California patients can sue if personal data are released during billing disputes

The California Supreme Court determines that physicians and others are liable if the information is given to credit agencies.

By Alicia Gallegos — Posted July 11, 2011

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The Supreme Court of California has ruled that patients can sue doctors, debt collectors and others who disclose their medical information to credit agencies during billing disputes.

The ruling exposes California physicians to more lawsuits and hinders their ability to collect outstanding bills, said an attorney involved in the case.

In the past, the Fair Reporting Credit Act protected doctors from lawsuits over such disclosures. The law says if doctors or others receive notice that a debt is in dispute, they are required to furnish accurate and complete information about the debt to the requesting credit agency.

But in its June 16 opinion, the state's high court said a more stringent California law on patient privacy trumps the FRCA, preventing doctors from releasing any confidential information to creditors without patient consent.

"It really inhibits the ability of health care providers to document the basis for [debt] claims," said Charles Messer, an attorney who represented the bill collector, Stewart Mortenson. "It makes collecting medical debts much more difficult."

The decision stems from a billing dispute between Robert Brown and his dentist, Rolf Reinholds. In 2000, Brown was billed for a treatment he said he never received. The bill was referred to a debt collector, who contacted Reinholds for more information after Brown denied the debt, according to court records.

Reinholds sent Mortenson a copy of Brown's medical history. The record included medical histories of Brown's children, which were in the same file. As the billing dispute continued, Mortenson disclosed the medical information to three national consumer reporting agencies.

Brown sued Reinholds and Mortenson, alleging that he never consented to the record disclosure. Among other details, the information included Brown's Social Security number, address, date of birth and telephone number, court records show. Reinholds was dismissed from the suit after settling out of court, according to attorneys in the case.

Lower courts cited federal law

The trial and appellate courts ruled in favor of Mortenson. The lower courts said the confidential information provided was protected by the FRCA.

But the Supreme Court said the law is preempted by the stricter state measure, and that Brown's original claim could move forward. The court said the state privacy law also trumps the Health Insurance Portability and Accountability Act, which allows for certain administrative disclosures.

Brown, an attorney who represented himself, said the high court analyzed the facts carefully and came to the correct conclusion.

"It means people working with health care records in California have to be very careful they are not violating patients' confidentiality," he said. "Without patients' consent, medical information, including a patient's identifying [details], cannot be turned over to credit agencies."

The decision restricts the free flow of information needed for fair and accurate credit reporting, Messer said. Doctors are now subject to legal claims for complying with federal law and providing debt information, he added.

"It becomes a Catch-22 and exposes health care providers to liability," he said.

Messer is considering asking the U.S. Supreme Court to review the case.

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External links

Robert A. Brown v. Stewart Mortenson, Supreme Court of California, June 16 (link)

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