DC Circuit Turns Away Healthcare Challenges to TCPA Declaratory Ruling

By Zachary K. Dunn

In ACA International v. Federal Communications Commission, 2018 U.S. App. LEXIS 6535 (2018), the DC Circuit rejected a series of challenges to the FCC’s 2015 Declaratory Ruling brought by Rite-Aid related to the partial-exemption to the prior-consent requirement for healthcare related calls. The Court rejected two separate arguments: first, that the Declaratory Ruling conflicts with HIPPA; and second, that the Declaratory Ruling’s exemption for “certain healthcare calls” but not others was arbitrary and capricious.

 Declaratory Ruling’s Partial Exemption for Healthcare Related Calls

The TCPA contains a prior-consent requirement for calls to wireless numbers, but permits the FCC to exempt from that requirement “calls to a telephone number assigned to a cellular telephone service that are not charged to the called party, subject to such conditions as the [FCC] may prescribe as necessary in the interest of the privacy rights this section is intended to protect.” 47 U.S.C. § 227(b)(2)(C).

During the rulemaking process which resulted in the Declaratory Ruling, the FCC was petitioned to exempt from the prior-consent requirement “certain non-telemarketing, healthcare calls” alleged to “provide vital, time-sensitive information patients welcome, expect, and often rely on to make informed decisions.” While the FCC found that calls “regarding post-discharge follow-up intended to prevent readmission, or prescription notifications” were in the public interest – and chose to exempt them from the prior-consent requirement – the FCC “fail[ed] to see the same exigency and public interest in calls regarding account communications and payment notifications.” It therefore did not exempt those calls from the TCPA’s prior-consent requirement. It was this partial exemption, which did not include exemptions for billing and payment notifications, that was challenged and ultimately upheld by the Court.

Conflict between Declaratory Ruling and HIPPA

In ACA International, Rite Aid first contended that by “restricting otherwise permissible HIPPA communications,” the Declaratory Ruling conflicts with another federal law. Under HIPAA regulations, covered entities and their business associates presumptively “may not use or disclose protected health information,” 45 C.F.R. § 164.502(a), but they are generally permitted to use or disclose that information “for treatment, payment, or health care operations.” Id. § 164.506(a).

At the DC Circuit, Rite Aid argued that that the partial exemption conflicts with HIPAA because it stops short of exempting billing- and account-related communications—i.e., ones “for . . . payment” and therefore conflicted with 45 C.F.R. § 164.506(a). The Court did not agree, and reasoned that while § 164.506(a)’s exclusion carves out an exception to civil and criminal liability for using or disclosing protected health information, it says nothing about the FCC’s “authority to exempt (or refrain from exempting) certain kinds of calls from the TCPA’s consent requirement.” Therefore, the Court held, “the [FCC] did not restrict communications that HIPAA requires be permitted to flow freely. It simply declined to make certain exchanges even less burdensome than they would have been by default.”

Whether the Partial Exemption is Arbitrary and Capricious

Rite Aid also contended that the Declaratory Ruling’s partial exemption for certain healthcare related calls, but not others, was arbitrary and capricious. Rite Aid made two arbitrary and capricious arguments.

First, Rite Aid argued that the FCC had failed to explain the reason for its departure from its earlier practice of exempting all HIPPA-protected communications to landlines from TCPA’s regulations. The Court recognized that in a 2012 Order, the FCC exempted all “health care message[s]” to residential numbers – including messages related to billing – from the TCPA’s requirements because such messages were “already regulated by” HIPPA. The Court also acknowledged that the 2012 Order “swept more broadly than” the 2015 Declaratory Ruling’s partial exemption.

However, the Court refused to find the differing treatment regarding residential and wireless numbers to be arbitrary and capricious, holding that “[e]ven if one might hypothesize important reasons for treating residential and wireless telephone lines the same, the TCPA itself presupposes the contrary—that calls to residential and wireless numbers warrant differential treatment.”

Rite Aid also challenged the partial exemption as arbitrary and capricious because it failed to “recognize that all healthcare-related calls satisfy the TCPA’s ‘emergency purposes’ exception to the consent requirement.” As used in the TCPA, “[t]he term emergency purposes means calls made necessary in any situation affecting the health and safety of consumers.” 47 C.F.R. § 64.1200(f)(4). Rejecting this challenge, the Court held that Rite Aid had identified “no calls satisfying that exception that were not already subject to the 2015 exemption.” The Court also found that it would be “implausible” to conclude that calls concerning telemarking, solicitation, or advertising content, or which include accounting, billing, debt-collection, or other financial content are made for emergency purposes.

Zachary Dunn is a member of Smith Debnam's Consumer Financial Services Litigation and Compliance practice.

Second Circuit Remains Firm That Flu Shot Reminders are Health Care Messages Under the TCPA

Following up on its decision in Latner v. Mount Sinai Health System, Inc., 2018 U.S. App. LEXIS 114 (2nd Cir. Jan. 3, 2018), the Second Circuit has again held that a flu shot reminder was a health care message under the TCPA. Zani v. Rite Aid Hdqtrs. Corp., 2018 U.S. App. LEXIS 4354 (2nd Cir. Feb. 21, 2018).

