My
discussion of the opinion below.
411-Pain advertises extensively and connects callers to health care
providers or attorneys in their areas.
It contends that its “extensive—and very costly—advertising” benefits
providers in its referral network who might not otherwise choose to advertise
on their own. Defendants are the members of the Minnesota Board of
Chiropractors whose enforcement of Minnesota’s No-Fault Act Amendments
allegedly unconstitutionally chilled 411-Pain’s speech. The Act requires insurers to provide basic
economic loss benefits to their insureds, regardless of fault, and also
regulates ads to curtail potentially unethical practices by “licensed health
care provider[s].” The 2012 amendments to this law require solicitations or ads
for medical treatment or referral for medical treatment of an injury eligible
under the No-Fault Act 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 … ;
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 [the No-Fault Act]; and
6. not imply endorsement by any law
enforcement personnel or agency.
411-Pain argued that
several elements of this suppressed its speech protected by the First Amendment. Its radio ads, for example, tell car accident
victims to call the company immediately after an accident and inform accident
victims that they “may be entitled to up to forty thousand dollars in injury
and lost wage benefits,” without disclosing the legal names or license types of
the health care providers in 411-Pain’s referral network. Sample ad excerpt:
... Car accidents happen ... What
you plan to do next can make all the difference ... Car accident ... Remember
after 911 ... Call 411 ... 1-800-411-pain ... 1-800-411-pain knows about car
accidents ... It’s what they do ... Call 1-800-411-pain 24 hours a day 7 days a
week from home, hospital or accident scene ... 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” ... Car accident, remember, after 911 call 411. 1-800-411-pain.
TV ads “feature a vehicle crash and then an actor appearing
as a police officer or EMT with an ambulance conveying to viewers that if they
call the phone number associated with 800-411-PAIN or go to411Pain.com, then
they can get help after being injured in an accident.” 411-Pain claimed that the ads had conspicuous
and prominent disclaimers stating that the person appearing in the ad was a “PAID
ACTOR.”
The district court denied preliminary injunctive relief,
finding that the challenged aspects were inherently misleading commercial
speech and thus unprotected. The ads
failed to inform victims that 411-Pain was a referral service, and the
reference to up to $40,000 in benefits was inherently misleading because
accident victims may receive nothing, or may receive benefits far in excess of
$40,000 from many different sources. The
use of law enforcement personnel “extend[ed] a misleading aura of authorized
approval” to the company, despite the disclaimer. The ban on advertising not
done “by or at the direction of a health care provider,” was a “valid
prohibition on speech concerning unlawful activity,” since if the advertising
was not done at the direction of licensed health care providers, then 411-Pain’s
business relationships with chiropractors may implicate anti-kickback statutes.
In the alternative, a referral business inherently advertises “at the direction
of” its providers, and contracts could further clarify this. The disclosure requirements were also okay
under Zauderer.
In order to make it hard to get a preliminary injunction (the
standard comes from an abortion case), when a “validly enacted statute” is at
issue, there’s an elevated standard for success, designed “to ensure that
preliminary injunctions that thwart a state’s presumptively reasonable
democratic processes are pronounced only after an appropriately deferential
analysis.” (I don’t know why the court
doesn’t just talk about eBay—it seems
to suggest that a challenge to a non-legislative action isn’t governed by the likely success on the merits standard but by
something lower.)
The court then tried to understand what Sorrell meant, determining that the Court had “devised a new
two-part test for assessing restrictions on commercial speech.” First, ask whether a restriction is content-
or speaker-based, or both. If it’s
either, it’s subject to “heightened scrutiny,” though we don’t know what that
means, since after determining that the regulation in Sorrell was indeed subject to heightened scrutiny, the court
proceeded to use Central Hudson,
saying that the state lost even under that standard. So, when commercial speech restrictions are
content- or speaker-based, their constitutionality depends on Central Hudson. (Why is this new? Why aren’t all commercial speech regulations “content-based”
in the sense that they only cover commercial speech, and not noncommercial
speech? Your guess is as good as mine.)
So, the court of appeals turned to the first challenged
provision, the ban on “any reference to the dollar amounts of the potential
benefits under [the No-Fault Act].” This was a content- and speaker-based
restriction, because it only applied to “licensed health care providers” and related
people. Whether it governed inherently
misleading speech was a question of law, which could be determined by examining
the “particular content or method of the advertising” as well as from
“experience [that] has proved that in fact such advertising is subject to
abuse.” (Why isn’t that a fact question,
not a question of law? Your guess is as
good as mine.) Inherently misleading
speech may be banned outright.
The court of appeals agreed that the reference in 411-Pain’s
radio ads to a possible entitlement of “up to $40,000 in injury and lost wage
benefits” was inherently misleading, because it implied that consumers would
receive a floor of benefits “up to” $40,000, while many would receive nothing;
it also implied that there was a ceiling that didn’t exist. “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.” The ads
could prompt some consumers to unnecessarily seek benefits and keep other
consumers from obtaining more benefits.
The ads were also inherently misleading by omission: they
didn’t explain that an accident victim wouldn’t receive $40,000, or any amount
of money, as a simple cash transfer. The
reference to “benefits” was insufficient, because “the effect of the invocation
of money without reference to the Act or a description of the way the benefits
are obtained misleadingly implies that 411-Pain will acquire cash and pass
along a portion of it to the car accident victim.” In fact, 411-Pain would just refer consumers
to providers, and the potential benefits would be paid to providers in the form
of reimbursements for services. “By
selectively omitting important pieces of information from its radio ads,
411-Pain’s speech is thus “inherently misleading” due to its failure to provide
meaningful context as to the origin and source of potential benefits available
under the No-Fault Act.” (Compare the misleading use of “fees” when ordinary
laypeople wouldn’t know the difference between “costs” and “fees” in Zauderer.)
