Medco Faxes Listing Health Plan Drugs Lacked Ad Content, Not TCPA Violation

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By Katie W. Johnson

June 9 --The “most important takeaway” from a recent decision by the U.S. Court of Appeals for the Sixth Circuit on sending faxes under the Telephone Consumer Protection Act “is that the face of the fax must have some commercial content in order to qualify as an advertisement,” an attorney told Bloomberg BNA June 9 (Sandusky Wellness Ctr., LLC v. Medco Health Solutions, Inc., 2015 BL 174540, 6th Cir., No. 14-4201, 6/3/15).

The June 3 ruling, in which the Sixth Circuit held that faxes from pharmacy benefit manager Medco Health Solutions Inc. to a chiropractic company listing the medications available in its patients' health plans weren't advertisements under the TCPA, is one of the first cases in which a federal court of appeals has interpreted the meaning of a fax “advertisement” under the act, David S. Almeida, a partner at Sheppard Mullin Richter & Hampton LLP, in Chicago, said.

Judge David W. McKeague, in addressing an issue of first impression within the Sixth Circuit, wrote that “the term 'advertisement' unambiguously contains commercial components: To be an ad, the fax must promote goods or services that are for sale, and the sender must have profit as an aim.”

Here, the record demonstrates that the Medco faxes didn't “solicit business for a commercially available product or service,” the court said in affirming a district court's grant of summary judgment to Medco.

Almeida noted that the court refused to look beyond the face of the faxes. “Significantly, Medco instructs district courts that they cannot consider 'extraneous and speculative down-the-stream evidence' of some future commercial benefit to the sender of the fax in order to convert an informational fax into an advertisement,” he said.

“From the standpoint of companies like Medco that send faxes to healthcare providers about things like prescription drug plans and the development of new healthcare options, the Sixth Circuit’s decision should provide senders more protection from liability under the TCPA,” Almeida added.

'Formulary' Faxes.

Medco sends lists of medicines, or its “formulary,” to health-care providers that prescribe medications to its clients' members to inform those providers which medications are covered by their patients' health-care plans, the court said.

Medco allegedly sent two such faxes to chiropractic services company Sandusky Wellness Center LLC listing the medications available in the health plans of Sandusky's patients.

Sandusky sued Medco on behalf of a proposed class under the TCPA, 47 U.S.C. § 227, alleging that the faxes were “unsolicited advertisements” prohibited by the act.

A district court granted Medco's motion for summary judgment, finding that the faxes weren't advertisements within the meaning of the statute. The Sixth Circuit agreed.

No 'Commercial Components.'

Section 227(a)(5) of the TCPA defines an “advertisement” as “any material advertising the commercial availability or quality of any property, goods, or services.”

Looking to the dictionary definitions of the terms “advertising” and “commercial,” the court said “to be an ad, the fax must promote goods or services to be bought or sold, and it should have profit as an aim.”

In the present case, although Medco's faxes called medications and its services to the attention of Sandusky, the purpose of the faxes wasn't to solicit business from Sandusky, the court said.

“The record instead shows that the faxes list the drugs in a purely informational, non-pecuniary sense: to inform Sandusky what drugs its patients might prefer, based on Medco's formulary--a paid service already rendered not to Sandusky but to Medco's clients,” the court said.

Thus, the faxes aren't advertisements within the meaning of the TCPA because they don't contain the “commercial components” that ads contain, the court concluded.

Almeida told Bloomberg BNA that the “decision demonstrates that courts are increasingly reluctant to penalize fax senders unless they explicitly solicit business for a commercially available product or service. This decision should go a long way to stemming the tide of opportunistic class actions seeking to take advantage of the TCPA and apply it to circumstances for which it was not intended.”

Judges Bernice B. Donald and Harry S. Mattice Jr. also served on the panel.

Anderson + Wanca and Montgomery Rennie & Jonson represented the Sandusky Wellness Center. Husch Blackwell LLP and Robison, Curphey & O'Connell LLC represented Medco.