IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

__________________________________________

                                          )

The Association of American  )

Physicians & Surgeons, Inc., et al., )

      )

      Plaintiffs,   )

      )

vs.       )   Civil Action No. H-01-2963 (SL)

      )

UNITED STATES DEPARTMENT OF  )

HEALTH AND HUMAN SERVICES, et al., )

                                          )

                   Defendants.   )

__________________________________________) 
IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

__________________________________________

)

The Association of American )

Physicians & Surgeons, Inc., et al., )

)

Plaintiffs, )

)

vs. ) Civil Action No. H-01-2963 (SL)

)

UNITED STATES DEPARTMENT OF )

HEALTH AND HUMAN SERVICES, et al., )

)

Defendants. )

__________________________________________)


MEMORANDUM OF POINTS AND AUTHORITIES

IN OPPOSITION TO DEFENDANTS MOTION TO DISMISS


STATEMENT


A. Nature and Stage of the Proceeding.

Initiated in the name of privacy, the voluminous Privacy Rule now includes provisions that deny patients access to their own medical records, allow broad government intrusions, and impose crippling burdens on small medical practices. On December 28, 2000, the Secretary of the Department of Health and Human Services (the Secretary or HHS) promulgated the Privacy Rule, but its attractive title served as a convenient Trojan Horse for last-minute insertions that directly injure patients and physicians. 65 Fed. Reg. 82462 (see Govt. Appendix). These objectionable clauses disregard patient confidentiality by infringing on rights guaranteed by the First, Fourth and Tenth Amendments. Complaint ¶¶ 31-43 (hereinafter, Comp. __). The Health Insurance Portability and Accountability Act of 1996 (HIPAA) required administrative simplification in this regulation, but the Privacy Rule imposes substantial and unwarranted costs on physicians with small medical practices. Id. ¶¶ 44-54.

Plaintiffs challenge this regulatory overreaching. Plaintiffs object to the broad governmental access to personal medical records, without adequate safeguards, and the 11th-hour extension by the Rule to cover paper records in addition to electronic ones. Id. ¶¶ 2-3, 5. The Rule operates to block access by patients to their own medical records for up to 90 days, interfering with state laws like Californias guarantee of access in 5 business days. Id. ¶ 38; Point I.A infra. The Rule obstructs patients access to their own records during medical research, likewise lacking in any privacy basis. Comp. ¶ 39.

Plaintiffs include a physicians organization, a physician-Congressman, and several patients, and have standing to initiate this review. Id. ¶¶ 11-15. Plaintiff AAPS, founded in 1943, is a collection of thousands of physicians already directly injured by the regulation. The Privacy Rule even relies on AAPSs submitted data concerning its members experiences with medical record privacy. 65 Fed. Reg. 82468. The patients have standing to object to the Rule, because what they tell their doctors now is fully subject to the disclosure and access regulation.

The Privacy Rule has been final for over a year, and has been ripe for review since HHS expressly made it effective on April 14, 2001. Id. at 82462 (The final rule is effective on February 26, 2001, later postponed to April 14, 2001). Covered entities will not be penalized until later, but that delay simply reflects the enormous burden of full compliance. The Privacy Rule already subjects patients medical records to unapproved disclosure and dissemination to third parties, and patients access to their own records can already be delayed and denied under the Rule. Defendants err in arguing that any potential access is, at a minimum, more than a year away, Govt. Mem. at 18-19; in fact, the Privacy Rule authorizes access immediately. 65 Fed. Reg. 82829 (allowing immediate compliance). Moreover, retroactive application of the Rule means that patient-physician communications documented now are governed by the Rule.

Defendants moved to dismiss the Complaint, primarily arguing lack of standing and ripeness. Plaintiffs oppose that motion here.

B. Statement of the Issues.
Defendants Motion to Dismiss raises the following issues:

(a) Do plaintiffs have standing to assert constitutional claims against the Privacy Rule, when the Supreme Court has recognized such standing on similar claims, as have numerous other precedents?

(b) Is a regulation that has been final for over a year and expressly effective since April 2001, and that applies to medical records created now, chills patient-physician communications now, and burdens medical practices now, ripe for judicial review?

(c) Have plaintiffs properly alleged a violation of constitutional rights based on mandatory and permissive governmental access to personal medical records without a warrant or showing of cause?

(d) Do individuals have standing to assert a claim under the Tenth Amendment?

(e) Does the Privacy Rules last-minute expansion to non-electronic records exceed HIPAA delegation to HHS?

(f) Did HHS consider meaningful alternatives for small medical practices?

In reviewing these issues, this Court should accept as true all allegations in the Complaint. For purposes of ruling on a motion to dismiss for want of standing, both the trial and reviewing courts must accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party. Warth v. Seldin, 422 U.S. 490, 501, 95 S. Ct. 2197, 2206 (1975). Plaintiffs need allege only facts that demonstrate a realistic danger of [the plaintiffs] sustaining a direct injury. Babbitt v. United Farm Workers Natl Union, 442 U.S. 289, 298, 99 S. Ct. 2301, 2308 (1979). Plaintiffs have the requisite standing to sue if they have suffered injury in fact, when there is a causal connection between the injury and the conduct complained of, and when it is likely . . . that the injury will be redressed by a favorable decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S. Ct. 2130, 2136 (1992) (quotations omitted). But even a small injury suffices. The injury need not be substantial. A trifle is enough for standing. Joseph v. United States Civil Serv. Commn, 554 F.2d 1140, 1145 (D.C. Cir. 1977).

C. Summary of the Argument.

The Supreme Court has already expressly rejected defendants core argument that these plaintiffs, a collection of physician and patients, lack standing. Govt. Mem. at 2-48 (referencing standing 37 times). In Whalen v. Roe, 429 U.S. 589, 97 S. Ct. 869 (1977), the Court granted standing to a similar collection of physicians and patients to challenge a statute governing medical records, which was less intrusive and burdensome than the Privacy Rule. 429 U.S. at 595, 97 S. Ct. at 874. There the issue concerned whether the State of New York may build a database of names and addresses of patients receiving specific drugs that are often illegally used. Id. at 591, 97 S. Ct. at 872. Here plaintiffs contest government access to all personal medical records without a showing of cause or a warrant. Standing existed in Whalen, and it exists here. Id. at 595 n.14, 97 S. Ct. at 874. Defendants rely heavily on Whalen, yet fail to mention that it precludes their motion to dismiss. Govt. Mem. at 19 n.14, 22 n.15, 25 n.19, 27, 28. See also AAPS v. FDA & HHS, Civ. No. 00-02898 (HHK) (D.D.C. Oct. 25, 2001) (attached as Exh. A) (rejecting similar standing argument by HHS against AAPS).

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