Gillispie v. Regionalcare Hosp. Partners, Inc. — Nov. 2016 (Summary)

EMTALA

Gillispie v. Regionalcare Hosp. Partners, Inc.
Civil Action No. 13-1534 (W.D. Pa. Nov. 14, 2016)

The United States District Court for the Western District of Pennsylvania ruled in favor of a hospital’s motion for summary judgment following allegations of a retaliatory employment action in violation of the anti-discrimination provisions of the Emergency Medical Treatment and Active Labor Act (“EMTALA”).

The court noted that an EMTALA retaliation claim requires a “report” to a government agency.  The plaintiff claimed that she opposed, on two separate occasions, the hospital’s decision to not officially report the occurrence of a suspected EMTALA violation.  The plaintiff, however, did not submit a “report” to any governmental or regulatory agency in accordance with EMTALA.  The fact that she disagreed with the hospital’s reporting decision was, alone, insufficient to invoke the anti-retaliation protections under EMTALA.  The court, therefore, granted the motion for summary judgment in favor of the defendant hospital.

Centinela Freeman Emergency Med. Assocs. v. Health Net of Cal., Inc. — Nov. 2016 (Summary)

HEALTH PLANS

Centinela Freeman Emergency Med. Assocs. v. Health Net of Cal., Inc.
No. S218497 (Cal. Nov. 14, 2016)

The Supreme Court of California affirmed the Court of Appeal’s order holding that a health care service plan may be liable to noncontracting emergency service providers for negligently delegating its financial responsibility to an individual practice association (“IPA”) or other contracting medical provider group that it knew or should have known would not be able to pay for emergency service and care provided to the health plan’s enrollees.

Two health care service plans delegated their emergency services financial responsibility to contracting medical providers.  Their contracting medical providers were three IPAs.  After the IPAs contracted with the health care service plans, they failed to comply with multiple state financial solvency requirements, resulting in their failure to reimburse noncontracting service providers for the emergency care that they provided to enrollees of the health care service plans.  The providers brought a claim against the health care service plans alleging that they knew or should have known that the IPAs were insolvent, that they lacked any reasonable expectation that the IPAs would reimburse the providers, and that they should be held responsible for the reimbursements.  To the contrary, the plans believed once they delegated their financial duty to the IPAs, they owed no further duty of care to the providers.

Health care service plans are governed by the Knox-Keene Health Care Service Plan Act of 1975.  The Act expressly allows contracts in which health care service plans delegate to the plans’ contracting medical providers the plans’ financial responsibility to reimburse emergency service providers’ claims.  Under this delegation, noncontracted emergency service providers are entitled to reimbursement at the reasonable and customary rate for the emergency services they perform.  Allowing delegation also carries the risk that the provider group, or IPA, will become insolvent.  Solvency regulations provide that every plan must have adequate procedures in place to ensure that it undertakes appropriate review of its financial status and appropriate action in the event of any notification of deficiency.  The solvency regulations do not prevent a health care service plan from terminating its risk arrangement contract if the provider group is fiscally unsound.  Under both the Act and the regulations, providers play no role, and must continue to provide services regardless of the arrangements, but neither the Act nor the regulations preclude the existence of a duty to pay the providers regardless.

The court used the six-factor test laid out in Biakanja to determine that the plans owed a duty to the providers to reimburse their claims if the IPAs to which they delegated their financial responsibility became insolvent.  They held that the health care service plans owe a duty of care to noncontracting emergency service providers when they enter their initial delegation contracts with IPAs.  They further held that a health care service plan’s duty to reassume the financial responsibility it has delegated to a contracting medical provider group is triggered by the plan’s receipt of information through which the plan becomes aware or should become aware that there can be no reasonable expectation that its delegate will be able to reimburse covered claims from noncontracting emergency service providers.  By imposing a continuing duty of care on health care service plans, future economic harm to noncontracting emergency service providers can be prevented.

U.S. ex rel. Fisher v. IASIS Healthcare LLC — Nov. 2016 (Summary)

FALSE CLAIMS ACT AND ANTI-KICKBACK STATUTE

U.S. ex rel. Fisher v. IASIS Healthcare LLC
No. CV-15-00872-PHX-JJT (D. Ariz. Nov. 9, 2016)

The U.S. District Court for the District of Arizona granted in part and denied in part defendants’ motion to dismiss potential Anti-Kickback Statute (“AKS”) and False Claims Act (“FCA”) violations allegedly perpetrated by the defendant by offering preferential payments for services, failing to perform mandated medical necessity and utilization reviews, and improperly credentialing providers.

