Deborah Heart & Lung Ctr. v. Virtua Health, Inc. — Aug. 2016 (Summary)

ANTITRUST

Deborah Heart & Lung Ctr. v. Virtua Health, Inc.
No. 15-2032 (3d Cir. Aug. 17, 2016)

The United States Court of Appeals for the Third Circuit affirmed the federal district court’s entry of summary judgment against a charity hospital, which claimed that a health system, a hospital, and a group of cardiologists (collectively, “defendants”) violated Section 1 of the Sherman Act and also brought claims for tortious interference and unfair competition.

The charity hospital alleged that when a group of cardiologists, who once had a relationship with the charity hospital that resulted in the transfer of numerous patients, entered into an exclusive agreement to provide cardiovascular services with another hospital, the arrangement constituted an illegal restraint on trade. The charity hospital maintained that the arrangement forced some consumers to obtain procedures at the other hospitals when, in a competitive market, the consumers would have chosen the charity hospital.

The court rejected the charity hospital’s position that its burden was to show that the effects of the arrangement had more than a de minimis effect on competition in the market, and found that the charity hospital failed to establish its actual burden of showing anticompetitive effects of the market as a whole. The court reasoned that all of the charity hospital’s arguments failed because the arguments pertained solely to the defendant’s patients rather than the undisputed relevant geographic market. Also, the charity hospital’s allegations failed because the charity hospital only showed the effects upon a small subset of the market rather than the broader effects upon the market as a whole.

Burns v. Georgetown Univ. Med. Ctr. — Aug. 2016 (Summary)

FELLOWSHIP

Burns v. Georgetown Univ. Med. Ctr.
Civil Action No. 13-898 (CKK) (D.D.C. Aug. 12, 2016)

The United States District Court for the District of Columbia granted a hospital and medical center’s motion for summary judgment in a suit brought by a former participant in a fellowship program, dismissing the fellow’s three contract-based claims as well as her three tort-based claims.

The fellow, who upon beginning her fellowship was an active duty member of the military, and her branch of service both entered into an agreement with the medical center prior to the fellow beginning the fellowship program. Eight months later, the fellow was handed a letter stating that she was being terminated, effective immediately, and per the fellow’s Fellowship Agreement, her branch of service would be notified. After negotiations, the fellow was allowed to submit a back-dated resignation letter. Subsequently, a second termination letter was given to the fellow, on the medical center’s letterhead, as well as the fellow’s branch of service. In response, the branch of service sent a form to the hospital asking if the fellow had ever been punished, to which the hospital responded yes and sent a Final Summative Assessment regarding the fellow’s time in the program.

With respect to the fellow’s contract-based claims, the court concluded that summary judgment in favor of the hospital was appropriate because the hospital was not a party to any of the contracts that formed the basis of the fellow’s claims. The court reasoned that an unambiguous reading of the contract at issue dictated an agreement between the fellow’s branch of service and the medical center. Additionally, the court rejected the fellow’s claim that the medical center breached the agreement by terminating the fellow without due process, failing to provide 30-day notice before the termination, and failing to provide a competent fellowship training program. The court concluded that the contract did not contain a due process requirement, there was no termination because the medical center allowed the fellow to retroactively exit the contract prior to her termination, and the contract contained no guarantee of a competent training program. Consequently, the court granted summary judgment on all three of the fellow’s contract-based claims.

The court also granted the hospital and medical center summary judgment on the fellow’s two defamation claims based on the last two forms sent to her branch of service and the intentional interference claim based on a theory of common interest privilege, which barred the defamation claims. The court maintained that the fellow was unable to overcome the common interest privilege because the record did not support her allegation of malice. The contents of the final documents delivered to her branch of service in the court’s eyes contained nothing more than a critical assessment of the fellow’s performance in professional language, which, consequently, did not rise to the level of defamation. Also, the court rejected the fellow’s argument that the final correspondence delivered to her branch of service was sent to interfere with her prospective economic advantage in her employment because the fellow was relying on future relations with her employer, which was speculative at best. Therefore, the court also granted summary judgment on the fellow’s additional tort-based claims.

Rush Univ. Med. Ctr. v. National Labor Relations Bd. — Aug. 2016 (Summary)

NLRB

Rush Univ. Med. Ctr. v. Nat’l Labor Relations Bd.
No. 15-1050 (D.C. Cir. Aug. 16, 2016)

The United States Court of Appeals for the District of Columbia Circuit denied an acute care facility’s petition for review of a self-determination election and granted the National Labor Relations Board (“Board”) cross application for enforcement.

