Richard Faber v. Ciox Health, LLC ( 2019 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 19a0291p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
RICHARD FABER and JENNIFER MONROE, Individually ┐
and also on behalf of all similarly situated persons, │
Plaintiffs-Appellants, │
> No. 18-5896
│
v. │
│
│
CIOX HEALTH, LLC, d/b/a HealthPort Technologies, │
LLC, │
Defendant-Appellee. │
┘
Appeal from the United States District Court
for the Western District of Tennessee at Memphis.
No. 2:16-cv-02337—S. Thomas Anderson, District Judge.
Argued: May 2, 2019
Decided and Filed: December 5, 2019
Before: MERRITT, KETHLEDGE, and NALBANDIAN, Circuit Judges.
_________________
COUNSEL
ARGUED: Kevin McCormack, BALLIN, BALLIN & FISHMAN, P.C., Memphis, Tennessee,
for Appellants. Jay P. Lefkowitz, P.C., KIRKLAND & ELLIS, LLP, New York, New York, for
Appellee. ON BRIEF: Kevin McCormack, BALLIN, BALLIN & FISHMAN, P.C., Memphis,
Tennessee, for Appellants. Jay P. Lefkowitz, P.C., KIRKLAND & ELLIS, LLP, New York,
New York, Garry K. Grooms, BURR & FORMAN LLP, Nashville, Tennessee, for Appellee.
NALBANDIAN, J., delivered the opinion of the court in which KETHLEDGE, J.,
joined., and MERRITT, J., joined in part. MERRITT, J. (pp. 16–18), delivered a separate
opinion concurring in part and dissenting in part.
No. 18-5896 Faber, et al. v. Ciox Health, LLC Page 2
_________________
OPINION
_________________
NALBANDIAN, Circuit Judge. Courts play a limited role in effecting public policy in
this country. In short: legislatures make the policy; we interpret it. So when Congress chose not
to create a private right of action in HIPAA, it wasn’t our job to graft one onto Tennessee
common law. And when the Tennessee legislature failed to make Ciox liable under the TMRA,
it wasn’t up to us to make it liable anyway. The district court understood this, so we AFFIRM its
judgment. But because the district court granted summary judgment to Ciox after certifying a
class action without sending notice to the absentee class members, we hold that its decision binds
only the named Plaintiffs.
I.
Ciox1 is one of the largest medical-records providers in the country. It doesn’t provide
any healthcare services of its own, but it contracts with those who do. In fact, three out of every
five hospitals use Ciox to help patients access their medical records. Unsurprisingly, Ciox
processes many records—about 4.3 million pages per day in 2018. It’s also unsurprising, then,
that Ciox is subject to many laws and regulations.
One of those laws is the Health Insurance Portability and Accountability Act of 1996
(“HIPAA”), Pub. L. No. 104-191, § 264, 110 Stat. 1936 (1996). HIPAA subjects Ciox to
Department of Health and Human Service regulations. Those regulations include fee-limit
provisions under 45 C.F.R. § 164.524(c)(4), which, in turn, prohibit Ciox from charging patients
more than “reasonable, cost-based fee[s]” for their records. Id.
HIPAA hasn’t stopped the states from regulating this activity. Tennessee, for one, has
layered on additional rules that govern patients’ access to medical records. See Tennessee
Medical Records Act of 1974 (“TMRA”), Tenn. Code. Ann. §§ 68-11-301 to -314. And those
1“Ciox” refers to the Defendant: Ciox Health, LLC, d/b/a HealthPort Technologies, LLC.
No. 18-5896 Faber, et al. v. Ciox Health, LLC Page 3
rules prevent hospitals from charging patients more than the “reasonable costs for copying and
the actual costs of mailing [their] records.” Tenn. Code Ann. § 68-11-304(a)(2)(A)(ii).
That’s the regulatory backdrop of this appeal. Here are the specifics: Both named
Plaintiffs worked with law firms to request their medical records from two Tennessee hospitals.
And both hospitals contracted with Ciox to provide patients their medical records. It was Ciox
who serviced Plaintiffs’ requests, and it was Ciox who charged them for their records.
Plaintiffs would eventually file this class action. Among other things, they accused Ciox
of charging them more than what HIPAA’s implementing regulations and the TMRA allow.
But, evidently, they realized they faced a serious hurdle: HIPAA doesn’t authorize a private
cause of action. See, e.g., Thomas v. Univ. of Tenn. Health Sci. Ctr. at Memphis, No. 17-5708,
2017 WL 9672523, at *2 (6th Cir. Dec. 6, 2017) (recognizing a consensus among our sister
circuits “that there is no private right of action under HIPAA”). So Plaintiffs decided to style
their HIPAA-based claims as common-law causes of action. These included causes of action
based on negligence, negligence per se, unjust enrichment, and breach of implied-in-law
contract.
The district court dismissed Plaintiffs’ TMRA claim for failure to state a claim. Plaintiffs
later moved to certify a class of “persons who requested their medical records from medical
providers and were subsequently overcharged for their medical records by Defendant Ciox.”
Plaintiffs and Ciox filed cross motions for summary judgment about three months later. And the
district court eventually granted Plaintiffs’ motion for class certification under Rule 23(b)(3).2
Just two weeks later, the district court granted Ciox’s summary judgment motion.
