Intermountain Stroke Ctr., Inc. v. Intermountain Health Care, Inc. — Feb. 2016 (Summary)

FALSE ADVERTISING

Intermountain Stroke Ctr., Inc. v. Intermountain Health Care, Inc.
No.14-4045 (10th Cir. Feb. 9, 2016)

The 10^th Circuit Court of Appeals upheld a district court ruling which dismissed a claim under the federal Lanham Act and remanded a state law claim to state court.

A neurologist specializing in stroke care and her employer, a stroke center (“plaintiffs”), alleged violations of the state’s Truth In Advertising Act (“TIAA”) and claims of unfair competition through false advertising under the federal Lanham Act against a parent corporation that operated a network of hospitals, and two subsidiaries of the parent, one which operated medical facilities and the other which operated a health maintenance organization (“defendants”). The plaintiffs claimed that the defendants misled prospective customers regarding the nature and quality of defendants’ services, causing the stroke center to close its doors. The district court dismissed the Lanham Act claim and remanded the TIAA claim to state court and the plaintiffs appealed to the 10^th Circuit Court of Appeals.

Under the Lanham Act, a plaintiff must plausibly allege: (1) that a defendant made material false or misleading representations of fact in connection with the commercial advertising or promotion of its product; (2) in commerce; (3) that are either likely to cause confusion or mistake as to the origin, association or approval of the product with or by another or the characteristics of the goods or services; and (4) injure the plaintiff.

The district court ruled that defendants’ general marketing statements, such as those pertaining to “best medical practices,” were not statements of fact but were mere “puffery” and thus not in violation of the Lanham Act.

Also, the district court found that three specific statements alleged by the plaintiffs to be in violation of the Lanham Act were not actionable because the statements were not false or misleading under the Act. In the first specific statement, the plaintiffs attacked the defendants’ website alleging that it misled consumers in the way the website listed physicians and that consumers could be deceived in thinking more specialists worked for the facility than actually did. The district court held that the statement was true and not misleading. The second specific statement was that the defendants did not adhere to their internal ethics code. The court held that the ability or inability to adhere to an ethics code is not relevant to a false advertising claim. The third specific statement was that a stroke pamphlet published by the defendants had incorrect information regarding stroke care. The court held that the language is not actionable because it is unrelated to the nature, characteristics, or qualities of the provider’s services. Therefore, the court of appeals upheld the findings of the district court.