27 Jul Tennessee Consumer Protection Act Recently Extended To Physicians
Tennessee Consumer Protection Act Recently Extended To Physicians
By Judy Regan, MD, JD, MBA, and Edward Hadley, JD
The current Federal Trade Commission (FTC) defines an unfair act as 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.” Since enforcement of the federal law may be made only by government agencies, many states have enacted adjunct laws titled “Consumer Protection Act” or “Unfair Competition Law.” Even though these laws were intended to protect the public from unfair methods of competition as well as deceptive or misleading practices during the course of any trade or commerce, the definitions of “unfair” and “deceptive” can be varied and often vague.i Plaintiff lawyers have focused their efforts on the legal rights of consumers injured by improper delivery of medical services seeking redress from doctors for “unfair and deceptive” business practices in violation of state consumer protection acts. As a result, physicians have been sued under these laws within the last few years alleging illegal prescribing of controlled substances, using defective implants or devices, performing unnecessary surgeries for financial gain, and advertising falsely.ii The Tennessee Court of Appeals has recently held that patients may pursue Tennessee Consumer Protection Act (TCPA) claims against healthcare providers.iii Practitioners should be aware of the types of conduct that may give rise to TCPA claims, make disclosures and avoid representations to minimize exposure to TCPA claims, and examine insurance policies for applicable coverage.
STATE APPLICATION OF CONSUMER PROTECTION LAWS TO PHYSICIANS
Although historically there was a learned profession exemption from liability under the federal antitrust laws, that exemption was eroded by Goldfarb v. Virginia. iv In Goldfarb, the United States Supreme Court recognized that the Sherman Antitrust Act contained no express exception for professionals. After Goldfarb, some states specifically exempted certain professions from the coverage under their consumer protection or deceptive trade practice acts (CPA or DTPA).v Most states have left it to the courts to determine whether physicians fall within the coverage of their consumer protection or deceptive trade practice acts.vi Although the issue has been widely litigated, many courts have interpreted the applicable statutory language as exempting a physician’s professional conduct within the actual practice of medicine but not the entrepreneurial or business aspects of those practices.
The Washington State Court of Appeals in Quimby v. Fine first addressed whether state consumer protection laws were applicable to physicians. In this case, the physician was found to have substituted procedures during a tubal ligation without advising the patient of the risks or alternatives. Ten months after surgery, a baby was born with multiple birth defects and lived for 10 months. The plaintiff brought an action for negligence and unfair and deceptive trade practices under the Washington CPA against the doctor based on theories of liability, negligence, and lack of informed consent. The defendant doctor argued that the Washington CPA did not apply to either claim. The Quimby court cited Short v. Demopolis, 103 Wash. 2d 52, 61, 691 P.2d 163 (1984), a case which held that “certain entrepreneurial aspects of the practice of law may fall within the ‘trade or commerce’ definition” of the Washington CPA. Quimby concluded that although the plaintiff’s negligence claim did not fall within the scope of the Washington CPA “because it relates to the actual competence of the medical practitioner,” the plaintiff’s lack of informed consent claim could fall within the scope of the Washington CPA “if it relates to the entrepreneurial aspects of the medical practice.” The court stated that a claim for lack of informed consent was not limited to a breach of the standard of care but “can be based on dishonest and unfair practices used to promote the entrepreneurial aspects of a doctor’s practice, such as when a doctor promotes an operation or service to increase profits and the volume of patients, then fails to adequately advise the patient of risks or alternative procedures.” Therefore the court held that although negligence was not within the scope of the state’s consumer protection act, the doctor’s failure to disclose accurate medical information was part of a trade or commerce (the doctor’s entrepreneurial activities) and within the scope of Washington’s law.
Other states have also held that consumer protection laws can apply to misrepresentations made in professional practice. In New York’s Karlin v. IVF America, Inc., the court found that patients of in vitro fertilization program “who alleged that program had disseminated false success rates for program and misrepresented health risks presented” could maintain an action against for deceptive practices and false advertising and were not limited to a medical malpractice claim based on lack of informed consent.
In Texas’ Rhodes v. Sorokolit, the court found a Texas DTPA cause of action existed against a plastic surgeon for misrepresentation and breach of express warranty where the plastic surgeon “promised patient’s breasts would look just like those in Playboy picture and affirmatively stated there would be no problems with scarring or capsulization of implants.” And in Chapman v. Paul R. Wilson, Jr., D.D.S., the Texas court also held that the Texas Medical Liability Act provision which exempts medical negligence from coverage under Texas DTPA did not also extend protection for a physician’s misrepresentations as to services to be provided. Here the defendant allegedly misrepresented expertise in wisdom teeth extraction and stated that general anesthesia would be used, and the plaintiff could bring a DTPA claim.
In Williamson v. Amrani, a Kansas court found that a patient injured as a result of alleged medical negligence can also file suit under the state’s consumer protection act. Here, the patient, Williamson, alleged the defendant doctor “represented that the surgery he was recommending had a high likelihood of successfully relieving her pain when, in fact, that surgery had been unsuccessful in the majority of cases.” After the court rendered its decision, the Kansas legislature passed H.B.2451, excluding licensed healthcare providers from the provisions of the Consumer Protection Act for causes of action resulting from medical negligence.
