Monday, March 18, 2013

JAMA article not commercially disparaging, given scientific oversight

HipSaver, Inc. v. Kiel, --- N.E.2d ----, 2013 WL 932155 (Mass.)

HipSaver, which makes medical devices that are supposed to reduce the risk of hip fractures in the event of a fall, sued Kiel for commercial disparagement from a 2007 article in the Journal of the American Medical Association that concluded that a hip protection device (not HipSaver’s) didn’t improve outcomes. Kiel conducted the clinical trial that formed the basis for the article and was its lead author.  The study described the trial, analyzed the data, and concluded, among other things, that the trial “confirm[ed] the growing body of evidence that hip protectors are not effective in nursing home populations.”

The trial court granted Kiel’s post-discovery motion for summary judgment, and the court granted HipSaver’s application for direct appellate review.  Finding no error, the court affirmed, while taking the opportunity to discuss the elements of commercial disparagement.

Kiel “has done research on osteoporosis, falls, and related bone fractures; has published over 125 papers in peer-reviewed journals; and is regarded by others as an expert on hip protectors.”  He received a multimillion, 5-year grant from NIH to study the efficacy of hip protectors, given that the findings of at least 12 earlier studies had been mixed.  He conducted a trial for two years involving over 1000 patients at 37 nursing homes in 3 states.  Residents wore a pad on one hip, but not the other, so they were their own controls.  About 20 months into the study, the review board recommended termination “due to lack of efficacy and the low probability of being able to demonstrate efficacy in the remaining years of the study.”  The study ended and the researchers wrote up the results for JAMA, which is of course a highly respected and widely circulated journal.  JAMA undertook a 7-month peer review process before publishing.

HipSaver argued that Kiel knew or had reason to know that the product he tested had a different, inferior design to HipSaver’s product; that readers wouldn’t know this; and that they’d believe that the article applied to all hip protectors.  The trial judge ruled that HipSaver didn’t show falsity: its proposed expert testimony that the clinical trial’s design was flawed didn’t necessarily mean that its scientific conclusions were false.  Also, HipSaver hadn’t shown intentional falsity or reckless disregard for truth.

The court began by noting the differences between commercial disparagement and defamation; the former targets harm to the economic interests of the injured party arising from false, disparaging statements about the party’s property, usually a product or service.  The line between commercial disparagement and defamation can be difficult to draw; false statements about a business’s lack of integrity or dishonesty can be defamatory.

Massachusetts follows the Restatement (Second) of Torts, supra at § 623A: “One who publishes a false statement harmful to the interests of another is subject to liability for pecuniary loss resulting to the other if (a) he intends for publication of the statement to result in harm to [the] interests of the other having a pecuniary value, or either recognizes or should recognize that it is likely to do so, and (b) he knows that the statement is false or acts in reckless disregard of its truth or falsity.”  This includes an “of and concerning” requirement, and also requires special damages in the form of pecuniary loss.

The court here agreed with the trial judge: “any purported design defects in the clinical trial were acknowledged by Dr. Kiel in the article, and did not necessarily render the challenged statements false.” The article fully described the hip protector used, acknowledged that differences between the clinical trial and previous studies “may have resulted from the type of hip protector used,” and explained several possible limitations of the clinical trial. The conclusion recommended future studies of new hip protectors.  The statement that the study “add[ed] to” or “confirm[ed]” the “growing body of evidence” of ineffectiveness wasn’t false even if the design of the clinical trial was flawed.  HipSaver didn’t allege that Kiel inaccurately interpreted or reported the data. (Thus, the court had no need to reach whether the fact/opinion divide works in commercial disparagement as it does in defamation, where a statement cast as opinion can be actionable if it implies the existence of undisclosed defamatory facts.)

What about whether the statements were “of and concerning” HipSaver?  Allowing a plaintiff who isn’t really identified to sue poses a threat of chilling speech.  “Of and concerning” can be shown by proof either “(1) that the defendant intended the words to refer to the plaintiff and that they were so understood or (2) that persons could reasonably interpret the defendant's words to refer to the plaintiff and that the defendant was negligent in publishing them in such a way that they could be so understood.”  If the publication doesn’t use a person’s name or other readily identifiable descriptions, extrinsic proof is required that a third person understood the reference.  And where a group is targeted, “an individual member of the defamed class cannot recover for defamation unless ‘the group or class is so small that the matter can reasonably be understood to refer to the member, or ... the circumstances of publication reasonably give rise to the conclusion that there is particular reference to the member.’”

HipSaver wasn’t mentioned in the article, and the hip protector studied wasn’t commercially available, while HipSaver’s product was. The article gave a lengthy and detailed description of the device studied, which had distinct materials not present in the HipSaver product, and which was only for one hip, while HipSaver doesn’t make a one-hip product. The reference to “hip protectors” generally being ineffective was insufficient to conclude that Kiel was specifically discussing HipSaver’s product. HipSaver alleged that it was the second largest manufacturer in the US, but at least 22 other companies make hip protectors, and HipSaver had no third-party evidence that others understood the article as referring to or being about HipSaver and its product. Indeed, HipSaver’s president/CEO stated that it was unlikely that the hip protector described in the article could be confused with HipSaver's product. “Simply put, the article cannot be understood as referring to HipSaver, either expressly or by clear implication.”

