McCracken et al v. Verisma Systems, Inc. et al

Filing 100

DECISION AND ORDER denying 84 Motion for Partial Summary Judgment and Response in Opposition to the Motion to Certify Class.. Signed by Hon. Michael A. Telesca on 5/15/17. (JMC)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK

ANN McCRACKEN, JOAN FARRELL,
SARAH STILSON, KEVIN McCLOSKEY,
CHRISTOPHER TRAPATSOS, and
KIMBERLY BAILEY, as individuals
and as representatives of the
classes,

DECISION AND ORDER
No. 6:14-cv-06248(MAT)

Plaintiffs,
-vsVERISMA SYSTEMS, INC., STRONG
MEMORIAL HOSPITAL, HIGHLAND
HOSPITAL, and UNIVERSITY OF
ROCHESTER,
Defendants.

INTRODUCTION
This

is a

putative

class

action

by

Ann

McCracken,

Joan

Farrell, Sara Stilson, Kevin McCloskey, Christopher Trapatsos, and
Kimberly

Bailey

Systems,

Inc.

(collectively,
(“Verisma”),

“Plaintiffs”)

Highland

Hospital

against
(“HH”),

Verisma
Strong

Memorial Hospital (“SMH”), and the University of Rochester (“UR”)1
based on these entities’ systematic overcharging of patients who
requested copies of their medical records, in violation of New York
Public Health Law (“NYPHL”) § 18.2 Plaintiffs allege that Verisma
1

HH, SMH, and UR are collectively referred to as the “Rochester Healthcare
Defendants.” Verisma and the Rochester Healthcare Defendants are collectively
referred to as “Defendants.”
2

The statute provides in relevant part that “[t]he provider may impose a
reasonable charge for all inspections and copies, not exceeding the costs

and the Rochester Healthcare Defendants ignored the restriction in
the statute that limits the amount that may be charged to “a
reasonable charge . . . not exceeding the costs incurred,” and not
to

exceed

$0.75

per

page,

to

produce

the

records.

Instead,

Plaintiffs allege, Verisma and the Rochester Healthcare Defendants
imposed an across-the-board, uniform charge of $0.75 per page for
all copies of medical records, even those produced electronically,
in excess of their actual costs and in violation of NYPHL § 18.
Additional facts will be set forth infra as necessary to the
Court’s resolution of Verisma’s summary judgment motion.
THE PENDING MOTIONS
Before the Court are various motions. Plaintiffs have filed a
Motion to Seal Documents (Dkt #70-1 through 70-14), and a Motion to
Certify Class (Dkt #71), along with a supporting Memorandum of Law
(Dkt #72) and supporting Declarations (Dkt #73 through #82). In
response, Verisma filed a combined Motion for Partial Summary
Judgment and Response in Opposition to the Motion to Certify Class
(Dkt #84-1 through #84-15). The “Rochester Healthcare Defendants”)
filed a Response in Opposition to the Motion to Certify Class (Dkt
#85-1 through #85-3). Plaintiffs filed a Reply (Dkt #88) in further
support of their Motion to Certify Class. Plaintiffs also filed a
Statement of Facts in Opposition to Verisma’s Motion for Summary

incurred by such provider. . . . However, the reasonable charge for paper copies
shall not exceed seventy-five cents per page.” N.Y. PUBLIC HEALTH L. § 18(2)(e).

-2-

Judgment (Dkt #90, replaced by Dkt #94), a Memorandum of Law in
Opposition

(Dkt

#91,

replaced

by

Dkt #95),

and

a

supporting

Declaration (Dkt #92). The Rochester Healthcare Defendants filed a
Response in Opposition. Verisma filed a Reply (Dkt #97) in further
support of its Motion for Summary Judgment.
For the reasons discussed below, Verisma’s Motion for Summary
Judgment is denied. The Court will rule on Plaintiffs’ Motion for
Class Certification and Motion to Seal Documents in separate
Decisions and Orders.
DISCUSSION
I.

This Court is Not Required to Decline Jurisdiction
In 2005, Congress passed the Class Action Fairness Act, Pub.