The lawsuit’s bringers, called “relators,” claimed that the defendant hospital management company and its wholly-owned subsidiary, a managed care organization (“MCO”), submitted claims with “reckless disregard or willful indifference as to whether or not the care was medically necessary” and also created preferential programs where providers routinely bypassed authorization processes that were designed to verify the medical necessity of services before providers rendered care.  The preferential programs stratified providers into “Gold” or “Platinum” status, which conferred the privilege of bypassing standard prior authorization review and other processes.  This, relators argued, led the defendants to approve claims without evaluating them for “necessity, consistency, or prior authorization requirements,” all of which the defendants implicitly certified compliance with when submitting claims.  The relators also asserted that the utilization and appeal processes did not take into account medical necessity or cost effectiveness, and that providers in the MCO network were improperly credentialed or not credentialed at all.  The court held that the relators’ claims, because of the specific examples and details they provided about the alleged fraud, survived a motion to dismiss as to the FCA claims.

The defendants asserted, and the court agreed, that the relators failed to demonstrate how remuneration to providers was based on referrals in violation of the federal AKS.  The defendant, as an MCO, received capitation payments rather than payments based on the volume of patients referred.  Defendants thus argued that they could not be found liable under the AKS, which prohibits claims that offer payment for “recommending purchasing, leasing, or ordering any good, facility, service, or item.”  The relators alleged that the MCO permitted more treatment to be performed than was necessary, which would affect how future capitation payments were made.  The court disagreed, opining that it was “speculative” as to whether this increased treatment would result in increased governmental costs.  The court also dismissed as “speculative” the allegation that the defendant’s preferential programs exposed it to risk for loss that the government would insure if it exceeded six percent.  Finally, the court also considered the relators’ claims that the defendants conspired to commit fraud.  The court held that the relators’ failure to adduce evidence tending to suggest an explicit, conspiratorial agreement among the defendants required dismissal of those claims.

The relators alleged corollary violations of the federal FCA under both the express and implied false certification theories.  The court determined that the waivers of prior authorization and utilization review, the deficient credentialing processes, the appeal practices that did not account for medical necessity or cost effectiveness, the lack of written policies, procedures, and processes, and the preferential status programs for providers all constituted infractions upon which FCA liability could attach.

The defendant reported patient encounter data as part of its regular compliance certification process to CMS.  The court found that while the encounter data was not, itself, a “claim” for purposes of the FCA, its eventual use in determining future capitation payments to the defendant was sufficient to survive the defendants’ motion to dismiss.  The court concluded that the encounter data required the defendants to aver compliance with a myriad of federal laws, regulations, and policies; the failure to thoroughly examine the medical necessity of services rendered under the claims and, as such, their submission to the government therefore constituted an express false certification violation of the FCA.  The court also determined that the defendants’ waiver of prior authorization for their preferred status providers while simultaneously attesting to the accuracy of their encounter data also amounted to an implied false certification violation of the FCA.

Following the mandates of the Escobar Supreme Court case, the court also examined the materiality of the allegations.  Because the defendant MCO had obligations to “recommend, direct, coordinate, and organize the furnishing of services to [its] enrollees[,]” the court held that the failure to comply constituted grounds upon which the government could have refused payment if it had been aware of such noncompliance; this is an essential element in the materiality determination.  The court ultimately held that the certifications of compliance were material to the defendants’ ability to receive payment from the government.  As such, the court denied the defendants’ motion to dismiss the FCA claims with respect to materiality.

Crestview Hosp. Corp., Inc. v. Coastal Anesthesia, P.A. — Nov. 2016 (Summary)

DISRUPTIVE PHYSICIAN; DEFAMATION

Crestview Hosp. Corp., Inc. v. Coastal Anesthesia, P.A.
No. 1D15-4392 (Fla. Dist. Ct. App. Nov. 9, 2016)

The District Court of Appeal of Florida reversed the trial court’s decision, holding that a hospital was not liable for defamation against an anesthesiologist following his forced resignation.

An anesthesiologist, contracted by a company to work for a hospital, eventually resigned after the hospital CEO contacted the company and informed it that the hospital no longer wanted the anesthesiologist working for the hospital.  The physician allegedly cursed at nurses and hospital staff, and unnecessarily delayed the surgery of an elderly patient.  The hospital did not investigate the complaints or initiate a disciplinary or review process under the hospital bylaws or code of conduct.  The hospital immediately complained to the company which then set out to terminate the anesthesiologist.  The anesthesiologist ultimately resigned in lieu of termination.

