The Federalism Challenges of Protecting Medical Privacy in Workers' Compensation

Abstract

Under current law, injured workers face a Hobson’s choice: They may file for workers’ compensation or maintain their medical privacy. The reason for this is that § 164.512(l) of the Health Insurance Portability and Accountability Act’s Privacy Rule (HPR) is widely misinterpreted by courts and legislatures as a wholesale waiver of privacy protections for injured workers. Section 164.512(l) excludes workers’ compensation from federal privacy protections that may frustrate the efficient administration of workers’ compensation claims. As the history and intent behind the HPR indicate, § 164.512(l) is premised on the assumption that states will protect workers’ privacy by creating and implementing their own privacy regimes. An original empirical survey detailed in this Article indicates states have not adequately provided such protections.

This Article argues that workers’ compensation programs must be aligned with the federal privacy protections of the HPR and proposes actions for the U.S. Department of Health and Human Services and the states to remedy privacy failures. The Article begins by explaining the misunderstood relationship between the HPR and workers’ compensation generally. It then discusses why § 164.512(l) is misconstrued. The Article suggests that the answer may be rooted in the unclear boundary between constitutionally grounded federal privacy protections and the historic role of states in administering their own workers’ compensation programs and protecting privacy. The Article argues that the protection of privacy in workers’ compensation highlights a unique federalism relationship—what this Article terms “symbiotic” federalism—whereby the federal and state governments are mutually dependent on one another to ensure privacy is protected. Under this reading, workers’ compensation statutes must be interpreted “through,” or in the spirit of the HPR, and contrary law preempted.

Keywords: Privacy, Workers' Compensation, Health Law, Disability Law, Federalism

JEL Classification: I113, I114