LESLIE E. KOBAYASHI, District Judge.
On September 12, 2014, this Court filed the original version of this order. [Dkt. no. 335.] On September 16, 2014, this Court received a letter from Defendants' counsel, Paul Alston, Esq. ("9/16/14 Letter"), asking this Court to amend the original version of this Order, [filed 9/12/14 (dkt. no. 334),] because it "creates the impression that [Claire Wong] Black[, Esq.,] was personally responsible for handling the subpoena." [9/16/14 Letter at 1.] Although this Court cannot agree that the original Order misstates the record about the filing of the confidential document described infra, this Court issues the instant Amended Order as requested.
On July 14, 2014, Plaintiffs/Counterclaim Defendants Pacific Radiation Oncology, LLC, a Hawai'i Limited Liability Corporation, PRO Associates, LLC, a Hawai'i Limited Liability Corporation, John Lederer, M.D., Laeton Pang, M.D., Eva Bieniek, M.D., Vincent Brown, M.D., Paul DeMare, M.D., and Thanh Huynh, M.D. (collectively "Plaintiffs"), filed their Motion for Temporary Restraining Order or in the Alternative for Preliminary Injunction ("Motion"). [Dkt. no. 240.
This matter came on for hearing on August 4, 2014. The Court issued its summary
The instant order is this Court's decision on the Motion, and this order supersedes the August 7, 2014 summary ruling. After careful consideration of the Motion, supporting and opposing documents, and counsel's arguments at the hearing, Plaintiffs' Motion is HEREBY GRANTED IN PART AND DENIED IN PART for the reasons set forth below.
At all relevant times, Plaintiff Pacific Radiation Oncology, LLC ("PRO") had five equity members and one employee physician. All six were citizens and residents of Hawai'i and were physicians licensed to practice in Hawai'i. [Amended Complaint for Declaratory and Injunctive Relief and for Damages, filed 2/23/12 (dkt. no. 44) ("Amended Complaint"), at ¶ 3.] According to the Amended Complaint, PRO was the largest radiation oncology group in Hawai'i. [Id. at ¶ 3.] Drs. DeMare, Brown, Huynh, Lederer, Pang, and Bieniek (collectively "the PRO Physicians") were part of PRO in various capacities. At the time Plaintiffs filed the Amended Complaint, Drs. Lederer and Brown were managers of PRO, Dr. Huynh was an equity partner, and Drs. DeMare, Pang, and Bieniek were members. [Id. at ¶¶ 4-5.] Prior to the filing of this action, the PRO Physicians provided services to their patients at, inter alia, The Queen's Medical Center ("Queen's"), The Cancer Center of Hawai'i ("TCCH") facility in Ewa Beach, and the TCCH facility in Liliha. Queen's was the only facility on Oahu that was licensed by the Nuclear Regulatory Commission ("NRC") and had an operating room. When the procedures they performed did not require an operating room, the PRO Physicians tried to accommodate their patients and allow the patients to choose the treatment location. [Id. at ¶ 3.]
In 2011, after an approximately forty-year professional relationship between Queen's and PRO, Queen's Board of Trustees made the decision to transition the Queen's radiation oncology department to a closed facility. In other words, only physicians who are employed by Queen's would be granted clinical privileges at Queen's. [Id. at ¶¶ 11, 19.] Plaintiffs' position is that implementing the closed-facility model, also known as an employment-based model, would effectively terminate the PRO Physicians' privileges at Queen's and leave them without access to an NRC-licensed hospital facility to treat their patients.
Plaintiffs allege that, in adopting the closed-facility model, the Queen's Board of Directors ("the Board") "did not follow any
The Amended Complaint alleges the following claims: denial of procedural and substantive due process, as guaranteed by article I of the Hawai'i Constitution and the First and Fourteenth Amendments of the United States Constitution ("Count I"); violations of Queen's bylaws and governing regulations ("Count II"); intentional and tortious interference with Plaintiffs' contractual obligations to facilities which compete with Queen's ("Count III"); intentional and tortious interference with prospective business advantage ("Count IV"); intentional and tortious interference with Plaintiffs' professional and contractual relationship with their patients ("Count V"); unfair, deceptive, anti-competitive and illegal trade practices in violation of Haw.Rev.Stat. Chapter 480 based on the termination of the PRO Physicians' privileges ("Count VI"); unfair, deceptive, anti-competitive and illegal trade practices in violation of Chapter 480 based on violations of the Federal Anti-Kickback statute, 42 U.S.C. § 1320a-7b ("Count VII"); unfair, deceptive, anti-competitive and illegal trade practices in violation of Chapter 480 based on attempted economic credentialing ("Count VIII"); unfair, deceptive, anticompetitive and illegal trade practices in violation of Chapter 480 based on the breach of Queen's corporate integrity agreement with the Office of the Inspector General of the Department of Health and Human Services ("Count IX"); and a claim for breach of fiduciary duty and bad faith ("Count X").
