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Ciox Health, LLC v. Azar

United States District Court for the District of Columbia

January 23, 2020, Decided; January 27, 2020, Filed

Case No. 18-cv-00040 (APM)

Opinion

MEMORANDUM OPINION

I. INTRODUCTION

Plaintiff Ciox Health, LLC ("Ciox") is a specialized medical-records provider that contracts with healthcare suppliers nationwide to maintain, retrieve, and produce individuals' protected health information ("PHI"). Ciox handles tens of millions of records requests annually for its clients. Such requests include PHI demands by healthcare providers for treatment purposes, patients asking for their own PHI, and third parties, such as life insurance companies and law firms, seeking a patient's PHI for commercial or legal reasons.

This case centers on various legal restrictions and conditions placed on producing PHI. Most significantly, [*2]  it concerns what a company like Ciox can charge for searching for, retrieving, and delivering PHI. To ensure that patient access to PHI is not thwarted by excessive fees, the United States Department of Health and Human Services ("HHS") has adopted rules that limit what companies may charge for delivering PHI. These restrictions are known as the "Patient Rate." For years, the medical records industry understood that the limitations imposed by the Patient Rate applied only to requests for PHI made by the patient for use by the patient. For other types of requests, such as those made by commercial entities, like insurance companies and law firms, the records industry understood that the allowable fee was not restricted by the Patient Rate. That understanding changed, however, in 2016, when HHS issued a guidance document, which stated that the Patient Rate applies even to requests to deliver PHI to third parties. This change, according to Ciox, caused Ciox and other medical records companies to lose millions of dollars in revenue. Ciox challenges the 2016 expansion of the Patient Rate as violative of the procedural and substantive protections of the Administrative Procedure Act ("APA"). [*3] 

In addition to the scope of the Patient Rate, Ciox also contests two additional pronouncements made by HHS in the 2016 guidance document. The first addresses the types of labor costs that are recoverable under the Patient Rate. The second concerns three alternative methods identified for calculating the Patient Rate. Ciox argues that these actions violate the APA's procedural and substantive provisions. Ciox also challenges under the APA a regulation adopted in 2013, which requires records companies to send PHI to third parties regardless of the format in which the PHI is contained and in the format specified by the patient. According to Ciox, Congress required only that certain types of electronic health records be delivered to third parties, not all records regardless of their format, as HHS's regulations now command.

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2020 U.S. Dist. LEXIS 12801 *; 2020 WL 418454

CIOX HEALTH, LLC, Plaintiff, v. ALEX AZAR, et al., Defendants.

CORE TERMS

Patient, covered entity, directives, regulations, third-party, third party, business associate, Privacy, electronic, requests, agency's action, format, HITECH Act, entities, labor cost, contracts, copying, costs, calculating, records, retrieval, Reply, health information, charges, notice, provisions, Cross-Mot, rulemaking, causation, marks