D.C. Circuit Shuts Down Rite Aid’s Challenge to Expand Healthcare Exemptions under the TCPA and HIPAA

On March 16, 2018, the U.S. Circuit Court of Appeals for the District of Columbia issued a groundbreaking decision in ACA Int’l v. FCC, No. 15-1211, 2018 U.S. App. LEXIS 6535 (D.C. Cir. Mar. 16, 2018) (“ACA Int’l“) that raises a number of questions regarding the future of the Telephone Consumer Protection Act (“TCPA”). See “Your Definitive Guide to the ACA Int’l Ruling: The Top 10 Things Every TCPAlander Needs to Know Now.” The ACA Int’l decision, however, left certain healthcare communications intact, while also establishing the test for determining whether a party is an “aggrieved party” for purposes of challenging orders issued by the Federal Communications Commission (“FCC”). Before delving further into the ACA Int’l decision, a brief overview of the TCPA regulatory landscape will be examined to fully assess the implications of ACA Int’l for the healthcare industry.

An Overview of the Telephone Consumer Protection Act, the Healthcare Industry and Damages

The TCPA generally prevents calls to cell phones made using an automated telephone dialing system (“ATDS”) without the prior express consent of the “called party.” 47 U.S.C. § 227(b)(1)(a)—so we think. See “D.C. Circuit Court of Appeals Sets Aside FCC’s Definition of ‘Called Party’ Under the TCPA—What Comes Next?” This means hospitals and healthcare organizations that send communications by telephone, text, or fax to consumers, patients, or other businesses must obtain prior express consent to do so. However, such healthcare organizations must also be mindful of the regulations set forth in the Health Information Portability and Accountability Act (“HIPAA”) that apply to communications pertaining to patient care. Pub. L. 104-191, 110 Stat. 1936 (1996).

Failure to comply with both the TCPA and HIPAA can result in the imposition of significant penalties. For example, the TCPA applies a $500.00 penalty for each violation. In some instances of a willful and knowing violation of the TCPA, the penalty can be trebled, resulting in a $1,500.00 penalty. See Kolinek v. Walgreens, Case No. 1:13-cv-4806 (N.D. Ill. 2015)(settling TPCA class action for $11 million dollars); Lees v. Anthem Insurance Cos., Inc., Case No. 4:13-cv-1411 SNLJ (E.D. Mo. 2015) (settling TCPA class action for $6.25 million dollars). As for HIPAA, a violation can involve both civil and criminal penalties and ranges anywhere from $100.00 to $50,000 per violation depending on the degree of negligence. 42 U.S.C.A. § 1320d-5.

Current Exemptions to Healthcare Communications

In light of these significant penalties and the recognition that certain healthcare communications provide “vital, time-sensitive information patients welcome, expect, and often rely on to make informed decisions,” the FCC—the federal agency that has the administrative authority to interpret and enforce the TCPA[1]—established certain exemptions from TCPA liability.  ¶ 144. The FCC based its authority on the fact that section 227(b)(2)(B) allows two types of calls to be exempted: “(i) calls that are not made for a commercial purpose, and (ii) such classes or categories of calls made for commercial purposes as the Commission determines (I) will not adversely affect the privacy rights that this section is intended to protect; and (II) do no include the transmission of any unsolicited advertisement.”

The 2012 Order

In 2012, the FCC specifically exempted “from TCPA requirements prerecorded calls to residential lines made by healthcare-related entities governed by [HIPAA].” In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991 (“2012 Order”), 27 FCC Rcd. 1830, ¶ 57. These exemptions include, but are not limited to, immunization reminders, prescription refills, post-hospital discharge follow-up, medical supply renewal requests, and generic drug migration recommendations. Id. ¶ 60, fn. 176.

The 2015 Declaratory Ruling

In 2015, the FCC issued its Declaratory Ruling in response to a number of healthcare and business entities seeking clarification regarding certain requirements and ambiguities under the TCPA. American Association of Healthcare Administrative Management, Petition for Expedited Declaratory Ruling and Exemption, CG Docket No. 02-278, filed Oct. 21, 2014 (AAHAM Petition); United Healthcare Services, Inc., Petition for Expedited Declaratory Ruling, CG Docket No. 02-278, filed Jan. 16, 2014 (United Petition). More specifically, the 2015 Declaratory Ruling clarified consent requirements and established scenarios and factors in which a telephone call is considered made for exigent or healthcare-related purposes.

With respect to consent, the FCC found that the provision of a phone number by a patient to a healthcare provider constitutes prior express consent. In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991 (“2015 Declaratory Ruling”), 30 FCC Rcd. 7961, 7970 at ¶ 141.The ruling also permits third parties to provide consent for a patient who may be mentally incapacitated. Id. at ¶ 142. However, the consent provision only applies narrowly to healthcare-related messages.

The following demonstrate acceptable situations in which telephone calls made to wireless numbers are exempt for exigent or a healthcare treatment purpose: (1) post-discharge follow-up; (2) prescription notifications; (3) wellness check-ups; (4) lab results; (5) pre-operative instructions; (6) home healthcare instructions; or (7) appointment and exam confirmations and reminders. Id. at ¶¶ 141, 146. The calls must be made by covered entities and their business associates (as defined by HIPAA). Id. at ¶ 141. The FCC also found that HIPAA’s privacy rules will control the content of the informational information where applicable. Id. at ¶ 146.