L. No. 109-2, 119 Stat. 4 (“CAFA”). Verisma seeks summary judgment
on the basis that CAFA mandates that this Court decline to exercise
subject matter jurisdiction over this lawsuit.
A.

CAFA

CAFA gives federal courts subject matter jurisdiction over
“class actions” if the suit meets certain requirements, namely,
that the “‘matter in controversy exceeds the sum or value of
$5,000,000,’ the aggregate number of proposed class members is 100
or more, and any class member is a citizen of a state different
from any defendant.” Vodenichar v. Halcon Energy Properties, Inc.,
733 F.3d 497, 503 (3d Cir. 2013) (citing
(d)(2)(A),

(d)(5)(B)).

Thus,

CAFA
-3-

28 U.S.C. § 1332(d)(2),
affords

federal

courts

jurisdiction over class actions “even in the absence of complete
diversity between the parties, except where the ‘controversy is
uniquely’ connected to the state in which the action was originally
filed.” Id. (citation omitted). To further the goal of excluding
cases with a “unique[ ]” connection to the forum state, CAFA
contains two “mandatory exceptions[,]” id., to the exercise of
federal subject matter jurisdiction over class actions—the “local
controversy” exception, see 28 U.S.C. § 1332(d)(4)(A), and “home
state” exception, see id. § 1332(d)(4)(B). “These exceptions are
designed to draw a delicate balance between making a federal forum
available to genuinely national litigation and allowing the state
courts to retain cases when the controversy is strongly linked to
that state.” Hart v. FedEx Ground Package System Inc., 457 F.3d
675, 681–82 (7th Cir. 2006) (citing Pub.L. 109–2, § 2, Feb. 18,
2005, 119 Stat. 4). The party seeking to invoke one of these
exceptions “bears the burden of proving by a preponderance of the
evidence that the exception applies.” Vodenichar, 733 F.3d at 503
(citing Kaufman v. Allstate N.J. Ins. Co., 561 F.3d 144, 153–54 (3d
Cir. 2009) (collecting circuit authority)).
B.
CAFA

The Court Need Not Address the Timeliness of Verisma’s
Motion
“imposes no

time limit”

on

a

motion

under Section

1332(d). Hart, 457 F.3d at 682. Nevertheless, Plaintiffs argue that
Verisma has waived its right to assert entitlement to an exception
under CAFA because its motion was not filed within a “reasonable
-4-

time.” Gold v. New York Life Ins. Co., 730 F.3d 137, 141 (2d Cir.
2013). In Gold, the Second Circuit agreed with the district court,
as well as the Seventh and Eighth Circuits, that
exception

was

not

jurisdictional

because

the “home state

the

‘“decline

to

exercise”’ language ‘“inherently recognizes [that] the district
court has subject matter jurisdiction”’ but must actively decline
to exercise it if the exception’s requirements are met.”’” Id.
(quoting Gold v. New York Life Ins. Co., No. 09 Civ. 3210(WHP),
2012 WL 1674300, at *2 (S.D.N.Y. May 14, 2012) (quoting Graphic
Communications v. CVS Caremark Corp., 636 F.3d 971, 973 (8th Cir.
2011); citing Morrison v. YTB Int’l, Inc., 649 F.3d 533, 536 (7th
Cir. 2011)). The Second Circuit further agreed with the plaintiffs
“that if the exception is not jurisdictional, it must be raised
within a reasonable time,” id., and if the defendant fails to do
so, it “thereby waive[s] the exception.” Gold, 730 F.3d at 141. The
Second Circuit reviews a district court’s determination as to
whether a CAFA motion was brought within a reasonable time for
abuse of discretion. Id. at 142 (citation omitted).
Both Plaintiffs and Verisma urge that Gold supports their
respective positions. The Court has assumed arguendo that Verisma’s
motion asserting a CAFA defense was made within a reasonable time.
As discussed further below, the Court finds that Verisma has not
shouldered its burden of proving by a preponderance of the evidence
that any of the mandatory CAFA exceptions apply.

