FISCHEL GOLDBERG VS. HEALTHPORT TECHNOLOGIES, LLC (L-1421-14, ESSEX COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2657-16T3
FISCHEL GOLDBERG and JERRY
VELASQUEZ, individually and
on behalf of all others
similarly situated,
Plaintiffs-Respondents,
v.
HEALTHPORT TECHNOLOGIES, LLC,
KIMBALL MEDICAL CENTER, INC.,
COMMUNITY MEDICAL CENTER,
INC., BARNABAS HEALTH, INC.,
OCEAN MEDICAL CENTER, JERSEY
SHORE UNIVERSITY MEDICAL
CENTER, and MERIDIAN HEALTH
SYSTEM, INC.,
Defendants-Respondents.
_____________________________
Submitted February 28, 2018 — Decided September 5, 2018
Before Judges Nugent and Geiger.
On appeal from Superior Court of New Jersey,
Law Division, Essex County, Docket No. L-1421-
14.
Clark Law Firm, PC, attorneys for appellant
Diana Dos Santos (Gerald H. Clark, of counsel;
Mark W. Morris, on the brief).
Chase Kurshan Herzfeld & Rubin, LLC, attorneys
for respondents Fischel Goldberg and Jerry
Velasquez (Michael R. Rudick, Peter J.
Kurshan, and Maureen Doerner Fogel, on the
joint brief).
Thompson Hine, LLP, attorneys for respondents
HealthPort Technologies, LLC, Kimball Medical
Center, Inc., Community Medical Center, Inc.,
Barnabas Health, Inc., Ocean Medical Center,
Jersey Shore University Medical Center, and
Meridian Health System, Inc. (Rebecca A.
Brazzano and Seth A. Litman (Thompson Hine,
LLP) of the Georgia bar, admitted pro hac
vice, on the joint brief).
PER CURIAM
This is a class action. Appellant, Diana Dos Santos, appeals
from two Law Division orders, the first approving the class action
settlement, the second entering a judgment of dismissal. Appellant
contends our review is de novo. She submits that under de novo
review we must reverse the Law Division orders, because notice to
the class members was "constitutionally lacking." Respondents,
nominal plaintiffs Fischel Goldberg and Jerry Velasquez, contend
we should review the Law Division orders under an abuse-of-
discretion standard. They submit that under the deferential abuse-
of-discretion standard, we must affirm the Law Division orders,
the trial court having properly exercised its discretion to approve
the class action settlement and dismiss the case. We conclude the
scope of our review is limited to determining whether the trial
court abused its discretion. Finding the court did not, we affirm.
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According to the amended complaint, with the exception of
Healthport Technologies, LLC, defendants operate hospital
facilities throughout New Jersey. The complaint identifies
Healthport as a "medical record reproduction company" and an agent
of defendants that provides hospital records to requestors.
The fees for records a hospital may charge a patient or the
patient's authorized representative are regulated:
If a patient or the patient's legally
authorized representative requests, in
writing, a copy of his or her medical record,
a legible, written copy of the record shall
be furnished at a fee based on actual costs.
One copy of the medical record from an
individual admission shall be provided to the
patient or the patient's legally authorized
representative within 30 days of the request,
in accordance with the following:
1. The fee for copying records
shall not exceed $1.00 per page or
$100.00 per record for the first 100
pages. For records which contain
more than 100 pages, a copying fee
of no more than $0.25 per page may
be charged for pages in excess of
the first 100 pages, up to a maximum
of $200.00 for the entire record;
2. In addition to per page
costs, the following charges are
permitted:
i. A search fee of no more
than $10.00 per patient per
request. (Although the patient
may have had more than one
admission, and thus more than
one record is provided, only
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one search fee shall be
permitted for that request.
The search fee is permitted
even though no medical record
is found as a result of the
search.); and
ii. A postage charge of
actual costs for mailing. No
charges shall be assessed
other than those permitted in
(d)1 and 2 above;
[N.J.A.C. 8:43G-15.3(d)(1) and (2).]
The amended complaint, which alleged defendants charged an
unauthorized, unlawful five-dollar fee for certifying copies of
hospital records, included four counts: violation of the New
Jersey Administrative Code, violation of the New Jersey Consumer
Fraud Act, N.J.S.A. 56:8-1 to -20, fraudulent and negligent
misrepresentation, and unjust enrichment. The proposed class was:
All "patients" who, during the time
period of March 4, 2008 through the present,
requested copies of medical records in the
State of New Jersey, either personally or
through their "legally authorized
representatives" (as such terms are defined
in N.J.A.C. 8:43G-15.3(d)), in writing, from
defendants . . . and who have suffered
economic damages as a result of the payment
of service fees that were imposed by
[d]efendants in excess of those expressly
authorized under N.J.A.C. 8:43G-15.3(d).
Following procedural events unrelated to the issues on
appeal, the completion of discovery, and mediation, the parties
agreed to settle the suit. Defendants agreed to pay four dollars
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to any class member who submitted a claim form. Defendants also
agreed to make a minimum payment of $100,000. Any balance after
reimbursed claims was to be paid to charity.
The trial court preliminarily approved the settlement as well
as the parties' plan for providing notice to potential class
members. Because all requests for medical records were made by
attorneys, the parties agreed to have notice sent directly to the
attorneys, as the class list prepared from HealthPort's business
records only contained the identity of the person who made the
request, the patient for whom the request was made, and the
requestor's address. HealthPort did not receive contact
information for the patients, and HealthPort did not maintain
copies of the medical records it processed because of
considerations concerning the Health Insurance Portability and
Accountability Act of 1996, 42 U.S.C. § 1320, (HIPPA) and other
privacy laws.
