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Pre-Trial Brief
IN THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY, PENNSYLVANIA
DANIEL S. SHRAGER, M.D. PLAINTIFF'S TRIAL MEMORANDUM
IN THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY, PENNSYLVANIA DANIEL S. SHRAGER, M.D. CIVIL DIVISION PLAINTIFF'S TRIAL MEMORANDUM AND NOW, comes the Plaintiff, Daniel S. Shrager, M.D., by and through his attorneys, Ray F. Middleman and Malone, Larchuk & Middleman, P.C., and files the within Trial Memorandum as follows: I. GENERAL BACKGROUND Plaintiff, Daniel S. Shrager, M.D., is a medical doctor licensed to practice medicine in the Commonwealth of Pennsylvania and a board certified psychiatrist. Dr. Shrager practices psychiatry with his primary office located at 5750 Center Avenue, Suite 390, Pittsburgh, Pennsylvania 15026. Defendant, Highmark Blue Cross and Blue Shield ("Highmark"), provides health insurance including insurance for psychiatric care to a substantial number of people in the area of Allegheny County and surroundings counties. Magellan Behavioral Health ("Magellan") and Greenspring Health Services ("Greenspring") are affiliated companies and act as third party administrators for Highmark.
In 1991 before Greenspring's affiliation with Magellan, Greenspring, acting as a third party administrator for Highmark, accepted Dr. Shrager as a "credentialed" provider of psychiatric services and contracted with Dr. Shrager to provide mental health services for Highmark members. Periodically, the parties revised their contract - always at the request of Greenspring who drafted the original contract and all revisions and addendums. Greenspring had previously required that Dr. Shrager produce certain documents so that he could be "recredentialed." These documents included copies of licenses, copies of certifications, documentation of education and training, professional references and malpractice insurance information. Dr Shrager was not previously requested to produce patient care records, and the Greenspring provider handbook makes no mention of producing patient records.1 Many years after Greenspring's acceptance of Dr. Shrager as a psychiatric care provider, Greenspring became an affiliate of Magellan. Thereafter, Magellan and Dr. Shrager agreed to an amendment of the contract (Plaintiff's Exhibit 5 at §2.3) which provided, inter alia, as follows: Subject to all applicable statutes and regulations governing confidentiality of medical records: (i) Greenspring and payer shall have the right at times reasonably acceptable to provider, to review member records, to determine compliance with Greenspring policies and procedures, with providers obligations under this addendum, and with providers other obligations hereunder and, if necessary to process claims submitted by provider; … Provider agrees to comply with all state and federal confidentiality requirements and the applicable confidentiality provisions in Greenspring's policies and procedures. Believing that the applicable Pennsylvania confidentiality requirements with respect to psychiatric records forbids a psychiatrist from providing those records to any party except the patient absent a knowing written authorization, Dr. Shrager assumed that the amended language did not contemplate the disclosure of patient records. Following his receipt of the contract amendment in March, 2000, Dr. Shrager, at Magellan's invitation for a response, sent a certified letter to Marie Carpenter, Vice President, network Field Management, stating that he assumed that the disclosure of confidential patient information was not required by the contract. (Plaintiff's Exhibit 14). Dr. Shrager received no response to his inquiry. One month later, despite the contract amendments reference to Pennsylvania and federal confidentiality requirements, Magellan demanded that Dr. Shrager produce patient psychiatric records for review. By letter dated April 24, 2000, Sam Donaldson, Ph.D., Vice President of Clinical Services for Magellan, informed Dr. Shrager that "[a] consultant for Magellan Behavior Health will review 5 treatment records, including three (3) open and two (2) closed cases." (Plaintiff's Exhibit 13). Magellan did not divulge the consultant's qualifications and did not provide Dr. Shrager with authorizations from his patients for the release of the records. On May 8, 2000, Dr. Shrager wrote to Magellan voicing his concerns with respect to the confidentiality of patient records and the lack of information provided to him with respect to the Magellan consultants who would be performing the file review. Dr. Shrager also expressed concerns about the exceedingly detrimental effect upon psychotherapy such a record review would cause. (Plaintiff's Exhibit 15). Dr. Shrager specifically did not refuse to cooperate with any quality assurance reviews, and Dr. Shrager requested that Magellan reply to this correspondence. On May 15, 2000, seven days after Dr. Shrager's letter of concern was written, a person identifying herself as Diane Birnenberg of Highmark