The decision made in the United States District Court for the District of Columbia (Ciox Health, LLC v. Azar, Case No. 18-cv-00040) sent a bit of a shockwave through the legal system, most notably the personal injury area of practice.
The ruling caused the US Department of Health and Human Services (HHS) to modify its interpretation of the HiTech Act. Originally, HHS provided guidance that patient requests for medical records can be directed to providers and require them to send their private records to third parties, regardless of who they are. This meant a patient can have their records sent to their attorney, a 3rd party retrieval company, or even their neighbor if they chose.
The real battle; however, was over the fees that they could charge for the records. Ciox and other medical record storage providers who worked with hospitals wanted to be able to charge fees beyond what was allowed under patient directed requests. Under HIPAA, fees that a covered entity may impose” must be “a reasonable, cost-based fee,” provided the fee only consists of the actual cost of labor for copying, supplies for creating the record (ie. paper of cd), and postage (see 45 CFR § 164.524 (4)(i)-(iv) and CFR § 164.524(c)(4)).
Therefore, a provider who is sending medical records on a patient directive is allowed to charge:
Now, there is no dispute that this is the law of the land and the companies that are in the business of selling access to medical records know that. What they did dispute was whether or not attorneys and other 3rd party retrieval companies working on behalf of the patient were entitled to pay the same amount as the patient themselves. The court said “no!” and shortly thereafter HHS released the following information on its website:
It appears that Ciox won the battle and limited the coverage of who was allowed the “reasonable, cost-based fee” to only the patient themselves when they want to access their own record.
You may ask yourself if this will impact you since it was only a district court and was in Washington, DC. The answer to that is, unfortunately, yes. When a federal agency’s regulations are challenged in Washington DC, it results in the invalidity of the regulation. However, it does not immediately vacate it. Instead, the issue at hand is sent back to the agency for them to consider and adjust. Therefore, HHS will have the ability to decide whether or not they want to challenge this, adjust their regulation to comply with the courts guidance, or simply accept it.
How does the Ciox decision impact personal injury attorneys?
Well, for starters, this means a decision has to be made. The DC District Court’s decision essentially left attorneys with two options.
Option 1. Clients Start Requesting their own Medical Records.
The pre-existing HITECH letters can still be a great way for plaintiffs to reduce the cost of medical records by requesting them in electronic form from the provider (the provider can still adopt the $6.50 safe harbor). Implementing a system where the client is responsible for the request, review, and payments of medical records may work in some boutique firms; however, it is likely to cause enormous problems for most plaintiff’s attorneys and ultimately, is very likely to delay cases and negatively impact the client.
Attorneys will still need to provide guidance on how to submit these requests, where they should go, and what to expect. However, the firms will also need to be aware that the patient will need to pay for the records. As all Personal Injury lawyers know, a good number of injured people struggle to keep up with finances, which means access to the medical records could be difficult (State law may be able to help you out here).
In situations where the client cannot afford to pay for the records, the lawyer may have an option to collect and review the bills and pay on the client’s behalf to be reimbursed later. However, this will likely prove to be an administrative nightmare because the firms will now need tracking systems for both payments on behalf of clients and then follow-up on records themselves.
Michael P. Earner, Esq.
It is unclear of this type of relationship of providing money to your client to cover the cost of medical records requires additional consideration of legal ethics rules. There is a rule in every state that talks about business transactions between attorneys and clients. In this scenario, essentially, the lawyer is loaning money to the client to obtain the medical records. There is an argument that there is a unique distinction here because even though this is essentially a case cost, the attorney/firm is not entitled to the record themselves at that rate under the new interpretations. So, although the medical records are a part of the case, and necessary. Is the direct payment on behalf of the client a loan to the client that is outside of the normal case expense? It may be a bit of a stretch and I don’t think it is; however, attorneys should be aware of the limitations and requirement outlined in Model Rule 1.8 (or your state equivalent). In the ABA comments on Rule 1.8, it outlines that “Paragraph (a)(1) requires that the transaction itself be fair to the client and that its essential terms be communicated to the client, in writing, in a manner that can be reasonably understood. There is no doubt that a lawyer advancing money to the client to retrieve medical records to further their case is fair, so the first part is passed. However, the second part requires that the terms be written and easily understood. This can be met by simply adding additional language to the fee agreement such as “throughout the course of this matter, I may advance money to cover the cost of medical records you request to assist with your case. This is considered to be part of the case expenses and will be repaid in the same manned outlined above.”
Seems pretty straightforward. However, Paragraph (a)(2) also requires that the client also be advised, in writing, of the desirability of seeking the advice of independent legal counsel and it also requires that the client be given a reasonable opportunity to obtain such advice.
Now, I am not saying this type of arrangement definitely runs afoul of the rules. However, it may be prudent to obtain ethics advice if you have concerns. You wouldn’t loan your client money to pay a car note, why would you loan them money to obtain medical records intended for their personal use?
Option 2. Attorneys continue to own the Process of Requesting Medical Records on their clients behalf.
This will allow the attorneys to continue to move the cases forward and control the financial aspect of the situation. However, there needs to be some consideration given because this will surely result in a higher amount being billed for the records, but could also prove to be the most efficient way to actually take care of the client and ultimately resolve their case.
The answer is yes. HIPAA was never intended to overrule state laws where the state has more strict requirements than the federal government. The decision only applies to the US Department of HHS regulatory guidance and interpretation of the federal law. However, the states themselves still need a statute that is applicable. A state can easily pass a state level “HITECH Act” that includes a third-party mandate.
We have met with several attorneys who have come up with possible ways to overcome this through crafty thought. Here are a couple of the best ones.
Of course, you could. However, it is very likely that the covered entities will simply adopt the old adage – If it walks like a duck and quacks like a duck, it must be a duck. It is very unlikely that will do anything to stop them from charging the higher level fees.
We suspect this could work, for a time, at least. However, there is no doubt that the providers will catch on to this and re-implement their duck sentiments. Most big record providers, like Ciox, MRO, ChartSwap, IOD and others will start to see this happening and put a stop to it pretty quickly. Also, this one may be a little deceptive on behalf of the crafty lawyer. We don’t recommend it.
There is no argument against the fact that resolving the case for the client and allowing them to begin to move forward in life is what is in the best interest of the client. There are a few things attorneys can do to help control costs and advance the matter as expeditiously as possible.