2The court agreed to define the class as:
From May 13, 2010 to the present, Plaintiffs and all similarly situated patients who, personally or
through a personal representative such as an attorney, requested their medical records from Ciox
or one of Ciox’s medical provider clients in Tennessee, and whom Ciox charged any of the
following: (1) a “basic fee” and/or “electronic delivery fee” the combined value of which exceeds
$6.50; (2) a “per page (paper)” fee when records were delivered electronically; or, (3) a “per page
(paper)” fee that exceeds the actual labor and supply costs incurred by Ciox in fulfilling that
request.
(R. 123, Class Certification Order at PageID #1730.)
No. 18-5896 Faber, et al. v. Ciox Health, LLC Page 4
Plaintiffs now appeal the district court’s grant of summary judgment to Ciox, which we
review de novo. Tysinger v. Police Dep’t of Zanesville, 463 F.3d 569, 572 (6th Cir. 2006). They
also appeal the district court’s dismissal of their TMRA claim, which we also review de novo.
Beydoun v. Sessions, 871 F.3d 459, 464 (6th Cir. 2017).
II.
All of Plaintiffs’ common-law claims suffer from the same fundamental
defect: Tennessee common law is no substitute for the private right of action that Congress
refused to create in HIPAA. That unavoidable conclusion has consequences. Here, it means that
Plaintiffs cannot prove every element of their claims.
A.
Negligence and Negligence Per Se. Plaintiffs’ negligence and negligence per se claims
fail right out of the gate for the same reason: Plaintiffs cannot establish that Ciox owed Plaintiffs
a duty to not overcharge for medical records.3 That is because no such duty exists under
Tennessee’s common law. See Amos v. Carson, 210 S.W.2d 677, 678 (Tenn. 1948) (“No ceiling
price limitation is known to the common law. Such are either creatures of statute or some duly
constituted board.”). As a result, each of Plaintiffs’ attempts to locate that duty leads to a
predictable dead end.
Plaintiffs first point us to Bradshaw v. Daniel, where the Tennessee Supreme Court
declared, “all persons have a duty to use reasonable care to refrain from conduct that will
foreseeably cause injury to others.” 854 S.W.2d 865, 870 (Tenn. 1993). It isn’t hard to see why
Plaintiffs like this language. On its own, it’s sweeping enough to turn every offense under the
sun into a common-law tort. But we don’t read judicial opinions in a vacuum. The Bradshaw
rule is one that would be familiar to most first-year law students: All persons must exercise
reasonable care to avoid causing physical harm to another’s person or property. See Satterfield
3To establish a negligence or negligence per se claim in Tennessee, a plaintiff must show: “a duty of care
owed by the defendant to the plaintiff.” West v. E. Tenn. Pioneer Oil Co., 172 S.W.3d 545, 550 (Tenn. 2005);
Myers v. United States, 17 F.3d 890, 892 (6th Cir. 1994). And the “existence or nonexistence of a duty owed to the
plaintiff by the defendant is entirely a question of law for the court.” Carson v. Headrick, 900 S.W.2d 685, 690
(Tenn. 1995) (citing W. Keeton et al., PROSSER AND KEETON ON THE LAW OF TORTS § 37 at 236 (5th ed. 1984)).
No. 18-5896 Faber, et al. v. Ciox Health, LLC Page 5
v. Breeding Insulation Co., 266 S.W.3d 347, 362 (Tenn. 2008); see also Dan B. Dobbs et al.,
THE LAW OF TORTS § 127 (2d ed. 2019) (describing the reasonable care standard as the “default
rule” for “negligent physical interferences with person or property”) (emphasis added and
alterations omitted); RESTATEMENT (THIRD) OF TORTS § 6 (2010) (“Ordinarily, an actor whose
conduct creates risks of physical harm to others has a duty to exercise reasonable care.”)
(emphasis added).
Bradshaw itself reflects that general rule because the injury there was physical. So was
the injury in the case it relied on for the rule. See Doe v. Linder Const. Co., 845 S.W.2d 173,
175 (Tenn. 1992). This is not to say that “physical harm” is the only type of cognizable injury
under Tennessee negligence law. Tennessee, like other states, has long recognized negligence
claims protecting other interests. These include claims based on negligent infliction of emotional
distress and negligent misrepresentation causing economic injury. See, e.g., Lourcey v. Estate of
Scarlett, 146 S.W.3d 48, 52 (Tenn. 2004); John Martin Co. v. Morse/Diesel, Inc., 819 S.W.2d
428, 429 (Tenn. 1991). But we are unaware of any negligence claim that could hold Ciox liable
for “overcharging” Plaintiffs. Bradshaw certainly gives us no license to invent such a claim.
So we do not. See Combs v. Int’l Ins. Co., 354 F.3d 568, 578 (6th Cir. 2004) (“When given a
choice between an interpretation of [state] law which reasonably restricts liability, and one which
greatly expands liability, we should choose the narrower and more reasonable path.”) (internal
quotation marks omitted).
Plaintiffs next point us to Ciox’s answer to their complaint. There, Ciox allegedly
admitted that it “owe[d] a duty to patients, including Plaintiffs and Class members, to comply
with federal law and regulations including HIPAA and the HITECH Act.” (Pls.’ Reply Br. at 3–
4.) But surely Ciox’s pleadings are not authoritative pronouncements of Tennessee law.
