Accounts Receivable Services, LLC, as Successor in Interest to Allina Health System, Respondent,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2016).

STATE OF MINNESOTA
IN COURT OF APPEALS
A16-1536

Accounts Receivable Services, LLC,
as Successor in Interest to Allina Health System,
Respondent,

Allina Health System,
Nonparty Respondent,

vs.

Michael C. Ojika, et al.,
Appellants.

Filed April 24, 2017
Affirmed in part, reversed in part, and remanded
Bjorkman, Judge

Ramsey County District Court
File No. 62-CV-16-1712

Brad D. Welp, Stewart, Zlimen & Jungers, Ltd., Minneapoli s, Minnesota (for respondent
Accounts Receivable Services, LLC)

Michael A. Klutho, Jessica L. Klander, Bassford Remele, P.A., Minneapolis, Minnesota
(for respondent Allina Health System)

Darren B. Schwiebert, DBS Law LLC, Minneapolis, Minnesota (for appellants)

Considered and decided by Johnson, Presiding Judge; Schellhas, Judge; and
Bjorkman, Judge.

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U N P U B L I S H E D O P I N I O N
BJORKMAN, Judge
Appellants challenge the district court’ s grant of sum mary judgment in favor of
respondent’s account-stated claim and against appellants’ counterclaim under the
Minnesota Health Records Act (MHRA) , Minn. Stat. § 144.291-.298 (2016) . Because
there are no genuine issues of material fact and respondent is entitled to judgment as a
matter of law on its account-stated claim, we affirm the grant of summary judgment on that
claim. But because the district court erred by concluding that respondent had shown that
the release of health records was authorized by law , we reverse the grant of summary
judgment on appellants’ MHRA counterclaim and remand for further proceedings.
FACTS
Appellants Michael Ojika and Precious Ojika, husband and wife, each received
medical services from respondent Allina Health Systems, for which they purportedly made
only partial payments . Respondent Accounts Receivable Services (ARS ) is the alleged
assignee of the unpaid accounts. ARS brought a conciliation court action against the Ojikas
to recover the balance . The conciliation court dismissed ARS’s claim after a contested
hearing, concluding that ARS did not satisfy the chain-of-title requirements of Minn. Stat.
§ 548.101 (2016).
ARS removed the matter to district court and moved for summary judgment,
attaching an affidavit of Al lina’s executive vice president and chief financial officer
(Gallagher affidavit), with exhibits, to establish Allina’s assignment of the Ojika accounts
to ARS. Four days later, the Ojikas’ counsel wrote to ARS’s counsel, asserting that

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Exhibits 1A and 2 to the Gallagher affidavit were “private health records,” which ARS
made availabl e to the public by filing the records in district court. Exhibits 1A and 2
contain the Ojikas’ account numbers, service dates and locations, dates of last payment ,
and the unpaid balance for each visit. ARS promptly filed redacted exhibits, and filed the
originals under seal . The Ojikas interposed a counterclaim for violation of the MHRA ,
alleging that they suffered harm from the original, unredacted filing of Exhibits 1A and 2.
On June 2, the district court held a hearing on and denied ARS’s summary-judgment
motion, apparently for lack of evidence of unpaid bills. On June 20, the Ojikas served
notice that they would depose ARS’s president and its corporate designee on July 6. The
next day, the Ojikas moved for summary judgment on their counterclaim, and ARS moved
for summary judgment on all claims. In support of its motion, ARS submitted billing
statements under seal. The Ojikas responded with sworn affidavits that they have no record
or memory of receiving the billing statements. A motion hearing was set for July 19.
On June 23, the Ojikas served a subpoena duces tecum on nonparty Allina, seeking
documents on July 1 and the deposition of a corporate designee on July 5. Allina objected
to the subpoena, and on July 1, moved the district court to quash it, noticing a July 19
hearing. ARS similarly moved for a protective order, objecting to the noticed depositions
of its president and corporate designee.
On July 11, the Ojikas requested additional time for discovery under Minn. R. Civ.
P. 56.06. After a July 19 hearing on all motions, the district court granted Allina’s motion

