Page1 Providers Can Halt Negative Advertisements in Court With an ever-increasing volume of negative advertisements against nursing and assisted living centers, providers are starting to fight back in court. Initiating litigation to stop attorneys from publishing negative advertisements can work; but nursing and assisted living centers should proceed with caution. Before going to court, providers need to carefully analyze the content of unfavorable advertisements and determine if there is a strong chance a judge would decide that the advertisement is misleading, inaccurate and must stop. Needless to say, a nursing center that has a good survey record is more likely to be successful in court than one with a troubled history. For instance, in Georgia, a nursing center challenged a false and misleading advertisement in state court and won. The judge determined that the advertisement did not accurately reflect the center s survey report and stopped the law firm from publishing any more unfavorable advertisements. Nursing centers in other states are now following similar legal strategies. Evaluate the Advertisement and Survey Providers need to dive into the details of the actual survey that is the basis for a negative advertisement. These advertisements often use a similar format, and generally rely on listings of past survey citations, called F-tags. Using F-tags in this way is a key component of most negative advertising; yet it also is a great vulnerability in debunking the advertisement in court. By using only the F-tag headings in advertisements, attorneys create a false impression that a care center provides poor care. The deception in the advertisement is that it does not mention the actual survey findings, which may have been benign, easily corrected and isolated. The following three examples are from real situations where judges stopped advertisements from continuing. Example #1 An advertisement claimed a nursing center FAILED to make sure that the nursing home area is safe, functional, clean, and comfortable for residents, staff, and the public. In fact, analysis showed that: The ad referred to garbage storage area that was actually a dumpster located in the back parking lot. The surveyor s language at the time was clear: The facility failed to maintain the garbage storage area in a safe and sanitary manner. A court ruled that the ad gave a false impression that the center was not safe or clean for the resident and stopped the ads. AMERICAN HEALTH CARE ASSOCIATION / NATIONAL CENTER FOR ASSISTED LIVING
Page2 Example #2 An advertisement claimed a nursing center FAILED to prepare food that is nutritional, appetizing, tasty, attractive, well-cooked, and at the right temperature. In fact, analysis showed that: The survey referred to only a few residents that ate slightly burned toast. The survey data was over 19 months old. A court ruled that the burnt toast was very different from the ad s claim that THESE DEFICIENCIES ARE KNOWN TO CAUSE SEVERE INJURY, HEALTH DETERIORATION, BED SORES AND EVEN DEATH; and stopped the ad. Example #3 An advertisement headlined that a nursing center FAILED to provide care for residents in a way that keeps or builds each resident s dignity and respect of individuality. In fact, analysis showed that: The facility gave several residents plastic drinking cups at meals instead of the required glass cups. The surveyor made no assertions about a failure to provide care to residents. The survey data was almost four years old. A court ruled the advertisement to be misleading and stopped it. Providers who are attacked by an unfavorable advertisement should first identify F-tags in the advertisement that have little or nothing to do with resident care. Research whether or not the surveyors identified any actual harm resulting from a citation that appears in the advertisement. Finally, only challenge advertisements referring to citations in the A through F range because these denote the same severity no actual harm resulting to any resident. Date of Deficiency When a nursing center identifies an unfavorable advertisement, the provider should determine how long ago the survey citations mentioned in the advertisement actually happened. The best examples to use in court are advertisements that rely on citations that are several years old. For example, if an advertisement cites deficiencies from 2011, and the nursing center returned to substantial compliance at that time, then any advertisement using present tense verbs (e.g., have, has, etc. ) is inaccurate and misleading. If a nursing center is considering litigation, the best chance for success is to focus on citations in the advertisement that are old, at a low severity level and that have nothing to do with resident care. Summary Statements Most negative attorney advertisements, after listing the F-tags, include a summary statement. This statement attempts to connect the deficiencies to hypothetical resident injuries. Two actual examples of how a summary statement can deceive consumers follow: THESE DEFICIENCIES ARE KNOWN TO CAUSE SEVERE INJURY, HEALTH DETERIORATION, BED SORES AND EVEN DEATH. AMERICAN HEALTH CARE ASSOCIATION / NATIONAL CENTER FOR ASSISTED LIVING