And besides, a quick look at the record confirms that Plaintiffs’ claim is misleading. Ciox only
admitted that it “ha[d] a duty to comply with the law.” (R. 44, Ciox’s Answer at PageID
#388 ¶ 118.) That, of course, tells us nothing about whether Ciox owed Plaintiffs the type of
common-law duty at issue here.
Plaintiffs also misplace their reliance on cases suggesting that statutes may inform the
standard of care of an ordinary negligence claim. See, e.g., Shanklin v. Norfolk S. Ry. Co.,
No. 18-5896 Faber, et al. v. Ciox Health, LLC Page 6
369 F.3d 978, 996 (6th Cir. 2004) (Rogers, J., concurring) (discussing Teal v. E.I. DuPont de
Nemours & Co., 728 F.2d 799 (6th Cir.1984)). This, of course, is one possible use for statutory
standards short of deeming such violations negligence per se. See, e.g., Barbara Kritchevsky,
What Does Law Have to Do with it: The Jury’s Role in Cases Alleging Violations of Law,
Custom, and Standards, 71 Ark. L. REV. 45, 122 (2018) (arguing that a statutory violation is
“relevant to the question of negligence and is certainly something the jury should be able to
consider”); Barry L. Johnson, Why Negligence Per Se Should Be Abandoned, 20 N.Y.U. J. LEGIS.
& PUB. POL’Y 247, 250 (2017) (arguing that “treating statutory violation[s] as some evidence of
negligence would be the better approach”). But the problem for Plaintiffs is that the issue is not
whether statutes can inform what it means to breach a hypothetical duty. The issue is whether
such a duty exists under Tennessee common law in the first place. And here it does not.
The same goes for Plaintiffs’ negligence per se claim. That aptly named doctrine permits
a court to treat a statutory violation as a per se breach of the standard of care. See Estate of
French v. Stratford House, 333 S.W.3d 546, 560–61 (Tenn. 2011); Rains v. Bend of the River,
124 S.W.3d 580, 590 (Tenn. Ct. App. 2003). But it does not permit a court to recognize new
common-law duties that could not support an ordinary negligence claim. See Rains, 124 S.W.3d
at 589; Dan B. Dobbs et al., THE LAW OF TORTS § 148 (2d ed. 2019) (“Likewise, the defendant
must be under a duty to use reasonable care; if he is not, violation of the statute cannot prove
breach of duty.”). In other words: “The negligence per se doctrine does not create a new cause
of action. Rather, it is a form of ordinary negligence that enables the courts to use a penal statute
to define a reasonably prudent person’s standard of care.” Rains, 124 S.W.3d at 589 (citations
omitted).4
4We recognize the tension between this excerpt from Rains and its earlier statement that “the common law
is not the only source of legal duties or standards of conduct in negligence cases.” 124 S.W.3d at 588. But the
tension disappears when one recognizes that the court was using the terms “duties” and “standards of conduct”
interchangeably, as often happens. See Peter F. Lake, Common Law “Duty” Analysis: The Conceptual Expansion
of “Duty” in a Period of Doctrinal Consolidation/Retrenchment, 10 KAN. J. L. & PUB. POL’Y 153, 155 (2000)
(“[T]he concept of standard of care becomes so connected with duty that sometimes the words are used
interchangeably.”). Language elsewhere in the opinion supports this reading. For example, the court spoke of the
reasonable-person standard as “requir[ing] a person to exercise reasonable care.” Rains, 124 S.W.3d at 588. But it
is really duty that speaks to the “require[ment]” and standard of care that speaks to “reasonable[ness].” Id. In any
event, the rest of the court’s opinion makes clear what it was saying. And we know it wasn’t saying that negligence
per se could recognize new causes of action unknown to ordinary, common-law negligence. After all, it disclaimed
No. 18-5896 Faber, et al. v. Ciox Health, LLC Page 7
Our decision in Myers v. United States, 17 F.3d 890 (6th Cir. 1994), illustrates the point.
In Myers, the survivors of six miners killed in a Tennessee coal mine sued the United States. Id.
at 892. The survivors alleged that federal inspectors had caused the explosion by breaching
certain regulations, making the Government liable under negligence per se. Id. On appeal, we
characterized the survivors’ arguments as “fundamentally flawed.” Id. We explained that “the
doctrine of negligence per se is never, by itself, a basis for liability.” Id. Because the survivors
hadn’t shown that the inspectors owed the miners a common-law duty of care, their negligence
per se claim failed. Id.; see also Ellis v. Chase Commc’ns, Inc., 63 F.3d 473, 476 (6th Cir. 1995)
(applying Tennessee law and holding that the plaintiff’s negligence per se claim failed because
the plaintiff failed to prove the existence of a duty “independent” of a federal statute).5
So too here. Plaintiffs can’t prove the existence of any common-law duty that could
support their negligence claims. So their negligence claims fail.
B.
