Legislative Update: Health Care Records Fees, Litigation Advances, and More
Adam Jordahl, The Hamilton Consulting Group, LLC

On behalf of WDC, the Hamilton Consulting Group monitors developments affecting civil litigation, insurance law, and worker’s compensation policy in Wisconsin, including Legislative opportunities and threats impacting Wisconsin’s civil litigation environment; Rule petitions to the Wisconsin Supreme Court affecting civil trial and appellate practice; and Case law from precedential opinions issued by the state’s supreme and appellate courts.[i] The Hamilton Consulting team is available to serve WDC and its members and can be contacted at [email protected].

I. Introduction

 The Wisconsin Legislature inaugurated its 2023-24 session in January. As usual, the first six months of the session have been dominated by deliberations over the biennial state budget, a process typically completed by the end of June or July. Key issues on the horizon for WDC this session include statutory fee limits for copies of patient health records and the regulation of nonrecourse civil litigation advances. Several other civil justice-related proposals have been introduced, most of which do not appear likely to become law at this time.

II. Health Care Records Fees

a. The Banuelos Decision

The cost of obtaining copies of health care records is an important issue for attorneys and insurers in Wisconsin. This April, in Banuelos v. University of Wisconsin Hospitals and Clinics Authority, the Wisconsin Supreme Court held that state law does not permit health care providers to charge any fees for electronic copies of patient records.[ii]

Banuelos was pursuing a personal injury suit when her attorneys requested copies of her health care records from UW Hospitals. UW Hospitals fulfilled the request through its records vendor, Ciox, which provided Banuelos’ attorneys with electronic copies of her records and an invoice for $109.96. This bill was based on the maximum allowable per-page fee for paper copies of patient health care records under Wisconsin law.[iii] 

Banuelos sued UW Hospitals, arguing that Wisconsin law does not permit providers to charge anything for electronic records because those records do not fall into any of the categories listed in Wis. Stat. § 146.83(3f). UW Hospitals filed a motion to dismiss, reasoning that it could not have violated the law because the statute simply does not address electronic records. The motion to dismiss was granted by the circuit court and the appellate court reversed.[iv]

The court held that, “although Wis. Stat. § 146.83(3f) provides for the imposition of fees for copies of medical records in certain formats, it does not permit health care providers to charge fees for patient records in an electronic format.”[v] The court agreed with Banuelos’ argument that “because fees for electronic copies are not enumerated in the statutory list of permissible fees that a health care provider may charge, the fees charged here are unlawful under state law.”[vi]

b. Policy Implications of Banuelos

Notably, the court’s decision in Banuelos aligned with a third-party brief submitted jointly by the Wisconsin Defense Counsel and the Wisconsin Association for Justice (WAJ). However, this ruling may put pressure on the Wisconsin Legislature to resolve the issue more definitively by establishing some kind of statutory fee limit for electronic records.

Last year, a proposal was brought to the Assembly by Ciox, a health care information management company used by some Wisconsin providers, including the defendant in Banuelos. The proposal would have established a per-page fee schedule for electronic copies of medical records at about 75% of the fee schedule for paper copies. 

Of course, charging a per-page fee for electronic copies makes little sense, and the 75% cost ratio is difficult to justify. In response, WDC joined with WAJ and the Wisconsin Insurance Alliance to propose a flat fee of $6.50 per request for electronic copies. The coalition also proposed requiring providers to furnish records in an electronic format on request if those records were created or are already stored in an electronic format. This would prevent vendors from printing and mailing paper copies of natively electronic records in order to legally charge a higher fee, an issue reported by some attorneys. In the wake of Banuelos, this practice may become more common given the court’s holding that no fees can be collected for electronic copies.

In response to this proposal, Ciox argued that a flat fee fails to account for the cost of copying older paper records that must be scanned into an electronic format, or mixed paper/electronic record sets. However, virtually all health care records today are created and stored electronically. As a compromise, the coalition proposed a per-page fee of 20% of the rate for paper copies, applicable to “electronic copies of patient health care records that were not created electronically.”

Ultimately, neither side’s proposal was introduced or passed before the Wisconsin Legislature adjourned for the remainder of 2022. WDC stands ready to engage on this issue if or when it arises during the 2023-24 session. More information about the proposals from last session, as well as the legislative history and case law behind the statutory fee schedule in Wisconsin, can be found in this author’s article published in the Summer 2022 edition of the Wisconsin Civil Trial Journal.[vii]

 III. Regulation of Nonrecourse Civil Litigation Advances

The Wisconsin Civil Justice Council, a broad coalition of organizations interested in civil liability issues, is pursuing legislation to regulate nonrecourse civil litigation advances. This practice is colloquially referred to as “lawsuit lending,” despite such advances not being a loan in the traditional sense. In essence, the plaintiff in a civil lawsuit receives an advance on a portion of the claim from a financing firm, with repayment of the advance contingent on the outcome of the case. 

The advances often have confusing terms and high effective interest rates, meaning that successful plaintiffs may see nothing at the end of the case after repayment. For this reason, plaintiffs who have received an advance commonly delay or prolong settlement negotiations, increasing the costs of litigation and legal services for all actors in the civil justice system.

The goal of this reform is to protect consumers and control litigation costs by creating reasonable consumer protections around nonrecourse civil litigation advances, which are mostly unregulated in Wisconsin. The bill includes the following provisions:

• Requires a written contract between the finance company and consumer including clear disclosures of the advance amount, interest rate, one-time fees, and the amounts of the potential proceeds assigned to the consumer and to the finance company.

