U.S. ex rel. Polansky v. Exec. Health Res., Inc. — July 2016 (Summary)

FALSE CLAIMS ACT

U.S. ex rel. Polansky v. Exec. Health Res., Inc.
Civil Action No. 12-4239 (E.D. Pa. July 26, 2016)

The United States District Court for the Eastern District of Pennsylvania granted the motion to dismiss of two hospitals against a relator, who brought a qui tam suit alleging violations of the False Claims Act.

The relator alleged that a physician advisor company defrauded Medicare and Medicaid by causing the hospitals to knowingly and falsely bill patients as inpatients when they were actually outpatients.  The relator maintained that while the physician advisor company was the main party defrauding Medicare and Medicaid by exploiting the different reimbursement rates while performing second level reviews, the two hospitals were nonetheless liable because one was put on notice by a government audit that resulted in the denial of 20 cases reviewed by the physician advisor company and the other hospital should have questioned an unusually high number of cases reviewed by the company.  The hospitals filed a motion to dismiss, arguing that the relator failed to adequately plead falsity and knowledge.

With respect to the hospital in which a government audit resulted in the denial of 20 cases, the court reasoned that knowledge of the audit alone is insufficient to allege knowledge of fraudulent claims.  However, the advisor company’s CCO communicating to the hospital that it should keep working with the company because enough claims would evade review to recoup any losses from claims denied in audits or on appeal was sufficient to plead knowledge of the fraud scheme from the date of the statement onward.  Nevertheless, because the court found that the relator failed to plead fraud with particularity against the hospital, it dismissed all of the relator’s claims against the hospital before and after the audit.

Turning to the hospital with an unusually high number of cases, the court agreed with the hospital’s position that the rate of the physician advisor company’s certifications that failed internal reviews did not imply any knowledge of fraud, and even assuming that the hospital had knowledge, the allegations would still be inconsistent with other claims brought against the advisor company.  Also, the physician advisor company only reviewed cases once one of the hospital’s physicians had recommended inpatient admission; hence, pairing the advisor company’s “marketing of the hospital’s internal review criteria as extremely inaccurate, this review process after a physician recommends inpatient admission makes high disagreement rates with internal criteria seem like a logical outcome rather than demonstrating the hospital’s knowledge of fraud.”  Thus, the court found that the relator failed to allege the hospital’s knowledge to sufficiently plead an FCA claim, and, subsequently, granted the hospitals’ motion to dismiss.

Grenier v. Stamford Hosp — July 2016 (Summary)

FEDERAL PEER REVIEW PRIVILEGE

Grenier v. Stamford Hosp.
No. 3:14-cv-0970 (VLB) (D. Conn. July 20, 2016)

The United States District Court for the District of Connecticut recognized a federal peer review privilege in a suit asserting claims for medical malpractice and violations of the Emergency Medical Treatment and Active Labor Act (“EMTALA”) brought against a hospital and others by the estate of a deceased patient. 

The estate filed a motion to compel the production of documents and responses to interrogatories, which the hospital argued were protected by the Connecticut peer review privilege.  The court first found that the facts of the case and the nature of the claims warranted recognition of a peer review privilege.  According to the court, federal courts will not recognize a peer review privilege in civil rights or antitrust actions, but with claims involving federal law “which touch upon medical malpractice,” such as EMTALA, there has been a recent trend to recognize a federal peer review privilege.  The court also indicated that this recognition would serve public and private interests because it encourages the peer review process, which is designed to give physicians a safe place to fully disclose and evaluate their work with their peers in a constructive setting.  The court also noted that the peer review materials that were sought were available from other sources and the peer review privilege is widely recognized. On this latter point, the court observed that “[a]ll 50 States and the District of Columbia recognize some form of medical peer review privilege.”  Furthermore, enactment of the federal Patient Safety and Quality Improvement Act, and its strong privilege protections for peer review information, evidences a “shift in congressional policy aimed at providing broad protection for peer review work product in an effort to improve patient safety and quality of care.”

