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Ninth Circuit:
Removal Based on Government Incentives Was Improper
Hospital Did Not Act as Federal Officer by Implementing On-line Portal Pursuant to Legislation Promoting Digital Health Records
By a MetNews Staff Writer
A hospital’s creation of a portal for patient access to health records—following passage of federal legislation that encourages the digitizing of medical records—does not render the institution a “federal official” for purposes of a removability statute where the institution was not acting pursuant to congressionally-delegated authority to accomplish a basic governmental task, the Ninth U.S. Circuit Court of Appeal held Friday.
The removal request was made by Cedars-Sinai Health System in three separate class actions filed in the Los Angeles Superior Court, each alleging that the hospital unlawfully disclosed private medical information to third parties through the use of tracking tools on its website in violation of California’s Invasion of Privacy Act and other state laws.
Each case was removed to the courtroom of Senior District Court Judge Dale S. Fischer the Central District of California.
After Fischer granted the plaintiffs’ motions for remand, the cases were consolidated on appeal.
Circuit Judge Salvador Mendoza Jr. authored the opinion affirming Fischer’s remand orders. Senior Circuit Judge Marsha S. Berzon and Arizona District Court Judge Susan R. Bolton, sitting by designation, joined in the opinion.
Federal Legislation
In 2009, Congress passed the Health Information Technology for Economic and Clinical Health (“HITECH”) Act to incentivize healthcare providers to digitize medical records and make them available to patients and other providers.
As part of this effort, the government established the Office of the National Coordinator for Health Information Technology to develop a nationwide health information technology infrastructure that allows for the electronic exchange of information.
The Department of Health and Human Services created the “Meaningful Use Program” to implement the HITECH Act and to develop certain thresholds that providers must meet to qualify as “meaningful users” and receive incentive payments or avoid reduced Medicare reimbursements.
To qualify for the incentives, many healthcare providers developed online patient portals.
Cedars-Sinai, like many other providers, developed a patient portal called My CS-Link on its website. The hospital uses tracking tools developed by Google LLC and Meta Platforms, Inc. to share data obtained from the website about patients with the companies.
Plaintiffs John Doe, Jarrod Browne, and Steven Beltran each filed class-action lawsuits asserting overlapping and distinct causes of action under California law relating to the sharing of patients’ information.
Federal Officer
Cedars-Sinai argues that removal was proper under 28 U.S.C. §1442(a)(1) because the provider “acted under” the national coordinator, a federal officer, when it developed My CS-Link.
Sec. 1442(a)(1) provides, in relevant part, that a civil action commenced in state court may be removed to federal court if it is filed against “[t]he United States or any agency thereof or any officer (or any person acting under that officer) of the United States or of any agency thereof, in an official or individual capacity, for or relating to any act under color of such office….”
Mendoza said that for removal to be proper under this section, the removing entity must establish that there is a causal nexus between the actions taken under the federal officer’s directions and the plaintiff’s claims.
Direction of Officer
To prove the causal relationship, he wrote, Cedars-Sinai must first demonstrate that it was acting under the direction of a federal officer in the performance of some governmental task.
The hospital contends that, in making the patient portal, it helped the government accomplish its goal of a nationwide technology infrastructure for health information, and points to its receipt of reimbursement payments under the statutory scheme as proof of the hospital working together with the federal agencies.
Unpersuaded, Mendoza remarked that “Cedars-Sinai did not assist the National Coordinator with delegated ‘basic governmental tasks’ when it built its patient portal and website using tracking technology.” He wrote:
“Cedars-Sinai does not allege that it has contracted with the government to provide a service or to create a product on its behalf…. Instead, Cedars-Sinai has presented evidence that it has complied with the broad requirements of the HITECH Act, which apply to any healthcare provider participating in the Meaningful Use Program.”
He continued:
“That Program’s requirements do not show an express delegation of authority to Cedars Sinai to accomplish a basic governmental task on the National Coordinator’s behalf. Far from it. Cedars-Sinai chose to satisfy the Meaningful Use Program’s objectives by building a patient portal using tracking technology. That decision does not mean Cedars-Sinai’s My CS-Link is a federal government website, or that it is operated on the government’s behalf or for the federal government’s benefit.
Private Website
Mendoza remarked:
“Put simply, it is a private website, built by a private entity, to serve that private entity’s patients and staff. Given that context, Cedar Sinai cannot establish that it is a subject of the government’s direction, thus entitling it to a federal forum to put on its federal defenses.”
Rejecting the defendant’s reliance on federal regulations governing hospitals, he concluded:
“These regulations do not require Cedars-Sinai to build a specific type of website or patient portal—much less a portal that uses the tracking technology described in the complaint. Nor do they impose sufficient federal oversight to demonstrate that Cedars-Sinai acted under the direction of a federal officer.”
He was not swayed by the fact that the hospital accepted incentive payments before they were phased out in 2016, saying:
“Nor do we agree that Cedars-Sinai’s receipt of federal ‘incentive payments’ warrants the exercise of federal officer removal jurisdiction….Neither the Supreme Court nor this court has held that federal incentives for compliance with federal regulations constitutes ‘payment’ sufficient to render federal officer removal appropriate.”
The jurist added:
“[T]o permit removal based on incentive payments would open the floodgates to a myriad of entities hoping to invoke federal officer removal jurisdiction, impermissibly expanding the scope of § 1442(a)(1) beyond its purview….That view is not supported by the removal statute, precedent, or the specific facts of this case.”
Not Blank Slate
Mendoza noted that “Our circuit has not yet…address[ed] whether a healthcare provider acts at the direction of the National Coordinator when it creates an [electronic health record] website with an embedded tracking code” but pointed out that “[t]he Third, Fifth, and Eighth Circuits have each considered this issue, and all three have held that the federal officer removal statute does not support removal for suits challenging conduct like Cedars-Sinai’s.”
He concluded that “[o]ur decision today puts us in good company” and said that Cedars-Sinai provides no “compelling reason” to create a circuit split by “expanding the reach of federal officer removal jurisdiction.”
The case is Doe v. Cedars-Sinai Health System, 23-55466.
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