Court: Charging tax on medical records legal


LITTLE ROCK — Arkansas law allows patients to be charged a sales tax when they pay a private company to obtain copies of their medical records, the state Supreme Court ruled Thursday.

The high court unanimously upheld a Pope County circuit judge’s dismissal of a class-action lawsuit by Theresa Holbrook of Russellville, who had argued that HealthPort of Alpharetta, Ga., was illegally collecting a sales taxes from her and other Arkansans who requested copies of their medical records.

In oral arguments before the Supreme Court last month, an attorney for Holbrook argued that the state Access to Medical Records Act allows a health-care provider to charge a patient who requests his or her medical records only for the cost of producing the records, and that the same limitation should apply when third parties provide the records.

HealthPort’s attorney said the Arkansas Department of Finance and Administration had advised the company to charge the tax and remit it to the state. An attorney for DF&A Director Richard Weiss argued that the state sales tax applies to sales of all tangible personal property, and that the Legislature has not created an exemption for medical records.

The Supreme Court said Thursday that the Arkansas Gross Receipts Act levies a tax on “the gross proceeds or gross receipts derived from all sales to any person of … tangible personal property” and that a sale is defined as the “transfer of either the title or possession … for a valuable consideration of tangible personal property.”

“Based on our reading of the clear and unambiguous language of the statutes in a consistent, harmonious, and sensible manner, and giving effect to every part, we conclude that the circuit court did not err in finding that HealthPort’s transfer of the paper copies of Holbrook’s medical records for money was a sale of tangible personal property and subject to sales tax,” Justice Cliff Hoofman wrote in the court’s opinion.

Holbrook’s lawsuit cited an October 2010 advisory opinion by Attorney General Dustin McDaniel that said the Access to Medical Records Act prohibits a health-care provider or a third party from charging a sales tax for providing medical records.

But the Supreme Court noted that McDaniel later supplemented the opinion with a comment that the power to determine issues relating to imposition of taxes is vested in the DF&A.

“The attorney general in essence retracted his previous opinion,” Hoofman wrote in the Supreme Court’s opinion.