Avoiding False Advertising Hassles for Health-related Businesses

Health Law Alert Newsletter

Summer 2009

By: Cynthia Blake Sanders and

What could a nursing home possibly have in common with a pizza chain? Well, when their advertising is considered misleading enough to trigger legal challenges by competitors, consumers and government agencies, they may both face the prospect of liability for false advertising messages. Advertisers can be forced to halt advertising, pay damages, and correct deceptive messages. Some statements are not actionable despite being misleading, but just countering allegations and negative publicity about deceptive advertising is expensive. Allegations of consumer deception can seriously tarnish a company’s reputation. Follow these guidelines to detect and avoid health-related communications that could cause costly advertising hassles:

Unintended Messages are Actionable

A common misconception is that if the message is not deliberate, it’s not relevant. It’s easy to focus on the intended meaning and ignore misleading subtexts. But being blind to possible connotations can lead to trouble. Advertisers are held responsible for any possible meaning conveyed — not just the intended message.

Never Claim to be "Better" in Puffery

Puffery refers to ads that are self-congratulatory, exaggerated or overstated. Done poorly, puffery can result in lawsuits targeting the advertiser’s implied disparagement of an anonymous competitor. Typically puffery is broad, vague and commendatory language that no reasonable person would rely upon it. Puffery is viewed as the advertiser’s opinion and expected to be discounted by the consumer. But puffery that implies a factual basis for its superiority can cause headaches if any false comparative message can be inferred. Comparative advertising is constitutionally protected because of the benefit it provides to consumers — but only if truthful and non-deceptive. "Better," "faster," "lighter," "healthier" and "only" are examples of advertising that, if capable of even marginal falsity, will be challenged by competitors.

Papa John’s pizza chain adopted the slogan " Better ingredients. Better pizza." Viewed alone, the slogan appears to be vague self-promotion and likely to qualify as puffery. But the trial court found the slogan to be misleading in the wider context of Papa John’s entire marketing campaign. In one ad, Papa John’s claimed that its fresh, vine-ripened tomatoes made its sauce superior to its competitors’ "remanufactured" sauces. Evidence produced at trial showed there were discernible differences in the methods used to produce the pizza chains’ respective sauces, but these differences didn’t impact the quality of the pizza. The court therefore determined Papa John’s "Better ingredients. Better pizza" slogan to be misleading. But Pizza Hut didn’t prove that Papa John’s misleading advertising induced consumers to purchase Papa John’s pizza instead of Pizza Hut’s. Since Pizza Hut couldn’t prove that the false advertising was material to the purchasing decision, the judgment against Papa John’s was reversed on appeal.

For a pizza chain, a legal challenge as to which pizza tastes best only provides additional exposure for its brand. When a health care company is challenged for misleading communications, however, the integrity and honesty of its management is called into question, which can have an adverse effect on the reputation of the company.

Two health insurers, US Healthcare and Blue Cross of Greater Philadelphia brought lawsuits against each other for implied disparagement arising from their respective advertising. The advertising at issue involved aggressive comparisons of the advantages and disadvantages of Healthcare Maintenance Organization (HMO) or Preferred Provider (Personal Choice) forms of health care insurance coverage. US Healthcare claimed Blue Cross Blue Shield’s slogan "Better than HMO. So good it’s Blue Cross Blue Shield" crossed the line from puffery to disparagement. As the advertising war became more aggressive, both sides implied that a consumer’s choice of provider was a decision fraught with peril. Blue Cross Blue Shield: "Your money or your life. . . . The high cost of HMO healthcare." In a US Healthcare spot, a dirge played in the background behind a narrator reciting the disadvantages of Personal Choice while a pair of hands pulled a sheet over a Personal Choice brochure as if it were a corpse. In a Blue Cross Blue Shield spot, a distraught woman cried: "The hospital my HMO sent me to just wasn’t enough," suggesting that she suffered some tragedy because of the HMO’s substandard care. These messages falsely implied that the other health care company’s care was so substandard it would result in death and were found false and disparaging by the court.

