Tammie Thompson v. Ciox Health, LLC

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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 21-2102
TAMMIE THOMPSON, individually and on behalf of all others similarly situated;
DEBRA LOVE, individually and on behalf of all others similarly situated,
Plaintiffs - Appellants,
v.
CIOX HEALTH, LLC, d/b/a IOD Incorporated; SCANSTAT TECHNOLOGIES
LLC,
Defendants - Appellees.
Appeal from the United States District Court for the District of South Carolina, at
Charleston. Bruce H. Hendricks, District Judge. (2:20-cv-02847-BHH)
Argued: September 16, 2022 Decided: October 28, 2022
Before KING, RUSHING, and HEYTENS, Circuit Judges.
Affirmed by published opinion. Judge Heytens wrote the opinion, in which Judge King and
Judge Rushing joined.
ARGUED: James C. Bradley, ROGERS, PATRICK, WESTBROOK & BRICKMAN,
LLC, Mount Pleasant, South Carolina, for Appellants. Gilad Yair Bendheim, KIRKLAND
& ELLIS LLP, New York, New York, for Appellees. ON BRIEF: Nina H. Fields, Caleb
M. Hodge, ROGERS, PATRICK, WESTBROOK & BRICKMAN, LLC, Mount Pleasant,
South Carolina, for Appellants. A. Victor Rawl, Jr., Brittany T. Bihun, GORDON & REES
LLP, Charleston, South Carolina, for Appellees ScanSTAT Technologies LLC. Jay P.
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Lefkowitz, Mason E. Reynolds, KIRKLAND & ELLIS LLP, New York, New York, for
Appellee Ciox Health, LLC.
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TOBY HEYTENS, Circuit Judge:
South Carolina law gives patients a right to obtain copies of their medical records,
while capping the fees “[a] physician, or other owner” may bill for providing them. S.C.
Code Ann. § 44-115-80. Asserting they were charged excessive fees, plaintiffs Tammie
Thompson and Debra Love sued third-party medical records companies that fulfilled their
requests, but which do not—and under South Carolina law, cannot—own those records.
Because the statutory obligations at issue apply only to physicians and other owners of
medical records, not medical records companies, we affirm the district court’s dismissal of
the complaint.
I.
Thompson and Love were injured in unspecified accidents and treated by South
Carolina health care providers. Seeking to pursue personal injury lawsuits, Thompson and
Love requested their medical records from the relevant providers. Those records—and
accompanying invoices—were supplied by defendants Ciox Health, LLC and ScanSTAT
Technologies LLC, “information management companies” that retrieve medical records
from health care providers and transmit them to requesting patients or patient
representatives. JA 9.
Claiming the invoiced fees were too high or otherwise illegal, Thompson and Love
filed a putative class action against Ciox and ScanSTAT in federal district court. The
complaint listed four claims, all arising under South Carolina law. The district court
dismissed the complaint on two separate grounds: (1) that the South Carolina Physicians’
Patient Records Act (Patient Records Act or Act) does not apply to medical records
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companies like Ciox and ScanSTAT; and (2) even if it did, the Act creates no private right
of action. We review the district court’s decision de novo. See, e.g., Krueger v. Angelos,
26 F.4th 212, 215 n.1 (4th Cir. 2022). 1
II.
In our view, this appeal comes down to one question: Does the Patient Records Act
cover companies like Ciox and ScanSTAT?
To begin, we decline plaintiffs’ belated request to certify this question to the
Supreme Court of South Carolina. Plaintiffs chose to file suit in a federal forum, and they
never asked the district court to certify any questions to the state courts. Indeed, plaintiffs’
first request for certification came via a one-sentence request on the last page of their
opening brief on appeal from a district court judgment against them. This Court has
declined requests for certification in analogous circumstances, and we see no reason for a
different result here. See Powell v. United States Fid. & Guar. Co., 88 F.3d 271, 273 & n.3
(4th Cir. 1996) (denying certification when the plaintiff “initially filed suit in a state court
1
We briefly address a jurisdictional tangle that could have been avoided by more
careful pleading. Despite asserting diversity jurisdiction under the Class Action Fairness
Act, the complaint does not specifically allege a principal place of business for either Ciox
or ScanSTAT. See Ferrell v. Express Check Advance of S.C. LLC, 591 F.3d 698, 704 (4th
Cir. 2010) (holding that entities like Ciox and ScanSTAT are citizens of both the States
under whose laws they are organized and in which they have their principal place of
business). At oral argument, plaintiffs asserted, without contradiction, that Ciox has its
principal place of business in Georgia, Oral Arg. 2:41:14–2:41:25, which is to enough to
maintain the required minimal diversity from the two South Carolina-domiciled plaintiffs.
Treating that uncontested allegation as a constructive amendment of the complaint under
28 U.S.C. § 1653, we are satisfied the district court had jurisdiction to consider a motion
to dismiss for failure to state a claim.
