Last year, in Robins v. Spokeo, Inc., 742 F.3d 409 (9th Cir. 2014), the Ninth Circuit Court of Appeals held that an uninjured plaintiff may have standing to bring suit under Article III of the U.S. Constitution* due to a defendant's technical violation of a statute. In April of this year, the United States Supreme Court granted certiorari and will review this case in its next term. (In layman's terms, granting certiorari means the Supreme Court will review the decision of the lower court.) The upcoming decision may be relevant to claims litigated in federal court against healthcare providers, particularly class claims, that involve statutory penalties for technical violations of statutes where there is no actual harm to plaintiffs.
Robins v. Spokeo, Inc.
Spokeo is a website that publishes information about individuals, including age, occupation and wealth level. The plaintiff alleged in the complaint that Spokeo published false information about him in violation of the Fair Credit Reporting Act which could negatively impact his job prospects. Spokeo's position is that without a showing of actual harm, plaintiff lacked Article III standing. The Ninth Circuit rejected Spokeo's argument, holding that Congress may, within the constraints of the Constitution, confer Article III standing to a plaintiff whose injury would be inadequate without the statutory right: "When, as here, the statutory cause of action does not require proof of actual damages, a plaintiff can suffer a violation of the statutory right without suffering actual damages." Id. at 413. The United States Supreme Court granted certiorari in April of this year.
The Spokeo decision could impact claims brought under healthcare statutes that confer on plaintiffs statutory rights even if they have suffered no actual damage. California Health and Safety Code section 1430(b), for example, allows a resident of a skilled nursing facility to recover up to $500 in an action for violation of certain statutory rights, such as the right to patient health records that meet certain requirements, including that nurses' notes be signed and dated. (22 CCR § 72547.) Section 1430(b) also allows enforcement of the right to reside in a skilled nursing facility staffed at a certain level. (See Cal. Health & Safety Code § 1276.5.) A defendant could potentially violate both rights without a plaintiff ever suffering any injury in fact. Spokeo could particularly impact class claims against skilled nursing facilities alleging facility-wide understaffing because those claims implicate injuries to a resident group rather than any resident in particular (including a named plaintiff). Significantly, class relief cannot be reached unless a named plaintiff has stated a valid claim, which necessarily includes satisfying Article III standing requirements. See O'Shea v. Littleton, 414 U.S. 488 (1974).
Likewise, actions brought under other healthcare statutes could be vulnerable to standing challenges should the Supreme Court disagree with the Ninth Circuit. For example, California Insurance Code section 10753.18 provides that "in any civil action, a court may also assess the penalties described in this chapter" for violation of the Nongrandfathered Small Employer Health Insurance chapter of the Insurance Code. The chapter provides elsewhere that sales and solicitations materials must disclose, among other things, that "no preexisting condition provisions shall be allowed." Cal. Ins. Code § 10753.16(c). Again, a defendant could potentially fail to include that disclosure in sales materials without a plaintiff ever suffering any injury in fact—perhaps sufficient injury under the Ninth Circuit's holding.
If the U.S. Supreme Court disagrees with the Ninth Circuit and overturns Spokeo, future actions brought in or removed to federal court to enforce statutory rights like those described above, without any actual injury to a plaintiff, could be vulnerable to standing challenges. Those outside California should likewise consider Spokeo's impact when assessing claims brought under similar statutes from other states.