This month's Legal Eagle column explores a scenario of marketing vs. misrepresentation.
Dr. PR has become increasingly concerned about the diminishing revenues of his general dermatology practice. Although in practice for only 5 years, he was never particularly interested in dermatologic surgery during his residency. He has considered bringing various laser techniques into his practice; however, he has always been wary of physicians performing procedures with which they are not comfortable. Recently, he attended an evening workshop about energy-based–device treatments and was impressed with the data on safety, efficacy, and ease of performance. Although multiple treatment sessions were usually required, all the presented slides at the meeting showed uniformly good results.
Dr PR recognizes the advantages of starting with laser hair removal and begins to consider doing some marketing, which he has never done before. He wants to focus on the advantages of laser hair removal. He ponders the substance of his ad. He wishes to stress no more tweezing, no more waxing, no more shaving, and no more depilatories, and that other techniques may be more painful, are a nuisance, and are only temporary. He knows that relative to laser hair removal, electrolysis is old fashioned. Laser hair removal, he is led to believe, can be marketed as a technique that does not require years of treatment.
With this in mind, Dr PR purchases the aforementioned laser and begins to run ads in his local paper. He has never used newspaper advertising before, and the ad department guides him through the process. The ads emphasize all the points made in the laser workshop Dr PR attended. The ads run for several weeks but, unfortunately, the response is not anywhere near what would be necessary to cover Dr PR’s laser lease payments. Frustrated with his return on investment, Dr PR contacts a local ad agency for advice. He discusses the advantages of his laser with the ad representative. The representative suggests that his marketing should highlight the following statement: “Permanent hair removal after 1 treatment.” Dr PR is concerned about this wording. It is not exactly in line with his understanding of the purchased laser’s results. The ad representative reassures him that stretching the truth is not unusual in advertising; it is considered hyperbole and should be nothing to worry about.
The ad runs and the response is remarkable. Mr. Doe, who is concerned about the excessively thick hair on his back, sees the ad. Based on the ad’s claim, he spends $1000 for 1 laser hair removal treatment with Dr PR. Unfortunately, all the hair has returned 3 months after the 1 laser session. Mr. Doe returns to Dr PR’s office and expresses his concern about the lack of response to the treatment. Dr PR assures him that such a response is not unusual and suggests that more laser treatments will lead to better results. Mr. Doe believes Dr PR’s ad misrepresented the reality of laser hair removal efficacy. He demands a refund of his $1000. Dr PR, frustrated with his economic difficulties, refuses to refund the money. Mr Doe seeks legal advice and sues Dr PR for misrepresentation and fraud.
Misrepresentation is a specialized area of the law where a plaintiff is seeking damages for some economic loss suffered because of his reliance on a false statement. Although some recovery for a “negligently” made false statement is allowed, the traditional action for fraud requires a knowingly made false statement. The basic elements for fraud are as follows: (1) a false representation of a material fact, (2) intent to induce reliance on that fact, (3) justifiable reliance on the statement, and (4) damages.
Dr PR knew the facts of his ad were false. He had expressed concern about the falseness of his ad. The inappropriate advice from the ad representative will not shield Dr PR from liability. The purpose of the ad was to induce reliance by patients who would seek laser hair removal from Dr PR. Mr. Doe justifiably relied on the ad. Had Mr. Doe known the ad to be false or exaggerated, he would be unable to bring a cause of action again Dr PR. However, a layperson has every reason to believe in the accuracy of a physician’s ad. Because of his justifiable reliance on the ad’s statements, Mr. Doe suffered a loss of his $1000 payment. He is likely to win his lawsuit.