Quasi-contract claims. Plaintiffs’ claims based on implied-in-law contract and unjust
enrichment fail for largely the same reasons. In Tennessee, these claims “are essentially the
same.” Paschall’s, Inc. v. Dozier, 407 S.W.2d 150, 154 (Tenn. 1966). They refer to those
situations when, based on “justice and equity,” the law will imply a contractual relationship
without a legal contract. Id. Essentially, Plaintiffs ask us to hold that Ciox owes Plaintiffs a
quasi-contractual duty to not charge them more for their medical records than HIPAA permits.
as much. Id. at 589 (“The negligence per se doctrine does not create a new cause of action.”); see also id. at 590
(“The common law tort of negligence is not changed, but the expression of the standard of care in certain fact
situations is modified; it is changed from a general standard to a specific rule of conduct.”) (quoting RESTATEMENT
(SECOND) OF TORTS § 874A cmt. e). That there is at least some confusion over the word “duty” is not new. See,
e.g., Esra Ripley Thayer, Public Wrong and Private Action, 27 HARV. L. REV. 317, 318 (1914) (“Too often the mere
statement of a conclusion that ‘the statute creates a duty to the plaintiff’ is used as if it furnished some reasons in its
own support.”).
5Permitting any statute to establish both an actionable duty on the part of any violator of that statute in
favor of any party claiming damage from the violation—as well as the standard of care for breach of that duty—
would be akin to implying a private right of action for any statutory violation. See Dobbs et al., THE LAW OF TORTS
§ 146 (discussing private rights of action versus negligence per se). Again, that is something that we will not do.
See Marquay v. Eno, 662 A.2d 272, 277 (N.H. 2015) (comparing expressed or implied causes of action with
negligence per se and noting that “[t]he doctrine of negligence per se . . . plays no role in the creation of common
law causes of action”); Draper v. Westerfield, 181 S.W.3d 283, 292 (Tenn. 2005) (citing Marquay) (distinguishing
between statutory rights of action and negligence).
No. 18-5896 Faber, et al. v. Ciox Health, LLC Page 8
They ask us for this because, of course, the parties never entered into a legal contract to that
effect. But Plaintiffs cite no authority remotely suggesting that “justice and equity” under
Tennessee common law so requires. Nor have we found any. And the one case on which they
substantially rely is inapposite. See Laborers Pension Tr. Fund v. Interior Exterior Specialists,
394 F. App’x 285, 294 (6th Cir. 2010) (recognizing an unjust enrichment claim under “federal
common law for equitable restitution of mistaken payments”) (emphasis added). So Plaintiffs’
quasi-contract claims also fail.
C.
Tennessee Medical Records Act. Plaintiffs’ TMRA claim flounders for a different
reason. As relevant here, the TMRA is unlike HIPAA in two ways—one good for Plaintiffs, one
bad (indeed, fatal) for them. The good: The TMRA appears to authorize a private cause of
action. See Tenn. Code Ann. § 68-11-311. At least the parties don’t dispute that it does.
The bad: The TMRA’s fee limits unambiguously do not apply to medical-records providers like
Ciox. See infra.
The TMRA’s fee limits are clear: They apply exclusively to hospitals. See Tenn. Code
Ann. § 68-11-304(a)(1)–(2). The Act mandates that a “hospital shall furnish to a patient or a
patient’s authorized representative . . . the patient’s hospital records.” Id. § 68-11-304(a)(1)
(emphasis added). The same subdivision that imposes this duty also includes the TMRA’s fee
limits. See id. § 68-11-304(a)(1)–(2). Those provisions prohibit the hospital from charging more
than the “reasonable costs of copying and mailing the patient’s records.” Id. § 68-11-
304(2)(A)(i). They also describe what “reasonable costs” include and don’t include. Id. § 68-11-
304(2)(A)(i)–(iii). And they list what charges “shall be presumed to be reasonable.” Id. § 68-
11-304(2)(A)(iii).
All of this leads to one inescapable conclusion: Plaintiffs’ entire TMRA claim rests on a
part of the statute that applies exclusively to hospitals. And just what is a hospital under the
TMRA? Common sense tells us it isn’t a medical-records provider like Ciox. But we need not
rely on common sense because the TMRA spells it out for us. Under the TMRA, “‘Hospital’
means any institution, place, building or agency that has been licensed by the board, as defined
No. 18-5896 Faber, et al. v. Ciox Health, LLC Page 9
in § 68-11-201, or any clinic operated under the authority of a local or regional health
department established under chapter 2, parts 6 and 7, of this title.” Tenn. Code Ann. § 68-11-
302(4). No one disputes that Ciox is not a hospital under this definition.6
Ordinarily, this would settle the matter. The statutory text is unambiguously clear: The
TMRA’s fee limits apply only to hospitals, and Ciox is not a hospital. But there’s one wrinkle.
The Tennessee Court of Appeals has held that the statute applies not just to hospitals but also to
“independent copying services” like Ciox. See Pratt v. Smart Corp., 968 S.W.2d 868, 873
(Tenn. Ct. App. 1997).
In Pratt, a patient sued one such company under the TMRA, alleging that the company
had “grossly” overcharged her for her medical records. Id. at 870. The company argued that, as
an independent-copy service, the TMRA did not apply to it. Id. at 873. The court acknowledged
that the TMRA “does not specifically mention such entities.” Id. But the company had “acted as
the hospital’s authorized agent.” Id. Thus, said the court, the company “could not perform acts
which the hospital was forbidden by law to perform itself.” Id. In the court’s view, the
legislature’s objective “would be completely defeated” if hospitals could hire such companies
that then “charged more than the reasonable copying and mailing costs.” Id.
