18‐1034‐cv
Ruzhinskaya v. HealthPort
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
____________________
August Term, 2018
(Argued: April 15, 2019 Decided: November 1, 2019)
Docket No. 18‐1034‐cv
____________________
TATYANA RUZHINSKAYA, as Administratix of the Estate of
MARINA ROCHNIAK, Deceased, on behalf of themselves and
all others similarly situated,
Plaintiff‐Appellant,
v.
HEALTHPORT TECHNOLOGIES, LLC,
Defendant‐Appellee,
BETH ISRAEL MEDICAL CENTER,
Defendant.1
____________________
Before: KEARSE, WINTER, and POOLER, Circuit Judges.
1 The Clerk of the Court is directed to amend the caption as above.
Appeal from the March 14, 2018 judgment entered in the United States
District Court for the Southern District of New York (Engelmayer, J.), granting
Defendant‐Appellee HealthPort Technologies, LLC’s motion for summary
judgment. Because this Court anticipates certifying certain questions to the New
York Court of Appeals after a final judgment is entered, and wishes to avoid
multiple, unnecessary proceedings, we VACATE the grant of summary
judgment and REMAND to the district court with instructions to reinstate Beth
Israel as a party and to adjudicate the case to a final judgment. We remand along
the lines of the procedures set out in United States v. Jacobson, 15 F.3d 19, 22 (2d
Cir. 1994), so that any new appeal will be referred to this panel.
VACATED and REMANDED.
____________________
MATHEW P. JASINSKI, Motley Rice LLC, Hartford,
CT, for Plaintiff‐Appellant Tatyana Ruzhinskaya.
JAY P. LEFKOWITZ (Nathaniel J. Kritzer, on the brief),
Kirkland & Ellis LLP, New York, N.Y. (Scott R. Emery,
Lynch Daskal Emery LLP, New York, N.Y.; Rebecca
Brazzano, Seth A. Litman, Thompson Hine LLP, New
York, N.Y., on the brief), for Defendant‐Appellee HealthPort
Technologies, LLC.
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POOLER, Circuit Judge:
This Court anticipates certifying to the New York Court of Appeals issues
of statutory interpretation as to New York Public Health Law § 18 and wishes to
avoid multiple, unnecessary proceedings. Accordingly, we vacate the grant of
summary judgment and remand the case to the district court with instructions to
reinstate Beth Israel as a party and to adjudicate the case to a final judgment. We
remand along the lines of the procedures set out in United States v. Jacobson, 15
F.3d 19, 22 (2d Cir. 1994), so that any new appeal will be referred to this panel.
BACKGROUND
This case involves claims of excessive charges for medical records under
New York Public Health Law (“PHL”) § 18, which governs access to and charges
for patient medical records. Plaintiff‐Appellant Tatyana Ruzhinskaya alleges that
she was overcharged for copies of her late mother’s medical records.
Ruzhinskaya initially brought claims both against Beth Israel Medical Center, the
hospital that housed the medical records, and the “release of information”
(“ROI”) company, HealthPort Technologies, LLC, with whom Beth Israel
contracted to photocopy and provide the records to requesters on its behalf.
Nevertheless, on January 26, 2015, the “parties . . . stipulate[d] to dismissal,
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without prejudice, of all claims against Defendant Beth Israel Medical Center.”
Dist. Ct. Dkt. No. 57, 1:14‐cv‐2921. Accordingly, the case proceeded with
HealthPort as the sole defendant.
HealthPort and Beth Israel share a written agreement regarding fees that
HealthPort charges requesters of medical records. HealthPort provides its
services at no cost to Beth Israel and “‘charge[s] [requesters] the per‐page fees as
set forth under state law’ where state law so provides, on the ground that such
fees are ‘presumed reasonable,’ and that HealthPort otherwise ‘will charge a
reasonable, cost‐based fee.’” Special App’x at 89‐90 (quoting an agreement
between HealthPort and Beth Israel).
It is undisputed that at all times relevant, HealthPort charged requesters 75
cents per page, regardless of the actual “cost incurred” in meeting such requests.
The crux of Ruzhinskaya’s argument, both before the district court and on
appeal, is that a blanket charge of 75 cents per page violates Section 18(2)(e).
Under that section, a health care “provider may impose a reasonable charge for
all inspections and copies, not exceeding the costs incurred by such provider . . . .
However, the reasonable charge for paper copies shall not exceed seventy‐five
cents per page.” PHL § 18(2)(e).
