Curiosity Killed the Cat, and Can Get Employees Fired: HIPAA Privacy Alert

Any time a patient is a public figure or when any patient is in the news, healthcare institutions across the nation face the challenge of keeping that patient’s information private, as required under HIPAA for all patients. While it may be obvious that staff are not to release any information to unauthorized outside individuals, HIPAA also mandates that reasonable safeguards be implemented to limit the number of internal staff who have access to a patient’s information to the “minimum necessary.” Whether a staff member’s access is necessary to carry out treatment, payment for that treatment, or other healthcare operations must be considered.

HIPAA requires healthcare institutions to have policies in place which address the unauthorized access of a patient’s medical records, requires the institutions to train staff regarding the policies, and that those institutions enforce their policies.

REMINDER: When a Patient is a Public Figure or the Patient is in the News:
- HIPAA still applies;
- Healthcare institutions must have policies in place addressing unauthorized access or disclosure, even internally;
- Medical providers and staff must continue to follow HIPAA and adhere to the institution’s privacy policies; and
- Healthcare institutions must continue to enforce their policies.

If you or your institution has any questions, please contact our HIPAA Compliance Officer, Kristin Ahmadian, at Lowis & Gellen LLP at (312)628-7869.

Women’s History Month and International Women’s Day

In honor of Women’s History Month and International Women’s Day, Lowis & Gellen would like to take the time to recognize and thank all of the women who are the very fabric of our firm. From the trailblazers who founded our firm based on a shared goal of elevating working women in the legal profession to the many women who shape L&G into the successful firm it is today, we salute you and we thank you!

International Women's Day2

Lowis & Gellen Successfully Defends Chicago Area Hospital at Arbitration

Lowis & Gellen’s Patrick Viktora successfully defended one of the firm’s hospital clients in an arbitration proceeding alleging premises liability. Plaintiff alleged the Hospital negligently maintained a restroom door, allowing it to slam shut on the plaintiff’s hand. The hospital maintained the door at issue was not defective, and the plaintiff’s hand was injured by accident or from the plaintiff’s own negligence.

The arbitration panel unanimously found in favor of the Hospital and awarded no damages to the plaintiff. The Hospital was also represented by Lowis & Gellen’s Shannon Holbrook.

HIPAA Alert: Judge Upholds $4.3 Million in Penalties against a Medical Center for Failing to Secure Laptops and USB Drives

On June 1, 2018, a Judge granted summary judgment in favor of the government and against a medical center, upholding over $4.3 million in civil monetary penalties for alleged HIPAA violations.

In Director of the Office for Civil Rights v. The University of Texas MD Anderson Cancer Center, the Department of Health and Human Services Office of Civil Rights (OCR) alleged the medical center failed to comply with HIPAA by (1) failing to secure electronic devices and data storage equipment, and (2) allowing electronic protected health information (ePHI) to be disclosed for over 30,000 patients.  The OCR investigated the medical center after the theft of an unsecured laptop and loss of two USB thumb drives. The laptop and USB drives were neither password-protected nor encrypted.

The medical center denied that HIPAA requires the encryption of devices and denied that there was an “unlawful disclosure” as there was no evidence that the lost or stolen information was received or viewed by anyone.  The Judge reasoned that a covered entity is not required to guarantee the safety of ePHI, but must reasonably safeguard PHI from unlawful disclosure. 45 C.F.R. Section 164.312(a)(1). While covered entities have flexibility to decide how the information is protected, it must be effective. By failing to encrypt or password protect the lost or stolen devices, the medical center failed to ensure its systems and devices containing ePHI were inaccessible to unauthorized users. The Judge also reasoned that the purpose of HIPAA is to protect against failures and omissions by covered entities that might result in such consequences as identity theft or other invasions of privacy, and that it would be impossible in most instances to determine whether the information contained on the lost and stolen devices resulted in an individual’s identity theft. The judge distinguished this case from a private suit for damages, in which courts have held there is no cause of action absent proof that an unauthorized individual or entity received the information and proof of damages.

In summary, the U.S. Department of Health and Human Services Departmental Appeals Board Judge ruled that the medical center violated HIPAA privacy and security rules, granted summary judgment in favor of the OCR, and upheld the OCR’s civil monetary penalties in the amount of $4,348,000.

