The Federal Court of Appeals in the Eleventh Circuit has vacated a lower court decision holding that a private company had a right to access Medicare claims data to hospitals through the Freedom of Information Act (FOIA). The appellate decision, handed down in December, has a significant impact on what Medicare data can be obtained by the public and then be used in a commercial manner, including the possibility of identification of reimbursement amounts to physicians.

The plaintiffs/appellees in the case--Jennifer D. Alley and Real Time Medical Data LLC, wanted to compel the United States Department of Health and Human Services (HHS) to disclose certain records under FOIA. HHS had argued that complying with the FOIA request violated an injunction issued in a much older case, Florida Medical Ass'n v. Department of Health Education & Welfare, 479 F. Supp. 1291 (M.D.F.L. 1979).

The appellate case, Alley v. United States HHS, 2009 U.S. App. LEXIS 27801 (11th Cir. 2009), stems from the District Court decision in Alley v. United States HHS, 2008 U.S. Dist. LEXIS 106884 (N.D. AL 2008).

As background, the Florida Medical case involved disclosure of information from the precursor to HHS-the Department of Health, Education and Welfare (HEW). In 1977, HEW had made public a list of the physicians and groups receiving large reimbursements from Medicare. This information was publicized in the media, despite inaccuracies found later. Nonetheless, HEW had directed continued publication of information from subsequent years. This information included the names of physicians and providers, their addresses, the net total amount of Medicare reimbursement paid and the net total amount of Medicare reimbursements paid to beneficiaries. While HEW did attempt to rectify the previous inaccuracies, in 1977 the Florida Medical Association and six individual physicians brought a class action suit to enjoin the scheduled disclosures. The AMA intervened as a plaintiff, which expanded the class of plaintiffs to include all physicians licensed to practice in Florida and all members of the AMA, if they were providers of Medicare services and would be individually identified by the HEW disclosure.

The plaintiffs in the Florida Medical case claimed that the disclosures would violate a federal privacy act, 5 U.S.C. 552a, and also fell under various FOIA exemptions including Exemption 6, which protects "personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy." In balancing the private and public interests within the case, the Florida Medical court ultimately decided that no legitimate public interest would be advanced by knowing the identity of the providers and the amounts involved. Therefore, disclosure of the information was prohibited by the privacy act and FOIA exemptions. The injunction stated that any such disclosure of Medicare reimbursement for "any years" was prohibited.

In the current case, Jennifer Alley is the owner of Real Time Medical Data, LLC, a business that provides Medicare claims data to hospitals and other health care organizations for marketing and strategic planning purposes. Alley filed a FOIA request with HHS for data on all Medicare claims paid in 2002 for procedures performed in Florida, Georgia, Mississippi, and Tennessee. She requested Current Procedural Terminology (CPT) codes for each Medicare-paid medical service and procedure, and the providing physician's name and address. HHS initially denied the request, and after exhausting administrative remedies, Alley filed the lawsuit with the District Court in 2007. HHS then withdrew its decision and notified Alley that it would provide some of the data requested, but not any Medicare Part B outpatient claims data that could, in conjunction with public information already available, lead to disclosure of individual physician reimbursement amounts. HHS later went on to say it would disclose the part of the Part B outpatient data, but not the names, addresses, cities or zip codes of individual physicians or small group practices. HHS justified that exception to FOIA as an unwarranted invasion of personal privacy under the FOIA Exemption 6.

In the District Court case, the court construed Florida Medical's injunction very narrowly and held that it does not cover the information Alley sought. If the information did not fall under the rubric of the injunction, then the principles of GTE Sylvania, Inc. v. Consumers Union of the United States, Inc., 445 U.S. 375 (1980), would not apply. In GTE Sylvania, an agency that complies with a court order forbidding disclosure does not violate FOIA.

The District Court determined the injunction does not apply because the data requested was "raw data" rather than the actual annual Medicare reimbursement amounts. The Court considered the "substantial public interest" in disclosure (allowing the public to evaluate physicians and understand what the government was "up to") stronger than the "very limited privacy interest" implicated in the injunction, and determined that disclosure would not constitute a clearly unwarranted invasion of privacy under Exemption 6.

The Appellate Court decision interpreted the Florida Medical injunction differently--that it does cover the information the District Court ordered HHS to disclose. Therefore, while the Florida Medical injunction is in effect, the GTE Sylvania decision bars any court from ordering disclosure. While appellate courts are usually loathe to reinterpret a lower court's decision in the same case, in this situation the interpretation is of an injunction by another district judge, and therefore the appellate court felt comfortable in its differing interpretation.

The Appellate Court determined that withholding the records from Alley was not improper under FOIA, if the injunction applies to the records Alley requested. The Court pointed out that other courts have rejected such very narrow interpretations of the scope of injunctions. The Court similarly rejects the interpretation here, and analyzes the fair meaning of the text of the injunction. The language of the Florida Medical injunction is fairly broad, stating a permanent injunction of disclosure of "any list" of annual Medicare reimbursement amounts, for "any years," if disclosing the amounts would identify members of the re-certified class.

Under that reading, the Appellate Court held that the Florida Medical injunction in the context of the GTE Sylvania standard means that HHS's refusal to disclose the requested records was not improper withholding under the FOIA. Even if the disclosure was indirect it still counts, as the public now has unknown data that can reveal in some manner the annual reimbursement total.

The Court added that a FOIA lawsuit may not be used to "collaterally" attack an injunction--meaning that one cannot attack the validity of the injunction through a case that is not a direct legal response to the injunction. Rather, a party must ask the court which handed down the injunction to modify or vacate the injunction and then appeal any refusal thereof.