Eric Goldman is going to hate this law, I predict.
Plaintiffs sought to enjoin pending amendments to Minnesota’s No-Fault Automobile Insurance Act as violating the First Amendment; the court rejected the attempt. The lead plaintiff was 1–800–411–Pain Referral Service, a legal and medical referral service that maintains a referral network with chiropractors and medical doctors, to whom accident victims are referred after calling 1–800–411–PAIN. It advertised through billboards, radio, television, print, and internet ads, to the alleged benefit of providers in its network who lack such an ability to advertise extensively. Other plaintiffs were part of 411–Pain's chiropractic network in Minnesota.
The No-Fault Act, among other things, prohibits health care providers from initiating direct contact with injured automobile accident victims. However, health care providers or persons acting on their behalf can mail people directly, or can advertise generally, if they follow disclosure requirements. For general advertising, the advertising must:
(1) be undertaken only by or at the direction of a health care provider; (2) prominently display or reference the legal name of the health care provider; (3) display or reference the license type of the health care provider, or in the case of a health care provider that is a business entity, the license type of all of the owners of the health care provider but need not include the names of the owners; (4) not contain any false, deceptive, or misleading information, or misrepresent the services to be provided; (5) not include any reference to the dollar amounts of the potential benefits under this chapter; and (6) not imply endorsement by any law enforcement personnel or agency.
Legal name, for these purposes, means the name under which a person or entity is registered in the state.
The amended language was “an effort by the insurance industry and health care providers, specifically chiropractors, to enact reforms to Minnesota's No-Fault Act. The legislative record before the Court also reveals an intent to prohibit deceptive, misleading advertising in the context of automobile accidents.” The record included specific references to 411-Pain’s billboards and those of another similar referral company, 1suggesting that they were driving up insurance costs under the no-fault system. Bob Johnson of the Insurance Federation of Minnesota testified that the proposed language requiring advertisers to disclose health care providers' legal names or clinic names would “follow up” on current law governing unethical practices. In answer to a question from one senator about the nature of the problem addressed, the bill’s sponsor said, “perhaps there are some outliers in the industry that use advertisements out of Florida companies that tend to get a lot of care directed their way, and perhaps they have a lot of modalities that they run through the treatment and there's presenting not the tightest language to correct some of that. And no-fault is fairly broad and so we are trying to deal with one of those issues. We would really rather have them be more specific than what I just said.” (Hunh?) A lobbyist for the Minnesota Chiropractic Association, stated that advertisements that fail to disclose the names of the health care providers to whom consumers are referred, are deceptive:
From the Chiropractors' Association, the concern that we're trying to address is deceptive advertising. We want people, patients injured, individuals who want to access care because they were injured in an auto accident to know—when they call a number—when they go to somebody who's advertised—that they know that it's either a provider or a referral source or that it's very clear to them what the advertisement is and who those people are that are advertising their wares. And so for us, it's an issue of deceptive advertising making sure that people who are accessing health care know exactly the conduit by which they're accessing it. And in this case, the language would clarify and specify that you need to use—if you're a health care provider advertising—you need to use your legal name. … [W]e do agree that there is a problem out there—or if not a problem—it's a perceived problem with deceptive practices by some providers out there.
Johnson also addressed why a telephone number or internet address might be considered misleading in this advertising context: “To just see a phone number, it doesn't actually tell you what the business is or what you're doing. So if consumers just see a phone number, that's what the advertisement is, then that's confusing and potentially deceptive or misleading.” He described the new rule as “targeted.”
A witness for the Association for Justice indicated that the language would eliminate 411-Pain and 1-800-ASK GARY’s ability to do business in the state. A representative indicated that the provision was similar to another issue “with locksmiths and florists where you would call a number in the phone book or something or look on Google. You would Google ‘Blaine locksmith’ and it would actually patch you to a company in New Jersey who would then send you back to a Blaine locksmith. We fixed that a couple years ago for locksmiths and florists and I believe that this language is fairly similar at least looking.” Another representative stated, “We're not trying to get rid of annoyance; we're trying to get rid of fraud.”
