United States: Guest Post – Indiana District Court Dismisses Plaintiff's Lawsuit Against Pharmaceutical Manufacturer For Disclosure Of Private Health Information

Last Updated: March 12 2018
Article by James Beck

We have another guest post today, from Reed Smith's own Erica Yen. This one is about a recent, interesting decision concerning the interaction between the Health Insurance Portability and Accountability Act ("HIPAA") and the common law – with a good result this time. As always, our guest bloggers are 100% responsible for their posts, and Erica deserves all the credit (and any blame) for what follows.

**********

As noted in our post last month, the fact that HIPAA does not provide for a private right of action has not stopped some state courts from allowing negligence claims using HIPAA to define a standard of care. That post discussed the Connecticut Supreme Court's questionable creation of a new tort of "unauthorized disclosure of confidential medical information" by a healthcare provider.

When the plaintiff in the recent case of Haywood v. Novartis Pharmaceuticals Corp., No. 2:15-CV-373, 2018 WL 437562 (N.D. Ill. Jan. 16, 2018), first filed her complaint in state court, she probably was hoping that the same expansive reasoning used in the Connecticut case would extend to the alleged disclosure by a pharmaceutical company of her private medical information to her employer. In federal court, however, her unusual negligence claims were not allowed to proceed, under HIPAA or otherwise.

In Haywood, the plaintiff had applied for a co-pay assistance program administered by the defendant to help offset the cost of purchasing that defendant's prescription medications. Id. at *1. Despite an alleged written request that no information be sent to her workplace, the defendant allegedly faxed information that became available to the plaintiff's co-workers. The information allegedly included her social security number, date of birth, income, Medicare number, disease, treatment, and medical providers. Id. The relevant (amended) complaint alleged negligence and negligent training and supervision in violating duties owed to her under (1) the defendant's Privacy Notice and Privacy Statement, (2) Indiana state law, and (3) HIPAA. Id. She also claimed punitive damages based on supposed reckless indifference by disclosing the information against her written request not to do so. Id.

The end result? The court held that the defendant drug manufacturer did not owe the plaintiff any duty for the following reasons, and the plaintiff was not entitled to any punitive damages.

First, the court was not persuaded by the plaintiff's argument that the defendant's Privacy Notice and Privacy Statement, posted on its website, created a duty of privacy to her as a customer. Id. at *4. The privacy policies posted online concerned dissemination of information to business partners who were prohibited from using customers' personal data for marketing purposes. Dissemination to plaintiff's place of employment had nothing to do with third-party marketing. The defendant's privacy policies did not set forth any obligations with respect to general non-disclosure, and the court found that the plaintiff's unilateral request not to send information to her workplace could not, by itself, create a legal duty. Id.

Second, the section of the Indiana Code the plaintiff cited, Ind. C. §25-26-13-15(b), failed to create a duty either. While facially applicable to the defendant, as the specific statute applied to "any 'person' with patient information," the court held that as a whole it regulated "Pharmacists, Pharmacies, and Drug Stores." The defendant was not any of those, nor did the statute purport to regulate the manufacture of pharmaceuticals or the administration of co-payment assistance programs. That the defendant was a "provider of pharmaceuticals" was not enough to bring it within the purview of a statute addressed to other types of entities and conduct. Therefore, no statutory duty could be owed to the plaintiff. Id.

Third, the court dismissed the plaintiff's attempt to allege a negligence per se theory that the defendant violated HIPAA standards. Id. at *7. Given that HIPAA does not provide for a private right of action and enforcement was intended to be solely under the authority of the Department of Health and Human Services, allowing state law claims that rely on HIPAA would allow plaintiffs to sidestep those enforcement mechanisms. Id. That sounds a lot like how the FDCA works.

Lastly, the court noted that there was no precedent in the jurisdiction to suggest that a pharmaceutical company has a general duty to safeguard an individual's personal information from disclosure. Id. at *8. The court could have stopped there but went further to explain the reasons why it concluded a duty should not be imposed at common law, after examining (1) the relationship between the parties, (2) the reasonable foreseeability of harm, and (3) public policy concerns:

  • The relationship between a potential customer and co-pay assistance company, as in the case here, was not similar to the relationship between a pharmacist and consumer "mainly because the direct contact, expertise, reliance, and counseling aspects of the relationship are wholly lacking." Id.
  • Given that much of an employee's personal information was likely already available to his or her employer anyway and was unlikely to cause adverse consequences, the foreseeability of legally actionable harm was minimal. Id. at *8-9.
  • Given the growing amount of sensitive personal information generally being made available to third parties in today's digital society, even if a pharmaceutical company could theoretically bear the liability from inadvertent disclosures, "[a]ssigning significant moral blame to a pharmaceutical corporation in this situation is disproportionate to the actual acts performed (i.e., negligently disclosing information to an employer during a routine application process) . . . Imposing a duty to safeguard information from all possible disclosures upon any party or entity who happens to be in possession of the personal information of another would expand liability in a way that has the potential to stifle the collection of data and the routine processing of information." Id. at *9. A Seventh Circuit decision analyzing the Indiana data disclosure statute had found no private right of action against a database owner for negligently disclosing information; rather the database owner only had to disclose the breach to customers and let the state attorney general handle enforcement. Id. (citing Pisciotta v. Old Nat. Bancorp, 499 F.3d 629, 636-637 (7th Cir. 2007)).

Based on this reasoning, and exercising appropriate restraint under the Erie doctrine, Haywood concluded that the plaintiff failed to state any viable claim for negligence, negligent training and supervision, or punitive damages. Notwithstanding the importance of protecting health information, and even assuming the defendant's handling of the plaintiff's information was done in error, the court acted reasonably in not opening the gates to the kind of expansive duty and liability the plaintiff sought. The unsatisfied plaintiff filed an appeal to the Seventh Circuit just a few weeks ago. See Case No. 18-1328 (filed February 24, 2018). It would be surprising if the Seventh Circuit did not agree with the district court's analysis and conclusion.

This article is presented for informational purposes only and is not intended to constitute legal advice.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
James Beck
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions