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Harwood v. Wheaton Franciscan Services, Inc.

Court of Appeals of Wisconsin, District I

August 20, 2019

Elizabeth Harwood, Plaintiff-Respondent,
Wheaton Franciscan Services, Inc., Wheaton Franciscan Medical Group, Inc. and Wheaton Franciscan Healthcare -St. Francis, Inc., Defendants-Appellants.

          APPEAL from an order of the circuit court for Milwaukee County, No. 2017CV12998 ELLEN R. BROSTROM, Judge. Affirmed.

          Before Brash, P.J., Kessler and Brennan, JJ.

          BRENNAN, J.

         ¶1 Wheaton Franciscan Services, Inc., (Wheaton Franciscan)[1] and two other defendants appeal an order certifying a class and appointing plaintiff Elizabeth Harwood as class representative. Harwood alleged that Wheaton Franciscan violated Wis.Stat. § 146.83(3f)(b)4.-5. (2017-18)[2] by charging Harwood and others at least $28 each in illegal added fees for copies of their health records.[3] Harwood moved to certify a class that included all persons in Wisconsin who were Wheaton Franciscan patients (or persons they authorized in writing to obtain their medical records) who were charged retrieval fees or certification fees for the six years preceding the filing of the complaint. The proposed class excluded certain persons and entities, including any persons who did not pay the fees.

         ¶2 The trial court decided the motion, applying the newly revised version of the class certification rule, Wis.Stat. § 803.08, which went into effect after this action was filed. The parties do not dispute the application of the current statute and they do not dispute that it was adopted with the express purpose of harmonizing Wisconsin's class action statute with the federal class action statute and federal case law. They dispute only whether the trial court erroneously exercised its discretion when it ruled that Harwood had satisfied the requirements for the class to be certified under the current version.

         ¶3 The trial court rejected Wheaton Franciscan's arguments as "represent[ing] defenses to the merits of the Plaintiff's case [that] do not preclude certifying the class," and quoted Messner v. Northshore University HealthSystem, 669 F.3d 802, 811 (7th Cir. 2012), which stated that "[a] court should not turn the class certification proceedings into a dress rehearsal for the trial on the merits." Its decision focused on the fact that Harwood had "provided a list of forty-four invoices, as well as the invoices themselves with the patient names redacted, representing separate clients … that have been allegedly charged improper fees for certified medical records in violation of Wis.Stat. § 146.83."

         ¶4 Noting that the revised class action statute that took effect July 1, 2018, [4] "imposes more stringent requirements than the prior version of Wis.Stat. § 803.08 and applicable case law," the trial court concluded that Harwood had satisfied the requirements-that the proposed class is large enough to make it impractical to proceed without a class action, that the members of the proposed class share a common interest, that Harwood's claim is typical of the claims of the class, and that Harwood, the named party, will provide adequate representation to the proposed class. The trial court further concluded that "questions of law and fact predominate over any questions affecting only individual members, and that a class action is superior to individual actions for fairly and efficiently adjudicating the controversy." It therefore certified the class.

         ¶5 The revised class certification rule directed Wisconsin courts to look to federal case law for guidance. Just like Wisconsin law, federal appellate courts "review class-certification decisions deferentially, in recognition of the fact that [Federal Rule of Civil Procedure] 23 gives the district courts broad discretion to determine whether certification of a class-action lawsuit is appropriate." Ervin v. OS Rest. Servs., Inc., 632 F.3d 971, 976 (7th Cir. 2011) (citation omitted). Federal appellate courts will "reverse the class-certification decision only when [they] find an abuse of discretion." Id. For the reasons set forth, we conclude that the trial court correctly considered the relevant facts, applied the legal standard set forth in the newly revised Wis.Stat. § 803.08 consistent with federal law on class certification, kept its analysis focused on the class certification question, and reached a reasonable decision. We affirm.


         ¶6 Because Wheaton Franciscan challenges the trial court's ruling as an erroneous exercise of discretion, we include a detailed background section to make clear what evidence and arguments the parties presented to the trial court prior to its decision to certify the class.

         ¶7 Harwood was injured in a car accident in August 2015 and filed a personal injury claim. She signed HIPAA releases[5] authorizing the release of medical information to her attorneys. Harwood's attorneys requested certified medical bills from Wheaton Franciscan - St. Francis and provided the HIPAA release signed by Harwood to evidence her written consent. Wheaton Franciscan Services responded to the request and charged $31.14 to be paid to Wheaton Franciscan Medical Group. Harwood's attorneys paid the charges to obtain the certified medical bills.

         ¶8 Harwood's attorneys also requested certified medical records from St. Francis Hospital, again providing the HIPAA release signed by Harwood. Wheaton Franciscan Services responded to the request on behalf of St. Francis Hospital and charged $61.31 to be paid to "St. Francis." Again, Harwood's attorney paid the fee to obtain her certified medical records. Harwood reimbursed her attorneys "for all charges incurred from [Wheaton Franciscan]."

         ¶9 Harwood alleged in the complaint that Wheaton Franciscan charged Harwood and others "a certification fee, processing fee, basic or retrieval fees" for both medical record requests made by Harwood's attorneys, who were persons authorized in writing by Harwood to access that information. In the class certification motion, Harwood provided copies of forty-four invoices from Wheaton Franciscan entities that showed the certification and retrieval charges for health care record requests that had been made by persons who authorized counsel in writing to request the records.

         ¶10 Harwood served on Wheaton Franciscan requests for admission.

         ¶11 In response to Request No. 3-"Admit that you charged a person authorized in writing by Elizabeth Harwood basic, processing, certification or retrieval fees"-two of the Wheaton Franciscan entities[6] provided the following response:

Object to the form and lack of foundation. Subject to the objections and assuming the reference is to [Harwood's counsel], admits that statutorily allowed certification and retrieval fees, as well as statutorily allowed copying fees, were charged. Denies that any charges for basic or processing fees were presented.

         ¶12 In response to Request No. 9-"Admit that since July 1, 2011, you charged at least 100 persons authorized in writing by the patient a certification, processing, basic or retrieval fee to obtain the patient's medical records"- the Wheaton Franciscan entities provided the following response:

Object to the form, lack of foundation, and being beyond the scope of the plaintiff's claim. Subject to the objections, this defendant cannot reasonably ascertain as to whether or not this request is true.

         ¶13 Harwood also issued a first set of interrogatories that included a question as to who handled the relevant invoicing, and the same Wheaton Franciscan entities (in a jointly filed response) answered that "Wheaton Franciscan Healthcare-St. Francis, Inc. personnel processed the request for medical records and Wheaton Franciscan Medical Group personnel processed the request for medical billing." Asked whether defendants "made any errors or mistakes in connection with" the relevant invoices, the entities answered, "[I]f an error includes an interpretation of the law retrospectively determined to be erroneous, it was made in good faith." Asked to identify the methodology Wheaton Franciscan used to determine when to charge basic fees, retrieval fees, processing fees, and certification fees, the Wheaton Franciscan entities first "den[ied] that these answering defendants charged a basic fee or processing fee[, ]" then added the following: "Based on information discovered to date … and based on state Department of Health Services and Wisconsin Health Information Management Association guidance."

         Harwood's class certification motion.

         ¶14 On February 23, 2018, Harwood filed her class certification motion.

         ¶15 On March 30, 2018, Wheaton Franciscan moved the trial court to stay proceedings pending a decision by this court in a separate case that also involved class certification issues. The trial court granted Wheaton Franciscan's motion to stay proceedings in part, permitting plaintiff to issue interrogatories. After the separate case resolved in a way that did not affect the questions presented in this case, the trial court lifted the stay and set a briefing schedule and a motion hearing.

         ¶16 In its brief opposing the class certification motion, Wheaton Franciscan objected to certification in part based on its contention that certification was premature because the proposed certification "raises several other issues that need to be explored in discovery[.]"