Eaves-Voyles v. Almost Family, Inc — July 2016 (Summary)

RETALIATION AND WRONGFUL TERMINATION

Eaves-Voyles v. Almost Family, Inc.
Civ. No. 1:15-CV-2421 (M.D. Pa. July 27, 2016)

The United States District Court for the Middle District of Pennsylvania granted in part and denied in part a home care company’s motion to dismiss a nurse’s claims of retaliation and wrongful termination.

After lodging various complaints to her supervisor, the company’s regional director, and the company’s corporate compliance office, the nurse was terminated from her position as a registered nurse clinical manager with the company.   The nurse sued, claiming that the company violated the Patient Safety and Quality Improvement Act (“PSQIA”) and the Pennsylvania Whistleblower Law by terminating her for making the complaints in good faith.  The company filed a motion to dismiss.  The court granted the motion to dismiss with respect to the nurse’s claim under the Pennsylvania Whistleblower Law.  According to the court, receipt of Medicaid and Medicare reimbursements was insufficient to transform the company, a private entity, into a “public body” subject to the Pennsylvania Whistleblower Law.  The court, however, declined to dismiss the nurse’s wrongful termination claim.  The nurse argued that the “at-will employment doctrine,” which permits an employer to terminate an employee “with or without cause, at pleasure, unless restrained by some contract,” did not apply because she was terminated in violation of public policy.  The court agreed, finding that the nurse alleged that the company terminated her after she refused to honor the company’s request to schedule nurses to perform services for which they were not qualified and, thus, in violation of Pennsylvania regulations.  The court also declined to dismiss the nurse’s claim under PSQIA, which protects individuals from adverse employment actions for good faith reporting of patient safety events to patient safety organizations.  In support of this decision, the court noted that the nurse’s complaint alleged that she intended for her concerns to “be reported in accordance with state and federal reporting requirements….”  Thus, “dismissal of [the nurse’s] PSQIA claim would be premature.”

Meister v. Avera Marshall — July 2016 (Summary)

UNILATERAL AMENDMENT OF MEDICAL STAFF BYLAWS

Meister v. Avera Marshall
No. A15-1982 (Minn. Ct. App. July 25, 2016)

The Court of Appeals of Minnesota affirmed the district court’s summary judgment determination that the board of a medical center could unilaterally amend and repeal the medical staff bylaws.

The medical staff, medical executive committee, and doctors practicing at the medical center (collectively, the “doctors”) sought a declaratory judgment that the board of the medical center could not unilaterally amend and repeal the medical staff bylaws.  The doctors argued that under the medical staff bylaws (which were determined to be a contract by the Minnesota Supreme Court), a two-thirds vote from the medical staff was necessary before the board could adopt, amend, or repeal the medical staff bylaws. The hospital contended that the doctors’ two-thirds vote requirement only applied to amendments proposed by the medical staff.  Since the changes to the bylaws were proposed by the board, not the medical staff, the two-thirds vote requirement was inapplicable.  The court of appeals noted a provision in the bylaws which stated that “the medical staff is subject to the ultimate authority of the board.”  Under state contract law, the court was required to interpret the bylaws “in such a way as to give meaning to all of its provisions.” Accordingly, the court concluded that the two-thirds vote requirement only applied to revisions to the bylaws proposed by the medical staff since the board retained ultimate authority over the medical staff.  The court also cited state law which requires the business and affairs of a corporation to be “managed by or under the direction of a board of directors” and which indicates that the medical staff “shall be called upon to advise regarding professional problems and policies.”  Per the court, “[t]hese authorities support [the medical center’s] ability to unilaterally amend the medical staff bylaws.”

Buchheit v. Lakeland Health Sys — July 2016 (Summary)

DUE PROCESS AND ANTITRUST

Buchheit v. Lakeland Health Sys.
No. 1:15-CV-1315 (W.D. Mich. July 21, 2016)

The United States District Court for the Western District of Michigan granted a health system’s motion for summary judgment on a physician’s claims asserting violations of due process and the Sherman Antitrust Act.

