Where an Tennessee HCLA plaintiff’s HIPAA authorization had an error in the “purpose” section, but the potential defendants only included two physicians who were employed by the third potential defendant health system and plaintiff asserted that the defendant health system was the only potential defendant who possessed any relevant medical records, the Court of Appeals vacated dismissal based on the noncompliant HIPAA authorization and held that plaintiff should have been allowed “to conduct limited discovery to determine whether [defendant health system] had been prejudiced by Plaintiff’s failure to provide a HIPAA-compliant medical authorization[.]”
In Hayward v. Chattanooga-Hamilton County Hospital Authority d/b/a Erlanger Health System, No. E2022-00488-COA-R3-CV (Tenn. Ct. App. April 27, 2023), plaintiff filed an HCLA claim against defendants related to a bladder surgery and related complications. Before filing suit, plaintiff sent pre-suit notice to three potential defendants, including two physicians and one health system (“Erlanger”). A HIPAA authorization was included with the pre-suit notice pursuant to Tenn. Code Ann. § 29-26-121(a)(2)(E).
After suit was filed, Erlanger filed a motion to dismiss based on the HIPAA authorization being noncompliant. Specifically, Erlanger pointed out that the purpose section of the HIPAA authorization, which is one of the six core elements required on a HIPAA authorization, only permitted disclosure of records to plaintiff’s attorney. Erlanger argued that this prevented the potential defendants from obtaining records from each other and that dismissal was thus appropriate.
The trial court agreed with Erlanger and granted the motion to dismiss. Plaintiff subsequently filed a motion to set aside the order and to permit limited discovery “to show that Erlanger possessed all medical records related to the facts at hand and that no separate medical records were provide by [the two physicians],” echoing an argument plaintiff had made orally at the motion to dismiss hearing. Plaintiff asserted that when he requested his own medical records from all three potential defendants, all records came from Erlanger, which showed that no other relevant records existed. The trial court denied plaintiff’s motion, but the Court of Appeals overturned this ruling.
The Court of Appeals began its analysis by agreeing that the incorrect purpose listed on the HIPAA authorizations made the authorizations noncompliant, but it noted that plaintiff argued that substantial compliance with the pre-suit notice requirements was still possible. While “prejudice [is] not a separate and distinct element,” the trial court can consider “whether a defendant was prejudiced…when determining whether a plaintiff has substantially complied with pre-suit notice, pursuant to Tenn. Code Ann. § 29-26-121(a)(2).” (internal citation omitted).
When a defendant challenges “the validity of pre-suit notice,” courts engage in a burden-shifting approach. (internal citation omitted). First, the plaintiff must show “compliance with Section 121(a)(2), which can be accomplished by including a statement regarding compliance in the complaint and attaching documentation reflecting such compliance.” (internal citation omitted). A defendant then files a motion to dismiss, which “must demonstrate how the plaintiff has failed to comply with Section 121(a)(2) by referencing specific omissions and by providing an explanation of the extent and significance of the plaintiff’s errors and omissions and whether the defendant was prejudiced by the plaintiff’s noncompliance.” (internal citations omitted). If the defendant shows “a prima facie case that Plaintiff has failed to substantially comply with the pre-suit notice requirements…, 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 defense.” (internal citations omitted).
In this case, after Erlanger established that plaintiff’s HIPAA authorizations were noncompliant, plaintiff asserted that “he believes that Erlanger was already in possession of all medical records developed by all the potential defendants.” He accordingly “requested to conduct discovery to determine whether Erlanger had been prejudiced,” but the trial court ruled against allowing such discovery.
To determine whether limited discovery should have been allowed here, the Court of Appeals looked at recent cases interpreting the pre-suit notice requirements of the HCLA. In Bray v. Khuri, 523 S.W.3d 619 (Tenn. 2017), the “Supreme Court held that the requirement of a HIPAA-compliant medical authorization does not apply when only a single health care provider received pre-suit notice.” In Lawson v. Knoxville Dermatology Group, P.C., 544 S.W.3d 704 (Tenn. Ct. App. 2017), the Court of Appeals ruled that the single-provider rule from Bray did not apply where there were “two defendants, even if the second defendant was an employee of the first defendant,” thus rejecting an argument similar to the one plaintiff was making in this case. But in Wenzler v. Yu, 2018 WL 6077847 (Tenn. Ct. App. Nov. 20, 2018), where counsel for the defendant health care provider conceded that no other potential defendants had health care records, the Court of Appeals “relied on Bray to conclude that a defendant medical practice had not suffered prejudice when it was already in possession of all the relevant medical records.” While Lawson and Wenzler appear to conflict, the Court wrote in this opinion that it “agree[d] with this Court’s conclusion in Wenzler and determine[d] it to be most consistent with our Supreme Court’s holding in Bray.”
Plaintiff asserted that he should be able to conduct limited discovery to show that Erlanger possessed all the medical records in this case and therefore was not prejudiced by the noncompliant authorization. Erlanger opposed the discovery, but the Court stated:
Erlanger’s position proposes a Catch-22 for plaintiffs in health care liability actions. If we adopt Erlanger’s position, the result would be that a health care liability plaintiff must prove in response to a motion to dismiss that a defendant was not prejudiced as part of its response to the motion to dismiss, but the plaintiff is not entitled to any discovery under any circumstances to attempt to prove to the trial court that the defendant has not been prejudiced by the lack of a HIPAA-compliant medical authorization. This approach creates an impossible hurdle for health care liability plaintiffs and is not consistent with statute or case law, including Bray. If our Supreme Court’s holding that whether a defendant was prejudiced is for the trial court to consider in determining whether a plaintiff has substantially complied with pre-suit notice as required by the statute is to mean anything, a plaintiff must be given a legitimate opportunity to prove no prejudice.
(internal citation omitted).
The Court ultimately reasoned:
Under the circumstances of this case, two potential defendants were employed by the third potential defendant, Erlanger. Plaintiff has legitimate reason to believe Erlanger possessed all his relevant medical records that would be available to Erlanger even if the pre-suit notice medical authorizations were HIPAA compliant. If Erlanger was in possession of all the relevant medical records and, as consistent with Bray, was permitted to use those records to consult legal counsel and investigate the merits of the upcoming action against it, we fail to see any prejudice that Erlanger would suffer resulting from the non-compliant HIPAA authorization. Plaintiff should have been permitted limited discovery regarding this issue as first discussed by Plaintiff’s lawyer and the Trial Court at the motion to dismiss hearing and later requested in Plaintiff’s motion to set aside and for limited discovery. Therefore, we hold that the Trial Court erred in this case by failing to allow Plaintiff to conduct limited discovery to determine whether Erlanger had been prejudiced by Plaintiff’s failure to provide a HIPAA-compliant medical authorization because the existence of such alleged prejudice must be considered in the Trial Court’s decision regarding whether Plaintiff substantially complied with Tenn. Code Ann. § 29- 26-121.
Dismissal was vacated and the case was remanded for limited discovery.
This case is very important for HCLA attorneys and plaintiffs. The holding that a plaintiff can engage in limited discovery to show a lack of prejudice based on a faulty HIPAA authorization appears to add a new layer to the substantial compliance analysis, and it could potentially help plaintiffs who inadvertently send HIPAA authorizations that are not fully compliant with the statute.
This opinion was released three months after oral arguments in this case.
Note: Chapter 52, Section 4 of Day on Torts: Leading Cases in Tennessee Tort Law has been updated to include this decision.
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