Pratt v. Smart ( 1997 )

IN THE COURT OF APPEALS OF TENNESSEE
FILED
BRENDA PRATT, ) C/A NO. 03A01-9701-CV-00024
) November 18, 1997
Plaintiff-Appellant, )
) Cecil Crowson, Jr.
) Appellate C ourt Clerk
) APPEAL AS OF RIGHT FROM THE
v. ) KNOX COUNTY CIRCUIT COURT
)
)
)
SMART CORPORATION, )
) HONORABLE HAROLD WIMBERLY,
Defendant-Appellee. ) JUDGE
For Appellant For Appellee
DONALD K. VOWELL DAN D. RHEA
ROBERT R. CARL II Arnett, Draper & Hagood
Vowell & Carl Knoxville, Tennessee
Knoxville, Tennessee
JAMES H. HICKMAN III
Knoxville, Tennessee
THOMAS A. SNAPP
Ayres & Parkey
Knoxville, Tennessee
OPINION
VACATED AND REMANDED Susano, J.
1
The plaintiff, Brenda Pratt (“Pratt”), filed suit to
recover a portion of the payment made by her to the defendant,
Smart Corporation (“Smart”), for copies of her medical records.
The trial court granted Smart’s motion for summary judgment,
concluding that the relevant statute does not permit a “recovery
for this plaintiff against this defendant.” Pratt appealed,
raising several issues which in essence present the following
questions for our review:
1. Does the record contain evidence from
which a jury could conclude that a charge by
a hospital’s agent, i.e., Smart, of $28.58
for copies of four pages of medical records
was in excess of “the reasonable costs of
copying and mailing the patient’s records,”
according to the Medical Records Act of 1974,
T.C.A. § 68-11-304(a)(2)(A), thus rendering
the transaction voidable?
2. Does the record contain evidence from
which a jury could conclude that Pratt’s
payment of Smart’s invoice constitutes a
voidable contract of adhesion?
Smart, on the other hand, frames the issue before us as follows:
May a personal injury claimant who has
voluntarily paid the invoice of a hospital
record copying service for copies of her
hospital chart later sue the copying service
for a partial refund of her payment on the
ground that the payment violated the
hospital’s statutory right to recoup
“reasonable costs of copying and mailing”?
I. Facts
The events that precipitated this litigation began when
Pratt was injured in an automobile accident. She received
2
treatment for her injuries at Fort Sanders Hospital (“the
hospital”) in Knoxville. Wishing to pursue a claim against the
driver of the other vehicle, Pratt subsequently requested,
through her attorney, copies of her hospital records. The
hospital referred the request to Smart, a “copy company” that it
had retained to handle written requests for copies. Smart
furnished copies of the four-page medical record to Pratt’s
attorney, along with an invoice for $28.58. Pratt’s attorney
then paid the invoice.
On June 16, 1995, Pratt filed, as the representative
plaintiff1, a class action complaint against Smart, pursuant to
the provisions of the Medical Records Act of 1974, T.C.A. § 68-
11-301, et seq. (“the Act”). Smart subsequently moved for
summary judgment. The trial court declined to certify the class
pending resolution of Smart’s motion for summary judgment. The
trial court ultimately granted summary judgment in favor of
Smart, stating that
there is no factual dispute about anything
happening in this case. And it is further
the opinion [of the court] that the statute
in question which is, as I said, the basis of
the plaintiff’s claim, does not allow
recovery for this plaintiff against this
defendant.
The trial court did not otherwise state its rationale for
granting summary judgment.
1
In addition to Pratt, Travis Maxson was originally named as a
representative plaintiff. However, an order of voluntary dismissal was
entered as to him on February 1, 1996.
3
4
II. Standard of Review
We measure the propriety of the trial court’s grant of
summary judgment against the standard of Rule 56.04,
Tenn.R.Civ.P., which provides that summary judgment is
appropriate where
the pleadings, depositions, answers to
interrogatories, and admissions on file,
together with the affidavits, if any, show
that there is no genuine issue as to any
material fact and that the moving party is
entitled to a judgment as a matter of law.
When reviewing a grant of summary judgment, an appellate court
must decide anew if judgment in summary fashion is appropriate.
Cowden v. Sovran Bank/Central South, 816 S.W.2d 741, 744 (Tenn.
1991); Gonzalez v. Alman Constr. Co., 857 S.W.2d 42, 44-45
(Tenn.App. 1993). Since this determination involves a question
of law, there is no presumption of correctness as to the trial
court’s judgment. Id.
