Ferris v. Milton S. Hershey Med. Ctr. — Sept. 2016 (Summary)

PARENT REFUSES TREATMENT FOR KID/LAWSUIT ENSUES

Ferris v. Milton S. Hershey Med. Ctr.
No. 1:12-cv-0442 (M.D. Pa. Sept. 29, 2016)

The Middle District of Pennsylvania granted two physicians and a social worker’s motion for summary judgment against a former patient who obtained counsel through the Home School Legal Defense Association to file Fourth and Fourteenth Amendment claims – as well as a false imprisonment claim – against them.

After giving birth to a child with a number of health issues, the patient was transferred to the department of obstetrics where she refused to allow her child to receive vaccinations and other treatments to prevent further complications.  Subsequently, the physicians contacted Children and Youth Services and alerted the social worker to the patient refusing to allow treatment for her child.  The social worker was also unable to convince the patient to allow treatment for the child, so the social worker contacted the police department, which ultimately concluded that the child’s removal from the custody of the patient was necessary and had an emergency custody order issued.

With respect to the Fourth Amendment claim against the physicians, the court reasoned that the physicians acted reasonably in determining that emergency circumstances existed posing an immediate threat to the safety of the child.  The court found the patient’s refusal to allow her child to receive treatment and the fact that the patient had failed to retain a midwife to care for her following discharge were enough to show that the physicians acted reasonably in light of the surrounding circumstances.  Additionally, the court noted that even if a Fourth Amendment violation had occurred, based on the information available to the physicians, a reasonable official in the physician’s position would have concluded that the seizure of the patient’s child was supported by exigent circumstances.  Therefore, even if the court had found a Fourth Amendment violation, the physicians were entitled to qualified immunity and exemption from liability regarding the patient’s Fourth Amendment claims.

Turning to the patient’s Fourteenth Amendment claim against the physicians, the court rejected the patient’s argument that there was no emergency circumstance to justify deprivation of custody without parental consent, finding that the physicians were reasonable in concluding that the patient’s child was in imminent danger, and therefore emergency circumstances in fact existed to justify the patient’s deprivation of custody.

As to the patient’s claims against the social worker, the court first rejected the social worker’s contention that she qualified for absolute immunity because the actions that allegedly involved constitutional violations occurred prior to the emergency order for removal of the child being issued.  However, the court found that the patient’s Fourth Amendment claim against the social worker failed because the record before the court lacked any evidence of an actual seizure.  While the social worker informed the officer who confiscated the child of pertinent details, the court found that her involvement did not rise to a level that constituted an actual seizure.  Moreover, the court found that even if the Fourth Amendment violation had been established, the social worker was entitled to qualified immunity because she acted reasonably under the circumstances.

Having determined that the physicians’ actions were reasonable, the court concluded that the patient’s Fourteenth Amendment claim against the social worker failed because the social worker was entitled to consider the professional opinions of the medical staff when she formulated her own opinion about taking custody of the patient’s child.  The court found that the social worker was justified in her reliance on the professional opinions of the physicians and that her conclusion to remove the patient’s child was proper because emergency circumstances that posed an immediate threat to the safety of the child existed.  Lastly, the court rejected the patient’s false imprisonment claim, reasoning that the patient’s child being removed from her custody was necessary and the detention was not unlawful.  As a result, the court granted summary judgment in favor of the physicians and social worker on all claims against them.

Levitin v. Nw. Cmty. Hosp. — Sept. 2016 (Summary)

TITLE VII

Levitin v. Nw. Cmty. Hosp.
No. 13 C 5553 (N.D. Ill. Sept. 28, 2016)

The United States District Court for the Northern District of Illinois dismissed a lawsuit brought by a physician who claimed that she was subjected to a hostile work environment by the hospital.  The physician filed suit when her clinical privileges were terminated following four levels of internal review.

In her complaint, the physician alleged a violation of Title VII of the Civil Rights Act and various state law claims.  Focusing on the Title VII claim, the court sought to determine if the physician could be considered an “employee” under the law.  To determine whether an employment relationship existed, the court examined “the economic realities of the relationship and the degree of control that the employer exercises over the employee.”  Although other courts have determined that a physician who has been granted medical staff appointment and clinical privileges may claim to be an employee for the purposes of alleging discrimination under federal law, the court declined to recognize the existence of an employment relationship in this case.  Although the physician argued that the hospital exercised control over the facilities, equipment, and instruments that she used and dictated the scope of her duties and responsibilities for general surgeries and procedures, the court ruled that the physician’s claims did not “adduce [any actual] evidence to back up her allegations.”

