Antitrust Law Daily Wrap Up, PRIVACY—6th Cir.: Unsolicited faxes were not “advertisements”; TCPA complaint properly dismissed, (Jun 4, 2015)

By Michael Menzhuber, J.D., LL.M.

A federal district court’s dismissal of a health care provider’s individual and class action suit, which alleged that two unsolicited facsimiles that it received from a pharmacy benefit manager violated the Telephone Consumer Protection Act (TCPA), was affirmed by the U.S. Court of Appeals in Cincinnati (Sandusky Wellness Center, LLC v. Medco Health Solutions, Inc., June 3, 2015, McKeague, D.).

Medco Health Solutions, Inc. (Medco), a pharmacy benefit manager that provides services to plan sponsors that enable their plans to offer more informed and less expensive prescription drug benefits to their members, sent a formulary (updated list of medicines available through a health plan) to its plan sponsors and also to healthcare providers that prescribe medications to its client’s members.

Sandusky Wellness Center, LLC (Sandusky), a healthcare provider that provides chiropractic services and prescribes medications to patients who are members of prescription drug plans contracted with Medco, received two faxes from Medco. The first fax, entitled “Formulary Notification”, asked Sandusky to consider prescribing “plan-preferred” drugs, listed some of those drugs, and provided a complete list of the formulary. It did not promote Medco’s services and did not solicit business from Medco.

The second fax, “Formulary Update,” informed Sandusky that a certain respiratory drug brand was preferred over another brand and that using this brand could save patients money. Neither fax contained pricing, ordering, or other sales information. Also, neither fax asked Sandusky, either directly or indirectly, to consider purchasing Medco’s services. Instead, the faxes merely informed Sandusky as to which drugs its patients might prefer, irrespective of Medco’s financial consideration.

Sandusky claimed that these faxes were “unsolicited advertisements,” prohibited by the TCPA and filed an individual and class action suit against Medco. Medco argued that the faxes were not advertisements, as a matter of law, because their primary purpose was informational rather than promotional. The district court agreed and granted Medco’s summary motion to dismiss.

The court noted that the TCPA prohibits sending unsolicited “advertisements” to fax machines. However, it determined that the faxes sent by Medco were not “advertisements” because there was no record evidence that: (1) the medications and services (Medoc’s formulary) listed in the faxes were for sale, at that time or in the future, by Medco; (2) the faxes promoted the drugs or services in a “commercial” sense; or (3) Medco hoped to attract clients or customers by sending the faxes. Instead, the record showed that the faxes listed drugs in a purely informational and non-pecuniary sense. Because the court determined that the TCPA unambiguously defines “advertisements” as having “commercial” components, and Medco’s faxes lacked these components, it was unnecessary to consider the effect, if any, of the Federal Communications Commission’s interpretation on this case.

Sandusky raised three arguments: (1) that the TCPA’s definition of “advertisement” is broader; (2) the Seventh Circuit’s decision on this issue should prevail; and (3) the court should look outside the four corners of the faxes to see if they are ads.

The court determined that Sandusky’s proposed definition of “advertisement” was too broad because it did not include word “commercial.” It also determined that the broad remedial goals of the TCPA, assuming there are such goals, was an insufficient justification for interpreting a specific provision more broadly than its language and statutory scheme reasonably permit.

The court determined that the Seventh Circuit’s decision in Ira Holtzman, C.P.A., & Associates, Ltd v. Turza, 728 F.3d 685 (2014) did not contradict its decision because the faxes in Turza solicited business from the public and the faxes sent by Medco solicited nothing.

The court also rejected Sandusky’s argument that Medco’s past, having operated a mail-order pharmacy business and having violated laws of various states, created a genuine dispute of fact as to whether the faxes were ads. It also rejected Sandusky’s argument that Medco might, at some time in future, profit from the faxes. According to the court, the fact that a sender may gain an ancillary, remote, and hypothetical economic benefit later on did not convert a noncommercial, informational communication into a commercial solicitation.

The case is No. 14-4201

Attorneys: Matthew Elton Stubbs (Montgomery, Rennie & Jonson) and Glenn Lorne Hara (Anderson & Wanca) for Sandusky Wellness Center, LLC. JoAnn T. Sandifer (Husch Blackwell), and Robert Charles Tucker (Robison, Curphey & O'Connell) for Medco Health Solutions, Inc.

Companies: Sandusky Wellness Center, LLC; Medco Health Solutions, Inc.; Express Scripts Holding Co.

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