A copy of the 17-page decision can be found here. Please do not hesitate to contact Lowis & Gellen’s HIPAA Compliance Officer, Kristin Ahmadian, or any of the attorneys at Lowis & Gellen, LLP should you have any questions.

Hold the Mayo: Vanda Ruling Reviews Patent Subject Matter Eligibility

By: Michael J. Weil

In the spring of 2018 a significant decision by the Federal Circuit, Vanda v. West-Ward , cut a distinct path though the controversial Mayo and Alice rules for evaluating subject matter eligibility of patents.

Relevant Case Background

The case is multifaceted; this article will focus on the Vanda court’s interpretation of Patent Subject Matter eligibility under 35 U.S.C. § 101. The suit revolved around Vanda’s schizophrenia drug Fanapt® (iloperidone). Vanda owned a patent which utilized a method of treating schizophrenia patients with iloperidone. Specifically, Vanda’s method employed a dosage range based on a patient’s genotype. West-Ward pharmaceuticals manufactured a generic version of Fanapt® and utilized a similar method—West-Ward’s “proposed generic drug label recommended that physicians perform genotyping tests on iloperidone patients.” West-Ward claimed that because Vanda used a person’s genotype (a natural phenomenon) in its method, Vanda’s patent was invalid. West-Ward used precedents known in patent law as the Mayo test and the Alice test, discussed below, to make its argument. Based on its invalidity contention West-Ward filed an Abbreviated New Drug Application (ANDA); if granted the ANDA would allow West-Ward to market its generic product before expiration of Vanda’s original patent. Vanda responded by suing for infringement, claiming that their patent was valid because it transformed the natural process into an inventive concept.

Mayo and Alice Tests

The Mayo Test consists of two steps. The first step states that when evaluating the validity of patent, courts must find whether the contested patent claims are “directed to a patent-ineligible concept.” If the concept is patent eligible, the test is satisfied. However, if the concept is not patent eligible the courts must next evaluate whether the elements of each claim, both individually and in combination, transform the law of nature into a patentable application. “To transform an un-patentable law of nature into a patent-eligible application of such law, one must do more than simply state the law of nature, while adding the words ‘apply it’…it must limit its reach to a particular, inventive application of the law.”

From the precedent set in Mayo, courts have inferred that if a patent employs natural phenomena—such as a method which utilizes a natural process—the patent must limit its reach to a particular concept. Under the Mayo Test an inventor should demonstrate that he or she has staked a claim to a particular aspect of nature, and developed that aspect in a unique way–thereby converting it into a human-made invention. Like the Vanda case, the concept specifically discussed in Mayo related to the concentration of certain metabolites in the bloodstream. In Mayo, the court ruled that the process of deciding whether to increase or decrease the dosage of a drug based on the measurement of metabolites failed both prongs of the court’s test, and thus, was not eligible for patent protection.

Ultimately, the Mayo court urged caution in granting patents that employed natural phenomena out of concern that “patent law not inhibit future discovery by improperly tying up the use of laws of nature and the like.”

Similarly, the Alice Test uses a two-step framework that is influenced by the Mayo Test. The Alice test states that to determine patentability, the court must: determine whether the claims at issue are directed to a patent-ineligible concept, and if the concept is ineligible search for the ‘inventive concept’ —i.e., “an element or combination of elements that is “sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.” In Alice the patent in question related to a computer-implemented, electronic escrow service which helped facilitate financial transactions. The court in Alice ruled that the financial facilitator was an abstract idea, and therefore fell out of the realm of patent protection. Regarding the second step, “The mere recitation of a generic computer cannot “transform” a patent ineligible abstract idea into a patent eligible invention.”

The decisions have been controversial. Critics have pointed out that the decisions significantly hamper the ability to obtain new patents in fields such as software and medicine. Gene Quinn, a well-known patent practitioner, has voiced major concern over the rulings—particularly Alice. Quinn critiques three aspects of Alice: 1) There is no objective standard for judging patent-eligibility; the test is completely subjective; 2) Other than by resort to analogy to specific patented inventions in prior cases, there is no definition of what “abstract idea” or “something more” means in the Alice test; and 3) Alice fails to provide any guidance for “reaching the patent eligibility zone.” Additionally, in the wake of the rulings, many previously granted patents have been challenged and invalidated. The judicial trend has largely been to cast a wide net and strike down most patents that invoke natural phenomena.

