A federal judge has cleared San Francisco's city attorney to move ahead with his investigation into the methods used by U.S. News and World Report to rank America's hospitals, rejecting attempts by the news magazine publisher to block the city attorney's subpoenas, which the publisher said amounted to government punishment of its speech rights.
U.S. News and World Report has immediately appealed the decision.
On May 7, U.S. District Judge William H. Orrick granted the request from San Francisco City Attorney David Chiu to dismiss a lawsuit brought by U.S. News, seeking an injunction blocking the city from enforcing its subpoenas in the investigation.
U.S. District Judge William H. Orrick
| Northern District of California
Chiu had launched an investigation in June 2023, seeking more information about alleged "misrepresentations" in U.S. News' annual hospital rankings.
In public statements, Chiu has asserted U.S. News may be receiving "significant" payments from hospitals, through alleged licensing fees allowing hospitals to use "Best Hospitals badges," "payments for 'Featured Hospital" placement, and other alleged perks and benefits through the hospital rankings program.
According to Chiu, this system allegedly could mislead consumers into making faulty decisions about their health care, noting U.S. News "markets itself as an expert on ranking hospitals" with claims the publication "has been 'helping patients and families find the best healthcare for more than 30 years.'"
"Health experts around the country have questioned whether - contrary to the company's representations of authority - 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," Chiu's office said in a recent news release.
Chiu has asserted such actions may violate California's Unfair Competition Law (UCL).
To back its investigation into those assertions, Chiu's office leveraged its subpoena power to hit U.S. News with demands for information and documents the city attorney said is needed to "determine the scope of the company's potential violations of California consumer protection laws."
U.S. News has not responded to the subpoenas. Rather, the publisher sued Chiu, saying he and his office are trampling their constitutional speech rights by attempting to use the power of their office to force the company to turn over such information, with the intent of using that information to potentially initiate further legal actions against them.
"At its core, the City Attorney’s actions pose a fundamental threat to our First Amendment rights and set a dangerous precedent for all media platforms and news organizations," U.S. News wrote in its complaint, filed in January. "The City Attorney is threatening invasive, sweeping, burdensome incursions against a news organization merely because he disagrees with an editorial viewpoint – specifically, U.S. News’ rankings and methodology.
"The independence of editorial determinations - free from business considerations - is a bedrock principle of journalism, to which U.S. News proudly adheres."
On May 7, however, Judge Orrick sided with Chiu. Orrick said he believed the city attorney's duty to investigate potential wrongdoing under California law trumps U.S. News' First Amendment rights in this instance.
Orrick disagreed with U.S. News' assertion that the subpoenas represent a threat from Chiu's office to prosecute U.S. News.
He said to allow U.S. News to block the investigation now would lead to a situation in which any business could use the possible threat of further action by the city attorney's office to prevent any investigation by the city attorney's office.
"A facially lawful investigation by the City Attorney is not a credible threat of prosecution," Orrick wrote.
Further, the judge said he did not believe the subpoenas represented a threat to U.S. News' speech rights, because the publication has not shown that the subpoenas and the investigation, as it exists at this time, would cause the company to alter its ranking methods or publishing practices.
"Here, U.S. News has not alleged that the Subpoenas have 'actually limited' its ability to express itself" or to "self-censor," the judge said.
The company, however, has asserted Chiu's actions are causing them harm. U.S. News noted at least one large hospital system - the University of Pennsylvania, also known as Penn Medicine - has withdrawn from participating in the rankings system since Chiu sent his subpoenas.
U.S. News further noted Chiu crowed about the Penn Medicine withdrawal on Twitter, noting how the withdrawal from U.S. News' "dubious hospital rankings" followed his June 2023 subpoenas.
Orrick, however, said that is not enough to back their claims that the subpoenas represent an illegal effort by the city attorney to use his power against their business.
"Here, were U.S. News to refuse to comply with the Subpoenas and were the City Attorney to try to enforce them, an entire set of legal procedures would be set in motion, forcing the City Attorney to justify the Subpoenas in state court before they could be enforced," Orrick wrote. "There is quite an obvious difference between the threat of immediate criminal prosecution for violating a law of general and prospective applicability and the participation in a statutory discovery procedure that allows a party to object or not respond to discovery requests and requires the City Attorney to file a petition in state court to require production.
"... And all of this would occur before the City Attorney determines whether to file suit. Meanwhile, nothing prevents U.S. News from engaging in the speech that it claims the Subpoenas seek to chill," Orrick said.
Orrick also sided with Chiu on the question of whether U.S. News' action amounted to an illegal lawsuit filed in violation of California's law prohibiting so-called strategic lawsuits against public participation, or SLAPPs. Chiu said the lawsuit was intended to illegally prevent his office from carrying out its duties, so it violated the anti-SLAPP statute.
Orrick agreed, and ordered U.S. News to pay the city attorney's costs associated with defending against the lawsuit.
In response to Orrick's decision, Chiu claimed victory. In a statement, Chiu said: “I am pleased the Court saw right through this legal charade and dismissed the lawsuit entirely. It’s disappointing that U.S. News chose to waste judicial resources on a red herring lawsuit to evade legitimate questions about its undisclosed financial links to the hospitals it ranks.”
U.S. News and World Report filed an immediate appeal of the decision to the U.S. Ninth Circuit Court of Appeals, according to federal court records.
U.S. News has been represented by attorney John Potter and others with the law firm of Quinn Emanuel Urquhart & Sullivan, of San Francisco, Los Angeles and Washington, D.C.
In a statement first published by KRON4 news, U.S. News said: “We respectfully disagree with the District Court’s ruling and intend to continue fighting for the First Amendment and challenging any threat to the Constitutional right that news organizations rely upon. No city official anywhere in the country should be allowed to launch a fishing expedition just because they disagree with a news outlet’s editorial decisions.”