III. The Parties’ Contentions
Pratt contends that there is evidence from which a jury
could conclude that Smart violated the Act by charging $28.58 for
copies of four pages of hospital records. The Act provides, in
pertinent part, that
5
...a hospital shall furnish to a patient or a
patient’s authorized representative such part
or parts of such patient’s hospital records
without unreasonable delay upon request in
writing by the patient or such
representative.
The party requesting the patient’s records
shall be responsible to the hospital for the
reasonable costs of copying and mailing the
patient’s records.
T.C.A. § 68-11-304(a)(1), (a)(2)(A). The Act provides that a
willful violation of its terms constitutes a Class C misdemeanor.
T.C.A. § 68-11-311(a). It also limits an offending party’s civil
liability to “actual damages... for willful or reckless or
wanton” violations. T.C.A. § 68-11-311(b).
Pratt argues that the Act was intended to protect
patients from incurring excessive charges in obtaining copies of
their medical records. She contends that Smart falls within the
ambit of the Act and that there is evidence from which a jury
could conclude that Smart willfully, intentionally, or wantonly
violated its provisions in the following ways: by charging her a
grossly excessive, unreasonable amount; by using such excessive
charges to “subsidize” free copies provided to doctors and
hospitals; and by abusing its “monopoly power” over her medical
records.
Pratt contends that Smart’s violation of the Act
renders her attorney’s payment of the invoice a voidable
transaction, in accordance with the doctrine of Newton v. Cox,
878 S.W.2d 105 (Tenn. 1994). In Newton, the Supreme Court found
that a 50% contingency fee agreement between an attorney and
6
client in a medical malpractice case was in violation of T.C.A. §
29-26-120, which sets the maximum contingency fee arrangement in
such cases at one-third. The Court found that the contract in
question violated the public policy embodied in the statute, and
that as a result, the contract was voidable by the client. The
Court stated as follows:
The prevailing view which has also been
applied in Tennessee is that contracts are
voidable and not void when they violate
statutes enacted for the protection of the
public interests or for the protection of the
class of persons of which the party seeking
to avoid the contract is a member.
Newton, 878 S.W.2d at 108 (citations omitted). In the instant
case, Pratt argues that the Act incorporates a public policy of
protecting medical patients from excessive charges for copies of
their records, and that the legislative history of the Act
supports this conclusion. Pratt contends that Smart’s actions
constitute a violation of the Act and that the subject
transaction therefore is voidable under the principle set forth
in Newton.
As a second theory of recovery, Pratt argues that the
record contains evidence from which a jury could conclude that
her attorney’s payment of Smart’s invoice constitutes a voidable
contract of adhesion.
Smart, on the other hand, advances a variety of
theories to support the trial court’s grant of summary judgment
in its favor. As previously indicated, the trial court did not
7
give a detailed explanation for its decision that “the statute in
question...does not allow recovery for this plaintiff against
this defendant.” We will not attempt to discern the reasons for
the trial court’s decision but instead will review the record de
novo without a presumption of correctness, Gonzales, 857 S.W.2d
at 44, to determine if summary judgment for Smart is appropriate.
Smart’s primary defense to Pratt’s claim, and its
principal argument for sustaining the trial court’s decision, is
based upon the voluntary payment rule. That doctrine provides
that where one makes a voluntary payment with knowledge of all
relevant facts, and then sues to recover that payment, there
generally can be no recovery, even if there was no legal
liability to pay in the first place. Roach v. Underwood, 241
S.W.2d 498, 499 (Tenn. 1951). In accordance with this principle,
Smart contends that Pratt is barred from recovery, due to the
fact that her attorney voluntarily paid the invoice with
knowledge of all relevant facts.
Smart relies upon the case of Cotton v. Med-Cor Health
Information Solutions, Inc., 472 S.E.2d 92, 221 Ga.App. 609
(1996), a decision of the Georgia Court of Appeals. In that
case, the court held that the plaintiffs -- former hospital
patients who alleged that they had been overcharged for copies of
their medical records -- were barred from recovery, due to their
voluntary payment of the invoices for such copies, regardless of
the fact that the charges were in violation of a statute, which
is similar to the one in the instant case. Id. at 96. Smart
8
argues that the same reasoning is applicable to the case now
before us.
