Penn Medicine Loses Bid to Move Privacy Suit to Federal Court

The University of Pennsylvania Health System can’t invoke federal jurisdiction over a lawsuit filed in state court alleging it illegally shared personal health information from its online patient portal with Facebook, a federal appellate court ruled.

Johnathon Mohr alleged in a proposed class action filed in the Court of Common Pleas of Philadelphia County that Penn Medicine installed the Facebook pixel on its patient portal, allowing the social media giant to collect sensitive information about patients identities, medical conditions, and online activities in violation of Pennsylvania privacy law.

Penn Medicine wasn’t “acting under” the federal government in operating the portal, a requirement for removing a lawsuit from state court under the federal officer removal statute, the US Court of Appeals for the Third Circuit said Wednesday.

The ruling comes two months after the Eighth Circuit rejected the effort of the St. Louis-based BJC Health System to invoke the statute to remove a similar lawsuit over the alleged sharing of health information with Facebook through tracking technology installed in a patient portal.

At issue was Penn Medicine’s activities in operating its online patient portal in the wake of 2009 legislation directing the Department of Health and Human Services to provide incentive payments to health care providers to adopt electronic medical records and make them available to patients.

Penn Medicine removed the lawsuit to the US District Court for the Eastern District of Pennsylvania, arguing it was “acting under” the federal government within the meaning of the removal statute in operating the portal so as to receive federal incentive payments and avoid penalties.

The case arrived at the Third Circuit after the district court rejected the health system’s argument and granted the plaintiff’s motion for remand.

The argument for removal fared no better on appeal.

The classic example of private parties acting under the federal government is that of contractors producing goods for the government which it would otherwise have to produce for itself, Judge David J. Porter said for the court.

But when health systems operate patient portals, they are doing their own business, not the government’s, he said.

“Advancing governmental policy while operating one’s own business is not the same as executing a delegated governmental duty,” he said.

Penn Medicine argued that its contractual relationship with the government rendered it a federal officer under the statute, but Porter said the deciding issue was the nature of the relationship between the private party and the government, not the existence of a contract.

“Here, that relationship demonstrates that Penn is not acting under the federal government in operating Penn Medicine’s patient portals,” he said.

Judges Cheryl Ann Krause and Cindy K. Chung joined in the opinion.

Public Citizen Litigation Group represents Mohr and the proposed class. Holland & Knight LLP represents Penn Medicine.

The case is Mohr v. Trustees of the Univ. of Pa., 3d Cir., No. 23-01924, 2/21/24.