Refill reminder programs implicate an evolving body of both healthcare and consumer protection laws, such as the Health Insurance Portability and Accountability Act (HIPAA) and the Telephone Consumer Protection Act (TCPA), as well as various implementing regulations. The recent case of Zani v. Rite Aid Headquarters Corp. in the Southern District of New York reviewed these laws and provided insight into how pharmacies and health care providers can ensure compliance when instituting a refill reminder program. 14-CV-9701 (AJN), 2017 WL 1383969 (S.D.N.Y. Mar. 30, 2017).

Background 

In Zani, the plaintiff received a flu shot at a Rite Aid through a prescription filled by a Rite Aid pharmacist. Zani, 2017 WL 1383969, at *2. Rite Aid later made prerecorded flu shot reminder calls to Rite Aid pharmacy patients, including plaintiff, through a vendor that Rite Aid had designated as a “business associate” under HIPAA. Id. After receiving a reminder call on his cell phone, plaintiff filed a putative class action against Rite Aid on behalf of himself individually and on behalf of all those similarly situated for alleged violations of the TCPA. Id. at *1. Rite Aid moved for summary judgment after a period of discovery, and plaintiff moved for class certification. Id. at *1. In addressing Rite Aid’s arguments, the Court examined the statutory and regulatory framework applicable to refill reminder calls under the TCPA, as informed by relevant regulations and pronouncements by the Federal Communications Commission (FCC), the Federal Trade Commission (FTC), and Health and Human Services (HHS).

The TCPA, FCC, and FTC

Among other things, the TCPA prohibits (a) calling cell phones with an automatic telephone dialing system, and (b) calling cell phones or residential phones using an artificial or prerecorded voice, unless the caller has the prior express consent of the called party. Id. at *1, 4; see also 47 U.S.C. § 227(b)(1)(A)-(B). The statute is silent as to the form of express consent—oral, written, or some other kind—required for an otherwise prohibited automated or prerecorded call to avoid the TCPA’s proscriptions. Id. at *4. The TCPA authorizes the FCC to prescribe regulations to implement the TCPA, and the FCC has regulated the form of consent required for various calls. Id. Complicating matters of implementation, however, the FTC also regulates telemarketing communications pursuant to the Federal Trade Commission Act. Id. at *5.

The Telemarketing Rule

As the Court noted, pharmacies face a “shifting legal landscape in light of new FCC rules governing automated calls” because of the FCC’s efforts to harmonize its TCPA implementing regulations with the FTC’s telemarketing rules. Id. at *3, 5. As a result of these efforts, the FCC announced a rule in 2013—referred to in Zani as the “Telemarketing Rule”—that distinguished between automated or prerecorded calls that (a) contain advertising or constitute telemarketing, and (b) those that are, instead, “informational.” Id. at *5. The FCC required mere prior express consent for the latter, whereas the FCC required prior express written consent for the former. Id.

Exception for Certain Calls to Residential Lines

When it created the Telemarketing Rule, the FCC also established various exceptions to it that pharmacies should bear in mind when instituting refill reminder programs. Id. First, the FCC excepted automated or prerecorded calls to residential lines from any consent requirement so long as they deliver a “health care” message from or on behalf of a “covered entity” or its “business associate,” as such terms are defined in the HIPAA Privacy Rule. Id. The FCC’s exemption replicated the FTC’s identical exemption of such calls from the FTC’s Telemarketing Sales Rule, and the FCC also invoked the same rationale for creating the exemption—“that such calls were already extensively regulated by HIPAA, and that such a narrow exception would be unlikely to tread greatly on consumer's privacy rights.” Id.

The Health Care Rule

Second, the FCC created an exception from the Telemarketing Rule’s prior express written consent requirement for automated or prerecorded calls to cell phones so long as they deliver “health care” messages from or on behalf of a “covered entity” or its “business associate,” as such terms are defined in the HIPAA Privacy Rule. Id. at *6. The Court in Zani referred to this exception to the Telemarketing Rule as the “Health Care Rule.” Id.

The FCC’s 2015 Exemption for Calls with a “Healthcare Treatment Purpose”

Additionally, in 2015, the FCC exempted a narrower class of health care calls to cell phones from even the prior express consent requirement. Id. To qualify for this exemption, the calls must be of an exigent nature, comply with HIPAA privacy rules, and must be strictly limited to a healthcare treatment purpose; they cannot include any telemarketing, solicitation, advertising, or billing, debt-collection, or other financial content. Id.