Page3 This summary statement (above) creates an impression that the F-tag cited in the advertisement has or will cause SEVERE INJURY, HEALTH DETERIORATION, BED SORES, or EVEN DEATH. The problem with this language is there is no connection between the actual deficiency and the stated harm. The F-tags in the advertisement had nothing to do with resident care (this was the heading in the dumpster case, -Example #1 (above)). The surveyor concluded that there was no actual harm to any residents. In addition, omitting the old timeframe from the ad weakens the content of the ad even more. POOR CARE AND UNDERSTAFFING CAN LEAD TO: BEDSORES, CHOKING, FALLS, BROKEN BONES, DEHYDRATION, INFECTIONS/SEPSIS, MALNUTRITION, OR UNEXPLAINED DEATH This statement alleges that poor care and understaffing lead to a list of bad outcomes. When a nursing center can show that, despite this dire list, the surveyor did not cite staffing-related deficiencies, the difference or disconnect -- between the advertisement and the actual deficiency becomes apparent. Consider Rating History Nursing centers are sometimes frustrated with CMS Five Star program because of errors, survey inconsistencies and outdated information. The recent reset of the Five Star program by CMS and the redistribution of ratings among the various star classifications has also been problematic to some providers. Nevertheless, the staffing component of the Five Star program can be crucial in challenging an advertisement that includes an understaffing statement. A high Five Star rating, at four or five stars, can help to challenge claims of understaffing in court and is likely to help convince a judge to order that the attorney stop publishing negative advertisements, at least temporarily. Even a three star rating shows that, on the whole, the nursing center is performing equal to its peers. Carefully examine what an advertisement says and what it implies. It is incongruous and deceptive for an ad to state that a nursing center s understaffing can lead to poor care and injuries, when in fact the nursing center has an acceptable staffing score equal to, or higher than, its peers. Electronic Advertisement Perpetual Existence A provider must show continued injury to be successful in stopping attorneys from continuing to publish a negative advertisement about the care center. In most cases, a nursing center can point to the idea of perpetual existence of an advertisement in electronic form. That is, the advertisement will exist forever either as a stand-alone electronic advertisement on a newspaper s web site or in the newspaper s electronic archival system. The nursing center, or its attorney, should take screenshots of the online advertisement showing the date and time notations to demonstrate the on-going injury to the court. Note: Online advertisements can be difficult to find on a newspaper s web site. Often a subscription is required to access an e-edition or archived newspaper; but subscriptions are typically low cost and easily cancellable. Shaping a Complaint Causes of Action One of the most important considerations in determining whether or not to go to court to stop a negative advertisement is to carefully analyze the appropriate cause of action for the lawsuit, including: o State deceptive trade practices act claims o State trade name/service mark anti-dilution claims o State common law claims AMERICAN HEALTH CARE ASSOCIATION / NATIONAL CENTER FOR ASSISTED LIVING
Page4 o Federal Lanham Act claims Filing a complaint under a state s deceptive trade practices act or trade name/service mark anti-dilution statute is usually the most successful route. Generally, these statutes provide a precise remedy and a more efficient framework for a favorable outcome, including the recovery of costs and fees. State Deceptive Trade Practices Act Claims Under the deceptive trade practice laws in Georgia and Ohio, for example, granting injunctive relief (e.g., a court order to stop the attorney from publishing negative advertisement) is possible without any evidence of monetary damages. A complaint filed under Georgia s Deceptive Trade Practices Act is included (See Appendix 1). Unfortunately, some states deceptive trade practices acts are limited. For example, in New Jersey and Pennsylvania there is no mechanism for providers to bring a complaint under those laws. State Anti-dilution Statutes Anti-dilution statutes can also be effective in the fight against negative advertising. For example, in Georgia the anti-dilution law only requires evidence of a likelihood of injury to a business reputation or a likelihood of a weakened trademark or trade name by another s wrongful use. The Georgia law does not require proof of confusion or competition, and also allows flexibility about who can bring the actual complaint. The flexibility about who can bring the suit, along with the limited evidence to show an injury, reduces the burden on the nursing center to show an injury from an unfavorable advertisement. It is important to work with local counsel to determine the appropriateness of using a state s anti-dilution statute. State Common Law Other traditional state common laws that a provider could use to bring a complaint against an attorney publishing negative advertisements include, but are not limited to: o Defamation o Invasion of privacy o Tortious interference with contractual relations A state specific legal analysis of any of these laws and potential causes of action is absolutely necessary to determine a nursing center s probability of success. Federal Lanham Act The federal Lanham Act may also be used as a vehicle for a complaint. Typically, a cause of action under the Lanham Act relates to trade infringement cases; but it also provides broad remedies ranging from injunctive relief to monetary damages. A Lanham Act complaint also brings the force and reach of the federal court to stop the unfair practice of targeting nursing centers with negative advertisements. To win a Lanham Act complaint, a nursing center must show that: o o o o o The attorney has made false or misleading statements about the nursing center s services There is actual deception or at least a tendency to deceive a substantial portion of the relevant public The deception is likely to influence the consumer s purchasing decisions The advertisement and/or services are within the United States There is a likelihood of injury in terms of declining sales, loss of good will, etc. An example of a federal Lanham Act complaint is included (See Appendix 2). AMERICAN HEALTH CARE ASSOCIATION / NATIONAL CENTER FOR ASSISTED LIVING