left a phone message for Dr. Shrager stating that Highmark would be placing Dr. Shrager on a list of inactive providers. The message was cryptic and seemed to infer that Dr. Shrager's inquiry regarding confidentiality was the reason for his being "inactivated." (Plaintiff's Exhibit 49). Dr. Shrager wrote to Magellan on May 18, 2000 making inquiry with respect to this phone message. (Plaintiff's Exhibit 17). On May 24, 2000, Magellan delivered a letter to Dr. Shrager stating that Dr. Shrager had to comply with a file review by May 19, 2000, or his status as a psychiatric services provider would be impacted. (Plaintiff's Exhibit 18). The aforesaid letter was misdelivered by FedEx and was not received by Dr. Shrager in a timely fashion. Following the delivery of the May 19, 2000 letter on May 25, 2000, counsel for Dr. Shrager wrote to Magellan and inquired as to why no response had been received to Dr. Shrager's prior correspondence. (Plaintiff's Exhibit 19). In this letter from Dr. Shrager's counsel, Dr. Shrager's concerns regarding patient confidentiality were again set out and an inquiry was made as to whether Magellan had a legal opinion with respect to the psychiatrist/patient privilege under the circumstances at issue. By letter dated May 31, 2000, Magellan stated that it would be seeking an opinion letter from its legal counsel with respect to conducting a review of patient records. (Plaintiff's Exhibit 20). It seems that, Magellan had not previously considered whether the conduct it was undertaking with respect to patient record reviews was legal or ethical. Magellan apparently did not wait for the requested legal analysis and sent a letter to Dr. Shrager on June 12, 2000, and advised him that his file had been rendered inactive, and further stated that Magellan would come up with an appropriate transition plan for the Magellan patients being treated by Dr. Shrager. The letter, however, further stated that Dr. Shrager could request reconsideration of this decision Said letter was misdated May 12, 2000. (Plaintiff's Exhibit 21). Dr. Shrager’s counsel, by extensive letter and exhibits dated July 12, 2000, within the 30 days allotted, wrote to Magellan requesting reconsideration and a hearing. (Plaintiff's Exhibit 23). Magellan did not respond to Plaintiff's counsel's request. Defendants, via phone and mail, on September 11, 2000, began informing Dr. Shrager's existing and long-standing patients that they, Highmark, would no longer pay for Dr. Shrager's services. In these phone calls, patients were led to believe that Dr. Shrager had left the network of his own free will without any advance notice, in effect abandoning them. Such information and inference is untrue. (Plaintiff's Exhibit 22). Patients who were informed telephonically of Dr. Shrager's termination, in several instances, received the news from a family member with whom the message was left – another example of the Defendants' reckless disregard for patient confidentiality. These phone calls were made and letters sent to Dr. Shrager's patients without his knowledge and without concern by the Defendants as to the current mental status of the patients. Thereafter, Dr. Shrager petitioned this court for an emergency preliminary injunction, and on September 19, 2000, the Court ordered that Dr. Shrager was entitled to an administrative review process. The court order that Dr. Shrager be reinstated, that his patients be informed of his reinstatement and that the parties commence with the internal administrative review process provided for in the parties contract. Dr. Shrager proceeded with the administrative procedures which Magellan would afford him which culminated in a decision by the Magellan National Professional Provider Review Committee to terminate his contract. Dr. Shrager was informed by letter dated April 24, 2001 that his "status as a Magellan network provider will terminate effective immediately," and that his patients would be informed of the same. (Plaintiff's Exhibit 38). Thereafter, this Court stayed Defendant’s termination of Dr. Shrager pending the present trial.
Psychiatric patient care records are privileged under 42 Pa. C.S.A. §5944 and a psychiatrist has no authority to release them to any party absent a proper written patient authorization, specific to the use for which the records are sought. 44 Pa. Code §41.61. Therefore, pursuant to the terms of the parties' contract, which incorporates by reference the applicable Pennsylvania confidentiality requirements, Magellan has no right to demand patient records. Moreover, Dr. Shrager has no authority to provide Magellan access to patient records without appropriate patient authorization being obtained by Magellan, the party interested in such a review. Dr. Shrager has no discretion in this matter. He did what he had to do; he refused to disclose patient records absent appropriate authorizations. By this course, Dr. Shrager has maintained his professional ethics and obeyed Pennsylvania law, and he has complied with the terms of his contract as a provider.