The FCC also adopted seven conditions for each exempted call, voice call, or text message that is made by or on behalf of a healthcare provider:

  1. The voice call or text message needs to be sent to the wireless phone number that the patient provides. As to text messages, the patient cannot be charged, nor can the text be counted against the limits of a wireless telephone plan.
  2. The name and contact information of the healthcare provider or organization must be stated at the outset of a voice call or prominently noted within a text message.
  3. The voice call or text message must comply with HIPAA privacy rules and cannot include telemarketing, solicitation, or advertising content, nor can it pertain to accounting, debt collection, or other financial information.
  4. The message needs to be concise, e.g., one minute or less for voice calls and 160 characters or less for text messages.
  5. Healthcare providers are limited to one voice call or text message a day, up to a maximum of three combined calls / messages per week per provider.
  6. Recipients need to be offered an easy “opt-out” option within each message, e.g., a press-activated mechanism or a toll-free number for voice calls, and replying “STOP” for text messages.
  7. All opt-out requests must be honored immediately.

Id. at ¶ 147.

ACA Int’l Upholds the Current Healthcare Exemptions under the TCPA and HIPAA

In ACA Int’l, Rite Aid unsuccessfully challenged the scope of the FCC’s exemption regarding certain healthcare-related calls. In particular, Rite Aid argued that the TCPA’s exemption for certain healthcare-related communications is unlawful because it conflicts with HIPAA. Rite Aid then argued that the TCPA exemption for health-related calls is arbitrary and capricious. The D.C. Circuit rejected both arguments, resulting in no change in the law.

The TCPA and HIPAA Coexist Peacefully

The D.C. Circuit found in ACA Int’l that the TCPA and HIPAA regulations exist coextensively with one another, as “[t]he two statutes provide separate protections.” ACA Int’l, 2018 U.S. App. LEXIS 6535, at *62 (quoting Mais v. Gulf Coast Collection Bureau, Inc., 768 F.3d 1110, 1125 (11th Cir. 2014)). Thus, Rite Aid’s argument that the TCPA exemptions violate HIPAA because they do not include communications relating to billing, account information, or payments is simply untenable. The D.C. Circuit further reasoned that if Rite Aid’s position were correct, it would frustrate the purpose of the TCPA—namely, because healthcare providers could contact wireless users to no end using ATDS equipment without being subject to TCPA liability.

Exemptions for Landlines and Wireless Phones are Not Inherently Contradictory

As for the healthcare message exemption being arbitrary and capricious, Rite Aid argued that the FCC acted arbitrarily and capriciously when it provided a broader exemption for healthcare messages to residential phone lines (2012 Order) and a narrower exemption for healthcare-related calls to wireless numbers (2015 Declaratory Ruling). The D.C. Circuit found “nothing inherently contradictory about easing restrictions on certain kinds of calls to landlines, but not to cellular phones.” ACA Int’l, 2018 U.S. App. LEXIS 6535, at *66. In reaching this conclusion, the D.C. Circuit cited to the FCC’s finding that messages that are not critical or vital to an individual’s health “do not justify setting aside a consumer’s privacy interests,” suggesting the FCC affords greater privacy interests in wireless phone numbers than landlines. Id. (citing 2015 Declaratory Ruling, at ¶ 146).

All Healthcare-Related Calls Do Not Satisfy the “Emergency Purposes” Exception

In Rite Aid’s last-ditch effort to have the D.C. Circuit expand healthcare exemptions under the TCPA, Rite Aid argued that the FCC acted arbitrarily when it excluded communications pertaining to billing, account information, and payment information. Rite Aid further argued that these types of communications fall within the TCPA’s exception for “emergency purposes.” The exception states “emergency purposes mean calls made necessary in any situation affecting the health and safety of consumers.” 47 C.F.R. § 64.1200(f)(4). The D.C. Circuit did not find this persuasive, as Rite Aid failed to identify any calls that satisfy the exception that were not already covered by the 2015 Declaratory Ruling. Moreover, the D.C. Circuit found communications regarding accounting, billing, and payment information to be necessary to the continuity of healthcare delivery, but “not critical.” As such, the court rejected this argument as well.

The ACA Int’l Decision Also Establishes an Important Bright Line Procedural Rule for Challenges to FCC Orders 

It has long been held that an “aggrieved party” can challenge declaratory rulings or orders issued by an agency. 28 U.S.C. § 2344. Nonetheless, the contours of who precisely qualifies as an “aggrieved party” had not been articulated in the case law. That changed significantly with the ACA Int’l decision. In examining Rite Aid’s challenges, the D.C. Circuit held that Rite Aid fell within the definition of an “aggrieved party” by simply commenting on a petition in agency proceedings that result in a declaratory ruling. Notably, Rite Aid did not author the petition. The court found that “our decisions have recognized that ‘party aggrieved’ means a party who has ‘made a full presentation of views to the agency.’” ACA Int’l, 2018 U.S. App. LEXIS 6535, at *61 (quoting Water Transp. Ass’n v. ICC, 819 F.2d 1189, 1193 (D.C. Cir. 1987)). By merely commenting on another party’s “petition for a rulemaking or declaratory ruling,” the D.C. Circuit found Rite Aid had “‘present[ed] its view to the agency [so as] to qualify as’” an aggrieved party. ACA Int’l, 2018 U.S. App. LEXIS 6535, at *61.

The effect of this procedural rule is significant, as it serves to lower the bar for individuals or entities seeking to obtain “aggrieved party” status in order to challenge final rulemaking or declaratory rulings from agency proceedings.

[1] Leyse v. Clear Channel Broad., Inc., 697 F.3d 360 (giving Chevron deference to FCC’s interpretation of TCPA).

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