Oregon tables broad substantiation rule amid focus on coronavirus claimsOregon tables broad substantiation rule amid focus on coronavirus claims
Dietary supplement trade groups have raised concerns about a proposed rule in Oregon governing health claims in advertisements, which includes a private right of action to sue advertisers who lack "competent and reliable scientific evidence" to support their statements.
May 8, 2020
Editor's note: This article was updated May 13 to clarify the proposal below applies to both advertisers and sellers of goods making health benefit representations.
Oregon officials recently tabled a proposed rule that would require an advertiser or seller of a good to possess “competent and reliable scientific evidence” before making a representation about a health benefit.
Instead of adopting the health claims proposal, which has drawn widespread opposition from dietary supplement trade groups, the Oregon Department of Justice (ODOJ) in mid-April implemented a similar emergency rule with a narrower focus on claims related to coronavirus. That temporary rule is designed to address unsubstantiated claims that a good will prevent, treat, diagnose, mitigate or cure coronavirus.
The broader proposed rule, several dietary supplement trade groups maintain, is unnecessary and would cause hardship to industry.
In an April 10 letter to the head of ODOJ—Oregon Attorney General Ellen Rosenblum—the American Herbal Products Association (AHPA) and Council for Responsible Nutrition (CRN) said they share “DOJ’s concern about false and fraudulent claims made by opportunists and other bad actors taking advantage of this current crisis.”
But the trade groups proclaimed “ODOJ currently possesses the ability to take action against such bad actors on the basis that their statements are simply and clearly false, without the need for an additional cause of action based on a lack of substantiation.”
Due to the coronavirus, ODOJ on April 17 adopted the emergency rule that lasts for six months. It states, in part: “It is unfair and deceptive for an advertiser or seller to represent that a good that is or may be obtained primarily for personal, family or household purposes will prevent, treat, diagnose, mitigate, or cure coronavirus, COVID-19 or a related condition, without first having competent and reliable scientific evidence upon which to base a reasonable belief in the truth of the representation.”
In the coming summer, ODOJ still plans to begin a new rulemaking process on the broader substantiation rule, said Kristina Edmunson, a spokeswoman for Rosenblum.
“Broadly speaking, this means the [Oregon] Department of Justice plans to hold a rulemaking advisory committee, a public hearing, and receive public comment, as well as the other various Administrative Procedure Act requirements,” Edmunson said in an email. “Notice will be given in the usual course.”
On Sept. 30, 2019, following consultation with an advisory committee representing businesses, consumer interests and other stakeholders, ODOJ filed the substantiation rule’s text. Under a summary of the proposal, the rule “makes it an unfair and deceptive practice to represent, without competent and reliable scientific evidence, that a good has a health benefit.”
The proposed rule applies to both advertisers and sellers of goods making health benefit representations, fueling concerns that the proposal would have a sweeping impact on the supplement sector, including retailers of products.
The "competent and reliable scientific evidence" standard is the same one used by the Federal Trade Commission for health and safety claims, whose mission is to prevent unfair and deceptive trade practices in interstate commerce.
Claims without competent and reliable scientific evidence “may be deceiving consumers” and persuading them “to purchase goods that will not provide the health benefits as described,” ODOJ explained in its Sept. 30, 2019 notice of proposed rulemaking (NPRM). “This deception not only leads consumers to lose money on fruitless goods, but could also lead to adverse health consequences” because a consumer who uses such a product “might be missing out on the health benefits of a different, substantiated good.”
According to a fiscal and economic input analysis in the NPRM, the “rule would put Oregon on par with the Federal Trade Commission and most other states that require claimed health benefits to be supported by competent and reliable scientific evidence.”
Megan Olsen is vice president and associate general counsel of CRN, who co-authored the April 10 letter to ODOJ along with AHPA President Michael McGuffin. In an interview, she said CRN believes the proposal would make Oregon the only jurisdiction that allows a plaintiff to challenge whether a product has adequate substantiation rather than proving the falsity of a claim.
Instead of having to prove an advertisement is false, the proposed rule says anyone “can bring a case for false and misleading advertising by simply saying, ‘We don’t think you have competent and reliable scientific evidence. Prove it,’” said Steve Mister, president and CEO of CRN, in a separate interview.