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C. The “Home State” Exception Does Not Apply
The home state exception provides that “[a] district court
shall decline to exercise jurisdiction . . . over a class action in
which . . . [1] two-thirds or more of the members of all proposed
plaintiff classes in the aggregate, and the [2] primary defendants,
are citizens of the State in which the action was originally
filed.” 28 U.S.C. § 1332(d)(4)(B). Plaintiff does not dispute that
the first element of the home state exception is met, but argues
that Verisma, which is a non-domiciliary of New York, is the
“primary defendant.” Therefore, the question for the Court to
resolve is whether the “primary defendants” in this case are all
New York citizens.
“Despite burgeoning CAFA jurisprudence, few courts have opined
on the home-state controversy requirement with respect to the
definition of ‘primary defendants’.” Anthony v. Small Tube Mfg.
Corp., 535 F. Supp.2d 506, 515 (E.D. Pa. 2007) (quoting 28 U.S.C.
§ 1332(d)(4)(B)). The Second Circuit has not weighed in on this
discussion. “However, as ‘evident from the statute’s use of the
phrase “the primary defendants” rather than “a primary defendant”,
“the plain language of the statute requires remand only when all of
the primary defendants are residents of the same state in which the
action was originally filed.”’” Id. (quoting Robinson v. Cheetah
Transportation, Civ.A.No. 06–0005, 2006 WL 3322580, at *3 (W.D. La.
Nov. 14, 2006) (emphases in original)).

-6-

Most courts have construed “primary defendants” by relying on
a

construction

of

an

analogous

provision

of

the

Multiparty,

Multiforum, Trial Jurisdiction Act of 2002, 28 U.S.C. § 1369[.]”
Anthony, 535 F. Supp.2d at 515 (citing Passa v. Derderian, 308 F.
Supp.2d 43, 61–64 (D. R.I. 2004)). The district court in Passa
indicated that there is a settled judicial understanding of the
term “primary defendants” borrowed from tort law. Passa, 308 F.
Supp.2d at 62 (“In tort actions, . . . ‘primary’ defendants are
most often defined as those parties that are allegedly directly
liable to the plaintiffs, while ‘secondary’ defendants are usually
those parties sued under theories of vicarious liability or joined
for purposes

of

contribution

or

indemnification.”)

(citations

omitted); see also, e.g., Kitson v. Bank of Edwardsville, Civ.A.No.
06–528, 2006 WL 3392752, at *13–17 (S.D. Ill. Nov. 22, 2006)
(settled legal definitions are properly considered as part of
congressional understanding). After reviewing applicable precedent,
the Passa court discerned a “settled judicial understanding of
‘primary defendants’ as those parties having a dominant relation to
the subject

matter

of

the

controversy,

in contrast

to other

defendants who played a secondary role by merely assisting in the
alleged wrongdoing, or who are only vicariously liable.” Passa, 308
F. Supp.2d at 61–64; accord, e.g., Anthony, 535 F. Supp.2d at 51516

(D .R.I. 2004). Significantly, these courts have “rejected a

definition of primary defendants as those with the deepest pockets

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or the greatest culpability. These definitions were determined to
be unworkable because they would require a degree of fact-finding
beyond which could be performed at the procedural juncture.”
Anthony v. Small Tube Mfg. Corp., 535 F. Supp. 2d 506, 516 (E.D.
Pa. 2007) (citing Passa, 308 F. Supp.2d at 61 (rejecting “outright”
the “contention” that “primary defendants” “should be defined as
those defendants with the “‘deepest pockets’” because “the measure
of a particular defendant’s ability to pay a judgment should have
no bearing on [a] [c]ourt’s evaluation of a Rule 12(b)(1) motion”);
Kearns v. Ford Motor Co., Civ.A.No. 05–5644, 2005 WL 3967998, at *8
(C.D. Cal. Nov. 21, 2005)); footnote omitted).
The Court agrees with the approach followed by the district
courts in Passa and Anthony, inter alia, and rejects Verisma’s
invitation to circumscribe the “home state” exception to require a
determination that there is only one “primary defendant,” and that
this singular “primary defendant” is the one with the “deepest
pockets.” By its terms, the home-state exception refers to primary
defendants in the plural, and Plaintiff’s Complaint alleges direct
liability against all of the named defendants, not just Verisma.
Based on the pleadings and unrebutted evidence in the record thus
far,

the

Court

finds

that

Verisma

is

one

of

three

“primary

defendants” in this action because all three named defendants face
direct liability. The unrebutted evidence also establishes that
Verisma is a non-domiciliary of New York, which creates diversity

