Intermountain Stroke Center, Inc. v. Intermountain Health Care, Inc., --- Fed.Appx. ----, 2016 WL 523613, No. 14–4045 (10th Cir. 2016)
Intermountain Health Care is a large hospital/clinic/doctor network. Before it ceased business in 2013, the Stroke Center provided “same-day and next-day treatment” to patients presenting with strokes and transient ischemic attacks (TIAs). According to its staffer Dr. Nancy Futrell, the Stroke Center was “the only outpatient, non-emergency facility in Utah to provide non-emergency, same-day and next-day stroke and TIA treatment by .... a stroke specialist” and the “only” facility in the state that offered these services at rates significantly lower than prevailing hospital rates. Originally, Futrell and the Stroke Center sued Intermounntain in state court for violations of Utah’s Truth in Advertising Act and related claims; they added a Lanham Act claim and Intermountain removed.
Plaintiffs challenged (1) general representations that Intermountain follows “best medical practices,” provides the “best possible care,” and has a mission of “[p]roviding excellent care of the highest quality at an affordable cost,” and (2) three more specific representations about the number of Intermountain physicians specializing in stroke and TIA treatment, the efforts made by Intermountain to avoid prohibited sources of revenue, and the proper scope of post-stroke or post-TIA care. The court of appeals affirmed the dismissal of the Lanham Act claim because the challenged statements were puffery as a matter of law.
On its website, Intermountain held itself out as “an internationally recognized, nonprofit system of 22 hospitals, a Medical Group with more than 185 physician clinics, and an affiliated health insurance company,” “offering a full range of services,” and “[p]roviding excellent care of the highest quality at an affordable cost is at the heart of [its] mission.” Also: “Our network of experienced doctors, surgeons and caregivers strive[s] to provide clinically excellent healthcare through a wide range of services in a setting where patient needs come first.” On a page called “For Intermountain Healthcare Trustees,” Intermountain described its business model as “[a]n [i]ntegrated [h]ealthcare [s]ystem” offering “[c]linical quality,” “[s]ervice quality,” “[l]ower costs,” “[p]revention,” and “a relatively seamless continuum of care.” Being a vertically-integrated network supposedly enabled it to “contribute in essential ways to the sharing of best medical practices, and raising the standards of clinical excellence.” Thus “Intermountain not only provides quality healthcare; it often achieves lasting improvement in cost structures.”
All this was puffery, in context, which included the fact that it was mass advertising expressed in vague terms, not something said to a particular person with knowledge of that person’s specific needs. “Healthcare is fraught with unpredictability, and a healthcare-delivery system hardly strikes us as the species of business from which a particular objectively-superior result (e.g., with respect to certain stroke and TIA treatments) could reasonably be expected by a consumer without at least some modicum of specificity being provided by the business in its representations ….”
Puffery was not an affirmative defense, as plaintiffs claimed; whether statements were factual or puffery were questions of whether actionable conduct had occurred. Nor did puffery have to be “forward-looking”; that’s just an example of a type of puffery. “[V]ague statements of corporate optimism” also qualify. Lexmark changed none of this.
As for the three specific statements, they were also non-actionable. First, plaintiffs argued that Intermountain claimed to have more physicians for stroke and TIA care than it actually did, using misleading statements that its heart and vascular surgeons specialized in such care, and that neurologists at its clinic were stroke and TIA “subspecialists.” Plaintiffs alleged that Intermountain’s listing of stroke on its website “under ‘Heart and Vascular Services’” would “confuse stroke and TIA patients into believing that cardiologists and other heart specialists specialize in the treatment of stroke and TIA, which is not accurate.” Also, “the ‘Find a Doctor’ link from the [Intermountain] website ... lists heart and vascular surgeons ... as stroke treatment providers,” which would mislead consumers.