The court found that although the physician was required to follow hospital guidelines, the physician’s “primary authority and fairly wide latitude to determine how best to treat her patients” indicated that she was not an employee of the hospital.  While the court noted that hospitals are required to exercise some measure of physician oversight in the heavily regulated health care market, such as requiring record-keeping, this type of compulsory supervision did not amount to control over the physician’s practice in this case.  In support of its determination, the court indicated that the physician did not receive employment benefits from the hospital (such as vacation days or health insurance) and did not have private office space.  The court also found that the hospital did not pay for her worker’s compensation, malpractice insurance, professional organization dues, licensing fees, or Social Security taxes.

Although the physician received some income from the Physician Hospital Organization, that was not a “sufficient” source of income.  There was no evidence that the hospital compensated her directly other than paying the physician on behalf of the PHO.  Thus, since the physician “largely controlled the means and manner of her delivery of patient services,” the court held that she was not an employee of the hospital and, therefore, could not recover under Title VII.  Accordingly, the court dismissed the physician’s Title VII claims.  The court also decided not to exercise jurisdiction over the physician’s state law claims and dismissed those claims as well.

Chernicoff v. Pinnacle Health Med. Servs. — Sept. 2016 (Summary)

EMPLOYMENT

Chernicoff v. Pinnacle Health Med. Servs.
No. 1:14-cv-1990 (M.D. Pa. Sept. 26, 2016)

The United States District Court for the Middle District of Pennsylvania granted a health system’s motion for summary judgment against an oncologist who was a former employee and who had brought claims of fraudulent misrepresentations, fraudulent inducement, negligent misrepresentation, and age discrimination.

The court addressed the fraudulent misrepresentations, fraudulent inducement, and negligent misrepresentation claims together because they all arose out of the oncologist’s expectations of his employment with the health system.  The oncologist based his claims on 11 alleged misrepresentations made while he was meeting with agents of the health system to discuss the possibility of his employment.  The court found that the oncologist failed to offer any evidence that seven of the 11 alleged misrepresentations were actually false.

The oncologist also claimed that the health system assured him that he would be employed by the health center for a reasonable amount of time.  However, the court found that the oncologist failed to provide any evidence that the statement was false and entered into an employment agreement with a without-cause termination provision.  The court also found that the oncologist failed to proffer any evidence on the remaining claims and, consequently, granted the health system’s motion for summary judgment on the claims of fraudulent misrepresentation, fraudulent inducement, and negligent misrepresentation.

Turning to the oncologist’s claim for discrimination under the Age Discrimination in Employment Act (“ADEA”), the court found that the claim was based exclusively on the oncologist’s own belief that he was fired because of his age.  The court noted that the oncologist produced no evidence that would lead a jury to believe that he was replaced by a “sufficiently younger person.”  One of the physicians who allegedly replaced the oncologist had signed an employment agreement two months before the oncologist signed his agreement.  With respect to the other physician who allegedly replaced the oncologist, the court noted that there was no evidence in the record to indicate that physician’s age.

The court also concluded that even if the oncologist had established a prima facie case, the health system had a number of reasons to terminate the oncologist, including poor work performance and poor attitude towards his employment, coworkers, and patients.  The record supported that the oncologist “plain out forgot” to arrive at work on time and that a patient had complained that he smelled like cigars.  These supported the health system’s non-discriminatory reason for termination.  Thus, the court ruled in favor of the health system and granted its motion for summary judgment.

Fed. Trade Commission v. Penn State Hershey Med. Ctr. — Sept. 2016 (Summary)

ANTITRUST

Fed. Trade Commission v. Penn State Hershey Med. Ctr.
No. 16-2365 (3d Cir. Sept. 27, 2016)

The United States Court of Appeals for the Third Circuit reversed and remanded a decision by the United States District Court for the Middle District of Pennsylvania with instructions for the lower court to grant a preliminary injunction, requested by the Federal Trade Commission (“FTC”), against the proposed merger between Penn State Hershey Medical Center (“Hershey”) and Pinnacle Health System (“Pinnacle”).