The health system imposed a precautionary suspension after a quality review raised concerns about the physician’s cases.  Ultimately, the medical staff medical executive committee (“MEC”) decided to permanently suspend the physician. Following a medical staff hearing, the hearing committee voted to uphold the MEC’s decision, which was, subsequently, affirmed by the Board of Trustees.  The physician sued, claiming that his due process rights under the Federal Constitution were violated.  To support his due process claim, the physician argued that the health system failed to follow its own bylaws during the proceedings, he was not allowed to have an attorney present at the MEC meetings, and the decision-makers were biased. The court rejected these arguments and concluded that the physician had a meaningful opportunity to be heard at numerous points in the process, he had an attorney present at the hearing, and there was no evidence that the hearing committee was biased.  The court also cited Sixth Circuit precedent, noting that “compliance with organizational bylaws is not a mandatory requirement of due process.” With respect to the physician’s antitrust claims, the court instructed that the claim repeated allegations underlying the due process claim and the physician failed to offer any allegation of an agreement that affected interstate commerce.  Accordingly, the court granted summary judgment to the health system and declined to exercise supplemental jurisdiction over the physician’s state law claims.

Pal v. Jersey City Medical Center — July 2016 (Summary)

HCQIA No Pal to Terminated Resident

Pal v. Jersey City Medical Center
Nos. 14-3710, 14-4605 (3d Cir. July 15, 2016)

The United States Court of Appeals for the Third Circuit affirmed a district court’s grant of summary judgment in favor of a hospital in a suit by a physician.  The doctor was a woman of Indian origin, who was a resident in the hospital’s cardiothoracic surgery program.  She resigned after learning that her contract would not be renewed.  The physician previously sued the hospital where she was terminated from the residency program in state court alleging discrimination and retaliation and was awarded $1,600,000 by a jury.  She subsequently sued the hospital where she was terminated from the residency program, the hospital where she subsequently sought privileges and two doctors in federal court alleging post-employment retaliation, denial of due process in violation of 42 U.S.C. §1983, and conspiracy under 42 U.S.C. §1985, and several new state law claims including defamation and false light.

The court concluded that the federal civil rights laws did not entitle the physician to a favorable reference, and that the hospital where she sought privileges and the two physicians there were immune under HCQIA since the physician was granted a hearing.

Furr v. Ridgewood Surgery and Endoscopy Ctr., LLC — June 2016 (Summary)

EMPLOYMENT DISCRIMINATION

Furr v. Ridgewood Surgery and Endoscopy Ctr., LLC
Civil Action No. 14-1011-KHV (D. Kan. June 29, 2016)

The U.S. District Court for the District of Kansas sustained in part a healthcare management company’s motion for summary judgment against a former employee, who claimed that the management company created a sexually hostile work environment, constructively discharged her based on sex, and retaliated against her because she engaged in protected activity.

The former employee was hired as the clinical administrator for one of the management company’s surgery centers.  Her job duties included reporting allegations of sexual harassment and reporting incidents of physician misconduct.  The clinical administrator filed suit after she reported an alleged incident of inappropriate sexual behavior by a physician, and, as a result, the physician, along with his colleague, allegedly retaliated against her by, among other things, yelling and using a degrading tone while speaking to her.  The clinical administrator ultimately resigned after being informed by her direct supervisor that he could no longer protect her, and he did not think the retaliation would stop.

With respect to the claim for sexual harassment, the court found that the clinical administrator failed to exhaust her administrative remedies. Specifically, the court found that she failed to indicate on the administrative charge for the EEOC that the illegal conduct was part of a continuing action.  Instead, on the EEOC charge, the clinical administrator described only two incidents of alleged retaliation or discrimination, which included being yelled at by one of the physicians and being confronted by board-member physicians a week later regarding a proposed expansion of her job duties.  Importantly, the clinical administrator did not allege that either event was based on sex. Therefore, the court granted the management company’s summary judgment motion on the sexual harassment claim.

