Deming et al v. Ciox Health et al

MEDICAL RECORDS CHARGES: Montana limits applicable to paper copies requested by patients, not their attorneys, and not to electronic records… putative class action alleging overcharges dismissed… Molloy.

Ryan Deming, Briana Frasier, Michael McFarland, and Lucas Griswold (collectively “Deming”) allege that a group of Montana hospitals and their records vendor Ciox Health (collectively “Ciox”) overcharged for copies of medical records in violation of Montana law. Ciox seeks to dismiss for failure to state a claim. The motion is granted.

Both state and federal law impose limits on fees for medical records. Under the federal Health Insurance Portability & Accountability Act and its regulations, providers and their vendors may charge a “reasonable, cost-based fee,” limited to the cost of labor, supplies, postage, and preparing an explanation of the records. 45 CFR 164.524(c)(4). The Health Information Technology for Economic & Clinical Health Act further limits the fee for electronic health records to the labor cost in responding to the request. 42 USC 17935(e)(3). However, these limits apply only to records requested by patients for personal use and not to requests from 3rd parties such as insurers or law firms. Ciox (DDC 2020).

MCA Title 50 Ch. 16 Part 8 imposes additional limits on health care providers that are subject to HIPAA. §50-16-801(4), 802. Title 50 Ch. 16 Part 5 governs providers not subject to HIPAA. §50-16-502. Under both parts, “a reasonable fee for providing copies of health care information may not exceed 50 cents per page for a paper copy or photo copy. A reasonable fee may include an administrative fee that may not exceed $15 for searching & handling recorded health care information.” MCA 50-16-816, 540.

Plaintiffs engaged Western Justice Associates about PI suits. The attorneys ordered 3 years of their medical records. For each request Ciox charged a $15 basic fee and a per page fee of 50 or 75 cents. In some cases it also charged a $2 electronic data archive fee. In one instance it charged a shipping fee even though the records were delivered electronically. Invoices did not describe the time or labor involved. The parties agree that Ciox is subject to HIPAA and Part 8 and that because attorneys placed the requests, federal law does not limit the fees, but dispute whether Part 8 limits the fees.

Deming claims that Ciox violated §50-16-816, the Montana CPA, and the implied covenant of good faith & fair dealing. He moved for class certification in 2/20 before any of the Defendants appeared, but the parties eventually agreed that class discovery was necessary. The motion for class certification was denied subject to renewal pending completion of discovery. Ciox moved in 4/20 to dismiss under Rule 12(b)(6).

Although Ciox presents numerous arguments in support of its motion, the dispositive issue is application of §50-16-816:

Unless prohibited by federal law, a reasonable fee for providing copies of health care information may not exceed 50 cents for each page for a paper copy or photocopy. A reasonable fee may include an administrative fee that may not exceed $15 for searching and handling recorded health care information.

Ciox argues that the statute merely defines “reasonable fee,” applying only if some other provision limits the allowable fees, and does not apply to electronically transmitted records. Deming contends that it limits fees for medical records in any circumstance. Applying principles of interpretation for Montana statutes, Ciox has the better interpretation.

Deming asserts that §816 is “a standalone statute requiring that the charge for providing medical records be reasonable.” But it does not require anything; it is purely definitional. Its plain text does not authorize or command providers to take any action, nor does it explain when a fee must be reasonable. More compelling than the text is the structure of Part 8, which shows that §816 merely explains what is meant by “a reasonable fee” as used elsewhere in the statute. It does not apply unless some other provision already limits providers to charging “a reasonable fee” for records.

Only one provision in Part 8 explicitly limits providers to charging “a reasonable fee:” “A health care provider required to disclose health care information pursuant to compulsory process may charge a reasonable fee, not to exceed the fee provided for in 50-16-816, and may deny examination or copying of the information until the fee is paid.” §812(5) (emphasis added). This limits the allowable charge to “a reasonable fee,” which is defined via reference to §816, confirming that 816 is definitional. Indeed, even Part 8’s “Definitions” section defines “reasonable fee” by reference to §50-16-816. §803(7). Deming’s contention that 816 governs the allowable fees in all situations would render the subpoena provision superfluous, in contravention of the MCA 1-2-101 command to “give effect to all” provisions.

By contrast, Part 5 limits healthcare providers to charging “a reasonable fee,” as provided in its version of §816, in 4 situations. Like Part 8, it limits the fees that can be charged in response to a subpoena. §536. However, it also limits the allowable fees for a patient’s own request for records, §541(2), a patient’s authorization to disclose records to a 3rd party, §526(2), and a patient’s request for amended or corrected records, §545(2). Importantly, Part 5 predates HIPAA and Part 8. In enacting Part 8 to govern HIPAA-regulated entities, the Legislature only duplicated the fee limitation regarding subpoenas. Unlike Part 5, Part 8 is silent on the fees allowed in response to requests for 3rd-party disclosure, like the requests here. Deming would have the Court import the provision governing 3rd-party requests from Part 5, notwithstanding the Legislature’s choice not to. But “the office of the judge is simply to ascertain and declare what is in terms or in substance contained therein, not to insert what has been omitted or to omit what has been inserted.” §1-2-101.

Rather than engage with the text, Deming appeals to Part 8’s purpose to be more restrictive than HIPAA and a snippet of legislative history indicating that “where federal rules don’t apply, current State standards remain in place.” (HB 647 (2003) Legislative History). According to Deming, because federal law does not govern records requests by 3rd parties, Ciox, state law must limit the fees. But neither the purpose nor the legislative history can overcome the Legislature’s failure to impose the same standards on 3rd-party fee requests in Part 8 that exists in Part 5. Further, Deming’s policy arguments about protecting Montanans are overstated considering the federal protections. Had Deming rather than his attorneys requested the records, HIPAA and HITECHA would have limited the fees. 45 CFR 164.524(c)(4), 42 CFR 17935(e)(3).

Finally, as Ciox argues, §816’s plain text does not apply to electronic records, but limits fees “for each page for a paper copy or photocopy.” Deming’s contention that discovery is needed to determine if Ciox’s method qualifies as a photocopy lacks support. And while his argument is well-taken that under this interpretation, fees are limited for the more burdensome process of providing paper copies but not for likely cheaper electronic copies, it is more properly addressed to the Legislature. Part 8 was enacted in 2003 and §816 has not been updated since. As Congress did with HITECHA, the Legislature may need to update the fee statute to comport with practices of our digital world. But in its present form, §816 does not limit fees that can be charged for electronic medical records.

Because state law does not limit fees that can be charged when 3rd parties request electronic records, Deming’s claim under §816 fails. His CPA and implied covenant claims also fail because they are premised on Ciox’s alleged unlawful charge.

Ciox’s motion to dismiss is granted.

Deming, Frasier, McFarland, and Griswold individually and on behalf of all others similarly situated v. Ciox Health, St. Vincent Healthcare, Bozeman Health Deaconess Hospital, Kalispell Regional Healthcare, St. James Healthcare, and Community Medical Center, 44 MFR 228, 7/30/20.

Domenic Cossi, Jory Ruggiero, and Maxwell Kirchoff (Western Justice Associates), Bozeman, for Plaintiffs; Jay Lefkowitz & Joseph Sanderson (Kirkland Ellis), NYC, and Matthew Hayhurst & Randy Tanner (Boone Karlberg), Missoula, for Ciox; Ian McIntosh (Crowley Fleck), Bozeman, for the hospitals.