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Minnesota justices hear debate on fundraising exemption to health privacy law

Parents of a patient at a nonprofit hospital argued that a state law's broader prohibitions on record dissemination should take precedence over a federal exception for nonprofit fundraising efforts.

ST. PAUL, Minn. (CN) — Minnesota’s Supreme Court heard arguments Monday in a patient privacy dispute testing the boundaries of a landmark 1997 federal law governing the use of health records and a state statute covering some of the same territory. 

Before the court was the case of Kelly and Evan Schneider, parents who learned that St. Paul’s Children’s Hospital and Clinics had disclosed health information about their child to its fundraising arm, the Children’s Health Care Foundation, without their explicit consent, and that the foundation had then disclosed at least some of that information to cloud-computing company Blackbaud. 

The Schneiders argued the Minnesota Health Records Act requires patients to waive their right to privacy for such a release. At Monday’s arguments, the hospital operator’s attorney David Carney said the MHRA allowed for such releases with “specific authorization in law,” and that the federal Health Insurance Portability and Accountability Act, better known as HIPAA, granted that authorization. 

Arguing for the Schneiders and the class of similarly situated individuals they hope to represent, attorney A.L. Brown pointed out that MHRA’s enactment preceded HIPAA by some six years, having first been enacted in 1991, and the Legislature therefore could not have been considering HIPAA when penning the law.

Furthermore, he argued, MHRA’s provisions governing fundraising were outside HIPAA’s scope and more restrictive than the federal law, thus invoking HIPAA’s “reverse preemption” clause and giving Minnesota a broader latitude to regulate fundraising efforts. 

“If Children’s wanted to do exactly what it did, all it had to do was ask. It’s that simple,” Brown said. “Tell the patient what records you’re giving, to whom you’re giving them to, for what purpose and for how long. That’s all you had to do.”

The Schneiders’ suit faltered in Ramsey County District Court, where Judge Laura Nelson granted summary judgment to the hospital last January after finding that “otherwise authorized by law” encompassed authorizations permitted under HIPAA. They appealed that decision to the Minnesota Court of Appeals, which affirmed Nelson’s order and found that the MHRA was not more stringent than HIPAA. 

Brown sought to overcome that finding at the Minnesota Supreme Court, arguing that HIPAA’s exceptions to nondisclosure rules for fundraising purposes must be subsumed by the MHRA’s lack thereof. 

“When the respondent says, ‘we don’t have enough on the issue of fundraising specifically’ – HIPAA is not about fundraising,” Brown said. He referred to the rotation between the state law’s “specific authorization of law” clause and HIPAA’s “more stringent” clause as a “doom loop,” and urged the justices to break with it.  

Justice Natalie Hudson took up much of the court’s questioning of Brown, and sounded skeptical of his arguments throughout.

“It seems to me, whether we’re talking about the 1991 version of this or later…. 'Law' means law, whether that was 1991 or 2007," Hudson said.

Carney, meanwhile, argued that the MHRA, both in 1991 and at the time of the law’s 2007 post-HIPAA readoption, had been more specific than HIPAA on a number of points but not on fundraising.

“We have all of these more specific rules, within MHRA itself. There’s not one with respect to fundraising,” he said. “Those are carve-outs where the Health Records Act was very specific about what they wanted to see.”

While MHRA and HIPAA may have been designed separately, he said, there was “good reason to coordinate federal and state law” and the Legislature’s readoption of the law was undertaken with full knowledge of HIPAA’s provisions. The intent of Congress to address fundraising, he said, was included in that. 

“Children’s Minnesota complied – absolutely complied, dotted the I’s, crossed the T’s in every single way, no factual dispute about that – with a detailed… federal regulation that dealt specifically with fundraising issues,” Carney said. “It gets back to the Legislature’s intent in 2007, which was to have the words used include… a duly noticed and commented federal regulation.”

Categories / Appeals, Civil Rights, Health, Law, Regional

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