Summary of HB1125: Deceptive Lead Generation

Lawsuit advertisements—specifically ones that target prescription drugs and medical devices—can be dangerous.  Nationwide, dramatized and exaggerated legal ads have flooded both televisions and the internet, often masquerading as “medical alerts.”  Some estimates have total spending on legal advertisements at around $1 billion annually.  As a result, state legislatures are beginning to take action to combat deceptive advertising and come up with solutions, including in Indiana, which recently passed House Bill 1125.  House Bill 1125 places several limitations on the practice of lead generation – the use of commercial communications to initiate consumer interest or inquiry into legal services intended to redress an alleged injury from a medical device or legend drug – and provides a private right of action for manufacturers and sellers of medical devices and legend drugs against deceptive lead generators.

In short, House Bill 1125 prohibits lead generators from engaging in false, deceptive, and misleading lead generation tactics, including the use of advertisements that

  • cause consumers to fail to use or to discontinue medications or remove a medical device without appropriate medical advice from a person who is independent from the lead generator;
  • employ sensationalized warnings or alerts that may mislead consumers to believe the advertisement is a government-sanctioned consumer alert; and
  • misrepresent the risks or benefits of a medical device or legend drug, leave consumers with the false impression that the risks of the medical device or legend drug exceed the benefits, or leave consumers with the false impression that the FDA has recalled the medical device or legend drug.

House Bill 1125 also imposes certain disclosure requirements on lead generators, including the requirement to inform consumers that their cases will be referred to another attorney or law firm, the identity of the attorney or law firm to whom the consumers will be referred, and the identity of the sponsor of the advertisement or other commercial communication to which the consumers are responding.  Failure to make these disclosures is a deceptive act.

In addition to providing a private right of action to manufacturers and sellers of medical devices and legend drugs, House Bill 1125 also permits the Attorney General to join actions against the lead generators and to create additional rules to enforce the law.

Other states have taken aim at deceptive lead generation in recent years as well.  Tennessee and Texas have both enacted legislation similar to House Bill 1125.  Broadly, House Bill 1125 most resembles Tennessee’s legislation.  See Tenn. Code § 47-18-5601.  Both laws apply broadly to various kinds of media (e.g., internet advertisements, television advertisements, etc.), and both laws give manufacturers and sellers the right to take action to stop deceptive lead generators.  The damages allowed under each law differ though.  Tennessee’s law allows recovery of actual damages, and a triple award of actual damages if the offender willfully or knowingly violated the statute.  Here, Indiana House Bill 1125 allows the recovery of court costs and reasonable litigation fees.  Texas’s law, on the other hand, does not give manufacturers and sellers the right to take action, only the attorney general has that right. See Tex. Gov’t Code § 81.151; Tex. Gov’t Code § 81.155.  Further, Texas’s law, unlike Indiana’s and Tennessee’s laws, applies only to “television advertisements,” making it considerably more limited in scope.

West Virginia also passed similar legislation.  W.Va. Code § 47-28-1, et seq.  However, earlier this month a West Virginia federal court partially enjoined the law, finding that many of its key provisions violated the First Amendment.  Recht, et al. v. Morrissey, Civil Action No. 5:20-cv-90, Dkt. 60 (N.D.W. Va. May 7, 2021) (enjoining the enforcement of W.Va. Code §§ 47-28-3(a)(2), (3), and (4) and § 47-28-3(b), leaving the rest of the law intact.).  We expect to see First Amendment challenges to other states’ laws as well.  In the meantime, Indiana House Bill 1125 has the potential to be an effective tool to limit the most egregious and deceptive lead generation tactics and protect consumers from false and misleading information that could adversely affect their medical care.