Court Opinion

ID: 3186775
Source: CourtListenerOpinion
Date Created: 2016-03-18 14:15:49.338134+00
Date Added: 2024-06-11T14:35:41.254280
License: Public Domain

IN THE SUPREME COURT OF IOWA
                              No. 14–1918

                         Filed March 18, 2016

GERALD P. YOUNG, MICHAEL L. HAIGH, and SUZANNE M. RUNYON,
Individually and on Behalf of Others Similarly Situated,

      Appellees,

vs.

HEALTHPORT TECHNOLOGIES, INC.,

      Appellant.

      Appeal from the Iowa District Court for Polk County, Mary Pat

Gunderson, Judge.

      A company that fulfills records requests received by healthcare

providers appeals a district court order denying its motion to dismiss.

AFFIRMED AND CASE REMANDED.

      Ryan G. Koopmans, Angel A. West, and Ryan W. Leemkuil (until
withdrawal) of Nyemaster Goode, P.C., Des Moines, for appellant.

      James J. Biscoglia, Ryan C. Nixon, George A. LaMarca, and Gary

G. Mattson of LaMarca Law Group, P.C., Des Moines, for appellees.

      Joel E. Fenton of Law Offices of Joel E. Fenton, PLC, Des Moines,

and Elaine F. Gray of Fehseke & Gray Law Offices, Fort Madison, for

amicus curiae Iowa Association for Justice.
                                     2

WIGGINS, Justice.

      Patients who requested medical records and billing statements

from their healthcare providers filed a class action lawsuit claiming the

company that fulfilled their records requests charged excessive fees in

violation of Iowa Code section 622.10(6) (2013). The company moved to

dismiss the petition, alleging section 622.10(6) did not apply to it

because it was not a provider as defined by the statute.        The district

court denied the motion.      We granted the company’s application for

interlocutory appeal. We affirm the district court and remand the case

for further proceedings consistent with this opinion because the well-

pleaded facts in the petition indicate the company acted as an agent of

the providers by fulfilling the records requests on their behalf.

      I. Prior Proceedings.

      On April 23, 2014, Gerald P. Young, Michael L. Haigh, and

Suzanne M. Runyon filed a class action alleging the fees HealthPort

Technologies, Inc. charged for providing copies of their medical records

and billing statements exceeded statutorily imposed limits set forth in

Iowa Code section 622.10(6).     HealthPort filed a pre-answer motion to

dismiss pursuant to Iowa Rule of Civil Procedure 1.421(1)(f) for failure to

state a claim upon which any relief may be granted. The district court

denied the motion, concluding section 622.10(6)(a) plainly requires fees

to be based upon actual cost and does not indicate the limitations it

imposes apply only to entities meeting the statutory definition of provider

in section 622.10(6)(e)(2).   Accordingly, the court concluded the class

representatives might establish their entitlement to relief under the

pleaded facts.   HealthPort filed an application for interlocutory appeal.

We granted the application.
                                          3

       II. Issue.

       The only issue we must decide in this appeal is whether the district

court properly denied HealthPort’s motion to dismiss.

       III. Scope of Review.

       We review district court rulings on motions to dismiss for failure to

state a claim upon which any relief may be granted for correction of

errors at law.      Rees v. City of Shenandoah, 682 N.W.2d 77, 78 (Iowa

2004).

       IV. Standards When Deciding a Motion to Dismiss.

       A court should grant a motion to dismiss “only if the petition on its

face shows no right of recovery under any state of facts.”                   Tate v.

Derifield, 510 N.W.2d 885, 887 (Iowa 1994). Thus, a motion to dismiss

may be properly granted “only when there exists no conceivable set of

facts entitling the non-moving party to relief.” Rees, 682 N.W.2d at 79

(quoting Barkema v. Williams Pipeline Co., 666 N.W.2d 612, 614 (Iowa

2003)).      When a moving party attacks a claim by filing a motion to

dismiss, that party “admits well-pleaded facts and waives ambiguity or

uncertainty in the petition.”       Schaffer v. Frank Moyer Const., Inc., 563
N.W.2d 605, 607 (Iowa 1997).            A court must decide the merits of a

motion to dismiss based on the facts alleged in the petition, not the facts

alleged by the moving party or facts that may be developed in an

evidentiary hearing. 1 Berger v. Gen. United Grp., Inc., 268 N.W.2d 630,

634 (Iowa 1978); Riediger v. Marrland Dev. Corp., 253 N.W.2d 915, 916–

17 (Iowa 1977).

