Sixth Circuit Says Informational Fax Isn't an "Ad"--Sandusky v. Medco

Sixth Circuit Says Informational Fax Isn’t an “Ad”–Sandusky v. Medco

Medco is a “pharmacy benefit manager” (an intermediary between employers/health plan sponsors and drug companies). It sent two faxes to Sandusky Wellness Center, a health care provider, advising that many Sandusky patients had adopted Medco’s formulary, and encouraging Sandusky to prescribe “plan-preferred drugs”. Sandusky sued under the TCPA, which prohibits the transmission of unsolicited advertisements to fax machines.

The key question was whether the faxes in question were “ads”. The court says no. The definition in the statute says that an ad is any material advertising “the commercial availability or quality of any property, goods, or services.” Advertising is “the action of drawing the public’s attention to something to promote its sale.” (Black’s) While it’s obvious the everyday McDonald’s commercial is an ad, the faxes in question can’t quite fit into this category. Medco wasn’t offering its services or any drugs that Medco offered for sale. Nor did it have any interest in soliciting business from Sandusky:

[t]he 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.

The court cites to other on-point cases, including those that involve faxes about reclassifications of drugs (without reference to where the drugs were available for purchase) and one that found a fax from a PPO to a non-participating provider was not a fax where it did not promote the benefit of becoming a member.

The FCC has issued guidance on “incidental” ads and the court says that its conclusion here, because it is based on the unambiguous language of the statute, allows it to sidestep the issue of whether to defer to the agency’s determination on this issue. In any event, the court says that its conclusion is in line with the agency guidance, which says among other things that purely informational faxes which contain “only information, such as industry news articles, legislative updates, or employee benefit information” are not ads.

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Whether something is an “advertisement” is an interesting question that is addressed less often than one would think. Here, the fax undoubtedly has some benefit to Medco, but the court says that it is not a fax because it doesn’t list any products or services that Medco offers for sale.

Two other notable cases in this arena both involve attorney advertising. In Holtzman v. Turza, the court said that a ghostwritten “newsletter” was an ad, perhaps due to the fact that the attorney-putative author’s contact information occupied a large part of the fax. Stern v. Bluestone [pdf] held that “malpractice reports” sent out by an attorney were not ads notwithstanding that they may have incidentally advertised the lawyer’s services or promoted his expertise. I think what made this case somewhat easier was the fact that Medco could not have a direct client relationship with the recipient nor did it offer products that the recipient could buy directly from Medco.

Eric’s Comment: In what decade is ***fax*** the best way for Medco to communicate this information to Sandusky? Hint: not the 2010s. #SMH

Case Citation: Sandusky Wellness Center v. Medco Health Solutions, No. 14-4201 (6th Cir. June 3, 2015) [pdf]

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