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Analyzing prejudice to defendant when HCLA pre-suit notice is deficient.

When a defendant has filed a motion to dismiss challenging whether an HCLA plaintiff fulfilled the pre-suit notice requirements of Tenn. Code Ann. § 29-26-121, “prejudice is relevant to the determination…but it is not a separate and independent analytical element.”

In Martin v. Rolling Hills Hospital, LLC, No. M2016-02214-SC-R11-CV (Tenn. April 29, 2020), plaintiffs filed an HCLA case against multiple defendants based on the death of their daughter. Plaintiffs gave timely pre-suit notice, but the HIPAA authorization they sent with their notice failed to include “three of the six core elements federal law requires for HIPAA compliance.” Specifically, the authorizations “failed to list the name and address of the provider authorized to release medical records,” failed to list an expiration date, and “failed to provide a description or documentation of [plaintiff’s] authority to act for the decedent.”

After defendants raised the issue of noncompliant HIPAA authorizations, plaintiffs voluntarily dismissed their first suit, then re-filed less than a year later alleging the same HCLA claims and relying on the savings statute. Defendants filed a joint motion to dismiss, arguing that because the original HIPAA authorizations were noncompliant, plaintiffs were not entitled to the 120-day extension of the one-year statute of limitations, that plaintiffs’ first suit was therefore filed outside the applicable statute of limitations, and that plaintiffs could thus not rely on the savings statute and the present suit was also time-barred. The trial court agreed and dismissed the case, ruling that defendants were prejudiced by the noncompliant HIPAA authorizations. The Court of Appeals, however, reversed. The Court of Appeals ruled that “the letters exchanged between counsel for Dr. Karl and Rolling Hills did not reflect a good faith attempt on the part of Defendants to secure the records, but instead showed an effort by their counsel to establish a record upon which to present this argument. (internal quotations omitted). The Court of Appeals found that because one defendant was “merely a corporate entity” and “Dr. Karl was an employee and/or ostensible agent of Rolling Hills,” defendants had not shown prejudice. The Supreme Court reversed the Court of Appeals and reinstated the trial court’s decision to dismiss the case.

The dispositive issue in this case was whether plaintiffs substantially complied with the content requirements of the HCLA pre-suit notice, specifically the inclusion of a HIPAA compliant medical authorization, before filing their first case. In analyzing this question, the Court noted that it has previously emphasized the six core elements found in the federal regulations, and it has stated that “omitting any of these core elements may render a medical authorization noncompliant with HIPAA and ineffective to enable defendants to obtain and review a plaintiff’s relevant medical records.” (internal citations and quotation omitted). In Stevens ex rel. Stevens v. Hickman Cmty. Health Care Services, Inc., 418 S.W.3d 547 (Tenn. 2013), the Court stated that when considering whether a plaintiff “has substantially complied with [the HIPAA authorization portion of the HCLA pre-suit notice requirement], a reviewing court should consider the extent and significance of the plaintiff’s errors and omissions and whether the defendant was prejudiced by the plaintiff’s noncompliance.”

Looking at cases decided in the years since the Stevens opinion, the Court noted that there had been confusion over how to analyze the issue of prejudice to the defendant, with prejudice sometimes “treated as a separate independent element of analysis, in addition to substantial compliance,” and sometimes “as a consideration relevant to the determination of whether a plaintiff has substantially complied [with the statute] and not as a separate and independent analytical element.” (internal citations omitted). With that background in mind, the Court chose to use this case as an “opportunity to clarify the role of prejudice in a court’s determination of whether a plaintiff in a health care liability action has substantially complied with [the pre-suit notice requirements],” writing:

We reaffirm Stevens and hold that prejudice is not a separate and independent analytical element; rather, as Stevens explained, prejudice is a consideration relevant to determining whether a plaintiff has substantially complied. Prejudice, or the absence of prejudice, is especially relevant to evaluating the extent and significance of the plaintiff’s noncompliance. If a plaintiff’s noncompliance with Section 121 frustrates or interferes with the purposes of Section 121 or prevents the defendant from receiving a benefit Section 121 confers, then the plaintiff likely has not substantially complied with Section 121. On the other hand, if the plaintiff’s noncompliance neither frustrates or interferes with the purposes of Section 121 nor prevents a defendant from receiving a benefit the statute confers, then a court is more likely to determine that the plaintiff has substantially complied.

(internal citations omitted).

