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U.S. v. METROPOLITAN AMBULANCE & FIRST-AID CORP.

October 26, 2005.

UNITED STATES OF AMERICA ex rel. LARRY KAPLAN, Plaintiff,
v.
METROPOLITAN AMBULANCE & FIRST-AID CORP., (NOW KNOWN AS SEZ METRO CORP.); METRO NORTH AMBULANCE CORP. (NOW KNOWN AS SEZ NORTH CORP.); BIG APPLE AMBULANCE SERVICE, INC. (FORMERLY DBA UNITED AMBULANCE); and STEPHEN ZAKHEIM, Defendants.



The opinion of the court was delivered by: JOAN AZRACK, Chief Magistrate Judge

MEMORANDUM AND ORDER

This is a qui tam action in which relator, Larry Kaplan, seeks to recover damages on behalf of himself and the United States pursuant to the False Claims Act, 31 U.S.C. § 3729. The Complaint alleges that defendants defrauded the federal government by falsifying documents to obtain reimbursement for ambulance transportation services it provided to Medicare patients. The United States Department of Justice issued subpoenas to several non-party health care providers for patient medical records pursuant to Rule 45 of the Federal Rules of Civil Procedure. The current dispute between the parties concerns the terms of a protective order sought by defendants governing the use of these confidential medical records. The issue is whether defendants can limit the government's use of these medical records to this litigation. On September 6, 2005, I ordered the parties to submit authority for their respective positions. Having reviewed the parties' submissions, as well as the applicable law, I find that any protective order may not restrict the government's use of the confidential patient medical records solely to purposes of this litigation.

  I. FACTS

  Defendants seek a protective order pursuant to 45 C.F.R. § 164.512(e)(1)(ii)(B), restricting the government's use of confidential medical records obtained during the pendency of this action to purposes solely related to this litigation. The relevant section of defendants' proposed protective order states:
materials can only be used for purposes related to this litigation, except that nothing contained in this Protective Order shall limit or circumscribe the United States from carrying out its role as health oversight agency for oversight activities authorized by law under 45 C.F.R. § 164.512(d)(1) or from carrying out any obligation under law. At the end of the litigation, the protected health information . . . will be returned to the covered entities or will be destroyed.
(Defendants' Proposed Protective Order ¶ 1.)

  The government, however, argues that this language is too restrictive and interferes with its functions as a "health oversight agency" under 45 C.F.R. § 164.512(d). The government argues that 45 C.F.R. § 164.512(d) is the applicable regulation in this case, not 45 C.F.R. § 164.512(e)(1)(ii)(B), and that the protective order cannot limit the government's use of confidential patient medical records to purposes of this litigation.*fn1 The government has proposed a protective order that includes provisions allowing it to disclose patient medical records to various agencies or departments of the United States and Congress.

  Thus, the issue is whether, pursuant to § 164.512(e)(1)(ii)(B), the protective order must include a provision restricting the government's use of confidential patient information to purposes related to this litigation, or alternatively, whether the government must be permitted to disclose the confidential patient information to various agencies and departments of the United States and Congress in its role as a "health oversight agency." This issue has not been previously addressed in the Second Circuit.

  II. DISCUSSION

  One of the purposes of the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), Pub.L. No. 104-191 §§ 261-264, 110 Stat. 1936 is to "ensure the integrity and confidentiality of [patient] information." 42 U.S.C. § 1320d-2(d)(2)(A); see also 65 Fed. Reg. 82462, 82469 (Dec. 28, 2000) (stating that "Congress recognized the challenges to the confidentiality of health information presented by the increasing complexity of the health care industry, and by advances in health information systems technology and communications."). To accomplish this objective, Congress delegated authority to the Secretary of the United States Department of Health and Human Services to promulgate rules and regulations governing the disclosure of confidential patient information. See HIPAA § 264(c)(i), 110 Stat. 1936, 2033. In accordance with this rule-making authority, the Secretary adopted regulations which became effective on April 14, 2001. See 66 Fed. Reg. 12434 (Feb. 26, 2001); 45 C.F.R. §§ 164.500-535.

  Section 164.512(d) sets forth the standards for uses and disclosures of confidential patient information for health oversight activities. This regulation permits disclosures of protected health information to a "health oversight agency for oversight activities authorized by law . . . including . . . civil . . . proceedings. . . ." 45 C.F.R. § 164.512(d)(1). Disclosure of confidential patient information, however, is limited to "activities necessary for appropriate oversight of:"

  (i) The health care system;

 
(ii) Government benefit programs for which health information is relevant to beneficiary eligibility;
(iii) Entities subject to government regulatory programs for which health information is necessary for determining compliance with program standards; or
(iv) Entities subject to civil rights laws for which health information is necessary for determining compliance.
45 C.F.R. § 164.512(d)(1)(i)-(iv).

  In contrast, § 164.512(e) sets forth the standards for disclosures in judicial and administrative proceedings. This section permits a "covered entity"*fn2 to disclose confidential patient information under certain circumstances. Disclosures are permitted in response to a court order, whereby "only the protected health information expressly authorized by such an order" may be disclosed. 45 C.F.R. § 164.512(e)(1)(i). A "covered entity" is also permitted to disclose confidential patient information in response to a subpoena or discovery request if it has received adequate assurance that reasonable efforts have been made to either "ensure that the individual who is the subject of the protected information that has been requested has been given notice of the request" or to "secure a qualified protective order. . . ." 45 C.F.R. § 164.512(e)(1)(i), (ii). A qualified protective order entered into pursuant to § 164.512(e)(1)(ii) must satisfy two requirements. First, it must "prohibit the parties from using or disclosing the protected health information for any purpose other than the litigation or proceeding for which such information was requested." 45 C.F.R. § 164.512(e)(1)(v)(A). Second, the protective order must require that the parties return or destroy all protected health information, including any copies, at the end of the litigation. See 45 C.F.R. § 164.512(e)(1)(v)(B).

  The government, citing United States ex rel. Stewart v. Louisiana Clinic, No. Civ. A. 99-1767, 2002 WL 31819130 (E.D. La. Dec. 12, 2002), argues that it may use confidential patient information obtained during discovery in connection with "health oversight activities" and not solely for purposes related to this litigation. Stewart, like this case, was a qui tam action in which defendants were alleged to have submitted "false claims for reimbursement for medical services provided to Medicare and Medicaid." Id. at *1. The government declined to intervene in the action; therefore, defendants argued that the government was a "nonparty with no rights to participate in . . . discovery and that it must be ordered to use the documents, if it receives them, solely for purposes of this litigation." Id. at *7. The court, however, disagreed and held that the language in § 164.512(d)(1) was "clear and unambiguous" and that the government may use the nonparty medical records it obtained through discovery "in connection with its legitimate governmental health oversight activities, and not solely for the purposes of this litigation." Id. at *10.

  Defendants' rebuttal to the government's reliance on Stewart is simply, "[w]e do not believe [this case] is dispositive on whether plaintiff's broad language should be ordered by the Court." Defendants also urge that its proposed protective order is consistent with the holding in Stewart because it "recognizes the [Department of Justice's] function as a health oversight agency." (See ...


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