Avoid Unsubstantiated Advertising Statements

Advertising that makes factual statements must be substantiated with evidence proving that the statement is true. Federal Trade Commission (FTC) rules and advertising industry self-regulation guidelines require that an advertiser substantiate its advertising before publishing it.

This evidence should be organized in a file and updated, to ensure that the truthful message doesn’t morph into falsity as time goes by.

A division of GE Healthcare (GE) produces two x-ray contrast media products, a "first generation" product, Omnipague, and a "next gen" product, Visipaque. GE was recently ordered by a court to spend more than $11 million on corrective advertising for false and misleading statements it made about the superiority of Visipaque over competing contrast media products. GE commissioned a clinical study comparing the benefits of its new product Visipaque to Omnipague. The court determined that the study adequately supported GE’s advertising that Visipaque provided an improvement in safety and patient comfort over its predecessor Omnipague. The study did not compare Visipaque to competitors’ products, but was used by GE to demonstrate the superiority of Visipaque over competitor’s products anyway. The court held that unless GE conspicuously disclosed that the study did not compare Visipaque to competitors’ products, employing the study to support comparative advertising was misleading and deceptive, even though the competing products were similar to GE’s Omnipaque. The court cited a direct correlation between GE’s misleading use of the clinical study and increased sales of Visipaque as proof that the misleading advertising was material to consumer’s purchasing decisions.

Avoid Making Health Claims

The Food and Drug Administration strictly regulates health claims in "labeling" for food products and dietary supplements. Labeling is broadly defined to include packaging, point-of-purchase advertising and websites if listed in packaging. Advertising that promotes a relationship between a product and a disease or health-related condition is considered a health claim and may subject the product to a claim of misbranding by the FDA. Health claims must be backed by competent and reliable scientific evidence that reflects "significant scientific agreement" and pre-approved by the FDA. A few "qualified health claims" are listed in the FDA regulations as supported by significant scientific agreement and may be employed so long as the advertiser carefully follows the FDA’s qualified health claim requirements. Nutrient content claims and structure/function claims are regulated apart from health claims.

Nutrient content claims include "high in calcium," "fat-free," or "lite." Nutrient content claims are acceptable so long as they relate to recognized nutrients or dietary substances with an established daily value and follow FDA regulations. The proper usage of many words relating to nutrient contents are delineated in FDA regulations. An example is "healthy," which is considered by the FDA to be an implied nutrient content claim characterizing foods that have healthy levels of total fat, saturated fat, cholesterol and sodium. Structure/function claims address the role a nutrient or dietary ingredient plays in the normal structure or functioning of the human body. A common example is "Calcium builds strong bones." Structure/function claims are not required to be approved by the FDA but must be truthful and not misleading. Labeling that makes such claims must include a disclaimer that the FDA has not evaluated the claim and that the product "is not intended to diagnose, treat, cure or prevent any disease." A failure to do so may result in the FDA claiming that the product is misbranded and must seek approval as a drug.

In May 2009, the FDA sent a warning letter to General Mills that Cheerios is misbranded for advertising that regularly consuming the cereal can "lower your cholesterol by 4 percent in just 6 weeks." Although General Mills was granted permission by the FDA to link its soluble fiber from whole grain oats to a lower risk of heart disease and lower cholesterol levels, the FDA took issue with General Mills’ cholesterol-lowering health claim because it did not mirror regulatory guidelines for soluble fiber claims and with General Mills’ unapproved advertising on its Cheerios website linking consumption of Cheerios to a reduced risk of stomach and colon disease.

The makers of Airborne® Effervescent Health Formula discovered that false or misleading health claims may be concurrently challenged by government agencies and consumers. Administrative actions brought under FTC and state consumer protection laws can result in civil penalties and force corrective advertising. But as Airborne Health discovered, administrative actions can spur parallel class action suits, as demonstrated by the $30 million settlement of FTC, state attorneys general and class action lawsuits arising from Airborne Health false and deceptive advertising. The FTC and Attorneys General settlement announcement stated that Airborne Health’s deceptive claims that its products could prevent colds and fight germs could not be substantiated by significant scientific agreement.