Page5 Providers should work closely with an attorney to select the proper cause(s) of action to fight back against negative and misleading advertising. In order to make strategic decisions promptly, it is imperative to engage counsel as soon as possible after the advertisement first appears. Just as important is deciding where to file the lawsuit. Choosing a Venue Along with strategically identifying the appropriate complaint, providers and their attorneys have to decide whether to file a cause of action in state or federal court. State Court Generally, state courts are the best location for these actions, particularly in smaller or rural jurisdictions where the nursing center may be one of the largest employers. In making the decision to file in state court rather than federal court, providers should take precaution to ensure that it stays there. Diversity jurisdiction is the legal term that allows an out-of-state attorney to move the litigation from state to federal court if the amount in controversy exceeds $75,000, and the attorney is a citizen of the same state as the targeted nursing center. Since many attorneys publish advertisements in states outside the state where their law firm is located, nursing centers should make every effort to seek only injunctive relief to keep the litigation in state court. In a state deceptive Trade Practice Act case, the nursing center can seeking costs and fees; but should be careful that those costs and fees do not contribute to the amount in controversy, which would then allow the case to be moved to federal court. A provider can file a complaint under the federal Lanham Act in either state or federal court. The offending attorney, however, can easily move the lawsuit to a federal court, and most probably will. Nonetheless, that fact should not deter the nursing center from initially filing a complaint in state court if that is the best location for obtaining a temporary injunction. Federal Court A provider should only file an action in federal court if the state laws are unfavorable to the nursing center. For example, if the state law does not allow a private cause of action under its deceptive trade practices act or consumer fraud statute, or if the trial location is not favorable, then the targeted nursing center may have to file a complaint in federal court. Even in federal court, the nursing center can use state common law complaints. Remedies Injunctive Relief In most cases, the nursing center should ask for an injunction to require the attorney to stop publishing the offending advertisement now and in the future. This would include a request to remove any electronic versions of the advertisement. It is important to note, that while providers can request a formal retraction, this may have the unintended consequence of bringing the advertisement back into public focus and generate unwanted publicity. Monetary Damages In rare cases, a nursing center may want to ask for monetary damages. The nursing center should only consider this option when the damages are clearly quantifiable and it is not critical to the center s success to keep the case in state court. Alleging damages can open the door to an out-ofstate attorney asking to remove the case to federal court, which could trigger unwanted discovery into the center s finances. If the nursing center decides it wants to request monetary damages, it should consider naming the local newspaper in the action to guard against removal to federal court (even though potential jurors may feel sympathy towards the newspaper). AMERICAN HEALTH CARE ASSOCIATION / NATIONAL CENTER FOR ASSISTED LIVING
Page6 Limiting the request to a temporary, preliminary or permanent injunction is usually the best way to success for the nursing center. Code of Professional Conduct Complaints Although the State Bar or the state s highest court usually enforces violations of attorney rules of professional conduct, making such allegations in a complaint without seeking any relief in connection with those violations can serve as further evidence of deception and wrongdoing in court. Most states have rules of professional conduct covering attorney advertisements, and those rules generally prohibit false and misleading advertising. Generally, the advertisements targeting nursing centers fail to comply with the technical requirements for attorney ads. For example: attorney rules of professional conduct often require that advertisements contain, among other things, the name of at least one lawyer responsible for the advertisement; or a disclaimer somewhere on the advertisement that it is, in fact, an advertisement. Many unfavorable advertisements also fail to live up to both the spirit and letter of these rules, and a provider that points out these violations in conjunction with other evidence showing the false and misleading nature of the advertisement, helps set the overall tone of the court proceedings. Non-Judicial Efforts Bar Grievances While court actions are the primary weapon in the fight against negative advertisements, nursing centers also can file stand-alone, or parallel, complaints with the state s professional licensing body for attorneys (typically the State Bar), which has the authority to penalize attorneys who violate the state s professional rules of conduct. These penalties can include anything from a simple reprimand to cancelling