Brief - Illegal Telemedicine Drug Sale Not Deceptive Trade Practice - State ex rel. Stovall v. Confimed.com, L.L.C., 38 P.3d 707 (Kansas 2002)
|||In the Supreme Court of the State of Kansas
|||January 25, 2002
|||STATE OF KANSAS, EX REL., CARLA J. STOVALL, ATTORNEY GENERAL, APPELLANT
AND KANSAS BOARD OF PHARMACY,
CONFIMED.COM, L.L.C., D/B/A VSOURCE AND CONFIMED.COM., DEFENDANTS AND H. LEVINE, M.D., APPELLEE.
|||SYLLABUS BY THE COURT
|||1. The consideration of whether acts or actions of a supplier are unconscionable
under of the Kansas Consumer Protection Act requires the court to consider
but not be limited to the statutory examples set forth in subsections (b)(1)
through (b)(7) of K.S.A. 2000 Supp. 50-627.
|||2. A trial court's finding in an action under the Kansas Consumer Protection
Act that there was no actual harm, nothing was misrepresented, and the product
furnished was authentic conclusively shows that potential unconscionable
acts outside the enumerated examples of K.S.A. 2000 Supp. 50-627(b) were
|||3. Generally speaking, the determination of the unconscionability of acts
under the Kansas Consumer Protection Act is left to the sound discretion
of the trial court to be determined under the peculiar circumstances of
|||4. A review of K.S.A. 2000 Supp. 50-627 shows that the determination of
unconscionability involves not only a review of the written documents but
also consideration of the witness testimony as to actions surrounding the
|||5. Transactions that merely appear unfair, or in retrospect are bad bargains,
do not necessarily state a claim under the Kansas Consumer Protection Act.
|||6. Where a record is devoid of any evidence of deceptive or oppressive
practices, overreaching, intentional misstatements, or concealment of facts,
there are no grounds for a claim of unconscionability under the Kansas Consumer
|||7. Conduct which does not involve advertising techniques, contract terms,
debt obligation, or limitation of warranties is not the type of conduct
intended to be considered unconscionable under K.S.A. 2000 Supp. 50-627
of the Kansas Consumer Protection Act.
|||David L. Harder, assistant attorney general, argued the cause, and Carla
J. Stovall, attorney general, was with him on the brief for appellant. James
R. Jarrow, of Baker Sterchi Cowden & Rice, L.L.C., of Overland Park,
argued the cause and was on the brief for appellee.
|||The opinion of the court was delivered by: Larson, J.
|||Appeal from Shawnee district court; TERRY L. BULLOCK, judge.
|||This appeal presents the narrow question of whether a nonresident medical
doctor who was later enjoined from prescribing or dispensing prescription
medicine within the state of Kansas also committed unconscionable acts under
the Kansas Consumer Protection Act (KCPA), K.S.A. 59-623 et seq., when he
dispensed the sexual enhancement drug Viagra to Kansas residents without
any physical examination or direct contact other than through an out-of-state
internet site. Highly summarized, the Kansas Attorney General conducted
a "sting" operation whereby two individuals, one a minor, obtained
Viagra from a website operated by Howard J. Levine, a state of Washington
medical doctor. The trial court granted the State's request for an injunction
against Dr. Levine but refused to hold his actions were unconscionable under
the KCPA; from such ruling the State appeals.
|||The State contends the trial court erred in limiting its analysis to the
statutory examples of unconscionability found in K.S.A. 2000 Supp. 50-627
and by failing to liberally construe the KCPA as required by K.S.A. 50-623.
