Carter v. Healthport Techs., LLC

Decision Date10 May 2016
Docket NumberDocket No. 15–1072.
Citation822 F.3d 47
PartiesMarissa CARTER, Evelyn Grys, Bruce Currier, Sharon Koning, Sue Beehler, Marsha Mancuso, Jaclyn Cuthbertson, as individuals and as representatives of the classes, Plaintiffs–Appellants, v. HEALTHPORT TECHNOLOGIES, LLC, The Rochester General Hospital, The Unity Hospital of Rochester, F.F. Thompson Hospital, Inc., Defendants–Appellees.
CourtU.S. Court of Appeals — Second Circuit

Stephen G. Schwarz, Rochester, NY (Kathryn Lee Bruns, Faraci Lange, Rochester, NY; Kai H. Richter, Nichols Kaster, Minneapolis, MN, on the brief), for PlaintiffsAppellants.

Jodyann Galvin, Buffalo, NY (Hodgson Russ, Buffalo, NY, on the brief), for DefendantsAppellees HealthPort Technologies, LLC, The Rochester General Hospital, and The Unity Hospital of Rochester.

Eric J. Ward, Rochester, NY (Abigail L. Giarrusso, Ward Greenberg Heller & Reidy, Rochester, NY, on the brief), for DefendantAppellee F.F. Thompson Hospital, Inc.

Before: KEARSE, WALKER, and CABRANES, Circuit Judges.


, Circuit Judge:

Plaintiffs Marissa Carter et al., individually and as representatives of putative classes of persons alleging that they were overcharged for copies of their medical records by defendants Rochester General Hospital (RGH), Unity Hospital of Rochester (Unity), F.F. Thompson Hospital, Inc. (Thompson), and HealthPort Technologies, LLC (HealthPort), appeal from a judgment of the United States District Court for the Western District of New York, Frank P. Geraci, Jr., Chief Judge, dismissing their complaint (“Complaint”) for lack of subject matter jurisdiction. The Complaint alleged principally that RGH, Unity, and Thompson (collectively the Hospitals), through their agent HealthPort, charged plaintiffs more than the statutory maximum fees allowed by N.Y. Pub. Health Law §§ 18(2)(d) and (e)

(McKinney 2012) for providing copies of plaintiffs' medical records. The district court granted defendants' motions to dismiss the action pursuant to Fed.R.Civ.P. 12(b)(1) on the ground that the Complaint alleged that the requested records had been paid for by plaintiffs' attorneys, ruling that the Complaint therefore did not plead injury-in-fact to the plaintiffs themselves and that plaintiffs lacked standing under Article III of the Constitution to bring this action. Plaintiffs challenge that ruling. For the reasons that follow, we conclude that, in light of ordinary principles of agency, the Complaint's allegations that each named plaintiff “through [her or his] counsel “paid” the charges demanded by defendants for providing the records and that Plaintiffs bore “the ultimate expense” for those records, plausibly alleged that plaintiffs themselves were injured by the claimed violations of New York law. Accordingly, we conclude that the district court erred in dismissing the action pursuant to Rule 12(b)(1) for lack of standing.


The Complaint alleged that §§ 18(2)(d) and (e) of the New York Public Health Law

forbid hospitals to profit from the process of providing a patient with copies of his or her medical records. The Complaint cited § 18(2)(d)

as “requir[ing] that, upon written request by a patient or other qualified person for that patient's medical records, a health care provider must furnish a copy of the patient information requested” (Complaint ¶ 20), and alleged that a [q]ualified person’ is defined broadly” in §§ 18(1)(g)-(h) of that law “to include, among other[s] ..., any subject of the medical information or attorney representing a qualified person” (Complaint ¶ 21). It alleged that § 18(2)(e)

places two caps on the amount of money that a provider (or a person or entity acting on behalf of a provider) may charge for these records. First, a charge must not exceed[ ] the costs incurred by such provider ....” Second, the reasonable charge for paper copies shall not exceed seventy-five cents per page.

(Complaint ¶ 22 (quoting N.Y. Pub. Health Law § 18(2)(e)

(emphases ours)).)

A. The Complaint's Factual Allegations

The Complaint—whose factual assertions are taken as true, given the district court's dismissal on the basis of the Complaint—alleged the following as facts. Plaintiffs are seven individuals, each of whom had been a patient of one of the Hospitals. (See Complaint ¶¶ 33, 40, 47, 54, 70, 77, 84.) HealthPort was “a for-profit limited liability company” (id. ¶ 14) that “ha[d] contracts with the [Hospitals] and other New York health care providers to (a) respond to requests for medical records, and (b) produce such records to patients and other qualified persons” (id. ¶ 24).