an attorney s license for repeated violations. If a court determines the advertisement is false and misleading, then the State Bar should make the same decision. Likewise, if the court fails to find an advertisement is deceptive, it is unlikely the State Bar will make a contrary finding. Consumer Protection Agency Complaints In addition to filing a state bar grievance, some states have created a separate agency to protect consumers and businesses from unlawful, deceptive and unfair practices in the marketplace. These agencies will pursue actions on behalf of the consumer or business and enforce applicable laws whenever a substantial public interest is at stake. When violations occur, the agency typically has the power to require the offending party to change its business practices and/or pay restitution, civil penalties, and applicable administrative fees. Much like the bar grievance, state agencies will follow the court s lead with respect to a determination that the advertisement is false and misleading. A nursing center should bring a bar grievance or state consumer protection agency complaint, even if the outcome might not be successful. This is just another opportunity to go on the offensive against the attorney publishing unfavorable advertising against the nursing care center. Working with the Media Since the goal of the nursing center should always be to stop the publication of negative advertising, the importance of reaching out to the local media, particularly in smaller jurisdictions, cannot be overstated. This work should be ongoing and not just done when a crisis hits. Local newspapers consider both themselves and the nursing center as part of the community. If positive relationships are created and ongoing, newspaper staff may not only notify the nursing center when an attorney attempts to place the advertisement; but also refuse to run the negative advertisement. Some local newspapers have proactively refused to publish advertisements in the following cases: AMERICAN HEALTH CARE ASSOCIATION / NATIONAL CENTER FOR ASSISTED LIVING
Page7 o o A local newspaper -- named in the initial lawsuit -- entered into a consent order not to publish any advertisement from the attorney in the future. After receiving a request to run a full-page color advertisement on behalf of a nationally known law firm, a newspaper notified the care center and then (instead of publishing the advertisement) decided to issue the following editorial criticizing the law firm s advertising tactics: A full-page color advertisement in this week s edition of The News-Reporter would have implied that a [local] business might have been responsible for abuse and neglect resulting in injury and even death. The advertisement came from a law firm seeking victims of the suggested abuse and neglect. The advertisement will not run in this newspaper. We have returned the check. Without disclosing the target of the advertisement, it may be difficult to convey the seriousness of the advertisement s accusations. The local business in question, as far as this newspaper can determine after a preliminary search, is upstanding and among the best of its kind in the state We will not be part of such an effort, which could do a tremendous amount of undue harm. We can learn additional information from nursing centers that have reached out to local newspaper editors fearing that another round of targeted attack advertisements may be on the way: o One newspaper publisher did not print a negative advertisement after an attorney refused his request to modify the language in the advertisement. o Another publisher told nursing center representatives FYI - we ain t running this [attack advertisement]. I d heard this type advertisement was coming... ambulance-chasing lawyers targeting specific nursing homes. In another instance, a publisher apologized for printing a false and misleading advertisement and offered to: o Run a half-page advertisement challenging the allegations in the previous advertisement free of charge o Run a half-page advertisement in a sister publication supporting the nursing center free of charge o Refrain from running any future advertisements submitted by the attorney These cases illustrate that engaging with the local media in advance to prevent unfavorable advertising in the future is absolutely critical. This proactive approach is a more efficient method for stopping advertising than going to court. Of course, there is no guarantee that the above outcomes will occur. Newspapers need advertising revenue to keep the presses running and may run an advertisement attacking a facility. It is rare that small newspaper publisher receive a request to run a full-page, color advertisement, and the revenue generated by that kind of buy might be significant to their business. AMERICAN HEALTH CARE ASSOCIATION / NATIONAL CENTER FOR ASSISTED LIVING
IN THE SUPERIOR COURT OF COUNTY STATE OF GEORGIA ; Plaintiff, v. MCHUGH FULLER LAW GROUP, PLLC, Civil Action No. Defendant. VERIFIED COMPLAINT FOR EX PARTE TEMPORARY RESTRAINING ORDER AND PRELIMINARY AND PERMANENT INJUNCTIVE RELIEF Plaintiff files its Verified Complaint for an Ex Parte Temporary Restraining Order and Preliminary and Permanent Injunctive Relief ( Complaint ) against, showing this Court that Plaintiff is entitled to the relief sought in its Complaint for the following reasons: Statement of Parties, Jurisdiction, Venue and Service of Process 1. Plaintiff, ( Plaintiff ) is a Georgia limited liability company with its principal place of business located at. 2. Defendant ( ) is a professional limited liability company organized under the laws of and authorized to transact business in. 3. Defendant maintains its principle office at.