Pratt presents us with two mutually exclusive options: We can follow the court’s holding
despite the plain meaning of the statute. Or we can follow the plain meaning of the statute
despite the court’s holding. We follow the statute.
In diversity cases, we are only bound by the forum state’s highest state court. United
States v. Anderson County, 761 F.2d 1169, 1173 (6th Cir. 1985). But we don’t part company
with Pratt lightly. When the state’s highest court hasn’t addressed the issue, “we must predict
6Well, almost no one. The dissent cites a nationwide “patchwork of results” for recognizing private rights
of action for excessive fees charged by medical providers. But inconsistent results on this issue stem not from
inconsistent federal jurisprudence but from varied state medical records statutes. Federalism almost demands it to
be so. Here, the Tennessee legislature enacted language making its medical records act applicable only to hospitals.
Compare that with Georgia’s Health Records Act, which includes “health maintenance organizations” in its
definition of a provider. Ga. Code Ann. § 31-33-1(2). Or with the Iowa statute that states any “organization that
furnishes, bills, or is paid for health care in the normal course of business” is a provider. Iowa Code
§ 622.10(6)(e)(2). The Tennessee legislature restricted TMRA’s fee limits to hospitals only. It is of little
consequence that other state legislatures drafted medical records bills with differing text, or that the courts of those
states reached different conclusions from this opinion by following differently worded laws.
No. 18-5896 Faber, et al. v. Ciox Health, LLC Page 10
how [it] . . . would rule by looking to all the available data.” Allstate Ins. Co. v. Thrifty Rent-A-
Car Sys. Inc., 249 F.3d 450, 454 (6th Cir. 2001). This “include[s] the decisional law of the
state’s lower courts.” Ziegler v. IBP Hog Mkt., Inc., 249 F.3d 509, 517 (6th Cir. 2001). And we
may only disregard an on-point decision of the state appellate court if “other persuasive data”
convinces us that the highest state court “would decide otherwise.” Id. (quoting Puckett v.
Tennessee Eastman Co., 889 F.2d 1481, 1485 (6th Cir.1989)).
We have little doubt that the Tennessee Supreme Court would disagree with Pratt. The
Tennessee Supreme Court has reiterated time and again that the plain meaning of the written text
controls when the statute is unambiguous:
When a statute is clear, we apply the plain meaning without complicating the task.
Eastman Chem. Co. v. Johnson, 151 S.W.3d 503, 507 (Tenn. 2004). Our
obligation is simply to enforce the written language. Abels ex rel. Hunt v. Genie
Indus., Inc., 202 S.W.3d 99, 102 (Tenn. 2006). It is only when a statute is
ambiguous that we may reference the broader statutory scheme, the history of the
legislation, or other sources. Parks v. Tenn. Mun. League Risk Mgmt. Pool,
974 S.W.2d 677, 679 (Tenn. 1998).
In re Estate of Davis, 308 S.W.3d 832, 837 (Tenn. 2010). See also Riggs v. Burson, 941 S.W.2d
44, 54 (Tenn. 1997) (“[T]o ascertain and give effect to legislative intent . . . means examining the
language of a statute and applying its ordinary and plain meaning.”) (citations omitted).7 Here,
the statutory text is unambiguous. We therefore apply its plain meaning and hold that the
TMRA’s fee limits do not apply to Ciox.
Pratt is also unconvincing on its own terms. Assume, as it said, that an agent may not
perform acts that the law prohibits the principal from performing. Pratt never explained why an
agent would necessarily be liable for such acts. When an agent violates a statute, the agent’s
liability ultimately depends on the terms of the statute. See RESTATEMENT (THIRD) OF AGENCY
§ 7.01 cmt. c (2006). And here, the statute makes the principal liable.
7When we construe a state statute, we apply the rules of construction that the state supreme court applies
when construing its own statutes. Jones v. City of Franklin, 677 F. App’x. 279, 286 (6th Cir. 2017) (“The Tennessee
Supreme Court has established clear and plain methods for interpreting Tennessee statutes[.]”); accord, e.g., Wright
v. Ford Motor Co., 508 F.3d 263, 269 (5th Cir. 2007) (“When we interpret a Texas statute, we follow the same rules
of construction that a Texas court would apply . . . .”); see generally Abbe R. Gluck, Intersystemic Statutory
Interpretation: Methodology as “Law” and the Erie Doctrine, 120 YALE L.J. 1898 (2011).
No. 18-5896 Faber, et al. v. Ciox Health, LLC Page 11
Moreover, Pratt is wrong to predict that the result that we reach will frustrate the purpose
of the TMRA. We see no reason why Plaintiffs couldn’t have sued the hospitals to begin with,
nor could Plaintiffs give us one at oral argument. If the TMRA makes one thing clear, it is that
hospitals are ultimately responsible for patient medical records. We seriously doubt they can
evade this statutory duty by outsourcing it to a third-party agent. So we need not entertain
Pratt’s dubious prediction.
D.
Class Notice. Finally, both parties agree that the district court’s grant of summary
judgment without class notification warrants further action by our court. After all, Rule 23(c)(2)
requires the district court to give notice to the class, and so does the Constitution. See Eisen v.
