Two unsolicited faxes that listed drugs available to health clinics did not constitute "advertisements" under the Telephone Consumer Protection Act (TCPA) and were therefore not actionable under the statute, a panel of the Sixth Circuit Court of Appeals has ruled.
Medco Health Solutions acts as an intermediary between health plan sponsors and prescription drug companies, by providing services to plan sponsors so that they can offer more informed and less expensive prescription drug benefits to their members. The "formulary"—a list of medicines available through a given plan—is sent to plan sponsors and healthcare providers to inform them which medications are covered by the plans.
In June 2010, Sandusky Wellness Center received a fax from Medco. Titled "Formulary Notification," the fax stated that "The health plans of many of your patients have adopted" Medco's formulary and asked Sandusky to "consider prescribing plan-preferred drugs" to "help lower medication costs for [Sandusky] patients." Other than listing some of the drugs, and stating Medco's name and number, the fax did not promote Medco's services and did not solicit business from Sandusky.
Medco sent a second fax three months later with a "Formulary Update," referencing a certain respiratory drug brand that was preferred over another. Again, the fax did not ask Sandusky to consider purchasing Medco's services.
Sandusky filed suit, alleging that the two faxes violated the TCPA. Medco filed a motion for summary judgment, arguing that the faxes were not "advertisements" under the statute because their primary purpose was informational, not promotional. A district court agreed, characterizing the lawsuit as borderline "frivolous litigation."
Undeterred, Sandusky appealed to the Sixth Circuit.
The federal appellate panel began with the TCPA's definition of "advertisement" at Section 227(a)(5) as "any material advertising the commercial availability or quality of any property, goods, or services." Based on this definition, the court emphasized that the fax must advertise something to the public as for sale and be commercial in nature. "So to be an ad, the fax must promote goods or services to be bought or sold, and it should have profit as its aim," the court explained.
Medco's faxes failed to meet this definition, the panel concluded. "Under the Act's definition, and in everyday speak, these faxes are therefore not advertisements: They lack the commercial components inherent in ads."
"They call items (medications) and services (Medco's formulary) to Sandusky's attention, yes. But no record evidence shows that they do so because the drugs or Medco's services are for sale by Medco, now or in the future. In fact, the record shows that Medco has no interest whatsoever in soliciting 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."
This conclusion also allowed the panel "to avoid wading into another dispute: determining the effect (if any) of the Federal Communications Commission's interpretations on this case." Circuits are split on the level of deference appropriate for the FCC's definition of "advertisement," although the Sixth Circuit said reliance on that interpretation would only bolster its decision.
Under the Commission's analysis, if the primary purpose of the fax at issue is informational rather than promotional, the TCPA does not apply. "That aptly describes the faxes here," the court said. "They contain only information—parts of the formulary—and do not seek to promote products or services to make a profit."
The panel rejected Sandusky's arguments that the TCPA requires a broader interpretation of the term "advertisement" as a remedial statute and that a look outside the four corners of the faxes would show the court that the faxes were ads. The court also distinguishes a decision from the Seventh Circuit Court of Appeals where the sender of the fax conceded it was a promotional device.
To read the opinion in Sandusky Wellness Center v. Medco Health Solutions, click here.
Why it matters: The Sixth Circuit decision provides a much-needed victory for TCPA defendants, particularly in the wake of major changes to the FCC's interpretation of the statute, including hot-button issues like the definition of an autodialer and reassigned numbers. The Sandusky court recognized that not every fax constitutes an advertisement under the statute—instead, an advertisement must promote the sale of any property, goods, or services available to be bought or sold so some entity can profit.