Written By ESR News Blog Editor Thomas Ahearn
An Appeals Court has affirmed the judgment of a district court to dismiss a complaint that claimed a hospital violated the federal Fair Credit Reporting Act (FCRA) and found that the hospital was not a “consumer reporting agency” as defined under the FCRA.
In the case of Tierney v. Advocate Health & Hospitals Corp., burglars stole four desktop computers containing unencrypted private data relating to approximately four million Advocate patients from one of the defendant’s administrative offices in Illinois in July of 2013.
Six affected patients brought a putative class action against Advocate alleging that the defendant did not safeguard their information and was also a “consumer reporting agency” because it assembled information on consumers to furnish consumer reports to third parties.
The FCRA 15 U.S.C. § 1681, et seq., requires every consumer reporting agency (CRA) to maintain “reasonable procedures” to ensure that the CRA does not furnish consumer reports to unauthorized third parties or for impermissible purposes.
However, the United States Court of Appeals for the Seventh Circuit found that the plaintiffs did not properly plead that Advocate is a “consumer reporting agency” under all three prongs of the definition used by the FCRA. A “consumer reporting agency” means any person which:
 for monetary fees, dues, or on a cooperative nonprofit basis,  regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers  for the purpose of furnishing consumer reports to third parties….
The Court of Appeals found that the complaint did not satisfy the definition’s first prong because Advocate did not assemble personal and medical information of patients “for monetary fees” but only in order to receive payment for health care services rendered by its physicians.
The plaintiffs’ allegations also did not satisfy the third prong of the statutory definition because the FCRA expressly excludes from the definition any “report containing information solely as to transactions or experiences between the consumer and the person making the report.”
The United States Court of Appeals for the Seventh Circuit finding in the case of Tierney v. Advocate Health & Hospitals Corp., is available here. For more information about background checks, visit Employment Screening Resources (ESR) at http://www.esrcheck.com.
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