practice. The chairman of the Texas Optometry Board asked the Attorney General to interpret that section using a hypothetical: an optometrist (called Dr. Smith) who wholly owns three optical offices, has partnership or ownership interests in about fifteen more, and also owns a stake in a chain of optical stores.

The first question was what "retailer of ophthalmic goods" means. The Act does not define the phrase, so the Attorney General used the ordinary meaning of "retailer," a person who sells to ultimate consumers, and read it together with the Act's definition of an "ophthalmic dispenser," who sells finished lenses, frames, and contact lenses. The opinion concluded that a "retailer of ophthalmic goods" is any person or legal entity that sells ophthalmic goods to consumers, that the term covers corporations and partnerships and not just individuals, and that even a part-owner of such a business is a "retailer" because that ownership stake puts the owner in a position to control the optometrist who practices there. On that reading, Dr. Smith was a retailer of ophthalmic goods.

The second question was about the exception in subsection (g). That subsection lifts the control restrictions for a retailer who is a licensed optometrist, or a legal entity wholly owned by optometrists, as long as the optometrist or entity has offices "at more than three locations" is not exceeded, in other words, no more than three offices. The Attorney General read "office" to mean a place where ophthalmic goods are sold. Because Dr. Smith had three wholly owned offices plus ownership interests in roughly fifteen others, he had offices at more than three locations. The opinion concluded that the subsection (g) exception therefore did not protect him, not even as to the three offices he wholly owned: once an optometrist has offices at more than three locations, the restrictions in subsections (a) and (b) apply to all of that optometrist's offices.

Currency note

This opinion was issued in 1992. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The Texas Optometry Act was later recodified into the Occupations Code, and the article 4552 citations used in this 1992 opinion no longer match the current statute numbering, so confirm the present-day provisions before relying on anything described here.

Background and statutory framework

The Texas Optometry Act, then codified at V.T.C.S. article 4552-1.01 et seq., regulates the practice of optometry. Article 4552-5.11 addresses the relationship between optometrists and the businesses that sell eyewear. Subsection (a) prohibits any person who is a manufacturer, wholesaler, or retailer of ophthalmic goods from directly or indirectly controlling or attempting to control an optometrist's professional judgment, manner of practice, or practice; from employing or contracting for an optometrist's services where those duties involve the practice of optometry; and from paying an optometrist for services not actually rendered. Subsection (b) lists examples of prohibited control, including setting an optometrist's fees or office hours, restricting appointment scheduling, terminating leases or agreements to exert control, sharing employees or business services, and making loans above the value of the collateral. Subsection (c) states the legislature's intent to stop retailers from controlling optometrists and directs that the section be liberally construed to carry out that intent.

The opinion traces the 1981 amendment that gave the section its current shape. The legislature acted in response to a recurring problem in which a manufacturer, wholesaler, or retailer of ophthalmic goods pressured an optometrist to push particular products on patients, often by holding the threat of a lease cancellation over the optometrist. The 1991 legislature later amended the section only to add the term "therapeutic optometrist" to several subsections.

Because the Act did not define "retailer," the Attorney General turned to the ordinary meaning of the word under Government Code § 312.002(a), which directs that statutory words generally be given their ordinary meaning. A "retailer" is a person engaged in making sales to ultimate consumers. The opinion concluded that "retailer," as used in article 4552-5.11, reaches not only individuals but also legal entities such as corporations and partnerships, and that a part-owner of a business selling ophthalmic goods is himself a retailer, because the ownership interest puts him in a position to exercise control over the optometrist who is his co-owner.

Subsection (g) creates the only exception relevant here. It removes the control restrictions where the retailer is a licensed optometrist, therapeutic optometrist, or physician, or a legal entity wholly owned and controlled by such practitioners, but the exception does not apply where that optometrist or entity has offices at more than three locations. The Attorney General construed the undefined term "office" to mean a place where ophthalmic goods are sold, drawing on dictionary definitions and case law on the ordinary meaning of "office." Applying that to the hypothetical, Dr. Smith wholly owned three such offices and held ownership interests in about fifteen more, so he had offices at more than three locations. The opinion concluded that the subsection (g) exception did not apply to him at all, and that once an optometrist crosses the three-location threshold, every one of that optometrist's offices is subject to the restrictions in subsections (a) and (b).