Avoid Legal Issues Arising From a Failure to Meet Advertised Standards of Care

Marketing materials and admission contracts for health care facilities that offer high quality care, specialized care, levels of staffing or particular health care services can serve as the basis for legal claims if the proffered level of result in the FDA claiming that the product is misbranded and must seek approval as a drug. service isn’t met or if the facility is cited for a failure to meet state or federal standards. Residents, family members, and government agencies may bring lawsuits for false advertising, fraudulent deception, and violations of consumer protection laws.

Family members of a nursing home resident successfully sued the facility for breach of contract based on the facility’s promise in its admissions agreement to provide the resident "with safe and reasonable care in a safe environment" and "services which would . . . maintain the highest practicable, physical, mental, and psychological well being." Following a change in management, the facility sent a letter to residents which stated: "As always, our priority is to provide quality care and provide a safe and comfortable environment for our residents." Following the management change, the facility failed to properly maintain the resident’s quality of care. She suffered various conditions and injuries, including bleeding in the area of her feeding tube and lungs, significant weight loss, choking, bed sores, seizures and labored breathing which lead to her death. The court found that the facility breached its admission agreement by failing to provide safe and reasonable care in a safe environment. The plaintiffs also brought a fraudulent deception claim based on representations in the letter. However, the court held that the representations were merely puffery, so indefinite and elusive in meaning that no person would reasonably rely upon the representations and were not actionable as fraud.

Two class action lawsuits against Extendicare, a Wisconsin-based* chain of nursing homes, were dismissed earlier this year by courts in Minnesota and Washington State because of the vagueness of the plaintiffs’ claims. The lawsuit in Minnesota alleged fraudulent and deceptive trade practices for alleged misrepresentations in marketing materials about the quality of care provided by Extendicare facilities. Extendicare’s website claimed that its facilities "always maintained quality standards above government regulations and this is a tradition that will continue within [its] new operating structure," that Extendicare is "committed to providing health care services in compliance with applicable laws and regulations," and that it has "established rigorous standards to ensure [compliance with] the physical, social, emotional and intellectual needs of residents and health care customers." Extendicare’s admission agreement claimed that the facility would provide "basic room and board, general nursing care, social services, dietary services, and activities as required by law." Although the complaint alleged that the facility was cited by state regulatory officials and was not compliant with all legal standards as promised, the court dismissed the claim. The court found that the marketing language cited in the complaint, such as Extendicare’s commitment to provide quality care — was either puffery or so general and unspecific that no reasonable person would rely upon it. As for the facility’s promise to comply with the law — the court found its promise to be redundant and meaningless since the facility was already required to do so by law.

Last summer, Sun Mar Health Care, a California chain of assisted living facilities, settled a class action lawsuit for $2 million. According to the complaint, the facilities’ brochures advertised high levels of staffing and training but company policy encouraged understaffing. Sun Mar facilities were repeatedly cited for violations of state and federal law.

In a 2004 case, a resident of the Rosewood Care Center, a nursing home in Illinois, and her son sought damages for fraudulent misrepresentations made in marketing materials under the Racketeer Influenced and Corrupt Organizations Act (RICO). The complaint focused on an alleged bait-and-switch scheme related to room pricing, but also contended that marketing materials sent to the resident by mail contained fraudulent misrepresentations, including that the facility provides "high quality care" to residents, a choice of entrée and a nurse maitre d’ at every meal, and unique overlapping staffing with 24/7 RNs and LPNs and that the patient’s medical conditions would be conveyed daily to a physician. The court acknowledged that few of the advertised promises bore fruit but dismissed the case, finding that there was no evidence of racketeering, that the unfulfilled promises were not material to the resident’s admission decision, and that "high quality care" is puffery which cannot support mail fraud.

To avoid expensive and reputation-tarnishing advertising hassles, review all advertising messages to detect any potentially misleading or deceptive content, express or implied. Advertisers are responsible for all possible meanings conveyed — not just the intended message. Puffery should be carefully scrutinized in the context of all advertising messages made by a company to avoid any possible false comparative connotation. should be carefully scrutinized in the context of all advertising messages made by a company to avoid any possible false comparative connotation.

[CORRECTION: An earlier version of this article stated that Extendicare is based in Minnesota. The company is actually based in Wisconsin.]