The anesthesiologist filed suit alleging several claims.  His claim of defamation against both the hospital and the hospital CEO was the only one remaining at trial.  The anesthesiologist claimed the CEO’s claims against him were false and the hospital’s failure to investigate the claims amounted to the anesthesiologist being singled out and intentionally, maliciously defamed.

As described by the court, there is a general presumption that someone who broadcasts a false statement that harms another person’s reputation can be held liable for defamation, but that presumption does not apply when parties have a mutual interest in evaluating a person’s work.  When the CEO of the hospital contacted the company, he was evaluating the work and behavior of the anesthesiologist within the services he contracted with the company to receive.  By the court, under those circumstances, there is a presumption of good faith, even when the comments are critical.

In order to succeed on his defamation claim, and strip the hospital of its privilege of evaluation, the anesthesiologist had to prove express malice, or improper motives on behalf of the hospital and the hospital CEO.  The court ruled that the trial court erred in instructing the jury to decide the question of whether the hospital and the hospital CEO acted simply with improper motives, which resulted in the hospital losing its privilege of evaluation.  The jury should have been instructed that it had to find that the hospital or the hospital CEO acted with the primary motive of gratifying ill will, hostility, and their desire to harm the plaintiff.  Further, the jury stated that it found the defendants to have been motivated solely for the purpose of unreasonable financial gain.  The trial court erred in its jury instruction, and that error could not be found to be harmless given the jury’s verdict based upon a reason that did not meet the legal requirement.

U.S. ex rel. Schaefer v. Family Med. Ctrs. of S.C., LLC — Nov. 2016 (Summary)

STARK LAW AND FALSE CLAIMS ACT

U.S. ex rel. Schaefer v. Family Med. Ctrs. of S.C., LLC
C/A No. 3:14-382-MBS (D.S.C. Nov. 8, 2016)

The U.S. District Court for the District of South Carolina, Columbia Division, denied a medical center’s motion to dismiss the United States claims that it and certain employed physicians operated in violation of the Stark Law and the False Claims Act (“FCA”).

The United States filed a complaint alleging that the medical center had employment arrangements with physicians that included compensation directly attributable to the volume or value of the employed physicians’ referrals in violation of the Stark Law and reimbursement based on referrals and unnecessary tests in violation of the FCA.  The U.S. also claimed that in order to maximize revenue, the medical center devised a variety of schemes including, among other things, referencing improper Current Procedural Terminology (“CPT”) codes and ordering unnecessary laboratory tests.  The medical center moved to dismiss the United States’ claims.  In order to survive the motion to dismiss, the U.S. had to allege sufficient facts to support its claims for relief.

The court found that the U.S. had alleged sufficient facts to support both its Stark and FCA claims.  The U.S. argued that the alleged improper billing structure spanned over ten years, allowing the medical center to be reimbursed for millions of dollars.  The U.S. argued that between 2008 and 2015, the medical center was paid over $4 million for unnecessary lipid tests; over $1.6 million for unnecessary chemistry panel tests; over $500,000 for unnecessary hepatic function tests; and over $1 million for unnecessary thyroid panel tests. 

George v. Christus Health Sw. La. — Nov. 2016 (Summary)

PEER REVIEW STATUTE

George v. Christus Health Sw. La.
16-412 (La. Ct. App. Nov. 4, 2016)

The Third Circuit for the Court of Appeal of Louisiana set aside and remanded back to a lower court a case brought by a neurosurgeon who claimed that his former employer, a hospital, had treated him disproportionately with respect to other doctors under the hospital’s employ.  The neurosurgeon sought evidence to determine whether the hospital had subjected the other doctors’ competencies to the same peer review process that the neurosurgeon was subjected to before the termination of his employment.  The hospital responded to the discovery request with a motion for a protective order, asserting that the documents sought were peer review materials protected from discovery under Louisiana’s peer review confidentiality statutes.

The court looked to cases of the Supreme Court of Louisiana, which had made it clear that the state’s confidentiality statutes did not provide blanket immunity, and also established that no liability attaches to a committee member who acts without malice and in good faith while performing his or her functions within committee.  Thus, when a committee member steps outside the scope of his or her duties, immunity does not continue.  The appeals court reasoned that the lower court incorrectly concluded that the state’s confidentiality statutes provided the hospital with total immunity from discovery of anything that had occurred.  As such, because the lower court had yet to examine the discovery requests in order to determine whether each item of information sought by the neurosurgeon was protected by the state’s confidentiality statutes, the court set aside and remanded the case back to the lower court to determine whether any of the information sought was protected by the privilege established in the confidentiality statutes.  

