law firm raises significant 1A questions over nursing home-specific advertising law

Wilkes & McHugh, P.A. v. LTC Consulting, L.P., --- S.E.2d ----, 2019 WL 2570982 (Ga. Jun. 24, 2019)

Georgia revised its anti-SLAPP law to be more like California’s (though apparently without the exception for commercial advertising) and the state supreme court here interprets the revised version for the first time, sending the case back to the trial court for some actual findings about whether the law at issue violates the First Amendment.

LTC Consulting sued law firm Wilkes & McHugh, P.A. and one of its attorneys for violations of a Georgia statute governing nursing home-related advertising, deceptive trade practices, and false advertising after the defendants ran full-page advertisements in local newspapers targeting patients of plaintiffs’ nursing homes.

The ads arose “from acts that could reasonably be construed as acts in furtherance of the defendants’ right of free speech under the United States Constitution in connection with an issue of public interest or concern,” triggering the anti-SLAPP law and shifting the burden to the plaintiffs to establish that there was a probability that they would prevail on their claims. But “the parties and the trial court overlooked certain preliminary questions, which also have not been adequately briefed here.” Specifically, the trial court thought plaintiffs had sufficiently shown a likelihood of success on violation of the nursing home advertising law, but that law itself (1) might not cover defendants’ ads (though it sure looks like it would) and (2) might be unconstitutional if it did.  Those issues had to be resolved before likelihood of prevailing could be assessed. Back to the trial court they go!

I’m much more interested in the underlying First Amendment question than the anti-SLAPP part.  Defendants ran ads referring to specific nursing homes and to the results of one or more legally required government “surveys,” or inspections, of the nursing home named in the ad.  Each ad stated across the top in a large font and all capital letters, “THIS IS A LEGAL ADVERTISEMENT,” followed by a larger, reverse-background stripe stretching all the way across the page and containing the contrasting words “IMPORTANT NOTICE” in a still larger font.

The ads stated, “If your loved one has been a resident at” [nursing home name/address, with the name very large], “[t]his facility has been cited for multiple deficiencies* including” multiple paragraphs, each beginning with the word “FAILURE.” The text “purported to recount the deficiencies for which each nursing home had been cited in a government survey conducted on one or more dates listed. The text also stated the date by which each deficiency was corrected and described the level of harm from each deficiency and the number of residents affected.” Then there was a “densely worded” asterisked paragraph “that, among other things, said that the ads were not authorized or endorsed by any government agency, provided information on the survey process and average numbers of cited deficiencies at nursing homes in Georgia and in the United States, and listed a government website where those interested could find additional information.”  The ad then said, in large font, “POOR CARE AND UNDERSTAFFING CAN LEAD TO: BEDSORES, CHOKING, FALLS, BROKEN BONES, DEHYDRATION, INFECTIONS/ SEPSIS, MALNUTRITION, OR UNEXPLAINED DEATH” and solicited people with loved ones who were residents to contact defendants.

Plaintiffs alleged that 91% of nursing homes surveyed are found to have “deficiencies” and that the defendants did not include in the ads all the information required by the law, and also that the ads deceptively omitted important facts and falsely implied that residents of the plaintiffs’ nursing homes had suffered “BEDSORES,” “BROKEN BONES,” and “DEATH” from the cited deficiencies. One ad allegedly falsely stated that four of the deficiencies “constituted minimal harm or the potential for actual harm,” when in reality those four deficiencies were cited at the “D” level, meaning that there was no actual harm.

Plaintiffs alleged violation of OCGA § 31-7-3.2’s recently enacted subsection (j), which imposes limitations on advertisements that use or reference the results of federal or state surveys or inspections of nursing homes, as well as Georgia’s Uniform Deceptive Trade Practices Act and two state false advertising statutes, one specific to ads for legal services.  The trial court granted a TRO, which enjoined the defendants from publishing “any false, fraudulent, deceptive and misleading advertisements concerning the Plaintiffs”; the existing ads, and other ads not complying with the nursing home-specific law.