-8-

between the putative class and the primary defendants. See, e.g.,
Anthony, 535 F. Supp.2d at 527-18 (“The home-state controversy
exception refers to multiple ‘primary defendants’. Plaintiff’s
complaint

alleges

direct

liability

against

all

four

named

defendants. Based on the pleadings and the unrebutted evidence
submitted by the parties, I find that there are four ‘primary
defendants’ in this action because all four named defendants face
direct liability. The unrebutted evidence also establishes that two
of the four primary defendants in this action are not citizens of
Pennsylvania. Therefore, there is diversity between the putative
class and the primary defendants.”).
The Court finds that Verisma has not met its burden with
regard to the second prong of the home state exception. Therefore,
it has not shown that the home state exception to CAFA precludes
this Court from assuming jurisdiction over Plaintiff’s case.
D.

The “Local Controversy” Exception Does Not Apply

The local-controversy exception, see 28 U.S.C. § 1332(d)(4),
is more intricate than the home-state exception[.]” In re Sprint
Nextel Corp., 593 F.3d 669, 672 (7th Cir. 2010). Section 1332(d)(4)
provides in relevant part that a district court “shall decline” to
exercise jurisdiction
(A)(i) over a class action in which—
(I) greater than two-thirds of the members of all
proposed plaintiff classes in the aggregate are
citizens of the State in which the action was
originally filed;
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(II) at least 1 defendant is a defendant—
(aa) from whom significant relief is sought by
members of the plaintiff class;
(bb) whose alleged conduct forms a significant
basis for the claims asserted by the proposed
plaintiff class; and
(cc) who is a citizen of the State in which
the action was originally filed; and
(III) principal injuries resulting from the alleged
conduct or any related conduct of each defendant
were incurred in the State in which the action was
originally filed; and
(ii) during the 3–year period preceding the filing of
that class action, no other class action has been filed
asserting the same or similar factual allegations against
any of the defendants on behalf of the same persons. . .
.
28 U.S.C. § 1332(d)(4)(A). “The local controversy exception seeks
to ‘identify a truly local controversy—a controversy that uniquely
affects a particular locality to the exclusion of all others[,]’”
Vodenichar, 733 F.3d at

508 n. 11 (quoting 151 Cong. Rec. H723–01,

2005 WL 387992 (daily ed. Feb. 17, 2005) (statement of Rep.
Sensenbrenner)), and ‘enables State courts to adjudicate truly
local disputes involving principal injuries concentrated within the
forum State.’” Id. (quoting 151 Cong. Rec. S999–02, 2005 WL 283380
(daily ed. Feb. 7, 2005) (statement of Sen. Specter)).
Plaintiffs dispute only one element of the local controversy
exception,

namely,

that

“no

other

class

action,”

28

U.S.C.

§ 1332(d)(4)(A)(ii), has been filed within three years of the
filing date of the instant action. Plaintiffs argue that there is
an “other class action” filed within the relevant time-frame: Lagas

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v. Verisma Systems, Inc., Cause No. 4:13-cv-01082-SWH, (W.D. Mo.
Nov. 4, 2013), filed on August 28, 2013, in the Circuit Court of
Jackson

County,

Missouri,

Independence

Division,

Case

No.

1316-CV21932, and removed to the Western District of Missouri on
November 4, 2013. The proposed class in Lagas consisted of “[a]ll
persons and businesses that paid a ‘Certification Fee’ to [Verisma]
in connection with the furnishing of medical records in the State
of Missouri from August 24, 2012[,] and April 30, 2014.” Lagas v.
Verisma Sys., Inc., 4:13-CV-01082-SWH, 2014 WL 12589322,

at *1

(W.D. Mo. July 17, 2014).
While the Second Circuit has not addressed the meaning of the
“no

other

class

action”

element

in

CAFA’s

local

controversy

exception, the Third Circuit’s Vodenichar decision is instructive.
By

including

the

local

controversy

exception

in

CAFA,

the

Vodenichar panel stated, “Congress wanted to ensure that defendants
did not face copycat, or near copycat, suits in multiple forums and
hence excluded from the local controversy exception cases where a
defendant was named in multiple similar cases.” Id. The Third
Circuit concluded that “[i]t follows that the ‘no other class
action’ factor must not be read too narrowly.” Id. (emphasis
supplied).

