U.S. News and World Report tries to obstruct investigation of unlawful business practices

U.S. News and World Report has filed a baseless lawsuit to shut down an investigation into the company’s undisclosed financial ties to hospitals it endorses

SAN FRANCISCO (January 31, 2024) — San Francisco City Attorney David Chiu responded today to a gratuitous lawsuit filed by U.S. News and World Report that is meant to impede the City Attorney’s consumer protection investigation into the company’s potential unlawful business practices. City Attorney Chiu launched an investigation in June 2023 into the company’s hospital rankings, seeking information about U.S. News’s financial ties to the hospitals it ranks and whether the company’s bold statements about the authoritativeness of its rankings are undermined by its ranking methodology leading to adverse outcomes for poorer, sicker, and more diverse health care patients. Instead of working with the City Attorney’s Office to address these matters, U.S. News filed a baseless lawsuit to try to thwart the investigation, claiming that the City Attorney’s questions quelled the company’s free speech rights.

City Attorney David Chiu speaks at a press conference in August 2022.

“It’s ironic that U.S. News claims its speech has been chilled, when the purpose of the company’s lawsuit is to chill and impede a legitimate government investigation of potential unlawful business practices,” said City Attorney Chiu. “Despite U.S. News’s stated commitment to transparency, the company has spent months evading legitimate questions about its undisclosed financial links to the hospitals it ranks. This lawsuit is yet another baseless attempt to avoid these questions and a waste of judicial resources. U.S. News is not above the law, and its bullying litigation tactics will not deter us from standing up for patients and consumers.”

The City Attorney’s Office discovered last year that U.S. News accepts payments from the entities it endorses without disclosing those financial links. In order to avoid misleading the public, Federal Trade Commission regulations interpreting the Federal Trade Commission Act require disclosure. U.S. News receives revenue from hospitals through licensing fees to use its “best hospitals” badges, subscriptions to access the granular data underpinning the rankings, advertising on U.S. News’s website and in the Best Hospitals Guidebook, and payments for “Featured Hospital” placement. This funding is significant, with one hospital in Kansas acknowledging that it paid U.S. News $42,000 to use the “best hospitals” badge for one year.

U.S. News markets itself as an expert on ranking hospitals. It claims it is “the global authority in hospital rankings” and has been “[h]elping patients and families find the best healthcare for more than 30 years.”

U.S. News’s hospital rankings affect many people’s healthcare decisions, including Californians. The company claims that more than 40 million people visit its website every month, with others buying its annual Best Hospitals Guidebook. As health experts around the country have questioned whether U.S. News’s hospital ranking methodology is misleading patients and warping the health care system to the detriment of poorer, sicker, and more diverse patients, several major hospitals have withdrawn from participation in U.S. News’s rankings, and U.S. Senator Richard Blumenthal has demanded U.S. News stop accepting money from the hospitals it ranks.

The impact of the hospital rankings on Californians, along with the undisclosed financial ties to the hospitals that U.S. News ranks, led City Attorney Chiu to initiate an investigation in June 2023 into the company’s business practices. California’s Unfair Competition Law (UCL) prohibits unlawful, unfair, and fraudulent business practices as well as unfair, deceptive, untrue, or misleading advertising. Certain city attorneys in California, including the San Francisco City Attorney, can send subpoenas or letters of inquiry and file lawsuits on behalf of the People of the State of California to protect consumers and ensure fair competition among businesses.

In response to the City Attorney’s letter sent in June 2023, the company did not respond to the reasonable questions about its methods, and it has refused to address the payments it receives from hospitals the company ranks. As a result, City Attorney Chiu sent two subpoenas to U.S. News earlier this month to obtain the necessary information to determine the scope of the company’s violations of federal and California consumer protection laws.

Rather than take the reasonable course of requesting an extension on the subpoena or utilize the available procedures to object to a subpoena under California law, U.S. News chose to preemptively file a flimsy lawsuit claiming that a legitimate government investigation into unlawful business practices violated the company’s First Amendment rights. The City Attorney will vigorously defend against U.S. News’s baseless claims and efforts to evade important questions.