Rite Aid’s Arguments and the Court’s Analysis

In its motion for summary judgment, Rite Aid argued, among other things, that its prerecorded reminder call to plaintiff did not subject it to liability under the TCPA. Id. at *7-8. According to Rite Aid, the call was subject to the Health Care Rule, not the Telemarketing Rule, because it delivered a health care message conveyed by or on behalf of a covered entity or its business associate, and Rite Aid had the prior express consent of plaintiff before calling. Id. at *7. Additionally, Rite Aid argued that its call qualified for the narrower exception for certain health care calls that the FCC created in 2015. Id. The Court in Zani did not reach the latter argument or other alternatives put forth by Rite Aid. Instead, the Court agreed that Rite Aid’s call fell subject to the Health Care Rule, and its less demanding consent requirement, rather than the Telemarketing Rule, which requires prior express written consent. Id. Importantly, the Court further concluded that, because the Health Care Rule is an exception to the Telemarketing Rule, evidence that Rite Aid made the calls for marketing purposes was irrelevant. Id. at *8, 12.

At the outset of its analysis, the Court noted the dearth of available case law addressing the text and scope of the FCC’s Health Care Rule. Id. at *8. In interpreting the Health Care Rule and analyzing whether Rite Aid’s refill reminder call violated the TCPA or whether the Health Care Rule applied to exempt them from the TCPA’s proscription, the Court thus relied primarily upon the relevant regulations along with statements by the FCC, HHS, and the FTC interpreting the regulatory text at issue or analogous exemptions. Id.

Conveyed by or on behalf of a “Covered Entity” or its “Business Associate”?

In the first step of its analysis under the Health Care Rule—determining whether the call was conveyed by or on behalf of a “covered entity” or its “business associate”—the Court concluded that, although a separate Rite Aid entity placed the call, this entity was not only a business associate of Rite Aid, a health care provider, but it also acted on Rite Aid’s behalf. Id. The Court noted that Rite Aid had designated this separate Rite Aid company and the relevant Rite Aid pharmacy as “affiliated covered entities” under relevant HIPAA regulations, and that the Rite Aid pharmacy had transmitted protected health information (PHI) to its affiliate so that the affiliate could provide services to help Rite Aid make sales—thus meeting the definition of “business associate” set forth in HHS implementing regulations. Id. Further, because the affiliate made the calls to encourage customers to patronize Rite Aid, the Court concluded that the affiliate’s calls were made on behalf of Rite Aid. Id. at *9.

Delivered a “Health Care” Message?

In the second step of its analysis under the Health Care Rule—determining whether the call delivered a “health care” message—the Court looked to HHS regulations implementing HIPAA, as well as pronouncements by the FCC and FTC and the limited case law available. Id. at *9-10. Based upon the regulatory text and other guidance, the Court held that three factors are material to whether a call conveys a health care message:

  • whether the call concerns a “health-related product or service,” as defined by the FTC;
  • whether the call is placed by or on behalf of a health care provider to a patient with whom the provider has an established health care treatment relationship; and
  • whether the call concerns the individual health care needs of the patient-recipient such that a nexus exists between the subject matter of the call and the established health care needs of the called party. Id. at *11.

The Court refrained from deciding whether each factor must exist for a call to convey a health care message—or whether meeting one or two factors would be sufficient—because the Court found that the undisputed facts demonstrated that Rite Aid’s flu reminder call satisfied each of the three factors. Id. The Court determined that Rite Aid’s call met each of the factors material to determining whether a call conveys a health care message because:

  • Rite Aid’s calls concerned the availability of a prescription medication administered at its pharmacies, and the administration of medicine pursuant to a prescription constitutes a health-related product under even the most narrow reading of the Health Care Rule, as interpreted through HHS regulations implementing HIPAA, FTC guidance, and the relevant FCC Order. Id.
  • The calls were made only to patients of Rite Aid pharmacies who had previously filled prescriptions at those pharmacies. The calls were not directed to the general public, but instead, were made within the context of an established health care relationship. Id.
  • The calls alerted the patient-recipients to the availability of a medication treating the precise medical issue for which they previously sought care. Id. Thus, the calls concerned an established medical need of the individual recipients. Id. at *12.

In rejecting plaintiff’s arguments that Rite Aid’s calls did not convey a health care message, the Court reached several notable conclusions. First, although “health care” must relate to the “health of an individual,” the Court rejected the notion that health care must be “individualized” pursuant to HHS guidance. Id. (emphasis in original). While HHS previously explained that certain generic manufacturers, who have no relationship with any individual patient, would not be “providing ‘health care’” so as to come under the HIPAA regulatory framework, HHS did not go so far as to say that “the same health care message or product could not be delivered to numerous patients and still qualify as health care.” Id.