Friedrich v. S. Cty. Hosp. Healthcare Sys. — Nov. 2016 (Summary)

EMTALA/URGENT CARE CENTER

Friedrich v. S. Cty. Hosp. Healthcare Sys.
No. 14-353 S (D.R.I. Nov. 1, 2016)

The United States District Court for the District of Rhode Island denied a healthcare system’s motion for partial summary judgment in a suit brought by the estate of a deceased patient asserting that the healthcare system’s urgent care center violated the Emergency Medical Treatment and Active Labor Act (“EMTALA”).

The patient visited the urgent care center after experiencing chest pains.  The urgent care center diagnosed the patient with acid reflux and sent her home.  The patient died the next day from a heart attack.  The patient’s estate sued the healthcare system, claiming that its urgent care center violated EMTALA because it failed to screen and stabilize the patient.  The healthcare system filed a motion for partial summary judgment arguing that the urgent care center did not constitute a “dedicated emergency department” under EMTALA and, therefore, was not required to comply with EMTALA’s mandates.  The court disagreed.  Relying on the EMTALA regulations, the court concluded that the urgent care center was a “dedicated emergency department” subject to EMTALA because it held itself out “as a place that provides care for emergency medical conditions on an urgent basis without requiring a previously scheduled appointment.”

Novotny v. Sacred Heart Health Servs. — Oct. 2016 (Summary)

PEER REVIEW PRIVILEGE

Novotny v. Sacred Heart Health Servs.
Nos. 27615, 27626, 27631 (S.D. Oct. 26, 2016)

The Supreme Court of South Dakota reversed and remanded the lower court’s decision ordering  defendant health care providers to produce peer review materials in suits brought by patients asserting numerous claims, including fraud, deceit, and negligent credentialing.

The patients sought production of documents from the defendants, but the defendants claimed that the documents were protected by the state’s peer review privilege. In the lower court, the patients challenged the privilege as unconstitutional. The lower court agreed, but ultimately held that the statute was constitutional, but only if a court-created “crime-fraud exception” applied.  Pursuant to this “crime-fraud exception,” the lower court ordered the defendants to turn over the peer review materials, finding that the patients had presented enough evidence to make out prima facie cases for fraud and deceit.

On appeal, the Supreme Court of South Dakota disagreed with the lower court, determining that the state’s peer review privilege gives broad protection to information generated “by or at the behest of a peer review committee,” including deliberative information and objective information.  The Supreme Court of South Dakota also took issue with the lower court’s “crime-fraud exception,” concluding that the exception was not necessary to preserve the patients’ rights to open courts.  The court noted that the patients “may obtain certain information from independent sources.  The availability of that information from sources outside the peer review committees allows [the patients] access to information that may expose alleged fraudulent activity and allow [the patients] to present their case.”

Commonwealth of Pa. Dept. of State, Bureau of Prof. and Occupational Affairs v. Abington Health — Oct. 2016 (Summary)

RELEASE OF RESULTS OF DRUG TESTING

Commonwealth of Pa. Dep’t of State, Bureau of Prof’l and Occupational Affairs v. Abington Health
No. 242 M.D. 2016 (Pa. Commw. Ct. Oct. 28, 2016)

The Commonwealth Court of Pennsylvania granted the request for relief filed by the Pennsylvania State Board of Nursing (“Board”) and ordered a hospital to release to the Board, pursuant to the Board’s investigative subpoena, the drug and alcohol test results of a registered nurse whose employment the hospital terminated based on these results.  The court held that the confidentiality provisions of the Pennsylvania Drug and Alcohol Abuse Control Act applied to patients and their patient records generated for purposes of drug and alcohol treatment, but not to employees and their drug and alcohol test results generated for employment purposes.

Sharda v. Sunrise Hosp. and Med. Ctr., LLC — Oct. 2016 (Summary)

MEDICAL STAFF HEARING/FOURTEENTH AMENDMENT

Sharda v. Sunrise Hosp. and Med. Ctr., LLC
No. 2:16-CV-2233 JCM (GWF) (D. Nev. Oct. 26, 2016)

The United States District Court for the District of Nevada denied a physician’s motion for a temporary restraining order and preliminary injunction related to the suspension of his clinical privileges by a hospital.  The physician alleged that his procedural due process and Fourteenth Amendment rights were violated by the hospital “not scheduling a hearing with respect to the denial of his request for reinstatement of clinical privileges.”  According to the physician, he was entitled to a hearing under the hospital’s medical staff bylaws.  The court denied his motion, concluding that the hospital was not a state actor as required to demonstrate a violation of the Fourteenth Amendment.  Since his claim would not succeed on the merits because of this, there were no grounds for granting a temporary restraining order and preliminary injunction.