Klein v. Aicher

Background

Refael Klein sued Stacey B. Aicher under New York law, asserting claims for legal malpractice, tortious interference with doctor-patient confidentiality, breach of duty, and aiding and abetting a breach of duty. He also sought declaratory and injunctive relief. Klein alleged that Aicher, who was associate counsel for Catholic Health Services of Long Island, accessed his protected health information through the Long Island Patient Information Exchange and disclosed it to counsel for her husband, John Aicher. The alleged disclosure concerned Klein’s request for more time to respond to an information subpoena in a separate state-court proceeding involving her husband and Klein.

Aicher moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), or alternatively for summary judgment under Rule 56. She also moved for sanctions under Rule 11. The court declined to convert the dismissal motion into a summary-judgment motion because discovery had not occurred.

Jurisdiction and dismissal

The court held that it had no federal-question jurisdiction. Klein pleaded only state-law claims and did not assert a claim under the Health Insurance Portability and Accountability Act, or HIPAA. Although he argued that deciding his state-law claims would require reviewing HIPAA’s medical-privacy standards, the court concluded that applying a federal standard to the facts of state-law claims did not create the required substantial federal issue. The court also determined that exercising jurisdiction would conflict with the federal-state balance, particularly because courts have generally concluded that HIPAA does not create a private right to sue.

The court further noted that the complaint raised issues of New York law, including whether Klein could pursue legal malpractice without an attorney-client relationship with Aicher and whether New York recognizes his proposed confidentiality tort. The court concluded that the action did not present a substantial federal question and dismissed it for lack of subject-matter jurisdiction. In the conclusion, the court stated that the complaint and action were dismissed without prejudice.

Rule 11 sanctions

Rule 11 requires that factual allegations have evidentiary support, or be likely to have such support after a reasonable investigation. The court found that Klein’s allegations lacked an objectively reasonable factual basis when filed. The complaint relied primarily on a conversation between lawyers and the fact that Aicher worked for an organization connected to a health-records exchange. The court found no reasonable basis for alleging that Aicher had access to Klein’s records, accessed them, or disclosed them.

The court also found that Klein and his counsel had not conducted a reasonable pre-filing inquiry. Their investigation consisted of identifying Aicher’s employment and conducting an online search showing that relevant healthcare organizations participated in the same electronic information exchange. The court noted that HIPAA-related records were available that could have shown who accessed Klein’s information, but Klein did not request those records until after filing the complaint.

The court also considered Klein’s conduct after filing. An access log did not show that Aicher accessed Klein’s records, and it showed no access during the period when Klein’s allegations required access to have occurred. The court concluded that Klein’s refusal to withdraw the claims after receiving this information provided an additional basis for sanctions. The court did not base sanctions solely on Aicher’s argument that Klein filed the case to influence the separate debt proceeding.

Sanction awarded and disposition

The court granted Aicher’s motion for sanctions under Rule 11 and ordered Klein to pay Aicher’s attorney’s fees and costs incurred in defending the action as of October 11, 2019. Aicher’s attorney was directed to submit an affidavit listing the hours, services, and hourly rate. The court declined to award costs for removing references to the lawsuit from internet sites. The clerk was directed to terminate the pending motions and close the case.