FISCHEL GOLDBERG VS. HEALTHPORT TECHNOLOGIES, LLC (L-1421-14, ESSEX COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: September 5, 2018
• Docket: A-2657-16T3
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-2657-16T3

FISCHEL GOLDBERG and JERRY VELASQUEZ, individually and on behalf of all others similarly situated,

Plaintiffs-Respondents,

v.

HEALTHPORT TECHNOLOGIES, LLC, KIMBALL MEDICAL CENTER, INC., COMMUNITY MEDICAL CENTER, INC., BARNABAS HEALTH, INC., OCEAN MEDICAL CENTER, JERSEY SHORE UNIVERSITY MEDICAL CENTER, and MERIDIAN HEALTH SYSTEM, INC.,

Defendants-Respondents. _____________________________

Submitted February 28, 2018 — Decided September 5, 2018

Before Judges Nugent and Geiger.

On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-1421- 14.

Clark Law Firm, PC, attorneys for appellant Diana Dos Santos (Gerald H. Clark, of counsel; Mark W. Morris, on the brief).

Chase Kurshan Herzfeld & Rubin, LLC, attorneys for respondents Fischel Goldberg and Jerry Velasquez (Michael R. Rudick, Peter J. Kurshan, and Maureen Doerner Fogel, on the joint brief).

Thompson Hine, LLP, attorneys for respondents HealthPort Technologies, LLC, Kimball Medical Center, Inc., Community Medical Center, Inc., Barnabas Health, Inc., Ocean Medical Center, Jersey Shore University Medical Center, and Meridian Health System, Inc. (Rebecca A. Brazzano and Seth A. Litman (Thompson Hine, LLP) of the Georgia bar, admitted pro hac vice, on the joint brief).

PER CURIAM

This is a class action. Appellant, Diana Dos Santos, appeals

from two Law Division orders, the first approving the class action

settlement, the second entering a judgment of dismissal. Appellant

contends our review is de novo. She submits that under de novo

review we must reverse the Law Division orders, because notice to

the class members was "constitutionally lacking." Respondents,

nominal plaintiffs Fischel Goldberg and Jerry Velasquez, contend

we should review the Law Division orders under an abuse-of-

discretion standard. They submit that under the deferential abuse-

of-discretion standard, we must affirm the Law Division orders,

the trial court having properly exercised its discretion to approve

the class action settlement and dismiss the case. We conclude the

scope of our review is limited to determining whether the trial

court abused its discretion. Finding the court did not, we affirm.

2 A-2657-16T3 According to the amended complaint, with the exception of

Healthport Technologies, LLC, defendants operate hospital

facilities throughout New Jersey. The complaint identifies

Healthport as a "medical record reproduction company" and an agent

of defendants that provides hospital records to requestors.

The fees for records a hospital may charge a patient or the

patient's authorized representative are regulated:

If a patient or the patient's legally authorized representative requests, in writing, a copy of his or her medical record, a legible, written copy of the record shall be furnished at a fee based on actual costs. One copy of the medical record from an individual admission shall be provided to the patient or the patient's legally authorized representative within 30 days of the request, in accordance with the following:

1. The fee for copying records shall not exceed $1.00 per page or $100.00 per record for the first 100 pages. For records which contain more than 100 pages, a copying fee of no more than $0.25 per page may be charged for pages in excess of the first 100 pages, up to a maximum of $200.00 for the entire record;

2. In addition to per page costs, the following charges are permitted:

i. A search fee of no more than $10.00 per patient per request. (Although the patient may have had more than one admission, and thus more than one record is provided, only

3 A-2657-16T3 one search fee shall be permitted for that request. The search fee is permitted even though no medical record is found as a result of the search.); and

ii. A postage charge of actual costs for mailing. No charges shall be assessed other than those permitted in (d)1 and 2 above;

[N.J.A.C. 8:43G-15.3(d)(1) and (2).]

The amended complaint, which alleged defendants charged an

unauthorized, unlawful five-dollar fee for certifying copies of

hospital records, included four counts: violation of the New

Jersey Administrative Code, violation of the New Jersey Consumer

Fraud Act, N.J.S.A. 56:8-1 to -20, fraudulent and negligent

misrepresentation, and unjust enrichment. The proposed class was:

All "patients" who, during the time period of March 4, 2008 through the present, requested copies of medical records in the State of New Jersey, either personally or through their "legally authorized representatives" (as such terms are defined in N.J.A.C. 8:43G-15.3(d)), in writing, from defendants . . . and who have suffered economic damages as a result of the payment of service fees that were imposed by [d]efendants in excess of those expressly authorized under N.J.A.C. 8:43G-15.3(d).

Following procedural events unrelated to the issues on

appeal, the completion of discovery, and mediation, the parties

agreed to settle the suit. Defendants agreed to pay four dollars

4 A-2657-16T3 to any class member who submitted a claim form. Defendants also

agreed to make a minimum payment of $100,000. Any balance after

reimbursed claims was to be paid to charity.

The trial court preliminarily approved the settlement as well

as the parties' plan for providing notice to potential class

members. Because all requests for medical records were made by

attorneys, the parties agreed to have notice sent directly to the

attorneys, as the class list prepared from HealthPort's business

records only contained the identity of the person who made the

request, the patient for whom the request was made, and the

requestor's address. HealthPort did not receive contact

information for the patients, and HealthPort did not maintain

copies of the medical records it processed because of

considerations concerning the Health Insurance Portability and

Accountability Act of 1996, 42 U.S.C. § 1320, (HIPPA) and other

privacy laws.