With respect to the claim for constructive discharge based on sex, the management company argued that it was entitled to summary judgment because the employee could not show an adverse employment action or that any such action occurred under circumstances that gave rise to an inference of discrimination.  The court agreed, holding that if the clinical administrator was able to establish that the working conditions during her employment were so severe that she had no choice but to quit, she still had not presented any evidence that she was treated less favorably than any similarly situated man.  Therefore, the management company was entitled to summary judgment on the employee’s claim for constructive discharge sex discrimination.

With respect to her claim for retaliatory harassment, the clinical administrator was required to show that (1) she engaged in protected opposition to discrimination, (2) she suffered a materially adverse action, and (3) a causal nexus between her opposition and management company’s conduct.  The court reasoned that the clinical administrator engaged in protected opposition to discrimination when she emailed her direct supervisor complaining of harassment and referred to sexual harassment complaints by employees.  Additionally, the court found that a reasonable jury would conclude that the alleged retaliatory acts – which included, among other things, a physician telling her to keep an employee who had complained of sexual harassment out of his operating room, speaking to her loudly with a demeaning tone, and coming into her office stating that he hated the surgery center and the employee was the surgery center – when considered together, rose to the level of materially adverse action.  Lastly, because the alleged harassment began shortly after the clinical administrator reported the sexual harassment of other employees and continued until she left the management company’s employment, a reasonable jury could find the necessary causal connection between the employee’s protected activity and the alleged harassment.

Subsequently, the management company argued that it was still entitled to summary judgment because the clinical administrator waited until after she found another job to resign, and if her work conditions were truly intolerable, she would have resigned immediately.  In response, the clinical administrator argued that she was constructively discharged when her supervisor informed her that he could not protect her, so she should find another job.  Based on the evidence supporting this statement from the supervisor, the court found that the clinical administrator set forth evidence from which a jury could find that the management company constructively discharged her in retaliation for engaging in protected opposition, and denied the management company’s motion for summary judgment on the retaliation claim.

Ashraf v. Adventist Health Sys./Sunbelt, Inc. — July 2016 (Summary)

DEFAMATION BASED ON DATA BANK REPORT/STATUTE OF LIMITATIONS

Ashraf v. Adventist Health Sys./Sunbelt, Inc.
No. 5D15-2415 (Fla. Dist. Ct. App. July 1, 2016)

The Florida District Court of Appeal affirmed the dismissal of a physician’s complaint for defamation against a hospital, based on a report the hospital filed with the National Practitioner Data Bank (“NPDB”).  The court also certified the question to the Florida Supreme Court as one of “great public importance.”

Underlying the claim for defamation was a decision by the hospital to revoke the physician’s clinical privileges.  Prior to the decision to revoke his privileges, there was an investigation which resulted in 20 factual findings against the physician.  These findings were upheld by a fair hearing panel and approved by the board of the hospital.  Shortly thereafter, as required by the Health Care Quality Improvement Act, the hospital filed a report with the NPDB.  In its report, the hospital cited, verbatim, to the 22 factual findings of the investigating committee.

Six years later, the physician filed a complaint against the hospital for defamation and injunctive relief, alleging that the NPDB report contained false and defamatory information that was the direct cause of the physician losing employment opportunities.  The hospital moved to dismiss the complaint, arguing that the two-year statute of limitations barred the physician’s claim.

The court ruled against the physician, reasoning that the two-year statute of limitation began to run when the report was issued to the NPDB and any issuance of the report to legally authorized entities did not start a new limitation period. Additionally, the court noted that not only did the NPDB send the physician a copy of his report, but also established internal protections whereby the physician could have filed an exception disputing the accuracy of the report’s content. Therefore, the physician had actual knowledge of the contents of the NPDB report well before the limitations period expired.  As a result, the court affirmed the lower court’s dismissal and certified an additional question to the Florida Supreme Court.