       1An   exception to this general rule applies to facts of which a court may take
judicial notice. Riediger v. Marrland Dev. Corp., 253 N.W.2d 915, 916 (Iowa 1977); see
Iowa R. Civ. P. 1.415; Iowa R. Evid. 5.201.
                                    4

      Under our notice-pleading standards, nearly every case will survive

a motion to dismiss for failure to state a claim upon which any relief may

be granted.     Smith v. Smith, 513 N.W.2d 728, 730 (Iowa 1994).        To

survive a motion to dismiss, the petition need not allege the ultimate

facts to support each element of a cause of action. Id. However, it must

contain factual allegations sufficient to give the defendant fair notice of

each claim asserted so the defendant can adequately respond. Schmidt

v. Wilkinson, 340 N.W.2d 282, 283 (Iowa 1983).       The allegations in a

petition comply with this fair-notice requirement if the petition informs

the defendant of the general nature of the claim and the incident giving

rise to it.   Soike v. Evan Matthews & Co., 302 N.W.2d 841, 842 (Iowa

1981). In ruling on a motion to dismiss, a court construes the petition in

the light most favorable to the plaintiff and resolves any doubts in the

plaintiff’s favor. Turner v. Iowa State Bank & Trust Co., 743 N.W.2d 1, 3

(Iowa 2007).

      V. Analysis.

      Section 622.10(6) of the Iowa Code provides:

             At any time, upon a written request from a patient, a
      patient’s legal representative or attorney, or an adverse party
      pursuant to subsection 3, any provider shall provide copies
      of the requested records or images to the requester within
      thirty days of receipt of the written request. The written
      request shall be accompanied by a legally sufficient patient’s
      waiver unless the request is made by the patient or the
      patient’s legal representative or attorney.

            a. The fee charged for the cost of producing the
      requested records or images shall be based upon the actual
      cost of production. If the written request and accompanying
      patient’s waiver, if required, authorizes the release of all of
      the patient’s records for the requested time period, including
      records relating to the patient’s mental health, substance
      abuse, and acquired immune deficiency syndrome-related
      conditions, the amount charged shall not exceed the rates
      established by the workers’ compensation commissioner for
                               5
copies of records in workers’ compensation cases.             If
requested, the provider shall include an affidavit certifying
that the records or images produced are true and accurate
copies of the originals for an additional fee not to exceed ten
dollars.

       b. A patient or a patient’s legal representative or a
patient’s attorney is entitled to one copy free of charge of the
patient’s complete billing statement, subject only to a charge
for the actual costs of postage or delivery charges incurred in
providing the statement.        If requested, the provider or
custodian of the record shall include an affidavit certifying
the billing statements produced to be true and accurate
copies of the originals for an additional fee not to exceed ten
dollars.

       c. Fees charged pursuant to this subsection are
exempt from the sales tax pursuant to section 423.3,
subsection 96. A provider providing the records or images
may require payment in advance if an itemized statement
demanding such is provided to the requesting party within
fifteen days of the request. Upon a timely request for
payment in advance, the time for providing the records or
images shall be extended until the greater of thirty days from
the date of the original request or ten days from the receipt
of payment.

      d. If a provider does not provide to the requester all
records or images encompassed by the request or does not
allow a patient access to all of the patient’s medical records
encompassed by the patient’s request to examine the
patient’s records, the provider shall give written notice to the
requester or the patient that providing the requested records
or images would be a violation of the federal Health
Insurance Portability and Accountability Act of 1996, Pub. L.
No. 104-191.

      e. As used in this subsection:

       (1) “Records” and “images” include electronic media
and data containing a patient’s health or billing information
and “copies” includes patient records or images provided in
electronic form, regardless of the form of the originals. If
consented to by the requesting party, records and images
produced pursuant to this subsection may be produced on
electronic media.
                                     6
             (2) “Provider” means any physician or surgeon,
      physician assistant, advanced registered nurse practitioner,
      mental health professional, hospital, nursing home, or other
      person, entity, facility, or organization that furnishes, bills,
      or is paid for health care in the normal course of business.