Thus,

when

examining

the

“no

other

class

action”

element, the “‘inquiry is whether similar factual allegations have
been made against the defendant in multiple class actions’—and
hence they are facing separate, distinct lawsuits—without regard to

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the procedural posture of the earlier filed cases or whether the
putative classes in the cases overlap, their claims arise from an
identical event, or involve the same causes of action or legal
theories.” Vodenichar, 733 F.3d at 508 (quoting S. Rep. No. 109–14,
at

41,

2005

U.S.

Code

Cong.

&

Admin.

News

at

39;

emphasis

supplied)).
Verisma relies on Rasberry v. Capitol County Mut. Fire. Ins.
Co., 609 F. Supp.2d 594 (E.D. Tex. 2009), which declined to apply
the local controversy exception, after finding that there was no
previously filed other class action:
[The earlier case] sought to recover money damages.
Rasberry seeks only declaratory and injunctive relief.
The principal objects of both suits are factually and
analytically distinct even though both suits arise from
a common event, Hurricane Rita, and share a common
defendant, Capitol County. Most importantly, the factual
basis giving rise to both actions differs dramatically.
The proof necessary to prevail in behalf of the class in
[the earlier case] differs in all crucial respects from
the proof necessary to prevail in behalf of the proposed
class in this action. These fundamental differences
between Williams and the instant action compel a
conclusion that during the 3–year period preceding the
filing of this class action, no other class action has
been filed asserting the same or similar factual
allegations against Capitol County on behalf of the same
or other persons.
Rasberry, 609 F. Supp.2d at 605-06 (emphasis supplied). Verisma
focuses on the italicized sentence in the above-quoted excerpt and
contends that the proof necessary for the plaintiffs in Lagas to
prevail is different that the proof required for Plaintiffs to
prevail here, which leads to the conclusion that it is not an

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“other class action.” Verisma focuses on differences between the
Missouri statute at issue in Lagas, and PHL § 18.

Here, the

statute at issue, PHL § 18 differs from MO. REV. STAT. § 191.227
insofar as it is violated when a “provider” charges more than the
“costs incurred” for the copying of a patient’s records. See N.Y.
PUB. HEALTH L. § 18. In Lagas, on the other hand, proof of a
violation of MO. REV. STAT. § 191.227 could be shown simply by
comparing the costs charged and the statutorily-fixed amount.
Stated another way, the proof of what was charged alone, and for
what type of expense, would establish whether the amount charged
varied from the amounts fixed by the Missouri statute; here, the
parties will have to present expert testimony to establish whether
the “costs incurred” for copying records were less than the amount
Verisma charged patients for copies of their records, thereby
violating PHL § 18.
Verisma’s argument relies entirely on a gloss placed on CAFA’s
statutory language in Rasberry, a case out of the Eastern District
of Texas, which is not controlling on this Court. Langsam v.
Vallarta Gardens, No. 08 CIV.2222(LAP), 2009 WL 2252612, at *2
(S.D.N.Y. July 28, 2009) Controlling decisions include decisions
from the United States Court of Appeals for the Second Circuit;
they do not include decisions from other circuits or district
courts. . . .”) (citing Ades v. Deloitte & Touche, 843 F. Supp.
888, 892 (S.D.N.Y. 1994). The interpretation of “other class