The acute-care facility’s union, which has represented a unit of employees in different job classes at the facility, petitioned for a special election that would enable the acute care facility’s unrepresented Patient Care Technicians (“PCT”) to vote to become members of the union. The acute care facility opposed the proposed vote because, in its view, to comply with the Health Care Rule, the vote needed to encompass all unrepresented nonprofessional employees not just the PCTs. After the union’s regional director rejected the acute care facility’s position, the Board denied the health care facility’s request for review, which, consequently, led to the acute care facility’s refusal to negotiate. The Board ultimately found that the refusal to negotiate violated the National Labor Relations Act and brought suit.

The court rejected the acute care facility’s contention that the Board’s bargaining unit determination relied on an impermissible interpretation of the Health Care Rule. The court reasoned that when a union seeks to add unrepresented employees to what under the Health Care Rule is a preexisting nonconforming unit, the union does not have to accept all of the unrepresented employees who would fit within the same standardized unit in the rule. Therefore, the special election to allow the unrepresented PCTs to become members of the union was consistent with the Health Care Rule. Consequently, the court denied the acute care facility’s petition for review and granted the Board’s cross application for enforcement.

Elkharwily v. Franciscan Health Sys. — Aug. 2016 (Summary)

NPDB REPORT; DISABILITY DISCRIMINATION

Elkharwily v. Franciscan Health Sys.
Case No. 3:15-cv-05579-RJB (W.D. Wash. Aug. 15, 2016)

The United States District Court for the Western District of Washington granted in part and denied in part a health system’s motion for summary judgment against a hospitalist who brought a claim for defamation as well as claims for disability discrimination in violation of the Washington Law Against Discrimination (“WLAD”) and the Rehabilitation Act.

After offering the hospitalist a provisional hospitalist position, the health system sent the application to the Regional Credentials Committee, which disclosed that the hospitalist had bipolar disorder.  The hospital subsequently revoked the hospitalist’s temporary medical privileges. Following the Medical Executive Committee’s recommendation that the hospitalist’s application for membership and privileges at the hospital be denied and a hearing and appeal affirming the recommendation, the health system reported the denial of medical privileges to the National Practitioner Data Bank (“NPDB”).

With respect to the hospitalist’s defamation claim, the court rejected the hospitalist’s argument that the health system defamed the hospitalist by reporting the denial of privileges to the NPDB because the report fell within the Health Care Quality Improvement Act privilege to protect professional review actions. The court found no issue of fact with regard to the consistency between the report and the action taken. Thus, the court granted the health system’s motion for summary judgment with respect to the defamation claim.

Turning to the WLAD claim, the court denied the health system’s motion to dismiss, but dismissed the hospitalist’s claim alleging discrimination based on national origin and race. The hospitalist showed that he could have possessed the requisite education and experience to be granted full privileges. However, while the hospital showed a nondiscriminatory reason for denying the hospitalist’s medical privileges, because the record showed that the hospitalist’s bipolar disorder was at least a factor in the health system’s decision to deny medical privileges at every stage of the hospitalist’s application, the court denied the WLAD claim to the extent of discrimination based on disability, and granted his claim on the basis of national origin and race.

Lastly, the court rejected the hospitalist’s allegation of discrimination based on his disability status in violation of the Rehabilitation Act. The court reasoned that the hospitalist failed to show that he was discriminated against solely because of his disability. Rather, the record showed a multitude of evidence supporting the denial of his medical privileges, and thus granted the health system’s motion for summary judgment on the Rehabilitation Act based claim.

Fallon v. Mercy Catholic Med. Ctr. of Se. Pa. — Aug. 2016 (Summary)

RELIGIOUS DISCRIMINATION

Fallon v. Mercy Catholic Med. Ctr. of Se. Pa.
Civil Action No. 16-00834 (E.D. Pa. Aug. 9, 2016)

The United States District Court for the Eastern District of Pennsylvania granted a defendant hospital’s motion to dismiss a religious discrimination claim brought by a former employee, who was terminated due to his unwillingness to be vaccinated.

The hospital required its employees to obtain a flu vaccination or submit an exemption form to obtain a religious exemption.  The employee was granted an exemption two years in a row by providing the hospital with an essay, then was denied an exemption the third year, and was informed that he would need to provide a letter on official clergy letterhead supporting his request for an exemption.  In response, the employee submitted an essay and letter explaining that he couldn’t provide such clergy letter because he was not a member of an official religious organization and explained that his reasoning behind requesting the exemption was his conscience.

