Pennsylvania Litigation Blog : Pennsylvania Litigation Lawyer & Attorney : Barley Snyder Law Firm : Serving Lancaster, Reading, York, Chambersburg

If you work in the field of human resources or employee benefits, you are doubtlessly familiar with the COBRA premium subsidy provisions of the American Recovery and Reinvestment Act of 2009 (ARRA), which provides a 65% reduction in COBRA premiums for employees involuntarily terminated from their jobs, or who have had their working hours substantially reduced, during the period from September 1, 2008 through May 31, 2010.  Employers are required to notify “assistance eligible employees” of their ARRA rights and, if they submit the required paperwork, reduce their COBRA premium by 65%, the cost of which the employer can recover through a tax credit.  The law also sets up an expedited process for employees to challenge denials of the premium subsidy by filing an appeal with the United States Secretary of Labor, who must issue a decision within 15 business days after receiving the appeal.  The employee can challenge the Secretary of Labor’s decision in court, but the Secretary’s decision is entitled to deference from the court.

On April 27, 2010, in a case of first impression, the United States District Court for the District of Columbia held that employees cannot short-circuit the appeal process by suing in court for denial of the COBRA premium subsidy.  In Dorsey v. Jacobson Holman, PLLC, Ms. Dorsey’s employment ended on September 16, 2007, at which time she elected to continue her health insurance coverage through COBRA.  On April 10, 2009, Ms. Dorsey requested that  Jacobson Holman provide the premium subsidy, claiming that she had been terminated.  Jacobson Holman refused, arguing that Ms. Dorsey she had voluntarily resigned.  Ms. Dorsey  followed up informally with a Department of Labor benefits advisor, but never filed an official appeal with the Secretary of Labor challenging the denial of her request for the COBRA premium subsidy.  Instead, she filed an action against Jacobson Holman in federal district court alleging violation of the ARRA’s COBRA subsidy provisions.

The court, however, dismissed the case, holding that Ms. Dorsey failed to properly exhaust her administrative remedies by filing an appeal with the Secretary of Labor.  The court described the ARRA as emergency legislation designed to get benefits into the hands of assistance eligible individuals quickly and noted that the required 15-day deadline for processing appeals furthered that goal.  On the other hand, “[i]t blunts that purpose to require – or allow – individuals to turn in the first instance to the courts.”    

For employers, this is good news.  They need not face the specter of frequent, and expensive, court challenges to decisions regarding whether separated employees are – or are not – eligible for the ARRA’s COBRA subsidy.  Rather, challenges to those decisions will usually get resolved through the Secretary of Labor’s relatively quick and cheap appeals process.    

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HIPAA leads to four months in jail for a former UCLA medical researcher, Huping Zhou.  See the April 27, 2010 press release by the U.S. Attorney’s Office for the Central District of California.  http://www.justice.gov/usao/cac/pressroom/pr2010/079.html.    As the release states, this case made history because the defendant “is the first person in the nation to be convicted and incarcerated for misdemeanor HIPAA offenses for merely accessing confidential records without a valid reason or authorization.”

We have seen a number of federal prosecutions and convictions for HIPAA violations, but, until last week, nobody got jail time for merely peeking at others’ confidential person health information without a valid reason or the patients’ authorization.  Also, prior prosecutions typically focused on someone’s use of another’s confidential health information for personal gain.  For example, the day after Mr. Zhou’s sentencing was announced, another U.S. Attorney’s Office announced that a federal grand jury indicted a man for violating HIPAA by conspiring with a hospital employee working in a trauma unit and others to sell patient records and confidential medical information to personal-injury attorneys who would use the information to solicit clients.   http://www.justice.gov/usao/nv/press/april2010/charette04282010.html.

Mr. Zhou’s situation is different.  Mr. Zhou, a licensed cardiothoracic surgeon in China, admitted that he accessed and read his direct supervisor’s and coworkers’ medical records without any legitimate reason or authorization.  He did that after he was told that he would lose his job for performance-based reasons unrelated to HIPAA.  Over the next several weeks and continuing beyond the termination of his employment, he kept peeking at records, including those for celebrities, and did some more than 300 times, according to court documents.

What is the lesson here?  Healthcare workers and others governed by HIPAA must control their curiosity.  HIPAA demands it and must be respected, at the risk of suffering serious ramifications.  Federal prosecutors have raised the stakes.  So did the HITECH Act of 2009, which was part of the American Recovery and Reinvestment Act of 2009 and amended HIPAA by increasing penalties, among other things.  Expect to see stepped-up enforcement efforts by federal prosecutors, state prosecutors, and the U.S. Department of Health and Human Services’s Office of Civil Rights.  Likewise, employers are increasing monitoring and enforcement in the workplace.  Make no mistake about it:  HIPAA does not demand entity accountability only.  HIPAA holds individuals accountable.

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