Steiner v. Bonanni

• Citation: 292 Mich.App. 265,807 N.W.2d 902
• Decision Date: 07 April 2011
• Docket Number: Docket No. 294016.
• Parties: ISIDORE STEINER, DPM, PC v. BONANNI.
• Court: Court of Appeal of Michigan (US)

292 Mich.App. 265

807 N.W.2d 902

ISIDORE STEINER, DPM, PC

v.BONANNI.

Docket No. 294016.

Court of Appeals of Michigan.

Submitted Nov. 4, 2010, at Lansing.Decided April 7, 2011, at 9:00 a.m.

Wood, Kull, Herschfus, Obee & Kull, P.C., Farmington Hills (by Brian H. Herschfus and Nicole J. LaVake), for plaintiff.

Giarmarco, Mullins & Horton, P.C., Troy (by William H. Horton and Elizabeth A. Favaro), for defendant.

Before: SAWYER, P.J., and FITZGERALD and SAAD, JJ.

SAAD, J.

This Court granted plaintiff's application for leave to appeal a trial court order that denied plaintiff's motion to compel discovery. For the reasons set forth below, we affirm.

I. NATURE OF THE CASE

Plaintiff, Isidore Steiner, D.P.M., P.C., claims that defendant, Dr. Marc Bonanni, a former employee of the corporation, breached his employment contract with plaintiff and misappropriated property of the corporation. Plaintiff maintains that defendant stole its patients in violation of a clause in the employment agreement that prohibited defendant from soliciting or servicing any patients of the corporation after he left its employment. After defendant left the employment of plaintiff, plaintiff sued defendant and sought disclosure of defendant's patient list to prove its case and damages. Defendant objected to disclosure pursuant to the Health Insurance Portability and Accountability Act (HIPAA), 42 U.S.C. § 1320d et seq., and state law regarding physician-patient privilege. This discovery dispute requires us to decide whether federal or state law controls and whether disclosure would violate the nonparty patients' privacy rights.

By its language, HIPAA asserts supremacy in this area, but allows for the application of state law regarding physician-patient privilege if the state law is more protective of patients' privacy rights. In the context of litigation that, as here, involves nonparty patients' privacy, HIPAA requires only notice to the patient to effectuate disclosure whereas Michigan law grants the added protection of requiring patient consent before disclosure of patient information. Because Michigan law is more protective of patients' privacy interests in the context of this litigation, Michigan law applies to plaintiff's attempted discovery of defendant's patient information. And, because Michigan law protects the very fact of the physician-patient relationship from disclosure, absent patient consent, the trial court properly rejected plaintiff's efforts to obtain this confidential information, and we affirm the trial court's ruling.

II. FACTS AND PROCEEDINGS

On July 6, 1999, plaintiff and defendant entered into an employment agreement that contained a noncompetition and nonsolicitation clause. Among other things, the clause in issue prohibited defendant from inducing, soliciting, diverting, servicing, or taking away patients from plaintiff for a three-year period following the termination of the employment agreement. Defendant resigned from plaintiff in July 2007. Thereafter, plaintiff filed a lawsuit against defendant for breach of contract, conversion, fraud, and misrepresentation, and seeking an accounting. An essential component of plaintiff's claim for damages is that, after he left the practice, defendant treated plaintiff's patients in violation of the employment agreement.

During discovery, plaintiff sent defendant a set of interrogatories, one of which requested the names, addresses, and telephone numbers for every patient treated by defendant since he resigned. Plaintiff claims that it cannot protect its contractual rights to its patients without discovery of which of its former patients are now patients of defendant. Defendant objected to the interrogatory on the ground that such disclosure would violate HIPAA and Michigan's physician-patient privilege, and the trial court issued a qualified protective order in which the parties agreed to conduct their litigation in compliance with HIPAA and agreed to maintain all privileges. Because defendant failed to fully respond to plaintiff's interrogatories, plaintiff filed a motion to compel. In response, defendant argued that the information requested is protected by Michigan's statutory physician-patient privilege, which, he argued, contains more stringent requirements than HIPAA. The trial court denied plaintiff's motion to compel production of the patients' names, and ruled that the names of the nonparty patients are privileged under Michigan law.

III. ANALYSIS

A. STANDARDS OF REVIEW

We review de novo a trial court's decision about the application of the physician-patient privilege. Baker v. Oakwood Hosp. Corp., 239 Mich.App. 461, 468, 608 N.W.2d 823 (2000). If the privilege does apply, we review for an abuse of direction a trial court's order regarding disclosure. Id. An abuse of discretion occurs when a trial court chooses a result that falls outside the range of reasonable and principled outcomes. Maldonado v. Ford Motor Co., 476 Mich. 372, 388, 719 N.W.2d 809 (2006). Whether HIPAA preempts Michigan law is a question of law, which is reviewed de novo. Hines v. Volkswagen of America, Inc., 265 Mich.App. 432, 438, 695 N.W.2d 84 (2005).