The hospital denied the exemption, and the employee brought a claim for religious discrimination under Title VII of the Civil Rights Act of 1964.  The court ruled that the employee failed to state a claim for religious discrimination, finding that: the employee’s mindset was more personal and social rather than spiritual; his beliefs regarding the vaccination consisted of a single governing idea rather than a belief system; the employee explicitly stated that he was not a member of an organized religion, and he did not belong to a religious congregation; and the employee did not claim that his reasons for refusing to be vaccinated were based on a religious belief.

Olson v. Fairview Health Servs. of Minn. — Aug. 2016 (Summary)

QUI TAM

Olson v. Fairview Health Servs. of Minn.
No. 15-1780 (8th Cir. Aug. 8, 2016)

The United States Court of Appeals for the Eighth Circuit affirmed a district court’s grant of a motion to dismiss in favor of a defendant medical center against a relator, who brought a qui tam action alleging violations of the False Claims Act (“FCA”).

The relator alleged that the medical center fraudulently induced the Minnesota Department of Human Services to over-reimburse it for services provided to Medical Assistance patients by claiming that the children’s unit of the medical center was a children’s hospital under an amendment that excluded children’s hospitals from a reimbursement reduction.  The relator maintained that the medical center knowingly presented or caused to be presented false or fraudulent claims for payment or approval of Medicaid monies, knowing that it did not legally qualify for the exemption.

The court was unpersuaded by the relator’s argument, reasoning that the relator assumed that the term “children’s hospital” is simply a derivative of combining the definition of “children” and “hospital.”  The court found that there was no statutory definition, and that in the absence of an explicit statutory definition of “children’s hospital,” the statute was ambiguous, and a reasonable interpretation of ambiguous statutory language does not give rise to an FCA claim.  Therefore, the court affirmed the judgment of the district court.

U.S. ex rel. Swoben v. United Healthcare Ins. Co. — Aug. 2016 (Summary)

QUI TAM

U.S. ex rel. Swoben v. United Healthcare Ins. Co.
No. 13-56746 (9th Cir. Aug. 10, 2016)

The United States Court of Appeals for the Ninth Circuit vacated a district court’s judgment that dismissed a qui tam relator’s complaint, which alleged that certain Medicare Advantage organizations submitted false certifications in violation of the False Claims Act.

The relator claimed that the defendant organizations submitted false certifications by performing biased retrospective medical record reviews designed to not identify erroneously reported diagnosis codes, which the district court dismissed, concluding that relator failed to allege a False Claims Act claim with particularity.

The relator appealed, and the defendant organizations argued that during the relevant time period, there was no authority which indicated that a Medicare Advantage plan was obliged to undertake affirmative steps to uncover potentially unsupported codes before it could certify the third-party risk adjustments based on its best knowledge, information, and belief.

The appeals court held that in light of CMS guidance, Medicare Advantage organizations have always had an obligation to take steps to ensure the accuracy, completeness, and truthfulness of the encounter data submitted.  When Medicare Advantage organizations design retrospective reviews of enrollees’ medical records deliberately to avoid identifying erroneously submitted diagnosis codes that might otherwise have been identified with reasonable diligence, those organizations can no longer certify based on the standard set forth by CMS.  The appeals court further noted that this is especially the case when, as the relator alleged, an organization was on notice that its data included a significant number of erroneously reported diagnosis codes.

Additionally, the appeals court noted that blind coding is not consistent with the good faith requirement when it is used to avoid or conceal over-reporting errors: if Medicare Advantage organizations perform audits, identify both under-reporting and over-reporting, but withhold information about the over-reporting, the result is a false certification.  Therefore, the relator’s allegations were a cognizable legal theory and, consequently, the appeals court vacated the district court’s judgment.

Owensboro Health, Inc. v. U.S. Dept of Health and Human Servs. — Aug. 2016 (Summary)

MEDICARE DISPROPORTIONATE SHARE

Owensboro Health, Inc. v. U.S. Dep’t of Health and Human Servs.
Nos. 15-6109 and 15-6110 (6th Cir. Aug. 10, 2016)

The United States Court of Appeals for the Sixth Circuit affirmed a district court’s grant of summary judgment in favor of the federal government and against three hospitals, holding that the district courts were correct in concluding that the Medicare statute is unambiguous in excluding Kentucky Hospital Care Program (“KHCP”) patient days from the calculation of the Medicare Disproportionate Hospital Share (“DHS”) payment.

