Meier v. Awaad, Docket No. 310808.

299 Mich.App. 655

832 N.W.2d 251

MEIER

v.AWAAD.

Docket No. 310808.

Court of Appeals of Michigan.

Submitted Feb. 5, 2013, at Detroit.

Decided March 12, 2013, at 9:00 a.m.

Secrest Wardle, Troy, (by Bruce A. Truex and Drew W. Broaddus) for plaintiffs.

Kitch Drutchas Wagner Valitutti & Sherbrook, Detroit, (by Christina A. Ginter, Harry J. Sherbrook, and Charles W. Fisher) for defendants.

Before: MURPHY, C.J., and DONOFRIO and GLEICHER, JJ.

MURPHY, C.J.

The minor plaintiffs, through their next friends,¹ brought this lawsuit against defendant Yasser Awaad, M.D., and the remaining defendants, which are various corporate entities associated with Awaad's medical practice, alleging that Awaad intentionally misdiagnosed them with either epilepsy or seizure disorder for the purpose of increasing his billings. Plaintiffs maintained that, as a result of the false diagnoses, they were subjected to unnecessary and inappropriate medication, treatment, and medical testing. Plaintiffs alleged claims sounding in medical malpractice, negligent credentialing, negligent supervision, silent fraud, battery, conspiracy, and violation of the Michigan Consumer Protection Act (MCPA), MCL 445.901 et seq. In the course of discovery, plaintiffs served a subpoena on the Michigan Department of Community Health (MDCH), requesting the names and addresses of all Medicaid beneficiaries who were treated by Awaad and coded as having been diagnosed with epilepsy or seizure disorder. The MDCH refused to comply absent a court order, and on plaintiffs' motion to show cause why the subpoena should not be enforced, the trial court ordered enforcement of the subpoena in order to allow the determination of putative class members and witnesses. The order also declared that disclosure of the specified information would not result in a violation of the Health Insurance Portability and Accountability Act (HIPAA), 42 U.S.C. § 1320d et seq. In a separate protective order, the trial court restricted access to the requested patient list, set forth the permissible uses of the patient information, required the information to be maintained in a secure location, and authorized plaintiffs' counsel to contact individual patients identified in materials submitted by the MDCH in response to the subpoena. Defendants appeal by leave granted the two orders. We hold that the trial court's ruling violated Michigan's statutory physician-patient privilege, MCL 600.2157, as construed in Dorris v. Detroit Osteopathic Hosp. Corp., 460 Mich. 26, 594 N.W.2d 455 (1999), and, relative to an earlier but similar version of the statute, Massachusetts Mut. Life Ins. Co. v. Bd. of Trustees of Mich. Asylum for the Insane, 178 Mich. 193, 144 N.W. 538 (1913). Accordingly, we reverse the trial court's orders and remand for implementation of conditional remedial measures as specified below, but not including sanctions, as plaintiffs proceeded pursuant to court orders.

I. BACKGROUND

The minor plaintiffs were patients of Awaad, a pediatric neurologist, who is alleged to have knowingly and willfully misdiagnosedplaintiffs with either epilepsy or seizure disorder as part of an effort to maximize his billings.² Under this factual theory, plaintiffs commenced suit in 2008, asserting various legal causes of action including fraud and medical malpractice. Subsequently, in February 2012, plaintiffs subpoenaed the healthcare insurers of Awaad's patients, seeking the names and addresses of other patients that Awaad diagnosed with epilepsy or seizure disorder. Defendants and two of the recipients of the subpoenas filed an emergency motion to quash the subpoenas on the ground that disclosure of the requested information would violate the physician-patient privilege. Plaintiffs then decided to withdraw the subpoenas. Thereafter, plaintiffs served defendants with interrogatories, asking defendants to provide information regarding the number of Medicaid patients treated by Awaad who had been diagnosed with epilepsy and the amount of money expended by Medicaid in paying for treatment of those Medicaid beneficiaries. Defendants objected and plaintiffs' motion to compel was denied.