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to quash, awarded attorney fees and costs to Allina, and granted ARS’s summary-judgment
motion in full. The Ojikas appeal.1
D E C I S I O N
Summary judgment is proper “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits . . . show that there is
no genuine issue as to any material fact and that either party is entitled to a judgment as a
matter of law.” Minn. R. Civ. P. 56.03. On appeal from summary judgment, we must
determine whether there are any genuine issues of material fact and whether the district
court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn.
1990). We review the evidence de novo, in a light most favorable to the nonmoving party.
Valspar Refinish, Inc. v. Gaylord’s, Inc., 764 N.W.2d 359, 364 (Minn. 2009).
I. The district court did not abuse its discretion by declining to continue ARS’s
summary-judgment motion to permit additional discovery.

A party opposing summary judgment may ask the district court to deny or continue
the motion on the grounds that the non -moving party should be permitted to conduct
additional discovery. Minn. R. Civ. P. 56.06. “An affidavit filed pursuant to rule 56.06
must be specific about the evidence expected, the source of discovery necessary to obtain
the evidence, and the reasons for the failure to complete discovery to date.” Molde v.
CitiMortgage, Inc., 781 N.W.2d 36, 45 (Minn. App. 2010) (quotation omitted). We review
a district court’s refusal to grant a continuance to conduct discovery for abuse of discretion.

1 This court dismissed the part of the Ojikas’ appeal challenging the award of fees and
costs to Allina.

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Cherne Contracting Corp. v. Wausau Ins. Cos., 572 N.W.2d 339, 346 (Minn. App. 1997),
review denied (Minn. Feb. 19, 1998).
The Ojikas’ rule 56.06 affidavit asserts, “Defendants cannot present facts essential
to justify their opposition to ARS’s motion for summary judgment as a result of Plaintiff’s
refusal to p roceed with noticed de positions.” And it details counsel’s efforts , after ARS
renewed its summary-judgment motion, to take depositions. The affidavit does not specify
the evidence expected or explain why this discovery was not pursued earlier.
When considering a rule 56.06 request, the district court considers,
first, w hether the non -moving party is seeking further
discovery in the good faith belief that material facts will be
uncovered, or . . . merely engaging in a fishing expedition, and,
second, wh ether t he non -moving p arty has been diligent in
obtaining or seeking discovery before requesting denial or
continuance under rule 56.06.

Molde, 781 N.W.2d at 45 ( quotations omitted ). Because the Ojikas’ rule 56.06 request
lacks both specificity and a showing of diligence, we discern no abuse of discretion by the
district court in declining to grant the Ojikas the opportunity to conduct additional
discovery.
II. ARS is entitled to summary judgment on its account-stated claim.

A. Minn. Stat. § 548.101 does not apply to contested proceedings.

Minn. Stat. § 548.101 establishes procedures a party must follow if it seeks default
judgment in a conciliation court or district court action upon an assigned consumer debt.
Minn. Stat. § 548.101(a). The Ojikas argue that section 54 8.101, which , among other

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things, requires the moving party to submit admissible evidence of the debt assignment,
also applies to contested actions. We are not persuaded.
The Ojikas do not argue that the statute is ambiguous. When a statute is
unambiguous, a “court’s role is to enforce the language of the statute and not explore the
spirit or purpose of the law.” Caldas v. Affordable Granite & Stone, Inc., 820 N.W.2d 826,
836 (Minn. 2012). Based on the plain language of Minn. Stat. § 548.101, the district court
properly determined that its requirements do not apply to a contested action.
B. ARS is entitled to judgment as a matter of law.
“To establish and recover on an account stated, the claimant must show (1) a prior
relationship as debtor and creditor, (2) a showing of mutual assent between the parties as
to the correct balance of the account, and (3) a promise by the debtor to pay the balance of
the account.” Mountain Peaks Fin. Servs., Inc. v. Roth -Steffen, 778 N.W.2d 380, 387
(Minn. App. 2010), review denied (Minn. Apr. 28, 2010).
The Ojikas first assert that summary judgment is inappropriate because there are
genuine issues as to whether they received and retained a statement of account and whether
the accounts were paid in full. A party seeking summary judgment must demonstrate that
no genuine issue of material fact exists, but “when the moving party makes out a prima
facie case, the burden of producing facts that raise a genuine issue shifts to the opposing
party.” Thiele v. Stich, 425 N.W.2d 580, 583 (Minn. 1988). A genuine issue of material
fact exists “when reasonable persons might draw different conclusions from the evidence
presented.” DLH Inc. v. Russ , 566 N.W.2d 60, 69 (Minn. 1997). “[T]here is no genuine

