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Wayne M. Chiurazzi Law Inc. v. MRO Corp.

Supreme Court of Pennsylvania

June 16, 2014

WAYNE M. CHIURAZZI LAW INC. D/B/A CHIURAZZI & MENGINE, LLC; AND DAVID A. NEELY, ESQUIRE, Appellants
v.
MRO CORPORATION, Appellee

Argued October 16, 2012

Appeal from the Order of the Superior Court entered August 11, 2011, at No. 1283 WDA 2010, reversing the Order of the Court of Common Pleas of Allegheny County entered June 17, 2010, at No. GD-09-012911 and remanding. 2011 PA Super. 169, 27 A.3d 1272 (Pa. Super. 2011) .

For Wayne M. Chiurazzi Law Inc., et al., APPELLANT: Paul Adams Lagnese, Esq., David McCafferty Paul, Esq., Berger & Lagnese, L.L.C.; James Pietz, Esq.

For Pennsylvania Association for Justice, APPELLANT AMICUS CURIAE: Clifford Alan Rieders, Esq., Rieders, Travis, Humphrey, Harris, Waters & Waffenschmidt

For MRO Corp., APPELLEE: Jennifer Ann Callery, Esq., Carl A. Solano, Esq., Schnader Harrison Segal & Lewis, L.L.P.

For The Hospital & Healthsysten Association of Pennsylvania, APPELLEE AMICUS CURIAE: Lisa Whitcomb Clark, Esq., David Edwin Loder, Esq., Duane Morris, L.L.P.; Melissa Sobel Snyder, Esq.

For Healthport Technologies LLC, APPELLEE AMICUS CURIAE: Richard William Hosking, Esq., K& L Gates, L.L.P.; James Christopher Swetz, Esq.

CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, ORIE MELVIN, JJ.

OPINION

Page 276

MR. CASTILLE, CHIEF JUSTICE

This appeal involves the discretionary review of a matter that proceeded as an interlocutory appeal by permission in the Superior Court. The primary issue is whether Sections 6152(a)(1) and (a)(2)(i) of the Medical Records Act (" MRA" or " Act" ), 42 Pa.C.S. § § 6151-6160, require businesses such as appellee MRO Corporation (" MRO" ), which reproduce medical records for patients and their representatives, to limit their copying charges to their estimated actual and reasonable expenses of reproducing requested charts or records (subject to a statutory ceiling rate), or whether such businesses may simply charge the statutory ceiling rate. In addition, appellants ask us to review the Superior Court's finding that, where a medical records reproducer fails to disclose and charge its estimated actual and reasonable expenses and instead charges the MRA's ceiling rates which the records requestor then pays, the defenses of " voluntary payment" and " prior approval" bar the records requestor from maintaining a breach of contract claim to recoup alleged overpayments. For the reasons set forth below, we reverse the Superior Court and remand the matter to the trial court for proceedings consistent with this Opinion.

- I -

The MRA was enacted in 1986. The Act recognizes that a patient has a right to his own medical records; authorizes the use of certified copies of original medical records at trials and other proceedings without the necessity of preliminary testimony respecting foundation, identity and authenticity; streamlines the process for securing copies of medical records; and, of pertinence here, addresses what medical records providers can charge for the copies provided. Id. § § 6151, 6152.1, 6155(b).

This appeal concerns the version of the MRA in effect when this action arose in 2009. Most pertinently, Sections 6152(a)(1) and (a)(2)(i) then provided:

Page 277

(a) Election.--
(1) When a subpoena duces tecum is served upon any health care provider or an employee of any health care facility licensed under the laws of this Commonwealth, requiring the production of any medical charts or records at any action or proceeding, it shall be deemed a sufficient response to the subpoena if the health care provider or health care facility notifies the attorney for the party causing service of the subpoena, within three days of receipt of the subpoena, of the health care provider's or facility's election to proceed under this subchapter and of the estimated actual and reasonable expenses of reproducing the charts or records. However, when medical charts or records are requested by a district attorney or by an independent or executive agency of the Commonwealth, notice pursuant to this section shall not be deemed a sufficient response to the subpoena duces tecum.
(2)(i) Except as provided in subparagraph (ii), the health care provider or facility or a designated agent shall be entitled to receive payment of such expenses before producing the charts or records. The payment shall not exceed $15 for searching for and retrieving the records, $1 per page for paper copies for the first 20 pages, 75¢ per page for pages 21 through 60 and 25¢ per page for pages 61 and thereafter; $1.50 per page for copies from microfilm; plus the actual cost of postage, shipping or delivery. No other charges for the retrieval, copying and shipping or delivery of medical records other than those set forth in this paragraph shall be permitted without prior approval of the party requesting the copying of the medical records. The amounts which may be charged shall be adjusted annually beginning on January 1, 2000, by the Secretary of Health of the Commonwealth based on the most recent changes in the consumer price index reported annually by the Bureau of Labor Statistics of the United States Department of Labor.

42 Pa.C.S. § 6152(a)(1), (a)(2)(i) (emphasis added). After this Court granted review, the General Assembly amended the Act effective September 4, 2012 and deleted the conjunctive language highlighted in subsection (a)(1) above (" and of the estimated actual and reasonable expenses of reproducing the charts or records" ) which is central to the present dispute. As a number of similar actions remain pending, however,[1] resolution of the issues before us remain of broad importance.[2]

- II -

Based in King of Prussia, Pennsylvania, MRO is a medical records reproduction company that has exclusive agreements

Page 278

with certain Pennsylvania hospitals and hospital systems, including their affiliated physician practice groups, imaging centers and clinics, to provide medical records to requestors. Appellants are attorneys with offices in Pittsburgh who filed this class action in July of 2009 on behalf of medical records requestors, including patients, patient designees, representatives and attorneys, alleging that MRO overcharged for reproduction of medical records.

On March 15, 2010, appellants filed a Second Amended Class Action Complaint. Appellants alleged that the MRA required a medical records reproducer to provide records " for a fee derived from the actual and reasonable cost of searching for, retrieving, reproducing and transmitting the records," but MRO instead charged fees exceeding its actual and reasonable costs, resulting in MRO profiting from the sale of hospital patient medical records. Second Amended Complaint at 1. Appellants alleged that MRO had become the exclusive source through which a requestor must obtain copies of medical records from facilities with which MRO contracted.

Appellants alleged that technological advances have greatly reduced the costs of storage and reproduction of medical records. Prior to the use of computer technology in hospital medical record keeping, when a request was made for copies of medical records, the patient's medical chart (which consisted of numerous sheets of paper, sometimes printed on front and back and/or in tri- or bi-fold format, two-hole punched and held together by a metal clip), was retrieved from an in-house or off-site storage location. The party producing photocopies would need to take the sheets of paper out of clips, photocopy the records by hand, reassemble the chart and return it to storage, then assemble and mail the copies to the requestor. Now, however, medical records are increasingly created and stored in electronic form, the records can be retrieved and printed instantly, copied to CD-ROM, or electronically transmitted to the requestor. Thus, appellants alleged, although the cost of storing, locating, retrieving, copying and transmitting medical records has decreased dramatically, MRO's fees have not reflected those actual, lower costs for the reproduction of records.

Appellants further noted that the MRA requires an entity such as MRO to provide a records requestor with its estimated actual and reasonable expenses of reproducing the requested records. Appellants alleged that MRO did not follow that procedure, but instead automatically charged the statutory maximum search and retrieval fee and the maximum fee for photocopies of paper records, with no consideration of its actual costs.

