High-quality health care claims are puffery

Intermountain Stroke Center, Inc. v. Intermountain Health
Care, Inc., — Fed.Appx. —-, 2016 WL 523613, No. 14–4045 (10th
Cir. 2016)
Intermountain Health Care is a large hospital/clinic/doctor network.  Before it ceased business in 2013, the Stroke
Center provided “same-day and next-day treatment” to patients presenting with
strokes and transient ischemic attacks (TIAs). According to its staffer Dr. Nancy
Futrell, the Stroke Center was “the only outpatient, non-emergency facility in
Utah to provide non-emergency, same-day and next-day stroke and TIA treatment
by …. a stroke specialist” and the “only” facility in the state that offered
these services at rates significantly lower than prevailing hospital rates.  Originally, Futrell and the Stroke Center sued
Intermounntain in state court for violations of Utah’s Truth in Advertising Act
and related claims; they added a Lanham Act claim and Intermountain removed.
Plaintiffs challenged (1) general representations that
Intermountain follows “best medical practices,” provides the “best possible
care,” and has a mission of “[p]roviding excellent care of the highest quality
at an affordable cost,” and (2) three more specific representations about the
number of Intermountain physicians specializing in stroke and TIA treatment,
the efforts made by Intermountain to avoid prohibited sources of revenue, and
the proper scope of post-stroke or post-TIA care.  The court of appeals affirmed the dismissal
of the Lanham Act claim because the challenged statements were puffery as a
matter of law.
On its website, Intermountain held itself out as “an
internationally recognized, nonprofit system of 22 hospitals, a Medical Group
with more than 185 physician clinics, and an affiliated health insurance
company,” “offering a full range of services,” and “[p]roviding excellent care
of the highest quality at an affordable cost is at the heart of [its] mission.”
Also: “Our network of experienced doctors, surgeons and caregivers strive[s] to
provide clinically excellent healthcare through a wide range of services in a
setting where patient needs come first.” On a page called “For Intermountain
Healthcare Trustees,” Intermountain described its business model as “[a]n [i]ntegrated
[h]ealthcare [s]ystem” offering “[c]linical quality,” “[s]ervice quality,”
“[l]ower costs,” “[p]revention,” and “a relatively seamless continuum of care.”
Being a vertically-integrated network supposedly enabled it to “contribute in
essential ways to the sharing of best medical practices, and raising the
standards of clinical excellence.” Thus “Intermountain not only provides
quality healthcare; it often achieves lasting improvement in cost
All this was puffery, in context, which included the fact
that it was mass advertising expressed in vague terms, not something said to a
particular person with knowledge of that person’s specific needs. “Healthcare
is fraught with unpredictability, and a healthcare-delivery system hardly
strikes us as the species of business from which a particular
objectively-superior result (e.g., with respect to certain stroke and TIA
treatments) could reasonably be expected by a consumer without at least some
modicum of specificity being provided by the business in its representations
Puffery was not an affirmative defense, as plaintiffs
claimed; whether statements were factual or puffery were questions of whether
actionable conduct had occurred.  Nor did
puffery have to be “forward-looking”; that’s just an example of a type of
puffery.  “[V]ague statements of
corporate optimism” also qualify.  Lexmark changed none of this.
As for the three specific statements, they were also
non-actionable.  First, plaintiffs argued
that Intermountain claimed to have more physicians for stroke and TIA care than
it actually did, using misleading statements that its heart and vascular
surgeons specialized in such care, and that neurologists at its clinic were
stroke and TIA “subspecialists.”  Plaintiffs alleged that Intermountain’s
listing of stroke on its website “under ‘Heart and Vascular Services’”  would “confuse stroke and TIA patients into
believing that cardiologists and other heart specialists specialize in the
treatment of stroke and TIA, which is not accurate.”  Also, “the ‘Find a Doctor’ link from the
[Intermountain] website … lists heart and vascular surgeons … as stroke
treatment providers,” which would mislead consumers. 