(a) The Records of Mental Health Patients are absolutely privileged. Recognizing the importance of confidentiality in the treatment of mental illness, Pennsylvania has put in place privacy guarantees with respect to the treatment records of mental health patients. The most important of these protections renders mental health records absolutely privileged. 42 Pa.C.S.A. §5944. This privilege can only be waived as a result of the informed written consent of the mental health patient. 49 Pa. Code §41.61. Defendants obtained no such informed consent from any of Dr. Shrager’s patients prior to making demand upon Dr. Shrager to disclose patient records. The Pennsylvania General Assembly, in enacting legislation entitled as Confidential Communication to Psychiatrists or Licensed Psychologists, chose language that ensures that the confidentiality afforded mental health records will be as definite and as immune from assault as possible. The language chosen by the General Assembly, and included as part of the Judicial Code to establish the intended confidentiality, is as follows: ….The confidential relations and communications between a psychologist or psychiatrist and his client shall be on the same basis as those provided or prescribed by law between an attorney and client. 42 Pa. C.S.A. §5944. The importance of confidentiality in mental health treatment led the Pennsylvania Supreme Court to note: This Court is aware of the critical role that confidentiality plays in the relationship between therapist and patient, constituting, as one author has described, the “sine qua non of successful psychiatric treatment.” Emerich v. Philadelphia Center for Human Development, 554 Pa. 209, 720 A.2d 1032, 1042 (1998) (citation omitted). Also, a plurality of the Supreme Court of Pennsylvania found that a patient's constitutional right to privacy, in addition to the statutory psychiatrist/patient privilege, protects information revealed by a patient to a psychiatrist. In re B., 482 Pa. 471, 485, 394 A.2d 419, 426 (1978) (favorably cited in Commonwealth v. Fewell, 439 Pa. Super. 541, 654 A.2d 1109 (1995)). Likewise, the Superior Court has instructed that the "privilege afforded by §5944 was intended to inspire confidence in the client and to encourage full disclosure to the psychologist [and psychiatrist] by preventing the latter from making public any information which would result in humiliation, embarrassment or disgrace to the client, the privilege is designed to promote effective treatment and to insulate the client's private thoughts from public disclosure." Commonwealth v. Simmons, 719 A.2d 336, 340 (Pa. Super. 1998). The Superior Court has also ruled that 42 Pa. C.S.A. §5944 "grants an absolute privilege for communication between a licensed psychologist [or psychiatrist obviously] and a client." Commonwealth v. Kyle, 367 Pa. Super. 484, 533 A.2d 120 (1987)(refusing to permit sexual assault defendants to secure a court order requiring production of the assault victim's psychiatric records). The Court in Kyle stated as follows: In enacting §5944, the legislature made no exceptions for disclosure. Indeed, the legislative intent as stated in §5944 could not be clearer: the privilege established is the embodiment of a strong public policy favoring an absolute privilege from disclosure. That such a result was intended is supported by the language of §5944 which expressly provided that the psychologist/client privilege is molded after the attorney/client privilege, an absolute privilege which has been repeatedly sustained under constitutional attack. 533 A.2d at 125 (emphasis added). Similarly the Superior Court in Commonwealth v. Kennedy, 413 Pa. Super. 95, 604 A.2d 1036 (1992) held that even an accused's constitutional right to confront an accuser must give way to the absolute right of mental health confidentiality. The Court explained as follows: Having reviewed the language of the statutory privilege enacted by our legislature and having given consideration to the public policies underlying the absolute privilege as well as the relevant cases in this and other jurisdictions, we find that the interests protected by the privilege are substantial. We are, of course, cognizant of the heavy weight afforded to appellant's interest in disclosure of the victim's file. Nonetheless, in weighing the public interests protected by shielding the file with those advanced by disclosure, we conclude that the balance tips in favor of non-disclosure. 604 A.2d at 1046. The absolute confidentiality of psychotherapy records is also well recognized in civil actions. The Superior Court refused to allow a son access to his deceased father's mental health records in order to challenge the testamentary capacity of his deceased father even though his father was subject to involuntary commitment proceedings shortly after the execution of his Last Will and Testament. In Interest of Roy, 423 Pa. Super. 183, 620 A.2d 1172 (1993), allocatur den. 634 A.2d 30 (1994). Also, in Leonard v. Latrobe Area Hospital, 379 Pa. Super. 243, 549 A.2d 997 (1998), the Superior Court was faced with a claim by the relatives of a murder victim against a hospital and psychiatrist who the Plaintiffs claimed negligently allowed a dangerous patient to be released from psychiatric care and kill the Plaintiffs' mother. The Superior Court held that the records of the alleged killer were not discoverable in the civil action against the treating mental health professionals. Finally, the United States Supreme Court has recognized a psychotherapist patient privilege stating as follows: Like the spousal and attorney client privileges, the psychotherapist patient privilege is “rooted in the imperative need for confidence and trust.” (citation omitted) Treatment by a physician for physical ailments can often proceed successfully on the basis of a physical examination, objective information supplied by the patient, and the results of diagnostic tests. Effective psychotherapy, by contrast, depends upon an atmosphere of confidence and trust in which the patient is willing to make