In Zani, the consumer filled a prescription at a Rite Aid pharmacy, provided his phone number and signed a Notice of Privacy Practices which provided that Rite Aid “may contact [Zani] to provide refill reminders or information about treatment alternatives or other health related benefits and services that may be of interest.” Zani at *2. Sometime later, Zani received a pre-recorded message from Rite-Aid’s vendor which stated:

Get your flu shot at Rite Aid today and shield yourself from this season's strains of the flu. Rite Aid now offers patients sixty five and over the Fluzone High Dose vaccine designed for older patients and covered by Medicare Part B. Because our immune systems may need more help as we get older, the Fluzone High Dose vaccine available at Rite Aid may deliver a stronger immune response. Come in today and shield yourself. No appointment necessary and most insurance plans accepted. Vaccines available while supplies last. See your Rite Aid pharmacist for details. Goodbye.

Zani at *3. Zani filed suit contending the message violated the TCPA. Rite Aid moved for summary judgment, contending the message was a health care message provided with the consumer’s prior express consent. The district court granted Rite Aid’s motion for summary judgment.

On appeal, both parties agreed that Zani had provided his prior express consent when he provided his cell number previously. Zani contended, however, because the message did not convey a health care message, express written consent was required and he had not provided it. The court disagreed, noting that its recent decision in Latner involved virtually identical issues. The court reiterated its decision in Latner holding that the message was a “health care” message exempt from the written consent requirements of the TCPA.

Second Circuit Holds Flu Shot Reminder Did Not Violate the TCPA

The Second Circuit has affirmed a lower court decision that a flu shot reminder sent by text message by a medical provider did not violate the Telephone Consumer Protection Act (the “TCPA”).  The decision is important because it interprets the 2012 FCC Healthcare Exemption as providing an exemption as to prior written consent rather than a wholesale exemption from consent.  Latner v. Mount Sinai Health System, Inc., 2018 U.S. App. LEXIS 114 (2^nd Cir. Jan. 3, 2018).

The limited record indicates that Mr. Latner visited Mt. Sinai in 2003 for a routine health examination.  At that time, he filled out new patient forms including a “New Patient Health Form” which contained his contact information, as well as an “Ambulatory Patient Notification Record” granting the hospital and its facilities consent to use his health information “for payment, treatment and hospital operations purposes.”  In 2011, Mr. Latner visited Mt. Sinai again and declined any immunizations.  In 2014, Mt. Sinai, through a third-party vendor, sent Mr. Latner the following text message: “Its flu season again.  Your PCP at WPMG is thinking of you! Please call us at 212-247-8100 to schedule an appointment for a flu shot…”  Latner at *3.  The message was sent to all active patients, including Mr. Latner, that had visited the office in the three years prior to the date of the text.

Mr. Latner filed a putative class action, alleging that the text message violated the TCPA.  The hospital moved for judgment on the pleadings and asserted, as an affirmative defense, Mr. Latner’s prior express consent. Latner, 1:16-cv-00683 (S.D.N.Y.), Dkt. No. 42. 

In affirming the district court’s ruling, the Second Circuit did a two-step analysis.  It first determined whether the communication was covered by the 2012 FCC Healthcare Exemption and secondly, determining whether Mr. Latner had provided effective consent. 

The Second Circuit concluded that the communication was covered by the 2012 FCC Healthcare Exemption.  Under the 2012 FCC Telemarketing Rule, prior written consent is required for autodialed or prerecorded telemarketing calls.  The Rule, however, contains an exemption for covered healthcare providers in certain instances.  The court determined that the Healthcare Exemption exempts from written consent “calls to wireless cell numbers if the call ‘delivers a ‘health care’ message made by, or on behalf of, a ‘covered entity’ or its ‘business associate’ as those are defined in the HIPPA Privacy Rule.”  “HIPPA defines health care to include ‘care, services, or supplies related to the health of an individual’… and exempts from its definition of marketing all communications made ‘[f]or treatment of an individual by a health care provider… or to direct or recommend alternative treatments’ to the individual.” Id. at *5.  Both the district court and the Second Circuit concluded that the text message qualified for the FCC’s Healthcare Exemption.

The Second Circuit then moved to the issue of prior express consent and reviewed the terms of the consent provided by Mr. Latner in his 2003 consent forms.  Of particular importance to the court, the forms provided consent to use Latner’s information “to recommend possible treatment alternatives or health-related benefits and services.” Id. at *6-7.    The court concluded that the language of the forms therefore provided prior express consent to receive text messages concerning a “health related benefit” such as a flu shot.

The opinion is important for a few reasons.  First, it clarifies that the Healthcare Exemption only exempts covered communications from written consent and is not a wholesale exemption as to consent. Secondly, the opinion emphasizes the importance of carefully worded consent provisions.  All business verticals which use automated messaging, calls or text messages should review their intake documents to ensure that consent is properly addressed as to the scope of any contemplated telecommunications and then should again review any contemplated mass communications prior to being made in light of their consent documents.  Finally, the opinion notes by footnote that the text message (which was sent in 2014) was not covered by the FCC’s 2015 Healthcare Treatment Exception because “there is no language in the 2015 FCC order suggesting any intent to make the Exception retroactive, much less justification for any asserted retroactivity, precluding its application in this instance.” Id. at FN 2.