ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION TO DISMISS (D.E. 21) AND DISMISSING COUNTS TWO, THREE AND FOUR WITHOUT PREJUDICE
THIS CAUSE is before the Court on Miami Beach Healthcare Group, LTD and HCA-EmCare Holdings, LLC’s (hereinafter, “Defendants”) Motion to Dismiss (D.E. 21), filed on June 10, 2016. Barbara Brush (hereinafter, “Plaintiff’) filed her Response in Opposition (D.E. 44) on July 8, 2016. Defendants filed their Reply on July 26, 2016. (D.E. 61.) Having reviewed the Motion to Dismiss and response and reply thereto, the Court finds as follows.
I. Background
Defendants jointly provide healthcare services to patients at Aventura Hospital and Medical Center in South Florida. (D.E. 1, Pl.’s Compl. at ¶¶ 13 and 14). In October 2008, Plaintiff was admitted to Defendants’ hospital to receive medical treatment. (Id. at ¶ 43). As part of the patient-admission process, she provided Defendants with sensitive information, including, among other things: her name, date of birth, social security number and protected health information. (Id. at ¶¶ 44 and 90.) Plaintiff paid Defendants for their services. (Id. at ¶ 33.)
In September 2014, nearly six years after Plaintiff had received treatment, Defendants informed their patients that a hospital employee, who was unauthorized to do so, had been accessing patients’ sensitive information. (Id. at ¶ 8.) This security breach persisted between September 13, 2012 and June 9, 2014. (Id.)
Defendants’ employee subsequently disclosed and/or sold Plaintiffs information to a third party. (Id at ¶ 50.) Thereafter, the third party used Plaintiffs personal data to steal her identity and file a fraudulent tax return using her name and Social Security number. (Id.)
After her identity was stolen, Plaintiff spent (and continues to spend) time and resources remedying the harmful effects and mitigating future harm. (Id at ¶ 61.) Prior to her visit to Defendants’ hospital, Plaintiffs identity had never been stolen and she took considerable precautions to protect her private data. (|d at ¶ 52-53.) Specifically, Plaintiff avoided transmitting her sensitive information over insecure sources, she stored documents containing private data in a safe and secure location and she destroyed any documents that she received in the mail that contained any identifying information. (Id.)
On April 18, 2016, Plaintiff filed a four-count Complaint for negligence, breach of contract, breach of implied contract and unjust enrichment. (D.E. 1.) She claims that:
Defendants [failed to] comply with safeguards mandated by HIPAA regulations, Florida law or industry standards.
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Defendants failed to implement sufficient information security policies and procedures to (1) protect (e.g., via encryption) or otherwise safeguard their patients’ electronically-stored Sensitive Information; (2) restrict access (i.e., segment) their electronic database tolimit access to such Sensitive Information to only those employees and personnel that need to access such information for treatment related reasons; and (3) supervise employees and personnel with access to patient Sensitive Information and enforce their data protection and confidentiality policies.
(Id. at ¶ 28.) Plaintiff claims that because of the Defendants’ security failures, her identity was stolen. She seeks damages for the purported economic and non-economic damages she has suffered as a result of a third party stealing her identity and filing a false tax return in her name.
In response, the Defendants filed a Motion to Dismiss. (D.E. 21.) They argue that the Court should dismiss Plaintiffs Complaint and strike class allegations because: (1) Plaintiff lacks Article III standing to bring this action, see Fed. R. Civ. P. 12(b)(1); (2) Plaintiff fails to state claims upon which relief may be granted, see Fed. R. Civ. P. 12(b)(6); (3) the statute of limitation bars the Plaintiff from seeking relief; and (4) Plaintiffs class action allegations are atypical of the other members of the class. (Id.)
Plaintiff replied, asserting that she satisfies Article Ill’s standing requirements because she had suffered a concrete injury that can be remedied by this lawsuit. (D.E. 44.) She further argues that she has successfully pleaded the elements of negligence, breach of contract, breach of implied contract and quantum meruit. (Id.)
II. Legal Standards
A. Motion to Dismiss for Lack of Jurisdiction
Federal Rule of Civil Procedure 12(b)(1) governs motions to dismiss for lack of subject matter jurisdiction. Standing to bring suit is an essential component of a federal court’s subject matter jurisdiction. Clapper v. Amnesty Int’l USA,
264 (2013). Standing “determin[es] the power of the court to entertain the suit.” Hollywood Mobile Estates Ltd. v. Seminole Tribe of Florida,
B. Motion to Dismiss for Failure to State a Claim
Under Federal Rule of Civil Procedure 12(b)(6), a court may dismiss an action for “failure to state a claim upon which relief can be granted.” To survive a motion to dismiss, the complaint “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal,
III. Discussion
A. Standing
To satisfy the basic constitutional requirement that there is an active case or controversy, standing must exist to assert the claims. Hollywood Mobile Estates Ltd. v. Seminole Tribe of Florida,
The threshold issues in this case are whether Plaintiff suffered an actual, concrete injury, and if so, whether her injury is fairly traceable to the conduct of the Defendants.
