Statements about quality care were puffing despite standard of care

Intermountain Stroke Center, Inc. v. Intermountain Health Care, Inc., No. 2:13–cv–00909, 2014 WL 1320281 (D. Utah Mar. 31, 2014)

ISC sued IHC for violations of the Lanham Act and Utah’s Truth in Advertising Act and intentional interference with actual/prospective economic relations. The court dismissed the Lanham Act claims and declined to exercise jurisdiction over the state law claims.  IHC offers insurance plans and operates hospitals and clinics. ISC treated strokes and transient ischemic attacks (TIA)until it closed, allegedly as a result of IHC’s conduct. 

Though the standard of care for stroke and TIA allegedly requires that the patient either be immediately hospitalized or be seen within forty-eight hours at a same-day, urgent-care stroke clinic, plaintiffs alleged that IHC frequently saw stroke and TIA patients in IHC emergency rooms, failed to hospitalize such patients, and refused to refer them to the Stroke Center—the only same-day, urgent-care stroke clinic in Utah.  Treatment at the Stroke Center was not covered by IHC insurance, so many stroke and TIA patients were allegedly forced to settle for IHC’s allegedly sub-standard treatment.  IHC allegedly misled consumers about their care, misrepresenting that ICH provided high quality care with the best medical practices.  IHC’s advertising allegedly misled consumers to believe that IHC employs many specialists in stroke/TIA treatment when it has almost no one in those categories, and to believe that IHC carefully complies with federal laws that ban rewarding doctors for referrals even though IHC recently settled with DoJ for violations of those laws.

The court found that the complaint didn’t state a plausible claim for relief; many of the challenged statements weren’t statements of fact and the rest weren’t adequately alleged to be misleading or give rise to a competitive injury.

Non-fact: IHC’s claim to provide “high quality care,” “the best possible care,” “excellent care of the highest quality at an affordable cost,” and that it employs “best medical practices” were puffery as a matter of law.  These were “vague generalities that no reasonable person would rely on as assertions of particular facts.” Plaintiffs argued that these statements were objectively false because IHC fell below the standard of care for stroke and TIA patients. But literal falsity isn’t dispositive; the question is whether any reasonable person would rely on the assertions.  As a well-worn old case says, puffery is “a seller’s privilege to lie his head off, so long as he says nothing specific, on the theory that no reasonable man would believe him, or that no reasonable man would be influenced by such talk.”  (Raising as always the question of why advertisers use it.)  “Claims as to high quality and low cost—even if linked to a particular product or service and even if false—are paradigmatic examples of puffery upon which no reasonable person would be expected to rely.”

Plaintiffs argued that “best medical practices” had a specific referent, the standard of care.  (Example statement: “all three Intermountain divisions—Health Services, SelectHealth, and the Intermountain Medical Group—contribute in essential ways to the sharing of best medical practices, and raising the standards of clinical excellence.”)  But this statement wasn’t made in the context of any particular product or service.  Even if the claims were made about stroke and TIA services in particular, they still would be too vague.  If IHC specifically stated that its practice of refusing to either hospitalize stroke and TIA patients or to refer such patients to a same day stroke or TIA clinic is in accord with the best medical practices, plaintiffs could state a claim, but IHC wasn’t alleged to have done that.  Also, the “best medical practices” statements were phrased to suggest puffery, without defining the term.  “Whatever exactly it means to ‘contribute in essential ways to the sharing of best medical practices,’ no reasonable consumer would rely on the claim in choosing IHC as its stroke and TIA treatment provider.”

Plaintiffs also alleged that IHC misled patients and consumers to believe that it employs more specialists in stroke and TIA treatment than it in fact does.  The court found its statements true and not misleading.  Stroke care isn’t its own category on the IHC website.  It’s listed under “Heart and Vascular Services.” IHC’s “Find a Doctor” link from its stroke care page provides a list of heart and vascular surgeons, but not vascular neurologists or stroke specialists. Plaintiffs argued that these features induced consumers to falsely believe that the heart and vascular physicians employed by IHC specialize in stoke and TIA treatment.

