Providers Face Uncertainty on Fees for Copying Medical Records

The fees allowed for copying medical records are often a source of confusion for health care providers. Over the past few years, patients who believed they were overcharged turned to the courts to resolve their claims. Unfortunately, not all of the court decisions have been uniform, and there is still much uncertainty in this area.

Most recently, on March 14, 2018, the US District Court for the Southern District of New York issued a decision addressing claims that plaintiffs were overcharged for their medical records in violation of New York Public Health Law §18. (Ruzhinskaya v. HealthPort Technologies, LLC, 2018 U.S. Dist LEXIS 41960 (S.D.N.Y March 14, 2018). In Ruzhinskaya, plaintiffs sought medical records from three different New York hospitals that had hired HealthPort, a company in the business of duplicating and copying medical records, to fulfill patient requests. The plaintiffs had originally sued all three hospitals, but then dropped those claims and proceeded only against HealthPort. HealthPort charged $0.75 per page for copies, which is the statutory limit specified in PHL §18. Nevertheless, plaintiffs alleged the per-page rate was excessive under s§18 because it exceeded the actual costs HealthPort incurred. The plaintiffs argued that §18 limits charges to "costs incurred" and that it was designed to prevent "profiteering" in carrying out the records-request function.

The court examined the language of PHL §18, which states that the "provider may impose a reasonable charge for all inspections and copies, not exceeding the costs incurred by such provider "¦ However, the reasonable charge for paper copies shall not exceed $0.75 per page" (PHL §18(2)(e)).

After review, the Southern District held that the obligations found in PHL §18 applied only to "providers" and not to vendors. The statute did not prohibit vendors from charging patients above their actual costs and thereby making a profit, because the limits in §18 did not apply. Therefore, HealthPort's charges were lawful. The plaintiffs' claims of overcharging were dismissed, including their claims for unjust enrichment and deceptive business practices under New York law.

The Ruzhinskaya case was decided by the US district court in the Southern District of New York, which governs the counties of Bronx, Dutchess, New York, Orange, Putnam, Rockland, Sullivan, and Westchester. However, the Western District of New York (covering Allegany, Cattaraugus, Chautauqua, Chemung, Erie, Genesee, Livingston, Monroe, Niagara, Ontario, Orleans, Schuyler, Seneca, Steuben, Wayne, Wyoming, and Yates) issued a conflicting decision in 2017. In McCracken v. Verisma Systems, 2017 US Dist. LEXIS 73666 (W.D.N.Y. May 15, 2017), plaintiffs had signed authorizations to their own attorneys, which were processed by Verisma Systems, Inc. on behalf of Strong Memorial Hospital. They alleged that Verisma imposed an across-the-board, uniform charge of $0.75 per page for all copies of a medical record, even those sent electronically, in excess of Verisma's actual costs. Unlike the Southern District, the Western District held that Verisma, although not a "provider," was indeed subject to the limitations in PHL §18. The court noted that the objective of the statute would be "completely defeated" if it were interpreted to allow patients to be charged more in situations where providers hired others to perform the task of supplying records. The Western District also sustained the plaintiffs' claims of unjust enrichment and misleading business practices, both of which had been rejected in Ruzhinskaya by the Southern District court.

There is one further case that spoke to copying charges imposed by third-party vendors. In Carter v. HealthPort Technologies, LLC, 822 F.3d 47 (2d Cir. 2016), the federal appellate court for New York sustained a complaint by seven individuals who had requested medical records from several upstate hospitals. The plaintiffs alleged that the fees charged by HealthPort substantially exceeded the "actual cost" standard imposed by PHL §18 and that there was a built-in kickback under the contracts with hospitals, resulting in a profit center. One of the plaintiffs attacked HealthPort for charging $0.75 per page for a 100-page chart with a $2 electronic delivery fee. Another plaintiff challenged a $0.75 per page fee for granting access through an online portal electronically. The Second Circuit upheld the plaintiffs' standing to bring the action and stated that any response to a patient's request for medical records on behalf of a health care provider is "fairly traceable" to that health care provider who has a legal duty to provide the copies. Unfortunately, since Carter was in its preliminary stages and simply upholding the sufficiency of the complaint, it did not completely clarify the rules for providers.

These inconsistent decisions add to the confusion for health care providers. What is clear is that providers that copy medical records in-house to fulfill patient requests will be held to the restriction in PHL §18: that all fees must be limited to "costs incurred" with a cap of $0.75 per page. Providers must be aware that they cannot automatically charge $0.75 per page in situations where actual costs are much less. The legal landscape becomes murkier when a provider engages a third-party vendor to fulfill patient requests. Although Ruzhinskaya states there is no fee limitation where providers outsource this function to a third-party vendor, that decision applies in a very limited geographic area. In other areas of New York State, there are indications that vendors must adhere to the same fee limitations as health care providers.

It is likely that, at some point, a higher court will be asked to resolve these contradictions. In the meantime, those facilities and providers choosing to fulfill record requests in-house must be aware 1) that $0.75 per page is a limitation and not a flat fee, and 2) that all charges must reflect actual costs and be reasonable. The corollary to this is that providers choosing to outsource this function should give serious consideration to contractually limiting their vendors' charges to the same standards.

None of the cases discussed here directly addressed the limitations imposed under the Health Information Technology for Economic and Clinical Health Act (HITECH), 42 U.S.C. §17935(e). HITECH requires that the fees for providing individuals with copies of their medical records must be reasonable and cost based. The fee limitations in New York PHL §18 are read in conjunction with HITECH. Covered entities must calculate the actual costs on which they base their copying fees, although they can use average costs rather than calculating the cost for each record request. In addition, per page fees can be used only for paper copies or scanned copies of paper documents, and if a flat fee is charged for electronic copies of PHI that are maintained electronically, the fee cannot exceed $6.50 per request.