The FTC filed an administrative complaint alleging that the merger between Hershey and Pinnacle violated Section 7 of the Clayton Act because it would “substantially lessen competition in the market for general acute care services” in the Harrisburg area.  The district court dismissed the claim on the basis that the FTC failed to appropriately define the “geographic market” affected by the merger.  The FTC appealed.

The Third Circuit concluded that the trial court erred in both its formulation and application of the legal test to define a geographic market.  Specifically, the Third Circuit found that relying solely on patient flow data was inconsistent with the hypothetical monopolist test that both parties agreed should be used to define the geographic market.  The Third Circuit also found that the trial court had failed to consider patient outflow data which supported that general acute care services (the relevant product market) are inherently local.  The Third Circuit concluded “citing only patient inflows and ignoring patient outflows creates a misleading picture of the relevant geographic market.”  The Third Circuit was also critical of the district court’s analysis because it failed to properly account for the likely response of insurers to changes in price.  “This incorrect focus reflects a misunderstanding of the ‘commercial realities’ of the healthcare market.”

Additionally, the Third Circuit concluded that the trial court erred in basing its analysis of the geographic market on private contracts entered into between the hospitals and insurers maintaining the existing rate structure for five and ten years.  Based on prior case law, the Third Circuit concluded that such private contracts “are not to be considered” in determining the relevant geographic market.  Thus, the Third Circuit concluded:  “These errors together render the District Court’s analysis economically unsound and not reflective of the commercial reality of the healthcare market.”

The Third Circuit then went on to conclude that the FTC had appropriately defined the geographic market by demonstrating that insurers in the market would have no choice but to pay more for services if Hershey and Pinnacle would consummate the merger.  The Third Circuit then considered whether the FTC could prove that the merger “will probably lead to anticompetitive effects on the market.”  Based on the evidence presented by the FTC, the Third Circuit concluded that the merger was presumptively anticompetitive.

The Third Circuit also considered the “efficiencies defense” put forth by Hershey and Pinnacle and noted “we are skeptical that such an efficiencies defense even exists.”  The Third Circuit then concluded:  “Our review of the Hospitals’ claimed efficiencies leads us to conclude that they are insufficient to rebut the presumption of anticompetitiveness.”  Specifically, the Third Circuit noted that capital savings cited by the hospitals could not constitute “efficiencies” unless the savings resulted in some subsequent benefit to consumers.  It reached a similar conclusion with respect to the hospitals’ argument that the merger would enhance their efforts to engage in risk-based contracting.  “Irrespective of whatever benefits the merger may bestow upon the Hospitals in increasing their ability to engage in risk-based contracting, the Hospitals must demonstrate that such a benefit would ultimately be passed on to consumers.  It is not clear from the record how this would be so beyond the mere assertion that it would save the Hospitals money and such savings would be passed on to consumers.”

Ultimately, the Third Circuit concluded that a preliminary injunction would be in the public interest.  Thus, it reversed and remanded the case, directing the district court to grant the FTC’s preliminary injunction to enjoin the proposed merger pending the FTC’s administrative adjudication.

Baptist Health Richmond, Inc. v. Clouse — Sept. 2016 (Summary)

PATIENT SAFETY ACT

Baptist Health Richmond, Inc. v. Clouse
No. 2015-SC-000657-MR (Ky. Sept. 22, 2016)

Recently, the Supreme Court of Kentucky issued an opinion dealing with patient safety organizations (“PSOs”).  In Baptist Health Richmond v. Clouse, No. 2015-SC-000657-MR (Ky.  Sept. 22, 2016), the court addressed the scope of the privilege under the Patient Safety and Quality Improvement Act (“Patient Safety Act”) for patient safety work product (or information generated in connection with working with a PSO).  The opinion rolls back the narrow interpretation given to the privilege under the Patient Safety Act by the court in the plurality opinion of Tibbs v. Bunnell, 448 S.W.3d 796 (Ky. 2014) – an opinion with which many in the industry adamantly disagreed.

In the Clouse case, a deceased patient’s husband filed a medical negligence suit on the patient’s behalf.  During discovery, the husband sought a number of documents which the hospital defendant refused to produce, arguing that they were privileged under the Patient Safety Act.  The trial court granted in part a motion to compel filed by the patient’s husband, holding that only documents that were “collected, maintained, or developed for the sole purpose of disclosure to a [PSO] pursuant to the [Patient Safety Act]” were privileged.  On appeal, the Kentucky Court of Appeals agreed with this assessment, holding that this “sole purpose” standard was consistent with the Tibbs opinion.  The hospital subsequently appealed the issue to the Supreme Court of Kentucky.

