Branch v. WakeMed (In re Branch)

569 B.R. 657
CourtUnited States Bankruptcy Court, E.D. North Carolina
DecidedMarch 20, 2017
DocketCase No.: 14-02379-5-SWH; Adversary Proceeding No.: 16-00142-5-SWH
StatusPublished

This text of 569 B.R. 657 (Branch v. WakeMed (In re Branch)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Branch v. WakeMed (In re Branch), 569 B.R. 657 (N.C. 2017).

Opinion

ORDER REGARDING MOTION TO DISMISS ADVERSARY PROCEEDING

Stephani W. Humiickhouse, United States Bankruptcy Judge

The matter before the court is the motion to dismiss this adversary proceeding pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure, made applicable to this adversary proceeding by Federal Rule of Bankruptcy Procedure 7012, filed by defendant WakeMed f/k/a Wake County Hospital System, Inc. (“WakeMed”), AP Dkt. 9.1 A hearing took place in Raleigh, North Carolina on January 25,2017.

BACKGROUND

Wayne Edward Branch filed a voluntary petition for relief under chapter 7 of the Bankruptcy Code on April 25, 2014. Wak-eMed filed a proof of claim in the case in the amount of $4,910.00 on August 10, 2015. Claim No. 3-1. The proof of claim included an attachment that listed Mr. Branch’s medical record number and patient numbers,2 as well as his dates of admission and discharge Id. On December 23, 2015, Mr. Branch through counsel filed an Ex-Parte Motion to Seal Proof of Claim No. 3, BR Dkt. 143. On December 29, 2015, an order granting the motion to seal was allowed, BR Dkt. 144.

Meanwhile, on December 4, 2015, a miscellaneous proceeding was commenced in which WakeMed filed an Ex Parte Global Motion to Establish a Procedure to Restrict Public Access to Certain Claims Pursuant to 11 U.S.C. § 107(c) and Federal Rule of Bankruptcy Procedure 9037.3 See Mise. Pro. No. 15-00004-5-SWH (the [661]*661“Miscellaneous Proceeding”), Dkt. 1.4 After a hearing on December 7, 2015, an Order Establishing Procedure to Restrict Public Access was entered on December 11, 2015. Mise. Pro. Dkt. 5, Thereafter, a series of motions to seal and orders allowing those motions were filed, effectively restricting from public view all claims filed by WakeMed on or after December 1,2007 (the effective date of Federal Rule of Bankruptcy Procedure 9037), and some earlier-filed claims. See generally Mise. Pro. Dkts. 6, 7, 8, 9, 12, 13, 14, 16, 20, 22, 24, 25, 27, 28.

On January 15, 2016, WakeMed filed a status report, Mise. Pro. Dkt. 19, indicating that it had moved to restrict access to 2,819 claims in closed cases, 788 claims filed before September 1, 2013 in open cases, and 602 claims filed after September 1, 2013 in open cases. According to the status report, on December 31, 2015, debtors whose protected health information may have been disclosed were sent notices required by the Healthcare Insurance Portability and Accountability Act (“HI-PAA”), offering one year of third-party credit monitoring at no charge. Mise. Pro. Dkt. 19 at 3.

On January 7, 2016, a motion for contempt and sanctions was filed on behalf of Mr. Branch. Branch Dkt. 146 (the “Sanctions Motion”). In the Sanctions Motion, Mr. Branch contended that by filing a proof of claim containing personal information that should have been redacted, Wak-eMed violated Rule 9037 of the Federal Rules of Bankruptcy Procedure, HIPAA, and possibly other obligations to the debt- or. After hearing four days of testimony and argument on Mr. Branch’s motion and similar motions filed by two other debtors, Mr. Branch’s Sanctions Motion was denied in an order dated August 31, 2016, BR Dkt. 174 (the “Sanctions Order”). There, the court found that “the claim filed in Mr. Branch’s case did not disclose any information that clearly must be redacted under Rule 9037,” and thus “WakeMed has not knowingly violated any provision of the Bankruptcy Code and Rules with respect to Mr. Branch.” BR Dkt. 174 at 20. The court specifically declined to consider whether WakeMed violated HIPAA or other non-bankruptcy laws. Id. at 17 (“This court is not a HIPAA compliance tribunal, and will limit its inquiry to whether the Bankruptcy Code or Rules have been violated arid, if so, what remedy is available for those violations under the bankruptcy laws.”).

On September 15, 2016, Mr. Branch filed the complaint in this adversary proceeding, seeking

compensatory and punitive damages, and attorneys’ fees and expenses, arising from and in redress of Defendant’s grossly negligent conduct including, inter alia, its repeated failure to comply with applicable standards, policies, regulations, and laws governing the dissemination, disclosure, and publication of sensitive, private, and protected account-related and health information relating to its patients, including Plaintiff.

AP Dkt. 1 at If 1. Specifically, Mr. Branch contends that the attachment to the proof of claim included Mr. Branch’s patient account number, medical record number, and admission and discharge dates, and that the inclusion of this information on a publicly-available document violated Wak-eMed’s duty to protect certain health information under HIPAA and was grossly [662]*662negligent.5 Mr. Branch further contends that he is,- as a result, “exposed to an increased likelihood that his information will be manipulated, transferred, stolen, or otherwise utilized for an improper purpose.” AP Dkt. 1 at ¶43. He maintains that he has suffered “significant damages,” including the “costs, expenses and attorneys’ fees associated with protecting and safeguarding his private ... information and the prosecution of this action.” Id. at ¶ 46. The amount of attorneys’ fees sought includes those previously submitted to the court in conjunction with the Sanctions Motion, which were denied in part because the court found there was no violation of Rule 9037 as to Mr. Branch.

WakeMed seeks dismissal on two grounds: first, that Mr. Branch lacks standing to pursue the action because he has suffered no actual injury; and second, that Mr. Branch has failed to state a claim for negligence because WakeMed has breached no duty to Mr. Branch. AP Dkt. 9, 10. WakeMed also raised a concern with respect to the court’s jurisdiction under Stern v. Marshall, 564 U.S. 462, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011), see AP Dkt. 17; however, because the district court retains de novo appellate jurisdiction over any legal conclusions this court might reach in its ruling on a motion to dismiss, any Stem concerns are alleviated.

DISCUSSION

I. STANDING UNDER RULE 12(b)(1)

WakeMed first contends that this court lacks subject-matter jurisdiction over this adversary proceeding because Mr. Branch lacks standing to pursue the claim. Specifically, WakeMed contends that the injury that Mr. Branch asserts — that he “has been, and continues to be, exposed to an increased likelihood that his information will be manipulated, transferred, stolen, or otherwise utilized for an improper purpose” — is insufficient to establish an “injury in fact” as required to confer standing upon him.

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Cite This Page — Counsel Stack

Bluebook (online)
569 B.R. 657, Counsel Stack Legal Research, https://law.counselstack.com/opinion/branch-v-wakemed-in-re-branch-nceb-2017.