The nursing home law says:

(j)(1) The results or findings of a federal or state survey or inspection of a nursing home facility, including any statement of deficiencies or reports, shall not be used or referenced in an advertisement or solicitation by any person or any entity, unless the advertisement or solicitation includes all of the following:

(A) The date the survey was conducted;

(B) A statement that the Department of Community Health conducts a survey of all nursing home facilities at least once every 15 months;

(C) If a finding or deficiency cited in the statement of deficiencies has been substantially corrected, a statement that the finding or deficiency has been substantially corrected and the date that the finding or deficiency was substantially corrected;

(D) The number of findings and deficiencies cited in the statement of deficiencies on the basis of the survey and a disclosure of the severity level for each finding and deficiency;

(E) The average number of findings and deficiencies cited in statements of deficiencies on the basis of surveys conducted by the department during the same calendar year as the survey used in the advertisement;

(F) A disclosure of whether each finding or deficiency caused actual bodily harm to any residents and the number of residents harmed thereby;  and

(G) A statement that the advertisement is neither authorized nor endorsed by any government agency.

(2) In addition to any other remedies and damages allowed by law, a party found to have violated paragraph (1) of this subsection shall be liable for attorney fees and expenses of litigation incurred in an action to restrain or enjoin such violation;  provided, however, that damages, attorney fees, and expenses of litigation shall not be recoverable against any newspaper, news outlet, or broadcaster publishing an advertisement or solicitation submitted by a third party for a fee.

RT: The newly enacted provision is pretty clearly enacted to protect nursing homes against negative reputational consequences from surveys/inspections, and I understand why—no one likes dirty laundry aired, and it is also the case that things labeled deficiencies might not necessarily be all that bad—risky, or diagnostic of imperfect procedures, which is itself not a great thing but may be common enough that no nursing home could expect to be above reproach. And one might further conclude that consumers are likely to overweight officially reported deficiencies compared to their actual seriousness—but that conclusion will have a hard time weathering current First Amendment scrutiny.  Doing this as a disclosure regime helps, but courts vary in the degree of rigor with which they evaluate how burdensome a disclosure like this can be. I wonder if the regulators could instead relabel minor deficiencies as “concerns” (or, heck, “fizzbins”), leaving the same regulatory consequences (if you don’t remediate concerns sufficiently, you can lose your license, etc.) without requiring as much regulation of advertising.

Anyway, lawyer advertising has some First Amendment protection, and “the alleged existence of serious injuries and deaths at local nursing homes resulting from deficiencies known to a government agency certainly qualifies as a public issue or an issue of public concern. Thus, running the ads could reasonably be construed as an act in furtherance of the defendants’ constitutional right of free speech in connection with a public issue or an issue of public concern,” so the anti-SLAPP law’s threshold requirements had been met.  Plaintiffs were thus required to demonstrate that their claims were both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if their evidence is credited. In doing that, the plaintiffs’ evidence is accepted as true, and the defendants’ evidence is evaluated only to determine if it defeats the plaintiffs’ showing as a matter of law.

The trial court said only that plaintiffs demonstrated a probability of prevailing “by submitting a verified complaint citing to the Georgia statute limiting the use of survey data and by prevailing on their temporary restraining order on the same issue before this Court.”  The transcript revealed no further explanation. That wasn’t enough.  First, the court thought that the law establishing Georgia’s regulatory framework for hospitals and related institutions was “an unlikely place to find a statute regulating attorney advertising” and might contemplate enforcement only by the AG, not private parties.  “If the most natural reading of the statutory text is that the cited statutes do apply to the defendants’ ads, there is a constitutional separation of powers issue that might require reading them not to apply. There is also a significant First Amendment issue with respect to the application of each statute here,” which wasn’t adequately addressed. Given that “the particular claims at issue in this case implicate complex and important questions of statutory interpretation and constitutional law,” the trial court should go back and do that.