Written by Ashley Hardesty

Pursuant to the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), enacted to ensure transferability of health insurance among employers, the Department of Health and Human Services developed privacy rules to prevent the unauthorized dissemination of an individual’s protected health information. The privacy rules, effective on April 14, 2003, included harsh penalty provisions and created panic throughout the health care community. Health care providers must now exercise extreme caution to ensure protected health care information is not released to unauthorized persons.

The anxiety the health care community is experiencing in response to the stringent privacy rules may ultimately prevent them from releasing important health information to appropriate persons, including one’s appointed personal representative. The effectiveness of financial and medical powers of attorney executed prior to the enactment of HIPAA is called into question by this reluctance of health care providers to share patient information with appropriate persons.

Therefore, these earlier powers of attorney should be reexamined to ensure the power will serve the purposes intended by the individual. Essentially, the HIPAA privacy rules present two issues with respect to powers of attorney: (1) if a power of attorney is a “springing” power that requires a physician’s determination of incapacity before the power becomes effective, may the physician disclose that determination to the putative representative; and (2) may a medical provider disclose protected health information to a personal representative and, if so, may that personal representative republish the information to other providers?

Typically, financial powers of attorney are immediately effective upon execution, thereby authorizing the personal representative to step into the shoes of the individual despite the individual’s capacity to act on his or her own behalf. Individuals making their estate plan commonly request a power that “springs” into effect only after a physician determines that he or she is incapacitated. However, under HIPAA’s privacy rules, the determination of incapacity may not be published to any unauthorized person. Unauthorized persons may, at least in the mind of apprehensive health care providers, include the intended personal representative named in a power of attorney. The authority one intends to confer on his or her personal representative may not be exercised if health care providers refuse to share the determination of incapacity with such personal representative.

This problem is also prevalent in dealing with medical powers of attorney in West Virginia. Under the West Virginia Health Care Decisions Act of 2003, all medical powers of attorney are considered “springing.” The Act provides that a medical power of attorney representative has no authority to act until the person is determined to be incapacitated by a qualified physician, psychologist, or advanced nurse practitioner who personally examined the person. Therefore, certain steps must be taken to convince health care providers they will not violate HIPAA by publishing the determination of incapacity to the purported personal representative.

Finally, although HIPAA treats one’s personal representative as if he or she were the individual, health care providers may hesitate in disclosing important medical information even to a personal representative appointed pursuant to a valid power of attorney. This is especially true if the personal representative is appointed pursuant to a power of attorney that does not specifically authorize disclosure of medical information to the representative. Even if one’s physician does disclose such information to the personal representative, HIPAA may not permit the personal representative to subsequently republish the information to other medical providers.

Clearly the effects of HIPAA have exceeded the Act’s intended scope. One consequence of HIPAA is the potential weakening of financial and medical powers of attorney which spring into effect sometime after execution and upon the occurrence of some future event. Thus, “springing” powers of attorney should be reevaluated by a lawyer to ensure such documents are respected by health care providers, and that the goals of one’s estate plan are fully accomplished.

For more information, please contact Ashley Hardesty or any member of our Tax Team:

Ashley Hardesty

Contact Information:
ahardesty@bowlesrice.com
Telephone: (304) 285-2522
Facsimile: (304) 599-1390
7000 Hampton Center Suite K
Morgantown, West Virginia 26505-1720

The author presents these materials with the understanding that the information provided is not legal advice. Due to the rapidly changing nature of the law, information contained in this publication may become outdated. Anyone using these materials should always research original sources of authority and update this information to ensure accuracy when dealing with a specific matter. No person should act or rely upon the information contained in this publication without seeking the advice of an attorney.