The court began its analysis by noting that the Tibbs opinion was not precedential because “[a]lthough a majority of the Court agreed with the outcome in Tibbs, less than a majority agreed on the reasoning.”  According to the Tibbs’ plurality opinion, information developed by healthcare providers because of a mandate in a law, regulation, or accrediting and licensing requirement could not be patient safety work product and, thus, was not eligible for the privilege protection of the Patient Safety Act.  In Clouse, the court signaled a shift away from this narrow approach.  In doing so, it reviewed the plurality and dissenting opinions of Tibbs and recent guidance issued by the Department of Health and Human Services (“HHS”) (which takes a similar approach to the Tibbs’ plurality).

The court determined that “the correct result in this case lies in the middle ground between the plurality and dissenting opinions in Tibbs.”  Per the court:

A provider who participates in the [Patient Safety] Act may collect information within its patient safety evaluation system that complies with the [Patient Safety] Act and that also complies with state statutory and regulatory requirements.  However, doing so does not relieve the provider from complying with those state requirements and, to the extent information collected in the provider’s internal patient safety evaluation system is needed to comply with those state requirements, it is not privileged.

A “patient safety evaluation system,” as referenced in this passage, is the “space” where a provider collects patient safety work product before reporting it to a PSO.  This is an important concept because the Patient Safety Act’s privilege applies once information is collected within a provider’s patient safety evaluation system (even if it has not yet been reported to a PSO).  In this passage, the court appeared to be accepting the narrow interpretation of the Patient Safety Act’s privilege by excluding from the definition of patient safety work product anything that is required for federal, state, or accreditation oversight purposes.

However, the court explained further:

The existence of the [Patient Safety] Act does not relieve providers from fulfilling their statutory and regulatory reporting obligations.  As long as a provider fulfills those obligations, the trial court has no reason to review the information in the provider’s patient safety evaluation system….  Because the provider is claiming the privilege, it bears the burden of proving that it complied with the statutory and regulatory reporting requirements.  If the provider fails to meet that burden, the party seeking the information then bears the burden of establishing what information is generally contained in state-mandated reports.  (Emphasis added.)

In this second passage, the court emphasizes statutory and regulatory reporting obligations without mentioning statutory and regulatory record-keeping obligations.  The court appears to draw a distinction between the two.  Under the Crouse opinion, providers can continue to protect information as patient safety work product as long as they demonstrate that they complied with “statutory and regulatory reporting requirements.”  But, how do providers go about doing this?  Perhaps a state survey report showing that the provider complied with all of its reporting obligations or a computer-generated log listing, generally, reports made by the provider pursuant to an external obligation.

Nonetheless, HHS’s guidance is still on the books.  According to the guidance, information needed to satisfy reporting and record-keeping obligations cannot be patient safety work product and eligible for the Patient Safety Act’s privilege.  This guidance (which is not legally binding because it was not a formally adopted regulation) was met with a great deal of dismay because the health care industry is one of the most regulated industries in the country and close to all information generated by hospitals falls under some record-keeping obligation.  This had many providers asking, in response to HHS’s guidance, “what is protected under the Patient Safety Act.”  At least in Kentucky, providers working with PSOs have a little more clarity on this question.

Shah v. Orange Park Med. Ctr., Inc. — Sept. 2016 (Summary)

RACIAL DISCRIMINATION/SHAM PEER REVIEW

Shah v. Orange Park Med. Ctr., Inc.
Case No. 3:14-cv-1081-J-34JRK (M.D. Fla. Sept. 16, 2016)

The United States District Court for the Middle District of Florida dismissed a lawsuit brought by a physician who claimed that he was subjected to racial discrimination by the hospital at which he worked, as well as by the staffing company that employed him, because he was prevented from holding leadership positions at the hospital, was provided unequal benefits and pay (such as reimbursement of licensing and CME fees), and was subjected to “sham” peer review based on alleged disruptive conduct.  The physician alleged that the work environment became so intolerable that he was forced to resign his employment – a “constructive discharge” – and the hospital then retaliated by terminating his privileges pursuant to the coterminous language of his employment agreement.