Carlisle & Jacquelin, 417 U.S. 156, 176 (1974) (“[I]ndividual notice to identifiable class
members is not a discretionary consideration to be waived in a particular case.”).
But the parties disagree on the appropriate remedy. Ciox argues that this court should
remand to the district court for the sole purpose of issuing opt-out notices at Plaintiffs’ expense.
Plaintiffs argue that the district court’s order must be limited to the named Plaintiffs only.
Although this is an issue of first impression in our circuit, we are not without guidance.
Here’s the general rule: When the defendant moves for and obtains summary judgment
before the class has been properly notified, the defendant waives the right to have notice sent to
the class, and the district court’s decision binds only the named plaintiffs. See, e.g.,
Schwarzschild v. Tse, 69 F.3d 293, 295 (9th Cir. 1995); Postow v. OBA Fed. Sav. & Loan Ass’n,
627 F.2d 1370, 1382 (D.C. Cir. 1980); Katz v. Carte Blanche Corp., 496 F.2d 747, 759 (3d Cir.
1974) (en banc); accord 7AA Charles Alan Wright, Arthur R. Miller & Mary Kay Kane,
FEDERAL PRACTICE AND PROCEDURE § 1788 n.2 (3d ed. 2005); 5 MOORE’S FEDERAL PRACTICE
§ 23.101 (2019). “In such a situation, ‘the defendants . . . assume the risk that a judgment in
their favor will not protect them from subsequent suits by other potential class members, for only
the slender reed of stare decisis stands between them and the prospective onrush of litigants.’”
Schwarzschild, 69 F.3d at 297 (emphasis omitted and alteration in original) (quoting Postow,
627 F.2d at 1382); accord Katz, 496 F.2d at 759. Ciox’s argument that applying the general rule
No. 18-5896 Faber, et al. v. Ciox Health, LLC Page 12
would be inequitable ignores the fundamental requirement that class members receive notice in
Rule 23(b)(3) class action suits.
Certification notice for class actions under Fed. R. Civ. P. Rule 23(c)(2) must be given
before class members can be legally bound. And Rule 23(b)(3) class certification cannot bind a
class without providing adequate notice as required by the Due Process Clause. Phillips
Petroleum Co. v. Shutts, 472 U.S. 797, 812 (1985) (“The plaintiff must receive notice plus an
opportunity to be heard and participate in the litigation, whether in person or through counsel.”);
Eisen, 417 U.S. at 177 (denying that providing “no notice at all” could satisfy Rule 23(c)(2) or
the Due Process Clause). Moreover, notice that is “incomplete or erroneous or . . . fails to
apprise the absent class members of their rights” does not satisfy due process. Gooch v. Life
Investors Ins. Co. of America, 672 F.3d 402, 423 (6th Cir. 2012) (quoting 7B Charles Alan
Wright, Arthur R. Miller & Mary Kay Kane, FEDERAL PRACTICE AND PROCEDURE § 1797.6 (2d
ed. 1996)).
Until receiving adequate notice, class members merely constitute “passive beneficiaries
with no notice to take note of the suit.” Bedel v. Thompson, No. 91–3448, 1992 WL 44883, at *4
(6th Cir. 1992). This is true even after a court certifies the class. Id. Following this logic, class
certification remains functionally incomplete until class members receive notice. If class
members never get a chance to be heard, then notice does not satisfy the Due Process Clause.
Phillips Petroleum, 472 U.S. at 811–12. And parties are not bound to class action judgments
until given a full and fair opportunity to litigate. Richards v. Jefferson Cnty., 517 U.S. 793, 797
n.4 (1996).
Here, we consider the sufficiency of notice in an atypical sequence: The district court
entered summary judgment for Ciox after certifying the class but before notice could be sent.
In such a scenario, post-judgment notice would present no meaningful opportunity for class
members to make their case. See Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306,
314 (1950) (“[The] right to be heard has little reality or worth unless one is informed that the
matter is pending and can choose for himself whether to appear or default, acquiesce or
contest.”). Still, Ciox wishes to bind members of a certified class to an adverse summary
judgment decision, alleging that adequate post-judgment notice could be given on remand.
No. 18-5896 Faber, et al. v. Ciox Health, LLC Page 13
Considering the lack of notice, the class certification issued by the district court cannot
bind absent class members. Post-judgment notice would only invite parties to enter a fight that
they already lost. While courts have the prerogative to remand class action suits for post-
judgment notice, it should only be done “in appropriate circumstances” where “equitable
reasons” demand binding the class. Postow, 627 F.2d at 1382–83. Typically we disfavor “one
way street” post-judgment certifications, where parties may enter a class action suit with full
knowledge of the outcome. Id. at 1383; see also Gooch, 672 F.3d at 432 (explaining the
importance of preventing “one-way intervention” in class action litigation). Here, class members
would be prejudiced upon receiving notice of certification for a case they already lost on the
merits, so the equities go against post-judgment notice.