Common questions

Who counts as a "retailer of ophthalmic goods" under this opinion?
The opinion concluded that any person or legal entity with an ownership interest in a business that sells ophthalmic goods (finished lenses, frames, contact lenses, and similar devices) to consumers is a "retailer of ophthalmic goods" for purposes of article 4552-5.11. That includes corporations and partnerships, not just individuals, and it includes a part-owner, not only a sole owner.

Does an optometrist escape the rules just because the retailer is also an optometrist?
Only within a limit. The opinion explained that subsection (g) exempts a retailer who is a licensed optometrist (or an entity wholly owned by optometrists), but the exemption is capped: it applies only when the optometrist or entity has offices at no more than three locations.

What happens once an optometrist has offices at more than three locations?
The opinion concluded that the subsection (g) exemption falls away entirely, and the control restrictions in subsections (a) and (b) then apply to all of the optometrist's offices, including the ones he wholly owns.

What did the opinion treat as an "office"?
Because the Act did not define the term, the Attorney General construed "office" to mean a place where ophthalmic goods are sold, relying on the ordinary meaning of the word as reflected in dictionaries and case law.

Citations

• V.T.C.S. article 4552-5.11 (Texas Optometry Act), subsections (a), (b), (c), and (g)
• V.T.C.S. article 4552-1.01 et seq. (Texas Optometry Act)
• V.T.C.S. article 4552-5.3
• Government Code § 312.002(a)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/dan-morales/dm-0170
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1992/dm0170.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain. The linked PDF is authoritative.

Office of the Attorney General
State of Texas

DAN MORALES
ATTORNEY GENERAL

September 24, 1992

Clinton M. DeWolfe, O.D.
Chairman
Texas Optometry Board
9101 Burnet Road, Suite 214
Austin, Texas 78758

Opinion No. DM-170

Re: Construction of V.T.C.S. article 4552-5.11 of the Texas Optometry Act, and related questions (RQ-396)

Dear Dr. DeWolfe:

You have asked us to construe V.T.C.S. article 4552-5.11(a) and (b) of the Texas Optometry Act (the act), V.T.C.S. article 4552-1.01 et seq., chapter 10. As background material, you provide a hypothetical set of facts. You state that the hypothetical facts are similar to an actual circumstance involving a particular optometrist practicing in the State of Texas, but you also state that the facts are not unique to this particular optometrist. The hypothetical situation you set forth is as follows:

Dr. Smith (hypothetical name) is a licensed optometrist in the State of Texas. Dr. Smith and one other optometrist have formed a partnership (legal entity) for the practice of optometry and also for the sale and dispensing at retail of optometric goods at a given location in Texas. Dr. Smith and his partner are 100% owners of the office in which optometry is practiced and in which optometric goods are dispensed and sold at retail. The partnership practices under a trade name or assumed name.

Dr. Smith has similar partnerships for the practice of optometry and for the sale and dispensing at retail of ophthalmic goods at approximately fifteen (15) additional offices located throughout Texas. Each office practices under the same trade name or assumed name. With respect to each office, Dr. Smith has formed a partnership (legal entity) with one other different optometrist. In other words, Dr. Smith has a partnership interest in approximately fifteen (15) offices in Texas where ophthalmic goods are sold at retail. In addition, Dr. Smith has three locations in Texas where optometry is practiced and ophthalmic goods are sold and dispensed at retail which are 100% owned and operated by Dr. Smith, individually. Dr. Smith also has an ownership interest in a chain of stores where optical goods are dispensed and sold at retail.

You have informed us that you do not know whether Dr. Smith has actual partnership agreements with all of the other optometrists, or whether he has some other kind of investment arrangement with some of the other optometrists. Thus, you have not used the word "partnership" in its technical, legal sense, but simply to refer to any kind of arrangement whereby Dr. Smith has become a co-owner of a business where optometry is practiced and ophthalmic goods are sold.