The Amended Complaint prays for the following relief: temporary, preliminary, and permanent injunctions enjoining Queen's from terminating the PRO Physicians' hospital privileges; special, general, and punitive damages under Hawai'i law for the damages caused by Defendants' actions alleged in the Amended Complaint; treble damages under Chapter 480, if greater than the amount of punitive damages that Plaintiffs are entitled to; attorneys' fees, interest, and prejudgment interest; restitution, disgorgement of profits, and other equitable relief warranted by Defendants' breach of their fiduciary duties; and any other appropriate relief.
In the instant Motion, Plaintiffs allege that, in January 2011, Queen's was concerned that it was losing patients to TCCH. Queen's executives therefore authorized Queen's administrators to analyze PRO's referral practices and any resulting loss of revenue to Queen's. This required the administrators to access and review
Initially, a spreadsheet was prepared of all surgeons, urologists, or other physicians who referred a patient to a PRO Physician, as far back as 2008. After the analysis of the spreadsheet, an effort was made to encourage some of the referring physicians to begin referring patients to non-PRO radiation oncologists. A further review of the PRO patients' records was conducted to determine: where each PRO patient received his or her treatment; whether it appeared that a PRO Physician directed the patient to a TCCH facility for reasons that were not related to the patient's best interests; and the economic impact on Queen's. Queen's sought to confirm its suspicions that the PRO Physicians were referring patients to TCCH for economic reasons. [Id. at 8-9.] According to Plaintiffs, the "unlawful examinations of PRO's confidential patient records to gain a competitive advantage is now part of Plaintiffs' 480-2 claim against [Queen's]." [Id. at 9.]
Randy Talavera, the manager of Queen's radiation therapy department reviewed the records of 133 patients "who had a consultation with a PRO physician but then did show up at [Queen's] again for radiation therapy during the time frame January 2011 through June of 2011." [Id.] A list of 132 such patients was compiled showing each patient's name, patient number, and the name of his or her physician ("the List"). Defendants' counsel attached the List as an exhibit to: 1) a subpoena to TCCH's custodian of records, signed by the Clerk of Court on July 10, 2014 ("the Subpoena"); and 2) Defendants' Second Request for Production of Documents and Things to Plaintiffs Pacific Radiation Oncology, LLC and PRO Associates, LLC, dated July 9, 2013
In addition to challenging the attachment of the List to the Subpoena and the RPD and the public filing of the List with the Subpoena, Plaintiffs argue that: Queen's was not entitled to review the
This Court has described the standards applicable to a motion for a TRO as follows:
Hunger v. Univ. of Hawai'i, 927 F.Supp.2d 1007, 1015 (D.Hawai'i 2013) (some alterations in Hunger) (some citations omitted).
At the outset, this Court recognizes that the Motion raises important issues about the confidentiality of patients' medical records. A patient's medical records, especially a cancer patient's medical records, contain material that is the very essence of private, personal information. It is beyond dispute that the public disclosure of that information in this case subjected the affected PRO patients to potential irreparable harm. Further, the unauthorized review and use of patients' medical records, even where the use is less than public disclosure, also puts the patients at risk of irreparable harm.
The patients on the List, however, are not parties to this action, nor have any of them come forward to join in Plaintiffs' Motion. This Court notes that, in each of the Hawai'i Supreme Court's mandamus rulings that Plaintiffs cite, it was the patient who was seeking a ruling protecting his or her medical information. Cohan v. Ayabe, 132 Haw. 408, 322 P.3d 948 (2014); Naipo v. Border, 125 Haw. 31, 251 P.3d 594 (2011) (per curiam); Brende v. Hara, 113 Haw. 424, 153 P.3d 1109 (2007) (per curiam). Despite that fact, this Court could find that the PRO Physicians face imminent, irreparable harm because their relationships with the affected patients would suffer because of the alleged violation of the patients' rights under HIPAA and the Hawai'i State Constitution. However, even if it made such a finding, this Court could not grant the TRO that Plaintiffs seek.
In spite of the egregious public disclosure of the List, this Court cannot find that Plaintiffs are likely to succeed on the merits because the Amended Complaint does not contain a claim alleging improper review and use of confidential patient information in violation of HIPAA and the Hawai'i State Constitution.
This Court, however, also construes Plaintiffs' Motion as a discovery motion.
On November 8, 2013, the magistrate judge filed the Amended Stipulated Protective Order ("Protective Order"). [Dkt. no. 134.] The Protective Order defines
[Id. at ¶ 15.]