Our disagreement with Ciox follows the general rule of movant beware: A defendant’s
motion for summary judgment made prior to class certification carries the risk of only binding
the named plaintiffs, and not the entire class. William B. Rubenstein et al., 3 NEWBERG ON
CLASS ACTIONS § 7:10 (5th ed. 2016) (“If it is the defendant moving for summary judgment
prior to certification, courts view the defendant as deliberately waiving the possibility of a
victory against the whole class.”). And that principle applies here. Ciox submitted its motion for
summary judgment three months before the district court certified the class. Despite waiving the
potential to bind the class by making a pre-certification motion for summary judgment, Ciox
now seeks to bind the class after winning on the merits. And it wants us to enforce this benefit
even though it admits class members failed to receive proper notice. If defendants waive the
ability to bind a class after moving for summary judgment in typical cases, then Ciox certainly
waived it here. Even after applying the general rule, one knot remains left to untangle: What is
the status of the class certification going forward?
Although the district court issued a valid class certification, the class members who could
receive fair notice at this stage amount to an empty set. Neither party challenges the formal
validity of the class certification or that the district court can grant motions on its preferred,
though unusual, timeline. As for the class certification’s functionality, the impossibility of
giving adequate notice to class members now, or ever, renders the class certification inoperative.
No. 18-5896 Faber, et al. v. Ciox Health, LLC Page 14
See Bedel, 1992 WL 44883, at *4. Unable to bind any class members, the class certification
carries no effect and is therefore a nullity.
Additionally, Rule 23’s text and structure further convince us that the general rule, i.e.
that only named plaintiffs are bound when the defendant obtains summary judgment, is correct.
Rule 23(c)(3) states that “the judgment in a class action must . . . for any class certified under
Rule 23(b)(3), include and specify or describe those to whom the Rule 23(c)(2) notice was
directed, who have not requested exclusion, and whom the court finds to be class members.”
Fed. R. Civ. P. 23(c)(3). It would make little sense for absentee class members to not request
exclusion, as this rule contemplates, if the court gave them notice after granting summary
judgment to the defendant. On top of that, Rule 23(C)(2)(B)(iv) requires that the notice inform
class members that they “may enter an appearance through an attorney if [they] . . . so desire[].”
But an attorney’s appearance would seem to serve little purpose once the court has granted
summary judgment. Lawyers usually appear in court to obtain favorable outcomes—not for its
own sake. And Rule 23(d)(1)(B) provides that a court may inform class members of important
steps in the litigation process. Again, that Rule is largely pointless if a district court grants
summary judgment before notifying the class.
Rule 23 thus “clearly contemplates that the notice requirement will be met before the
parties are aware of the district court’s judgment on the merits.” Schwarzschild, 69 F.3d at 296.
We therefore adopt the general rule for our circuit and hold that the district court’s decision binds
only the named Plaintiffs.8
8The rule we adopt today is limited to the situation presented here: Where a defendant moves for and
obtains summary judgment before the absentee class members have been notified. We do not intend to establish a
rule governing all instances where the district court issues a judgment on the merits before the class has received
notice. Other situations may call for a different rule or balance of considerations. For example, in Postow, the court
allowed for post-judgment certification and notice where, based on “equitable reasons,” the plaintiffs had succeeded
on summary judgment. Postow, 627 F.2d at 1383. And in Katz, the court held that the defendant, “on the ground of
fairness,” could postpone class certification and notice until after plaintiffs had proved the violation. 496 F.2d at
758. But the certification and notice would only work to benefit the absentee class members:
If [the named plaintiff] loses his case on violation they will not be bound. If [the named plaintiff]
establishes the violation they can be afforded the same opting out option, but the notice will advise
them that there is a judgment establishing violation, and their decision will be more informed than
if the notice was sent early in the proceedings.
No. 18-5896 Faber, et al. v. Ciox Health, LLC Page 15
For these reasons, we AFFIRM the district court’s decision in favor of the Defendant
with respect to the named Plaintiffs. And because the merits of this lawsuit have been resolved,
the trial court’s certification of the class is a nullity and this case need not be remanded to issue
post-judgment notice.9
Id. Thus, the defendant agreed to accept the risk that the class would be enlarged if the plaintiff established the
violation. Id. at 762; see also id. at 760 n.7 (noting that a trial court could condition postponement of notice on a
defendant’s stipulation that it would “be bound in favor of potential class members by an adverse determination of
liability”).
9Ciox, of course, has still obtained something valuable here—a judgment in its favor on the merits that has
been affirmed on appeal. Even though absent class members are not formally bound by the judgment, principles of
stare decisis (and possibly preclusion) will prove to be valuable assets for Ciox should any absent class members
choose to bring similar claims.
No. 18-5896 Faber, et al. v. Ciox Health, LLC Page 16
_______________________________________________________
CONCURRING IN PART AND DISSENTING IN PART
_______________________________________________________
MERRITT, Circuit Judge, concurring in part and dissenting in part. I agree with the
majority’s resolution of all claims except its affirmation of the dismissal of plaintiffs’ claim
under the Tennessee Medical Records Act, Tenn. Code Ann. §§ 68-11-301 et seq.
The Tennessee Court of Appeals has explicitly held that the statute in question, Tenn.