4. Defendant is subject to personal jurisdiction before this Court because it: (i) transacts business within this State, within the meaning of O.C.G.A. 9-10- 91(1); and (ii) has committed tortious acts within this State, within the meaning of O.C.G.A. 9-10-91(2). Defendant may be served with process in this action at its principle office through delivery of service copies of the Summons and Complaint in this action to its Members,. 5. Venue and jurisdiction are proper in this Court pursuant to O.C.G.A. 9-10-91(2), 9-10-91(3), 9-10-93 and 23-1-1. Statement of Facts 6. Plaintiff operates a skilled nursing facility known as located at. 7. Defendant is a law firm that advertises across the country in an effort to bring claims against skilled nursing facilities. 8. Defendant has no office or place of business in Georgia. Nevertheless, of its attorneys are licensed to practice law in Georgia and are therefore subject to the Georgia Rules of Professional Conduct. 9. In inducing potential and prospective clients to bring suit against skilled nursing facilities, Defendant engages in false, fraudulent, deceptive and
misleading advertising, including in County, Georgia, that fails to comply with the ethical requirements for Georgia lawyers under the Georgia Rules of Professional Conduct and is in violation of O.C.G.A. 10-1-372, 10-1-421, and 10-1-427. 10. A true and accurate copy of such an advertisement published by the Defendant on, in County is attached to this Complaint as Exhibit A. 11. The example advertisement in Exhibit A violates, inter alia, Rule 7.3(b) of the Georgia Rules of Professional Conduct, in that it fails to include an Advertisement disclaimer on the top of each page of the written communication in type size no smaller than the largest type size used in the body of the letter. 12. In addition, the example advertisement in Exhibit A violates Rule 7.1 (a) of the Georgia Rules of Professional Conduct, in that it is false, fraudulent, deceptive, and misleading because it omits facts necessary to make the advertisement, considered as a whole, not materially misleading. Specifically, the advertisement falsely implies that the government has cited Plaintiff for bedsores, broken bones, and death none of which are accurate representations. Moreover, through omission, the advertisement creates an impression of ongoing problems at the Plaintiff s nursing home and fails to disclose that any alleged deficiencies had been corrected and removed or appealed. 13. The example advertisement in Exhibit A also violates the Georgia Uniform Deceptive Trade Practices Act, in that it: (i) makes false and misleading statements that are likely to cause confusion or misunderstanding in violation of O.C.G.A. 10-1-372(a)(12); (ii) was published with the intent to perform services and, in connection therewith, make
statements concerning matters of fact connected with the proposed performance which are untrue, were known to be untrue, and/or by the exercise of reasonable care should have been known to be untrue, in violation of O.C.G.A. 10-1-421(a); and (iii) were published with the intent to perform legal services, or to induce the public to enter into obligations related thereto and, in connection therewith, make statements concerning circumstances or matters of fact connected with the proposed performance thereof which are untrue, fraudulent, deceptive, and/or misleading and which were known or which by the exercise of reasonable care should have been known to be untrue, fraudulent, deceptive, and/or misleading, in violation of O.C.G.A. 10-1-427(a). 14. In addition to the false, fraudulent, deceptive, and misleading advertisements that Defendant has published in the newspaper, that same advertisement appears in the online edition of The Toccoa Record. If the Defendant is not immediately enjoined from publishing false, fraudulent, deceptive, and misleading advertisements concerning the Plaintiff, the effectiveness of a subsequent action by the Court enjoining the Defendants would be lost. Statement of Legal Basis and Justification for Injunctive Relief 15. Plaintiff re-alleges and incorporates by specific reference the allegations contained in the preceding paragraphs of its Complaint, as if fully set forth herein. 16. Plaintiff is likely to be damaged by the deceptive trade practices described above within the meaning of O.C.G.A. 10-1-373; has been and will continue to be aggrieved by the practices described above within the meaning of O.C.G.A. 10-1-423; and will suffer immediate and irreparable harm to its goodwill and contractual and business relationships if