a frank and complete disclosure of facts, emotions, memories and fears. Because of the sensitive nature of the problems for which individuals consult psychotherapists, disclosure of confidential communications made during counseling sessions may cause embarrassment or disgrace. For this reason, the mere possibility of disclosure may impede development of the confidential relationship. Jaffee v. Redmond, 518 U.S. 1, 116 S.Ct. 1923 (1996). Given the obvious solemnity of the relationship between patient and therapist and the recognized public policy of protecting the relationship without exception, and, given that the contract amendment drafted by Magellan incorporates "all state and federal confidentiality requirements," it is incredible that Defendants champion the position that Dr. Shrager can and must disclose patient records without authorizations. Furthermore, Defendants have expressed no concern whatsoever about the legal implications to Dr. Shrager were he to disclose records without authorizations. Rost v. State Bd. of Psychology, 659 A.2d 626 (Pa. Commw. 1995)(upholding the reprimand of a licensed psychologist disclosing patient records without the necessary authorization). (b) It is improper for a psychiatrist to request a patient to authorize the disclosure of treatment records unless the psychiatrist concludes that the disclosure is necessary to advance the welfare of the patient. It is no answer to suggest that Dr. Shrager should seek the consent of his patients for the disclosure. Dr. Shrager has no right to approach his patients and request authorization to release their records for the sole purpose of securing his credentials with the defendants. The voluntary release of mental health records requires more than the nod of a patient’s head to the psychiatrist. Quite the contrary, a patient authorization is only valid if given with a full understanding of the reason for the request. 49 Pa. Code §41.61, Ethical Principle 5(a) provides in pertinent part: "Information may be revealed with the consent of the clients affected only after full disclosure to them and after their authorization…" The ethical principles are silent as to the contents of the required authorization and the specifics of the required disclosure. However, with respect to the necessary disclosure, the suggestion of Magellan's Chief Medical Officer, Jonathan Book, M.D., that a valid authorization can be obtained before records are even created is obviously erroneous. (Book Deposition, Pages 74-77). The concept of full disclosure obviously contemplates that the patient will be aware of the specific records and their contents. Such an awareness is impossible where the records are not yet in existence. Some guidance on the issue of authorization requirements is found in the regulations governing the treatment of patients receiving public funds. The Department of Health pursuant to a grant of authority from the legislature has formalized specific requirements regarding the release of mental health records with respect to such patients. 50 P.S. §4201.2
These regulations allow a psychiatrist to release patient records only when presented with a valid written authorization by the patient. 55 Pa. Code §5100.34. 55 Pa. Code §5100.34(f) provides the following requirements for a valid written release: …a form for use in the voluntary release of records…shall meet the following requirements: (1) a time limit on its validity which shows starting and ending dates; (2) identification of the agency or person to whom the records are to be released; (3) a statement of the specific purposes for which the released records are to be used; (4) a statement identifying the specific relevant and timely information to be released; (5) a place for the signature of the client/patient or parent or guardian and the date, following a statement that the person understands the nature of his/her release; (6) a place for the signature of a staff person obtaining the consent of the client/patient or parent or guardian and the date; (7) a place to record a verbal consent to release of information given by a person physically unable to provide a signature and a place for the signatures of two responsible persons who witnessed that the person understood the nature of the release and freely gave his/her verbal consent; (8) indication that the consent is revocable at the written request of the person giving consent, or oral request as in paragraph (7). While Dr. Shrager recognizes that this regulation is not technically applicable to private patients, it is still an important statement of public policy. Indisputably, the patient’s interest in confidentiality is the same whether or not treatment is paid for with private or public funds. Therefore, 55 Pa. Code §5100.34(f) is an important guide for the Court in this matter. A valid authorization for Dr. Shrager’s patients would need to be substantially similar to that which is described in 55 Pa. Code §5100.34(f). In any event, mental health professionals are constrained by the ethics of their professions from securing a patient authorization except in the event the professional concludes that the release of records will be directly beneficial to the patient. The American Psychiatric Association of Principles of Medical Ethics provide in relevant part: A physician shall respect the rights of patients, of colleagues, and of other health professionals, and shall safeguard patient confidences within the constraints of the law. 1. Psychiatric records, including even the identification of a person as a patient, must be protected with extreme care. Confidentiality is essential to psychiatric treatment. This is based in part on the special nature of psychiatric theory as well as on the traditional ethical relationship between physician and patient. Growing concern regarding the civil rights of patients and the possible adverse effects of computerization, duplication equipment, and data banks makes the dissemination of confidential information an increasing hazard. Because of the sensitive and private nature of the