In addition, Smart offers various arguments regarding
the scope and purpose of the Act. Specifically, it contends that
the Act does not authorize a lawsuit of this kind or provide a
cause of action against an independent copying service. Pratt
then insists that the Act’s “reasonable costs” provision imposes
a duty upon requestors of medical records, rather than upon
hospitals, which Smart maintains are the intended beneficiaries
of that provision. Smart also contends that any resort to the
Act’s legislative history is unwarranted, since an ordinary
construction of the statute shows that the Act is an “access”
statute, benefitting patients who require access to their
records. According to Smart, Pratt was not in the class of
persons protected by the Act, since she had already obtained
access to her records at the time she filed suit. Smart further
argues that the Act merely provides a recipient of copies with a
defense to unreasonable charges, and that such defense may be
waived, e.g., under the voluntary payment rule. In addition,
Smart contends that since the Act fails to set forth any maximum
charge for copies of medical records, the only standard by which
such charges are measured is that of reasonableness; thus,
according to Smart, the definition of what constitutes a
“reasonable” cost is left entirely to the parties to a given
transaction: if an invoice is rendered and paid, the parties to
the transaction have agreed that the cost is reasonable,
regardless of the amount.
9
As further support for the trial court’s decision,
Smart argues that the charge of $28.58 was not unreasonable. It
maintains that shifting copying costs away from health care
providers, at the expense of individual patients, is not
unreasonable. As an additional theory, Smart argues that the
parties were in pari delicto, thus precluding either party from
seeking relief on the basis of any illegality in the contract.
Finally, Smart contends that the subject transaction cannot be
considered a contract of adhesion, since Pratt’s attorney paid
the invoice after his receipt of the copies.
In response to Smart’s contentions, Pratt submits the
following arguments: that the jury could conclude that the
payment of the invoice by Pratt’s attorney was not voluntary,
given Smart’s monopoly over her hospital records; that the Act
does provide a private cause of action to remedy violations of
its terms; that the Act’s failure to establish a maximum amount
for copy charges is irrelevant, since the paramount question is
whether the contract violates the public policy embodied in the
Act; that the Act speaks in terms of reasonable costs, rather
than charges, and a jury could conclude that $28.58 exceeded the
reasonable costs of copying and mailing Pratt’s records; that an
agent may not accomplish for its principal an act which the
principal is forbidden to accomplish itself, and that therefore
Smart is liable despite the Act’s failure to specifically address
independent copying companies; and finally, that Pratt was not in
pari delicto with Smart.
IV. Application of the Voluntary Payment Rule
10
We shall first address Smart’s primary contention --
that Pratt’s claim is barred by virtue of her attorney’s
voluntary payment of the invoice. Our review of the record and
the relevant case law persuades us that the voluntary payment
rule is not applicable to bar this action.
We recognize that Smart’s position is in accord with
the Georgia case of Cotton v. Med-Cor Health Information
Solutions, Inc., 472 S.E.2d 92, 221 Ga.App. 609 (1996). That
decision is based upon a specific Georgia statute2 that sets
forth that state’s version of the voluntary payment rule. In
Tennessee, however, the voluntary payment rule finds its genesis
in the common law. See, e.g., Roach v. Underwood, 241 S.W.2d 498(Tenn. 1951). Other authority in this jurisdiction indicates
that this common law doctrine is not universally applicable to
all transactions. Specifically, the case of Newton v. Cox, 878
S.W.2d 105 (Tenn. 1994), illustrates that the voluntary payment
rule does not come into play in situations involving a
transaction that violates public policy. In that decision, the
Supreme Court held that a medical malpractice client could
recover an excessive fee that he had already remitted but which
was in derogation of the public policy behind a specific statute.
Id. Newton thus recognizes that, where public policy has been
established by a legislative enactment, a transaction that is
violative of that policy is subject to inquiry even though it may
be fully consummated. See Id. In other words, the State has an
interest in transactions that involve violations of statutorily-
2
O.C.G.A. § 13-1-13.
11
defined public policy, and, generally speaking, in such
situations, the voluntary payment rule will not be applicable.
Relying on Newton and its analysis, we find that the voluntary
payment rule presents no impediment to Pratt’s cause of action,
and thus does not provide an adequate basis for sustaining the
trial court’s grant of summary judgment in favor of Smart.3
V. Analysis of Smart’s Other Arguments
We turn now to Smart’s other justifications for the
trial court’s grant of summary judgment. Initially, we disagree
with Smart to the extent that it argues that the Act does not
authorize a cause of action such as the one in this case. The
Act clearly contemplates private actions to remedy violations of
its terms, as evidenced by its provision for the recovery of
“actual damages in a civil action for willful or reckless or
wanton” violations. See T.C.A. § 68-11-311.
