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Smith v. American Home Products Corp.

September 23, 2003


The opinion of the court was delivered by: Corodemus, J.S.C.

Argued August 8, 2003

Presently before this court is a unified motion by defendants, the phenylpropanolamine ("PPA") manufacturers, compelling ex parte physician interviews and seeking judicial approval of a revised medical authorization. Plaintiffs, consumers of PPA who allege injuries caused from the use of the drug, claim that regulations promulgated pursuant to the Health Insurance Portability and Accountability Act of 1996, Pub.L. 104-191, 110 Stat.1936 (codified in scattered sections of 18 U.S.C.A., 26 U.S.C.A., 29 U.S.C.A., and 42 U.S.C.A.) effective April 14, 2003 ("HIPAA" or "the Act") preempt the informal discovery procedures permitted under Stempler v. Speidell, 100 N.J. 368, 495 A.2d 857 (1985). Plaintiffs contend that defendants' proposed medical authorization is moot as the standards under Stempler are less stringent than the federal act's requirements for patients' "protected health information" ("PHI"). 45 C.F.R. § 164.501. The issue of HIPAA's preemption of Stempler is one of first impression in New Jersey.

For the reasons set forth below, the court holds that HIPAA is an express but selective preemption of New Jersey law. It does not conflict with the general principles of N.J.S.A. 2A:84A-22.4 *fn1 and the informal discovery techniques permitted under Stempler. However, the current proposed medical authorization offered by the defense does not comport with HIPAA or the Stempler safeguards. Therefore, the motion is granted in part and denied in part.


A. HIPAA and the Privacy Rule.

In 1996, the United States Congress enacted HIPAA. One of the primary purposes of the Act is to standardize and increase the efficiency of common electronic transactions in health care through the "administrative simplification" *fn2 provisions of HIPAA as well as to protect the security and privacy of individually identifiable health information ("IIHI"). *fn3 Congress entrusted the Secretary of the Department of Health and Human Services with the task of creating national standards to "ensure the integrity and confidentiality of the information" to be collected and disseminated. 42 U.S.C.A. § 1320d-2(d)(2)(A). The regulations promulgating these standards as created by the Department of Health and Human Services became effective on April 14, 2003, and are collectively known as "the Privacy Rule," which sets forth standards and procedures for the collection and disclosure of "protected health information" ("PHI"). *fn4 The Privacy Rule establishes patients' rights and requires that health professionals implement various procedures regarding the use of and access to health care information. It prohibits "covered entities" from using and disclosing PHI except as required or permitted by the regulations. 45 C.F.R. § 164.501 and C.F.R. § 160.103. There are three categories of "covered entities": (1) health plans; (2) health care clearinghouses; and (3) health care providers. 45 C.F.R. § 160.103. *fn5

The Privacy Rule prohibits covered entities from using or disclosing PHI in any form oral, written or electronic except as permitted under the Privacy Rule. 45 C.F.R. § 164.502(a). "Use" and "disclosure" are defined very broadly. 45 C.F.R. § 164.501. "Use" includes an examination of PHI; "disclosure" includes divulging or providing access to PHI. The Privacy Rule is also centered on the concept that, when using PHI or when requesting PHI from another covered entity, a covered entity must make reasonable efforts to limit PHI to the "minimum necessary" to accomplish the intended purpose of the use, disclosure or request. 45 C.F.R. § 164.508. In other words, even if a use or disclosure of PHI is permitted, covered entities must make reasonable efforts to disclose only the minimum necessary to achieve the purpose for which it is being used or disclosed. The "minimum necessary" standard was implemented to prevent improper disclosure of PHI, yet to be flexible when a patient waives his or her privacy privilege for confidential medical information.

B. The New Jersey Supreme Court Permits Defense Counsel to Conduct Ex Parte Interviews with Plaintiff's Treating Physicians.

By virtue of filing a suit for personal injury, the plaintiff has placed his or her medical condition in issue, and consequently, has waived some of his or her privacy privilege. Stempler, supra, 100 N.J. at 373, 495 A.2d at 859 (1985) (citing N.J.S.A. 2A:84A-22.1-22.7). In Stempler, the Court found that the costs incurred and the time expended during trial preparation justified "personal interviews" as an "informal method of assembling facts and documents in preparation for trial." Id. at 382, 495 A.2d at 864. Defendants often conduct personal interviews of the treating physician of a plaintiff that has filed a suit for personal injury. These informal, personal interviews generally take place outside the presence of plaintiff's counsel. The New Jersey Supreme Court permits defendants to conduct these ex parte interviews of a plaintiff's health care provider so long as the defendant complies with specific patient authorization requirements. Id. at 373-82, 495 A.2d at 859-64. Those requirements are that defense counsel must: 1) "provide plaintiff's counsel with reasonable notice of the time and place of the proposed interview"; 2) "provide the physician with a description of the anticipated scope of the interview"; and 3) "communicate with unmistakable clarity the fact that the physician's participation in an ex parte interview is voluntary." Id. at 382, 495 A.2d at 864.


A. Defendants Argue that Stempler Interviews are Permissible Under HIPAA.

1. Stempler interviews are consistent with HIPAA.

Defendants' briefs assert that there is no conflict between Stempler and HIPAA once a plaintiff has waived his patient-physician privilege. Therefore, according to defendants, this court's preemption analysis is not warranted because HIPAA's broad statutory purpose is in harmony with Stempler. The primary purpose of HIPAA, as reflected in its legislative history, is aimed at regulating the commercial behavior of the national health care industry. 68 Fed.Reg. 8334 (Feb. 20, 2003). Therefore, according to defendants, any argument supercedes state law is limited to that provision of state law which requires medical or health plan records to be maintained or transmitted in written rather than electronic form. 42 U.S.C.A. § 1320d-7.