You believe that article 4552-5.11 of the act prohibits Dr. Smith from, among other things, controlling or attempting to control the professional judgment, manner of practice, or practice of an optometrist. Article 4552-5.11 states in pertinent part as follows:

(a) Any person who is a manufacturer, wholesaler, or retailer of ophthalmic goods is prohibited from:

(1) directly or indirectly controlling or attempting to control the professional judgment, the manner of practice, or the practice of an optometrist or therapeutic optometrist; or

(2) directly or indirectly employing or hiring or contracting for the services of an optometrist or therapeutic optometrist if any part of such optometrist's or therapeutic optometrist's duties involve the practice of optometry or therapeutic optometry; or

(3) directly or indirectly making any payment to an optometrist or therapeutic optometrist for any service not actually rendered.

(b) For purposes of this section "controlling or attempting to control the professional judgment, the manner of practice, or the practice of an optometrist or therapeutic optometrist" shall include but not be limited to:

(1) setting or attempting to influence the professional fees of an optometrist or therapeutic optometrist;

(2) setting or attempting to influence the office hours of an optometrist or therapeutic optometrist;

(3) restricting or attempting to restrict an optometrist's or therapeutic optometrist's freedom to see patients on an appointment basis;

(4) terminating or threatening to terminate any lease, agreement, or other relationship in an effort to control the professional judgment, manner of practice, or practice of an optometrist or therapeutic optometrist;

(5) providing, hiring, or sharing employees or business services or similar items to or with an optometrist or therapeutic optometrist; or

(6) making or guaranteeing a loan to an optometrist or therapeutic optometrist in excess of the value of the collateral securing the loan.

(c) It is the intent of the legislature to prevent manufacturers, wholesalers, and retailers of ophthalmic goods from controlling or attempting to control the professional judgment, manner of practice, or the practice of an optometrist or therapeutic optometrist, and the provisions of this section shall be liberally construed to carry out this intent.

. . . .

(g) This section shall not apply where the manufacturer, wholesaler, or retailer of ophthalmic goods is a licensed optometrist, therapeutic optometrist, or physician or legal entity 100 percent owned and controlled by one or more licensed optometrists, therapeutic optometrists, or physicians; however, the exception set forth in this subsection shall not apply where the optometrist, therapeutic optometrist, or legal entity has offices at more than three locations.

The legislature amended article 4552-5.11 in 1981 to read substantially as it does now. See Acts 1981, 67th Leg., ch. 758, § 2, at 2807-08. (Prior to amendment in 1981, article 4552-5.11 restricted optometrists' use of window displays and signs. In 1991 the legislature again amended article 4552-5.11, but at that time the legislature only added the term "therapeutic optometrist" to subsections (a)-(c) and (g). Acts 1991, 72d Leg., ch. 588, § 18, at 2113.) The legislature designed the 1981 amendment to prohibit "any person who is a manufacturer, wholesaler, or retailer of ophthalmic goods from controlling an optometrist, from hiring an optometrist to perform optometry and from paying for services not rendered." House Comm. on Gov't Organization, Bill Analysis, S.B. 109, 67th Leg. (1981). Apparently, the legislature amended article 4552-5.11 in response to a common situation in which a manufacturer, a wholesaler, or a retailer of ophthalmic goods pressured an optometrist to recommend to the optometrist's patients that they purchase certain ophthalmic products produced or sold by the manufacturer, wholesaler, or retailer. For example, a manufacturer might offer an optometrist favorable lease terms on equipment or office space. However, the contract between the manufacturer and optometrist would contain a provision authorizing the manufacturer to cancel the lease without cause upon thirty days notice. In practice, the manufacturer would exercise the cancellation clause if the optometrist failed to charge fees that the manufacturer felt were "reasonable," failed to keep hours the manufacturer "suggested," or if a certain percentage of the optometrist's patients did not purchase their ophthalmic goods from the manufacturer. The legislature's statement of intention, found in article 4552-5.11(c), clearly expresses the legislature's desire that this kind of economic coercion stop, and that an optometrist or therapeutic optometrist be free to recommend to his or her patients the best products for each particular patient. See V.T.C.S. art. 4552-5.13 (containing professional responsibility requirements for optometrists); id. art. 4552-5.14 (restricting optometrists' authority to lease space from mercantile establishments); id. art. 4552-5.15 (requiring optometrists to practice completely and totally separate from dispensing opticians).