Secondly, we disagree with Smart’s contention that by
its terms, the Act does not apply to independent copying
services. It is true that the Act does not specifically mention
such entities; nevertheless, it is clear in this case that Smart
acted as the hospital’s authorized agent, and, as such, could not
perform acts which the hospital was forbidden by law to perform
itself. Furthermore, in the Cotton case, upon which Smart
relies, the Georgia Court of Appeals specifically held that a
statute substantially similar to the Act was applicable to
3
Given this conclusion, we find it unnecessary to address Pratt’s
argument that her attorney’s payment of Smart’s invoice was not “voluntary.”
12
independent copying services. Cotton, 472 S.E.2d at 95. The
court in Cotton stated that the legislature’s objective of
ensuring that patients have access to medical records at a
reasonable cost
would be completely defeated through a
construction of the Act that would allow
patients to be charged more than the
reasonable copying and mailing costs if the
providers hire others to perform the task of
supplying the records.
Id. We agree with this reasoning, and we therefore find that the
Act applies to independent entities that are retained to provide
copying services for hospitals.
As set forth earlier in this opinion, Smart presents
several arguments pertaining to the proper construction and
application of the Act. We agree with Smart that, in the absence
of any ambiguity, the Act need only be enforced as written,
without reference to its legislative history. See In re
Conservatorship of Clayton, 914 S.W.2d 84, 90 (Tenn.App. 1995).
We take issue, however, with several aspects of Smart’s analysis
of the Act and its application to the facts before us. We
disagree that the Act’s “reasonable costs” provision was intended
to benefit only the hospital by imposing a duty of payment upon a
requestor of medical records. On the contrary, that provision
was clearly intended to protect a requestor of records from
excessive charges. We also disagree with Smart’s contention that
the Act only confers upon a patient a defense to unreasonable
charges, and that such defense can be waived by a voluntary
13
payment of the amount charged. As stated earlier, the Act
benefits the patient by providing the remedy of actual damages,
and the voluntary payment rule will not be implicated where a
transaction is in violation of its terms.
By the same token, we disagree with Smart’s position
that the Act’s failure to establish a definite maximum charge
allows the parties to define “reasonable” costs in any way that
they choose. An excessive amount, although tacitly agreed to by
the parties, will nevertheless violate the provisions of, and
policy behind, the Act. We also find no merit in the argument
that because she had already received copies of her medical
records at the time she filed suit, Pratt was not in the class of
persons protected by the Act, i.e., individuals seeking access to
their medical records. We agree that the Act serves to provide
patients with access to their records; however, as previously
discussed, the Act also is intended to protect such individuals
from excessive charges. This latter protection is available
whether or not the records have been received. Pratt thus falls
squarely within the protective ambit of the Act. Likewise, the
fact that it was Pratt’s attorney, rather than Pratt herself, who
received the records and paid the invoice presents no obstacle to
Pratt’s claim, since her attorney clearly acted on her behalf in
obtaining the records.4
We also find Smart’s theory that the parties were in
pari delicto to be without merit. This is not a situation in
4
The attorney would not be entitled to the records in the absence of a
written authorization from Pratt. Thus, Smart knew that it was dealing with
an agent for a disclosed principal. This was a transaction between Pratt and
Smart.
14
which both parties to a transaction were involved in improper
conduct. Neither Pratt nor her attorney were involved in setting
the price of the copies, and the mere fact that her attorney had
previously engaged in similar transactions with Smart is
insufficient to establish such a defense.
Finally, Smart argues that the charge of $28.58 for
copying and mailing Pratt’s medical records was reasonable. We
believe that this represents a disputed question of fact that is
properly left for the trier of fact.
VI. Conclusion
Finding no basis for the trial court’s grant of summary
judgment in this case, we conclude that the judgment now before
us is erroneous. Given this determination, we do not find it
necessary to address the question of whether the subject
transaction constitutes a voidable contract of adhesion.
The judgment of the trial court is hereby vacated.
Costs on appeal are assessed to the appellee. This case is
remanded to the trial court for such further proceedings as are
necessary, consistent with this opinion.
__________________________
Charles D. Susano, Jr., J.
15
CONCUR:
_________________________
Houston M. Goddard, P.J.
_________________________
William H. Inman, Sr.J.
16