The court found that implausible. Next to each doctor’s name is his or her primary area of specialization, and clicking on the name gives more information, including additional areas of specialization, practice areas, and board certifications. None of the information says they specialize in stroke or TIA treatment.  “The fact that the list is accessible from the stroke care portion of IHC’s website may suggest that some of the physicians listed are competent to provide stroke and TIA treatment.”  But plaintiffs didn’t allege that such an implication was false, only that they weren’t specialists.  “Given the extensive information regarding the physicians’ areas of focus and specialization, there is no reason to believe that patients or consumers would infer that some or all of those physicians specialize in—and do not merely have competence with respect to—the treatment of stroke.” The Lanham Act didn’t require an affirmative warning here.

Similarly, IHC’s advertising for its Neuroscience Institute—advertised as offering stroke patients with resources for “ongoing medical needs after hospitalization” and employing “subspecialists including epileptologists, general neurologists, physical medicine and rehabilitation physicians, and neuropsychologists”—wouldn’t mean anything more to consumers than what it says; consumers wouldn’t likely receive the message that these providers are subspecialists in treating stroke.

As for IHC’s statements about its code of ethics/anti-kickback practices, IHC’s claims were true and not misleading.  IHC said it

carefully review[s] financial relationships with physicians and other health care practitioners for compliance with the anti-kickback and Stark laws. All financial arrangements and contracts with physicians and physician groups must have legal Department review. Intermountain will not improperly induce or reward referrals of patients or services as prohibited under these laws and regulations.

Plaintiffs alleged that IHC’s refusal to refer patients to the Stroke Center or provide insurance coverage for treatment inappropriately created revenue for IHC, and that ICH recently settled claims with DoJ over a compensation arrangement that improperly rewarded physicians for referrals in violation of federal law.

The court held that this statement didn’t suggest that IHC or its employees uniformly meet the ethical standards outlined in the Code of Ethics, which set out disciplinary action for violations and told everyone to report suspected violations.  “In recognizing a potential violation of one of its ethical standards, reporting that violation, and accepting the consequences [with DoJ, IHC acted in exactly the way contemplated by the Code of Ethics.” Likewise, IHC’s standard regarding the avoidance of “actions that inappropriately create revenues” didn’t make its decision not to do business with the Intermountain Stroke Center false advertising.

Plus, plaintiffs didn’t plausibly allege competitive injury from these statements. Their allegations of injury were conclusory, and the alleged misrepresentation wasn’t about IHC’s stroke care but about its business operations generally.  It wasn’t plausible that a consumer trying to decide about stroke treatment would be influenced by these statements in a Code of Ethics intended primarily for IHC employees. The Stroke Center may have suffered harm, but not from the alleged misrepresentation.

Finally, IHC’s pamphlet—“Life After a Stroke or TIA”—was also nonmisleading.  The pamphlet’s entry on “Aftercare” said that “[i]n the first few weeks after your discharge, you’ll need to see members of your medical team. Use the chart below to keep track of these important appointments.” The second entry on the included chart is for an appointment with a neurologist and provides that the appointment is “usually recommended 4 to 6 weeks after you leave to go home.” Plaintiffs argued that IHC’s pamphlet was likely to mislead TIA patients to believe that they can “safely wait 4 to 6 weeks before following up with a neurologist.”  Though plaintiffs alleged that the standard of care required either hospitalization or quick referral to a stroke/TIA clinic to see a neurologist, the pamphlet on its face was directed to patients who’d been admitted to, and were being discharged from, a hospital. Thus, it was unlikely that consumers would believe that the pamphlet was recommending something less than the standard of care regarding hospitalization.

Even if a TIA patient treated in an ER got the pamphlet, that still wasn’t false advertising about the “the nature, characteristics, [or] qualities” of IHC’s services. It provided only very general information about stroke; IHC’s name only appeared twice: once as an author and once as a resource for stroke rehab and support groups on the last page.