Defendant is not temporarily restrained and preliminarily and permanently enjoined from publishing false, fraudulent, deceptive, and misleading advertisements of the kind contained in Exhibit A. 17. Plaintiff has no adequate remedy at law with regard to Defendant s publication of these false, fraudulent, deceptive, and misleading advertisements in newspapers or other media, including online, in this jurisdiction, or across the State. 18. Plaintiff has a meritorious claim against Defendant to restrain and enjoin it from further publishing false, fraudulent, deceptive, and misleading advertisements involving the Plaintiff in newspapers or other print media. 19. A balancing of the equities between the parties weighs heavily in favor of Plaintiff as to whether Defendant should be permitted to publish false, fraudulent, deceptive, and misleading advertisements concerning the Plaintiff in newspapers or other media, including online. WHEREFORE, having set forth its Complaint against Defendant, Plaintiff prays for a judgment in its favor against Defendants as follows: (a) That Defendant be temporarily restrained and preliminarily and permanently enjoined, pursuant to O.C.G.A. 9-11-65, 10-1-373, and 10-1-423, from publishing false, fraudulent, deceptive, and misleading advertisements concerning the Plaintiff, including the type of advertisements contained in Exhibit A attached hereto; (b) Reasonable attorneys fees and expenses of litigation incurred by Plaintiff in connection with this litigation; (c) All costs of this action; and
(d) Such other and further relief as the Court considers just and appropriate under the circumstances. Respectfully submitted, ARNALL GOLDEN GREGORY LLP Jason E. Bring Georgia State Bar No. 082498 J. Ryan Hood Georgia State Bar No. 030611 171 17 th Street, NW, Suite 2100 Atlanta, Georgia 30363-1031 Phone: 404-873-8676 Fax: 404-873-8677 Attorneys for Plaintiff
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF, Plaintiff, CIVIL ACTION NO. v., Defendant. COMPLAINT FOR PRELIMINARY AND PERMANENT INJUNCTION FOR FALSE ADVERTISING UNDER LANHAM ACT, 15 U.S.C. 1125(a) Plaintiff ( ) files this Complaint against ( ), showing the Court that is entitled to the injunctive relief sought in its Complaint for the following reasons: Introduction 1. Through this lawsuit, seeks to bring an end to a deceptive and false advertising campaign being waged by the law firm. Indeed, in an apparent effort to encourage tort litigation against and profit therefrom, widely distributes advertisements (including that attached hereto as Exhibit ) that contain sensational content and deliberately misleading references to certain government citations issued against, all in an effort to deceive consumers that is unsafe or has harmed their loved ones. As explained herein, the messages that advertisements deliver are false and misleading.
By purposefully misrepresenting the nature of the government citations at issue and by omitting critical information included in these citations from its advertisements, is likely to deceive the public and, at the same time, cause significant monetary and reputational harm to. Therefore, false advertising campaign is in violation of the Lanham Act, 15 U.S.C. 1125(a), and it should be temporarily and permanently enjoined from further engaging in such deception at the expense and detriment of the public and. Further, given the bad faith and willful nature of false advertising, the Court should declare this case exceptional and award the attorneys fees it has incurred in obtaining the requested relief. Parties, Jurisdiction, and Venue 2. is a corporation with its principal place of business is located at. 3. is a that operates in a number of states. It transacts business in from its office location at. 4. is subject to personal jurisdiction before this Court because it has maintained continuous and systematic contacts with the through its practice of law within and because claims for relief in this 2
action arise out of harm caused by false advertising activities directed at residents of the. 5. may be served with process in this action through its registered agent,, located at. 6. The Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. 1331 (federal question) and 15 U.S.C. 1121 (Lanham Act claims). 7. Venue is proper in this District pursuant to 28 U.S.C. 1391(b) and 1400 because a substantial part of the events or omissions giving rise to claims herein occurred in this District. Regulatory Oversight and Surveys of Nursing Facilities 8. participates in the Medicare reimbursement program and is, therefore, subject to a complex regulatory system known as the OBRA Regulations. The OBRA Regulations serve as the basis for determining whether a skilled nursing facility may participate in the Medicare reimbursement program. See 42 C.F.R. 483.1(b). 9. The OBRA Regulations are administered by state surveyors with oversight and additional levels of survey conducted by the federal Centers for Medicare and Medicaid 3
Services ( CMS ). Particularly, CMS contracts with each state to carry out the annual and periodic survey functions to determine whether nursing facilities are in substantial compliance with the OBRA Regulations so that they may qualify for reimbursement. See 42 U.S.C. 1395aa. 10. Under the OBRA Regulations, over 91 percent of nursing homes surveyed are found to have deficiencies indicating that they are not in substantial compliance with the conditions of participation. Thus, substantial compliance is very much the exception. 11. Because the OBRA Regulations are administered by fifty different state agencies and overseen by ten different CMS Regional Offices, there is substantial variation among each individual surveyor and from agency-to-agency across state lines. 12. The OBRA Regulations and the state survey process are intended to ascertain compliance for purposes of determining whether a facility is qualified to obtain reimbursement under the Medicare and Medicaid programs, not for use in advertisements for legal services or as a basis for solicitations of any type. 13. In other words, any citation or inspection report issued to skilled nursing facility pursuant to the OBRA Regulations for reimbursement qualification purposes does not in of itself equate to a pronouncement that the facility has caused harm to its patients or 4