The court of appeals found that implausible.  “Plaintiffs’ own evidence supports our
conclusion that any association of stroke and TIA with ‘heart and vascular’
services is proper” because stroke is a cerebrovascular or cardiovascular
disorder.  “[I]t follows that stroke
patients could not have been misled by a suggestion that a vascular physician
might be of assistance.”  Likewise, the
“Find a Doctor” tool would provide a list of doctors, including information
about each doctor’s educational background, certifications, and clinical
interests. None of the “primary specialty” notations explicitly included a
claim of expertise in stroke and TIA treatment; the only claim was that some of
them possessed “the core competencies to treat cerebrovascular diseases,” which
appeared to be true.  Plaintiffs failed
to explain how consumers would infer that the doctors were specialists in
stroke and TIA.  Though plaintiffs might
want Intermountain to include a disclaimer, the law didn’t require that.
Also, Intermountain’s Annual Stroke Report said: “The Stroke
Program also offers resources for patients with ongoing medical needs after
hospitalization. The Outpatient Neuroscience Clinic[ ] … is home to
subspecialists including epileptologists, general neurologists, physical
medicine and rehabilitation physicians, and neuropsychologists.”  Plaintiffs failed to explain why it was false
or misleading to label them “subspecialists,” even though they held themselves
out as focusing on specified brain disorders. There was no explicit or implicit
representation that Intermountain’s Outpatient Neuroscience Clinic was devoted
to stroke and TIA.  [I have changed the
court of appeals’ language a bit; the court wrote as if making merits
determinations, where under Twiqbal
it really should have been talking about plausibility.]
Plaintiffs alleged that Intermountain falsely claimed in its
Ethics Code to “carefully review financial relationships with physicians and
other Health Care Practitioners for compliance with the anti-kickback and Stark
laws.” In fact, Intermountain reached a settlement with regulators over compensation
arrangements that appeared to violate federal healthcare-fraud statutes. But
the court found the Ethics Code claims true and not misleading.  Then, contradictorily, it said that an announcement
of intent to behave ethically was outside the scope of the Lanham Act entirely
(that is, puffery).  A code of ethics is
aspirational; “it simply cannot be that every time a violation of that code
occurs, a company is liable under federal law for having chosen to adopt the
code at all, particularly when the adoption of such a code is effectively
Moreover, the Ethics Code promised consequences for
misconduct, tacitly acknowledging that standards are sometimes violated.  In fact, the court found that was what
happened when Intermountain found out about the compensation schemes and
settled with federal regulators. 
Comment: Even on its own terms, that’s wrong, which is not to say the
ultimate holding is wrong.  But in fact,
that Intermountain settled does not itself show that anyone involved in the
schemes suffered “consequences” therefore; we would need a lot more information.  The court of appeals, however, concluded that
“the very existence of the resulting settlement agreement evinces the truthful
spirit underlying Intermountain’s Ethics Code,” which promised to report
observed and suspected violations of laws or policies.  Aspirational statements about federal anti-fraud
laws didn’t implicate “the nature, characteristics, qualities, or geographic
origin of [its] … services.”
Finally, plaintiffs challenged Intermountain’s Stroke
Pamphlet, targeted at stroke and TIA patients who have been admitted to an
Intermountain facility, as well as their family members and friends. The
pamphlet contained background material on strokes and TIAs, a “Stroke Recovery
Checklist,” an index of stroke resources, and other general information
concerning “[a]ftercare.”  The aftercare
page said that “an appointment with” a patient’s primary care provider “is
usually recommended 1 to 7 days after [leaving] to go home” and, similarly,
that visiting a neurologist “is usually recommended” “4 to 6 weeks after
[leaving] to go home.” Plaintiffs alleged that “a TIA patient who reads this
pamphlet is likely to be under the mistaken impression that he or she can
safely wait 4 to 6 weeks before following up with a neurologist.”
The court of appeals found this nonactionable because it
made no statement about “the nature, characteristics, [or] qualities[ ] … of
[Intermountain’s] … services.”  In the
entire pamphlet, Intermountain named itself only on the title page; in one very
small “Call 911!” icon; and at the end, as one of “many organizations that
support people who’ve had a stroke.”  Plus, the aftercare chart in particular
couldn’t plausibly mislead anyone about the scope of Intermountain’s services.  This “rudimentary worksheet suggesting how
patients might approach post-stroke or post-TIA life” was “far too vague to
support a Lanham Act claim.” Plus, if a reader reached the chart on page 10, it
stood to reason that she also read the disclaimer on page 3 stating that “this
booklet doesn’t replace the specific instructions you will receive from your
healthcare providers.”

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