The class action notice required the attorneys to either
affirm they were the proper claimant because they paid the
certification fee and were not reimbursed, or indicate the fee
should be paid to their client because their client reimbursed
them the fee. If the client was in fact the proper claimant, then
the attorney could register the client, provide the client's
address to the Administrator and direct payment be sent to the
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client, or provide the client's address to the Administrator and
request the notice be sent directly to the client.
The deadline to mail the notice was August 22, 2016, and
class members had until October 21, 2016, to opt out of the class
or object to the settlement. Class members then had until January
2, 2017, to submit their proofs of claim, either electronically
or by mail.
Appellant's attorneys received the initial notice in
September, before any registration or notification deadline.
Although the deadline to object was October 21, 2016, due to some
other deadlines that were extended, appellant had the "impression"
the deadline to object was also extended and did not object until
November 13, 2016. Despite the late objection, during the motion
to approve the settlement on December 16, 2016, the trial court
heard and considered appellant's arguments against the settlement.
Appellant objected to the settlement based on the method of
notice. She argued defendants should have sent the notice directly
to the patients, not their attorneys. She claimed most class
members never received notice, a fact evidenced by only 4.4% of
affected patients submitting claims. She argued the method of
notice placed the onus on the class members' prior counsel to
alert class members of the pending settlement, causing many members
to never receive notice. Thus, the method of notice was
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insufficient as it "aimed at minimizing defendants' exposure [and]
maximizing class counsels fees" and was not "aimed at compensating
those harmed by defendants['] unlawful practices."
Respondents argued that sending notice to the attorneys who
were invoiced was more streamlined and reasonable, as all of
defendants' records showed the person who paid the fee was the
attorney requestor, not the patient. Defendants had no way of
knowing if the patient-clients reimbursed the attorneys for the
fee.
The court decided on January 6, 2017, to approve the final
settlement for the class action, noting "[t]o satisfy the standards
of due process [in providing notice], mandatory individual notice
is not required." The court acknowledged notice mailed directly
to the patients "would have been the best notice available," but
found it "was unreasonable in this matter." HealthPort did not
have individual addresses for each patient, but only contact
information for the law firms.
The court found it reasonable to instead provide notice to
the individual who had requested the documentation, which, in this
case, consisted primarily of the patients' attorneys. Thus, the
court found providing notice to the attorneys was the "only
reasonable way . . . that Health[P]ort could have provided the
notices." The court also found the settlement was in the best
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interest of the class members, as it reimbursed eighty percent of
the five dollar fee.
Appellant appeals from the resulting dismissal of the
underlying class action, issued on January 26, 2017. On appeal
she makes three arguments regarding notice:
I. The Trial Court's Determination That
Notice Was Adequate Was Incorrect and
Should Be Reversed
II. Direct Notice Should Have Been Utilized
to Provide Class Members Notice and
Fairly Apprise Them of Their Rights and
Remedies
III. The Class Was Not Provided with the Best
Notice Practicable
We must first determine the appropriate standard of review.
Rule 4:32 provides the framework for class actions, and is modeled
after Federal Rule of Civil Procedure 23(a) and (b). See Saldana
v. City of Camden, 252 N.J. Super. 188, 194 n.1 (App. Div. 1991).
Because there is no binding precedent within our court to determine
the standard of review in assessing the approval of a class action
settlement, and because Rule 4:32 is modeled after its federal
counterpart, we look to federal precedent.
The Third Circuit has determined that when reviewing "the
decision of the . . . [c]ourt to certify [a] class and approve [a]
settlement," it does so "under an abuse of discretion standard."
In re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 527 (3d Cir.
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2004) (citations omitted). The abuse of discretion standard is
applied because "[t]he [trial] court has considerable discretion
in determining whether a settlement is fair and reasonable." Bryan
v. Pittsburgh Plate Glass Co. (PPG Indus., Inc.), 494 F.2d 799,
801 (3d Cir. 1974).
Applying that standard, we conclude the trial court did not
abuse its discretion in determining the class notice was the best
notice practicable under the circumstances. Rule 4:32-2(b)(2)
requires "the best notice practicable under the circumstances,
consistent with the due process of law." Due process imposes
certain minimum notice requirements, but does not require
individual notice to each party member. Sulcov v. 2100 Linwood
Owners, Inc., 303 N.J. Super. 13, 36 (App. Div. 1997) (citation
omitted). Instead, "[t]he court shall direct notice in a
reasonable manner to all class members who would be bound by a
proposed settlement." R. 4:32-2(e)(1)(B).
In the underlying action, the known medical record requestors
were the attorneys who requested the records on behalf of their
clients. Although the attorneys may have been reimbursed the
disputed certification fees by their clients, the only contact
defendants had concerning the requested records was with the
attorneys and law firms requesting them. Therefore, it was
reasonable for notice to be sent to the attorneys.
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Appellant contends by having notice sent to the attorneys,
the court burdened attorneys to contact their clients, explain the
settlement and the options, and ultimately file for a claim in the
settlement. However, the notice sent to the attorneys only
requested they either affirm the attorney is the proper claimant,
or, if not, provide the address of the proper claimant so that
notice might be sent there. Attorneys could also register for
their clients and have payment directed to them.
We do not find the trial court abused its discretion in
finding appellant's proposed notice was less practicable than that
used. Appellant argues notice should be sent either directly to
the underlying patients, or to both the underlying patients and
their attorneys. However, the former method overlooks that the
attorneys requested the documents and payed the certification fee,
and the latter method raises the issue of duplicative claims. In
addition, due to privacy considerations, it was unclear who was
permitted to provide patient names. For these reasons, we conclude
the trial court did not abuse its discretion in determining that
sending the notice to the requesting attorney was the most
effective and efficient manner to ensure notice reached the proper
claimant.
Affirmed.
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