Daphne Smith v. RecordQuest LLC, 989 F.3d 513

Background

In 2014 Smith was injured in a car accident and authorized her attorney to obtain medical records from Milwaukee Health Services, Inc. (MHS).
A third‑party records company, RecordQuest (agent for MHS), supplied the records and charged Smith’s attorney a $20.96 handling fee and an $8.26 certification fee on three occasions.
Smith sued in state court asserting (1) violation of Wisconsin’s health‑records fee statute (Wis. Stat. § 146.83(3f)(b)) and (2) unjust enrichment; the case was removed to federal court.
The district court dismissed both claims, reasoning the statute imposes duties only on listed “health care providers” (principals) and not their agents, and that any benefit flowed to MHS.
The Wisconsin Court of Appeals decided ChartSwap v. ChartSwap (Townsend) and disagreed with the district court, holding third‑party records companies can be bound by § 146.83(3f)(b).
The Seventh Circuit, while expressing its own reservations about ChartSwap, deferred to that state appellate decision: it reversed dismissal of the statutory claim, affirmed dismissal of unjust enrichment on different grounds, and held the claims were timely under a six‑year limitations period.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether an agent like RecordQuest can be liable under Wis. Stat. § 146.83(3f)(b) for charging excessive fees	Smith: agents may not be allowed to circumvent statutory fee limits and should be treated as within the statute’s scope	RecordQuest: statute applies only to the enumerated “health care providers”; agents are not separately liable	Reversed district court; in deference to the Wisconsin Court of Appeals (ChartSwap), the appellate outcome allowing agent liability controls here (Seventh Circuit follows ChartSwap despite reservations)
Whether Smith may recover in unjust enrichment for fees paid to RecordQuest	Smith: equitable restitution is appropriate because RecordQuest retained excessive fees	RecordQuest: any benefit belongs to principal MHS; statutory remedy exists so equity is unavailable	Affirmed dismissal on different grounds: unjust enrichment unavailable because Smith has an adequate legal remedy under § 146.83(3f)(b) (no double recovery)
Applicable statute of limitations for the statutory and unjust enrichment claims	Smith: six‑year period applies (catch‑all statute for liabilities created by statute; quasi‑contract for unjust enrichment)	RecordQuest: two‑year period applies as a private action on a statute penalty	Held six‑year limitations applies to both the statutory claim and the quasi‑contract unjust enrichment claim
Whether the district court erred by not sua sponte granting leave to amend	Smith: leave to amend could have addressed agency law defects	RecordQuest: plaintiff never moved to amend; no requirement to amend sua sponte	Held no error: district court not obliged to amend sua sponte when plaintiff did not seek leave to amend

Key Cases Cited

UWM Student Ass'n v. Lovell, 888 F.3d 854 (7th Cir. 2018) (standard of review and affirm on any basis)
ADT Sec. Servs., Inc. v. Lisle‑Woodridge Fire Prot. Dist., 672 F.3d 492 (7th Cir. 2012) (follow intermediate state appellate decisions absent convincing reason to predict state supreme court would differ)
Rodas v. Seidlin, 656 F.3d 610 (7th Cir. 2011) (federal courts must determine how the state’s highest court would rule on state‑law questions)
State ex rel. Kalal v. Circuit Court for Dane Cnty., 271 Wis.2d 633 (Wis. 2004) (statutory interpretation begins with plain text)
Mohamad v. Palestinian Auth., 566 U.S. 459 (2012) (plain statutory text controls over purposive arguments)
Lindquist Ford, Inc. v. Middleton Motors, Inc., 557 F.3d 469 (7th Cir. 2009) (elements of unjust enrichment under Wisconsin law)
Watts v. Watts, 137 Wis.2d 506 (Wis. 1987) (unjust enrichment defined as equitable remedy to prevent injustice)
Sanchelima Int'l, Inc. v. Walker Stainless Equip. Co., LLC, 920 F.3d 1141 (7th Cir. 2019) (discusses Erie deference to state precedent)