The issue is whether your mom has capacity and whether she is authorizing the disclosure. Is your mom competent so that she can execute a power of attorney? If you have real issues with what is going on, you need to contact a local elder law attorney.
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Challenging situation, I agree with Charles that you should speak with an attorney.
Very briefly, not all powers of attorney are the same:
(a) A General Power of Attorney provides broad powers to deal with an individual's assets and administrative matters.
(b) A Healthcare or Medical Power of Attorney grants authority to make medical decisions.
(c) If a power of attorney is "durable" it is effective even during times of "incompetence" (when someone cannot make decisions for themselves).
(d) If a power of attorney only grants authority during times of disability, then it may not be effective until the triggering event or certification of disability occurs.
As you mention, under Health Insurance Portability and Accountability Act "HIPPA" (Pub.L. 104–191, enacted in 1996), disclosing and discussing medical information is subject to restrictions and protections imposed by HIPPA. With the passage of that law, additional authorizations and powers are required for inclusion in the power of attorney.
It may be that the power of attorney your sister has contains all of the proper authorizations and powers. Consulting with an experienced Elder Law attorney will be the best way to help you resolve your questions and concerns.
Disclaimer: My answer is provided without all relevant facts, let alone your unique objectives. No attorney-client relationship is hereby created as a consequence and you should not take (or not take) any action based on my answer. I highly recommend that you consult with competent legal counsel before deciding to take or not take any action, as every situation is more complex than it appears.
Capacity will definitely be the key issue here. Sit down with an Elder Law attorney in Wisconsin to discuss and chart a good course ahead. See Avvo.com under Find-A-Lawyer.
In Wisconsin, the document you are referring to is a Power of Attorney for Health Care. In general, the person who is named as your health care agent has the right to access those medical records that are relevant to making health care decisions on your behalf. However, this right only applies while the Power of Attorney for Health Care is actually in force. Typically, a Power of Attorney for Health Care is activated upon a determination by two physicians, or one physician and one psychologist, who have personally examined you that you have become incapacitated. Therefore, and pursuant to HIPAA laws, until a certification of incapacity has been issued, your health care agent should not have access to your medical records.
I have included a link to Wisconsin's advance directive forms, as provided by the Department of Health Services website, and a pamphlet from CWAG (Coalition of Wisconsin Aging Groups) regarding powers of attorney for health care. However, in your situation, I would advise you to consult with a Wisconsin estate planning attorney as soon as possible in order to ensure all issues surrounding your mother and her estate are covered.