Based upon these allegations, appellants asserted two counts for relief, one for breach of contract/implied contract and the second pursuant to the Declaratory Judgments Act, 42 Pa.C.S. § § 7531-7541. The breach of contract count alleged that contracts existed between MRO and the appellant requestors, which required MRO to reproduce medical records in a manner consistent with the MRA, and that MRO failed to comply with the Act, thereby breaching the contracts. Appellants demanded monetary damages; an order enjoining MRO from charging in excess of its actual and reasonable expenses of reproduction; an accounting of sums billed to records requestors since June 15, 2005; prejudgment interest; and punitive damages. On the second count, appellants sought a declaration that MRO's conduct constituted a breach of contract, as well as costs and attorney's fees.[3]

Page 279

MRO filed preliminary objections, claiming, in relevant part to this interlocutory matter, that appellants invoked the " estimated actual and reasonable expenses" language of Section 6152(a)(1), yet the record requests appellants made were pursuant to Section 6155, which governs a patient's request for his own records. MRO noted that the MRA provided two means for requesting records: (1) a subpoena duces tecum under Section 6152; or (2) a patient authorization seeking the patient's records under Section 6155(b)(1).[4] MRO argued that Section 6155(b)(1) does not include an " estimated actual and reasonable expenses of reproducing" qualifier, and thus permits a records reproducer to charge any fee not in excess of the rate ceiling set forth in Section 6152(a)(2)(i). MRO noted that appellants admitted that the fees MRO charged did not exceed the Section 6152(a)(2)(i) rate ceiling; therefore, MRO argued, it had complied with Section 6155. MRO also argued that its practice of automatically charging the statutory ceiling rate was authorized by the Court in Liss & Marion, P.C. v. Recordex Acquisition Corp., 603 Pa. 198, 983 A.2d 652 (Pa. 2009).

MRO further raised the defense of voluntary payment, i.e., a defense that, " one who has voluntarily paid money with full knowledge, or means of knowledge of all the facts, without any fraud having been practiced upon him ... cannot recover it back by reason of the payment having been made under a mistake or error as to the applicable rules of law." Liss, 983 A.2d at 661 (Pa. 2009) (quoting In re Kennedy's Estate, 321 Pa. 225, 183 A. 798, 802 (Pa. 1936)). MRO claimed that appellants had received invoices from MRO and voluntarily paid them, triggering the voluntary payment doctrine defense.

Appellants answered MRO's preliminary objections, arguing that the MRA limits a medical records reproducer to its actual and reasonable expenses regardless of whether the request was via subpoena or patient authorization. Appellants argued that Section 6155(b)(1)'s reference to the " amounts set forth in section 6152(a)(2)(i)" necessarily encompassed the section's " estimated actual and reasonable expenses" language. Further, appellants argued that the Liss Court found that medical records reproducers must comply with Section 6152(a)(2)(i) regardless of whether records are sought by subpoena because the records requests in Liss were by patient authorization. Thus, appellants concluded, Section 6155 requires a medical records reproducer to identify and charge its actual and reasonable expenses of reproduction or the maximum rates set forth in Section 6152(a)(2)(i), whichever is less. Appellants did not respond to MRO's voluntary payment doctrine defense.

On June 17, 2010, the Court of Common Pleas of Allegheny County, per the Honorable R. Stanton Wettick, Jr., overruled MRO's preliminary objections. The trial

Page 280

court's accompanying opinion framed the issue succinctly:

[Appellants] contend that a health care facility may only charge its actual and reasonable expenses where those expenses are less than the amount set forth in the second sentence of § 6152(a)(2)(i) as adjusted. [MRO], on the other hand, contends that it may impose any charge that does not exceed the amounts permitted within the second sentence as adjusted.
If [MRO's] construction of the Medical Records Act is correct, this case and all related litigation will be dismissed. However, if [appellants'] construction of the Medical Records Act is correct, this litigation will require consideration of several (possibly complicated) factual and legal issues, including what are actual and reasonable expenses, the applicability of the voluntary payment doctrine, and the applicability of the prior approval provision of § 6152(a)(2)(i).

Tr. Ct. Op. at 3.

In its ensuing analysis, the trial court first discussed the effect of the Liss decision, stating that, pursuant to Liss, appellants could pursue a breach of contract action against MRO based on their allegations that MRO's charges exceeded the permissible charges under the Act, and that MRO could not charge in excess of the default rate for the copies at issue because the copies were not from microfilm. The trial court noted that appellants did not allege that MRO charged more than the statutory maximum rate, but that its charges did not reflect their lower actual costs of reproduction. The court further observed that the issue before it was not presented in Liss, because the dispute in that case only concerned which rate, the default rate or the microfilm rate, applied.