It also contends a $75 charge for an online medical consultation, prescribing
Viagra without personal physical examination, and dispensing Viagra to a
minor without consultation with the parents were individually or collectively
|||We first set forth the details of the transaction, which was done at the
request of the Attorney General. One of the purchasers, Stuart Nelson, was
a minor and the son of Special Agent Teresa Salts. The other purchaser was
Special Agent Angelia Crawford.
|||In attempting to purchase the product, both individuals accessed a website
entitled Vsource. They were directed through numerous pages of information,
including waivers, general information about the drug, credit card information,
and an online consultation regarding medical and sexual history. The first
page described the online consultation process as well as the potential
for international consultation. The next page was a waiver, stating the
reader releases "this service" from all liability associated with
the reader's participation in "the Viagra ® program." To continue,
the reader agrees he or she is over 21 years of age, does not live in a
state that limits access to medication over the internet, has read all available
information from the Viagra manufacturer about the potential side effects,
is solely interested in personal use of the product for "treatment
of compromised sexual performance," and has recently performed "complete
annual history physical examinations and appropriate laboratory studies"
to ensure good health. The waiver appeared to have a link to the information
available from the pharmaceutical manufacturer. The general information
page on the website stated the recommended dosage of Viagra and its indications
and warned that individuals taking organic nitrates must not take Viagra.
|||The next area of the website set forth that an online consultation was
available for patients without a prescription. In limiting the efficacy
of the consultation, the website stated: "It is in no way a substitute
for a general medical history and physical examination determining general
good health with special attention to blood pressure and cardio-pulmonary
(heart and lung) status." The screen further informed the reader that
the fee for the online consultation was $75 and would be charged only if
the buyer was approved.
|||The next series of pages viewed by potential buyers was the online consultation
form which both Crawford and Nelson at separate times and in separate locations
|||The parties affirmatively admitted when they filled out the online form
that they understood the potential side effects of Viagra and that they
would be billed $75 for this consultation only if their application was
approved and that all information provided was "truthful and complete."
Nelson left blank the questions concerning allergies and the taking of other
prescription medication and did not indicate that he had any of the 15 specific
medical problems listed. He left blank the questions concerning his sexual
health and changes in sexual function but did answer affirmatively that
he had problems achieving erection and stated he had not been evaluated
for erectile dysfunction. He stated his date of birth was November 1982.
His mother provided him her credit card number and personally supervised
the entire order.
|||Agent Crawford filled out the same form, with similar answers. She stated
she was a female on her first attempt to purchase the drug. An individual
named Debra attempted to contact Crawford several times, with the call eventually
taken by another agent who posed as Crawford. Debra stated that the order
could not be processed for a female, but Debra suggested that Crawford could
have a male friend order the drug for her. Agent Crawford resubmitted an
order under the name of "Frederick Crawford," listing his birthdate
as August 1972.
|||Both parties received the pills, and it was stipulated at trial that they
were Viagra. The name "H. Levine, M.D." was typed on the pill
bottles, and the website ConfiMed.com was printed at the top of the labels.
Investigations revealed that Dr. Levine was not licensed to practice medicine
in Kansas, nor was ConfiMed.com licensed to practice pharmacy in Kansas.
|||The parties were billed in accordance with the charges they had agreed
upon for the pills, postage, and consultation.
|||The Kansas Attorney General on behalf of the State of Kansas and the Kansas
Board of Pharmacy sued ConfiMed.com and Dr. Levine, contending he committed
unconscionable acts under K.S.A. 2000 Supp. 50-627 and prescribed prescription
medication without a physical exam or consultation and without explanation
of the side effects. The State argued the entire transaction was unconscionable.
Damages, attorney fees, investigative fees, civil penalties under K.S.A.
50-636(a), and a permanent injunction against further violations of the
Kansas Pharmacy Act, K.S.A. 65-1626 et seq., were requested. The Board of
Pharmacy was subsequently dismissed as a party in that its claims were solely
made against ConfiMed.com, which was found to have been dissolved and no
longer in existence.
|||The trial court did not find the acts of Dr. Levine to be unconscionable
under the KCPA, but it did enjoin him from dispensing medication or practicing
medicine in Kansas. The court held as follows:
|||"Plaintiff contends Defendant Levine, a doctor licensed only in the
State of Washington, prescribed and sold Viagra to two undercover investigators
for the Kansas Attorney General: one a woman and one a 16-year-old boy,
all without a physical examination or other personal contact. These transactions
are claimed to have occurred over the Internet. The transactions included
misrepresentations by the investigators and contained waivers whereby the
investigators indicated they had read manufacturer's information about the
drug, understood its contraindications and assumed all risk of use.
|||"Notwithstanding, however, the Court is not satisfied these facts
describe an 'unconscionable act' as defined by K.S.A. 50-627, the claim
made by the plaintiff. First, the conduct bears no resemblance to the statutory
examples of such behavior and further, there was no actual harm done to
anyone. Nothing was misrepresented. All drugs furnished were authentic.
