Home > Uncategorized > California Supreme Court: state privacy law not preempted by FCRA

California Supreme Court: state privacy law not preempted by FCRA

June 17, 2011

Most FCRA defense lawyers, myself included, tend to think of the consumer reporting as something that is exclusively federal:  the FCRA is a federal law, so we assume that lawsuits involving consumer reports present federal questions to be decided by federal courts.

It doesn’t always work that way.  The FCRA does preempt state laws to a significant extent.  But it does not completely preempt them:  states can and do pass laws that supplement the FCRA.  (As I mentioned just last week, Ohio is considering whether to ban the use of consumer reports by employers, something that is permitted by the FCRA).  But even so, we tend to think that federal courts will decide whether a state law is preempted or not.

Confounding this conventional wisdom, the California Supreme Court recently decided a dispute between a California consumer and a California dentist over whether the dentist violated California law when it provided medical records to a debt collector regarding a $600 debt that the consumer had not paid.  (Because the suit was between two state residents and involved less than $75,000, and because case law indicates that state courts are just as able to resolve federal preemption issues as are federal courts, the dispute was heard by California state courts and not by federal courts).

The Court ruled that the FCRA does not preempt the California Confidentiality of Medical Information Act.  This California law went beyond the FCRA and another federal law (HIPAA, involving medical records) and allegedly prohibited the dentist from disclosing the records to the debt collector.  The consumer sued for violations of this California law.  The state trial court and the intermediate state appeals court both held that the California law was preempted by the FCRA.  But the California Supreme Court has just reversed that finding.  We don’t know yet whether the dentist violated the California law – further proceedings in the trial court will decide that question (if the parties don’t settle first).  But we do know that California creditors and debt collectors now have another law to consider when they engage in debt collection efforts.


Categories: Uncategorized
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