Lab Charged With Sending Unsolicited Faxes

A Minnesota laboratory facing a class action lawsuit over unsolicited facsimile advertisements it sent to an Ohio clinic, Sandusky Wellness Center LLC, in February 2012 lost its motion for summary judgment, according to court documents filed on Dec. 5 in a Minnesota district court.

Medtox Scientific Inc., Medtox Laboratories Inc., and John Does 1-10, the defendants in the case, may have violated the federal Telephone Consumer Protection Act (TCPA) when they sent an advertisement for blood lead testing without the recipient’s prior permission or invitation, which subjects them to statutory damages of at least $500 per violation.

The court may grant summary judgment if the movant, Medtox in this case, shows that there are no material facts in dispute. According to Sandusky’s response to the Medtox motion for summary judgment, there are 18 disputed facts in the case.

Consumer Protection Against Unsolicited Facsimile Ads
The TCPA says that unsolicited faxes, referred to as junk faxes, damage recipients because they lose the use of their fax machine and waste paper and ink toner. Recipients also lose valuable time that would have been spent on something else, and their privacy is interrupted. In addition, these faxes prevent the fax machine from being used for authorized purpose and for sending authorized faxes. Finally, determining the source and purpose of the unsolicited fax wastes additional human resources such as labor.

acts Remain in Dispute
On or about Feb. 21, 2012, Medtox sent a fax to Sandusky’s fax machine that was an advertisement for a Medtox blood test for lead. According to Medtox, the number used for the fax belonged to Dr. Bruce Montgomery and was obtained by a sales representative for Medtox from a third party directory called CareSource. The fax was allegedly sent without a cover sheet and did not identify Montgomery as the intended recipient. Neither Sandusky nor Montgomery gave permission for Medtox to use the fax number for advertising its products. Based on information and belief, Medtox also allegedly sent the advertisement to more than 39 other recipients without permission. The facsimiles did not display an opt-out notice as is required by law. All of the above allegations would constitute violations of the TCPA.

The class is made up of all persons who, on or after four years prior to the filing of the lawsuit, received facsimiles of material advertisement on behalf of Medtox, which did not have prior invitation or permission and whose ads did not contain the required opt-out notice. However, the court denied class certification in an Aug. 5, 2014, ruling. Sandusky retains the right to appeal that ruling at a later date.

In its answer to the first amended complaint in the suit, Medtox “denies each and every statement, allegation, matter, and thing contained in the Amended Complaint except as hereinafter specifically admitted, qualified, or alleged.”

Professional Plaintiff Intercepted Fax
In a memorandum of law in support of its motion for summary judgment, Medtox alleges that the plaintiff intercepted the fax intended for Montgomery for the purpose of filing the TCPA legal action. The document further alleges that Sandusky has been involved in at least nine putative TCPA class actions all filed by the same attorney. This same document says that Medtox offered Sandusky a payment in the amount of $3,500 to settle the case but that Sandusky rejected the offer. The letter enclosed with the check does not admit any liability and denies it sent an illegal fax. It also promises not to send “another facsimile to the plaintiff in violation of any law.”

The Latest Documents Leave Case in Limbo
The latest document in the case is the plaintiff’s response in opposition to Medtox’s motion for summary judgment. Still pending is Sandusky’s potential appeal of the earlier denial of class certification, which must be resolved before certain other aspects of the case can move forward. In this case, an employee of the laboratory took an action that has the potential to seriously impact the future of the laboratory.

Compliance officers worry about whistleblowers and False Claims Act lawsuits; they should also be concerned with the actions of individual employees. Ongoing compliance training can help minimize this risk.

Takeaway: The variety of potentially applicable laws and regulations to clinical laboratories means that it is more important than ever that employees understand the importance of checking with their compliance officer when they contemplate any new actions.

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