It is beyond dispute that the List constituted Protected Health Information, as defined in the Protective Order, because it revealed patients' names and their cancer diagnoses. Protective orders are issued to protect parties and other persons "from annoyance, embarrassment, oppression or undue burden or expense." Fed.R.Civ.P. 26(c)(1). Information about a patient's cancer diagnosis is precisely the type of information that protective orders are intended to prevent disclosure of. Defendants admit, as they must, that the List should not have been publicly filed with the Subpoena. Defendants assert that the public filing of the List was inadvertent and that defense counsel took reasonable steps to try to avoid the public filing of Confidential Health Information. Defense counsel, Claire Wong Black, Esq., of the law firm Alston Hunt Floyd & Ing ("the Law Firm"), took the following steps:
[Black Decl. at ¶¶ 2-4 (citations omitted).] In spite of these instructions, however, on July 10, 2014, "a staff member inadvertently filed a return of service," which included the List as an Exhibit, "without requesting attorney review and approval as required." [Id. at ¶ 6.]
The Return of Service on Subpoena, which included the List as an Exhibit, was filed on behalf of William Hunt, Esq., an attorney with the Law Firm. However, Mr. Hunt did not submit a declaration stating what, if any, instructions he gave to the staff regarding the proper use of Protected Health Information in this case. Nor did the staff person who filed the document submit a declaration explaining any instructions given regarding the use of Protected Health Information. Based on
The Black Declaration indicates that the only instruction given immediately before filing occurred was the July 8, 2014 instruction that the List was highly confidential and to keep it "in a safe place." [Id. at ¶ 4.] Apparently, no one repeated the March 25, 2014 instruction about obtaining attorney approval prior to filing documents in this case. Thus, the instruction given about obtaining approval before filing occurred almost four months prior to the actual filing of the List. This Court FINDS that, under the circumstances of this case — a case in which Protected Health Information clearly plays a significant role — the Law Firm failed to make reasonable efforts to ensure that Protected Health Information was not publicly filed, and the staff member included the List in a public filing because of the failure to make reasonable efforts. This Court therefore FINDS that the Protective Order was violated when the List was publicly filed.
The Ninth Circuit has stated that "[d]istrict courts have the inherent power to sanction a lawyer for a `full range of litigation abuses.'" Evon v. Law Offices of Sidney Mickell, 688 F.3d 1015, 1035 (9th Cir.2012) (quoting Chambers v. NASCO, Inc., 501 U.S. 32, 55, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991)). In Evon, the Ninth Circuit rejected the argument that the district court lacked the inherent authority to impose sanctions for an allegedly inadvertent violation of a protective order. Id.
"[A] district court may levy sanctions pursuant to its inherent power for willful disobedience of a court order or when the losing party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons." Id. (alteration, citations, and internal quotation marks omitted). "[A] `willful' violation of a court order does not require proof of mental intent such as bad faith or an improper motive, but rather, it is enough that a party acted deliberately." Id. Thus, a district court can impose sanctions for either: "(1) willful violation of a court order; or (2) bad faith. A determination that a party was willfully disobedient is different from a finding that a party acted in bad faith. Either supports the imposition of sanctions." Id. (emphasis added). In the instant case, this Court has found that the Protective Order was violated. Thus, the only remaining issue is whether that violation was willful.
In Evon, the defendant's attorney, who was "running up against the filing deadline, filed documents without sealing or redacting them, exposing to public view certain material that had been designated `confidential' under the protective order." Id. at 1034. In appealing the award of sanctions against him, the attorney argued that the public filing was "inadvertent," but the Ninth Circuit stated that "what he really means is that on the day of the filing, he realized that compliance with the
The instant case does not rise to the same level as Evon because there is no evidence that the Law Firm chose to violate the Protective Order or acted in bad faith or with an improper motive. Evon, however, clearly holds that a district court may impose sanctions if there was a deliberate violation of a court order. See id. The Law Firm, through its staff member, deliberately filed the Subpoena, which included the List as an exhibit. This Court therefore FINDS that this violation of the Protective order was willful and warrants the imposition of sanctions.
As noted supra note 4, this Court directed the parties to file position statements addressing the type of sanction that this Court should impose for the violation of the Protective Order. Plaintiffs propose the following sanctions:
The imposition of sanctions in this Order, however, is limited to sanctions for the public filing of the List as part of the Subpoena. All of Plaintiffs' proposed sanctions relate to Plaintiffs' request for a ruling on whether Defendants' review and use of the patients' medical records was proper in the first instance and whether Defendants are entitled to obtain other similar records in discovery. These issues are beyond the scope of this Order. See infra Discussion Section II.B. This Court therefore rejects Plaintiffs' proposed sanctions.
