Source: https://bmrfirm.com/practice%E2%80%99s-medical-records-are-protected-trade-secrets
Timestamp: 2019-04-21 04:20:39+00:00

Document:
In Part I of our two-part blog series, we began our evaluation of the legal status of medical records in the context of corporate divorce. In Part I, we emphasized that a practice owns the medical records it creates over the associated patients and physicians who created the record. Now, in Part II of this series, we examine how this unique area of law ultimately defines such medical records as confidential business information, which are protected as trade secrets.
First, a bit of background. Generally speaking, the law of trade secrets provides businesses a potent means for protecting their confidential and commercially valuable information. As early as 1925, Tennessee courts expressly provided businesses the right to enjoin others from using their confidential commercial information under Tennessee common law. See, e.g., Kelly Mfg. Co. v. Brower, 1 Tenn. App. 428 (Tenn. Ct. App. 1925) (holding that the plaintiff’s “McKinney Soap and Water Mixer” – which was essentially an early-version of a washing machine – constituted a trade secret, and the defendant, plaintiff’s former salesmen, should be enjoined from using and sharing the technological knowledge he had acquired from the plaintiff).
In 2000, Tennessee adopted a version of the Uniform Trade Secrets Act, which supplanted Tennessee common law with a statutory framework for more consistent trade secrets enforcement. See Tenn. Code Ann. §§ 47-25-1701, et seq. (“TUTSA”). With TUTSA, Tennessee became among the majority of other states that had adopted some version of the Uniform Trade Secrets Act. See Uniform Law Commission Trade Secrets Act. Currently, 48 states have enacted a version of the Uniform Act, with the remaining two states – Massachusetts and New York – having legislation introduced earlier this year. Id.
Under TUTSA, “trade secret” includes any “information, without regard to form, including, but not limited to, technical, nontechnical or financial data, a formula, pattern, compilation, program, device, method, technique, process, or plan that: (A) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use; and (B) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” Tenn. Code Ann. § 47-25-1702(4).
Do Medical Records Really Constitute Trade Secrets?
Yes. While no Tennessee cases have addressed this precise issue under TUTSA, courts in other states have routinely defined medical records themselves as trade secrets. For example, in Total Care Phys. P.A. v. O’Hara, 798 A.2d 1043 (Del. 2001), a Superior Court of Delaware held that records containing patient information, including medical data and treatment information, were trade secrets under the Delaware Trade Secrets Act. O’Hara, 798 A.2d at 1054. There, a physician who was departing from a practice used “super bills” – which contained “patient addresses, medical diagnoses and treatment codes, and specific patient insurance information” – to generate a medical records release forms for the patients he treated. Id. The court held that such information was precisely the sort of “proprietary information which courts in Delaware have concluded justify ‘trade secret’ status and protection.” Id.
Dickinson, 1984 WL 8208, at *2 (emphasis added).
Other jurisdictions have rendered the same opinions as the Delaware cases outlined above. See e.g., Med. Wellness Assoc. P.C. v. Heithaus, 2001 WL 1112991 (Pa. 2000) (where the former physician had access to “patient lists, names, addresses and telephone numbers, medical records, pricing information, billing procedures, patient good will, and patient development and advertising techniques” which constitute “highly confidently and valuable assets” of the practice); Bellefuielle v. Equine Sports Med. & Surgery, 2016 WL 1163364 (Tex. Ct. App. Mar. 24, 2016) (equine medical records constitute trade secrets).
Specifically, “Tennessee's definition of ‘trade secret’ includes any information ‘without regard to form, including, but not limited to, technical, nontechnical or financial data.’” Tennessee's definition “also adds the word ‘plan’ to the non-exclusive list of information and items that may constitute a trade secret.” Thus, the definition of a “trade secret” under the Act is sufficiently broad to include information which at common law would have been considered confidential information. In contrast to the common law, for the information to be protectable under [TUTSA], the business need only show “reasonable” efforts to maintain the secrecy of the information.
Hamilton-Ryker Grp., LLC v. Keymon, 2010 WL 323057, at *14 (Tenn. Ct. App. Jan. 28, 2010) (quoting Douglas F. Halijan, The Past, Present, and Future of Trade Secrets Law in Tennessee: A Practitioner’s Guide Following the Enactment of the Uniform Trade Secrets Act, 32 U. Mem. L. Rev. 1, 21-22 (2001).
Accordingly, if – or more likely “when” – a Tennessee court is posed with the question of whether a medical record constitutes a protected trade secret under TUTSA, we believe the court would answer that question in the affirmative. As a result, if a physician leaves an existing medical practice and unilaterally removes the practice’s medical records, the practice may seek an injunction to have the records returned under TUTSA. See Tenn. Code Ann. § 47-25-1703(c) (“In appropriate circumstances, affirmative acts to provide a trade secret may be compelled by court order.”) In addition, the practice may be entitled to damages, including both “the actual loss caused by misappropriation and the unjust enrichment caused by misappropriation that is not taken into account in computing actual loss.” Tenn. Code Ann. § 47-25-1704(a). Further, if the court finds that the misappropriation was “willful and malicious,” it may award “exemplary damages” by doubling the damages award. Tenn. Code Ann. § 47-25-1704(b).
It is also worth noting that on May 11, 2016, The Defend Trade Secrets Act of 2016 (“DTSA”) was signed into law, after being unanimously passed by the Senate and ratified in the House by a resounding 410-2 vote. DTSA does not preempt existing state law, like TUTSA, but creates an additional federal cause of action, which largely mirrors the Uniform Trade Secrets Act. Accordingly, practices which believe their medical records have been misappropriated very likely have remedies under both federal law and state law.

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