Antitrust Law Daily Wrap Up, ADVERTISING—M.D. Fla.: Drug testing company granted partial summary judgment on competitor’s false advertising claims, (Apr 15, 2014)

By Linda O’Brien, J.D., LL.M.

In an action by a drug testing company against a competitor for false advertising and deceptive trade practices, the federal district court in Tampa has granted partial summary judgment to the competitor in relation to the legality of certain business practices. However, summary judgment was denied with respect to the remaining false advertising claims (Ameritox, Ltd. v. Millennium Laboratories, Inc., April 14, 2014, Bucklew, S.).

The clinical laboratory, Millennium Laboratories, Inc., screens urine specimens for the presence of drugs. A competitor, Ameritox Ltd., sued Millennium, asserting a range of claims including false advertising under the Lanham Act. Millennium filed a series of counterclaims, alleging a deceptive trade practices, among other claims. Millennium moved for summary judgment on the Lanham Act claims.

The court found that Ameritox failed to sufficiently allege claims of false advertising under the Lanham Act based on its business practice of providing free testing materials and assistance in obtaining testing waivers to physicians. To proceed with claims under the Lanham Act, Ameritox must demonstrate that Millennium’s advertisements were false or misleading, the deception had a material effect on purchasing decisions, and the Ameritox was likely to be injured as a result of the false advertising.

Ameritox’s Lanham Act false advertising claims were based on seven alleged representations: (1) a physician billing letter; (2) a press release; (3) a billing manual; (4) a gross revenue chart; (5) representations to health care providers regarding billing modifiers; (6) representations to health care providers regarding testing; and (7) representations regarding certain billing practices.

As a business practice, Millennium entered into agreements with physicians to provide free testing cups in which the physicians would not bill their patients for testing but would return the samples to Millennium for testing. In rejecting Ameritox’s argument that the agreements were violations of anti-kickback laws, the court noted that no court or regulatory agency ruled on the legality of those agreements. Accordingly, representations by Millennium to physicians regarding the legality of those agreements could not form the basis on Lanham Act liability.

Additionally, Millennium marketed its provision of assistance to physicians to obtain waiver certificates under the Clinical Laboratory Improvement Amendments (CLIA) to conduct point-of-care testing in their offices for a small fee. According to the court, Millennium did not falsely advertise the legality of its assistance to obtain CLIA waivers since there was no allegation that it advertised the provision of assistance for no charge. Thus, Millennium’s marketing of its assistance was not actionable under the Lanham Act.

However, Ameritox presented evidence that Millennium offered chemical analyzers to its customers at a low cost by negotiating preferential pricing with third-party vendors. Material issues of fact remained regarding whether the representations by Millennium to physicians that the offers were legal constituted false advertising. Thus, summary judgment was denied. Summary judgment was also denied regarding Ameritox’s claims based on physician billing letter, press release, billing manual, and gross revenue chart since Millennium failed to present sufficient argument or authority in support on its motion, the court concluded.

The case is No. 8:11-cv-775-T-24-TBM.

Attorneys: Adam Marchuk (Perkins Coie, LLP) for Ameritox, LTD. Margaret Diane Mathews (Akerman Senterfitt) for Ameritox, LTD. Christopher A. Lisy (Skadden, Arps, Slate, Meagher & Flom, LLP) for Millennium Laboratories, Inc. Kevin Jon Napper (Carlton Fields Jorden Burt, PA) for Millennium Laboratories, Inc.

Companies: Ameritox, Ltd.; Millennium Laboratories, Inc.

Cases: Advertising FloridaNews