Supreme Court Strikes Down Vermont Prescriber Data Privacy Law . . .

This posting was written by Thomas A. Long, Editor of CCH Privacy Law in Marketing.

A Vermont statute regulating the collection and use of data identifying health care providers’ prescribing patterns impermissibly restricted data mining companies’ free speech rights in violation of the First Amendment, the U.S. Supreme Court has determined.

The challenged statute banned the sale, transmission, or use of prescriber-identifiable data (“PI data”) for marketing or promoting a prescription drug unless the prescriber gave consent.

Freedom of Speech

The statute imposed content- and speaker-based burdens on protected expression, so it was subject to heightened judicial scrutiny, the Court said. The creation and dissemination of information were speech for First Amendment purposes.

The law forbade the sale of PI data subject to exceptions based in large part on the content of a purchaser’s speech. It then barred pharmacies from disclosing the information when recipient speakers would use that information for marketing. Finally, it prohibited pharmaceutical manufacturers from using the information for marketing.

The statute disfavored marketing—speech with a particular content. It also disfavored speech by particular speakers, according to the Court.

Specifically, it restricted the practice of “detailing” by data mining companies, which prepared reports helping pharmaceutical manufacturers to refine their marketing tactics. The law allowed PI data to be purchased, acquired, and used for other types of speech and by other speakers. Therefore, the statute went beyond mere content discrimination, to actual viewpoint discrimination.

Whether a special commercial speech inquiry or a stricter form of judicial scrutiny were applied, the statute did not advance a substantial government interest and was not narrowly tailored to serve that interest, in the Court’s view.

Vermont contended that the statute was intended to:

(1) Protect medical privacy, including physician confidentiality, avoidance of harassment, and the integrity of the doctor-patient relationship, and

(2) Achieve the policy objectives of improving public health and reducing healthcare costs.

Assuming that physicians had an interest in keeping their prescription decisions confidential, the statute was not drawn to serve that interest, the Court said. Pharmacies were permitted to share prescriber-identifying information with anyone for any reason except for marketing. Vermont might have addressed physician confidentiality through “a more coherent policy,” but it did not.

Vermont’s goals of lowering the costs of medical services and promoting public health may have been proper, but the statute did not advance them in a permissible way, the Court stated. Vermont sought to achieve those objectives through the indirect means of restraining certain speech by certain speakers. Vermont did not contend that the statute would prevent false or misleading speech. The fear that people would make bad decisions if given truthful information cannot justify content-based burdens on speech, the Court concluded.

The opinion was delivered by Justice Kennedy and was joined by Chief Justice Roberts and Justices Scalia, Thomas, Alito, and Sotomayor.

The Court affirmed a decision of the U.S. Court of Appeals in New York City (CCH Privacy Law in Marketing ¶60,646). The U.S. Court of Appeals in Boston had upheld the validity of similar laws in Maine (IMS Health Inc. v. Mills, CCH Privacy Law in Marketing ¶60,527) and New Hampshire (IMS Health Inc. v. Ayotte, CCH Privacy Law in Marketing ¶60,270), rejecting constitutional challenges in both cases.

Dissenting Opinion

In a dissenting opinion joined by Justices Ginsburg and Kagan, Justice Breyer argued that the statute’s effect on expression was inextricably related to a lawful governmental effort to regulate a commercial enterprise. In Breyer’s view, heightened First Amendment scrutiny of such an effort was not required. In any event, Breyer said, the statute met the First Amendment standard previously applied by the Court when the government sought to regulate commercial speech.

The decision is Sorrell v. IMS Health Inc, CCH Privacy Law in Marketing ¶60,646.


. . . Agrees to Review Telephone Consumer Protection Act Jurisdictional Question

The U.S. Supreme Court has granted an individual’s petition for certiorari requesting review of whether Congress divested the federal district courts of their federal-question jurisdiction under 28 U.S.C. Sec. 1331 over private actions brought under the Telephone Consumer Protection Act.

At issue is a decision of the U.S. Court of Appeals in Atlanta (CCH Privacy Law in Marketing ¶60,637) holding that the individual’s TCPA claims against a debt collection agency could be pursued only in state court.

Six U.S. Courts of Appeals (the Second, Third, Fourth, Fifth, Ninth, and Eleventh Circuits) have held that federal courts lack federal-question jurisdiction over private TCPA actions. The Sixth and Seventh Circuits have taken the contrary position, with the Seventh Circuit reasoning in Brill v. Countrywide Home Loans, Inc., 427 F.3d 446 (2005) that federal courts retained jurisdiction because the TCPA's provision authorizing private actions in state court did not declare state jurisdiction to be exclusive.

The petition for review is Mims v. Arrow Financial Services, LLC, Dkt. 10-1195, filed March 30, 2011, granted June 27, 2011.

Further information regarding CCH Privacy Law in Marketing appears here.