The court dismissed all of the physician’s discrimination and retaliation claims because he failed to allege even a modicum of facts from which a court could plausibly infer that racial discrimination had occurred.  For example, the physician did not describe any leadership positions that he had sought and been denied, nor did he allege the qualifications for leadership positions and whether he even satisfied those.  Further, while the physician alleged that his licensure and CME fees were not paid, he did not allege that he ever requested reimbursement of any fees, nor did he allege that any non-Asian-Indian physicians had received reimbursement of similar fees.  Finally, the court found that the plaintiff’s allegation of constructive discharge based on discrimination and retaliation did not contain the required evidence of severe harassment and hostile work environment.  According to the court, while it may be uncomfortable to be subjected to peer review, criticism, and hearings, such activities do not constitute an adverse employment action, nor are they sufficient to support a claim of constructive discharge.

According to the court, the physician’s own conclusion that an action was taken against him on the basis of his race could not, alone, lead to a plausible suggestion of discrimination.  Because the plaintiff failed to state any claims upon which relief could be granted, the court granted the defendants’ motions and dismissed the plaintiff’s federal claims with prejudice.  Having dismissed all of the physician’s federal claims, the court also determined not to exercise jurisdiction over the physician’s state law claims and therefore dismissed the physician’s claims for protection under the state whistleblower statute (he alleged that his reports of quality concerns were ignored and met with sham peer review accusations) without prejudice.

Morales-Ramos v. Hosp. Episcopal San Lucas Guayama, Inc. — Sept. 2016 (Summary)

EMTALA

Morales-Ramos v. Hosp. Episcopal San Lucas Guayama, Inc.
Civil No. 13-1614 (BJM) (D.P.R. Sept. 13, 2016)

The United States District Court for the District of Puerto Rico granted in part and denied in part a hospital’s motion for summary judgment against a patient alleging, among other jurisdictional claims, transfer and screening violations under the Emergency Medical Treatment and Active Labor Act (“EMTALA”).

The court found that summary judgment was not appropriate, with respect to the patient’s EMTALA screening claim, because the hospital deviated from its standard protocol of connecting a fetal monitor to every pregnant woman with over 20 weeks of gestation. The patient, who was 37 weeks pregnant, was in the hospital’s emergency room from 1:50 a.m. to 3:30 a.m., which should have resulted in a fetal monitor being connected for at least 100 minutes. However, the fetal monitor showed that it was connected for only 50 minutes. Accordingly, the court reasoned that even though a doctor from the hospital maintained that the patient was connected the entire time, the evidence at the very least created a genuine issue of material fact.

The court further reasoned that a reasonable jury could also find that the hospital’s failure to document the patient’s vital signs constituted a deviation from standard protocol. While the patient’s vital signs were properly documented upon her arrival at the hospital, the record reflected three instances in which the patient’s vital signs were not properly documented. Additionally, the court stated that a reasonable jury could also find that the hospital did not follow the proper screening procedures required before a doctor can decide to transfer a patient. A doctor from the hospital testified that before deciding to transfer or make arrangements to transfer a patient, the patient’s laboratory test should be examined. However, the hospital began making arrangements to transfer the patient approximately 20 minutes before she arrived at the hospital’s emergency room.

Turning to the patient’s EMTALA transfer claim, the patient claimed that she was suffering from abruption placentae, which presented a life-threatening medical condition for the patient and her unborn child. The court noted, however, that the patient failed to include any evidence that the hospital was aware of her condition at the time of the transfer. The court was unconvinced by the patient’s argument that the doctor at the hospital must have known, reasoning that the patient was attempting to impose liability on a theory of constructive knowledge. The court concluded that summary judgment was appropriate because the patient failed to show any evidence indicating that the hospital knew that she was suffering from the life-threatening condition. Therefore, in light of their findings, the court granted the hospital’s motion for summary judgment with respect to the patient’s EMTALA transfer claim, and denied summary judgment with regard to their EMTALA screening claim.  Since the federal court had jurisdiction over the plaintiff’s EMTALA screening claim, it retained supplemental jurisdiction over the plaintiff’s state law, medical malpractice claim.

