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Volume XIII, Number 86


March 24, 2023

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FCC Provides Some Clarity On Healthcare Messages, Indirectly Confirms No Requirement To Use Free-To-The-End-User Texts

On January 23, 2023 the Federal Communications Commission’s (FCC) Consumer and Governmental Affairs Bureau released a Declaratory Ruling addressing a request for clarification submitted by US Department of Health and Human Services (HHS) concerning whether certain calls and text messages, meant to encourage enrollment in various healthcare plans, are legal under the Telephone Consumer Protection Act (TCPA). 

The Declaratory Ruling can be found here. We previously summarized HHS’s request for clarification here

The Bureau started by reiterating decades of TCPA precedent: when a consumer voluntarily provides their telephone number as part of enrolling in a government healthcare program, they have provided their prior express consent to receive autodialed and/or prerecorded calls or texts concerning these programs. Importantly, the Bureau ruled that for “any entity making calls in reliance upon the [consumer’s] prior express consent,” that entity can rely on this consent so long as they can show “they are acting pursuant to the direction and authorization of a governmental agency to make calls or send text messages to enrollees.” 

To put a finer point on this holding, there was perceived uncertainty over how far potential derivative sovereign immunity could extend down the government contractor chain. But this holding makes clear that any entity in the chain can be the one that is physically placing the calls or sending the texts, at least when there is consent. In other words, there does not need to be a direct contractual relationship between the applicable government agency and the subcontractor sending the messages, if (1) the subcontractor is doing the government’s bidding, and (2) the recipient consented to receive the message. 

But what about when the autodialed or prerecorded message goes to someone who has not consented, e.g., the original Medicaid applicant got a new number that was reassigned to someone else? That is where the related issues of derivative sovereign immunity and which entity is actually “the caller” come into play. More specifically, the FCC has already ruled that the federal government and the states cannot be liable under the TCPA – period. HHS was seeking additional clarity on how far this immunity extends when contractors and subcontractors are carrying out the government’s directives to contact government healthcare plan enrollees. Relatedly, they were also seeking clarity on whether the government agency was so involved in the calls at issue that the government should be deemed the “initiator” of the calls, effectively relieving the contractor of any responsibility for this legally distinct reason. 

Unfortunately, that is where the Bureau decided to punt. It stated that HHS did not provide sufficient details for the FCC to address these questions, finding that these are “highly fact-specific, case-by-case” inquiries. That said, it should be noted that the FCC’s test for whether any entity can rely on the consumer’s consent provided to the government is effectively the same standard as courts use to evaluate whether derivative sovereign immunity should apply:

FCC Pass-Through Consent Standard

Derivative Sovereign Immunity Test

Any entity which is “acting pursuant to the direction and authorization of a governmental agency to make calls or send text messages” can rely on consumer’s prior express consent.

(1) the government authorized the contractor’s actions, and (2) the government “validly conferred” that authorization, meaning it acted within its constitutional power.

FCC Pass-Through Consent Standard Derivative Sovereign Immunity Test

Any entity which is “acting pursuant to the direction and authorization of a governmental agency to make calls or send text messages” can rely on consumer’s prior express consent.(1) the government authorized the contractor’s actions, and (2) the government “validly conferred” that authorization, meaning it acted within its constitutional power.

Because courts routinely find that government agencies can validly contract with private sector entities to make calls on the government’s behalf, the real question in both cases comes down to “did the government agency direct or authorize the calls” made by the entity placing the calls at issue? Thus, even though the Bureau refused to prospectively bless the calls and texts generically described in HHS’s letter, any entity in the government-contractor chain that is sending messages ultimately authorized by a federal or state government agency should be able to rely on this Declaratory Ruling. 

Separately, the Bureau rejected a consumer group’s request that such messages be sent pursuant to the FCC’s Free-to-The-End-User (FTEU) exemption. Many entities in the healthcare industry are confused by the FTEU exemption created for healthcare calls in 2015. For good reason – it doesn’t make any sense. That is, the FTEU Exemption exempts from any consent requirements for autodialed or prerecorded calls that meet all the conditions of Rule 64.1200(a)(9)(iv). The first condition of the FTEU Exemption is that calls “must be sent only to the wireless telephone number provided by the” consumer. Given that when a consumer knowingly releases their number, and that this act constitutes prior express consent, the FTEU Exemption effectively provides that “you don’t need prior express consent if you have prior express consent.” Thankfully, the Bureau rejected opening the door again to this unnecessary FTEU sandbox.  Instead, as detailed above, the consumer providing their telephone number to the government agency directing the calling campaigns should be enough. And if the wrong number is called, the comparable standard for derivative sovereign immunity should provide protection as well. 

Finally, while contractors should be able to ignore this dicta, it’s worth noting that the Bureau inserted a very “curious” footnote citing back to a 2020 order and asserting that consent is needed when “a text message is sent using a peer-to-peer platform … unless it is not capable of dialing such numbers without a person actively and affirmatively manually dialing each one.” It looks like the Bureau might have missed the US Supreme Court’s 2021 Facebook ruling, in which the Court unequivocally ruled that the issue of human intervention is entirely irrelevant to whether a platform can be considered an auto-dialer or not. For those who haven’t picked up Constitutional Law for Dummies, a Supreme Court decision slightly outranks an FCC Bureau declaratory ruling.   

© 2023 ArentFox Schiff LLPNational Law Review, Volume XIII, Number 30

About this Author

Douglas A. Grimm Health Care Lawyer Practice Leader ArentFoxSchiff Washington DC

Douglas advises health care providers in a wide range of matters. He previously served as a former Chief Executive Officer of multiple acute-care hospitals throughout the United States, and remains active in health care administration as a Fellow of the American College of Healthcare Executives (FACHE), the premier certification institution in health care management. This unique background enables Douglas to provide legal counsel with a practical, pragmatic perspective gained from years of experience as a health care executive.

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Adam D. Bowser Litigation TCPA Communications Telecom Law Partner Arentfox Schiff LLP

Adam’s practice focuses on complex litigation in federal and state courts, including class action trials and appeals, as well as related advocacy before administrative agencies in rulemaking and enforcement proceedings. He has been recognized as a Washington, DC Super Lawyers “Rising Star” in Communications Law every year since 2014 and he has recently won several notable victories for clients brought into class-action litigation arising out of consumer protection and privacy laws, particularly the Telephone Consumer Protection Act (TCPA). As part of his deep expertise...

Jeffrey E. Rummel Washington D.C. Communcations Technology Law Partner Arentfox Schiff LLP
Partner and Communications & Technology Practice Leader

Jeff leads the firm's Communications & Technology practice. His focus includes the federal and state courts and state public utility commissions. Jeff is also a member of the firm’s National Security group.