Regulatory burdens

• South Carolina Medical Association v. Thompson

South Carolina Medical Association v. Thompson, 327 F.3d 346 (4th Cir. 2003)

Issue

The issue in this case was the validity of privacy regulations promulgated under the Health Insurance Portability and Accountability Act (“HIPAA”), based on the purported unconstitutionality of HIPAA.

Case summary

The South Carolina Medical Association (SCMA), the Louisiana State Medical Society, the Medical Association of the State of Alabama, the Connecticut State Medical Society, six physicians, and an independent practice association of physicians sued the United States Department of Health and Human Services (HHS) for a declaration that the HHS privacy regulations promulgated under HIPAA were invalid. The suit alleged that the statute authorizing the regulations was unconstitutional, in that it unlawfully delegated legislative authority to the executive branch of government, and was so vaguely worded that it failed to provide an intelligible standard for its compliance. The suit also alleged that the statute covered only electronic communications, whereas the regulations covered all forms of communication. Therefore, the suit claimed, even if the enabling statute were valid, the regulations, as written, exceeded the authority that Congress had delegated to HHS.

The United States District Court dismissed the lawsuit. The court acknowledged that the plaintiffs had raised several probing questions, which merited careful analysis. However, the court believed that any ambiguities in the law or the HHS regulations must be resolved in favor of their validity. Since the Supreme Court raised the “intelligible principle” doctrine more than 70 years ago, it has only twice stricken an act of Congress for failure to meet that requirement. Although the district court found drafting gaps in the HIPAA language, it ultimately found that the law met constitutional standards. By similar reasoning, it found the HHS regulations valid.

The plaintiffs appealed to the United States Court of Appeals for the Fourth Circuit, but the Fourth Circuit affirmed the District Court's decision. SCMA then petitioned the United States Supreme Court for further review, which request the Court denied.

AMA interest and Litigation Center involvement

The AMA and the Litigation Center believed that, while the regulations have flaws, they do have merit and so the best strategy in this situation was to engage in discussions with HHS, rather than sue it. For that reason, the Litigation Center declined an invitation to join the lawsuit.

However, the physicians of the plaintiff medical societies believed that the problems presented by these regulations outweighed their benefits and that the most effective way to solve these problems was through a lawsuit. Because the Litigation Center respected that belief, at the SCMA's request, it contributed a modest sum to help defray the litigation expenses.