• Requires such contracts to include a provision allowing the consumer to cancel the contract within five days, a statement that the company has no right to participate in the dispute or make decisions on the consumer’s behalf, and a statement that, except for prepayments, the company is not entitled to repayment if there are no proceeds at the conclusion of the dispute.

• Limits the total finance charge (the sum of all charges, including interest, fees, and assigned proceeds) to the prime interest rate plus 10 percent and the contract length to 36 months.

• Allows a consumer to prepay the advance at any time and entitles the consumer to a pro rata reduction in the finance charge.

• Prohibits the finance company from paying commissions or referral fees to attorneys or health care providers.

Last session, WDC supported similar legislation,[viii] submitting a written memo to legislators and testifying before the relevant committee in each house. The bill was authored by a bipartisan group of legislators including several attorneys. The bill ran into headwinds as the session ended, and the Wisconsin Civil Justice Council worked to improve the bill by addressing concerns raised by some legislators and representatives of the legal finance industry.

The primary change was to simplify the finance charge calculation and link it to the prime interest rate, rather than setting specific interest rate or fee limits. The original bill capped the interest rate at 18 percent and limited fees to $360 annually. This change prevents a need for the interest rate or fee numbers to be updated in the future in response to changing financial conditions.

Also, the definitions of terms used in the bill were clarified to ensure consistent interpretation and application. Notably, the bill now refers to “nonrecourse civil litigation advances” rather than “lawsuit lending,” a more accurate term that is in line with the statutory language used in other states that regulate such transactions.

 IV. Other Legislative Issues

 a. State Budget Bill: New Causes of Action Removed

The 2023-25 state budget, as originally proposed by Governor Evers, included new causes of action for employment discrimination, unfair honesty or genetic testing, and broadband service denial. It also would have restored the ability of private parties to bring a qui tam action against a person for making a false or fraudulent claim to the state’s Medical Assistance program, as well as expanding those actions to include all claims to moneys from a state agency.[ix]

At its first executive session on the budget, the Joint Committee on Finance voted to remove hundreds of spending proposals and non-fiscal policy items from the budget, including the above items, which will not be considered further as part of the budget process.[x]

b. Other Legislation: Farm Implements, Unsworn Declarations, Deicer Liability, RVs 

The following bills are moving through the legislative process:

• Implements of Animal Husbandry (AB 14/SB 42): Creates “lemon law” requirements for a defective implement of animal husbandry that is covered by an express warranty and is repaired at least four times or is out of service for at least 30 days. Also creates a new civil cause of action allowing a consumer to recover damages, costs, and attorney fees. The Assembly passed the bill by voice vote on June 7, amending it to remove the latter provision. The bill has not yet seen committee action in the Senate.[xi]

• Uniform Unsworn Declarations Act (AB 27/SB 29): Allows the use of unsworn declarations, under penalty of perjury, in state court proceedings under certain circumstances. This is currently allowed for unsworn declarations made in foreign jurisdictions, and the bill would expand it to include other U.S. jurisdictions. Passed the Senate by voice vote in March and has not yet seen committee action in the Assembly.[xii]

• Deicer Applicators Certification Program (AB 61/SB 52): Creates a voluntary certification program for commercial deicer applicators that have completed approved training and passed an exam. Limits the liability of a certified applicator for damages arising from snow and ice accumulation. An amendment was introduced to make various updates to the bill, including improving the liability language. The relevant committee in each house has recommended the bill for passage, as amended.[xiii]

• Recreational Vehicle Regulations (AB 230/SB 225): Creates various new regulations affecting the recreational vehicle (RV) industry. The bill is supported by RV manufacturers, parts suppliers, and dealers. Includes a “dispute resolution” provision that allows RV dealers, manufacturers, distributors, and warrantors to bring a civil action against one another to recover actual damages, attorney fees, and costs. Requires parties to attempt mediation before filing a lawsuit. Received a public hearing in the Assembly and has not yet seen committee action in the Senate.[xiv]

Several other bills of interest have been introduced but have not yet received a public hearing or further committee action and do not appear likely to become law at this time. This includes legislation to create new civil causes of action for failure to properly care for a child born alive following an abortion (AB 63/SB 61),[xv] financial exploitation of a vulnerable person (AB 116/SB 116),[xvi] and discrimination based on traits historically associated with race, including hair texture and protective hairstyles (AB 240/SB 246).[xvii]

Additionally, WDC has registered in support of a bill (SB 77/AB 81) that, according to the official summary, “eliminates the cap on the amount that recovery for injuries or damages may be reduced for failure to wear a safety belt.” Current law limits the potential reduction of damages to 15 percent. The bill has yet to receive a public hearing or further committee action.[xviii]

 c. Worker’s Compensation Disability Ratings

The Department of Workforce Development (DWD) is proposing updates to the minimum permanent partial disability (PPD) ratings used for worker’s compensation claims. DWD is required by law to review and revise minimum PPD ratings at least once every eight years to reflect advances in medical science. The department introduced this proposal at the April 11 meeting of the Worker’s Compensation Advisory Council.[xix] The proposal includes various ratings changes and the creation of new ratings for damage to various nerves and changes to ratings for knee, elbow, shoulder, and organ damage. 

Author Biography:

Adam Jordahl is the Communications & Government Relations Manager at the Hamilton Consulting Group, a full-service government affairs firm located in Madison. On behalf of the firm’s clients, including Wisconsin Defense Counsel, he monitors legislation, rules, and public meetings, communicates with legislators, researches policy issues, and develops reports and publications. Adam earned a B.A. from Rice University, graduating cum laude with distinction for his senior thesis on internet memes and politics.