Before the final vote, one representative stated:
We did agree on some advertising. In particular there is one group you might have heard the jingle 411 Pain that promises you $40,000. Pretty good deal. Not exactly the purpose of auto insurance is to give people $40,000. And so that's an example of an abuse. ... There are some people who will run interference and go attract patients and give them rides and pay them money to go become patients whether they are injured very bad. They are called runners, cappers and steerers. That's a problem. The amendment that's before you is agreed upon by all parties and it involves advertising and adds some peace [sic] to the runners, cappers and steerers piece. In short it says advertising must be undertaken by health care providers, they must display the legal name with a health care provider or their clinic name. They must tell what kind of health provider they are. It must not be false, deceptive or misleading. It must not give reference to dollar amounts like the $40,000 and it must not imply endorsement by law enforcement or personnel.
A senator likewise stated:
This will protect individuals injured in a motor vehicle accident from solicitations and advertisements that exert undue influence, are deceptive and mislead. First of all, by imposing new restrictions on advertisement targeted to individuals injured in a motor vehicle accident to insure that advertising is not misleading and clearly identifies the health care provider directing the solicitation.
Another described the bill as a whole as “an appropriate protection for consumers and injured parties so they don't get taken advantage of at some of the most vulnerable moments.”
411-Pain’s founder averred that, through significant ad investment, the company has name recognition in the Minnesota market, and that it’s not required to have a license in order to provide referrals for professional services, including referrals for medical treatment. Further, he averred that 411-Pain's advertisements contain only truthful, nonmisleading information. Examples of prohibited ads referring to specific dollar amounts of possible benefits include ads stating “... REMEMBER, AFTER 911, CALL 411 ... 1–800–411–PAIN ... YOU MAY BE ENTITLED TO FORTY THOUSAND DOLLARS IN INJURY AND LOST WAGE BENEFITS ...”; “... CALL 1–800–411–PAIN AND LET THEM EXPLAIN THE UP TO $40,000 IN INJURY AND LOST WAGE BENEFITS YOU MAY BE ENTITLED TO ... PLAN NOW ... PROGRAM 1–800–411–PAIN INTO YOUR PHONE NUMBER UNDER ‘ACCIDENT’ ...”; “Call 1–800–411–PAIN 24 hours a day 7 days a week and let them explain the up to $40,000 injury benefits you may be entitled to ... In an accident, and the guy with the tie says ‘let's not get our insurance companies involved.’ No good deed goes unpunished ... always call 911 and always call 411. REMEMBER after 911 call 411, 1–800–411–PAIN”; and so on. Some of 411-Pain’s TV ads show actors appearing as police officers or EMTs, supposedly with conspicuous disclaimers that they are actors.
The amended act would drastically limit 411-Pain’s business model. First, 411-Pain doesn’t advertise at the “direction” of any one health care provider. Second, the requirement to disclose individual provider names wouldn’t be feasible on billboards, due to space limits, nor in radio or TV ads, due to time limitations. Plus, the prohibition against advertising specific dollar amounts would bar its past ads. A licensed chiropractor submitted a declaration saying that he’d like to become part of 411-Pain’s referral network, but wouldn’t with the law in place for fear of disciplinary action by the licensing board. Another chiropractor attested that his clinic was part of the 411-Pain network, and that if not for the law he would himself create ads referencing specific dollar amounts and depicting police officers or EMT personnel with a “paid actor” disclaimer.
Plaintiffs sought to enjoin all elements of the new section except for the ban on falsity, misrepresentation, misleadingness, and deception. They argued that these were speaker/content-based bans that violated Sorrell v. IMS Health, Inc., 131 S.Ct. 2653 (2011). The court determined that it would apply Sorrell’s two-part approach, incorporating Central Hudson in the second half of the analysis.
The first Sorrell question, then, was whether the restrictions were content- and speaker-based. Content neutrality depends on whether the government adopted a regulation because of disagreement with a message. The court agreed that some parts of the regulation were—the requirement that any referrals for medical treatment of a car accident injury must be undertaken only by or at the direction of a health care provider (which only applies to a narrow class of speakers: advertisers in the context of car accidents, as opposed to slip or fall accidents); the ban on references to specific dollar amounts of potential recovery (as opposed to the possibility of economic benefits in general); and the ban on implied law enforcement endorsement.
