March 27, 2021

In its opinion filed on March 8, 2021, the Supreme Court of the State of Arizona (“Arizona Supreme Court”) stated, “Section 12-2296 affords healthcare providers immunity from liability for damages if they acted in good faith when disclosing medical information pursuant to applicable law. While acting in good faith is presumed, the presumption may be rebutted by clear and convincing evidence. We hold that a plaintiff does not have to allege bad faith or rebut the good faith presumption in his complaint when asserting a claim of negligent disclosure of medical information. We also hold that HIPAA may inform the standard of care in a negligence claim.”

The Underlying Facts

Greg Shepherd (“Shepherd”) visited his physician for a check-up and a refill of his usual prescription. He also received a sample of an erectile dysfunction (“E.D.”) medication. Thereafter, Shepherd went to Costco Pharmacy (“Costco”) to pick up his regular prescription and was notified that a full prescription of the E.D. medication was ready, too. Shepherd said that he did not want the E.D. prescription and instructed the Costco employee to cancel it. The employee acknowledged the request.

Shepherd called Costco the next month to check on his regular prescription refill. An employee told him that the regular and E.D. prescriptions were ready. Shepherd again stated that he did not want the E.D. prescription and, again, his request was acknowledged. Shepherd called back the next day, asking if his ex-wife, with whom he was exploring possible reconciliation, could pick up his regular prescription. The employee stated she could and that it was ready. The employee did not tell Shepherd, though, that the E.D. prescription was still available for pick up, as well.

When Shepherd’s ex-wife went to Costco, the employee gave her both prescriptions. However, she did not accept the E.D. prescription, and the two joked about it. Upon returning to Shepherd, she told him she knew about the E.D. medication and no longer wanted to be with him, ending any reconciliation effort. She later told Shepherd’s children and friends about the E.D. medication.

Shepherd complained to Costco headquarters about the disclosure of the E.D. prescription and received a written response acknowledging a violation of HIPAA and Costco’s privacy policy. Shepherd then sued Costco, alleging negligence, breach of fiduciary duty, fraud, negligent misrepresentation, intentional infliction of emotional distress, intrusion upon seclusion, and public disclosure of private facts based on Costco’s “public disclosure of an embarrassing medication that [he] twice rejected.” Shepherd further alleged that had he known Costco failed to cancel the E.D. prescription, he would not have sent his ex-wife to pick up his regular prescription.

Costco moved to dismiss Shepherd’s complaint pursuant to Arizona Rule of Civil Procedure 12(b)(6), asserting that § 12-2296 provided immunity from all his claims and that the claims were also precluded by HIPAA. The trial court granted the motion and dismissed the entire complaint with prejudice, finding that Costco was entitled to immunity from suit under § 12-2296, that the claims were preempted by HIPAA, and that Shepherd failed to allege sufficient facts to support his claims.

Arizona Supreme Court Opinion

Section 12-2296 states: “A health care provider . . . that acts in good faith under this article is not liable for damages in any civil action for the disclosure of . . . information contained in medical records . . . that is made pursuant to this article or as otherwise provided by law. The health care provider . . . is presumed to have acted in good faith. The presumption may be rebutted by clear and convincing evidence.”

The Arizona Supreme Court stated that in the context of Section 12-2296, good faith is an honest belief, the absence of malice and the absence of a design to defraud or to seek an unconscionable advantage. The Arizona Supreme Court further stated that while it is clear that HIPAA does not provide for a private right of action, it is equally clear that it does not prohibit a state law claim for negligent disclosure of medical information and thus does not preclude Shepherd’s negligence claim.

The Supreme Court also stated, “Shepherd’s reference to Costco’s company policies thus provides an additional source to inform the standard of care beyond the sole provisions of HIPAA, as does his reference to regulations governing pharmacies … Therefore, the argument that Shepherd is relying solely on HIPAA to establish the standard of care for his negligence claim is incorrect … To the extent Costco argues that any use of HIPAA to inform the standard of care in a negligence claim is precluded, we disagree … We conclude that Shepherd permissibly referenced HIPAA in his complaint to inform the standard of care in his negligence claim. The trial court thus erred in granting Costco’s motion to dismiss on this basis.”

Source Shepherd v. Costco Wholesale Corporation, No. CV-19-0144-PR.

If you or a loved one suffered serious harm (or worse) as a result of a pharmacy error in Arizona or in another U.S. state, you should promptly seek the legal advice of an Arizona medical malpractice attorney or a medical malpractice attorney in your state who may investigate your pharmacy mistake claim for you and represent you in a pharmacy negligence case,  if appropriate.

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