The pharmacy expert testified that if the waivers in the orders signed by
the investigators were true, more would have been understood by them than
'regular' doctors and druggists typically advise their patients or customers.
|||"This does not describe a deceptive, fraudulent or unconscionable
|||Our consideration of the question of whether actions are unconscionable
under the KCPA is a legal question for the court, Waggener v. Seever Systems,
Inc., 233 Kan. 517, 521-22, 664 P.2d 813 (1983), under which our review
is unlimited. Babe Houser Motor Co. v. Tetreault, 270 Kan. 502, 506, 14
P.3d 1149 (2000).
|||We first look to the provisions of K.S.A. 2000 Supp. 50-627 which the
State contends the trial court erroneously applied when it limited its analysis
to the statutory examples of unconscionability. K.S.A. 2000 Supp. 50-627
and the statutory examples are as follows:
|||"(a) No supplier shall engage in any unconscionable act or practice
in connection with a consumer transaction. An unconscionable act or practice
violates this act whether it occurs before, during or after the transaction.
|||"(b) The unconscionability of an act or practice is a question for
the court. In determining whether an act or practice is unconscionable,
the court shall consider circumstances of which the supplier knew or had
reason to know, such as, but not limited to the following that:
|||(1) The supplier took advantage of the inability of the consumer reasonably
to protect the consumer's interests because of the consumer's physical infirmity,
ignorance, illiteracy, inability to understand the language of an agreement
or similar factor;
|||(2) when the consumer transaction was entered into, the price grossly
exceeded the price at which similar property or services were readily obtainable
in similar transactions by similar consumers;
|||(3) the consumer was unable to receive a material benefit from the subject
of the transaction;
|||(4) when the consumer transaction was entered into, there was no reasonable
probability of payment of the obligation in full by the consumer;
|||(5) the transaction the supplier induced the consumer to enter into was
excessively onesided in favor of the supplier;
|||(6) the supplier made a misleading statement of opinion on which the consumer
was likely to rely to the consumer's detriment; and
|||(7) except as provided by K.S.A. 50-639, and amendments thereto, the supplier
excluded, modified or otherwise attempted to limit either the implied warranties
of merchantability and fitness for a particular purpose or any remedy provided
by law for a breach of those warranties."
|||"Kansas Comment, 1973
|||"1. Section 50-627 forbids unconscionable advertising techniques,
unconscionable contract terms, and unconscionable debt collection practices.
As under the UCC (K.S.A. 84-2-302), unconscionability typically involves
conduct by which a supplier seeks to induce or to require a consumer to
assume risks which materially exceed the benefits to him of a related consumer
transaction. It involves over-reaching, not necessarily deception. The Old
Buyer Protection Act had no such provision. 'Knowledge or reason to know'
often will be established by a supplier's course of conduct.
|||"2. Subsection (b)(1) includes such conduct as selling an English-language
encyclopedia set for personal use to a Spanish-American bachelor laborer
who does not read English, or using legal verbiage in a manner which cannot
be readily comprehended by a low-income consumer who both reads and speaks
|||"Subsection (b)(2) includes such conduct as a home solicitation sale
of a set of cookware to a housewife for $375 in an area where a set of comparable
quality is readily available to such a housewife for $125 or less.
|||"Subsection (b)(3) includes such conduct as the sale of two expensive
vacuum cleaners to two poor families whom the salesman knows, or has reason
to know, share the same apartment and the same rug.
|||"Subsection (b)(4) includes such conduct as the sale of goods, services,
or intangibles to a low-income consumer whom the salesman knows, or has
reason to know, does not have sufficient income to make the stipulated payments.
|||"Subsection (b)(5) includes such conduct as requiring a consumer
to sign a one-sided adhesion contract which is loaded too heavily in favor
of the supplier, even though some or all of the contract terms are lawful
in and of themselves.
|||"Subsection (b)(6) applies to misleading subjective expressions of
opinion on which a supplier should reasonably expect a consumer to rely
to his detriment. For example, a violation of this subsection would occur
if a prospective purchaser asked a supplier what the useful life of a paint
job was and the supplier, with reason to know that repainting would be necessary
within two years, responded, 'in my opinion the paint will wear like iron.'