Defendants propose that this Court impose a monetary sanction of no more than $1,000.00, and they emphasize that the sanction imposed "must specifically relate to the particular claim at issue in the discovery order." [Defs.' Position Statement at 2 (citing U.S. v. Nat'l Med. Enters., Inc., 792 F.2d 906, 910 (9th Cir. 1986)).]
Under the circumstances of this case, a monetary sanction is a less than satisfactory form of sanction, but the Court is unable to articulate one that is more appropriate. With this limitation in mind, the
This Court therefore FINDS that the appropriate sanction for the violation of the Protective Order is an award of Plaintiffs' reasonable attorneys' fees and costs incurred in responding to the public filing of the List as part of the Subpoena. This includes, inter alia, Plaintiffs' counsel's: communication with defense counsel and district court personnel regarding the removal of the List from the public record; communication with patients identified on the List to notify them of
Plaintiffs shall file a memorandum, with a supporting declaration of counsel and supporting documentation (including detailed itemization of the hours spent and invoices or receipts for any expenses incurred), by no later than
Defendants may file a memorandum, not to exceed five pages, responding to the amount of Plaintiffs' requested award of attorneys' fees and costs. Defendants may also file declarations and exhibits, if any, relevant to the amount of the requested award. Defendants may not use the memorandum to challenge the decision to award sanctions or the ruling that an award of reasonable attorneys' fees and costs is the appropriate sanction. Defendants must file their memorandum by no later than
This Court CAUTIONS the parties that it may strike any memorandum that does not comply with this Order.
To the extent that Defendants contend that patient information is relevant and necessary to the claims and defenses in this case, while Plaintiffs seek to prevent Defendants from obtaining or using patient information in a manner that violates HIPAA and/or the Hawai'i State Constitution, the parties must address these issues through the normal discovery process.
In order to provide guidance to the parties and the much beleaguered magistrate judge, this Court will briefly address the parties' dispute about the applicable law. Defendants take the position that their review and use of the medical records of the patients at issue in this case complies with HIPAA. Plaintiffs contend that Defendants' prior use and review of the medical records violated HIPAA, as well as article I, section 6 of the Hawai'i Constitution, which states, in relevant part that "[t]he right of the people to privacy is recognized and shall not be infringed without the showing of a compelling state interest." Plaintiffs also argue that this Court should prohibit Defendants from obtaining any further medical records of PRO patients. Defendants assert that HIPAA preempts Plaintiffs' arguments based on the Hawai'i State Constitution.
HIPAA does contain an express preemption provision. 42 U.S.C. § 1320d-7(a)(1) (stating, in pertinent part, that "a provision or requirement under this part, or a standard or implementation specification adopted or established under sections 1320d-1 through 1320d-3 of this title, shall supersede any
45 C.F.R. § 160.202. In addition,
45 C.F.R. § 160.203. Thus, courts have recognized that HIPAA does not preempt "more stringent" privacy protections guaranteed under state law. See, e.g., OPIS Mgmt. Res., LLC v. Sec., Fla. Agency for Health Care Admin., 713 F.3d 1291, 1294 (11th Cir.2013). Pursuant to the HIPAA regulations:
§ 160.202.
Further, although Cohan, Naipo, and Brende, were factually distinguishable in the context of Plaintiffs' request for a TRO and a preliminary injunction, see supra Discussion Section I, the legal analysis in those cases regarding the relationship between HIPAA and article I, section 6 of the Hawai'i Constitution applies to the parties' discovery disputes. In Cohan, the Hawai'i Supreme Court stated:
132 Hawai'i at 415, 322 P.3d at 955 (some alterations in Cohan) (emphases added) (footnote omitted). Thus,
Id. at 417, 322 P.3d at 957.
This Court emphasizes that its analysis in this section does not constitute a ruling that: 1) any party is or is not entitled to obtain discovery; or 2) any party is or is not entitled to use medical records previously obtained and/or reviewed. The parties may address these discovery issues during their conference with the magistrate judge.
On the basis of the foregoing, Plaintiffs' Motion for Temporary Restraining Order or in the Alternative for Preliminary Injunction, filed July 14, 2014, is HEREBY GRANTED IN PART AND DENIED IN PART. The Motion is GRANTED insofar as this Court: FINDS that Defendants' counsel violated the Amended Stipulated Protective Order; [dkt. no. 134;] and FINDS that the appropriate sanction is an award of Plaintiffs' reasonable attorneys' fees and costs incurred as a result of the violation, as described in this Order. Plaintiffs shall file their memorandum regarding the amount of the award, with supporting documentation, by
This Court ORDERS the parties to contact the magistrate judge to schedule a discovery conference to address the issues set forth in this Order.
IT IS SO ORDERED.