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Robert A. Brown et al v. Stewart Mortensen

June 16, 2011


Ct.App. 2/1 B199793 Super. Ct. No. BC289546 Court: Superior County: Los Angeles Judge: Anthony J. Mohr

The opinion of the court was delivered by: Werdegar, J.

Los Angeles County

In this case we address the remedies available to a patient when a debt collector, acting on behalf of a medical professional, is asserted to have illegally disclosed confidential patient medical information to various consumer reporting agencies in the course of a dispute over an alleged medical debt.

Individuals, as patients, have a substantial interest in the privacy of their medical information. (Hill v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1, 41.) As consumers, they have substantial interests as well in the privacy and accuracy of their credit information. Recognizing the importance of these interests, Congress has intervened on both fronts, enacting the Health Insurance Portability and Accountability Act (HIPAA) (42 U.S.C. § 1320d et seq., inter alia) and the Fair Credit Reporting Act (FCRA) (15 U.S.C. § 1681 et seq.) to protect against the mishandling of medical information and credit information, respectively. Our Legislature has been no less diligent, enacting the Confidentiality of Medical Information Act (Confidentiality Act) (Civ. Code, § 56 et seq.) and the Consumer Credit Reporting Agencies Act (id., § 1785.1 et seq.), inter alia, to address the same concerns.

Because of the dual state and federal responses to the protection of an individual's privacy and accuracy interests, when the interests overlap, as in this case, the question of what remedies are available is a federalism problem. As will appear, we conclude that Congress did not intend the state remedies to be preempted. Accordingly, we reverse the Court of Appeal, which held to the contrary.

Factual and Procedural Background*fn1

Plaintiff Robert A. Brown and his two minor children were dental patients of defendant Dr. Rolf Reinholds.*fn2 In July 2000, Dr. Reinholds billed Brown $600 for a permanent dental crown. Brown never received a crown and never entered into an agreement to pay for one. He thus declined to pay the bill.

Dr. Reinholds referred the debt to a collection agency, Credit Bureau Services, the fictitious business name for defendant Stewart Mortensen. Mortensen or his agents contacted Brown and attempted to collect the debt. When Brown requested that Mortensen provide proof of the debt, Mortensen sent Brown a copy of Brown's dental chart, as well as the charts of Brown's minor children. In response, Brown informed Mortensen he did not owe any money to Dr. Reinholds and the dental charts contained his and his children's confidential medical information.

Over the next two years, Mortensen repeatedly disclosed the contents of Brown's and his children's dental charts to the three major national consumer reporting agencies, Experian, Equifax, and Trans Union. Additionally, Mortensen disclosed to the agencies the Browns' names, Social Security numbers, dates of birth, addresses, telephone numbers, and Brown's and his children's entire dental history with Dr. Reinholds, including alleged dental treatments. Mortensen made these disclosures for purposes of verifying to the consumer reporting agencies that a debt was owed, despite the facts that (1) no one contended Brown owed money for dentistry performed on his children, and (2) Brown had never authorized Dr. Reinholds or Mortensen to disclose this information to any third parties, including the three consumer reporting agencies.

From 2001 to 2003, Brown repeatedly but unsuccessfully demanded that Mortensen cease making unauthorized disclosures. Brown also contacted the three consumer reporting agencies and informed them the disclosures made by Mortensen were inaccurate and incomplete. This assertion prompted the agencies to request that Mortensen provide additional information; in response, Mortensen disclosed Brown's dental history dating back 10 years, despite the fact this history included detailed information about Brown's dental treatments and was irrelevant to the present dispute over whether Brown owed anything for a permanent dental crown.

Brown contacted Dr. Reinholds in January 2003 and requested that he submit signed written instructions to the three consumer reporting agencies directing them to delete the disclosures of medical information. Dr. Reinholds declined and instead ratified Mortensen's disclosures; Dr. Reinholds also made further unauthorized disclosures to Equifax.

Brown and his wife, individually and as guardians ad litem for their minor children, then sued Dr. Reinholds and Mortensen, alleging violations of the Confidentiality Act (Civ. Code, § 56 et seq.), inter alia. Only the claims against Mortensen for violation of the Confidentiality Act are at issue; all other claims and parties have been voluntarily dismissed.

In the third and fourth causes of action of the operative complaint, the fourth amended complaint, Brown alleges Mortensen's disclosure of his and his children's medical information to consumer reporting agencies violated the Confidentiality Act. Subject to certain exceptions, that act prohibits the unauthorized dissemination of individually identifiable medical information and provides for compensatory damages and other remedies. (Civ. Code, §§ 56.10, 56.26, 56.35.) The trial court sustained a demurrer with leave to amend and then, when Brown elected not to amend, dismissed the action.