The Eleventh Circuit recently addressed whether a victim of identity theft resulting from a data breach has standing to assert a claim in Resnick v. AvMed, Inc.,
After determining the plaintiffs had alleged actual, concrete injuries, the Resnick court considered whether the plaintiffs’ injuries were “fairly traceable” to the defendant’s failure to secure their personal information. The Eleventh Circuit explained that:
A showing that an injury is fairly traceable requires less than at showing of ‘proximate cause,’ Focus on the. Family v, Pinellas Suncoast Transit Auth.,344 F.3d 1263 , 1273 (11th Cir.2003). Even a showing that á plaintiffs injury is indirectly caused by a defendant’s actions satisfies the fairly traceable requirement. Plaintiffs allege that [Defendant] failed to secure their information oncompany laptops, and that those laptops were subsequently stolen. Despite Plaintiffs personal habits of securing their -sensitive information, Plaintiffs became victims of identity theft after the unencrypted laptops containing their sensitive information were stolen. For purposes of standing, these allegations are sufficient to ‘fairly trace’ their injury to [Defendant’s] failures.
Resnick, at 1324.
Following the Resnik decision, two district courts in this circuit have addressed the exact issue before this Court, namely: does a plaintiff have standing to sue when her identity is stolen and an unknown third party files a tax return in her name. See Smith v. Triad of Alabama, LLC, No. 1:14-CV-324-WKW,
B. Failure to State a Claim
1. Count One: Negligence
Under Florida law, a negligence claim has four elements: “a duty, breach of that duty, causation, and damages.” Virgilio v. Ryland, Grp., Inc.,
Financial institutions and health care providers possess a very high duty to protect consumer data residing on their networks and therefore a serious potential level of loss exposure. Firms that collect and retain such statutorily protected data must comply with internal controls and reporting standards set by the state and federal government. Even entities that are not specifically covered by laws or regulations pertaining to their specific industry are charged with a general duty to safeguard the consumer data under their control.
Liam M. D. Bailey, Mitigating Moral Hazard in Cyber-Risk Insurance, 3 J.L. & Cyber Warfare 1, 11 (2014); see also Resnick,
In Resnick, the Eleventh Circuit discussed the causation element at length.
Considering the plaintiffs’ Complaint and “applying common sense to [its] understanding of [the] allegation^,” the Resnik court held that the plaintiffs’ claims “that the data breach caused their identities to be stolen move[d] from the realm of the possible into the plausible.” (Id.) The panel noted, however, that “[h]ad [plaintiffs alleged fewer facts, we doubt whether the Complaint could have survived a motion to dismiss. (Id. at 1327).
In this case, the Plaintiff alleges that:
• “Beginning in September 2012, [the Defendants’] employee began to continuously and systematically use their databases to access and remove tens of thousands of their patients’ Sensitive Information.” (D.E. 1 at ¶22.)
• “The excessive and unauthorized access of patients’ Sensitive Information by the Aventura Hospital employee went uncorrected for two consecutive years.” (Id. at ¶ 23.)
• “The records accessed and viewed by Defendants’ employee without authorization included Plaintiffs Sensitive Information,” (Id. at ¶ 49.)
• Plaintiffs “Sensitive Information was thereafter disclosed to or sold to a third party by Defendants’ employee. This third party subsequently used that information to steal her identity and file a fraudulent tax return using her name and Social Security number.” (Id. at ¶ 50.)
• “Prior to her visit to Defendants’ Aventura Hospital and Medical Center facilities in Florida, [Plaintiffs] identity had never been stolen.” (Id. at ¶ 52.)
• “[P]rior to the data breach, Brush took considerable precautions to protect her Sensitive Information. Brush avoids transmitting her Sensitive Information over insecure sources, she stores documents containing Sensitive Information in a safe and secure location, and she destroys any documents that she receives in the mail that contain any of her Sensitive Information or that contain any information that could otherwise be used to steal her identity.” (Id. at ¶ 53.)
These allegations, like those in Resnik, move Plaintiffs claims “from the realm of the possible into the plausible.” Therefore, Plaintiff has sufficiently pleaded the element of causation.
Because Plaintiff has stated a claim for negligence, Defendants’ Motion to Dismiss Count One must be denied.