The Court also used this case to “clarify the burdens each party bears when seeking to establish, or to challenge, compliance with Section 121,” holding that it adopted a “burden-shifting approach” used in a previous case. The Court explained:

[A] health care liability plaintiff bears the initial burden of establishing compliance with Section 121 by stating in the pleadings and providing the documentation specified in subdivision (a)(2), or of alleging ‘extraordinary cause’ for any noncompliance. A defendant wishing to challenge a plaintiff’s compliance with Section 121(a)(2) must file a 12.02(6) motion to dismiss for failure to state a claim. The defense motion must describe how the plaintiff has failed to comply…by referencing specific omissions, and by explaining the extent and significance of the plaintiff’s errors and omissions and whether the defendant was prejudiced by the plaintiff’s noncompliance. …One means of satisfying this burden is by alleging that the plaintiff’s Section 121(a)(2)(E) medical authorization lacks one or more of the six core elements required by federal law for HIPAA compliance. …Although defendants must explain how they were prejudiced by noncompliance, defendants need not test incomplete and facially noncompliant medical authorizations. …Once a defendant files a motion that satisfies the foregoing prima facie showing, the plaintiff then bears the burden of establishing substantial compliance with Section 121, which includes the burden of demonstrating that the noncompliance did not prejudice the defendant. The plaintiff may not rest upon the mere allegations or denials of its pleading, but must respond, and by affidavits or another means provided in Tennessee Rule 56, set forth specific facts demonstrating that the noncompliance did not prejudice the defense.

(internal citations and quotations omitted).

Applying this analysis to the present case, the Court found that plaintiffs failed to substantially comply with the HCLA pre-suit notice requirements when three of the core elements of the HIPAA authorization were missing. The Court ruled that plaintiffs did not meet their burden in refuting defendants’ motion and that plaintiffs “simply have failed to point to specific facts in the record to satisfy their burden of showing that the Defendants were not prejudiced by their noncompliance.” Because their initial pre-suit notice was insufficient, the Court ruled that plaintiffs were not entitled to the 120-day statute of limitations extension, making their first suit untimely. Plaintiffs thus could not rely on the savings statute, and their second suit was time-barred. The Supreme Court accordingly held that the trial court correctly dismissed the case.

Plaintiffs also argued that “even if they failed to substantially comply with Section 121(a)(2), they were still entitled to the 120-day extension of the statute of limitations provided in Section 121(c) because that extension is contingent upon a plaintiff’s” giving pre-suit notice, not substantially complying with the content requirements of that notice. The majority opinion deemed this argument waived, but Justice Kirby wrote a lengthy opinion agreeing with plaintiffs on this issue.

Justice Kirby wrote that she would hold that “the availability of the 120-day extension in subsection (c) hinges on compliance with the provisions referenced in subsection (c); i.e., plaintiffs may rely on the 120-day extension so long as they serve the mandatory notice to providers in accordance with the provisions on personal service or service by mail.” She wrote that the 120-day extension should not be dependent on a plaintiff’s substantial compliance with the pre-suit notice content requirements, meaning that “plaintiffs whose sole error is to attach an imperfect medical authorization to the pre-suit notice can rely on the 120-day extension, [so that] dismissal of the lawsuit without prejudice gives them the opportunity to re-file their lawsuits with corrected medical authorizations.” To support her conclusion, Justice Kirby looked at the language of subsection (c), as well as the evolution of Section 121 as a whole, noting that in adopting the 2009 amendments the legislature “purposefully distinguished the requirements in subsection (c) on service of the pre-suit notice from the content requirements in subsection (a)(2).” Further, Justice Kirby considered the practical effect of the current interpretation requiring substantial compliance with the content requirements. She noted that substantial compliance with the HIPAA authorization requirement has “proven especially challenging” to HCLA plaintiffs, and that because the initial limitations period has almost always passed by the time a plaintiff becomes aware of the HIPAA authorization issues, the current interpretation “results in such frequent dismissal with prejudice of otherwise meritorious cases on purely technical grounds that it borders on the ‘absurd result’ that we are to avoid in construing statutes.”

Although the majority deemed this argument waived, it did briefly address Justice Kirby’s opinion. The majority stated that her analysis was “inconsistent with the understanding of the statute’s meaning by persons who were familiar with the 2009 amendments,” that she mischaracterized a footnote in a previous case, and that she ignored the fact that if the Court has been misinterpreting the 120-day extension, the “General Assembly has not amended the statute to abrogate these allegedly erroneous judicial decisions.”

This opinion holds two major points for HCLA cases. First, it clarifies the proper way to analyze prejudice to defendants when determining whether a plaintiff substantially complied with the content requirements of the HCLA pre-suit notice. Second, it seems to cement the current interpretation that a plaintiff must substantially comply with the pre-suit notice content requirements in order to gain the benefit of the 120-day time extension for filing suit. While the majority did not technically rule on this issue, it made a point to refute the partially dissenting Justice who made a case for reinterpreting this requirement.

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