Accusations of cheating state defamation claim, not Lanham Act claim

American Board of Internal Medicine v. Von Muller, 2011 WL 857337 (E.D. Pa.)

ABIM has sued a number of doctors for allegedly unlawfully copying and disseminating ABIM’s copyrighted and/or trade secret-protected Board Certification exam questions. In this suit, ABIM alleged that before taking an exam for board certification in gastroenterology, Von Muller purchased infringing exam questions from Arora Board Review for $480 and a promise to provide test questions to Arora after the exam. Despite agreeing to abide by ABIM’s policies including a promise not to disclose or copy any part of the exam, Von Muller allegedly sent 77 questions “substantially similar” to those contained on the exam to Arora. Von Muller denied most of the allegations and counterclaimed.

The court dismissed Von Muller’s claim for failure to afford due process because she didn’t sufficiently allege that ABIM was a state actor.

Von Muller also counterclaimed for tortious interference. Review of the elements: (1) the existence of a contractual or prospective contractual relation between the complainant and a third party (this requires something less than a right but more than a hope); (2) purposeful action on the part of the defendant, specifically intended to harm the existing relation, or to prevent a prospective relation from occurring; (3) the absence of privilege or justification on the part of the defendant; and (4) the occasioning of actual legal damage as a result of the defendant's conduct.

This counterclaim was sufficiently alleged. Von Muller pled that many hospitals in Tulsa, where she lives and practices, require board certification to get admitting privileges, and that admitting privileges are required for a doctor to have access to hospital facilities and patient referrals from the hospital. After seeing ABIM’s report of her suspension, one of the hospitals at which she had admitting privileges revoked them, allegedly causing her business to decline by $229,000 from the same quarter the previous year.

Commercial disparagement: this applies to statements attacking the quality of goods or services, as opposed to defamation, which is about the qualities of the person providing those goods or services. Elements: (1) the statement is false; (2) the publisher either intends the publication to cause pecuniary loss or reasonably should recognize that publication will result in pecuniary loss; (3) pecuniary loss does in fact result; (4) the publisher either knows the published statement is false or acts in reckless disregard of its truth or falsity. Damages must be pled with considerable specificity, with customer names and amounts, though this requirement is relaxed where the disparagement arises to the level of defamation per se.

The allegedly false statements here were made to the Wall Street Journal: ABIM stated that Von Muller and a number of others had cheated and that their certifications had been suspended. ABIM allegedly suspended her without any opportunity to defend herself, then publicized that on its website, contacted the WSJ, and emailed copies of the WSJ article to "many, if not all, of the residency programs in the U.S." ABIM allegedly then backpedaled, given that its rules preclude it from suspending doctors without a process including three levels of appeals, and now lists her status as “suspension recommended/appeal pending.” Von Muller alleged that ABIM knew its actions would have a devastating effect on her career and medical practices. These allegations were sufficiently plausible to state a claim. “Certainly, the statement that a doctor has cheated on a certification examination and has therefore had her board certification revoked … arguably equates to defamation per se.”

Unsurprisingly, defamation too was adequately pled. “We believe that accusing anyone of cheating on an examination is indeed a very serious charge which would unquestionably harm the reputation of and lower the accused individual in the eyes of his community and would likely deter third persons from associating or dealing with him or her. Furthermore, given that the accused here is a physician to whom her patients entrust their health and well-being, the cheating accusation and the subsequent announcement that her board certification had been revoked clearly ascribes to Dr. Von Muller conduct, character and/or condition that would likely have an adverse effect on her fitness to perform her chosen profession.”

False light requires that (1) the false light in which the plaintiff was placed would be highly offensive to a reasonable person; and (2) the defendant had knowledge or acted in reckless disregard as to the falsity of the publicized matter and the false light in which the plaintiff would be placed. Given the allegations, this counterclaim also survived.

Lanham Act/unfair competition: Pennsylvania law recognizes a broad tort of unfair competition that mirrors the Lanham Act. Von Muller failed to state a claim: First of all, the truth or falsity of the cheating accusation remains to be seen. I can’t see why this matters to whether the complaint properly alleges a claim. Second, even if the accusation were true, it didn’t implicate Von Muller’s product or service, only her personal character and status (whether she is in fact “Board Certified” in gasteroenterology). This one’s just as wrong—it’s not only inconsistent with the holdings above, it’s also inconsistent with Lanham Act jurisprudence, which recognizes false statements about certification/lack thereof as actionable, because reasonable consumers could certainly consider board certification relevant to a purchase decision. Third, “even more fatal” (because the counts were only mostly dead, I guess), ABIM wasn’t in competition with Von Muller. Bypassing/ignoring the terrible Conte Bros. test entirely, the court stated that the Third Circuit requires an unfair competition plaintiff to be in competition with the defendant.  Not that I think that Conte Bros. would have helped Von Muller, though maybe if there's no comepting certification entity in a better position to bring the claims there's some argument to be made.