Overt factual misstatements expressed in form of opinion are dealt with
by 50-626's proscription of deceptive consumer sales practices. For example,
a violation of 50-626 would occur if a prospective purchaser asked a supplier
what the useful life of a two-year paint job was and the supplier responded,
'in my opinion repainting will not be necessary for five years.'"
|||The State's first argument is premised on the direction of K.S.A. 50-623
of the KCPA which requires its provisions to be "construed liberally
to . . . protect consumers from suppliers who commit deceptive and unconscionable
practices." The State contends that the trial court's ruling involved
a "strict" construction, of the KCPA which was improper, as was
the trial court's analysis that centered on the examples the legislature
provided in the Kansas Comment to K.S.A. 2000 Supp. 50-627(b).
|||Dr. Levine more convincingly argues that the trial court's ruling, while
stating that it could find no logical connection between the examples established
by the legislature and the actions in issue, also looked to other hallmarks
of unconscionable conduct such as whether there was harm to a consumer,
whether any misrepresentation occurred, or whether there was a failure to
provide authentic goods.
|||The State is mistaken that the trial court's ruling was limited to the
statutory examples. Although the court wrote: "First, the conduct bears
no resemblance to the statutory examples of such behavior," it went
on to note: "[T]here was no actual harm done to anyone." In viewing
the transaction, the trial court held that "[n]othing was misrepresented"
and "[a]ll drugs furnished were authentic."
|||The trial court specifically noted that if the waivers signed were true,
more information would have been known and understood by the purchasers
than is typically provided to Kansas patients. The court did not limit its
construction to the statutory examples.
|||The wording of K.S.A. 2000 Supp. 50-627(b) sets the tone for consideration
of whether an action is unconscionable when it states: "[T]he court
shall consider circumstances of which the supplier knew or had reason to
know, such as, but not limited to the following." It is clear the legislature
intended the original subsections of (b)(1) through (b)(6) to be a guide
in determining what kind of conduct should be found unconscionable without
expressly limiting the court to the statutory examples. See L. 1973, ch.
217, § 5; see also Willman v. Ewen, 6 Kan. App. 2d 321, 324, 627 P.2d 1190,
1192 (1981), aff'd 230 Kan. 262, 634 P.2d 1061 (1981) ("[The KCPA]
sets forth certain things for a court to consider, but states they are not
the exclusive tests by which a court should determine unconscionability.").
|||It should be noted that certain other statutes such as K.S.A. 50-644 (flammable
thermal insulation), K.S.A. 2000 Supp. 50-670 (unsolicited telemarketing
calls), K.S.A. 50-669 (check identification), K.S.A. 50-669a (credit card
sales), K.S.A. 50-692 (prize notification), and K.S.A. 17-1769 (charitable
solicitations) specifically make certain conduct unconscionable. The State
points to these provisions as showing unconscionability is a broad, sweeping
concept that cannot be limited to contract formation issues. Dr. Levine
counters that by making specific conduct unconscionable, the legislature
implicitly did not intend K.S.A. 2000 Supp. 50-627 to have a broad scope.
We do not adopt either argument as being definitive. The legislature has
obviously desired for certain conduct to be considered unconscionable per
se, but this should in no way contract or expand the right of courts to
find (or fail to find) other conduct unconscionable.
|||In State ex rel. Miller v. Midwest Serv. Bur. of Topeka, Inc., 229 Kan.
