Ryan Deming v. Ciox Health, LLC ( 2022 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS MAR 1 2022
FOR THE NINTH CIRCUIT MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
RYAN DEMING; BRIANA FRAISER; No. 20-35744
MICHAEL MCFARLAND; LUCAS
GRISWOLD, individually and on behalf of D.C. No. 9:20-cv-00016-DWM
all others similarly situated,
MEMORANDUM*
Plaintiffs-Appellants,
v.
CIOX HEALTH, LLC; ST. JAMES
HEALTHCARE; SCL HEALTH -
MONTANA, DBA St. Vincent Healthcare;
BOZEMAN HEALTH DEACONESS
HOSPITAL; KALISPELL REGIONAL
HEALTHCARE SYSTEM, INC.; RCHP
BILLINGS-MISSOULA, LLC, DBA
Community Medical Center,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Montana
Donald W. Molloy, District Judge, Presiding
Argued and Submitted June 9, 2021
Seattle, Washington
Before: W. FLETCHER, WATFORD, and COLLINS, Circuit Judges.
Invoking diversity jurisdiction under the Class Action Fairness Act, 28
U.S.C. § 1332(d), Plaintiffs brought this putative class action challenging, under
*
This disposition is not appropriate for publication and is not precedent except as
provided by Ninth Circuit Rule 36-3.
Montana law, the charges that Defendant Ciox Health, LLC (“Ciox”) imposed for
delivering electronic medical records pursuant to its contracts with several
Montana health-care providers, who were also named as Defendants. The district
court dismissed the operative second amended complaint, without leave to amend,
for failure to state a claim. See FED. R. CIV. P. 12(b)(6). Plaintiffs timely appealed,
and we have jurisdiction under 28 U.S.C. § 1291. Reviewing de novo, Hicks v.
PGA Tour, Inc., 897 F.3d 1109, 1117 (9th Cir. 2018), we affirm.
1. Plaintiffs’ first cause of action alleges that the charges imposed by Ciox
violated Montana Code Annotated § 50-16-816. We agree with the district court
that § 50-16-816 does not apply to the challenged charges.
The relevant chapter of the Montana Code contains two separate parts that
address the provision of health care information, namely, “Part 5” and “Part 8.”
Part 5 was enacted prior to Part 8 and, in its current form, it applies to health care
providers that are not subject to the privacy provisions of the federal Health
Insurance Portability and Accountability Act (“HIPAA”). See MONT. CODE ANN.
§ 50-16-505. Part 8, by contrast, applies “only to health care providers subject to”
HIPAA’s privacy protections. See id. § 50-16-802.
Part 5 authorizes, in four specific contexts, the imposition of “a reasonable
fee” for the delivery of medical records, which fee may not exceed “the fee
provided for in [§] 50-16-540”: (1) where the provider is “required to disclose
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health care information pursuant to compulsory process,” MONT. CODE ANN. § 50-
16-536(5); (2) where a patient has authorized the provider to provide a copy of the
medical record to a third party, id. § 50-16-526; (3) where a patient has made a
written request for the medical record, id. § 50-16-541; and (4) where a provider is
required to provide copies of a corrected or amended medical record, “unless the
provider’s error necessitated the correction or amendment,” id. § 50-16-545. The
“fee provided for” in § 50-16-540 is as follows:
A reasonable fee for providing health care information may
not exceed 50 cents for each page for a paper copy or
photocopy. A reasonable fee may include an administrative
fee that may not exceed $15 for searching and handling
recorded health care information.
Id. § 50-16-540.
Part 8 follows a parallel structure with respect to HIPAA-covered providers,
but it authorizes imposition of “a reasonable fee, not to exceed the fee provided for
in [§] 50-16-816,” only in one of the four contexts mentioned in Part 5.
Specifically, § 50-16-812(5) states that health care providers that are “required to
disclose health care information pursuant to compulsory process may charge a
reasonable fee, not to exceed the fee provided for in [§] 50-16-816.” MONT. CODE
ANN. § 50-16-812(5). The omission of the other three circumstances mentioned in
Part 5 is perhaps not surprising, because the federal regulations applicable to
HIPAA providers impose their own disclosure and fee rules with respect to certain
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of those contexts. See 45 C.F.R. § 164.524. Part 8’s “reasonable fee” limitation in
§ 50-16-816 is substantively identical to that contained in Part 5’s § 50-16-540,
except that it includes, at the very beginning, the specification that its limitation
applies “[u]nless prohibited by federal law.”1
Plaintiffs’ first cause of action contends that Defendants violated the
reasonable fee limitation in § 50-16-816 when they charged excessive fees for
delivering Plaintiffs’ medical records upon Plaintiffs’ written request or for
delivery to third parties (specifically, Plaintiffs’ attorneys or the attorneys’ agents
or employees). Thus, even though Part 8—unlike Part 5—does not contain
provisions specifically authorizing a “reasonable fee,” not to exceed the specified
limits, when such records are (1) requested by the patient or (2) authorized to be
delivered to a third party, Plaintiffs contend that those specified limits on fees
should be deemed to apply anyway.