B. DISCUSSION

Plaintiff argues that the trial court erred by holding that the names, addresses, and telephone numbers of the nonparty patients that defendant allegedly wrongfully took from plaintiff are privileged and protected from disclosure by Michigan law, under MCL 600.2157 and Baker, 239 Mich.App. 461, 608 N.W.2d 823, because HIPAA applies and permits disclosure.

HIPAA is the federal regulation that governs the retention, use, and transfer of information obtained during the course of the physician-patient relationship. In re Petition of Attorney General for Investigative Subpoenas, 274 Mich.App. 696, 699, 736 N.W.2d 594 (2007). “Under HIPAA, the general rule pertaining to the disclosure of protected health information is that a covered entity may not use or disclose protected health information without a written authorization from the individual as described in 45 C.F.R. § 164.508, or, alternatively, the opportunity for the individual to agree or object as described in 45 C.F.R. § 164.510.” Holman v. Rasak, 486 Mich. 429, 438–439, 785 N.W.2d 98 (2010). However, 45 C.F.R. § 164.512 “ enumerates several specific situations in which ‘[a] covered entity may use or disclose protected health information without the written authorization of the individual, as described in [45 C.F.R.] § 164.508, or the opportunity for the individual to agree or object as described in [45 C.F.R.] § 164.510....’ ” Holman, 486 Mich. at 439, 785 N.W.2d 98, quoting 45 C.F.R. § 164.512. Included within those situations is disclosure for judicial and administrative proceedings, which allows a provider or other covered entity to disclose the protected information in response to an order or in response to a subpoena or discovery request if the provider receives satisfactory assurance that notice was provided to the patient or that reasonable efforts were made to secure a qualified protective order. 45 C.F.R. § 164.512(e). As our Supreme Court also explained in Holman:

Under HIPAA, “[a] standard, requirement, or implementation specification” of HIPAA “that is contrary to a provision of State law preempts the provision of State law” unless, among other exceptions, “[t]he provision of State law relates to the privacy of individually identifiable health information and is more stringent than a standard, requirement, or implementation specification adopted under” HIPAA. 45 C.F.R. § 160.203 (emphasis added). “Contrary” means either that “[a] covered entity would find it impossible to comply with both the State and federal requirements” or that “[t]he provision of State law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of” HIPAA. 45 C.F.R. § 160.202. “More stringent,” in this context, means “provides greater privacy protection for the individual who is the subject of the individually identifiable health information.” 45 C.F.R. § 160.202. [ Holman, 486 Mich. at 440–441, 785 N.W.2d 98.]

Plaintiff maintains that Michigan law is less stringent than HIPAA because it can be informally waived and that, therefore, MCL 600.2157 is preempted by HIPAA as a matter of law.

We first observe that, under Michigan law, the privilege belongs to the patient and only the patient may waive it. Baker, 239 Mich.App. at 470, 608 N.W.2d 823. The purpose of the physician-patient privilege is to protect the confidential nature of the physician-patient relationship. Swickard v. Wayne Co. Medical Examiner, 438 Mich. 536, 560, 475 N.W.2d 304 (1991); Gaertner v. Michigan, 385 Mich. 49, 53, 187 N.W.2d 429 (1971). These principles are particularly important in a context, as here, wherein a plaintiff seeks the names, addresses, and telephone numbers of nonparty patients, many of whom are unlikely to know the lawsuit is pending.

MCL 600.2157 provides, in part, that,

[e]xcept as otherwise provided by law, a person duly authorized to practice medicine or surgery shall not disclose any information that the person has acquired in attending a patient in a professional character, if the information was necessary to enable the person to prescribe for the patient as a physician, or to do any act for the patient as a surgeon.

When interpreting a statute, this Court must give effect to the Legislature's intent as expressed in the language of the statute by analyzing the words, phrases, and clauses according to their plain meaning. Bukowski v. Detroit, 478 Mich. 268, 273–274, 732 N.W.2d 75 (2007). The language of MCL 600.2157 states that physicians “shall not” disclose information obtained from patients for purposes of medical treatment, except as otherwise provided in the law. The use of the word “shall” denotes mandatory action. Wolverine Power Supply Coop., Inc. v. Dep't of Environmental Quality, 285 Mich.App. 548, 561, 777 N.W.2d 1 (2009). This type of...