Joseph v. S.C. Dept of Labor, Licensing and Regulation — Sept. 2016 (Summary)

PHYSICAL THERAPY

Joseph v. S.C. Dept of Labor, Licensing and Regulation
Appellate Case No. 2014-001115 (S.C. Sept. 14, 2016)

The South Carolina Supreme Court, in a 3-2 decision, reversed the circuit court’s grant of summary judgment and ruled that judicial and regulatory interpretations of Section 40-45-110(A)(1) of the South Carolina Code violated the constitutional rights of physicians and physical therapists by prohibiting physicians from employing and referring patients to physical therapists while allowing physical therapists to employ and refer patients to other physical therapists.  In reaching this result, the court also overruled its 2004 precedent in Sloan v. South Carolina Board of Physical Therapy.  In Sloan, the court prevented physicians from employing and referring patients to physical therapists, while allowing physicians to employ and refer patients to other practitioners, on the assumption that such relationship would create a conflict of interest and lead to overuse of physical therapy services.

A physical therapist and two orthopedic surgeons sought declaratory judgment from a 2011 Position Statement issued by the South Carolina Board of Physical Therapy on the applicability of Section 40-45-110(A)(1) of the South Carolina Code to physician-physical therapist referrals.  The Position Statement, based on a perceived legislative desire to avoid overuse of physical therapy by self-interested referrals, permitted physical therapists to refer patients to other physical therapists, while maintaining the prohibition on physician-physical therapist referrals.  The Position Statement and Sloan, together, allowed practitioners other than physical therapists to provide treatment to referred patients as direct employees of physicians and also permitted physical therapists to employ and refer patients to other physical therapists, but prohibited physicians from employing physical therapists.

The court found that the appellant health care providers had  standing to challenge the 2011 Position Statement because the limitation on collaboration between physicians and physical therapists restricted their respective rights to practice.  The appellants asserted both equal protection and due process violations, claiming that the decision negatively affected both their rights to practice and their legal relationships among other providers.  Regarding the equal protection claim, the court determined that there was no “rational relationship” between the harm that the legislature sought to prevent (conflicts of interest and misuse of health care services) and the means adopted in Sloan to prevent the harm (barring physician-physical therapist referrals).  Because other health care professionals, such as occupational therapists and nurse practitioners, could collaborate with physicians and treat referrals, the court held that Sloan’s prohibition on physician-physical therapist referrals constituted a violation of equal protection and accordingly overruled Sloan.

Regarding the due process claim, the court held that the South Carolina Board of Physical Therapy’s 2011 Position Statement violated the state’s Administrative Procedures Act.  The court found that the Position Statement constituted a regulation-equivalent “binding norm” and, as such, its enactment required that the Board give notice and provide those affected with an opportunity to be heard.  Because the Board did neither of these, it violated the appellant health care providers’ due process rights.  Finally, the court held that Section 40-45-110(A)(1) of the South Carolina Code prohibits only referral-for-pay situations rather than all physician-physical therapist referral relationships.

The concurrence suggested that Sloan and the 2011 Position Statement should be nullified by the court based on the South Carolina Board of Physical Therapy’s failure to adhere to the Administrative Procedures Act in either circumstance despite promulgating position statements that were analogous to regulations in substance and effect.

The dissent contested the majority’s decision on the basis that the appellants did not have standing and, on the merits, pointed to the inaction of the legislature as implicit approbation of the result reached in Sloan.

Moran v. Prime Healthcare Mgmt., Inc. — Sept. 2016 (Summary)

PATIENT BILLING

Moran v. Prime Healthcare Mgmt., Inc.
Case No. G051391 (Cal. Ct. App. Sept. 14, 2016)

The Court of Appeal of California reversed the trial court’s decision to dismiss a patient’s claims against a hospital for, among other things, wrongfully charging self-pay patients more than insured patients in violation of the Unfair Competition Law (“UCL”), and restitutionary relief under the Consumer Legal Remedies Act (“CLRA”).

A patient visited the emergency room on three different occasions as a self-pay patient, signed a financial liability contract, and was charged over $10,000 in medical bills. Prior to receiving the bill, the patient contacted the hospital to inform it that he was unemployed and uninsured, and asked the hospital to take his financial status into consideration when addressing his bill. The patient never received a response from the hospital. The patient then filed a complaint against the hospital alleging that self-pay patients are discriminated against when they are charged higher rates than insured patients; that self-pay patients reasonably relied on the belief that they would be charged the same amount as patients who received the same services; that self-pay patients reasonably expected to be billed no more than the reasonable value of the services they received, all in violation of the UCL; and that the hospital failed to inform the patients that they would be billed at an excessively higher amount than insured patients, in violation of the CLRA.