More importantly, defendants note that HIPAA recognizes that a patient who may be a plaintiff in a personal injury case can waive his or her patient-physician privilege by expressly permitting the unrestricted use and disclosure of PHI through the use of a valid authorization. *fn6 45 C.F.R. §§ 164.508, 164.502(b)(2). This provision is identical to the New Jersey statute that allows waiver of the patient-physician privilege when a personal injury case is placed into suit. N.J.S.A. 2A:84A-22.4.

Defendants disagree with plaintiffs' contention that HIPAA requires in all circumstances that "only minimal necessary amounts of [protected health] information ...may be disclosed," pointing out that 45 C.F.R. § 164.502(b)(1) involves duties of a commercial nature such as billing, submitting insurance claims for payment and the like, i.e., where specific minimum information is needed in a personal injury case.

Defendants strongly take issue with plaintiffs' reliance of the "minimal necessary" standard, saying that it does not apply to disclosures made pursuant to an authorization under 45 C.F.R. § 164.508. Instead, they maintain that "section 164.508 affirms that an authorization is a means by which a covered entity can use and disclose protected health care information, and the section provides the form requirements for a valid HIPAA authorization."

Defendants also contend that psychologist, psychiatrist, and therapist interviews are appropriate where plaintiff's mental or emotional condition is in issue. Defendants rely upon the Appellate Division statement in no uncertain terms that:

[A] psychologist may be compelled to reveal relevant confidences of treatment when the patient tenders her mental or emotional condition in issue during the course of litigation. Under such circumstances, the patient's communications to her psychotherapist should not be enshrouded in the veil of absolute privilege. Rather, important public policy considerations favoring liberal pre-trial discovery compel disclosure of all relevant information.

[Arena v. Saphier, 201 N.J.Super. 79, 81, 492 A.2d 1020, 1021 (App.Div.1985).]

Defendants argue that the waiver of the psychologist-patient privilege has been upheld by the New Jersey Supreme Court in Kinsella v. Kinsella, 150 N.J. 276, 302-03, 696 A.2d 556, 569-70 (1997). In Kinsella, the Court recognized that given the sensitive and personal nature of the communications between psychologist and the patient, along with the critical role of confidentiality in the success of mental health therapy, this privilege can be likened to the attorney-client privilege. However, as with the attorney-client privilege, there exist very narrow circumstances that permit piercing this protection. Id. at 330, 696 A.2d at 584. HIPAA also provides for the use and disclosure of PHI, specifically psychotherapy notes, so long as a valid authorization is employed. 45 C.F.R. § 164.508(a)(2). Defendants offer to provide plaintiffs with a revised HIPAA-compliant authorization that will permit the production of psychological records only in accordance with the appropriate protocol. Defendants further contend that adequate safeguards already exist in Stempler to protect the patient from unnecessary disclosure.

2. HIPAA does not preempt informal interviews authorized by Stempler.

Defendants contend that Stempler is not inconsistent with HIPAA and that they should be permitted to continue with discovery as it has been routinely sought prior to the latest HIPAA amendments. In order to accommodate plaintiffs' perceived concerns with HIPAA, defendants, in April 2003, proposed a revised medical authorization. In May 2003, plaintiffs objected to the continued informal discovery procedures as permitted by Stempler and sought a ruling requiring a deposition, on the grounds that the procedural safeguards would avoid the potential HIPAA issues. Defendants' argument endorses a traditional Stempler rational. Citing specific amendment exceptions, 45 C.F.R. § 164.508 and § 164.502(b)(2), defendants state that when a patient puts his or her medical condition in issue by filing a suit for personal injuries, he or she waives the patient-physician privilege and authorizes discovery of his medical condition, treatment and history. The waiver language is clear in New Jersey's lawsuit exception regarding patient-physician privilege. N.J.S.A. 2A:84A-22.4.

Second, defendants argue that in accordance with Congressional intent, the Act serves as a "floor" for the regulation of electronic storage and commercial use of nationwide "customer" health information. The primary goal of HIPAA as reflected in the legislative history, is the regulation of the commercial behavior of the national health care industry:

The Department of Health and Human Services (HHS) Medicare Program, other federal agencies operating health plans or providing health care, state Medicaid agencies, private health plans, health care providers, and health care clearinghouses must assure their customers (for example, the patients, insured individuals, providers and health plans) that the integrity, confidentiality and availability of electronic protected health information they collect, maintain, use or transmit is protected. [68 Fed.Reg., supra, at 8334.]

In 1985, the New Jersey Supreme Court ruled that a defendant in such an action may conduct discovery in the form of ex parte interviews of the plaintiff's health care provider (e.g., treating physician) as "an aid to the defendant's discovery," provided that the defendant complies with specific patient authorization requirements. Stempler, supra, 100 N.J. at 373-82, 495 A.2d at 859-64. The requirements of Stempler include affording the health care provider with reasonable notice of the time and place of the interview and a description of the scope of the interview, and advising the health care worker with unmistakable clarity of the voluntariness of his or her participation. Id. at 382, 495 A.2d at 864. In particular, contained in the Stempler decision is the judicial reasoning that "personal interviews, although not expressly referred to in our Rules, are an accepted, informal method of assembling facts and documents in preparation for trial. Their use should be encouraged, as should other informal means of discovery that reduce the cost and time of trial preparation." Ibid. Therefore, defendants reasoned that since plaintiffs have put their medical condition in question, their medical information is subject to disclosure under Stempler.

As to the HIPPA regulation, the defendants argue that the revised authorization satisfied the conditions of the amendments. HIPAA requires all patient authorizations for the use of protected health information to contain the necessary items. Defendants contend that so long as Plaintiffs sign the proposed medical authorizations, there ...

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