The City Attorney’s brief pushes back on U.S. News and World Report’s attempts to obstruct investigation into the company’s undisclosed financial ties to hospitals it ranks
SAN FRANCISCO (February 29, 2024) — San Francisco City Attorney David Chiu announced today that he filed a brief seeking to dismiss U.S. News and World Report’s baseless lawsuit meant to obstruct the City Attorney’s consumer protection investigation into the company’s potential unlawful business practices.
City Attorney Chiu launched an investigation in June 2023 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 a flawed methodology that leads 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 lawsuit and sought a preliminary injunction in an attempt to thwart the investigation, claiming that the City Attorney’s questions quelled the company’s free speech rights.
“U.S. News continues to waste judicial resources to evade legitimate questions about its undisclosed financial links to the hospitals it ranks,” said City Attorney Chiu. “Its preliminary injunction motion is just as baseless as the lawsuit. U.S. News is not above the law, and its bullying litigation tactics will not deter us from standing up for patients and consumers. We are hopeful the Court will see right through this legal charade and dismiss the lawsuit entirely.”
Background
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 prevent the public from being misled, 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 in January to obtain the necessary information to determine the scope of the company’s potential violations of California consumer protection laws.
Rather than take the reasonable course of requesting an extension on the subpoena or utilizing the available procedures under California law to raise objections to the subpoena, U.S. News chose to preemptively file a flimsy lawsuit and preliminary injunction motion claiming that a legitimate government investigation into potential unlawful business practices violated the company’s First Amendment rights. U.S. News’s meritless lawsuit directly interferes with the City Attorney’s duty to investigate potential violations of California consumer protection laws. The City Attorney’s brief asks the Court to deny U.S. News’s preliminary injunction and dismiss the lawsuit entirely. Due to possible implications of U.S. News’s lawsuit, 18 local jurisdictions and officials from across the country, and local government organizations, filed an amicus brief in support of our motions before the Court.
The case is U.S. News & World Report, L.P., v. City Attorney of San Francisco David Chiu, U.S. Northern District Court of California, No. 24-00395. The brief can be found here.
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