Applying Consumer Protection Acts Against Doctors

by Leona Egeland Siadek, Vice President, Government Relations

Subsequent to the passage of the Federal Fair Trade Statutes, many states enacted adjunct laws titled “Consumer Protection Act” or “Unfair Competition Law.” These laws were intended to protect the public and businesses from unfair methods of competition and from deceptive or misleading practices during the course of any trade or commerce. Definitions of “unfair” and “deceptive” were varied and often vague. While it is easy to define a violation of weight and measuring rules, it is only by applying common-law doctrines that other violations can be judged.

The current Federal Trade Commission (FTC) definition of an unfair act is one that “causes or is likely to cause substantial injury to consumers, that cannot be avoided by consumers, and that is not outweighed by countervailing benefits to consumers.” The FTC defines a deceptive act as one where there is “a material representation, omission, or practice that is likely to mislead a reasonable consumer.” Enforcement of the federal law may be made only by government agencies. Forty-eight states have laws of “private enforcement” by a lawyer (without a client) suing on behalf of the general public. Many state laws allow suing even when there is no evidence of harm or financial loss.

With the advent of state laws restricting medical malpractice claims, trial lawyers have focused their efforts on the legal rights of consumers injured by improper delivery of medical services. They are also seeking redress from doctors for “unfair and deceptive” business practices in violation of state consumer protection acts.

The Washington State Court of Appeals in Quimby v. Fine was the first court to address whether state consumer protection laws could be applied to doctors. In this complicated case, the doctor substituted procedures during a tubal ligation without advising the patient of the risks or alternatives. Ten months after surgery, a baby with multiple birth defects was born and lived for 10 months.

The patient sued for wrongful birth and negligence. She also filed an unfair and deceptive trade practice claim alleging that the negligence and lack of informed consent constituted deceptive trade practices. The court held that negligence was not within the scope of the state’s consumer protection act. They ruled, however, that the doctor’s failure to disclose accurate medical information was part of the doctor’s entrepreneurial activities— in other words, it was part of trade or commerce and thus within the scope of Washington’s law.

A Texas court held that a dentist made false statements regarding his expertise in wisdom tooth extraction and the use of general anesthesia and that this deception was a violation of the Texas Deceptive Trade Practices Act (Chapman v. Wilson). The court later ruled in Sorokolit v. Rhodes that a deceptive trade practice act claim was valid against a doctor who guaranteed the patient that she would look exactly like a breast augmentation photograph shown to her.

In Pennsylvania, the court ruled with the medical doctor when the patient did not lose weight after surgery (Gatten v. Merzi), and, in Ohio, the court held that doctors are expressly excluded from coverage under the Ohio Consumer Sales Practices Act.

Doctors have been sued under consumer protection laws within the last few years for purporting to prescribe controlled substances illegally, for using defective implants or devices, for performing unnecessary surgeries for financial gain, and for false advertising. Current cases are pending in Washington, Oregon, Kentucky, Tennessee, and Connecticut.

Following a positive ruling in Kansas that a patient injured as a result of alleged medical negligence can also file suit under the state’s consumer protection act (Williamson v. Amrani), other state supreme courts will most likely be asked to rule in similar suits. After the court rendered its decision, the Kansas legislature, governor, and provider associations engaged in lengthy negotiations. In 2007, the legislature passed H.B.2451, which excluded licensed health care providers from the provisions of the Consumer Protection Act for causes of action resulting from medical negligence.

Federal Issues
Regulations for the Patient Safety Act of 2005 were finally proposed, and The Doctors Company submitted comments. Among our comments, we stressed that adopted regulations should not increase provider liability during transmittal of patient medical information.

As reported in the first-quarter issue of The Doctor’s Advocate, several 2007 measures on medical liability reform and on electronic medical records remain technically available for consideration. With a congressional focus on the long-term financial outlook for Social Security and Medicare, it is doubtful that House and Senate leadership will be interested in adopting any of the open legislative proposals.

With a July 1 cut in Medicare fees still scheduled, solving the issue of adequate reimbursement for doctors providing services is of paramount importance. H.R.5480 (Hoyer of Maryland) and S.2662 (Baucus of Montana) were introduced to address the shortfall in Medicare funding. President Bush sent Congress a list of proposals that would minimize the shortfall. The language included a number of MICRA-like provisions, which Hoyer and Baucus duplicated in their bills. While the procedural rules of both houses require action to correct the Medicare shortfall, Democratic leadership is not anxious to bring up the president’s proposals on medical liability as the 2008 elections draw closer.

Wisconsin Senator Herb Kohl introduced S.2449 in early 2008. Known as the Sunshine Litigation Act, the bill is modeled after a Florida law that prevents judges from sealing court records except under extreme situations. The Kohl bill also contains language eroding arbitration.

State Actions
States vary widely in the timing of their legislative sessions. Some states meet only every other year, and others have legislative sessions that run for an entire year. Currently, we are following numerous bills.

In Virginia, the 2008 legislative session is over. H.B.1282 (Athey) was defeated. The bill would have severely limited The Doctors Company’s flexibility during settlement negotiations. Governor Tim Kaine signed two bills. H.B.616 (Amundson) gives a one-year extension of the statute of limitations when a doctor communicates a cancer diagnosis to a patient. H.B.501 (Hamilton) expands the definition of “professional services” in the context of medical malpractice actions.

No legislation was introduced to address the issue of the state’s monetary cap on economic damages awards reaching its legal maximum amount on July 1. This issue will be addressed by the 2009 legislature.

The Texas legislature will not convene again until 2009, but there is significant movement to undermine the 2003 and 2004 reforms. The major areas of concern are reducing ER and trauma center protections, eliminating expert witness standards, and increasing the noneconomic cap.

In Colorado, changes in the governor’s office and in the legislature brought renewed efforts by the plaintiffs’ attorneys to raise the noneconomic cap in medical malpractice actions. S.B.164 (Groff) proposed raising the cap by more than 50 percent, making it per-defendant rather than per-incident, and allowing unlimited damages for physical impairment or disfigurement (undefined) that are separate from the cap.

The bill would have also required insurers to bear increased losses without increasing premiums until the company’s assets became so depleted that the insurance commissioner had to step in. This provision guaranteed that insurers would eventually have to choose between leaving the market or insolvency. We participated with COPIC, the Colorado Medical Society, and the state Ob/Gyn association in a successful, coordinated effort to defeat the bill.

In Washington, H.B.1873 was a 2007 House Appropriations Committee bill still in play that attempted to expand wrongful death liability and to increase economic damages in civil suits. We worked with the Washington Liability Reform Coalition and other tort reform supporters to fight the bill.

On March 6, the Florida Supreme Court struck down parts of a 2005 statute that had amended a 2004 ballot measure establishing a patient’s constitutional right to access records of adverse incidents. The statute created limitations to the access provisions of the initiative. The court ruled that patient access was extended to records already in existence at the time the ballot measure passed and that the 2005 limits enacted in the statute were unconstitutional. The case is Florida Hospital Waterman, Inc. v. Teresa M. Buster, et al., and Notami Hospital of Florida, Inc. v. Evelyn Bowen, et al.