This argument ignores the text, structure, and context of the relevant
statutory provisions, and it would improperly rewrite Part 8 by reading into it the
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The full text of § 50-16-816 states:
Unless prohibited by federal law, a reasonable fee for
providing copies of health care information may not exceed 50
cents for each page for a paper copy or photocopy. A
reasonable fee may include an administrative fee that may not
exceed $15 for searching and handling recorded health care
information.
MONT. CODE ANN. § 50-16-816.
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directly analogous provisions of Part 5 that the Montana Legislature conspicuously
omitted. See Aye v. Fix, 626 P.2d 1259, 1262 (Mont. 1981) (stating that a Montana
statute “must be read in the context of the chapter in which it appears”). In
contrast to Part 5, which does authorize a “reasonable fee” subject to the specified
limits when a non-HIPAA provider delivers records in response to a patient request
or an authorization to disclose to a third-party, Part 8 only does so with respect to
delivery of medical records by a HIPAA provider pursuant to compulsory process.
Indeed, if the Montana Legislature had wanted the “reasonable fee” provisions of
Part 5 to continue to apply to HIPAA-regulated providers despite HIPAA’s
disclosure requirements, the Legislature simply could have left Part 5 in place
(with any appropriate amendments in light of HIPAA) and would not have needed
to enact Part 8.
Plaintiffs assert that, by adding the phrase “[u]nless prohibited by federal
law” to the specified fee limitations in § 50-16-816, the Montana Legislature
signaled its intention that that limit would apply to the fullest extent permitted by
federal law. But that phrase is more naturally read as simply a conforming
amendment acknowledging that, in copying Part 5’s fee limitations from § 50-16-
540 into Part 8’s § 50-16-816, the Montana Legislature did not purport to override
any applicable federal law. The phrase cannot reasonably be read as instead
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undoing the careful distinctions that the Legislature made in crafting the directly
analogous provisions of Part 5 and Part 8.
Accordingly, the district court correctly held that the limitations of § 50-16-
816 only apply in the context of a subpoena for patient records as described in
§ 50-16-812(5). Because, under the facts as pleaded, the delivery of Plaintiffs’
records did not involve compulsory process, the fee limitations in § 50-16-816 do
not apply. The first cause of action was therefore properly dismissed.
2. The district court did not err in dismissing Plaintiffs’ related claims that
Defendants violated the Montana Consumer Protection Act (“MCPA”), MONT.
CODE ANN. § 30-14-101 et seq., and the implied covenant of good faith and fair
dealing.
a. An “unfair act or practice” in violation of the MCPA “is one which
offends established public policy and which is either immoral, unethical,
oppressive, unscrupulous or substantially injurious to consumers.” Rohrer v.
Knudson, 203 P.3d 759, 764 (Mont. 2009). Given that the Montana Legislature
specifically declined to apply the statutory “reasonable fee” limitations to
Plaintiffs’ circumstances, Plaintiffs have failed to establish any plausible basis for
concluding that requiring HIPAA-regulated health care providers to charge
“reasonable fees” for medical records is an “established public policy” in Montana
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or that Defendants acted unfairly. Plaintiffs have failed to plead a violation of the
MCPA.
b. Plaintiffs also allege that Ciox’s charges violated Montana Code
Annotated § 28-1-211, which provides that “the implied covenant of good faith and
fair dealing [requires] honesty in fact and the observance of reasonable commercial
standards of fair dealing in the trade.” MONT. CODE ANN. § 28-1-211. Under
Montana law, every contract contains this implied covenant. Puryer v. HSBC Bank
USA, 419 P.3d 105, 112 (Mont. 2018). We affirm the district court’s dismissal of
this claim because Plaintiffs cannot “circumvent [a] statute”—namely, the
carefully drawn provisions of Part 8—“through a theory of implied contract and
implied covenant of good faith and fair dealing.” Reiter v. Yellowstone Cnty., 627
P.2d 845, 849 (Mont. 1981). Moreover, Plaintiffs do not allege sufficient facts to
establish that there was a relevant contract between Plaintiffs and the providers or
between Plaintiffs and Ciox.
Because Plaintiffs have failed to provide any plausible basis for curing these
various deficiencies, the district court properly dismissed the operative complaint
without leave to amend. See Schreiber Distrib. Co. v. Serv-Well Furniture Co.,
806 F.2d 1393, 1401–02 (9th Cir. 1986).
AFFIRMED.
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