Iowa Code § 622.10(6).

      Section 622.10(6) requires that when a patient, a patient’s legal

representative, or a patient’s attorney properly requests a record from a

provider, the provider must promptly produce the requested record. In

addition, the statute limits the fees that may be charged for producing

requested records.    HealthPort contends section 622.10(6) does not
regulate how much entities that are not providers may charge for

producing records and urges us to dismiss the petition because

HealthPort is not a provider as defined in section 622.10(6)(e)(2).      The

putative class representatives maintain subsections (6)(a) and (6)(b) limit

fees that may be charged when any entity fulfills a record request

governed by section 622.10(6).      We think a reasonable person could

interpret the statute either way.

      The petition alleged the following facts in support of the plaintiffs’

claims:

            21. Plaintiffs are all residents of Polk, Marshall and
      Warren counties, State of Iowa.        Plaintiffs, individually
      and/or through their legal representatives, requested
      medical records from various medical providers, including
      but not limited to Mercy Medical Des Moines.

           22. Plaintiffs’ requests were fulfilled by HealthPort
      who has entered into contractual arrangements with the
      medical providers from whom the records were sought.

            23. In addition to the fees permitted by the Patient
      Records/Billings Statute, HealthPort charged and Plaintiffs
      paid the excess per page medical records charges, Basic Fees
      and Electronic Delivery Fees. Plaintiffs paid the excess per
      page medical records charges, Basic Fees and Electronic
      Delivery Fees in order to obtain the requested records
                                        7
         because HealthPort’s policy is not to send the records until
         after the invoice is paid and Plaintiffs feared that refusing to
         pay the excess per page medical records charges, Basic Fees
         and Electronic Delivery Fees would delay the receipt of the
         needed records.

For purposes of our analysis, we treat these facts as true.           Thus, in

reviewing the district court’s ruling on the motion to dismiss, we assume

HealthPort acted as the agent of providers in fulfilling their obligations

under the statute.      We have found two reported cases addressing this

issue.

         The first is Cotton v. Med-Cor Health Information Solutions, Inc.,
472 S.E.2d 92 (Ga. Ct. App. 1996). Like HealthPort, the defendants in

Cotton were companies that fulfilled records requests received by

healthcare providers.       The defendants moved to dismiss class-action

complaints alleging they charged fees for producing patient records

exceeding the statutory limits on such fees. Id. at 94. The defendants

alleged the relevant statute governed only providers.          Id.   The court

described the applicable Georgia Code sections as follows,

                The Health Records Act governs the furnishing of the
         record of a patient by a “provider.” Under the Act, a
         “provider” is defined as meaning all hospitals and other
         specified entities providing health care services.      Upon
         written request from the patient, the provider having custody
         and control of the patient’s record is required to furnish a
         copy of that record to the patient or to any other person or
         provider designated by the patient. [The statute] states that
         the party requesting the patient’s records shall be
         responsible to the provider for the “reasonable costs of
         copying and mailing the patient’s record.”

Id. at 95 (citations omitted) (quoting Ga. Code Ann. § 31-33-3(a) (1995)).

The court concluded the statute applied not only to healthcare providers,

but also to entities fulfilling records requests received by providers. Id.

In arriving at its conclusion, the court emphasized the intent of the

statute “was to ensure that patients have access to medical records in
                                             8

the custody and control of health care providers without being charged

more than the reasonable costs of copying and mailing them.” Id. The

court also noted this intent would be completely defeated if it construed

the statute to allow entities hired by providers to charge more for

producing records the providers were required by law to produce than

the providers were permitted to charge themselves. Id. Finally, the court

concluded agents of the providers had no greater power to charge fees in

excess of those permitted by the statute than the providers themselves

had. Id. Therefore, the court rejected the argument that the statute did

not limit the fees entities producing records on behalf of the providers

could charge for fulfilling records requests. 2 Id.