2. Count Two: Breach of Contract
Under Florida law, the elements of a breach of contract claim are “(1) a valid contract; (2) a material breach; and (3) damages.” Hartford Steam Boiler Inspection & Ins. Co. v. Brickellhouse Condo. Ass’n, Inc., No. 16-CV-22236,
Here, Plaintiff claims Defendant was obligated to protect her private, personal data from security breaches. Specifically, she identifies provisions in the Defendants’ Notice of Privacy Practices which she claims establish a contractual duty to protect her private information:
Each time you visit a hospital, physician, or other healthcare provider, a record of your visit is made. Typically, this record contains your symptoms, examination and test results, diagnoses, treatment, a plan for future care or treatment, and billing related information. This notice applies to all of the records of your care generated by the facility, whether made by facility personnel, agents of the facility, or your personal doctor
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We are required by law to maintain the privacy of [such] health information, provide you a description of our privacy practices, and to notify you following a breach of unsecured protected health information. We will abide by the terms of this notice .... Other uses and disclosures of health information not covered by this notice or the laws that apply to us will be made only with your written authorization.
(D.E. 1 at ¶ 18.) Plaintiff also identifies the following provision in Defendants’ Patient Rights and Responsibilities and Patient Visitation Rights form which states: “Patients shall have their medical records, including all computerized medical information, kept confidential .... ”
These provisions, despite Plaintiffs protestations otherwise, are not contractual in nature. Instead, these provisions inform patients of their rights under federal law—specifically the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”)—and the duties imposed upon the Defendants by these statutory provisions. Because the Defendants are required by law to adhere to HIPAA without receiving any consideration from the Plaintiff or any other patient, these provisions cannot create contractual obligations. Moreover, it is well-established that HI-PAA provides no private right of action. Weinberg v. Advanced Data Processing, Inc.,
Plaintiff has identified no contractual provision where the Defendants agreed to provide her with data security services in exchange for consideration. Furthermore, Plaintiff cannot mask a HIPAA claim as a breach of contract claim. Accordingly, Count Two fails as a matter of law and must be dismissed.
3. Counts Three and Four: Contract Implied by Fact and Contract Implied by Law
Under Florida law, a contract may be implied by law or fact. Merle Wood & Assocs., Inc. v. Trinity Yachts, LLC,
“A contract implied in fact is one. form of an enforceable contract; it is based on a tacit. promise, one that is inferred in whole or in part from the parties’ conduct, not solely from their words.” Equity Contracting Co.,
In contrast, a contract implied in law, or quasi contract, is “not based upon the finding, by a process of implication from the facts, of an agreement between the parties.” (Id.) A contract implied in law “is a legal fiction, an obligation created by the law without regard to the parties’ expression of assent by their words or conduct.”
In this case, the Plaintiff checked into the Defendants’ healthcare facility to obtain medical treatment. Nothing in the Plaintiffs Complaint gives rise to a factual inference that the Defendants tacitly agreed to secure her personal data in exchange for remuneration. It is clear from the Plaintiffs allegations that she transacted to receive healthcare services from the Defendants—not data security services beyond the privacy requirements already imposed on the Defendants by federal law. Accordingly, the Court cannot imply a contract to provide data security services based on the conduct of the parties.
Additionally, Plaintiff has not pleaded the elements of an unjust enrichment/restitution claim. The factual allegations—viewed in their entirety and in the light most favorable to the Plaintiff—do not establish that: (1) she conferred payment—above and beyond the money owed for her medical treatment; (2) the Defendant knew Plaintiff paid additional remuneration for data security; and (3) Defendants accepted more money than was owed for their healthcare services. Consequently, Plaintiff has failed to state a quasi-contract claim.
Alternatively, Plaintiffs implied contractual theories fail because—like her breach of contract claim—Plaintiff cannot create a private right of action for violations of HIPAA by recasting her claims as common law, implied contract claims.
IY. Conclusion
For the reasons set forth above, it is ORDERED AND ADJUDGED that:
1. Miami Beach Healthcare Group, LTD and HCA-EmCare Holdings, LLC’s Motion to Dismiss (D.E. 21), filed on June 10, 2016, is GRANTED IN PART AND DENIED IN PART;
2. Counts Two, Three and Four of Plaintiffs Complaint (D.E. 1) are DISMISSED WITHOUT PREJUDICE;
3. Plaintiff shall have ten (10) days from the date of this Order to file an Amended Complaint, should she choose to do so; and
4. The Court will DENY WITHOUT PREJUDICE the Defendants’ Motion to Strike Plaintiffs Class Allegations (D.E. 21). The Defendants may re-file this Motion at an appropriate time after some discovery has been conducted.
DONE AND ORDERED in Chambers at Miami, Florida this 17th day of February, 2017.
Notes
.' The Resnick court did not clarify whether the identity theft, or the identity theft plus monetary damages, constituted the injury in fact.
. Florida courts use several different terms to describe a contract implied in law including—“quasi contract,” "unjust enrichment,” ' ‘restitution, ’ ’ ‘ 'constructive contract, ” . and "quantum meruit.” Equity Contracting Co.,