The court of appeals found that implausible. “Plaintiffs’ own evidence supports our conclusion that any association of stroke and TIA with ‘heart and vascular’ services is proper” because stroke is a cerebrovascular or cardiovascular disorder. “[I]t follows that stroke patients could not have been misled by a suggestion that a vascular physician might be of assistance.” Likewise, the “Find a Doctor” tool would provide a list of doctors, including information about each doctor’s educational background, certifications, and clinical interests. None of the “primary specialty” notations explicitly included a claim of expertise in stroke and TIA treatment; the only claim was that some of them possessed “the core competencies to treat cerebrovascular diseases,” which appeared to be true. Plaintiffs failed to explain how consumers would infer that the doctors were specialists in stroke and TIA. Though plaintiffs might want Intermountain to include a disclaimer, the law didn’t require that.
Also, Intermountain’s Annual Stroke Report said: “The Stroke Program also offers resources for patients with ongoing medical needs after hospitalization. The Outpatient Neuroscience Clinic[ ] ... is home to subspecialists including epileptologists, general neurologists, physical medicine and rehabilitation physicians, and neuropsychologists.” Plaintiffs failed to explain why it was false or misleading to label them “subspecialists,” even though they held themselves out as focusing on specified brain disorders. There was no explicit or implicit representation that Intermountain’s Outpatient Neuroscience Clinic was devoted to stroke and TIA. [I have changed the court of appeals’ language a bit; the court wrote as if making merits determinations, where under Twiqbal it really should have been talking about plausibility.]
Plaintiffs alleged that Intermountain falsely claimed in its Ethics Code to “carefully review financial relationships with physicians and other Health Care Practitioners for compliance with the anti-kickback and Stark laws.” In fact, Intermountain reached a settlement with regulators over compensation arrangements that appeared to violate federal healthcare-fraud statutes. But the court found the Ethics Code claims true and not misleading. Then, contradictorily, it said that an announcement of intent to behave ethically was outside the scope of the Lanham Act entirely (that is, puffery). A code of ethics is aspirational; “it simply cannot be that every time a violation of that code occurs, a company is liable under federal law for having chosen to adopt the code at all, particularly when the adoption of such a code is effectively mandatory.”
Moreover, the Ethics Code promised consequences for misconduct, tacitly acknowledging that standards are sometimes violated. In fact, the court found that was what happened when Intermountain found out about the compensation schemes and settled with federal regulators. Comment: Even on its own terms, that’s wrong, which is not to say the ultimate holding is wrong. But in fact, that Intermountain settled does not itself show that anyone involved in the schemes suffered “consequences” therefore; we would need a lot more information. The court of appeals, however, concluded that “the very existence of the resulting settlement agreement evinces the truthful spirit underlying Intermountain’s Ethics Code,” which promised to report observed and suspected violations of laws or policies. Aspirational statements about federal anti-fraud laws didn’t implicate “the nature, characteristics, qualities, or geographic origin of [its] ... services.”
Finally, plaintiffs challenged Intermountain’s Stroke Pamphlet, targeted at stroke and TIA patients who have been admitted to an Intermountain facility, as well as their family members and friends. The pamphlet contained background material on strokes and TIAs, a “Stroke Recovery Checklist,” an index of stroke resources, and other general information concerning “[a]ftercare.” The aftercare page said that “an appointment with” a patient’s primary care provider “is usually recommended 1 to 7 days after [leaving] to go home” and, similarly, that visiting a neurologist “is usually recommended” “4 to 6 weeks after [leaving] to go home.” Plaintiffs alleged that “a TIA patient who reads this pamphlet is likely to be under the mistaken impression that he or she can safely wait 4 to 6 weeks before following up with a neurologist.”
The court of appeals found this nonactionable because it made no statement about “the nature, characteristics, [or] qualities[ ] ... of [Intermountain’s] ... services.” In the entire pamphlet, Intermountain named itself only on the title page; in one very small “Call 911!” icon; and at the end, as one of “many organizations that support people who’ve had a stroke.” Plus, the aftercare chart in particular couldn’t plausibly mislead anyone about the scope of Intermountain’s services. This “rudimentary worksheet suggesting how patients might approach post-stroke or post-TIA life” was “far too vague to support a Lanham Act claim.” Plus, if a reader reached the chart on page 10, it stood to reason that she also read the disclaimer on page 3 stating that “this booklet doesn’t replace the specific instructions you will receive from your healthcare providers.”