As to the required disclosure of the health care provider’s legal name and license type, the Supreme Court held in Zauderer that “advertisers' rights are adequately protected as long as the disclosure requirements in question are reasonably related to the government interest in preventing consumer deception.” The court pointed out that there are “countless” consumer protection disclosure requirements, including requirements specific to debt collectors, camping operators, lawyers, etc. Milavetz, Gallop & Milavetz, P.A. v. United States, 130 S.Ct. 1324 (2010), reiterated the holding in Zauderer that the standard of scrutiny to be applied to disclosure provisions for commercial speech was whether the requirements were reasonably related to the government's interest in preventing consumer deception. Plaintiffs argued that Sorrell required more than the “reasonably related” standard did. The court found that the outcome would be the same under Central Hudson anyway, and Central Hudson was part of Sorrell, so it didn’t consider the matter further. (I’m not sure I’ve seen a treatment of Sorrell like this, but since nobody else knows what Sorrell means either, I’m not prepared to say it’s wrong, though I have to wonder what the “first prong” of Sorrell is for under this analysis, since commercial speech regulation is by definition going to be speaker-based.)
Central Hudson first asks whether the speech is misleading; misleading advertising may be banned entirely. Here, there was a significant difference from Sorrell, where the government didn’t argue that the commercial speech (whatever it was) was misleading. The record contained statements from legislators and stakeholders that “consumers have little understanding, if any, of what type of services are advertised, who the advertiser is, or whether consumers are entitled to recover a specific dollar amount.” (Will removing references to specific amounts help with this last part? Perhaps research on framing would be relevant here.) The Senate bill’s sponsor specifically identified the purpose of the bill was to avoid misleading ads and clearly identify the health care provider directing solicitations.
The court found that the restricted advertising was “inherently misleading.” The radio ads plaintiffs submitted as examples failed to identify that 411-Pain was a health care referral source,
“much less that the health care in question is chiropractic care…. [C]onsumers hearing such ads have no idea what 411–Pain is or does. Instead, 411–Pain's advertisements urge consumers to call 411–Pain immediately, at the accident scene, second only to dialing 911.”
Also, though plaintiffs argued that the references to “up to $40,000 in injury and lost wage benefits” were truthful, the court nonetheless found them misleading. The dollar-specific amounts implied that consumers would receive a floor of benefits, up to a $40,000 ceiling, when in fact many consumers would receive nothing. On the other hand, $40,000 wasn’t actually the ceiling given the potential benefits available to car accident victims. “While an attorney or insurance agent qualified to advise clients about coverage could convey this information, 411–Pain's advertisements of ‘up to’ $40,000 in economic loss benefits misleadingly limit the universe of information. Just as 411–Pain's advertisements may prompt some consumers to unnecessarily seek benefits, the proscribed advertising may also keep some consumers from obtaining more benefits.”
Furthermore, the ads showing a vehicle crash and an actor playing a police officer or EMT suggesting that 411-Pain was a source of help implied law enforcement endorsement, even with the “Paid Actor” disclaimer. (The court might have been aided here by the extensive body of research, on which the FTC has relied, showing that textual disclaimers don’t work with visual/audio messages.)
Finally, the requirement that ads must be at the direction of a provider was a valid prohibition of speech concerning unlawful activity. Given the anti-steering provisions of the law, which allow restrictions on situations in which a person benefits financially by referring a patient to another person, this restriction was aimed at “forbidding practices that are both misleading and possibly unlawful.” (Note the regress here: if Sorrell is as powerful as plaintiffs argue, then restrictions on benefiting financially from steering a patient to a provider—through speech—may themselves independently be invalid, illustrating the corrosive power of subjecting commercial speech regulations to strict or even “heightened” scrutiny. After all, if politicians aren’t corrupted by donations, why would recommenders be?)
So was this government interest substantial? Plaintiffs argued that the challenged provisions were supported merely by claims that the conduct at issue was potentially misleading. Merely labeling commercial speech potentially misleading doesn’t satisfy the state’s burden. Ibanez v. Fla. Dep't of Bus. and Reg., 512 U.S. 136 (1994). But the record spoke both of potential and actual confusion/misleadingness. (This is finessing the question, since the legislators and lobbyists were giving their conclusions but don’t seem to have been relying on the experiences of actual consumers, copy testing, or marketing experts; the court’s approach indicates just how unsettled the evidentiary parts of the Central Hudson inquiry really are.)