Second, the Court rebuffed plaintiff’s argument that the call’s lack of individualization meant that it failed to qualify as a health care message because it did not contain PHI, as defined by HIPAA regulations. Id. at *13. The Court explained that the FCC had addressed the inclusion of personalized information in automated, prerecorded health care messages sent to patients and that not only had the FCC not required such information in these messages, but the FCC cautioned that such information was unnecessary and discouraged. Id. Even assuming a call must be subject to HIPAA to qualify for the Health Care Rule—which the text of the rule does not require—the Court determined that the calls could fall under HIPAA’s regulation even without containing PHI because HIPAA may govern the sharing of the patient’s contact information that produced and allowed for the calls. Id.

Next, in distinguishing a recent FCC decision relied upon by the plaintiff, the Court noted that in the situation that the FCC had confronted, the communications at issue were not sent only to patients of the petitioner who had previously received prescriptions for flu vaccines, but they were instead sent to “various corporations” to alert them to the availability of flu shots. Id. at *14. In holding that, in contrast, Rite Aid’s calls conveyed a health care message, the Court explained that it was not relying solely upon the fact that the calls concerned prescription medication availability, but that the calls were also made exclusively to Rite Aid patients concerning a prescription for medicine for a specific health problem for which they had previously sought care. Id.

Finally, the Court rejected plaintiff’s argument that the calls would be subject to the Telemarketing Rule, and its elevated requirement of prior express written consent, because Rite Aid made the calls for a marketing purpose. Id. at *15. The Court explained that the plain text of the regulation, as well as its structure and purpose, compels the conclusion that the Health Care Rule is an exception to the Telemarketing Rule; therefore, “a call that would otherwise be telemarketing or advertising is subject to the Health Care Rule, and its lower consent requirement, if the call conveys a health care message.” Id. (emphasis in original). The Court found it persuasive that the only other district court to address this issue had reached the same conclusion under the same rationale. Id. at *15. The Court also determined that the FCC’s 2012 and 2015 Orders did not require a contrary conclusion, and that the FTC’s statements regarding its textually identical exemption to the FTC’s telemarketing rules—which the FCC patterned its exemption after—corroborated the Court’s ruling that the FCC’s Health Care Rule is an exemption to the Telemarketing Rule. Id. at *16-17. Thus, even if Rite Aid’s purpose in calling was to advertise its flu shots—because Rite Aid conveyed a health care message and the call was therefore exempted from the Telemarketing Rule—such purpose was immaterial to the Court’s analysis. Id. at *17.

Conclusion 

Because Rite Aid’s call delivered a health care message and was conveyed by a business associate on Rite Aid’s behalf, the call was subject to the Health Care Rule and its reduced consent requirement, rather than the Telemarketing Rule’s prior express written consent requirement. Id. at *18. Prior to calling, Rite Aid had secured plaintiff’s prior express consent to call when the plaintiff provided his cell phone number to Rite Aid. Id. at *3, 18. As a result, the Court granted Rite Aid’s motion for summary judgment, finding that no reasonable jury could find Rite Aid liable for violating the TCPA, and the Court denied plaintiff’s motion for class certification as moot. Id. In holding that Rite Aid did not violate the TCPA, the Court not only cleared Rite Aid of liability, the Court also illuminated the regulatory morass of consumer protection and healthcare laws governing automated calls—providing other pharmacies and providers a prescription for preventive care that could reduce the risk of deleterious side effects from implementing a refill reminder program.

Key takeaways:

  • In order to be exempt from any consent requirement for calls to residential lines and to qualify for the Health Care Rule’s less demanding consent requirements for calls to cell phones, automated or prerecorded calls must deliver a “health care” message made by, or on behalf of, a “covered entity” or its “business associate,” as such terms are defined in the HIPAA Privacy Rule. Id. at *5-6.
  • Because the Health Care Rule is an exception to the Telemarketing Rule, the Health Care Rule may apply and exempt a cell phone call from the TCPA’s prior express written consent requirement even where a message contains advertising. Id. at *14. If a call conveys a health care message, regardless of whether it also has the characteristics of telemarketing or advertising, it requires only prior express consent, rather than prior express written consent. Id. at *15.
  • To qualify for the Health Care Rule’s reduced consent requirement for calls to cell phones, a pharmacy should either place the calls itself or utilize a “business associate” and, whether placed by the pharmacy or business associate, the calls should clear note that they are being made on the pharmacy’s behalf. Id. at *8-9.
  • In order to ensure that a call’s content falls within the parameters of a “health care” message, pharmacies should make clear that their call relates to a prescription drug that they provide. Id. at *9-10. Such drugs must be prescribed by a doctor or other health care provider as part of a plan of treatment. Id. at *10. Calls should omit mention of products or services not prescribed by a doctor or health care provider, such as vitamins or minerals. Id.
  • Further, although their calls need not be individualized, pharmacies should only call patients with whom they already have an established relationship, and the calls should relate to prescription medications that the patients have previously received. See id. at *12-14.