Kentucky enacted KHCP, a program that provides medical coverage to low-income individuals who do not qualify for Medicaid.  The hospitals submitted their Medicare cost reports to their fiscal intermediaries, and in their computations for the DHS payment, the hospitals included both Medicaid and KHCP patient days in their calculations.  The fiscal intermediaries disagreed with the inclusion of the KHCP patient days, and excluded such patient days from the DHS payment.  The hospitals went through the Medicare administrative process, then sought review in district courts, which ruled that the KHCP patient days should be excluded from the calculation, and the hospitals then appealed to the court of appeals, which consolidated the appeals.

The appeals court reviewed the Medicare statute to determine whether KHCP patient days should be included or excluded from the calculation.  The appeals court stated that it was clear that Congress’s use of the phrase “eligible for medical assistance under a State plan approved under subchapter XIX” is synonymous with being eligible for Medicaid – thus, in order for patient days to be considered in the calculation for DHS payment, a patient must be eligible for Medicaid.  The appeals court then found that, in accordance with the KHCP program, individuals must be ineligible for Medicaid in order to qualify for coverage.  Since KHCP patients were ineligible for Medicaid, the court affirmed the district courts’ rulings that the statute unambiguously excludes KHCP patient days from the calculation for DHS payments.

WLB Radiology, LLC v. Mercy Health N., LLC — Aug. 2016

BREACH OF CONTRACT

WLB Radiology, LLC v. Mercy Health N., LLC
No. L-16-1015 (Ohio Ct. App. Aug. 5, 2016)

The Ohio Court of Appeals affirmed a trial court’s grant of summary judgment in favor of a defendant health system on claims of breach of contract and tortious interference with contract and business expectations brought by a plaintiff radiologist’s limited liability company.

The health system and radiologist entered into a professional services agreement and after a number of months, the health system terminated the agreement, without cause.  The agreement called for a 90-day notice period, but the health system compensated him based on his average salary for the three months prior to termination instead of allowing the radiologist to provide services during the notice period.  The radiologist filed a lawsuit against the health system, among others, and alleged breach of contract and tortious interference with contract and business expectations, among other things.  The trial court granted summary judgment in favor of the health system, and the radiologist appealed as to the claims of breach of contract and tortious interference with contract and business expectations.

The radiologist argued that the health system breached the agreement when it unilaterally stopped paying him for reading CT scans and for working overtime, and also breached the agreement when it calculated his average salary for the three months prior to termination, since that calculation did not include reading CT scans and working overtime.  However, the court agreed with the health system and found that the agreement clearly stated that he was to read CT scans only as requested by the health system, and that he did not submit the proper documentation required under the agreement.  Therefore, the court held that the health system did not breach the agreement.

As for the interference with patients claim, the radiologist argued that the health system prevented him from providing follow-up care to his patients.  The health system countered that the radiologist never identified any patients with whom he had contracts and that there was no evidence that it intentionally refused access to facilities or patients.  The court agreed with the health system and held that the state did not recognize a claim for negligent interference, so the lack of evidence of intent made summary judgment appropriate.  On the claim of interference with referral services, the court found that the radiologist had not presented admissible evidence that the health system told potential referral sources that he could no longer perform procedures.

Azomani v. State — Aug. 2016 (Summary)

FRAUD AND ABUSE

Azomani v. State
No. 2015–KA–00050–COA (Miss. Ct. App. Aug. 9, 2016)

The Court of Appeals of Mississippi affirmed a jury’s verdict finding a physician guilty of Medicaid fraud.

A physician used the incorrect CPT Code, 99215, to bill Medicaid for services rendered to 125 children, resulting in him receiving the maximum payment for those services.  The Medicaid Fraud Control Unit investigated the physician’s billing practices, and found that the services were improperly billed to Medicaid.  The physician was indicted, found guilty of fraudulently misusing Medicaid billing codes, and he appealed arguing, among other things, that there was no evidence that he intended to improperly bill Medicaid.

The physician argued that he relied on the results of an audit by the Mississippi Department of Medicaid, which reported three coding errors, but none related to 99215, and that his reliance shows that there is no evidence that he “willfully, unlawfully, and feloniously” filed fraudulent claims for Medicaid benefits.  The appeals court focused on the testimony of the Program Integrity Director of the Mississippi Department of Medicaid, who stated that the physician was ultimately responsible for submitting properly coded bills, and that viewed in the light most favorable to the state, a jury could have found that the physician was ultimately responsible, regardless of the errors in the audit, and affirmed the conviction.