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Your Relationships With Your Patients Are Protectable Trade SecretsBy: Rob J. Crichton
The most valuable component of most dental practices is something intangible: the goodwill of the practice's patients. But what can be done to protect that goodwill when a competitor obtains your patient list and solicits your patients? Even in the absence of a noncompetition agreement, you may be able to enjoin this misuse of your confidential health information or, in the alternative, to obtain damages against your competitor. Both federal and state law recognize the confidential nature of a patient's relationship with his or her health care provider. A number of federal and state statutes prohibit the misuse of confidential patient information for commercial purposes. For example, under the Health Insurance Portability and Accountability Act, commonly known as HIPAA, a person who discloses a patient's medical health information to a third party, with the intent to use that information for commercial advantage, is subject to imprisonment for up to 10 years and a fine of up to $250,000. Washington state law also generally prohibits the disclosure of health care information about a patient without the patient's prior written authorization. But what can you do if an employee or colleague takes your practice's patient list and solicits your patients on behalf of a competing dental practice? Or if they surreptitiously provide that information to another health care provider, who then solicits them? The Washington Supreme Court has held that, even in the absence of an enforceable covenant not to compete, a former employee remains under a duty not to use or disclose trade secrets acquired in the course of their employment to the detriment of the former employer. This is true even if the employee has memorized the information. Washington also has adopted the Uniform Trade Secrets Act, which authorizes the recovery of damages caused by the misappropriation of trade secrets, as well as injunctive relief. (Here is a link to the statute) If the misappropriation is found to have been willful and malicious, you may be able to recover double damages, as well as your legal fees. "Misappropriation" is defined broadly to encompass not only the removing of the trade secrets but also their use by a third party who has reason to know of their confidential nature. There are a number of preventative steps that can and should be taken to guard your trade secrets, and to ensure that your employees understand their duty to preserve the confidential nature of your patients' identities and their health care information. And, if despite your best efforts, a misappropriation has occurred, we can assist you in litigation. In 2008, our team obtained entry of a $500,000 judgment against a nurse and her new employer for misappropriating confidential health care information. This article is only intended to provide a brief, general summary of the law applicable to trade secrets for informational purposes. We invite you to consult with Scott Henderson about potential trade secret concerns or issues.
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