Cybersecurity Policy Report, E.D. Pa.: Patient records privacy suit remanded to state court because federal officer removal was inapplicable, (Oct 10, 2023)

By Justin Marcus Smith, J.D.

It could not be said that healthcare providers who participate in the Meaningful Use Program of the HITECH Act “assist” or “help carry out” any federal duty or task.

A healthcare provider that initially succeeded in having state law data privacy claims against it removed to federal court found the matter remanded to state court because the federal officer removal statute did not apply, held a federal district court in Philadelphia, Pennsylvania. The healthcare provider was merely a participant in the HITECH Act Meaningful Use Program (MUP), a voluntary program meant to promote the adoption of electronic healthcare records. The healthcare provider was not carrying out a federal task or duty which the government would ordinarily have to perform itself, and the provider was not creating electronic healthcare records, under federal direction, any more than, say, a recipient of electric vehicle tax credits. Only one non-precedential case supported the healthcare provider’s position, but the court found it unpersuasive because it drew an “improper analogy” between binding government contracts and participation in voluntary incentive programs (Doe v. Redeemer Health, September 28, 2023, Beetlestone, W.).

Background. A patient proceeding pseudonymously alleged that healthcare providers Redeemer Health and Redeemer Health Systems (collectively, Redeemer) engaged in multiple violations of state medical privacy law in connection with online tracking pixels included in the Redeemer website and patient health portal source code. Although Redeemer made assurances about patient privacy, the tracking pixels, including the Meta Pixel, allegedly transmitted private medical information to third parties, including Facebook and Google, surreptitiously.

Redeemer succeeded in removing the matter from state court by invoking the federal officer removal statute, 28 U.S.C. § 1442, in light of the Health Information Technology for Economic and Clinical Health Act of 2008 (HITECH Act), 42 U.S.C. §§ 300jj-31. The HITECH Act offered federal funds to healthcare providers adopting the “meaningful use” of electronic health records (Meaningful Use Program or MUP). Redeemer said it was a MUP participant since 2013 and used the patient portal to meet MUP requirements. Now, the patient moved to remand the matter back to state court.

Discussion. The court said that although there was no doubt that Redeemer was a statutory MUP “person,” it was not “acting under” federal officers, including at the time it designed or operated its website and patient portal. The court described how federal officer removal turns on whether a private party acts in lieu of a federal actor to fulfill government duties or tasks the government would otherwise have to perform itself. The court noted that the Supreme Court has cautioned that merely complying with federal law does not, alone, fall within the scope of the statutory phrase “acting under” a “federal official.”

In this case, Redeemer’s actions were even further from the ambit of the federal removal statute than the nursing home operators in Maglioli v. Alliance HC Holdings LLC, 16 F.4th 393, 404 (3d Cir. 2021). Although Redeemer argued that it created its websites and patient portal to “assist the federal government” with the promotion of electronic health records, the court noted Redeemer really had no other relationship with any federal agency. MUP incentive payments were the result of providers’ voluntary compliance with Department of Health and Human Services benchmarks and no more established that recipients were “acting under” federal officers than any recipient of electric vehicle tax credits.

Redeemer insisted that MUP recipients are like government contractors performing services under federal specifications to obtain payment from the government. The court found “several problems” with this. First, being a government contractor did not automatically entitle a private entity to federal officer removal. Again, neither the HITECH Act nor any other federal law Redeemer cited authorized Redeemer to carry out any “basic government task” the government otherwise would have done itself. More importantly, MUP participation was voluntary, a fact “markedly different” from any of the federal officer removal court opinions the court considered, except for one, Doe I v. UPMC, 2020 WL 4381675 (W.D. Pa. Jul. 31, 2020). The court found Doe both non-precedential and unpersuasive for the same “improper analogy” Redeemer attempted to draw between binding government contracts and voluntary incentive programs.

Redeemer’s final argument was that discretionary actions can be part of an effort to carry out federal duties and tasks. The court agreed that might be true in specific circumstances, for example, manufacturing aircraft incorporating asbestos materials when the government did not specifically require the use of asbestos. That distinction highlighted the need for discretionary acts to be undertaken under the direction of federal officer or agency.

The case is No. 2:23-cv-02405-WB.

Attorneys: George Bochetto (Bochetto & Lentz PC) and Foster C. Johnson (Ahmad, Zavitsanos & Mensing, PLLC) for Jane Doe. Jeffrey D. Grossman (Stradley, Ronon, Stevens & Young, LLP) for Redeemer Health and Holy Redeemer Health System.

Companies: Redeemer Health; Holy Redeemer Health System

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