Next, on to the ban on implying endorsement “by any law
enforcement personnel or agency.” This is content-based, but not
unconstitutional, since implied endorsement by law enforcement is inherently
misleading. Plaintiffs didn’t submit
their video ads for review, relying instead on an affidavit. On this record, the ads were inherently
misleading. An affiant’s statement that
a disclaimer is “conspicuous and prominent,” standing alone, is “hopelessly
subjective: a disclaimer’s ‘conspicuousness’ and ‘prominence’ are, inevitably,
in the eyes of its beholder.” But
regardless, the disclaimer, no matter how large, didn’t fix the problem: it
didn’t “disclaim implied endorsement by the type of official the actor
portrays.” (Compare the result in Allen
v. National Video: “Moreover, the disclaimer says only that a celebrity
double is being used, which does not in and of itself necessarily dispel the
impression that plaintiff is somehow involved with National's products or
services.”) The net effect was
misleading.
This ban was distinguishable from invalid categorical bans
on mere depiction of judges in attorney advertising, since portrayals of judges
aren’t inherently misleading. The
statute here didn’t ban all depiction of law enforcement, but rather endorsement. The court noted that 411-Pain’s ad didn’t
show law enforcement performing normal functions, but rather “an officer or EMT
who speaks directly to the audience and tells viewers to call 411-Pain
immediately after a car accident. The actor-officer’s support for 411-Pain
imbues the company with a faux-sense of official legitimacy that ‘inherently
mislead[s]’ viewers.”
Next, the ban on ads that aren’t undertaken by or at the
direction of a health care provider: This is a speaker-based restriction. But it too shouldn’t be preliminarily
enjoined, since it targeted potentially unlawful activity, specificially
violation of anti-kickback statutes. The
authorization to advertise under providers’ direction, instead of burdening
speech, allowed arrangements that otherwise might be illegal under governing
state law. It’s simple for a provider to
direct a third party, by paying it for advertising services. If 411-Pain is still nervous, it can draft
contractual language warranting that it’s advertising at providers’ direction
for purposes of the law.
Next, the requirement that ads “prominently display or
reference the legal name of the health care provider” and the associated
license type. 411-Pain argued that this
amounted to a complete ban because it was so unduly burdensome. Given the
number of providers in 411-Pain’s network, 411-Pain argued that it couldn’t
possibly identify all of them and their license information on each ad. Also, it contended, without actual proof of
deception, the appropriate standard was Sorrell
and not Zauderer.
First, the court rejected a facial challenge: the provisions
aren’t so unduly burdensome and unjustified that in no conceivable instance
would such provisions ever be constitutional. Applied to a single provider,
there’s no undue burden.
On the as-applied challenge, the court of appeals didn’t
find an unconstitutional burden. The
Supreme Court has said that when laws “impose a disclosure requirement rather
than an affirmative limitation on speech, ... the less exacting scrutiny
described in Zauderer governs” a
court’s review of the disclosure rules, something the DC Circuit has called
“akin to rational-basis review.” The
state has a substantial interest in protecting the public from misleading and false
advertising aimed at persons injured in automobile accidents.
But 411-Pain argued that the government hadn’t shown that the
ads are actually misleading, and that Ibanez
therefore controlled instead since the ads were only “potentially” misleading. However, Zauderer
and Milavetz didn’t require proof of
actual deception. The court of appeals
followed Zauderer and Milavetz, inferring the inherently
misleading character of the speech at issue from its content. “The ads fail to inform consumers of the
nature of 411-Pain’s business as a referral service, and they omit the fact
that the No-Fault Act is only one of many sources of recovery an accident
victim may pursue. Indeed, the ads never mention the No-Fault Act at all.” No
survey was required to determine that the ads had a tendency to mislead.
Under Zauderer,
the question was whether the disclosure requirements were reasonably related to
the state’s interest in preventing deception, and whether they were
“unjustified or unduly burdensome.” Yes
and no, respectively. The display of
network providers’ legal names and license types was reasonably related to the
state’s interest because “absent such disclosures, consumers know nothing about
the type of care they may receive if they call 411-Pain.” If they’re calling immediately from the scene
of an accident, as the ads encourage them to do, 411-Pain sometimes (if not
always) puts them in touch with chiropractors, not physicians. “The disclosures thus serve an essential
purpose by informing victims about the nature of the services offered by the
providers with whom 411-Pain does business.” 411-Pain has a minimal interest in
not providing any particular factual information in its ads.
Plus, there was no justification for finding an undue burden
when the record had no evidence of the number of providers in 411-Pain’s
network. 411-Pain’s affiant stated that the
company intends to “establish and build” its referral network, and its business
would be threatened “if as its network grows, each and every provider’s name
and license type must be included in every advertisement.” Maybe, but this wasn’t
enough for a preliminary injunction. “To decide whether the disclosure
requirements are ‘unduly burdensome’ when applied to 411-Pain, the record must
contain more than allegations; it must contain facts demonstrating the undue
burden such requirements have on the company’s ability to advertise.” This is kicking the can down the road, and
not very far: the question to be answered is what business models/forms of
organization will be disallowed, in practice?
When put that way, though, the post-Lochner
settlement provides a ready answer: any forms the state has a rational basis to
prohibit, regardless of whether that’s efficient.
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