Between October 2012 and April 2014, each plaintiff, “through [her or his] counsel,” “requested medical records from” the treating hospital. (Complaint ¶ ¶ 34, 41, 48, 55, 71, 78, 85.) The Complaint alleged that HealthPort responded to each such request and stated that the charge for such records would be 75 cents per page, plus a $2 fee for electronic delivery; the fee demanded was paid by each plaintiff through her or his attorney. For example,

[o]n or about September 5, 2013, Carter requested medical records from RGH through her counsel.
35. On or about October 1, 2013, HealthPort, acting on behalf of RGH, sent an invoice, which indicated that Carter would be charged $77.00 for 100 pages of medical records ($0.75 per page, plus a $2.00 “Electronic Dlvry Fee”).
36. On or about October 7, 2013, Carter paid the $77.00 charge through her counsel in order to obtain copies of the requested medical records.
38. The cost to produce these medical records was substantially less than seventy-five cents per page.
39. The fee charged to, and paid by, Carter exceeded the cost to produce these medical records, and included a built-in kickback from HealthPort to RGH.

(Complaint ¶¶ 34–36, 38–39 (emphases added).) Parallel allegations were made with respect to each of the other plaintiffs. (See id. ¶¶ 41–43, 45–46 (plaintiff Evelyn Grys); id. ¶¶ 48–50, 52–53 (plaintiff Bruce Currier); id. ¶ ¶ 55–56, 58–61, 63–66, 68–69 (plaintiff Sharon Koning (three requests)); id. ¶ ¶ 71–73, 75–76 (plaintiff Sue Beehler); id. ¶¶ 78–80, 82–83 (plaintiff Marsha Mancuso); id. ¶¶ 85–87, 89–90 (plaintiff Jaclyn Cuthbertson).)

While the fee for Carter's records included a $2 charge for “Electronic” delivery (see id. ¶ 35), HealthPort “produced [her] records in paper format” (id. ¶ 37; see also id. ¶¶ 65–67 (same with respect to the third request by Koning)). With respect to the first two requests by Koning and the requests of the other five plaintiffs, the HealthPort fee included charges of 75 cents per page, but their records were provided only electronically through an online portal. (See id. ¶¶ 42–44 (Grys); id. ¶¶ 49–51 (Currier); id. ¶¶ 56–57, 61–62 (Koning); id. ¶¶ 72–74 (Beehler); id. ¶¶ 79–81 (Mancuso); id. ¶¶ 86–88 (Cuthbertson).)

In May 2014, plaintiffs commenced the present action on behalf of themselves and a putative class (the “Class”), defined as:

All patients who requested medical records (either by themselves or through a qualified person acting on their behalf) from a health care provider in the State of New York that contracted with HealthPort Technologies, LLC to produce such records, and were charged on or after May 20, 2008 for such records.

(Complaint ¶ 92; see also id. ¶¶ 93–95 (proposing three “Sub–Classes,” one for each of the three Hospitals).) Federal jurisdiction was premised on diversity of citizenship as permitted by the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d)(2)

. (See Complaint ¶ 18.)

The Complaint alleged that the fees charged by HealthPort and paid by plaintiffs substantially exceeded the cost to produce the requested medical records and included “built-in kickback[s] from HealthPort to” the respective Hospitals. (E.g., id. ¶¶ 39, 46, 53, 59, 64, 69, 76, 83, 90.) To support this allegation, plaintiffs attached to the Complaint printouts of two advertisements on HealthPort's website offering “hospitals and large clinics” a “shared release of information (ROI) or “ROI Partner” service, for responding to requests for medical records (Complaint Exhibit 1, at 1). One advertisement stated to offerees, [w]ith HealthPort ROI Partner, you will gain significant cash flow from the ROI process....” (Id. ) The other advertisement proffered testimonials from users of HealthPort's ROI services:

Just ask—our clients will tell you that our release of information services ... will ... boost revenue.

(Complaint Exhibit 2.) Thus, HealthPort quoted a Florida hospital's Administrative Director of Health Information Management, who wrote, inter alia, We decided to go with” HealthPort's “ROI Partner” service; [n]ow we're a revenue generating department.” (Id. )

The Complaint alleged that charging patients fees in excess of defendants' costs in order to obtain their medical records violated N.Y. Pub. Health Law §§ 18(2)(d) and (e)

, and unjustly enriched defendants “at the ultimate expense of Plaintiffs and other Class members” (Complaint ¶¶ 116, 123; see id. ¶¶ 115, 122). The Complaint also alleged that defendants' conduct, including charging of excessive fees, [f]ailing to disclose the actual cost to produce medical records,” engaging in the kickback scheme, and failing to disclose the kickbacks, constituted deceptive business practices in violation of New York's General Business Law, see N.Y. Gen. Bus. Law §§ 349(a) and (h) (McKinney 2004). (Complaint ¶ 129.) The Complaint stated that plaintiffs and the Class were injured and suffered monetary losses as a result of defendants' conduct. (See, e.g., id. ¶¶ 109, 116, 123, 134.)

B. Defendants' Motions To Dismiss

All of the defendants moved to dismiss the Complaint, each urging dismissal under Rule 12(b)(1)

on the ground that plaintiffs lacked standing, or dismissal under Rule 12(b)(6) for failure to state a claim on which relief can be granted. In support of their lack-of-standing argument, defendants principally submitted copies of (a) some...

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