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Gina Passarella

The Legal Intelligencer

12-03-2007

The Superior Court of Pennsylvania affirmed on Wednesday a nearly $600,000 judgment for a class of attorneys and law firms who were overcharged by a company that copies medical records.

The court, in Liss & Marion v. Recordex Acquisition Corp., denied all seven of Recordex's issues on appeal. The three-judge panel ruled that the class was not overly broad, summary judgment in favor of the class was appropriate and prejudgment interest in the amount of nearly $115,000 was not speculative.

Recordex argued that the Medical Records Act, which sets specific caps on charges for copies of medical records, does not state that the electronic documents at issue should be copied at a lower rate than other nonpaper documents outlined in the act.

The act sets rates for copies of paper documents and for documents in microfilm format, according to the opinion written by Senior Judge Stephen J. McEwen Jr.

The Superior Court adopted Philadelphia Common Pleas Judge Mark I. Bernstein's argument in granting summary judgment to the class that electronic documents are not more expensive to copy than paper documents and should not be charged at the higher, microfilm rate.

Aside from the fact that no testimony was offered to suggest otherwise, Bernstein said it is "counterintuitive" to suggest there are any increased costs for electronic documents, according to McEwen's opinion.

"The costs of producing a paper copy of medical records from electronically stored medical records is cheaper than the cost of producing a copy from even paper medical records because there is no need to disassemble records, feed records into a copier and reassemble both the original and the copy," McEwen said, citing Bernstein.

The total award for the class was $594,301, which included an award of $479,473 and prejudgment interest of $114,828.

Thomas More Marrone of Feldman Shepherd Wohlgelernter Tanner & Weinstock represented the class along with Alan Feldman. He said he couldn't say the exact number of class members that may have been affected by the overcharges.

He said the majority of the members are in the Philadelphia area and others have come forward since the suit began.

Marrone said the firm calculated that 700,000 documents that were not microfilm were charged at microfilm rates between 2001 and 2003.

"It shouldn't be this hard for people to get what they pay for and be charged correctly for what they're getting," Marrone said.

Changes in the law to conform to changes in technology are unnecessary, he said, because there isn't an increase in cost, but a decrease.

"[Recordex] never made the argument that it cost them more because they couldn't," he said.

Recordex's attorney, Don Foster of Klehr Harrison Harvey Branzburg & Ellers, was unavailable for comment by the time of publication.

McEwen rejected Recordex's claim that the class was improperly certified. The company argued that the description of the class was overbroad because, as worded, it allows for more than just attorneys and law firms to be included.

The description includes "individuals who requested their own medical records, insurance companies ... and medical copy services requesting records on behalf of a third party, often law firms representing clients," according to the opinion.

McEwen called the argument a diversion and said that although the class isn't limited to lawyers and firms, it is limited to those who subpoenaed the records for use in legal proceedings and were overbilled for the copies.

"Those entities that negotiated their own rates for copying charges, and therefore provided prior approval of those rates, would not fall within the class, since they would not have been overbilled," McEwen said. "Moreover, an individual who simply wants a copy of his or her own medical records for personal use would not fall within the rubric of the Medical Records Act."

In challenging the summary judgment in favor of the class, Recordex argued that the Medical Records Act does not provide a private cause of action for breach of contract when the act is an implied term of the contract, according to the opinion. It also argued that there was no contract between itself and the class members but itself and the hospitals that had the records.

Even if the invoices constituted contracts, Recordex argued, there was no agreement to charge the paper rate for electronic documents and the payment for the copies of those documents made by the class members constituted "prior approval" of the charges.

McEwen said Recordex had admitted during the summary judgment phase that the invoices sent to the class plaintiffs were contracts. He then used Bernstein's explanation of the cheaper cost of copying electronic documents to dismiss Recordex's argument that the contracts didn't need to specify the firms would be charged the paper rates.

McEwen said the law firms could not have provided prior approval of increased charges by paying the fees because the invoices did not specify whether copies were from paper or electronic records. Because the invoices weren't clear, Recordex's argument that a voluntary payment defense would apply failed, McEwen said.

The company argued that since Liss & Marion shareholder Ricky Liss testified he was aware of the Medical Records Act when he paid the bills without complaint, he could not recover the money.

President Judge Kate Ford Elliott and Judge Susan Peikes Gantman joined McEwen on the panel. Recordex's parent corporation, Sourcecorp Inc., was also named as an appellant. The two companies were treated as a sole appellant in the proceedings, according to the opinion.