that it is unsafe for patients. advertising, however, misrepresents these citations to deceive consumers into believing otherwise. It is this type of false advertising that seeks to enjoin. and its Advertising Campaign 14. The law firm advertises and solicits clients across the country in an effort to bring claims against skilled nursing facilities. 15. As is apparent from the advertisement included in Exhibit to this Complaint, advertisements and solicitations, through sensational and attentiongrabbing language and presentation, commonly cite only to the summary heading of a government regulation in an intentional effort to paint a false impression regarding the alleged issue observed by government surveyors at the targeted nursing home. The solicitations purposely exclude and do not inform the consumer of the actual reason for the citation reasons which are often minor, technical, and unrelated to the regulatory heading. Many of these false and misleading solicitations remain in print and electronic circulation to this day. 5
Solicitation Targeting ManorCare Health Services at Mercy Fitzgerald 16. On,, published an offending solicitation targeting. A true and accurate copy of full page advertisement against, as published in the newspaper and online, is attached to this Complaint as Exhibit. 17. solicitation was also published on the worldwide web and, as of the filing of this Complaint, is viewable and accessible to subscribers online through the website at. The online version contains an active hyperlink by which readers are redirected to website, as well as a second hyperlink that autodials telephone number. 18. The solicitation in Exhibit to this Complaint is false, fraudulent, deceptive, misleading, and defamatory because it incorrectly states that was cited for the following:. (Exhibit.) 19. While the solicitation does not disclose an actual survey or source as support for its offending statements, it appears to reference by date only a, 20 Survey Report, applicable portions of which are attached hereto as Exhibit. 6
20. As opposed to solicitation statement that the facility was cited, in reality, the February 27, 2014 survey report states only that. (Exhibit.) 21. Thus, the solicitation attempts to and does give a false and fraudulent representation to the public that the Plaintiff s nursing home was in some way unsafe, when in fact the survey report makes clear that the citation dealt solely with. (Exhibit.) 22. Moreover, the survey report indicated that the alleged deficiency was at a level (known as a Level ) that resulted in no actual harm to any residents and did not even create the potential for more than minimal harm. 23. As illustrated above, undertook its artifice and defamatory statements by quoting a summary and non-specific heading within the, 20 survey report and by deliberately and in bad faith excluding the actual findings of the survey report, all in an intentional effort to paint Plaintiff in a false and negative light and in an effort to cause confusion and deception amongst the public. 24. The law firm s solicitation is also false, fraudulent, deceptive, misleading, and defamatory because it purposely omits other facts necessary to make 7
the solicitation, considered as a whole, not materially misleading. Specifically, the solicitation falsely implies that the government has cited Plaintiff for bedsores, broken bones, death, abuse, and neglect none of which are accurate representations because the survey report states that no actual harm resulted to any nursing home resident from the alleged deficiency. 25. Through intentional and egregious omissions of this type, the solicitation creates an impression of ongoing problems at the Plaintiff s nursing home and fails to disclose that any alleged deficiencies had been corrected and removed long before the solicitation was published. 26. In addition, the solicitation fails to disclose that the alleged deficiency did not cause any harm to any nursing home resident. In fact, solicitation intentionally attempts to falsely imply that the alleged deficiency did result in harm, such as bedsores, broken bones, wrongful death, abuse, and neglect. 27. While there are specific OBRA Regulations that deal with alleged abuse and neglect of patients, the survey report did not include any allegations of abuse or neglect by the Plaintiff. 28. In fine print at the bottom of the solicitation, Defendant indicated that Citations and findings were obtained from two sources, one of which is apparently a CMS cite, 8
