Metropolitan News-Enterprise


Friday, June 17, 2011


Page 1


S.C. Allows Suit Over Claim Debt Collector Disclosed Medical Data




Federal law does not preempt a suit against a debt collector for violation of California’s medical privacy law, a unanimous state Supreme Court ruled.

Overruling lower courts, the justices said the interests served by the state Confidentiality of Medical Information differ from those that led Congress to pass the Fair Credit Reporting Act. Nothing in the FCRA, Justice Kathryn M. Werdegar wrote, suggests an intent to bar states from enforcing their medical privacy laws solely because the illegal disclosure was part of an effort to collect a debt.

The high court reinstated a suit by Robert A. Brown, a downtown Los Angeles attorney, against Stewart Mortensen, the former proprietor of Debt Collection Services.

Brown alleged that Rolf Reinholds, a Glendale dentist who treated the plaintiff and his two minor children, billed him $600 for a permanent dental crown, even though he never received or agreed to pay for one.

Brown further alleged that when he disputed the debt, Credit Bureau Services sent him copies of his and his children’s dental charts. Brown responded that he did not owe Reinholds money, and that his and his children’s dental records were confidential.

More Disclosures

For the next two years, Brown claims, the defendant repeatedly disclosed the contents of his and his children’s dental charts to credit reporting agencies, and disclosed  other confidential information such as social security numbers to Reinholds. Brown alleged that there was no cause to disclose information regarding his children, since the disputed bill was for work allegedly performed on him, and that when he contacted the credit reporting agencies to dispute the disclosures, the defendant made additional unauthorized and irrelevant disclosures regarding his past treatment history.

Brown and his wife, on behalf of themselves and their children, sued Mortensen, along with Reinhold and others who were subsequently dismissed.

Los Angeles Superior Court Judge  Anthony Mohr sustained Mortensen’s demurrer on the ground that the claims were impermissibly vague. The Court of Appeal disagreed with that conclusion, but affirmed on the alternative ground that the defendant was acting as a furnisher of credit information, so the claims were preempted by the federal act.

The court relied on a section of the Credit Reporting Reform Act adopted in 1996. The section broadened FCRA preemption to include, among other things, state regulation “relating to the responsibilities of persons who furnish information to consumer reporting agencies.”

Different Focuses

But Werdegar, in her opinion for the high court, said the focuses of the state and federal acts are different. The FCRA is designed to protect against harmful disclosure of inaccurate or outdated credit information, while the Confidentiality Act bars unauthorized release of medical information, the justice said.

“...Congress never preempt state laws regulating medical privacy and thereby to relieve entities otherwise obligated to maintain confidentiality of the duty to do so when reporting credit information,” she wrote.

 Werdegar also rejected the argument that the state law is preempted by the Health Insurance Portability and Accountability Act.

HIPAA and its implementing regulations, she wrote, reflect federal intent to grant strong protection against unauthorized disclosure and expressly allow states to legislate on the subject as long as those laws do not conflict with, and provide for at least as much protection, federal law. Werdegar also noted that HIPAA was enacted less than a month prior to the Consumer Reporting Reform Act, which amended the FCRA by, among other things, adding the preemption language relied upon by the defendant.

“The 104th Congress could have amended the FCRA to address the scope of a medical provider’s duties when furnishing information to a consumer reporting agency, or it could have addressed it as part of HIPAA,” the jurist reasoned.

“It chose to address it as part of HIPAA, authorizing the Department to adopt regulations on the subject, while at the same time inviting the states to continue to regulate to the extent they desired to enact more stringent, privacy-favoring legislation,” Werdegar continued. “...We see no plausible basis for reading into [the Reform Act’s preemption sections] a clear and manifest congressional intent to preempt state legislation on that topic, when the same Congress in HIPAA had just authorized and encouraged further state regulation of such matters.”

Brown argued his own case in the Supreme Court, while Charles Messer of Century City’s Carlson & Messer argued for the defendant, who can seek U.S. Supreme Court review because the case turns on a Supremacy Clause issue.

The case is Brown v. Mortensen, 11 S.O.S. 3243.


 Copyright 2011, Metropolitan News Company