Code Ann. § 68-11-302(4), applies to independent copying services like Ciox. Pratt v. Smart
Corp., 968 S.W.2d 868, 873 (Tenn. Ct. App. 1997). The majority states that in diversity cases
we are bound only by the forum state’s highest state court. Maj. Op. at 9. Regardless of whether
this blanket statement is accurate, it does not mean that lower courts’ opinions should not be
given deference in the absence of explicit Supreme Court directive. Here, as conceded by the
majority, the Tennessee Supreme Court has not ruled on the issue of whether the Tennessee
Medical Records Act would allow plaintiffs to bring a claim against an independent copying
service such as defendant Ciox, so we may look to the law of the state’s lower courts.
In Pratt, the Tennessee Court of Appeals applied agency principles to hold that the
Tennessee Medical Records Act of 1974 authorized a private cause of action by a patient against
the independent copying service that processed the plaintiff’s request for her hospital records and
allegedly charged unreasonable fees. The majority boldly states that it has “little doubt” that the
Tennessee Supreme Court would disagree with Pratt because it would look only to the plain
language of the statute, which says that the fee limits apply only to hospitals. Maj. Op. at 10.
Evidence to support this statement is lacking. The Tennessee Supreme Court denied permission
to appeal Pratt, letting the Court of Appeals decision stand. In the only case where the
Tennessee Supreme Court has cited Pratt, it did not criticize the holding. Instead, it simply
found Pratt “unhelpful in resolving the question before us” because Pratt did not address the
statute-of-limitations issue before the Court. Brown v. Tenn. Title Loans, Inc., 328 S.W.3d 850,
861 (Tenn. 2010). The Tennessee Supreme Court’s treatment of Pratt leads me to conclude that
we should not so lightly reject the only decision from the Tennessee courts that has directly
addressed the question before us based solely on a general rule of statutory construction that
No. 18-5896 Faber, et al. v. Ciox Health, LLC Page 17
courts should look to the plain language of the statute. Maj. Op. at 10. The only case to address
the issue in Tennessee would allow the plaintiffs’ claim under the Tennessee Medical Records
Act to proceed, and I believe we should follow that sole decision unless it is clearly erroneous
because it violates Tennessee law or policy. The majority’s argument does not clear that high
hurdle.1
In addition, the policy question raised was thoroughly and reasonably handled by the
Tennessee Court of Appeals in Pratt. As Pratt noted, the state has an interest in transactions that
violate “statutorily-defined public policy.” 968 S.W.2d at 872. Under the reasoning in Pratt,
Ciox effectively stands in the shoes of Tennessee providers who have delegated to it the
responsibility for responding to patient records requests. See id. at 873.
Decisions by other courts, both state and federal, that have addressed the question of a
private right of action for excessive fees charged by independent copying services for medical
records have resulted in a patchwork of results with no clear consensus. See, e.g., Ruzhinskaya v.
HealthPort Techs., LLC, 942 F.3d 69 (2d Cir. 2019) (vacating the district court’s opinion that
held that copying companies could not be sued under the New York medical records law, and
noting “continued uncertainty” as to the proper interpretation of the term “provider” under the
copying provision of New York law); Smith v. RecordQuest, LLC, 380 F. Supp. 3d 838 (E.D.
Wisc. 2019) (copy servicer was not liable to patient for charging excessive fees under Wisconsin
statute governing access to patient health records), appeal filed, No. 19-2084 (7th Cir. June 7,
2019); McCracken v. Verisma Sys., Inc., No. 6:14-cv-06248, 2017 WL 2080279, at *6-7
(W.D.N.Y. May 15, 2017) (New York medical records act applies to entity that is not a
“provider” of medical services); Young v. HealthPort Techs., Inc., 877 N.W.2d 124, 128-32
(Iowa 2016) (allegations that health care provider’s records servicer charged fees in excess of
1Defendant asserts that plaintiffs’ claim would fail in any event because the majority of its fees fall within
the “safe harbor” statutory limits set by the Tennessee legislature after Pratt was decided. Def. Br. at pp. 39-42.
But that question is not before us, and the defendant’s position is not as clear cut as it argues. The statutory fee
limits in the Tennessee Medical Record Act appear to cover primarily traditional “photocopying,” not the digital or
electronic “copying” performed routinely now. Defendant concedes as much when it acknowledges that electronic
delivery fees are not expressly included in the statute. Id. at 41-42. Plaintiffs could likely raise a debatable question
of fact as to whether the fees charged by defendant for electronic or digital copying are “reasonable,” regardless of
whether they fall within the safe harbor limits, and, if proved, Ciox’s allegedly excessive charges might well violate
the Act.
No. 18-5896 Faber, et al. v. Ciox Health, LLC Page 18
those authorized under statute governing such record requests stated claim against servicer, as
provider’s agent); Cotton v. Med-Cor Health Info. Sols., Inc., 472 S.E.2d 92, 95 (Ga. Ct. App.
1996) (Georgia’s Health Records Act, which governs the furnishing of the record of a patient by
a “provider,” applied “to entities such as defendants which supply photocopying services for
such providers even though such entities may be acting as the providers’ agents.”).
The Tennessee Court of Appeals has provided a reasoned opinion holding that the
Tennessee Medical Records Act applies to non-providers like Ciox. I would give deference to
that opinion in the absence of any contrary authority by the Tennessee Supreme Court, or any
other indication that the Court of Appeals opinion was clearly erroneous. I respectfully dissent
from the majority’s affirmance of the dismissal of plaintiffs’ claim under the Tennessee Medical
Records Act.