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On April 29, 2015, Ruzhinskaya moved for class certification with respect
to her second amended complaint, seeking to represent a statewide class defined
to include all patients or patient representatives who had made requests for
patient records from a healthcare provider for which HealthPort charged 75 cents
a page. After hearing argument, the district court denied the motion to certify on
November 9, 2015. The district court noted that it was undisputed that
HealthPort charged 75 cents per page on behalf of all the hospitals who retained
it to fill records requests, but the “costs incurred” in meeting records requests
differed hospital by hospital. Special App’x at 10. The district court reasoned that
the text of Section 18(2)(e) does not limit “costs incurred” to certain species of
costs such as direct costs; rather, cognizable costs include labor costs and
overhead. Special App’x at 10‐12. Nevertheless, the district court held that “a
more narrowly defined class, one drawn to include all requests for records made
to . . . Beth Israel,” would satisfy the requirements for certification. Special App’x
at 2. The district court invited Ruzhinskaya to move to certify such a class.
Ruzhinskaya accepted the court’s invitation, moving to certify a narrower
class of persons who, between March 12, 2011 and the present, had requested
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records from Beth Israel whose requests had been serviced by HealthPort and
who had been charged 75 cents per page. The district court granted that motion.
During a pretrial conference, the issue arose of “whether evidence of Beth
Israel’s costs incurred, to the extent these had not been passed along to
HealthPort, could be received at trial as a component of the costs incurred.”
Special App’x at 76. The district court directed the parties to brief the issue. The
court denied Ruzhinskaya’s motion in limine to exclude such evidence of Beth
Israel’s costs incurred, reasoning that HealthPort had no freestanding legal
duties under Section 18. Accordingly, were the case against HealthPort to reach
trial, the dispositive issue as to Ruzhinskaya’s claim under Section 18(2)(e) would
be whether the combined costs incurred by Beth Israel and its alleged agent,
HealthPort, met or exceeded 75 cents per page.
The district court then “commissioned a round of summary judgment
briefing” on two issues: (1) does Section 18 impose a duty on an ROI business;
“[i]n particular, does § 18 bar such a vendor from profiting from its work
assisting the provider to respond to such requests, or is the vendor limited to
recouping its ‘costs incurred’?”; and (2) “even if § 18 does not restrict a vendor’s
charges, does the evidence in this case regarding HealthPort’s collaboration with
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Beth Israel . . . give rise to a duty under § 18 that barred HealthPort from
charging more than its costs incurred?” Special App’x at 78, 82‐83.
Ultimately, the district court held that (1) “under § 18, an entity other than
a health care provider is not liable for charging for its services in connection with
records requests more than its costs incurred,” Special App’x at 86; and (2) “that
HealthPort did not take on a duty under § 18 to limit its charges to requesters to
its own ‘costs incurred.’” Special App’x at 90. Thus, the district court granted
HealthPort’s motion for summary judgment on Ruzhinskaya’s Section 18 claim
and her two derivative claims under New York General Business Law § 349 and
for unjust enrichment.
DISCUSSION
On appeal, Ruzhinskaya argues that the district erred a) in granting
summary judgment in favor of HealthPort on the ground that HealthPort did not
have a duty under Section 18; b) in its interpretation of “costs incurred” under
Section 18; and c) in denying, based on “its erroneous interpretation of § 18,”
Ruzhinskaya’s motion to certify a statewide class. Appellant’s Br. at 54.
Ruzhinskaya requests that this Court certify to the New York Court of Appeals
the question of whether “PHL § 18 appl[ies] to an entity to which a health care
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provider delegates responsibility and assigns the right to charge for responding
to requests for medical records.” Appellant’s Br. at 34.
During oral argument, this Court sua sponte raised the issue of whether
Beth Israel should be brought back into the case as a necessary party. Following
argument, we ordered “that each party shall show cause why this Court should
not remand this case to the district court with instructions to (a) bring Beth Israel
Medical Center back into the case as an indispensable party, and (b) to adjudicate
the case to a final adjudgment.” Order, Dkt. No. 84 (May 29, 2019). In the order,
we explained:
The Court is considering certifying the following two issues to the
New York Court of Appeals: (1) whether HealthPort can be sued
directly under New York Public Health Law § 18; and (2) which
calculation should be used to determine the cost of producing and
transmitting records. The district court, after dismissing Beth Israel
Medical Center as a party, held that HealthPort could not be sued
under Section 18. Thus, if the certification goes ahead without a
determination of whether Beth Israel is an indispensable party, the
Court will risk multiple, unnecessary proceedings, because the New
York Court of Appeals might hold that HealthPort, the only party,
cannot be sued under Section 18.
