Malcolmson v. Liberty Northwest

Malcolmson v. Liberty Northwest, 2014 MT 242 (Sept. 10, 2014) (7-0) Cotter, J.

Issue: Whether MCA § 39-71-604(3), requiring a work comp claimant to authorize the insurer to communicate with health care providers without prior notice to the employee, violates Malcolmson’s constitutional right to privacy.

Short Answer: Yes. Applying strict scrutiny, the Court determines the statute is facially unconstitutional. It is justified by a compelling state interest but is not narrowly tailored to effect that interest.

Affirmed

Facts: After injuring her back at work, Tina Malcolmson sought medical treatment and filed a work comp claim. Liberty hired a case manager. Eventually, Malcolmson revoked her authorization allowing Liberty or its agents to speak to her healthcare providers without prior notice to her. Citing that revocation, Liberty terminated Malcolmson’s medical benefits. Malcolmson filed a petition for an emergency trial.

Procedural Posture & Holding: The Workers’ Compensation Court held a trial, after which it determined that § 39-71-604(3), MCA, violated Malcolmson’s constitutional right to privacy because it did not provide Malcolmson notice or allow her to participate in conversations between the insurer and the healthcare providers. Liberty appeals, and the Supreme Court affirms.

Reasoning: The Work Comp Court applied strict scrutiny, reasoning that the right to privacy is a fundamental right. Liberty did not appeal that decision, instead arguing that § 39-71-604(3), MCA, does not implicate the right to privacy. The state joins Liberty in that argument as amicus.

The Court rejects Liberty’s argument that Malcolmson could not have an actual or subjective expectation of privacy in her medical information. Malcolmson does not dispute that an insurer is entitled to medical information relevant to her claims. She objects to the insurer or its agent being able to communicate with healthcare providers without prior notice to Malcolmson or an opportunity for her to participate. It also notes that the Court has already held that medical information is “quintessentially private” and deserves the “utmost constitutional protection.” ¶ 23.

While the Court agrees that the state has a compelling interest in the orderly administration of the workers’ compensation process, it holds that § 39-71-604(2) is not narrowly tailored to effectuate that interest. For 90 of the 100 years the work comp statutes have been in place, this statute did not exist and “yet relevant medical information was obtained by insurers adjusting claims.” ¶ 30. Although the lower court held that statute was unconstitutional as applied to Malcolmson, the Court concludes it is facially unconstitutional “because it would impose the same violation of privacy interests on every injured worker to who it was applied.” ¶ 32. The Court agrees that “insurers have a legitimate interest in engaging in ex parte contact with healthcare providers for the sole purpose of facilitating the administrative aspects of the claim handling procedure, such as scheduling appointments and requesting medical records,” and further agrees that “a release crafted to authorize this type of limited ex parte contract would not violate a claimant’s right of privacy.” ¶ 33.