         ¶17 First, Wheaton Franciscan argued that it was unclear whether the holding in Moya v. Aurora Healthcare, Inc., 2017 WI 45, ¶2, 375 Wis.2d 38, 894 N.W.2d 405, "permits any attorney with a client with a valid HIPAA authorization to be a participant in the proposed class, including attorneys representing defendants in personal injury actions." Moya addressed the question of "whether an attorney whose client authorized him via a HIPAA release form to obtain her health care records may benefit from this fee exemption." Id. (emphasis added, footnote omitted). Our supreme court answered that such an attorney may do so: "[A]n attorney authorized by his or her client in writing via a HIPAA release form to obtain the client's health care records is a 'person authorized by the patient' under Wis.Stat. § 146.83(3f)(b)4.-5. and is therefore exempt from certification charges and retrieval fees under these subdivisions." Id.

         ¶18 Second, Wheaton Franciscan argued that it was as yet undetermined "whether the fees charged were based on good faith guidance."

         ¶19 Third, Wheaton Franciscan argued that it was undetermined whether Harwood was an adequate representative because, "[f]or example, she listed her residence as being in Milwaukee, but she in fact resides in Oak Creek, Wisconsin."

         ¶20 Fourth, Wheaton Franciscan argued that it was undetermined how many of the forty-four Wheaton Franciscan invoices were actually paid.

         ¶21 Wheaton Franciscan also argued that further discovery was necessary. It argued that this case was analogous to the facts in Szabo v. Bridgeport Machines, Inc., 249 F.3d 672 (7th Cir. 2001), in which the appellate court reversed the district court's sweeping class certification[7] and remanded for further proceedings, inviting the district court "to deny Szabo's request for class certification or certify a more limited class." Id. at 678. The flaw in the district court's analysis, Szabo held, was that it had accepted as true all of the complaint's allegations when deciding whether to certify the class. Id. at 675. Wheaton Franciscan quoted the following language from Szabo:

Certifying classes on the basis of incontestable allegations in the complaint moves the court's discretion to the plaintiff's attorneys-who may use it in ways injurious to other class members, as well as ways injurious to defendants. Both the absent class members and defendants are entitled to the protection of independent judicial review of the plaintiff's allegations.

Id. at 677 (emphasis added). In a sur-reply brief, Wheaton Franciscan further argued that Wis.Stat. § 803.08, the statute governing class actions, had been "substantively changed" by the revisions enacted by the Wisconsin Supreme Court Order to harmonize Wisconsin law with federal law and that this change "undermin[ed] the legal basis" for granting plaintiff's motion. Noting that the Judicial Council had stated that its "intent was to craft a Wisconsin class action rule that tracks as closely as possible federal practice so that Wisconsin courts and practitioners can look to the well-developed body of federal case law interpreting [Federal Rule of Civil Procedure] 23 for guidance," see Judicial Council Committee Notes, 2017, § 803.08, Wheaton Franciscan argued that federal case law required more discovery before a ruling on class certification in this case. Finally, it argued that in addition to the four requirements a plaintiff must satisfy, federal courts had recognized a fifth requirement of "ascertainability," and that federal case law had recently adopted a more rigorous ascertainability requirement, creating a heightened standard for plaintiffs to meet. It cited language from cases that imposed on plaintiffs additional burdens of proof about ascertainability-a 2014 Wisconsin district court case and a 2012 Third Circuit case, Marcus v. BMW of North America, LLC, 687 F.3d 583, 593 (3rd Cir. 2012).

         ¶22 At the motion hearing, Harwood argued that she had satisfied the requirements of Wis.Stat. § 803.08.

         ¶23 The statute requires the plaintiff to first establish three facts about the proposed class and the representative-referred to as numerosity, commonality, and typicality-and one fact about the plaintiff's ability to represent the class. A plaintiff must show that:

(a) The class is so numerous that joinder of all members is impracticable.
(b) There are questions of law or fact common to the class.
(c) The claims or defenses of the representative parties are typical of the claims or defenses of the class.
(d) The representative parties will fairly and adequately protect the ...

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