What about knowledge of or reckless disregard for falsity?  (There was no need to adopt the description “actual malice” because the current standard was clear and precise. Also, here HipSaver was a limited purpose public figure because it injected itself into the debate over the efficacy of hip protectors through its ads and sponsorship of its own research. More broadly, in any commercial disparagement claim, the plaintiff must show knowledge/reckless disregard no matter whether the plaintiff is a public or private figure.)  HipSaver didn’t argue that Kiel fabricated data, but rather that he ignored or concealed evidence suggesting that the design of the clinical trial was flawed and therefore must have published with reckless disregard.  Not so.

The court emphasized the “scientific oversight” that was integral to both the trial and the article.  The NIH appointed a review board for the study; four institutional review boards assessed the trial protocol (ed. note: though they shouldn’t have been reviewing for correct design!); JAMA put the article through peer review, which resulted in changes in response to reviewers’ comments. Given the conflicting results of earlier trials, Kiel used a different clinical trial to address deficiencies in earlier studies. “It is generally understood that scientific research is not characterized by perfect theories, flawless studies, and desired results. Rather, the hallmarks of scientific research are continuous inquiry, testing, debate, disagreement, and revision.” 

The challenged statements were Kiel’s interpretations of the accurately reported data.  “That concerns may have been raised about the chosen design does not mean that Dr. Kiel entertained serious doubts about the truth of the challenged statements as they were a reflection of the achieved results.” The article “candidly” discussed the flaws and limitations of the clinical trial, including whether the chosen pad was the best possible design and whether results from 1-sided hip protectors would generalize to 2-sided protectors.  There wasn’t sufficient evidence of reckless disregard.

The court nonetheless analyzed whether HipSaver showed that Kiel intended, knew, or should have known that publication would result in pecuniary harm.  As evidence of Kiel’s knowledge, HipSaver pointed to the fact that the name of the particular device used in the clinical trial was removed prior to publication because of an email from the maker of that device, who said that including the name “might lead us to be involved in costly litigation and loss of market share.”  Also, a HipSaver principal also sent an email to Kiel: “From what I am hearing about Fall Guard in the nursing homes ... your study will be just another nail in the coffin of the hip protector product category.” Kiel responded: “FallGard is superior to your untested product. You are the biggest scam artist. The nail will not be in any coffin but your own.” The court agreed that these communications showed that Kiel recognized and understood that publication likely would cause makers of hip protectors, including HipSaver, pecuniary harm.  (Note the relationship here between knowledge of likely harm and “of and concerning.”)

In a footnote, the court rejected HipSaver’s argument that Kiel’s failure to disclose in the grant application his financial ties to pharmacos that make drugs to promote bone density showed reckless disregard for the truth.  But HipSaver didn’t show that bone density drugs compete with hip protectors in the market, or that Kiel’s research on such drugs biased or otherwise affected his clinical trial here.  Also, HipSaver contended that Kiel’s characterization of HipSaver’s principal as a “scam artist” showed that he was ready to make statements without factual foundations.  “Although this intemperate personal comment may have reflected Dr. Kiel's dislike for Goodwin, it was not evidence of Dr. Kiel's attitude toward the truth or falsity of the challenged statements.”  (What we say in email is not what we say in JAMA, though as this case shows we sometimes have to defend them both in public.)

Finally, the court considered whether HipSaver showed special damages.  Where feasible, this requires showing specific losses of sales to identifiable customers. There’s an exception when a false statement has been widely disseminated and it would be impossible to identify particular customers who chose not to buy the plaintiff’s products; in such cases, plaintiffs can rely on circumstantial evidence of lost markets as long as they eliminate other causes. They must still show that the disparaging publication was the direct and immediate cause of that pecuniary loss. (In a footnote, the court noted that some jurisdictions allow a similar showing of harm without wide dissemination as long as the plaintiff can show a decline in business or lost growth opportunities and can eliminate other possible explanations for the decline.  The court left the possible adoption of this broader exception for another day.) 

HipSaver argued that, as the second largest manufacturer in the US, it bore the full brunt of the ineffectiveness statement. But HipSaver didn’t get any information from its customers about their purchasing decisions. The JAMA article was widely disseminated, though.  HipSaver used expert testimony to claim lost sales. But the experts didn’t opine that the alleged lost profits were a direct and immediate result of the article, rather than other factors.  HipSaver didn’t analyze the impact of prior clinical studies—allegedly “well-known” as important sales drivers—some of which had also been negative.  It didn’t show whether any competitors had also experienced losses after the article was published, which would have suggested a causal relationship. Plus, there were other causes of loss: HipSaver had sued its largest competitor for false advertising several years before the JAMA article.  It claimed that the sales impact had ended long before the JAMA publication, but as of 2007, HipSaver had been “completely frozen out of every private sector nursing home and health care facility chain and every private distribution chain,” “frozen out of all the major catalog distributors and resellers of hip protectors,” and still had “no ability to access the private health care distribution and facility chains.” Thus, HipSaver didn’t show that the false advertising wasn’t a cause of lost sales.

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