Pirouzian v. Super. Ct. of L.A. Cty. — June 2016 (Summary)

LICENSURE ACTION

Pirouzian v. Super. Ct. of L.A. Cty.
No. B266015 (Cal. Ct. App. June 29, 2016)

The California Court of Appeal granted a physician’s petition, ordering the trial court to enter a new order commanding the Medical Board to set aside its order revoking the physician’s license, and to determine a new form of discipline that is more appropriate.  The physician took medical leave due to depression.  During that leave, the physician submitted claims for and received disability insurance benefits.  After the physician’s psychiatrist cleared him to return to work, the physician returned to his previous hospital on a part-time basis.  He also accepted a full-time offer at another hospital.  The physician did not inform his previous hospital or the insurance provider of his new employment.  The physician then made a series of misrepresentations about his employment status in order to receive income from his positions at the hospitals in addition to receiving disability benefits from the insurance provider as if he were still unemployed.  The insurance provider discovered the misrepresentations, and the physician was charged with insurance fraud.  The physician ultimately reached a plea agreement in which he pled guilty to a misdemeanor and repaid the insurance provider.  His conviction was subsequently expunged.  On the advice of counsel, the physician did not report his conviction to the Medical Board.

Five years later, the Medical Board learned of the physician’s misrepresentations and conviction and, following a hearing, revoked the physician’s medical license.  The Medical Board found that although there was no evidence that the physician’s dishonesty caused harm to any patients, “dishonesty is substantially related to the qualifications, functions and duties of a physician and surgeon.”  The Medical Board also found that not enough time had passed for the physician to be truly rehabilitated and the only discipline that would protect the public was outright revocation of his license.

In reviewing the decision of the Medical Board, the court held that the career ending penalty imposed was “clearly excessive.”  The goal of discipline is not to punish the physician but to protect the public and to rehabilitate the physician.  The court found that the Medical Board’s decision was not necessary to protect the public because there was no evidence that the physician’s misconduct affected the treatment of patients and there was no evidence that the physician would repeat his actions.  The court also found that the Medical Board’s decision was clearly made with the goal of punishing the physician, which is inconsistent with the goals of disciplinary review, and thereby an abuse of discretion.

Knapp Med. Ctr. v. Burwell — June 2016 (Summary)

STARK LAW

Knapp Med. Ctr. v. Burwell
Civil Action No. 15-cv-1663 (RMC) (D.D.C. June 28, 2016)

The United States District Court for the District of Columbia granted a motion to dismiss in favor of the Department of Health and Human Services (“HHS”) against three hospitals that were challenging a decision by HHS (plaintiff hospitals) to approve the expansion of a physician-owned hospital.  As established by the Stark Law, physician-owned hospitals must get permission from HHS before they can expand.  Upon approval, physician-owned hospitals will be permitted to expand up to 100%.  The physician-owned hospital seeking expansion filed two applications with HHS. HHS approved the request for expansion, determining that the requirements for approval were met, and granting permission for the hospital to double in size. The plaintiff hospitals challenged HHS’s approval of expansion on several grounds. In response to the challenge, both HHS and the physician-owned hospital filed a motion to dismiss for lack of subject matter jurisdiction.

Congress has intentionally precluded review of an agency’s process or the decisions resulting from that process by stating that “there shall be no administrative or judicial review…of this title…or otherwise of the process….”  The plaintiff hospitals argued that they sought review of the process of approval used by HHS not the approval itself.  The court concluded that according to Congress’s expressed insulation of agency decisions, the process cannot be separated from the result.

The plaintiff hospitals also argued that without review of the HHS decision, HHS could easily exceed its authority to grant physician-owned hospital expansions. That argument was also rejected by the court.  According to the court, plaintiff hospitals “have not alleged or argued that HHS acted beyond its statutory authority when it granted [the physician-owned hospital’s] request for expansion, but instead worry about the possibility of such action at an unspecified time in the future. Their worry does not constitute a case or controversy.”  Because allegations must be concrete and not hypothetical or abstract, the claim brought by the plaintiff hospitals was dismissed.