Final Order of Dismissal Cannot Be Re-Litigated in Second Suit

Failure to comply with HCLA pre-suit notice requirements will not be excused due to local practice, and a final order dismissing defendants from a suit that is not appealed cannot later be revised by the trial court through a decision in a second suit.

In Smith v. Wellmont Health System, No. E2017-00850-COA-R9-CV (Tenn. Ct. App. July 9, 2018), plaintiff filed an HCLA claim against several defendants, all of whom filed motions to dismiss based on an inadequate HIPAA authorization in the pre-suit notice. The trial court granted three defendants’ joint motion to dismiss and entered a dismissal order, from which plaintiff did not appeal. Before the motions from the other defendants were decided, plaintiff voluntarily nonsuited those claims.

Plaintiff subsequently sent a second pre-suit notice to all original defendants and filed a second suit naming all of them, including the three dismissed from the original suit. All defendants filed motions to dismiss in this case as well, and the trial court denied them all. It ruled that its first dismissal order was incorrect because “plaintiff’s first complaint was not time-barred because…plaintiff provided proper pre-suit notice.” This interlocutory appeal followed.

The issues in this case were identical to those in Roberts v. Wellmont Health System, No. 2017-00845-COA-R9-CV (Tenn. Ct. App. July 5, 2018), a decision that came out just four days before this one. In both cases, plaintiff provided a HIPAA authorization that left blanks for which parties could disclose protected health information, to whom disclosures could be made, and the expiration date. Here, the Court noted that plaintiff expressly stated in a letter accompanying the HIPAA form that defendants “could use the authorizations to get the records of the other Defendants and he invited them to contact him if they had any questions.” In this case, like in Roberts, the plaintiff and trial court relied on the fact that providing blank forms was the local practice to deem the forms sufficient.

The Court of Appeals reversed the finding that these blank forms substantially complied with statutory requirements. Using identical reasoning to that employed in Roberts, the Court held that forms that failed to include three core elements of HIPAA requirements did not satisfy the HCLA; that “judicial notice of a local custom, without more, does not rise to the level of extraordinary cause” to excuse compliance; and that “third parties are not permitted to alter or modify a medical authorization after it has been executed by a patient or patient’s authorized representative.” (See our post on Roberts to read a more extensive analysis of the Court’s reasoning).

The only issue presented here that was not included in the Roberts opinion was whether the trial court could revise its own final order through its denial of the motion to dismiss in the second suit. The Court of Appeals ruled that this action was improper, reasoning:

Plaintiff did not appeal the Order or file a motion for reconsideration….[T]he court permitted the resurrection of a case against three parties it had previously dismissed. …The trial court should not have allowed plaintiff to re-litigate this issue in the second-filed lawsuit between the same parties. The trial court erred when it did. Plaintiff was estopped from so doing. Plaintiff does not get a mulligan. The trial court’s subsequent order overruling itself was therefore produced in error as well.

Accordingly, the trial court’s denial of the motions to dismiss was reversed.

As we saw in the Roberts case, this case demonstrates that relying on local practice will not save you if you fail to comply with the HCLA. Be sure to read and understand the statutory requirements, not just the way lawyers in your area always do things. In addition, this case also shows the importance of appealing final orders on issues you wish to revisit. Here, plaintiff would have lost this claim on the pre-suit notice issue, but even if the claim had been able to go forward, he would have lost his chance against the three defendants dismissed in the first suit due to his allowing the final dismissal order to stand.