322, 324, 623 P.2d 1343 (1981), this court cited the comment to K.S.A. 50-627
(Weeks) in noting the three general categories of conduct proscribed: "[T]hat
section forbids 'unconscionable advertising techniques, unconscionable contract
terms, and unconscionable debt collection practices.'" Limitation of
implied warranties, added as an example to the statute after the Midwest
decision, would be a fourth category. See L. 1983, ch. 180, § 1.
|||Although unconscionable contract terms were somewhat expanded by the decision
of Willman v. Ewen, 230 Kan. 262, 266, 634 P.2d 1061 (1981), in which the
contract itself was found to be valid but the subsequent deceptive conduct
tainted the transaction as unconscionable, this court has held to general
guidelines in determining unconscionability. After reviewing several cases,
we concluded: "The cases seem to support the view that there must be
some element of deceptive bargaining conduct present as well as unequal
bargaining power to render the contract between the parties unconscionable."
Willman, 230 Kan. at 266. Further support is the comment to K.S.A. 50-627
which references unconscionability in the context of the UCC, clearly a
contractual-based form of the doctrine: "As under the UCC (K.S.A. 84-2-302),
unconscionability typically involves conduct by which a supplier seeks to
induce or to require a consumer to assume risks which materially exceed
the benefits to him of a related consumer transaction." See also Wille
v. Southwestern Bell Tel. Co., 219 Kan. 755, 758-59, 549 P.2d 903 (1976)
(lists 10 factors that aid in applying the doctrine of unconscionability
but in situations involving the Uniform Commercial Code).
|||We hold that the trial court did consider potential unconscionable acts
outside of the enumerated examples of K.S.A. 2000 Supp. 50-627(b), and the
State's argument to the contrary must fail.
|||Before considering the State's final arguments that three different specific
acts of Dr. Levine must be considered to be unconscionable, we briefly mention
that there remains unanswered a question of whether the agents were "consumers"
as defined under the KCPA. K.S.A. 50-624(b) states: "'Consumer' means
an individual or sole proprietor who seeks or acquires property or services
for personal, family, household, business or agricultural purposes."
This is not a question we reach, as the trial court centered its decision
on the question of whether unconscionable conduct existed.
|||The State contends that charging $75 for an online consultation service,
prescribing medication without a physical examination or advisement of the
dangers of the medicine, and prescribing Viagra to a minor without consulting
the parents or guardian constitute individually or collectively unconscionable
practices under K.S.A. 2000 Supp. 50-627.
|||While we do not retreat from what we have previously said concerning our
standard of review as being unlimited, we also note that in Remco Enterprises,
Inc. v. Houston, 9 Kan. App. 2d 296, Syl. ¶ 3, 677 P.2d 567, rev. denied
235 Kan. 1042 (1984), the court said: "Generally speaking, the unconscionability
of acts under the Kansas Consumer Protection Act, K.S.A. 50-623 et seq.,
and amendments thereto is left to the sound discretion of the trial court
to be determined under the peculiar circumstances of each case."
|||The Remco opinion also quoted from Meyer v. Diesel Equipment Co., Inc.,
1 Kan. App. 2d 574, 570 P.2d 1374 (1977), where the trial court's finding
that the KCPA was inapplicable was reversed but the appellate court upheld
the trial court's determination that unconscionability did not exist with
the following statement:
|||"'The trial court concluded that defendant's conduct was not unconscionable.
We are not of a mind to now hold that defendant's complained-of conduct
was unconscionable as a matter of law. With a concept so nebulous as "unconscionability"
involved, it is necessary that a certain amount of leeway be granted trial
courts when deciding the unconscionability of acts. Our legislature recognized
this and, accordingly, left the unconscionability question to be decided
by the court under the peculiar circumstances of each case.'" Remco,
9 Kan. App. 2d at 303.
|||In addition, a review of 50-627 shows that the determination of unconscionability
involves not only a review of the written documents but also consideration
of the witness testimony as to actions surrounding the transaction. We have
long held that the credibility of witnesses will not be reweighed on appeal.
