Friday, February 24, 2017

Court won't hear false advertising and contributory liability claims based on tinnitus credentialing

Academy of Doctors of Audiology v. International Hearing Society, 2017 WL 679354, No. 16-13839 (E.D. Mich. Feb. 21, 2017)

IHS held a training program on tinnitus care in Orlando, Florida, stating that it would provide a “Tinnitus Care Provider Certificate” to people who completed the program and passed an examination. Before the program was held, plaintiff ADA sued for false advertising. The court dismissed the complaint on standing and other grounds.

According to ADA, hearing health care is provided mainly by doctors; audiologists; and hearing aid dealers/specialists.  Doctors can treat tinnitus, which is the phenomenon of hearing sound when no sound is present—the classic “ringing in the ears.”  According to the CDC, nearly 15% of the general public experience some form of tinnitus. Twenty million people have chronic tinnitus, while 2 million have extreme and debilitating cases. More than 99% of tinnitus is subjective, audible only to the patient, while under 1% is objective—sounds usually produced by the body’s circulatory and somatic systems. There’s no scientifically validated cure, but tinnitus can be treated, including by sound generation systems and hearing aids.  The treatment can be complex, and tinnitus can also be a sign of other problems.

Audiologists provide clinical services related to identifying and preventing hearing loss and related impairments, and can also provide treatment for tinnitus.  Since 2007, audiologists entering the profession have been required to have the degree of Doctor of Audiology, usually requiring four years of postgraduate education, including a clinical externship; past practice generally required a two-year Masters degree or a Ph.D. in Hearing Sciences.  

In Michigan, as in many other states, dealers can be licensed if they’re graduates of an accredited high school or secondary school, have served as a salesperson under a licensed dealer for two years, and pass a written examination.  Outside of North Carolina, dealers aren’t licensed to treat tinnitus.  Sound masking devices incorporated into hearing aids are regulated by the FDA, and can only be sold on the prescription or order of a licensed practitioner—and outside of North Carolina, only doctors and audiologists can order such use.

IHS is a Michigan nonprofit with about 3000 members, a large number of whom are dealers. ADA is a nonprofit dedicated to audiology, though the complaint didn’t allege facts about the professions or educational backgrounds of ADA’s own members, or what services ADA’s members provide to their patients. 

ADA challenged IHS’s intended “Tinnitus Care Provider Certificate.”  Although the program description advised participants to check what are permitted practices as to tinnitus care under their state licensure, IHS intended to issue the Certificate to to qualifying dealers regardless of whether they were licensed to provide tinnitus care.  ADA alleged that, outside of North Carolina, the Certificate would falsely or misleadingly convey to the public that the dealer holding it was legally permitted to provide tinnitus care.  Further, ADA alleged that the program wouldn’t provide dealers with sufficient knowledge and skill to provide appropriate tinnitus care, so the Certificate would falsely or misleadingly indicate competence to provide tinnitus care.

ADA also brought claims for contributory false advertising under the Lanham Act, alleging that IHS would be responsible for dealers’ misleading display/advertisement of Certificates, as well as a claim under Michigan’s Consumer Protection Act and the common law of unfair competition.

IHS challenged ADA’s constitutional standing.  ADA argued that, on its own behalf, it would suffer harm “in the form of costs to respond to the audiology profession and the public about Dealers beginning to offer tinnitus care with the Certificate to Dealers,” but this resource-diversion theory wasn’t alleged in the complaint.  ADA also argued that it had representative standing, which required it to show that 1) its members would otherwise have standing to sue in their own right; 2) the interests it seeks to protect were germane to its purpose; and 3) neither the claim asserted not the relief requested required the participation of the individuals in the lawsuit.

ADA’s claim failed at the first part: it didn’t properly allege that individual members would have standing.  The complaint alleged that the public would be harmed by poor care, and that ADA’s members would be harmed by the diversion of tinnitus care patients to dealers holding the Certificate.  However, the complaint didn’t allege that ADA’s members directly compete with dealers in the hearing healthcare industry; 2) didn’t allege that ADA members would suffer competitive injury; and 3) didn’t allege that ADA’s members would suffer a loss of business customers or a loss of financial revenue.  Lost sales would only result if the number of licensed members available exceeded the amount of services sought/if there was actual competition for tinnitus patients, which wasn’t alleged. The court wouldn’t assume facts not alleged, and IHS argued the contrary, given that “the need for devices and other non-medical management for the approximately 30 million American tinnitus sufferers outweighs the number of licensed audiologist and hearing instrument specialists available to provide such care and relief.”

ADA also failed redressibility, because enjoining the issuance of the Certificates would do nothing to prevent any dealers who attended the Dec. 2016 program from advertising their completion thereof.  They could advertise “the very substance of what the Certificates would presumably say” even if the requested injunction issued.

Separately, the Michigan Consumer Protection Act claim had to be dismissed because that law covered only consumer purchases, not business seminars.

The common-law unfair competition claim was treated like the Lanham Act claim, which also failed.  First, ADA failed the Lexmark zone-of-interests/proximate cause test.  Even if ADA could bring suit in a representational capacity under Lexmark, a theory of which the court seemed skeptical, it couldn’t succeed here for failure to actually allege that its members would suffer a competitive injury.  There was also a “solid argument” that ADA didn’t allege proximate cause: its injury didn’t “flow directly” from IHS advertising.

Moreover, ADA didn’t identify sufficient falsehoods.  The two things consumers would allegedly be misled about were (1) non-North Carolina dealers being legally permitted to provide tinnitus care, and (2) the same being competent to do so based on advertising acquisition of the Certificates.  Because the certificates at issue hadn’t yet been drafted, “ADA has not alleged any specific statement that is likely to lead anyone to conclude that there is ‘legal permission’ or ‘competence’ to provide” tinnitus care. Moreover, false advertising claims based on allegations of implied government approval aren’t allowed, because they interfere with regulatory enforcement: the Lanham Act can’t be used to indirectly enforce other government regulations.  The true harm, in ADA’s view, was provision of tinnitus treatment by dealers, but that’s not the concern of the Lanham Act; moreover, the complaint didn’t even allege that it was illegal for dealers outside North Carolina to provide treatment—“the real issue here is that most state statutes are silent as to whether or not Dealers can provide tinnitus care.”

As for the allegedly false implication of competence, that’s a nonfactual opinion.

Sealing the deal—and here’s the only part of the ruling I find really shaky—the court held that ADA couldn’t sue for contributory false advertising after Lexmark; contributory trademark infringement is ok but not contributory false advertising.  The court didn’t explain why; Lexmark’s statutory analysis is directed at language that applies to §43(a)(1)(A) and even to §32.  But the court here declined to join Duty Free America, Inc. v. Estee Lauder Companies, Inc., 797 F.3d 1248 (11th Cir. 2015), recognizing such a claim.

No comments:

Post a Comment