       The second case we identified dealing with this issue is Pratt v.

Smart Corp., 968 S.W.2d 868 (Tenn. Ct. App. 1997). In Pratt, the plaintiff

claimed Smart Corporation violated a Tennessee statute governing the

production of medical records by hospitals. Id. at 870. The corporation

moved for summary judgment, claiming the statute did not apply to an

independent entity fulfilling records requests received by a hospital. Id.

at 870, 873. The relevant statute required hospitals to furnish records to

patients and patients’ authorized representatives and limited the fees
that could be charged when those requests were fulfilled, but it did not

explicitly state that those limits applied to requests fulfilled by other

entities.   Id.       Adopting the rationale of Cotton, the court held that

although the statute referenced only hospitals and not entities like Smart

Corporation,      when     acting   as   a       hospital’s   authorized   agent   the

corporation “could not perform acts which the hospital was forbidden by

       2Ultimately,  the court upheld the trial court’s dismissal of the claims, but in
doing so it relied on another Georgia statute codifying the voluntary-payment doctrine.
Cotton, 472 S.E.2d at 96.
                                           9

law to perform itself.”       Id. at 873.      The court thus reversed the trial

court’s grant of summary judgment in favor of Smart Corporation. Id. at

873–74.

       The statutes analyzed in Cotton and Pratt required healthcare

providers to produce records and limited what fees could be charged

when the providers produced the records.               However, even though the

Georgia and Tennessee statutes specifically referenced healthcare

providers, the courts in Cotton and Pratt interpreted the statutes to limit

the fees entities fulfilling records requests on behalf of healthcare

providers could charge.

       Subsections (6)(a) and (6)(b) limit what may be charged for fulfilling

records    requests     but     do   not       specifically   reference   providers.

Consequently, we could conclude the legislature intended the statute to

limit the fees charged by any entity fulfilling records requests received by

providers. However, this case comes before us on a motion to dismiss,

and the well-pleaded facts allege an agency relationship. Thus, we can

decide this case without reaching that issue.

       We agree with the analysis of the Georgia and Tennessee courts

regarding the apparent intent of statutes like the ones considered in

Cotton and Pratt and the relevancy of agency principles in the application

of such statutes. 3       We therefore conclude the intent of our state

legislature in enacting section 622.10(6) was to protect patients from

being charged excessive fees for access to information in the custody and

control of healthcare providers and ensure their timely access to such

       3We have found no case addressing a similar statute in which the court held to

the contrary.
                                           10

information. 4 We also conclude agency principles apply when an entity

hired by a provider performs a service the statute requires a provider to

perform. Under Iowa law, an agency relationship exists when one entity

has actual (express or implied) authority or apparent authority to act on

behalf of another. C & J Vantage Leasing Co. v. Wolfe, 795 N.W.2d 65,

79 (Iowa 2011).         An entity fulfilling records requests received by a

provider may operate as the provider’s agent by virtue of a contractual

agreement requiring it to produce records in a manner that fulfills the

provider’s statutory obligations. See Soults Farms, Inc. v. Schafer, 797
N.W.2d 92, 102 (Iowa 2011) (explaining the distinction between express

and implied actual authority).          On the other hand, an entity fulfilling

records requests received by a provider may operate as the provider’s

agent by virtue of authority vested in it during the provider’s

communications with those requesting records.                   See Frontier Leasing