Id.
The parties submitted post‐argument letter briefs on June 21, 2019.
Ruzhinskaya argues against bringing Beth Israel back into the case and asserts
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that doing so would not answer whether Section 18 permits HealthPort to be
sued directly. Appellant’s Letter Br., Dkt. No. 86 at 5. HealthPort does not object
to remanding the case to add Beth Israel as a party before this Court certifies any
questions regarding Section 18, though it argues that Section 18 clearly resolves
the appeal in its favor. Appellee’s Letter Br., Dkt. No. 85 at 1‐2.
We determine that remanding the case to add Beth Israel as a party before
certification is the best course of action. Here, HealthPort charges and receives
the fees from requesters of medical records pursuant to its agreement with Beth
Israel. As the district court noted, “if use of this direct‐billing arrangement were
viewed as depriving Beth Israel of the right to term HealthPort’s charge a ‘cost
incurred’ by Beth Israel, Beth Israel, not HealthPort, would be accountable under
§ 18 for any charge in excess of Beth Israel’s costs incurred.” Special App’x at 89.
If we were to certify issues of statutory interpretation regarding Section 18
without Beth Israel’s presence as a party, we would risk multiple, unnecessary
proceedings.
Although Beth Israel is not technically a necessary party under Federal
Rule of Civil Procedure 19 in the sense that “complete relief [could not] be
accorded among those already parties, ” MasterCard Int’l Inc. v. Visa Int’l Serv.
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Ass’n, Inc., 471 F.3d 377, 385 (2d Cir. 2006), under Federal Rule of Civil Procedure
21, “[o]n motion or on its own, the court may at any time, on just terms, add or
drop a party.” Fed. R. Civ. P. 21. “Rule 21 expressly permits orders adding or
dropping parties ‘at any time.’ Parties may be added or dropped after trial, after
notice of appeal has been filed, or even on appeal.” 4 Moore’s Federal Practice §
21.02[3]; see also Newman‐Green, Inc. v. Alfonzo‐Larrain, 490 U.S. 826, 837‐38 (1989)
(holding that Rule 21 permits appellate courts to drop a dispensable non‐diverse
party). Pursuant to Federal Rule of Civil Procedure 21, we remand to the district
court to reinstate Beth Israel as a party and to adjudicate the case to a final
judgment.
After a final judgment is entered, we anticipate certifying questions to the
New York Court of Appeals if there is continued uncertainty as to the proper
interpretation of Section 18. While “certification is an exceptional procedure,” we
certify issues where “the statute’s plain language does not indicate the answer to
the question pending before the court and there is an absence of authoritative
state court interpretations of the state statute.” McGrath v. Toys “R” Us, Inc., 356
F.3d 246, 250 (2d Cir. 2004) (internal citation and quotation marks omitted). Here,
Section 18’s plain language does not answer whether ROIs should be subject to
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liability for overcharges or how “costs incurred” are to be calculated. PHL § 18.
Further, an absence of authoritative state court interpretations of Section 18,
coupled with case law regarding the “the New York Legislature’s intent in
enacting” Section 18 that supports holding ROIs subject to suit under Section 18
for overcharges, McCracken v. Verisma Sys., Inc., No. 6:14‐cv‐06248, 2017 WL
2080279, at *7 (W.D.N.Y. May 15, 2017); see also Matter of Casillo v St. John’s
Episcopal Hosp., 580 N.Y.S.2d 992, 995 (Sup Ct. Suffolk Cty. 1992), renders
certification all‐the‐more appropriate.
CONCLUSION
Based on the foregoing, we VACATE the judgment below and REMAND
to the district court to restore Beth Israel as a party pursuant to Federal Rule of
Civil Procedure 21 and to adjudicate the case to a final judgment. After judgment
is entered, any party wishing to appeal must file a new notice of appeal. While
we anticipate certifying questions to the New York Court of Appeals on Section
18 if there is continued uncertainty as to its proper interpretation, at this time we
decline to state the precise formulation of those questions. Accordingly, we
remand along the lines of the procedures set out in United States v. Jacobson, 15
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F.3d 19, 22 (2d Cir. 1994), so that any new appeal taken by the parties will be
referred to this panel.
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