information with which the psychiatrist deals, he/she must be circumspect in the information that he/she chooses to disclose to others about a patient. The welfare of the patient must be a continuing consideration. The requirement that a psychiatrist "safeguard patient confidences within the constraints of the law" obviously contemplates that a psychiatrist will look for legal support and construe the law to maintain confidentiality not to skirt confidentiality. Thus, as an honest and conscientious practitioner, Dr. Shrager’s decision, although one of enormous consequence and potential detriment to himself, was not difficult in the analytical sense. Dr. Shrager needed only to ask himself if the release of the patient records as requested by Defendants would do anything to advance the welfare of the patients. Because the answer was no, Dr. Shrager could not in good conscious request an authorization from any of his patients. (c) Redacting patient records does not lessen the application of confidentiality requirements. The United States Supreme Court succinctly summed up the great need for confidentiality in Jaffee v. Redmond, stating as follows: Because of the sensitive nature of the problems for which individuals consult psychotherapists, disclosure of confidential communications made during counseling sessions may cause embarrassment or disgrace. For this reason, the mere possibility of disclosure may impede development of the confidential relationship. 116 S.Ct. at 1928. It is the relationship that is critical to effective treatment, and it is undeniable that a patient is likely to be concerned about records disclosure even if redactions are made. Certainly then, patient authorization is still required where records have been redacted. Dr. Shrager concedes that redaction is a tool that may dispose a patient to grant an authorization, but, insists that redaction can never be a substitute for authorization. (d) The credentialing process should not be used as a cost control device. The practice of psychiatry, along with the practice of medicine in general has changed dramatically in the last fifteen years. The words "managed care," "provider network" and "individual case management" are familiar to anyone who has ever cracked their employee benefits manual. Gone are the days when the patient selected a physician or psychiatrist and submitted invoices to the insurer. Now, when a patient needs care the first thought is to check to see which providers are part of her network. Independent providers, not affiliated with a network, are the rarest of things for the simple reason that the insurers will not approve payment for their services. The concept of "managed care" is not without its benefits, and it is not the purpose of this lawsuit to impugn the concept. However, managed care adds a third party administrator into the doctor/patient equation, and vigilance is required to protect this time honored and statutorily protected relationship. In this particular circumstance, Plaintiff believes the third party administrator may misuse the credentialing process as a tool to control costs. The strongest evidence of this is the fact that Greenspring was able to adequately perform the credentialing and re-credentialing process for many years without need of patient records. With the appearance of Magellan, Defendants suddenly insisted that patient’s records must be reviewed. Rather than a means of assessing a provider’s competence, Plaintiff suspects that accessing treatment records will allow Magellan to intrude upon the doctor/patient relationship and curtail the quantity of patient care. Obviously, Highmark has retained Magellan, in part, to reduce the costs of medical services provided to the plan beneficiaries, and there is a place for cost consideration in psychiatric administration. However, it is not proper for Highmark and Magellan to pursue cost reduction by pressuring service providers via the credentialing process to reduce the amount of psychiatric services that beneficiaries receive. Magellan controls a substantial number of insured psychiatric patients; Plaintiff believes that more than 40% of the insured psychiatric patients in Plaintiff's geographic area are insured under plans that are administered by Magellan. This arrangement has the effect that when Magellan rejects a psychiatrist as a credentialed mental health care provider, a very large part of the market for insured psychiatric patients becomes unavailable to that psychiatrist. This control over the market for insured psychiatric patients may allow Magellan to pressure providers to reduce the amount of patient care provided. The logical first step in a challenge to the necessity of treatment is to obtain information as to the treatment. Plaintiff worries that Magellan might take this first step by demanding that providers permit a review of their records prior to Magellan's "recredentialing" of the provider. Dr. Shrager further suspects that Defendants intend and desire that any provider who questions a Magellan directive suffers harm to his practice. Dr. Shrager also suspects that Defendants intend and desire that other providers become aware that when a provider questions a Magellan directive, he risks his credentials. Defendants desire that providers not advocate what they believe is in the best interests of patients, but instead concur with Magellan's plans for cost savings and control.
Dr. Shrager did not breach his contract as a provider by failing to disclose patient records. To the contrary, the contract requires Dr. Shrager to comply with all state and federal confidentiality requirements. As discussed above, these confidentiality requirements do not permit the release of records, even if redacted, absent patient authorization.
I hereby certify that a true and correct copy of the foregoing Plaintiff's Trial Memorandum was served upon the following by hand delivery this 1st day of October, 2002 addressed as follows: John R. Leathers, Esquire Stephen F. Ban, Esquire |
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