THE TENNESSEE CONSUMER PROTECTION ACT
The Tennessee Consumer Protection Act was enacted in 1977 and allows consumers to sue businesses for “unfair or deceptive acts,” which are prohibited by the act. In addition to generally prohibiting “any other act or practice which is deceptive to the consumer or to any other person,” the act specifically prohibits a long list of conduct ranging from misrepresenting the geographic location of a florist to turning back car odometers. TCPA claims differ from medical malpractice claims. Under the TCPA, a consumer must only prove that the healthcare provider engaged in an act or practice that was deceptive to the consumer or any other person and that he or she sustained injury or damage as a result. Under the Medical Malpractice Act a patient must prove the healthcare provider deviated from the recognized standard of acceptable professional practice and that deviation proximately caused an injury that would not otherwise have occurred. Notably, no expert proof is necessary to establish a TCPA claim whereas expert proof is almost always required to establish a medical malpractice claim. Damages recoverable in each type of suit are also different. Consumers who successfully prosecute TCPA claims may recover attorneys’ fees and a punitive award up to three times the amount of compensatory damages, in addition to compensatory damages. By contrast, patients who successfully prosecute medical malpractice cases may recover compensatory damages for their injury; however, they may not recover attorneys’ fees and may recover punitive damages only if the error or omission rises to the level of intentional, fraudulent, malicious, or reckless conduct.
In Proctor v. Chattanooga Orthopaedic Group, P.C., the Tennessee Court of Appeals held that the TCPA may apply to the entrepreneurial, commercial, or business practices of a medical practice. Notably, the patient did not allege medical malpractice but instead alleged the defendants had misled the patient in order to keep the patient’s business by substituting another surgeon when the initial physician was unavailable, and by charging the patient and the patient’s insurer for a more expensive surgical procedure than the one actually performed. Although the Court held that physicians were subject to the TCPA, the Court was careful to confirm that medical malpractice claims may not be merely recast as Tennessee Consumer Protection Act claims. These two types of claims are wholly separate and distinct claims governed by separate statutory schemes. A discussion of the Proctor case helps to illustrate the differences in these two types of cases.
The Proctor case arose out of a shoulder surgery. The patient was initially seen by Physician A, who was employed by the practice entity. Over several years, Physician A performed a right rotator cuff repair and a left shoulder arthroscopic debridement. Ultimately, the patient elected to undergo a total shoulder arthroplasty to be performed by Physician A. The surgery was scheduled but before it was performed, Physician A left the group practice and Physician B performed the procedure. However, Physician B performed a hemi-arthroplasty rather than a total shoulder arthroplasty. Also, Physician B’s operative report stated that a total shoulder arthroplasty was performed and the practice entity billed the patient’s insurer for a total shoulder arthroplasty rather than the cheaper hemi-arthroplasty. The Court found these actions were sufficient to support claims under the TCPA that the defendants had misled the patient in order to keep the patient’s business and that the defendants charged for a more expensive procedure than the one actually performed. Because the case had been dismissed by the trial court before trial, it was remanded to the trial court to proceed to trial.
The extension of the Tennessee Consumer Practice Act to physicians raises several important considerations for practitioners. First, marketing materials should be examined. Physician marketing has become more common. Marketing companies are usually unaware of consumer protection laws and rely upon the physician to verify content. Statements made in marketing pamphlets, in advertisements, on web sites, on signs, or elsewhere may serve as the basis for a TCPA claim. Practices should review their marketing materials to ensure that representations match practices. Second, physicians should advise patients that other physicians may be “on call” and see the patient in an emergency. Most obstetricians are careful to explain to their patients that they may not actually perform the delivery. All physicians will want to be sure to document such communications to the patient in the medical record. Physicians should also consider including this documentation in the informed consent forms or initial patient intake documentation. Third, mid-level providers are being utilized in many specialities and physicians should consider disclosing and documenting the fact that mid-level providers may provide certain therapeutic services. Fourth, surgeons should consider discussing and documenting the potential for departure from the planned procedure based upon intraoperative findings. Fifth, all practitioners should examine their chart and bill auditing procedures and other controls. Most practitioners recognize that errors in charting and billing can give rise to civil and criminal liability under the Federal False Claims Act and other federal laws. However, the Proctor case now creates additional liability to private litigants for the same errors. Finally, practitioners should examine their medical malpractice and other insurance coverages to determine whether their policies provide coverage for TCPA claims. Depending upon policy language, TCPA claims may not be covered by a medical malpractice insurance policy; the same may go for commercial general liability insurance policies. When no coverage is afforded by either policy, a physician and/or practice may be faced with the cost of paying any judgment against the physician and/or practice, their own attorneys’ fees to defend a TCPA claim, and the plaintiff’s attorneys’ fees.