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issue of material fact . . . when the nonmoving party presents evidence which merely creates
a metaphysical doubt as to a factual issue.” Id. at 71.
ARS presented evidence that (1) the Ojikas signed agreements to pay medical bills
not covered by insurance, (2) Allina sent billing statements to the Ojikas, and (3) the Ojikas
made partial payments. No competent evidence in the record suggests that the Ojikas paid
the accounts in full or objected to any billing statements. The Ojikas point to their own
affidavits, in which they aver that they have no record or memory of receiving the billing
statements. But the Ojikas “must do more than rest on mere averments” to resist summary
judgment. Id. On this record, we conclude that ARS demonstrated the absence of genuine
fact issues, and the Ojikas did not meet their burden of producing evidence to show
otherwise.
The Ojikas next argue that ARS failed to establish the first and second elements of
their account-stated claim. They frame their argument as a question of standing—whether
ARS has standing to bring a claim against the Ojikas. Subject to certain exceptions not
applicable here, “a debtor has no standing to question the validity of an assignment which
is accepted as valid betwee n the creditor and his assignee. ” Gen. Underwriters v. Kline ,
233 Minn. 345, 350, 46 N.W.2d 794, 797 -98 (1951). ARS and Allina agree that Allina
assigned the Ojika accounts to ARS. Nevertheless, ARS must establish a debtor-creditor
relationship with the Ojikas to show that it is entitled to judgment as a matter of law . See
Minn. R. Civ. P. 56.03; Mountain Peaks Fin. Servs., Inc. , 778 N.W.2d at 387 (list ing
elements of account stated).

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Contractual rights and duties are generally assignable , Travertine Corp. v.
Lexington-Silverwood, 683 N.W.2d 267, 270 (Minn. 2004) , including the rig ht to receive
payment on debts, Wilkie v. Becker , 268 Minn. 262, 267, 128 N.W.2d 704, 707 (1964).
Minnesota law recognizes that “[a]n assignment operates to place the assignee in the shoes
of the assignor, and provides the assignee with the same legal rights as the assignor had
before assignment.” Ill. Farmers Ins. Co. v. Glass Serv. Co., 683 N.W.2d 792, 803 (Minn.
2004).
ARS submitted the Gallagher a ffidavit and an affidavit of AR S’s president. Both
affiants attested to the assignment of the accounts and the validity of the exhibits attached
to the Gallagher affidavit, including a bill of sale. The Ojikas challenge the admissibility
of the G allagher affidavit, but not the affidav it of ARS’s president. A district court’s
evidentiary rulings made in connection with a summary-judgment ruling are reviewed for
abuse of discretion. Doe v. Archdiocese of St. Paul , 817 N.W.2d 150, 164 (Minn. 2012).
On this record, we see no abuse of discretion by the district court in determining that ARS
submitted admissible evidence showing the assignment . Thus, the district court properly
determined that ARS met its burden of showing a debtor-creditor relationship between the
Ojikas and ARS.
The Ojikas also argue that ARS failed to establish mutual assent as to the account
balance. Under certain circumstances, retention of a statement of account without
objection, for more than a reasonable amount of time may constitute an admission that the
statement is correct. Meagher v. Kavli, 251 Minn. 477, 487, 88 N.W.2d 871, 879 (1958).
Partial payment on an account without objection may “strengthen the inference” that an

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account stated exists. 1A C.J.S. Account Stated § 35 (2016). Here, ARS offered evidence
that billing statements were sent to the Ojikas, no objection was made, and the Ojikas made
partial payments. The Ojikas submitted no evidence, only their averments, that they
objected to the billing statements. And they provided no explanation for the payments they
made on the account. Viewing the record in the light most favorable to the Ojikas, we
cannot conclude that “reasonable persons might draw different conclusions from the
evidence presented.” See DLH, Inc. , 566 N.W.2d at 69. ARS is entitled to summary
judgment on its account-stated claim.2
III. ARS is not entitled to summary judgment on the Ojikas’ MHRA claim.

