Health Law Daily Medical records provider did not have duty not to overcharge patients
Friday, December 6, 2019

Medical records provider did not have duty not to overcharge patients

By George Basharis, J.D.

Named plaintiffs in a class action suit against medical records provider Ciox could not prove elements of common-law claims styled as HIPPA claims, and Tennessee law does not apply to medical records providers.

Named plaintiffs in a class action suit against medical records provider Ciox Health, LLC (Ciox) for allegedly overcharging for its services were unable to prove all elements of their common-law claims, and Tennessee law’s fee limits do not apply to providers of medical records to patients, the U.S. Court of Appeals for the Sixth Circuit has determined. The named plaintiffs attempted to evade the fact that HIPPA does not provide for private rights of action by couching HIPPA-based claims as common-law claims of negligence, breach of implied contract, and unjust enrichment, but the claims failed because "Tennessee common law is no substitute for the private right of action that Congress refused to create in HIPPA." Although the court affirmed the district court’s grant of summary judgment to Ciox, the decision was binding only as to the named plaintiffs and not the class (Faber v. Ciox Health, LLC, December 5, 2019, Nalbandian, J.).

Ciox is a large medical-records provider that contracts with healthcare services to help patients access their medical records. The two named plaintiffs worked with law firms to access their medical records from two Tennessee hospitals that contracted with Ciox to provide medical records for their patients. Ciox serviced the requests and charged them for the records. Plaintiffs filed a class action suit alleging that Ciox charged them more than what HIPPA’s regulations and the Tennessee Medical Records Act of 1974 (TMRA) allow. Because HIPPA does not authorize a private cause of action, plaintiffs "decided to style" their claims as common-law causes of action based on negligence, negligence per se, unjust enrichment, and breach of implied-in-law contract. After the district court dismissed the TMRA claim for failure to state a claim, plaintiffs moved to certify a class of persons who requested records and were overcharged by Ciox, which was granted. Both plaintiffs and Ciox filed motions for summary judgment, and the district court granted Ciox’s motion. The plaintiffs appealed the grant of summary judgment and the dismissal of the TMRA claim.

Negligence and negligence per se. Plaintiffs’ negligence and negligence per se claims failed because plaintiffs could not establish that Ciox owed them a duty to not overcharge for medical records; there is no duty under Tennessee common law. Plaintiffs argued that in Ciox’s answer to their complaint, Ciox allegedly admitted it owed a duty to patients to comply with federal law and regulations, including HIPPA. The court opined that Ciox’s pleadings are not authoritative statements of Tennessee law, and the claim is misleading because Ciox only said it had a duty to comply with the law, not that it owed plaintiffs the common-law duty at issue. As for plaintiffs’ negligence per se claim, the doctrine does not permit a court to recognize new common-law duties that could not support an ordinary negligence claim.

Quasi-contract claims. The court determined that plaintiffs’ claims based on implied-in-law contract and unjust enrichment failed for the same reasons as the negligence claims. There was no legal contract indicting that Ciox owed plaintiffs a quasi-contractual duty to not charge them more for their medical records than HIPAA permits, and plaintiffs cited no authority to suggest that "justice and equity" under Tennessee common law requires such a duty.

TMRA. The TMRA appears to authorize a private cause of action, the court noted, but the TMRA’s fee limits do not apply to medical-record providers like Ciox; they apply exclusively to hospitals. However, the Tennessee Court of Appeals held in Pratt v. Smart Corp. that the statute also applies to independent copying services like Cox. Faced with the options of applying the Pratt holding or the statute, the court chose to follow the plain meaning of the statute.

Class notice. Although plaintiffs and Ciox agree that the district court’s grant of summary judgment without class notification requires further action by the court, they disagree on the remedy. Ciox contended that the court should remand to the district court for the purpose of issuing opt-out notices at plaintiffs’ expense, while plaintiffs claimed that the district court’s order must be limited to the named plaintiffs only. The court stated that the general rule is that when a defendant moves for and obtains summary judgment before the class has been notified, the defendant waives the right to have notice sent to the class, and the district court’s decision is binding only as to the named plaintiffs. Considering the lack of notice, the class certification by the district court cannot bind absent class members. The court noted that the text and structure of Rule 23 further supports the general rule.

Dissent. Circuit Judge Merritt concurred in part and dissented in part, agreeing with the resolution of all plaintiffs’ claims except the dismissal of the claim under TMRA. The Tennessee Court of Appeals explicitly held that the statute applies to independent copying services like Ciox (Pratt). The Tennessee Supreme Court has not ruled on the issue of whether the TRA would allow plaintiffs to bring a claim against an independent copying service such as Ciox. Therefore, it is proper to look to lower court decisions, specifically Pratt.

The case is No. 18-5896.

Attorneys: Tim Edwards (Ballin, Ballin & Fishman, PC) for Richard Faber, I and Jennifer Monroe. Jay P. Lefkowitz (Kirkland & Ellis LLP) and Garry Kevin Grooms (Burr & Forman LLP) for Ciox Health, LLC d/b/a HealthPort Technologies, LLC.

Companies: Ciox Health, LLC d/b/a HealthPort Technologies, LLC

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