and the second is a citation to http://pp2.health.state.pa.us/commonpoc/nhlocatorie.asp, a web address that is inactive and inaccurate. In addition, the fine print does not indicate who obtained the citations and findings, i.e., whether it was the government or Defendant. Moreover, while there is an asterisk before this fine print, there is no corresponding asterisk within the body of the solicitation, thereby intentionally giving the impression that fine print relates to all of the statements within the solicitation, including those about bedsores, broken bones, wrongful death, abuse, and neglect. 29. The Federal Trade Commission ( FTC ) has recently launched Operation Full Disclosure, in order to stop solicitations such as those by Defendant that attempt to rely upon fine print disclosures. See http://www.ftc.gov/news-events/pressreleases/2014/09/operation-full-disclosure-targets-more-60-national-advertisers. More specifically, the FTC stressed its longstanding guidance to companies is that disclosures in their ads should be close to the claims to which they relate not hidden or buried in unrelated details and they should appear in a font that is easy to read and in a shade that stands out against the background. 30. In the wake of, 20 advertisement against it, Plaintiff experienced a sharp decline in patient census. In addition, it received complaints and inquiries from families and residents regarding the allegations of neglect, abuse, and broken bones that had appeared in solicitation. 9
As a result, Plaintiff experienced actual damages both to its reputation and to its finances. 31. Because solicitations continue to appear in the online edition of the newspaper, if it is not enjoined, Plaintiff will continue to be injured and the public will continue to be confused and deceived by false advertising. Count I (False Advertising under 15 U.S.C. 1125(a)) 32. incorporates by reference each of the foregoing allegations above as though fully set forth herein. 33. has made and distributed in interstate commerce and in this District, with harmful effect on interstate commerce, commercial advertisements that contain false and misleading statements regarding the nature, characteristics, and qualities of the services or commercial activities of. These advertisements contain actual misstatements and/or misleading statements or failures to disclose. 34. The law firm s intentional and wrongful actions of publishing misleading and incomplete descriptions of fact serves to misrepresent and falsely 10
characterize the nature, characteristics, and qualities of Plaintiff s health care services. false advertisements actually deceive, or have a tendency to deceive, a substantial segment of the customers and potential customers of and its members. 35. false advertising is material in that it concerns the inherent qualities and characteristics of the services offered by Plaintiff and because it is likely to influence the purchasing decisions of relevant consumers. 36. false and misleading advertising has caused and will likely continue to cause a loss of revenue and damage to Plaintiff s reputation. 37. false and misleading advertising constitutes a violation of 15 U.S.C. 1125(a). 38. has no adequate remedy at law with regard to publication of such false, deceptive, and misleading solicitations in newspapers and other media, including online, in this District. 39., therefore, has a meritorious claim against to restrain and enjoin it from further publishing false, deceptive, and misleading solicitations involving Plaintiff in newspapers or other print and electronic media. 11
40. A balancing of the equities between the parties weighs heavily in favor of Plaintiff as to whether should be restrained from publishing false, deceptive, misleading, and disparaging solicitations concerning in newspapers or other media, including online. 41. Because has caused, and will likely continue to cause, immediate and irreparable injury to, including injury to Plaintiff s business, reputation and goodwill, is entitled to a temporary and permanent injunction under 15 U.S.C. 1116 restraining from engaging in future acts of false advertising and ordering destruction of all of its false advertisement materials, both in electronic and hard copy form. 42. Moreover because engaged in the aforementioned false advertising with the apparent purpose of inviting litigation against and profiting therefrom, actions are intentional, malicious, and in bad faith. Hence, this case should be deemed exceptional and should be entitled to recover its attorneys fees pursuant to 15 U.S.C. 1117. PRAYER FOR RELIEF WHEREFORE, having set forth its Complaint against, prays for a judgment in its favor against as follows: 12
a) That be temporarily restrained and preliminarily and permanently enjoined from publishing false, deceptive, and misleading solicitations concerning, including the type of solicitations contained in the advertisements and solicitations attached hereto at Exhibit ; b) That a preliminary and permanent injunction be entered against, requiring it to remove or cause to be removed any postings of the false and misleading solicitations and to engage in corrective advertising as necessary; c) That all costs of this action be imposed against ; d) That this case be deemed exceptional under 15 U.S.C. 1117 and be awarded its attorneys fee s incurred in seeking the foregoing relief; and e) That be granted such other and further relief as the Court considers just and appropriate under the circumstances. Respectfully submitted this day of, 20. ARNALL GOLDEN GREGORY LLP Jason E. Bring J. Ryan Hood Anuj Desai 171 17th Street NW, Suite 2100 Atlanta, Georgia 30363-1031 jason.bring@agg.com ryan.hood@agg.com anuj.desai@agg.com Telephone: 404.873.8500 Facsimile: 404.873.8501 13