Richard Faber v. Ciox Health, LLC
944 F.3d 593
| 6th Cir. | 2019Background
- Ciox is a third-party medical-records vendor contracting with Tennessee hospitals and processed Plaintiffs’ record requests, charging fees for copies/delivery.
- Plaintiffs (through law firms) alleged Ciox overcharged in violation of HIPAA implementing regs and the Tennessee Medical Records Act (TMRA); they pleaded common-law claims (negligence, negligence per se, unjust enrichment, implied-in-law contract) because HIPAA creates no private right of action.
- District court certified a Rule 23(b)(3) class, then (before class notice) granted summary judgment for Ciox and dismissed the TMRA claim; Plaintiffs appealed.
- Sixth Circuit reviewed de novo and held Tennessee common law does not supply a private-duty to enforce HIPAA fee limits and therefore Plaintiffs’ common-law claims fail for lack of duty/basis for recovery.
- The court held the TMRA’s fee limits apply to hospitals only (Ciox is not a hospital), declined to follow a Tennessee Court of Appeals decision (Pratt) that extended liability to independent copying services, and ruled the summary judgment binds only the named plaintiffs because no class notice was provided.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Tennessee common law recognizes a duty to avoid overcharging patients based on HIPAA/regulations (negligence) | Bradshaw’s broad duty of reasonable care creates a duty to avoid overcharging | No common-law duty exists; price ceilings are statutory, not common-law | No duty under Tennessee common law; negligence claim fails |
| Whether statutory/regulatory violations (HIPAA/TMRA) support negligence per se | Statute/regulation establishes duty and breach (negligence per se) | Negligence per se cannot create a new common-law duty where none exists | Negligence per se fails because no antecedent common-law duty exists |
| Whether unjust enrichment / implied-in-law contract can impose liability to enforce HIPAA fee limits | Equity/quasi-contract can recover amounts charged in excess of lawful fees | Quasi-contract cannot be used to create a private enforcement mechanism for statutory/regulatory limits | Quasi-contract claims fail; Tennessee law provides no basis to imply such a duty |
| Whether the TMRA’s fee limits apply to third-party copying vendors like Ciox | TMRA should reach agents/vendors who provide copying services so hospitals can’t evade limits (Pratt) | TMRA text limits fee provisions to "hospital"; Ciox is not a hospital | TMRA fee limits apply only to hospitals; Ciox is not covered; TMRA claim dismissed |
| Whether class members are bound by the adverse summary judgment though no Rule 23 notice issued before judgment | Class should not be bound without notice; district court must give notice | Defendant sought to bind class and asked remand to provide post-judgment notice | Judgment binds only the named plaintiffs; class certification is inoperative because absentee members received no pre-judgment notice |
Key Cases Cited
- Bradshaw v. Daniel, 854 S.W.2d 865 (Tenn. 1993) (articulates Tennessee’s reasonable-care rule in context of physical harm)
- Amos v. Carson, 210 S.W.2d 677 (Tenn. 1948) (common law contains no ceiling-price limitation)
- Myers v. United States, 17 F.3d 890 (6th Cir. 1994) (negligence per se cannot supply liability absent a common-law duty)
- Rains v. Bend of the River, 124 S.W.3d 580 (Tenn. Ct. App. 2003) (explains negligence per se doctrine and limits)
- Combs v. Int’l Ins. Co., 354 F.3d 568 (6th Cir. 2004) (interpretation favoring narrower state-law liability where appropriate)
- Schwarzschild v. Tse, 69 F.3d 293 (9th Cir. 1995) (defendant obtaining summary judgment before class notice binds only named plaintiffs)
- Postow v. OBA Fed. Sav. & Loan Ass’n, 627 F.2d 1370 (D.C. Cir. 1980) (discusses prejudice and waiver when summary judgment precedes class notice)
- Katz v. Carte Blanche Corp., 496 F.2d 747 (3d Cir. 1974) (en banc) (one-way intervention and notice timing principles in class actions)
- Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974) (Rule 23 notice requirement is mandatory for binding absent class members)
- Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985) (due process requires notice and opportunity to be heard for absent class members)
- Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950) (notice is prerequisite to meaningful opportunity to be heard)
- Draper v. Westerfield, 181 S.W.3d 283 (Tenn. 2005) (distinguishes statutory rights of action from negligence doctrines)