The trial court reasoned that the ordinary meaning of Section 6152(a)(1) is that " actual expenses means expenses existing in fact, and reasonable expenses means that the costs are not padded." Id. at 6 (emphasis in original). The court then looked to Section 6152(a)(2)(i), which states that, " the health care provider or facility or a designated agent shall be entitled to receive payment of such expenses before producing the charts or records." The court interpreted the term " such expenses" as obviously referring back to the " actual and reasonable expenses of reproduction" language in the prior paragraph. Thus, the trial court concluded, Section 6152(a)(2)(i)'s reference to " such" expenses " clearly and unambiguously provides that charges shall be based on actual and reasonable expenses." Id. The court then explained its reasoning in rejecting MRO's argument that it could charge any amount up to the statutory ceiling rate, as follows:

The second sentence of § 6152(a)(2)(i) does not provide that a health care provider is entitled to receive additional payments in excess of actual expenses. To the contrary, while the previous provision of § 6152 entitles the health care provider to receive actual and reasonable expenses, this second sentence of § 6152(a)(2)(i) places a cap on what may be charged as actual and reasonable expenses by providing that the payment of actual and reasonable expenses " shall not exceed" the amounts set forth in this sentence. Or, in other words, this sentence applies only to health care providers whose actual expenses exceed the amounts set forth in the pricing schedule.
* * * *
I recognize that there can be legislation which provides for charges to be based on reasonable expenses and which thereafter includes a formula to calculate reasonable expenses. However, the Medical Records Act is not such legislation.

Page 281

Nothing in the language of the Act suggests that the charges in the second sentence are presumed to be actual expenses. To the contrary, the use of the language " shall not exceed" modifies a health care provider's entitlement to recover actual expenses by setting the maximum amount that may be charged where the actual expenses exceed this amount.

Id. at 7-8 (footnote omitted).

The trial court further noted the statutory construction precepts that (1) the General Assembly intends the entire statute to be effective, and thus, a statute should be construed to give effect to all of its provisions, and (2) provisions are to be read in pari materia when they relate to the same issues and should be construed together where possible. Id. at 8, citing 1 Pa.C.S. § § 1922(2), 1932. MRO's interpretation of the MRA, the court observed, would substitute the word " charges" for " actual expenses," with the result that the records provider would notify the requestor of estimated charges rather than its estimated actual and reasonable expenses of reproduction. The court opined that it was obliged to construe the actual word in the statute, " expenses," and not MRO's substitute language, " charges." Id. at 8-9.

Respecting MRO's argument that the " actual and reasonable expenses" language applies only to records sought via subpoena and not records requested via patient authorization, the trial court stressed the language in Section 6155(b)(1) stating that a provider shall not charge " a fee in excess of the amounts set forth in section 6152(a)(2)(i) (relating to subpoena of records)." This language does not refer only to the second sentence of Section 6152(a)(2)(i) (the pricing schedule), but also embraces the " such expenses" language that, the trial court had concluded, means actual and reasonable expenses of reproduction. The trial court also pointed to Liss, where records were sought through patient authorization, and yet the Court applied Section 6152. Finally, the trial court determined that to allow a records provider to charge more for records sought via patient authorization than via subpoena would produce an unreasonable result. Id. at 10-12. The trial court did not address or decide the voluntary payment and prior approval defenses MRO raised, instead confining its decision to the potentially controlling issue of statutory construction.

In response to MRO's request, the trial court certified its interlocutory order for immediate appeal pursuant to 42 Pa.C.S. § 702(b), which governs interlocutory appeals by permission. The court's certification stated that the order construing the Act as prohibiting charges that exceed the records provider's actual and reasonable expenses " involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal may materially advance the ultimate termination of the matter." On August 18, 2010, the Superior Court granted MRO permission to appeal the interlocutory order.

Thereafter, in a published opinion, a divided 2-1 Superior Court panel reversed and remanded for entry of an order granting MRO's preliminary objections and dismissing the complaint. Wayne M. Chiurazzi Law Inc. v. MRO Corp., 2011 PA Super. 169, 27 A.3d 1272 ...


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