The MHRA governs the release or disclosure of health records. Minn. Stat.
§ 144.293, subd s. 1-2 (2016). “Health record” is defined as “any information . . . that
relates to . . . the provision of health care to a patient; or the past, present or future payment
for the provision of health care to a patient.” Minn. Stat. § 144.291, subd. 2(c) (2016). The
MHRA prohibits the release or disclosure of “a patient’s health records to a person”
without, in relevant part, consent or “specific authorization in law.” Minn. Stat. § 144.293,
subd. 2. It is undisputed that Exhibits 1A and 2 to the Gallagh er affidavit are “health
records,” and that ARS released the records without the Ojikas’ consent.
The district court determined that specific authorization in law for the release is
provided by a related regulation promulgated under the Health Insurance Portability and

2 The Ojikas also argue that the district court abused its discretion in quashing the subpoena
served on Allina. Because we conclude that the district court did not abuse its discretion
in declining to grant additional time for discovery, and properly granted summary judgment
to ARS on its account-stated claim, the subpoena issue is moot.

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Accountability Act (HIPAA). The district court reasoned that HIPAA “specifically permits
or allows a covered entity (or its business associate), such as ARS, to use or disclose
protected health information [to seek payment ],” and that this provision constituted
“specific authorization in law” under the MHRA.3
The Ojikas argue that HIPAA cannot provide specific authorization in law because
the MHRA is not coextensive with HIPAA. We disagree. Nothing in the MHRA suggests
that the specific authorization in law must emanate from the MHRA itself.
We next consider whether ARS has shown that HIPAA specifically authorizes the
release of the records in this case. The HIPAA regulation relied upon by the district court
provides, “a covered entity may use or disclose protected health information for its own
treatment, payment, or health care operations.” 45 C.F.R. § 164.506(c)(1) (2016).
“Protected health information,” similar to “health record,” is defined as “individually
identifiable health information,” which “[r]elates to the past, present, or future . . . provision
of health care to an individual; or the past, present, or future payment for the provision of
health care to an individual.” 45 C.F.R. § 160.103 (2016). “Payment” includes activities
undertaken by a health -care provider to obtain reimbursement for the provision of health
care, including billing and collection activities. 45 C.F.R. § 164.501 (2016). A “covered
entity” is defined in relevant part as a “hea lth care provider who transmits any health

3 The district court also concluded that ARS did not violate the MHRA because Exhibits
1A and 2 are not “medical records” under the Rules of Public Access to Records of the
Judicial Branch. See Minn. R. Pub. Access to Recs. of Jud. Branch 4, subd. 1(f). B ut
because “health record” is defined in the MHRA, we need not look to other sources to
define it.

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information in electronic form in connection with a transaction covered by this
subchapter.” 45 C.F.R. § 160.103.
ARS does not argue that it meets the definition of a covered entity, but asserts that
it is a business associate of a covered entity and is also entitled to use or disclose protected
health information under 45 C.F.R. § 164.506(c). A “business associate” is defined as an
entity that (i) “[o]n behalf of such covered entity” creates, receives, maintains, or transmits
protected health information for functions such as claims processing, quality assurance, or
billing, or (ii) provides legal, accounting, administrative, or financial services “to or for
such covered entity.” 45 C.F.R. § 160.103.
ARS’s position throughout this litigation has been that it is a se parate legal entity
from Allina and that it purchased the Ojika accounts from Allina to pursue collection
efforts on its own behalf . On this record, ARS has not shown that it meets the definition
of a “ business associate” of a covered entity. Because ARS points to no other specific
authorization in law permitting its release of health records under the MHRA , the district
court erred in granting summary judgment to ARS on the Ojika s’ MHRA claim. We
therefore reverse that determination and remand for the district court to consider the merits
of the MHRA claim and ARS’s potential defenses.
Affirmed in part, reversed in part, and remanded.