The patient’s first argument that self-pay patients are discriminated against when they are charged higher rates than insured patients failed because the hospital’s variable pricing is legislatively endorsed by the Business and Professions Code, which permits the use of variable pricing. Therefore, the patient cannot have a viable claim of violating the UCL based on variable pricing. The patient’s arguments of reasonably believing he would either be charged the same as other patients receiving the same services, or charged a reasonable value for those services failed for two reasons. First, the court determined that even if the patient read the contract he signed stating that he was financially liable, he could not have reasonably believed that he would pay the same as all other patients because the contract includes provisions for discounted payment policies such as charity care, and federal and state assistance. Second, the court determined that reliance on charges of reasonable value applies only when the agreement does not determine the charge, or include the method by which it is to be ascertained. The patient signed an express financial liability contract that did not include prices, but included means of determining the price. The patient also failed to show that he reasonably relied on a misrepresentation by the hospital that led him to believe that he would be charged the same as all other patients, which defeated his CLRA claim.

The patient’s UCL claim survives on his argument that the financial liability contract is unconscionable. The patient alleged that the hospital’s “pricing, billing and collection practices have a significant detrimental impact on the large population of self-pay emergency care patients.” Because the patients need the medical care, they are placed at a disadvantage, ultimately sign a contract that favors a more powerful party, the hospital, and become responsible for payments that far exceed the cost of actual care. The court determined that the patient stated a sufficient claim for the unconscionability of the financial liability contract. The hospital argued that the patient’s claim should fail because he was offered alternatives to pay a lower rate. The court determined both that the alternatives offered constituted a tangible burden, and that the patient showed sufficient proof of seeking a lower rate by contacting the hospital and informing it of his financial status.

Rowell v. Phoebe Putney Memorial Hosp., Inc. — Sept. 2016 (Summary)

EXCLUSIVE AGREEMENT

Rowell v. Phoebe Putney Memorial Hosp., Inc.
Case No. A16A1304 (Ga. Ct. App. Sept. 14, 2016)

The Court of Appeals of Georgia affirmed the trial court’s decision to grant a hospital and the hospital’s Vice President of Medical Affairs summary judgment, dismissing an anesthesiologist’s claims for, among other things, tortious interference with her existing contractual relationship and violation of the hospital bylaws.

An anesthesiologist had an oral agreement to work on nights and weekends for the anesthesia group that was the exclusive provider of anesthesia services at the hospital.  After the anesthesiologist’s employer met with the Vice President of Medical Affairs (“VPMA”) due to concerns about the anesthesiologist’s patient care, the employer informed the anesthesiologist that the VPMA instructed him to stop the anesthesiologist from coming to work, and if she did come back to work, her privileges would be suspended. Following that conversation, the employer called the anesthesiologist back, told her she wasn’t fired, and that she needed to fight the hospital’s instruction. The anesthesiologist chose not to return to work and picked up her last paycheck.  The anesthesia group then terminated her malpractice insurance policy and as a result she no longer qualified for privileges under the Medical Staff Bylaws.

The anesthesiologist initiated an action against the hospital and the VPMA which included claims for tortious interference with her existing contractual relationship and violation of the hospital’s bylaws. In order for the anesthesiologist to succeed in her claim of tortious interference with her existing contractual relationship, she had to prove the VPMA acted with malice by suspending her privileges.

The VPMA met with the anesthesiologist’s employer to tell him that the hospital planned to investigate her patient care, and that the initiation of the investigation would result in a suspension of her privileges. The VPMA’s communications with the employer were made in good faith, as he was acting in the interest of patient safety; and though he had the right to suspend the anesthesiologist’s privileges, he ultimately did not do so. The anesthesiologist never returned to work; therefore, there was no need to initiate an investigation and suspend her privileges. The anesthesiologist failed to prove the VPMA acted with malice since there was no act; therefore, her tortious inference claim cannot stand.

The anesthesiologist also claimed the VPMA failed to follow the hospital’s bylaws because he did not consult with other members of the Executive Committee concerning her suspension before contacting her employer. When the anesthesiologist made the unilateral decision not to return to work, which resulted in the anesthesia group cancelling her malpractice insurance, a suspension of her privileges was no longer necessary because she was no longer qualified to have privileges at the hospital. Because the hospital never imposed a summary suspension of her privileges, the anesthesiologist was not entitled to the hearing rights that were set forth in the medical staff bylaws.  Therefore, the anesthesiologist did not have a claim for a violation of the bylaws based on a suspension of her privileges.