CVS Subsidiary Swallows $9.25M Class Junk Fax Pill

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By Daniel R. Stoller

Dec. 8 — Advanced Care Scripts Inc. will pay $9.25 million to settle class junk fax claims ( Jefferson Radiation Oncology v. Advanced Care Scripts, Inc. , E.D. La., No. 15-cv-1399, final settlement 12/6/16 ).

The case highlights the complexities for the health-care industry when engaging in direct marketing. These companies need to navigate the waters of both federal telemarketing laws and federal health privacy laws. Ignoring either of the two may lead to costly litigation or federal regulatory enforcement action.

Settlement counsel will receive $1.85 million of the $9.25 million settlement fund and an additional $24,000 in expenses. Jefferson Radiology, the named plaintiff, will receive a $20,000 service award. The remainder will be available to the settlement class, which according to the complaint consists of thousands of businesses. Any undistributed funds remaining will be provided to the American Cancer Society.

David Almeida, defense-side class action partner at Sheppard, Mullin, Richter & Hampton LLP in Chicago, told Bloomberg BNA Dec. 8 that the settlement “exemplifies” some of the shortcomings with junk fax damages.

Although the company only sent one fax to multiple parties, a settlement was needed because of the potentially high cost of going through a full case. “The TCPA has become a boon to plaintiffs’ lawyers,” Almeida said.

Judge Lance M. Africk of the U.S. District Court for the Eastern District of Louisiana gave final approval to the settlement agreement Dec. 6.

CVS Health Corp. acquired ACS’s parent company, Omnicare Inc., in 2015 for $11.3 billion, Bloomberg data show. CVS is the second largest public pharmacy in the world with a $84.7 billion market capitalization, Bloomberg data show.

Junk Faxes Won’t Go Away

The case stems from an April 2015 class complaint filed by Jefferson Radiology. In the complaint, the plaintiff claimed that ACS “blasted thousands of junk faxes nationwide in direct violation” of the Telephone Consumer Protection Act (TCPA).

The plaintiff further alleged that ACS obtained a list of contact information from a third party. However, ACS didn’t receive the consent from the various parties before starting its “junk fax campaign,” the complaint said.

The Junk Fax Protection Act (JFPA) amended the TCPA by strengthening notice provisions for consumers. Under the JFPA, senders must include in faxed advertisements “a clear and conspicuous notice that discloses to recipients their right to stop future junk faxes” and how to use that right, the court said.

Almeida said that it is unexpected that Congress will extend similar laws to other technologies. There isn’t much backing from medical providers that “prefer to receive any and all communications via fax.”

If Congress plans to make any changes they should look at CAN-SPAM for an “appropriate balance between preventing unwanted e-mail and avoiding plaintiffs' law-driven lawsuits,” Almeida said.

Chehardy, Sherman, Williams, Murray, Recile, Stakelum & Hayes LLP represented the settlement class. O’Melveny & Meyers LLP and Barrasso, Usdin, Kupperman, Freeman & Sarver LLC represented ACS.

To contact the reporter on this story: Daniel R. Stoller in Washington at dStoller@bna.com

To contact the editor responsible for this story: Donald Aplin at daplin@bna.com

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