The Biden administration on Thursday walked away from its appeal of a federal court decision which rejected new regulations it had issued to limit hospitals’ deployment of web-tracking tools.

In June, a Texas federal judge ruled that the Biden administration’s efforts to restrict the use of online trackers by hospitals and other health providers were illegal.

The administration’s decision not to continue pursuing the case comes at a time when many hospitals are being sued for how their use of web tracking pixels have violated patient privacy.  

The American Hospital Association (AHA), the lead plaintiff in the high-profile case, celebrated the Department of Health and Human Services’ (HHS) decision to abandon its appeal, calling the administration’s attempt to prevent hospitals from using what it called “standard third-party web technologies that capture IP addresses on key portions of their public-facing web pages” an example of government overreach.

The HHS rules, issued in 2022 as “guidance,” warned health care providers that if they let third-party vendors collect data from hospital website users they could be in violation of the 1996 federal Health Insurance Portability and Accountability Act (HIPAA) law, which bars the public sharing of private health information, largely to protect against discrimination.

Last July, prior to the Texas judge’s June ruling, the Federal Trade Commission (FTC) and HHS warned about 130 hospital systems and telehealth providers to guard against the dangers posed by tracking technologies such as the Meta/Facebook Pixel and Google Analytics.

They cautioned that it is difficult for website users to avoid how the technologies hoover up their private data and said consumers are largely unaware that their health data is tracked and widely shared with third parties who use the information for ad targeting.

HHS did not respond to a request for comment and did not issue a press release announcing its decision to abandon its appeal.

The AHA said in a statement from its general counsel Chad Golder that it repeatedly explained to the HHS Office of Civil Rights, which promulgated the guidance, that the rule was “a gross overreach by the federal government, imposed without any input from healthcare providers or the general public.” 

Now that what the AHA called an illegal rule has been “vacated once and for all, hospitals can safely share reliable, accurate health care information with the communities they serve without the fear of federal civil and criminal penalties,” Golder added.

Class action suits against hospitals using the tracking technology continue to spread nationwide.

In January, a North Carolina healthcare system agreed to a $6.6 million settlement to end a class action lawsuit centered on its use of website tracking tools and patient portals. Plaintiffs had alleged the website trackers gathered and shared sensitive health information to third parties without patients knowing or agreeing.