State v. Chaney, 269 Kan. 10, 20, 5 P.3d 492 (2000).
|||The State's contention that the agreed-upon $75 for an online consultation
is unconscionable because the applicants did not receive a material benefit
(See K.S.A. 2000 Supp. 50-627[b]) lacks merit. The record reflects the
applicants failed to give substantive information in blank areas and provided
false answers to others. The declaration of Dr. Levine stated the applications
were reviewed for any contradictions and, if noted, the prospective purchaser
would be rejected. In fact, Agent Crawford's application truthfully stating
that she was a female was rejected.
|||Nelson and Crawford at best made a bad bargain, but, lacking any indication
of deceptive bargaining conduct or unequal bargaining power, the $75 charge
for the consultation was not unconscionable. See Willman, 230 Kan. at 266;
see also Gonzales v. Associates Financial Serv. Co. of Kansas, 266 Kan.
141, 166, 967 P.2d 312 (1998)("Transactions that merely appear unfair,
or in retrospect are bad bargains, do not state a claim under the KCPA.")(citing
Remco Enterprises, Inc. v. Houston, 9 Kan. App. 2d 296, 300-03, 677 P.2d
567, rev. denied 235 Kan. 1042 ).
|||The State next argues that prescribing Viagra without a physical examination
and the actual physical supervision of the patient is unconscionable. The
State relies on 21 U.S.C. 353(b)(1) (1994) and the testimony of its pharmaceutical
expert to conclude that Dr. Levine's actions do not comply with established
standards of conduct.
|||The State makes no effort to analogize these facts with any of the examples
of unconscionable conduct in 50-627(b). This conduct falls short of this
court's pronouncement in Willman that "there must be some element of
deceptive bargaining conduct present as well as unequal bargaining power
to render the contract between the parties unconscionable." 230 Kan.
at 266. Also, "[w]here a record is 'devoid of any evidence of any deceptive
or oppressive practices, overreaching, intentional misstatements, or concealment
of facts,' there is no claim under the KCPA. [Remco Enterprises, Inc.] 9
Kan. App.2d at 303." Gonzalez, 266 Kan. at 166-67.
|||As the trial court pointed out, Nelson and Crawford paid for Viagra and
received Viagra. Further, they falsified their applications by affirmatively
stating that they had read the information available about Viagra from the
manufacturer and that they understood the potential side effects. At best,
the State argues that the conduct is "hazardous to consumers."
|||However, in this case, both purchasers did not intend to use the drugs
nor did they use the drugs. The lack of a physical examination posed no
threat to either of them. They falsified information in order to procure
the pharmaceutical. Finally, the State's pharmacist testified that had the
purchasers in fact read the manufacturer information about Viagra, they
would know more information than he provides his own customers. He also
admitted that the questions asked on the computerized consultation form
were more in depth than those he poses to individuals who have been prescribed
Viagra. When considering the entire transaction, the facts are insufficient
to fall within the purview of K.S.A. 2000 Supp. 50-627.
|||Finally, the State argues that Nelson's minority makes this transaction
unconscionable. Although Dr. Levine did admit that the prescription should
not have been allowed to be dispensed to a minor and this clearly violates
a medical standard of conduct, this does not make it unconscionable under
K.S.A. 2000 Supp. 50-627.
|||It must be noted that the evidence presented to the trial court showed
that the minor's parent was present and involved in every step of the transaction.
The State failed to present any evidence that Dr. Levine deceived, oppressed,
or misused superior bargaining power in supplying or prescribing Viagra
to Nelson. Nelson was not overcharged, and the testimony clearly showed
that he would never have been allowed to use the medication because of the
supervision of his mother. The doctor was enjoined from further practice
in Kansas. The trial court said, "I don't have any trouble with saying
. . . these people ought to be de-frocked as medical practitioners, as pharmaceutical
practitioners. . . . But, I'm trying to figure out how this is a consumer
fraud case." Ultimately, after examining all of the documents and hearing
all of the witnesses, the trial court properly held Dr. Levine's actions
did not involve advertising techniques, contract terms, debt obligation,
limitation of warranties, or the type of conduct intended to be considered
unconscionable under K.S.A. 2000 Supp. 50-627 of the KCPA.
|||The public is adequately protected by the injunction that was issued,
and the trial court's refusal to expand the scope of the KCPA under the
facts of this case is affirmed.
|||DAVIS, J., not participating.
|||BRAZIL, Chief Judge Retired, assigned.
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