-13-

action” as requiring a comparison between the “proof necessary to
prevail in behalf of the class” may entail some “wading into the
merits

of

an

action

merely

to

determine

whether

federal

jurisdiction exists[,]” Meiman v. Kenton Cty., Ky., No. CIV.A.
10-156-DLB, 2011 WL 350465, at *6 (E.D. Ky. Feb. 2, 2011), which
does not further judicial efficiency. In addition, such an approach
appears to run counter to the general consensus among federal
courts that “CAFA’s language favors federal jurisdiction over class
actions and CAFA’s legislative history suggests that Congress
intended the local controversy exception to be a narrow one, with
all doubts resolved ‘in favor of exercising jurisdiction over the
case.’” Evans v. Walter Indus., 449 F.3d 1163, 1164 (11th Cir.
2006) (quoting S. Rep. No. 109-14 at 42, U.S. Code Cong. & Admin.
News 3, 40); accord, e.g., Brook v. UnitedHealth Grp. Inc., No. 06
CV 12954(GBD), 2007 WL 2827808, at *4 (S.D.N.Y. Sept. 27, 2007).
CAFA does not define what constitutes an ‘other class action’ other
than

to

limit

it

to

filed

cases

asserting

similar

factual

allegations against a defendant.” Vodenichar, 733 F.3d at 508.
Undoubtedly,

the

representative

plaintiff

in

Lagas

and

the

representative plaintiffs in this case assert “similar factual
allegations” against Verisma, namely that Verisma overcharged them
for copies of medical records requested and paid for through their
personal injury attorneys, in violation of the respective state’s
medical records law.

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Finally, the Court finds that Verisma’s position regarding the
“no other class action” element is not supported by the recent
unpublished decision from the Southern District of New York, Moore,
et al. v. IOD Incorporated, et al., No. 14-CV-8406(VSB) (S.D.N.Y.
Mar. 4, 2016) (“Moore”).3 Moore was commenced in 2014, shortly
after this action. Similarly to Plaintiffs here, the plaintiffs in
Moore sought to assert claims under PHL § 18 and GBL § 349 on
behalf of a class of qualified persons who requested copies of
medical records from a New York health care provider who had
contracted with a records-vendor (IOD). The plaintiffs paid the
records-vendor for those copies and “allege[d] that the $0.75 per
page rate charged by IOD was in excess of both its [costs] and the
costs incurred by the [New York] Health Care Providers in copying
the records.” Id. at 5. Moore was dismissed in March of 2016, after
the district court found that CAFA’s local controversy exception
applied. In stark contrast to the present case, the plaintiffs in
Moore conceded that there were no “other class actions” filed
within three years. The only elements of the local controversy
exception in dispute in Moore were whether the plaintiffs sought
“significant relief” from the local defendant and whether the local
defendant’s

conduct

formed

a

“significant

basis”

for

the

plaintiffs’ claims.

3

A copy of the Moore decision is attached as Exhibit B (Dkt #84-4) to the
Declaration of Christopher Belter, Esq. dated November 30, 2016 (Dkt #84).

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II.

Verisma, Although Not a “Provider,” is Subject to NYPHL § 18
Verisma argues that it cannot be held accountable under NYPHL

§ 18 because it merely fulfills medical records requests for health
care providers, and is not a health care provider itself.
NYPHL § 18 “itself contemplates actions against a provider for
its overcharges[,]” Ruzhinskaya v. Healthport Techs., LLC, 311
F.R.D. 87, 104 (S.D.N.Y. 2015). “[B]y its terms[, NYPHL § 18] is
addressed to what a ‘provider’ may charge for fulfilling these
requests—defining ‘provider’ as, in essence, a hospital or a
doctor.” Id. (citing N.Y. PUBLIC HEALTH L. § 18(1)(b)-(d). However,
this Court’s research has not uncovered any cases in which a court
has

interpreted

states—to bar

the

NYPHL—or

analogous

statutes

from

other

proceedings against vendors who provide release-of-

information (“ROI”) services to “providers.” Interpreting NYPHL
§

18,

the

district

court

explained

in

Ruzhinskaya,

that

“HealthPort[, the ROI vendor,] derives its statutory duty from each
provider’s statutory obligation. HealthPort effectively stands in
the shoes of around 500 New York providers who have delegated to it
the responsibility for responding to patient records requests.”
Ruzhinskaya, 311 F.R.D. at 104 (citation to record omitted). See
also Pratt v. Smart Corp., 968 S.W.2d 868, 873 (Tenn. Ct. App.
1997)

(It

is

true

that

the

Act[,

Tenn.

Code

Ann.