Some sources suggested the rule could make an advertiser vulnerable to an enforcement action, even if a widely accepted health claim in the marketplace was in fact truthful, but the advertiser didn’t possess the evidence to substantiate it.
“It would establish that the lack of adequate substantiation by itself” violates Oregon’s unfair and deceptive acts and practices (UDAP) statute “regardless of whether the claim itself is true,” said attorney Lori Kalani, co-chair of the State Attorneys General practice with Cozen O’Connor, in an interview. “I could say … ‘The sky is blue’ … but if they come to me and say, ‘Do you have substantiation for that?’ and I don’t have it, then I violated the statute even though the sky is blue.”
Private right of action
In March 2020, following public comments, ODOJ amended its proposal with the following language: “It is the intent of the rule that in construing the meaning of the term ‘competent and reliable scientific evidence,’ the courts be guided by decisions of federal courts and final orders of the Federal Trade Commission."
But the rule would still allow citizens to bring a private right of action in court for violating the substantiation rule.
Objecting to the proposal in testimony during a Nov. 14, 2019 hearing before ODOJ, Kyle Turk of the Natural Products Association (NPA) warned “private parties” rather than “experienced federal authorities” could determine “what does or doesn’t meet a particular standard.”
“That makes standards even less useful and increases consumer confusion,” testified Turk, deputy director of government affairs with NPA, whose head official, Daniel Fabricant, Ph.D., previously oversaw dietary supplements at FDA. The proposal “would arguably benefit the plaintiff’s bar,” Turk added, but “it would not help Oregonians seeking natural products for healthy lifestyles.”
Commenting on the health substantiation rule, Kalani said she doesn’t think the primary intent of Rosenblum is to create a private right of action.
“I think the AG is just trying to pass the rule about the substantiation, but because of how the Oregon UDAP works, a regulation that’s promulgated by the AG automatically gives rise to a private right of action,” the Washington, D.C.-based lawyer explained. “That’s obviously a major concern for every maker or seller of nutritional products because now it’s not just the AG, but there’s the trial bar out there who can bring these cases.”
In the April 10 letter to Rosenblum, Olsen and McGuffin wrote, “It is difficult to overstate the immensely harmful effect that the proposed rule’s private right of action would have on Oregon businesses.”
Another group opposed to the private right of action is the Oregon Business & Industry (OBI), reportedly the state’s largest business organization and one of the entities consulted in 2019 by ODOJ regarding its health claims substantiation proposal. In an interview, an OBI representative raised concerns that the private right of action could lead to “frivolous lawsuits.”
“You could have people who want to sue over any number of things,” said Paloma Sparks, OBI’s vice president of administration and general counsel. “And even if we could successfully defeat such a claim in court, that costs our members so much money to go through the court process. If we were just talking about attorney general enforcement, they would … consider what is a reasonable claim to take forward.”
Sparks also raised concerns that the rule would subject retailers to liability, even though they don't control the manufacturing of the products. OBI further questioned the wisdom of the broader rule itself.
"There's all sorts of products out there that say 'good for you,'" Sparks said. "Can they [sellers/advertisers] no longer say that Vitamin C is 'good for you'" without a study available to them?
A consumer advocacy group supported Oregon's proposal and disagreed that a private right of action would lead to many frivolous complaints.
Such a right is one of the “best” and “only” ways for consumers “to get recourse when they’re scammed,” said Charlie Fisher, state director of the Oregon State Public Interest Research Group (OSPIRG), in an interview. ODOJ also consulted OSPIRG in 2019.
While Fisher commended ODOJ for its work, he said the agency has “limited capacity” and a consumer who is defrauded should be entitled to recourse, even if ODOJ doesn’t bring a case.
Industry likes to make the “frivolous lawsuit” argument to ensure it isn’t “held accountable,” Fisher said, “but from a consumer perspective, we know it’s just the right thing to do.”
The Oregon Trial Lawyers Association, one of the groups ODOJ consulted in 2019, did not immediately respond to a request for comment for this article.
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