       4The legislature added subsection (6) to section 622.10 in 2008. See 2008 Iowa
Acts ch. 1191, § 83. As originally introduced, the relevant bill contained an explanation
stating:
               Code section 622.10 is amended as it relates to communications
       made in professional confidence concerning health care and health care
       records including patient access to the patient’s medical records,
       provisions relating to procedures for fees charged by certain medical
       providers for the production of certain health care records and consulting
       costs, and also to provisions relating to communications between certain
       medical providers and attorneys in a civil action in which the condition of
       the plaintiff is at issue.
H.F. 2700, 82d G.A., 2d Sess., explanation (Iowa 2008). The enacted bill remained
unchanged in relevant part following its introduction. Compare H.F. 2700, 82d G.A., 2d
Sess. § 55 (Iowa 2008), with 2008 Iowa Acts ch. 1191, § 83. Therefore, this explanation
is relevant to our analysis of the legislature’s intent in enacting section 622.10(6). See
Iowa Ins. Inst. v. Core Grp. of Iowa Ass’n for Justice, 867 N.W.2d 58, 76 (Iowa 2015)
(discussing the relevance of legislative explanations); Star Equip., Ltd. v. State, 843
N.W.2d 446, 454 & n.3 (Iowa 2014) (“[W]e give weight to explanations attached to bills
as indications of legislative intent.” (quoting Root v. Toney, 841 N.W.2d 83, 88 (Iowa
2013))).
                                      11

Corp. v. Links Eng’g, LLC, 781 N.W.2d 772, 776 (Iowa 2010) (explaining

the concept of apparent authority).

      An entity that acts as a provider’s agent in fulfilling records

requests covered by section 622.10(6) cannot perform acts in fulfilling

those requests the provider itself could not legally perform. See Pratt,
968 S.W.2d at 873.      In other words, an entity that fulfills records

requests on behalf of a provider cannot charge more for producing the

requested records than the provider itself could legally charge.       See

Cotton, 472 S.E.2d at 95. Interpreting section 622.10(6) to regulate fees

charged by providers and their authorized agents is consistent with the

foundational principle of the common law of agency that one “who acts

through another acts by or for himself.” See Andrews v. Young Men’s

Christian Ass’n of Des Moines, 226 Iowa 374, 380, 284 N.W. 186, 190

(1939). Moreover, to interpret the statute in a contrary fashion would

completely devastate the object the legislature sought to achieve in

enacting section 622.10(6). See Cotton, 472 S.E.2d at 95.

      In deciding this interlocutory appeal, we are bound by the well-

pleaded facts alleging HealthPort acts as the agent of providers in

fulfilling records requests governed by section 622.10(6) in accordance

with the providers’ obligations under the statute.     HealthPort admits

section 622.10(6) limits what a provider can charge a patient, a patient’s

legal representative, or a patient’s attorney for production of medical

records and billing statements. HealthPort also admits section 622.10(6)

indirectly binds entities fulfilling records requests received by providers

such that those entities may not charge fees exceeding the fees a

provider could “pass on” under the statute.

      HealthPort argues that when a provider outsources medical-record

production to a vendor like HealthPort, the fees the vendor charges for
                                     12

producing medical records are the provider’s actual costs of production.

However, we need not decide precisely how the cost limitations in section

622.10(6) apply to that factual scenario to decide this appeal. Rather,

when a party files a motion to dismiss, we must take all well-pleaded

facts in the petition as true. If the record establishes HealthPort is not

the providers’ agent or the costs HealthPort charges patients are the

providers’ actual costs, we can consider related arguments when they

become ripe for adjudication. As we have previously stated,

            We recognize the temptation is strong for a defendant
      to strike a vulnerable petition at the earliest opportunity.
      Experience has however taught us that vast judicial
      resources could be saved with the exercise of more
      professional patience. Under the foregoing rules dismissals
      of many of the weakest cases must be reversed on appeal.
      Two appeals often result where one would have sufficed had
      the defense moved by way of summary judgment, or even by
      way of defense at trial. From a defendant’s standpoint,
      moreover, it is far from unknown for the flimsiest of cases to
      gain strength when its dismissal is reversed on appeal.

Cutler v. Klass, Whicher & Mishne, 473 N.W.2d 178, 181 (Iowa 1991).

      Therefore, we hold the district court was correct in denying

HealthPort’s motion to dismiss the plaintiffs’ petition.

      VI. Disposition.

      We affirm the order of the district court denying the motion to

dismiss and remand the case to the district court for further proceedings.

      AFFIRMED AND CASE REMANDED.