The class action notice required the attorneys to either

affirm they were the proper claimant because they paid the

certification fee and were not reimbursed, or indicate the fee

should be paid to their client because their client reimbursed

them the fee. If the client was in fact the proper claimant, then

the attorney could register the client, provide the client's

address to the Administrator and direct payment be sent to the

5 A-2657-16T3 client, or provide the client's address to the Administrator and

request the notice be sent directly to the client.

The deadline to mail the notice was August 22, 2016, and

class members had until October 21, 2016, to opt out of the class

or object to the settlement. Class members then had until January

2, 2017, to submit their proofs of claim, either electronically

or by mail.

Appellant's attorneys received the initial notice in

September, before any registration or notification deadline.

Although the deadline to object was October 21, 2016, due to some

other deadlines that were extended, appellant had the "impression"

the deadline to object was also extended and did not object until

November 13, 2016. Despite the late objection, during the motion

to approve the settlement on December 16, 2016, the trial court

heard and considered appellant's arguments against the settlement.

Appellant objected to the settlement based on the method of

notice. She argued defendants should have sent the notice directly

to the patients, not their attorneys. She claimed most class

members never received notice, a fact evidenced by only 4.4% of

affected patients submitting claims. She argued the method of

notice placed the onus on the class members' prior counsel to

alert class members of the pending settlement, causing many members

to never receive notice. Thus, the method of notice was

6 A-2657-16T3 insufficient as it "aimed at minimizing defendants' exposure [and]

maximizing class counsels fees" and was not "aimed at compensating

those harmed by defendants['] unlawful practices."

Respondents argued that sending notice to the attorneys who

were invoiced was more streamlined and reasonable, as all of

defendants' records showed the person who paid the fee was the

attorney requestor, not the patient. Defendants had no way of

knowing if the patient-clients reimbursed the attorneys for the

fee.

The court decided on January 6, 2017, to approve the final

settlement for the class action, noting "[t]o satisfy the standards

of due process [in providing notice], mandatory individual notice

is not required." The court acknowledged notice mailed directly

to the patients "would have been the best notice available," but

found it "was unreasonable in this matter." HealthPort did not

have individual addresses for each patient, but only contact

information for the law firms.

The court found it reasonable to instead provide notice to

the individual who had requested the documentation, which, in this

case, consisted primarily of the patients' attorneys. Thus, the

court found providing notice to the attorneys was the "only

reasonable way . . . that Health[P]ort could have provided the

notices." The court also found the settlement was in the best

7 A-2657-16T3 interest of the class members, as it reimbursed eighty percent of

the five dollar fee.

Appellant appeals from the resulting dismissal of the

underlying class action, issued on January 26, 2017. On appeal

she makes three arguments regarding notice:

I. The Trial Court's Determination That Notice Was Adequate Was Incorrect and Should Be Reversed

II. Direct Notice Should Have Been Utilized to Provide Class Members Notice and Fairly Apprise Them of Their Rights and Remedies

III. The Class Was Not Provided with the Best Notice Practicable

We must first determine the appropriate standard of review.

Rule 4:32 provides the framework for class actions, and is modeled

after Federal Rule of Civil Procedure 23(a) and (b). See Saldana

v. City of Camden, 252 N.J. Super. 188, 194 n.1 (App. Div. 1991).

Because there is no binding precedent within our court to determine

the standard of review in assessing the approval of a class action

settlement, and because Rule 4:32 is modeled after its federal

counterpart, we look to federal precedent.

The Third Circuit has determined that when reviewing "the

decision of the . . . [c]ourt to certify [a] class and approve [a]

settlement," it does so "under an abuse of discretion standard."

In re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 527 (3d Cir.

8 A-2657-16T3 2004) (citations omitted). The abuse of discretion standard is

applied because "[t]he [trial] court has considerable discretion

in determining whether a settlement is fair and reasonable." Bryan

v. Pittsburgh Plate Glass Co. (PPG Indus., Inc.), 494 F.2d 799,

801 (3d Cir. 1974).

Applying that standard, we conclude the trial court did not

abuse its discretion in determining the class notice was the best

notice practicable under the circumstances. Rule 4:32-2(b)(2)

requires "the best notice practicable under the circumstances,

consistent with the due process of law." Due process imposes

certain minimum notice requirements, but does not require

individual notice to each party member. Sulcov v. 2100 Linwood

Owners, Inc., 303 N.J. Super. 13, 36 (App. Div. 1997) (citation

omitted). Instead, "[t]he court shall direct notice in a

reasonable manner to all class members who would be bound by a

proposed settlement." R. 4:32-2(e)(1)(B).

In the underlying action, the known medical record requestors

were the attorneys who requested the records on behalf of their

clients. Although the attorneys may have been reimbursed the

disputed certification fees by their clients, the only contact

defendants had concerning the requested records was with the

attorneys and law firms requesting them. Therefore, it was

reasonable for notice to be sent to the attorneys.

9 A-2657-16T3 Appellant contends by having notice sent to the attorneys,

the court burdened attorneys to contact their clients, explain the

settlement and the options, and ultimately file for a claim in the

settlement. However, the notice sent to the attorneys only

requested they either affirm the attorney is the proper claimant,

or, if not, provide the address of the proper claimant so that

notice might be sent there. Attorneys could also register for

their clients and have payment directed to them.

We do not find the trial court abused its discretion in

finding appellant's proposed notice was less practicable than that

used. Appellant argues notice should be sent either directly to

the underlying patients, or to both the underlying patients and

their attorneys. However, the former method overlooks that the

attorneys requested the documents and payed the certification fee,

and the latter method raises the issue of duplicative claims. In

addition, due to privacy considerations, it was unclear who was

permitted to provide patient names. For these reasons, we conclude

the trial court did not abuse its discretion in determining that

sending the notice to the requesting attorney was the most

effective and efficient manner to ensure notice reached the proper

claimant.

Affirmed.

10 A-2657-16T3