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but took a nonsuit” before refiling in federal court); National Bank of Wash. v. Pearson,
863 F.2d 322, 327 (4th Cir. 1988) (certification inappropriate when the party seeking it
“removed th[e] case from Maryland state court after the Maryland judge decided the
question against him”).
Nor is this a situation where existing authority “is clearly insufficient” to resolve the
question before us. Roe v. Doe, 28 F.3d 404, 407 (4th Cir. 1994). “In interpreting a state
law, we apply the statutory construction rules applied by the state’s highest court.” Eubanks
v. South Carolina Dep’t of Corr., 561 F.3d 294, 300 (4th Cir. 2009). And “[w]hen a
statute’s terms are clear and unambiguous,” South Carolina’s highest court has instructed,
“there is no room for statutory construction and a court must apply the statute according to
its literal meaning.” Sloan v. Hardee, 640 S.E.2d 457, 459 (S.C. 2007).
This is such a case. South Carolina law states that—absent circumstances no one
alleges apply here—the only permissible owners of patient medical records are “a
physician or osteopath licensed by the South Carolina State Board of Medical Examiners
or a hospital licensed by the South Carolina Department of Health and Environmental
Control.” S.C. Code Ann. § 44-115-130; see § 44-115-20. Although patients do not own
their medical records, they have “a right to receive a copy of ” such records “upon request.”
§ 44-115-30. Because fulfilling such requests takes time and resources, South Carolina law
provides that “[a] physician, or other owner of medical records as provided for in Section
44-115-130, may [generally] charge a fee for the search and duplication of a paper or
electronic medical record.” § 44-115-80(A); see also § 44-115-80(B) (requiring that certain
records be provided “at no charge”).
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The problem for plaintiffs is straightforward: The “plain and ordinary meaning” of
the Patient Records Act does not cover the kind of entities plaintiffs have sued. Catawba
Indian Tribe of S.C. v. State, 642 S.E.2d 751, 754 (S.C. 2007).
Acknowledging this problem, plaintiffs insist that excluding medical records
companies from the Act’s reach creates an absurdity. But even assuming—for the sake of
argument—that South Carolina’s highest court would authorize a rewrite of clear statutory
language to avoid genuinely “absurd” results, State v. Long, 753 S.E.2d 425, 427 n.5 (S.C.
2014), we perceive no such absurdity here.
The parties agree that when companies like Ciox and ScanSTAT fulfill requests for
copies of patient records, they do so as agents for the doctors and hospitals who are, under
South Carolina law, the only permissible owners of such records. Thompson Br. 25; Oral
Arg. 3:00:59–3:02:04. South Carolina law has long recognized that a principal who holds
a statutory duty cannot escape the legal consequences of failing to comply even when
employing an agent to carry out the required conduct. See Whitlock v. Creswell, 2 S.E.2d
838, 845–46 (S.C. 1939); accord Restatement (Third) of Agency § 7.06 (“A principal
required . . . by law to protect another cannot avoid liability by delegating performance of
the duty, whether or not the delegate is an agent.”). So if plaintiffs were charged fees to
obtain copies of their medical records that were not authorized by the Patient Records Act,
the providers who own the records have violated the Act. And if the Act creates a private
right of action—a point we need not decide given our conclusion that it does not apply to
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Ciox and ScanSTAT in the first place—it would thus be against the providers who bear the
Act’s obligations. 2
Plaintiffs’ response sounds more in inconvenience than absurdity. According to
plaintiffs, because it would not be “economically feasible” to bring direct claims against
the providers who own plaintiffs’ medical records, they must be allowed to bring a class
action against companies (like Ciox and ScanSTAT) that serve a bevy of providers. Oral
Arg. 2:48:15–2:49:12. But the Patient Records Act says what it does, and plaintiffs identify
no South Carolina authority for the proposition that it is absurd to require claims to be
brought against certain defendants even when it may be more convenient to sue others.
Our conclusion that the Patient Records Act does not apply to Ciox and ScanSTAT
is enough to affirm the dismissal of all of plaintiffs’ claims. Plaintiffs’ first and fourth
causes of action directly accuse Ciox and ScanSTAT of violating the Act. And plaintiffs’
second and third causes of action likewise fail because they are, as pled, premised on the
notion that Ciox and ScanSTAT (rather than any owner of medical records) “charg[ed] . . .
more than is allowed by” the Patient Records Act or “act[ed] in direct violation of ” it. JA
21, 22. The judgment of the district court is therefore
AFFIRMED.
2
Plaintiffs suggest they can sue Ciox and ScanSTAT as “agent[s] in possession of
funds to which neither the agent nor the principal is entitled.” Thompson Br. 27. It is black
letter law, however, that an agent fulfilling—or failing to fulfill—a principal’s statutory
duty takes on liability to a third party only when the terms of the statute allow. Restatement
(Third) of Agency § 7.01 cmt. c; see Faber v. Ciox Health, LLC, 944 F.3d 593, 602 (6th
Cir. 2019). The terms of this statute say nothing of the sort.
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