Court Finds Calls Regarding Medicaid Coverage Not Telemarketing

by Manatt, Phelps & Phillips, LLP

Manatt, Phelps & Phillips, LLP

A Nevada federal court granted summary judgment in favor of a Telephone Consumer Protection Act (TCPA) defendant after concluding that the plaintiff granted prior express consent to be contacted when she provided her phone number on a hospital registration form.

In July 2014, Charletta Williams obtained medical care at the emergency room at Desert Springs Hospital in Las Vegas, NV. When she arrived, she provided personal information including her name, Social Security number, address, birth date and phone number. After being seen and treated, Williams proceeded to the discharge booth, where she was given paperwork.

One of the documents she signed was a Consent Form that authorized the hospital (and its agents and third-party collection agents) to contact her by the telephone number she provided on her arrival, including the use of prerecorded and autodialed messages.

Over the next few weeks, Williams received five prerecorded calls to her cellphone from Adreima, a third-party contractor with the hospital. Adreima contacts any patients who do not have insurance and/or cannot pay their hospital bills and attempts to help them obtain insurance or assistance for payment (such as through Medicaid). Adreima is paid by the hospital when patients pay their bills.

Williams sued both the hospital and Adreima under the TCPA, arguing that she never consented to receive the calls.

U.S. District Judge Richard F. Boulware undertook a two-part inquiry. Prior express written consent is required for all telemarketing and advertisement calls under the statute. But did Adreima’s calls constitute an advertisement? The TCPA defines an “advertisement” as “any material advertising the commercial availability or quality of any property, goods, or services,” and courts have interpreted this to include “dual purpose” calls, those with both a customer service or informational component and a marketing component.

Williams argued that the contract relationship between the hospital and Adreima transformed the calls into advertising. The defendants objected, relying on the content of the calls—helping individuals sign up for a government program like Medicaid—instead of their relationship.

Agreeing with the defendants, the court found that Adreima’s calls regarding Medicaid and/or charitable health coverage did not constitute “advertising the commercial availability” of any good or service.

“Medicaid is not a ‘commercially available’ program under the plain meaning of that phrase, as it is used to define ‘advertising,’” the court said. “Medicaid is a non-market-based, public program, in which the government of a state subsidizes medical care for only certain citizens who meet specific requirements. It is immaterial that Adreima may be paid when a called customer signs up for Medicaid and Medicaid payments for that person are made to the hospital—the call cannot be an advertising call if it does not promote a commercially available property, good, or service.”

This conclusion was “inform[ed]” by the FCC’s 2015 order that created a medical exigency exception to the TCPA’s requirements, the court added. There, the agency reviewed a petition that asked the FCC to exempt from the prior express consent requirement certain non-telemarketing healthcare calls.

Although the FCC recognized the exigency and public interest in certain categories of healthcare calls (prescription notifications and discharge follow-up calls, for example), it did not include calls regarding account communications and payment notifications. However, the FCC also did not explicitly deny the request as to that type of call either, Judge Boulware said.

“The FCC appeared to articulate a standard for its public policy/exigency exemption, that the call must have a ‘true healthcare treatment purpose,’” the court wrote. “The Court finds that the calls at issue here have a healthcare treatment purpose. It is possible that Medicaid coverage could apply retroactively and cover Plaintiff’s prior treatment, and it is clear that coverage would encourage and enable follow-up treatment and future treatment, and also have the public policy benefit of increasing the likelihood of preventative care.”

Because the calls at issue were not telemarketing calls, prior express consent was sufficient to satisfy the requirements of the TCPA, and the court had little trouble finding the standard was met.

“In light of the limited transactional context of the initial giving of the number upon going to the hospital treatment, the Court finds that Plaintiff consented to calls regarding core treatment issues, as well as to payment for her treatment, and payment for follow-up or future treatment,” the court said. “In the absence of contrary intent, where an uninsured person seeks and receives treatment, it is reasonable to expect that a hospital that has been provided contact information would reach out regarding payment and/or insurance.”

To read the order in Williams v. National Healthcare Review, click here.

Why it matters: The question of what constitutes an “advertisement” is often a tricky one, especially in the context of healthcare-related calls. Here, the court took a close read of the definition of “advertisement” under the statute and concluded that because Medicaid is a non-market-based public program where the government subsidizes medical care for only certain citizens who meet specific requirements, the calls did not constitute advertising or telemarketing under the TCPA. Buoying this position is a 2015 FCC order that created an exemption for certain types of healthcare-related calls.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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