§ 68–11–304(a)(1), (a)(2)(A)] does not specifically mention such
entities [i.e., independent copying services]; nevertheless, it is

-16-

clear in this case that Smart acted as the hospital’s authorized
agent, and, as such, could not perform acts which the hospital was
forbidden by law to perform itself.”); Cotton v. Med-Cor Health
Info. Sol’ns, Inc., 221 Ga. App. 609, 610 (Ga. Ct. App. 1996)
(holding that trial court committed error under principles of
statutory construction and agency law by holding that Georgia’s
Health Records Act, which governs the furnishing of the record of
a patient by a “provider[,]” Ga. Code Ann. § 31–33–1 et seq., which
is “defined as meaning all hospitals and other specified entities
providing health care services[,]” Ga. Code Ann. § 31–33–1(2),” did
not apply “to entities such as defendants which supply photocopying
services for such providers even though such entities may be acting
as the providers’ agents”); Young v. HealthPort Techs., Inc., 877
N.W.2d 124, 128-32 (Iowa 2016) (allegations that health care
provider’s records servicer had entered into contract with health
care provider to fulfill patient requests for copies of medical
records, and that servicer charged, and patients paid fees in
excess of fees authorized under statute governing such record
requests, Iowa Code § 622.10, stated claim against servicer, as
provider’s
“provider,”

agent,
id.

§

for

violation

622.10(6),

as

of
“any

statute,

which

physician

or

defined
surgeon,

physician assistant, advanced registered nurse practitioner, mental
health professional, hospital, nursing home, or other person,
entity, facility, or organization that furnishes, bills, or is paid

-17-

for health care in the normal course of business”). The Court
agrees with the analysis in Cotton, supra, regarding Georgia’s
analogue to NYPHL § 18. The Cotton court explained that
the intent of the legislature was to ensure that patients
have access to medical records in the custody and control
of health care providers without being charged more than
the reasonable costs of copying and mailing them. This
intent
would
be
completely
defeated
through
a
construction of the Act that would allow patients to be
charged more than the reasonable copying and mailing
costs if the providers hire others to perform the task of
supplying the records.
Cotton, 221 Ga. App. at 611. The same reasoning applies to the
New

York

Legislature’s

intent

in

enacting

NYPHL

§

18.

[T]o

interpret the statute in a contrary fashion would completely
devastate the object the legislature sought to achieve in enacting
[the medical records statute].” Young, 877 N.W.2d at 132; see also
Pratt, 968 S.W.2d at 873 (agreeing with Cotton that objective of
statute would be “completely defeated” if statute were interpreted
so as not to apply to medical records vendors).
Verisma argues that an agent to a known principal has no
liability to third parties for conduct undertaken on behalf of the
principal. However, as Plaintiffs counter, this principle does not
exempt an agent from liability for its own acts. See Rusyniak v.
Gensini, 629 F. Supp. 2d 203, 223 n. 42 (N.D.N.Y. 2009) (“[A]n
agent’s tort liability [to a third party] is not based upon the
contractual relationship between the principal and the agent, but
upon the common-law obligation that every person must so act or use

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that which he or she controls as not to injury another.”) (quoting
3 AM. Jur. 2d Agency: Tort Liability § 298 (2008)). Here, the
record reflects that per the terms of the contract between Verisma
and

the

Rochester

Healthcare

Providers,

it

was

Verisma

who

determined the amount to be charged to individuals requesting
copies of their medical records.4 Thus, Verisma’s contention that
it is shielded from liability because it was merely following
instructions from the Healthcare Providers is belied by the terms
of the Contract.
III. Plaintiffs Have Standing Under NYPHL § 18
Verisma reasserts its unsuccessful argument that Plaintiffs
lack standing to pursue their claims under NYPHL § 18 because their
medical records

requests

were

not

accompanied

by

a

power of

attorney. In its previous Decision and Order, the Court stated,
“[l]eaving aside the issue of whether Verisma waived this argument
by nevertheless fulfilling Plaintiffs’ allegedly unlawful requests
and charging them $0.75 per page, the Court finds that it is
without merit.” (Decision & Order (Dkt #45 at 7). The argument
fares no better this time around.