You ask how to define "retailer of ophthalmic goods" in the context of article 4552-5.11. The act defines neither "retailer" nor "ophthalmic goods." However, the act defines "ophthalmic dispenser" as "a person not licensed as an optometrist, therapeutic optometrist, or physician who sells or delivers to the consumer fabricated and finished spectacle lenses, frames, contact lenses, or other ophthalmic devices" that an optometrist, therapeutic optometrist, or physician has prescribed. We believe that the kinds of goods an ophthalmic dispenser sells or delivers are "ophthalmic goods."

To determine the meaning of "retailer," we turn to the common understanding of the term. See Gov't Code § 312.002(a) (providing that, in general, words used in statute shall be given their ordinary meaning). A "retailer" is "a person engaged in making sales to ultimate consumers." Black's Law Dictionary 1182 (5th ed. 1987). We do not understand "retailer," as article 4552-5.11 uses the term, to refer only to a human person but also to include legal entities such as corporations or partnerships. See V.T.C.S. art. 4552-5.11(g). Thus, a "retailer of ophthalmic goods" is a person or legal entity that sells to ultimate consumers spectacle lenses, frames, contact lenses, and other ophthalmic devices.

Clearly, all of the businesses that Dr. Smith wholly owns or in which he has an ownership interest are "retailers of ophthalmic goods." As to those businesses Dr. Smith does not wholly own, the question becomes whether Dr. Smith is a retailer of ophthalmic goods simply by virtue of his ownership interest in the businesses. We conclude that his ownership interest does make him a "retailer of ophthalmic goods" for purposes of article 4552-5.11. Dr. Smith's ownership interest in a business engaged in selling ophthalmic goods puts him in a position to exercise control over the professional judgment, manner of practice, or practice of the optometrist who is Dr. Smith's co-owner and who practices optometry at the business.

Subsection (c) instructs us liberally to construe the act to prevent the exercise of control over optometrists. Accordingly, for purposes of V.T.C.S. article 4552-5.11, we believe "retailer of ophthalmic goods" must include any person with an ownership interest in a business that sells ophthalmic goods. In general, of course, a retailer of ophthalmic goods is subject to the restrictions that article 4552-5.11(a) and (b) articulate.

We note, however, that article 4552-5.11(g) excepts from these restrictions a retailer of ophthalmic goods who is a licensed optometrist or that is a legal entity wholly owned and controlled by one or more licensed optometrists, so long as the optometrist or legal entity has offices at fewer than four locations. In our opinion, "office" indicates a place where ophthalmic goods are sold. Under the hypothetical you have set up, Dr. Smith wholly owns offices at three locations in Texas at which ophthalmic goods are sold. Additionally, he has an ownership interest in offices at approximately fifteen other locations at which ophthalmic goods are sold. In our opinion, Dr. Smith has "offices at more than three locations" and thus is subject to the restrictions section article 4552-5.11(a) and (b) articulates.

Your second question asks whether, if Dr. Smith is a "retailer of ophthalmic goods" for purposes of article 4552-5.11(a) and (b), he may maintain an exception under article 4552-5.11(g) with respect to the three offices he wholly owns. You contend that he may not. We agree. Once an optometrist has more than three offices at which ophthalmic goods are sold, all offices are subject to the restrictions set out in subsections (a) and (b).

SUMMARY

Any person with an ownership interest in a business selling ophthalmic goods is a "retailer of ophthalmic goods" for purposes of V.T.C.S. article 4552-5.11 of the Texas Optometry Act. An optometrist who is also a retailer of ophthalmic goods and who has offices at fewer than four locations is excepted from the restrictions listed in article 4552-5.11. Such an optometrist who has offices at four or more locations is subject to the restrictions established in article 4552-5.11(a) and (b) as to all of his or her offices.

DAN MORALES
Attorney General of Texas

WILL PRYOR
First Assistant Attorney General

MARY KELLER
Deputy Assistant Attorney General

RENEA HICKS
Special Assistant Attorney General

MADELEINE B. JOHNSON
Chair, Opinion Committee

Prepared by Kymberly K. Oltrogge
Assistant Attorney General