In May 2012, plaintiffs served the MDCH with a subpoena requesting the names and addresses of Medicaid beneficiaries whose records Awaad had coded with a diagnosis of epilepsy or seizure disorder. The MDCH, through the Attorney General's office, advised plaintiffs' counsel that there would be no compliance with the subpoena unless the trial court ruled that providing the requested information would not constitute a HIPAA violation. Plaintiffs proceeded to file a motion to show cause why their subpoena to the MDCH should not be enforced. Plaintiffs asserted that Awaad's Medicaid billings, including charges for electroencephalographies (EEGs), rose significantly after 2001, which was the first year that Awaad and his practice entered into incentive contracts that allowed Awaad to earn supplemental income based on a percentage of his net collected billings. Plaintiffs argued that the requested information was discoverable because it was relevant to the issues in the pending case, although they agreed that a protective order limiting the use of the information would be appropriate. Plaintiffs indicated that they intended to use the information to mail individual letters to each patient or former patient identified by the MDCH. They had no intent to disclose or publish the names in any other context. Plaintiffs requested that the trial court enter an order allowing disclosure of the requested information, declaring that no HIPAA violation would result from the disclosure, and compelling the MDCH's compliance with the subpoena.

The MDCH maintained that should the trial court grant plaintiffs' motion, the court should also require plaintiffs' counsel to stipulate to a protective order with respect to the disclosed names and addresses. In opposition to plaintiffs' motion, defendants characterized the motion as an attempt to evade or circumvent the statutory physician-patient privilege, MCL 600.2157, by seeking Medicaid information from the MDCH that plaintiffs would otherwise be unable to obtain directly from defendants. Defendants also argued that plaintiffs' request violated HIPAA's privacy protections. Defendants contended that disclosure of the names, addresses, and medical diagnoses of approximately 600 nonparty patients would violate Michigan's statutory physician-patient privilege, the common-law right of privacy, and public policy favoring patients' privacy. Defendantsalso asserted that MCR 3.501(A), which governs class actions, precluded disclosure because that rule allows for notification to potential class members only after the class has been certified. Plaintiffs did move for class certification pursuant to MCR 3.501(B), but the trial court had not yet ruled on the certification motion at the time the orders at issue were entered.

In reply to defendants' response, plaintiffs argued that defendants lacked standing to challenge a subpoena directed at a nonparty and also lacked standing to assert the physician-patient privilege on behalf of the patients. Plaintiffs stated that they sought the names of the Medicaid beneficiaries because they were witnesses to Awaad's fraudulent scheme. Plaintiffs also anticipated that these witnesses would provide additional support for plaintiffs' request for class certification under MCR 3.501. Plaintiffs accused defendants of opposing the disclosure, not to protect former patients' confidential health information, but rather to conceal the fraudulent scheme from past patients, witnesses, and potential claimants.

At the hearing on plaintiffs' motion, the trial court ruled that MCL 600.2157 applied only to disclosures by healthcare providers, not third parties such as the MDCH. The court noted that the statute included a waiver for patients who bring malpractice actions against providers. The trial court did not agree that MCR 3.501 prohibited a party from discovering potential class members. The court ordered the MDCH to comply with plaintiffs' subpoena and provide the names and addresses of all Medicaid patients on whose behalf the MDCH made medical payments and who were assigned the epilepsy diagnostic code by Awaad, in order to allow a determination of putative class members and witnesses relative to the action. The order further declared that the disclosure did “not violate HIPAA” and that “the MDCH and [p]laintiff[s] may agree to any additional [p]rotective [o]rder with regard to safe-guarding the name[s] and address[es] of all Medicaid patients produced by the MDCH.”

The trial court also issued a protective order that limited access to the information to plaintiffs' attorneys and any law clerks, paralegals, and secretaries employed by plaintiffs' attorneys and agents. The protective order prohibited the list from being disclosed publicly or used for any purpose other than trial preparation and appeals in the case, but it did authorize plaintiffs' counsel to send individual letters to patients identified on the list. Under the protective order, all authorized individuals with a copy of the list were required to destroy or delete the copies within 30 days after the action was concluded and no longer appealable.

The MDCH released the information to plaintiffs' counsel pursuant to the subpoena and enforcement order, and plaintiffs' counsel immediately sent a letter to each of the persons identified in the MDCH's disclosure. The letter provided as follows:

Dear Parent or Medicaid Beneficiary:

We have been provided your name by the Michigan Department of Community Health. We believe you may be a witness in an action currently pending in the Wayne County Circuit Court against Dr. Yasser Awaad and Oakwood Hospital concerning the allegations set forth in the attached Complaint.

Please call me ... at your earliest convenience to discuss this matter.

Defendants filed their application...