Covered entities have a long list of laws and regulations governing their conduct, including their communications with patients, customers, and members. Specifically, the Health Insurance Portability and Accountability Act ("HIPAA") permits many such communications, including those about health care products and services, but precludes certain "marketing" communications absent written consent. Recently, however, healthcare providers and health plans have been subject to a spate of class actions alleging violations of the Telephone Consumer Protection Act ("TCPA"), which generally precludes autodialed (or "robo") calls to residential and cellular phones. The TCPA was originally enacted to curtail pesky "telemarketers," but has recently been used to go after a range of other business. The penalties under the TCPA can be substantial – at $500 to $1,500 per phone call, the statutory damages can quickly exceed $100 million.
A recent ruling out of the Central District of California, however, should help beat back these claims against covered entities. In it, the Court held that a reminder call from a health plan to its members during the annual enrollment period was not "telemarketing" under the TCPA even though it referenced the health plan's products. The court concluded, in essence, that because the health plan's communications were intended to be informational and were also in compliance with specific healthcare regulations governing communications with members, the call ought not also be subject to the TCPA. The ruling should provide some comfort to providers and health plans using autodialers to communicate with their members: If those communications comply with HIPAA's regulations governing communications with patients and plan members, they likely will not be subject to further regulation by the TCPA.
In Smith v. Blue Shield of California Life & Health Insurance Company, the plaintiff and her family were members of Blue Shield's health plan, and their plan was set to automatically renew for the following plan year. During the open enrollment period, as required by government regulations, Blue Shield sent plaintiff an information packet in the mail describing the changes to her health plan in the following year, including changes to her premiums and the network's list of providers. The information packet also described Blue Shield's alternate health plans and gave plaintiff and her family an opportunity to switch plans, if necessary.
To ensure that plaintiff and other subscribers opened their information packets during the open enrollment period, Blue Shield placed reminder calls to each member using an autodialer and a prerecorded message. The message reminded members that it "was time to review [their] 2016 health plan options," and that Blue Shield had "mailed [them] information about [their] 2016 plan and benefit changes," and that the information packet "compare[d] [their] current health plan to other options from Blue Shield." The message concluded: "If you have not received your information packet in the mail, or if you have any questions, please call the number on the back of your member ID card."
Plaintiff sued Blue Shield for violation of the TCPA, alleging that the autodialed reminder call to her cellphone, using a prerecorded message, constituted "telemarketing," for which written consent was required. She alleged claims on behalf of a class, the total potential damages for which exceeded $100 million. Blue Shield moved for summary judgment, arguing that the call was only informational, consistent with the required written communications during open enrollment, and not "marketing" under relevant health care regulations. As a result, Blue Shield argued, the call was not "telemarketing" under the TCPA. The Court ruled in Blue Shield's favor.
In the key portion of its decision, the Court held that communications from health plans and other covered entities are already heavily regulated by HIPAA, and if HIPAA did not consider the communication to be "marketing," it would be absurd to rule that the TCPA considered it "telemarketing." "Evaluating Blue Shield's call with a measure of common sense, the Court must conclude that the call is not telemarketing . . . [under the TCPA]. It makes no sense to the Court that a single call tracking Blue Shield's mandatory communications [under government regulation] regarding insurance enrollment and renewal would expose Blue Shield to millions of dollars of liability under the TCPA."
Blue Shield was represented in the lawsuit by Fred Puglisi and Jay Ramsey of Sheppard, Mullin, Richter & Hampton LLP.
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