Consistent with earlier cases on lawyer advertising, “the State has a substantial interest in ensuring that accident victims, who may be under duress, have a clear understanding of who they are contacting for aid and treatment.” And the state had an interest “in requiring that only parties actually capable of providing health care treatment direct the advertising of their health care services,” which would also protect consumers (presumably because the providers know their capabilities better than someone else hired to go off and tout the services). The interest in ensuring the accuracy of commercial information is substantial, as is the interest in protecting the public by regulating the practice of professions, including by regulating the boundaries of ethical conduct. “Absent the provisions in the amended No-Fault Act, advertisers and referral sources are permitted to make an end-run around the regulations and prohibitions otherwise enforceable only against licensed chiropractors.”
Next, the court considered whether the statute directly advanced the asserted interests. The disclosure requirements directly advanced the state’s interest in “prohibiting misleading advertising and ensuring that accident victims have a clear understanding of who they are contacting for aid and treatment,” including the provider’s name and license type. Likewise, the requirement that advertisements must be undertaken only by or at the direction of a health care provider advanced the state's interest in giving car accident victims “a full understanding that the person or entity to whom they may be referred for treatment is also directing the advertisement.” And the ban on specific amounts ensured that ads wouldn’t “entice, induce, or even lull consumers into believing that an automobile accident may lead to a particular sum of compensation.”
As for the ban on implied endorsement of law enforcement, this was an appropriate restriction on a specific type of misleading advertising. “To the extent that Plaintiffs contend that this ban on advertisements impermissibly extends to images of law-enforcement personnel, the statute does not ban the use of such images altogether—it merely bans the implication of law enforcement endorsement of a product.”
Finally, the court considered whether the law was “narrowly drawn” and not more extensive than necessary to serve the governmental interest. It was. The restrictions weren’t more extensive than necessary to ensure that “only parties actually capable of providing treatment are advertising that treatment” and that consumers are receiving non-misleading, non-deceptive information. Though the legislature was aware that the law would have a major impact on the business of companies such as 411-Pain and 1-800-ASK GARY, that doesn’t mean they weren’t narrowly tailored. Indeed, 411-Pain can continue some of its ads. Defendants took the position that 411-Pain could advertise on behalf of/at the direction of multiple health care providers at once, and 411-Pain could draft contract language to that effect if it was concerned about its risks. 411-Pain could also still advertise the general availability of potential economic benefits under Minnesota's No-Fault Act.
What about the burden of listing providers and identifying what types they were? 411-Pain didn’t provide evidence of the number of chiropractors with whom it did business. In any event, the law didn’t eliminate 411-Pain’s ability to advertise, and the disclosure requirements were narrowly drawn, consistent with Zauderer and Milavetz. (Notice the effects of regulation on firm structure: a multisite chiropractic practice that does its own advertising will be less burdened by this law than a bunch of independent providers who are trying to get returns to scale by participating in a third-party referral network. I don’t mean this as a criticism, necessarily: one point of the regulation is accountability, and a consolidated practice would have more reason to monitor the behavior of individual providers than a referral network would. Thus, the non-speech-related effects of the regulation are likely to work in tandem with the legislature’s goals because they favor bigger entities, at least if the malpractice liability regime works in any significant respect.)
With no likely success on the merits, the preliminary injunction was denied. The court specifically noted that disruption to 411-Pain’s business was insufficient as irreparable harm, absent likely success on the merits, and that to the extent that individual chiropractors would like to advertise similarly to 411-Pain, they’re already forbidden from disseminating deceptive, misleading, or incomplete advertising, including advertisements that do not contain the licensee's name, by a separate rule. “While the nature of some of Plaintiffs' advertising may necessarily change, the change does not constitute irreparable harm.” Indeed, because of litigation brought by the Florida AG under Florida’s Deceptive and Unfair Trade Practices Act, 411-Pain agreed to “various settlement terms, publicly available, some of which mirror the restrictions found in the new amendments…. 411–Pain agreed not to use any advertising promising a specific amount of monetary reward, nor to imply or misrepresent that a law enforcement official directed or mandated that consumers contact 411-Pain after contacting 911 or other emergency services.”
The balance of harms also favored the state: “411-Pain's advertisements provide no information to the public that a call to 411-Pain will result in a chiropractic or other health care referral. Moreover, callers have no idea to whom they will specifically be referred, as the identify of referral providers is unknown.” And the monetary claims both artificially raised and lowered consumer expectations. This outweighed the argument that the ads were “particularly valuable for accident victims who otherwise would not know who to call for assistance.”