Verisma has misconstrued the

statute, which only requires a power of attorney to be submitted
with a records “[w]here the written request for patient information
. . . is signed by the holder of a power of attorney.” NYPHL

4

Under the heading, “Verisma Billing Policies,” in Schedule C to the
Contract, it states that Verisma is responsible for “bill[ing] requestors based
upon applicable state fee schedules.” (Plaintiffs’ Statement of Facts, ¶ 19).

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§ 18(3)(h). “In the usual circumstance, such as the present case,
the records request is signed by the patient, and no power of
attorney is required.”
IV.

(Decision & Order (Dkt #45 at 10).

Plaintiffs Have Stated a Claim for Unjust Enrichment
Verisma contends that Plaintiffs have failed to state a non-

duplicative claim for unjust enrichment under New York State law.
The New York Court of Appeals has explained that a cause of action
for unjust enrichment “is not available where it simply duplicates,
or replaces, a conventional contract or tort claim.” Corsello v.
Verizon N.Y., Inc., 967 N.E.2d 1177, 1185 (N.Y. 2012) (citations
omitted). This in keeping with the general principle that when a
plaintiff has an adequate remedy at law, equitable remedies are
unavailable. E.g., Samiento v. World Yacht Inc., 883 N.E.2d 990,
996 (N.Y. 2008).
An unjust enrichment claim is not duplicative if a “reasonable
trier

of

fact

could

find

unjust

enrichment

.

.

.

without

establishing all the elements for one of [Plaintiffs’] claims
sounding in law.” Nuss v. Sabad, 7:10-CV-0279(LEK/TWD), 2016 WL
4098606, at *11 (N.D.N.Y. July 28, 2016). The elements of a cause
of action for unjust enrichment are as follows: (1) enrichment of
the defendant, (2) at the plaintiff’s expense, (3) the retention of
which by the defendant is “against equity and good conscience . .
. .” County of Nassau v. Expedia, Inc., 992 N.Y.S.2d 293, 296 (2d
Dep’t 2014) (citation omitted). A claim under New York General

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Business

Law

(“NYGBL”)

§

349

has

three

elements:

(1)

the

defendant’s challenged acts or practices must have been directed at
consumers, (2) the acts or practices must have been misleading in
a material way, and (3) the plaintiff must have sustained injury as
a result. Oswego Laborers’ Local 214 Pension Fund v. Marine Midland
Bank,

N.A.,

647

N.E.2d

741,

744-45

(N.Y.

1995)

(citations

omitted)). In contrast to a claim for unjust enrichment, a claim
for violating NYGBL § 349 requires “[p]roof that [a] defendant’s
acts are directed to consumers[.]” Id. Thus, a reasonable trier of
fact could find the elements unjust enrichment without establishing
all the elements for Plaintiffs’ NYGBL § 349 claim. Therefore, the
Court finds that Plaintiffs’ claim for unjust enrichment is not
duplicative of their NYGBL § 349 claim.
Likewise, the Court finds that Plaintiffs’ unjust enrichment
claim is not duplicative of their claim based on NYPHL § 18. For
example, Verisma contests liability under NYPHL § 18 because it is
not a “health care provider” as defined by the statute. However,
claims for unjust enrichment are not limited to claims against
“health

care

provider[s].”

Accordingly,

the

Court

finds

that

Plaintiffs’ unjust enrichment claim is not “duplicative” of their
NYPHL § 18 claim, but rather is an alternative theory of liability.
See Aramony v. United Way of Am., 949 F. Supp. 1080, 1084-85 & n.2
(S.D.N.Y. 1996) (where the defendant contests elements of one
claim, the “plaintiff’s unjust enrichment claim is not duplicative

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because

it

may

succeed

independently,”

and

is

therefore

“an

acceptable alternative theory”); see also Spiro v. Healthport
Techs., LLC, 73 F. Supp.3d 259, 272 (S.D.N.Y. 2014) (allowing
plaintiffs to proceed on claims of unjust enrichment and violation
of NYPHL § 18).
CONCLUSION
For

the

foregoing

reasons,

Verisma’s

Motion

for

Partial

Summary Judgment and Response in Opposition to the Motion to
Certify Class (Dkt #84) is denied.
SO ORDERED.
S/Michael A. Telesca
HON. MICHAEL A. TELESCA
United States District Judge
Dated:

May
, 2017
Rochester, New York.

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