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Furst v. Chomsky

BER-C-278-03 (N.J. Super. Ch. Div. 2004) (Unpublished)

HIPPA; DISCOVERY—Under the Health Insurance Portability and Accountability Act of 1996, a court of cognizant jurisdiction has the power to order discovery of medical records provided that it issues an appropriate protective order to guard the privacy of the patients covered by those medical records.

A shareholder of an ambulatory surgical center brought suit against its medical director. The shareholder alleged that the director implemented a scheme to fraudulently manage the center, so as to “loot” the assets and divert its profits to other businesses owned by the director. Before trial, the shareholder propounded a subpoena duces tecum upon the company that had provided billing and collection services to the surgical center and upon one of the director’s other companies.

The director moved to quash the subpoena, claiming that since the shareholder’s allegations were limited to alleged improper payments of expenses and loans, the billing records requested were not reasonably calculated to lead to discovery of admissible evidence. Specifically, the director asserted that Medicaid regulations only authorized the center to bill a facility fee; therefore, it was prohibited by law from billing for other physician’s services. Thus, the director contended that because the center was limited as to how and for what it could bill, its billing records would not lead to the discovery of admissible evidence of billing by the director that should have been billed by the center. The director also asserted that the subpoena sought privileged information under the Health Insurance Portability and Accountability Act of 1996 HIPPA. Finally, the director stated that due to the volume of the records requested, they could not be produced without great cost and expense.

The shareholder claimed that the subpoenaed records were a source to confirm the funds received by the center and the other businesses, and to allow a review of the intertwined finances of the various entities controlled and owned by the director. The shareholder also asserted that the documents could be disclosed under HIPAA’s exception for disclosures made in the course of judicial and administrative proceedings.

The Court held that the fact that the center and the other businesses were non-parties was not alone sufficient to quash the subpoena. Such a subpoena should only be quashed if it was deemed to be unreasonable and oppressive, imposed an undue burden, and was an unwarranted intrusion and invasion of rights. According to the Court, this was not the case here. As a result, it concluded that the subpoena was in fact reasonably calculated to lead to the discovery of admissible evidence.

HIPPA regulations, 45 C.F.R. § 164.512(e), provide that medical records are obtainable as long as reasonable efforts have been made to ensure that the patients whose records are being obtained have been given notice, or that there has been a qualified protective order. Such an order prohibits parties from using or disclosing the protected health information for any purpose other than the litigation for which the information was requested; and requires the return to the protected person or destruction of the protected information at the end of the litigation.

The director claimed that the shareholder had not satisfied 45 C.F.R. 164.512(e). The shareholder, however, contended that it would have been impractical to give notice to the patients because the number of patients was voluminous. Further, the Court noted that the director had not been willing to enter into a protective order because the director was claiming that the information sought was not reasonably calculated to lead to the discovery of admissible evidence. Since the Court determined that the subpoena should not have been quashed, it directed the parties to enter into a qualified protective order as required by the federal regulations and HIPPA.


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