Applying the Tests

In Vanda, the court laid out the tests for patent eligibility articulated in Mayo and Alice. Next, in a relatively surprising move (given the precedent set in the Mayo case) the court ruled that Vanda’s process was a new way to treat a disease–not merely a solicitation of an existing natural process. The court ruled that the process was patentable, fulfilling step one of both the Mayo and Alice tests: “Unlike the claim at issue in Mayo, the claims here require a treating doctor to administer iloperidone…depending on the results of the genotyping assay. The specification further highlights the significance of specific dosages and how certain ranges (of dosage) correlate with risk…thus, the claims are ‘a new way of using an existing drug’ that is safer for patients because it reduces risk.” Furthermore, in the Mayo case a doctor could violate the patent, even if he did not actually alter his treatment decision in light of the genetic tests. To paraphrase, the court in Mayo ruled that the patent in question was invalid because the patent impermissibly covered the metabolic process itself without a sufficient man-made application. In contrast, the Vanda court held that Vanda’s patent was tied specifically to the dosage or treatment regiment based on the results of the genetic testing, and was specifically tailored to cover the relationship between the genotype of the patient and the dosage. This limited the application of the natural phenomenon in a patentable way: “These are treatment steps. In contrast, the claim in Mayo stated that the metabolite level in blood simply “indicates” a need to (alter) dosage, without prescribing a specific dosage regiment…” Hence, the court ruled that treatment steps are patentable, even if they utilize a natural phenomenon; therefore, step one of both the Mayo Test and the Alice Test is satisfied and there is no need to move onto step two– seeing if there is an inventive concept involved.

Impact

The court’s ruling in Vanda may potentially pave the way for a re-interpretation of the rules set forth in Mayo and Alice. In theory, Vanda may even turn the tide back toward a more “expansive” and “broadly inclusive” interpretation of patent eligibility as set forth in Diamond v. Chakrabarty. The ruling also could also be a first salvo in the push to loosen the strictures on patents relating to abstract ideas or natural phenomena. Finally, given that the court did not elaborate on the second step of the Alice and Mayo tests, it remains to be seen if the second step is altered. Overall it will be fascinating to track the courts use of Vanda—will it become a new precedent regarding patent subject matter eligibility or merely an outlier?

If you have questions about the article, email mweil@lowis-gellen.com

Bryan Larsen wins a “Not Guilty” verdict for a L&G client in a case where the co-defendants had a $1.9 Million judgment entered against them

Congratulations to Bryan Larsen (with Local Counsel Lynne Nahmani). Bryan’s client, a physician and medical group, received a not guilty verdict this afternoon in a case where his co-defendants were found guilty. The case was on trial for 5 weeks in Ocean County (Toms River), New Jersey, and closing arguments were Friday. The case was transferred to the firm in April and was extremely complex in both the substantive medicine and in having to learn New Jersey law. Bryan did a fantastic job, as always.

Cahill and Pietras Present “Creditor Boot Camp” webinar to the Business Credit Management Association and Wisconsin Credit Association

On May 22, 2018, Allison Pietras and Christopher Cahill presented “Creditor Boot Camp,” an on-line webinar in the Legal Tuesdays Series sponsored by the Wisconsin Credit Association (see wcacredit.org). There are five remaining webinars in the Legal Tuesdays Series, covering, respectively: proofs of claim and claims trading (Sept. 11), dismissal and conversion of bankruptcy cases (Oct. 9), preference litigation (Nov. 13), fraudulent transfer litigation (Dec. 19), and equipment leasing (Feb. 12, 2019).

Jim Bream Presents on “Pitfalls, Perils and Promising Possibilities of Current Communications Outside the Chart”

On Saturday, April 28, Lowis & Gellen’s Managing Partner, Jim Bream, was the closing speaker at the Internal Medicine Update Symposium held at Silver Cross Hospital in New Lenox. Jim’s presentation addressed “Pitfalls, Perils and Promising Possibilities of Current Communications Outside the Chart” for medical professionals. This engaging and highly relevant presentation is ideal for nursing staffs and medical staffs engaged in communications with colleagues and patients regarding patient care. If you or your organization might find this presentation of interest to your staff, please contact us at Lowis & Gellen.