The Court of Appeal affirmed. While it rejected the trial court's conclusion that Brown's Confidentiality Act claims were impermissibly vague, it accepted Mortensen's alternative argument that the FCRA preempted them. The Court of Appeal opined that all state law claims arising from the furnishing of information to consumer reporting agencies are preempted by the FCRA. (See 15 U.S.C. § 1681t(b)(1)(F).)*fn3 Reasoning that Mortensen had acted as a furnisher of credit information when disclosing the Browns' medical information to various credit agencies, the court affirmed dismissal.

We granted review to consider the interplay between state and federal laws governing credit reporting and the confidentiality of medical information.


I. Preemption Principles

"The supremacy clause of the United States Constitution establishes a constitutional choice-of-law rule, makes federal law paramount, and vests Congress with the power to preempt state law." (Viva! Internat. Voice for Animals v. Adidas Promotional Retail Operations, Inc. (2007) 41 Cal.4th 929, 935, fn. omitted; see U.S. Const., art. VI, cl. 2; Cipollone v. Liggett Group, Inc. (1992) 505 U.S. 504, 516.) Congress may exercise that power by enacting an express preemption provision, or courts may infer preemption under one or more of three implied preemption doctrines: conflict, obstacle, or field preemption. (See In re Jose C. (2009) 45 Cal.4th 534, 550.) We consider here a single claim of express preemption: Mortensen asserts section 1681t(b)(1)(F), a provision of the FCRA, expressly preempts Brown's causes of action alleging violation of the Confidentiality Act (Civ. Code, § 56 et seq.).

The United States Supreme Court has identified "two cornerstones" of federal preemption analysis. (Wyeth v. Levine (2009) 555 U.S. 555, ___ [129 S.Ct. 1187, 1194].) First, the question of preemption " 'fundamentally is a question of congressional intent.' " (In re Tobacco Cases II (2007) 41 Cal.4th 1257, 1265, quoting English v. General Electric Co. (1990) 496 U.S. 72, 79; see also Wyeth, 555 U.S. at p. ___ [129 S.Ct. at p. 1194] [" '[T]he purpose of Congress is the ultimate touchstone in every pre-emption case.' "].) If a statute "contains an express pre-emption clause, our 'task of statutory construction must in the first instance focus on the plain wording of the clause, which necessarily contains the best evidence of Congress' pre-emptive intent.' " (Sprietsma v. Mercury Marine (2002) 537 U.S. 51, 62-63; see also Viva! Internat. Voice for Animals v. Adidas Promotional Retail Operations, Inc., supra, 41 Cal.4th at p. 939.) " 'Also relevant, however, is the "structure and purpose of the statute as a whole," [citation] as revealed not only in the text, but through the reviewing court's reasoned understanding of the way in which Congress intended the statute and its surrounding regulatory scheme to affect business, consumers, and the law.' " (Olszewski v. Scripps Health (2003) 30 Cal.4th 798, 816, quoting Medtronic, Inc. v. Lohr (1996) 518 U.S. 470, 486.)

"Second, '[i]n all pre-emption cases, and particularly in those in which Congress has "legislated . . . in a field which the States have traditionally occupied," . . . we "start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress." ' " (Wyeth v. Levine, supra, 555 U.S. at p. ___ [129 S.Ct. at pp. 1194-1195]; see also Viva! Internat. Voice for Animals v. Adidas Promotional Retail Operations, Inc., supra, 41 Cal.4th at p. 938.) The role of the presumption against preemption is to " 'provide[] assurance that "the federal-state balance" [citation] will not be disturbed unintentionally by Congress or unnecessarily by the courts.' " (Olszewski v. Scripps Health, supra, 30 Cal.4th at p. 815, quoting Jones v. Rath Packing Co. (1977) 430 U.S. 519, 525.)

The presumption against preemption applies fully in cases considering whether Congress intended by passage of the FCRA and subsequent amendments to displace state law. (See, e.g., American Bankers Ass'n. v. Gould (9th Cir. 2005) 412 F.3d 1081, 1086.) State statutory and common law protection of interests in informational privacy long predates federal regulation. (See Gormley, One Hundred Years of Privacy (1992) 1992 Wis. L.Rev. 1335, 1353-1357; Prosser, Privacy (1960) 49 Cal. L.Rev. 383, 386-388, 392-398; Warren & Brandeis, The Right to Privacy (1890) 4 Harv. L.Rev. 193.) It thus comprises a field traditionally occupied by the states and, accordingly, the presumption "applies with particular force here." (Farm Raised Salmon Cases (2008) 42 Cal.4th 1077, 1088.)

With these principles in mind, we turn to a consideration of ...

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