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United States v. Paulus — Mar. 2017 (Summary)

United States v. Paulus — Mar. 2017 (Summary)

HEALTH CARE FRAUD

United States v. Paulus
No. 15-15-DLB-EBA (E.D. Ky. Mar. 7, 2017)

The United States District Court for the Eastern District of Kentucky granted a physician’s motion for acquittal and conditionally granted the physician’s motion for a new trial regarding his criminal conviction on health care fraud and false statements.

The physician allegedly performed unnecessary cardiac stents and misstated the severity of stenosis in medical records to retroactively justify the procedures.  The physician was indicted by a grand jury and was later convicted of committing health care fraud and making false statements relating to health care matters.  The physician asked the trial court to overturn the conviction, claiming that there was insufficient evidence for a reasonable jury to conclude that he devised a scheme to defraud a health care benefit program or that he knowingly and willfully made objectively false statements.

The court reviewed the government’s evidence to determine if it was sufficient to enable the jury to determine that the physician’s statements regarding his patients’ medical conditions were false beyond a reasonable doubt.  The government argued that  the physician’s profits, patient volume, and testimony of coworkers and patients were circumstantial evidence of falsity while offering expert opinions that contradicted the physician’s judgment as direct evidence of falsity.  The court ruled that these were both insufficient to prove falsity.  The circumstantial evidence would not allow a reasonable jury to find that the physician made false statements or harbored an intent to defraud.

The court also noted that the discrepancy in expert testimony, with respect to the appropriateness of the physician’s procedures, was consistent with intra-observer variability regarding the procedures.  The court pointed out that this variance of opinion undermined the certainty that is required for a criminal conviction, saying:  “expressions of opinion, scientific judgments, or statements as to a conclusion about which reasonable minds may differ cannot be false.”  Thus, to the extent that subjective medical opinions are incapable of confirmation or contradiction, they could not be used to establish proof of falsity.

Casale v. Nationwide Children’s Hosp. — Mar. 2017 (Summary)

Casale v. Nationwide Children’s Hosp. — Mar. 2017 (Summary)

PHYSICIAN EMPLOYMENT/REFERENCE RESPONSES

Casale v. Nationwide Children’s Hosp.
No. 16-3906 (6th Cir. Mar. 7, 2017)

The United States Court of Appeals for the Sixth Circuit affirmed a district court’s ruling in favor of a hospital following its rescission of an employment contract with a physician.

After gauging the physician’s interest and qualifications through a series of interviews, the hospital sent the physician a first offer letter.  The hospital and physician discussed salary, bonuses, and other terms of the position.  The hospital required the physician to obtain medical staff privileges at the hospital in addition to verifying his Ohio licensure, neither of which occurred in a timely manner.  After receiving a “poor” peer review reference from the physician’s previous hospital, as well as negative input provided by staff members after meetings with the physician to discuss credentialing issues, the hospital withdrew its offer of employment.  The physician sued, alleging breach of contract and defamation, among other claims.

The Sixth Circuit noted the presumption, in Ohio law, of at-will employment, meaning that unless the terms of a contract specify a certain period of time during which the contract would be valid, either party can terminate the contract.  The court held that the hospital’s offer letter included “no express durational term and no limit on either party’s ability to terminate the relationship.”  Thus, even though the contract provided for an annual rate of compensation, guaranteed bonuses, and future raises, the absence of a specific duration indicated that the contract was at-will.

The court similarly rejected the physician’s contentions that the hospital’s manifestations amounted to an implied employment contract.  The court found no implicit promise of definite employment and no evidence that the hospital intended to limit its ability to terminate the physician at will.  The court also dismissed the physician’s claims that the peer review reference constituted defamation; the court held that there had been no forced republication to a third party and the allegedly defamatory statements were “substantially true” in nature.  Therefore, the hospital was entitled to terminate the physician’s prospective employment by rescinding the offer.  Accordingly, the court affirmed the district court’s grant of summary judgment on all claims.