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.

Cuellar v. Sw. Gen. Emergency Physicians, PLLC — Aug. 2016 (Summary)

RETALIATION

Cuellar v. Sw. Gen. Emergency Physicians, P.L.L.C.
No. 15-51078 (5th Cir. Aug. 4, 2016)

The United States Court of Appeals for the Fifth Circuit reversed the district court’s decision to grant defendant physician group’s motion to dismiss plaintiff nurse practitioner’s retaliation claim.

The nurse practitioner, an employee of the physician group, filed a claim against the group alleging sexual harassment and retaliation.  The nurse practitioner alleged that she was terminated after she reported that her supervisor promised to “spank her if she misbehaved.”  The district court granted the physician group’s motion to dismiss the sexual harassment and retaliation claim, and the nurse practitioner appealed the ruling solely on the retaliation claim.

The physician group argued that the nurse practitioner’s retaliation claim should be dismissed because there was no viable sexual harassment claim.  The appeals court held that the nurse practitioner’s retaliation claim does not depend on the viability of her sexual harassment claim, and ruled that since there was enough information in her complaint to support a retaliation claim, the district court’s grant of the physician group’s motion to dismiss was reversed.

Nam v. Regents of the Univ. of Cal. — July 2016 (Summary)

SLAPP

Nam v. Regents of the Univ. of Cal.
No. C074796 (Cal. Ct. App. July 29, 2016)

The Court of Appeal of California affirmed the trial court’s decision to deny defendant educational institution’s special motion to strike based on the anti-SLAPP (“Strategic Lawsuit Against Public Participation”) statute, holding that the plaintiff resident’s claims for sexual harassment and retaliation were not protected First Amendment activities under the statute.

After a resident drafted an email expressing concerns about patient care and refused the alleged sexual advances of the residency program director, she received complaints and warnings, was investigated, and ultimately given written notice of termination.  The resident filed a complaint against the educational institution for, among other things, sexual harassment and retaliation.  The institution moved to strike the resident’s complaint, alleging that it constituted a SLAPP because the resident’s complaint arose out of complaints based on the institution’s protected activity as part of an official proceeding.  The resident argued that her complaint did not arise out of the formal documentation of complaints and the formal documentation of her termination, but out of her voicing concern for patient safety, being sexually harassed, and being retaliated against when she publicly expressed her concerns for patient care, and refused the physician’s alleged advances.

The court rejected the educational institution’s argument.  The court stated that accepting the institution’s argument would subject most harassment and retaliation claims to an anti-SLAPP motion to strike, since the institution could use protected activities such as compiling complaints, conducting investigations, and giving written notice of suspension or termination as means to discriminate or retaliate.  The court also stated that the resident alleged the wrongdoings of sexual harassment and retaliation, and such conduct is not a protected activity.  Thus, since the alleged wrongdoings are not protected activities, the institution could not succeed on a motion to strike based on the anti-SLAPP statute.  The court further noted the questionable nature of characterizing the resident’s claim as a SLAPP because it is unlikely that the resident’s suit would be able to stifle the institution from conducting protected activities, as is the motivation for a SLAPP.

Glaskox v. George Cty. Hosp. — Aug. 2016 (Summary)

EMTALA

Glaskox v. George Cty. Hosp.
Civil No. 1:16cv9-HSO-JCG (S.D. Miss. Aug. 1, 2016)

The United States District Court for the Southern District of Mississippi granted a defendant hospital’s motion for judgment on the pleadings, dismissing a patient’s Emergency Medical Treatment and Active Labor Act (“EMTALA”) claim for failure to comply with the pre-suit notice requirement of state law.

The plaintiff patient went to a hospital’s emergency department due to abdominal pain after an abdominal surgery.  Since only nine days had passed since the patient’s surgery, a physician determined that it would be best to transfer the patient to the medical center where she received the surgery in order for the patient to receive a higher level of care from physicians who are familiar with her case.  The patient alleged that prior to her transfer she went into shock and was not in a stable condition.  The hospital proceeded with the transfer and the patient suffered limb complications resulting in amputation.  The patient filed an EMTALA claim against the hospital asserting that the hospital failed to stabilize her before she was transferred, and that failure caused her injury and a loss of chance of a better result.

EMTALA allows patients injured by hospital failure to obtain damages available under state law, thereby acting in concert with state law.  In this case, state law requires the patient to file a pre-suit notice of her claim with the hospital in order to proceed, or risk having her claim dismissed. The patient did not file a pre-suit notice with the hospital, and argued that the state requirement was in conflict with EMTALA which would prevent her from complying with the pre-suit notice requirement.

The court held that the pre-suit notice requirement was not in conflict with EMTALA, and in theory would actually support the underlying policy of EMTALA by allowing hospitals to respond to patient allegations more quickly in order to prevent further patient injuries due to similar treatment.  Because the pre-suit notice requirement was not in conflict, and such notice is required under state law in order to proceed with the EMTALA claim, the court granted the hospital’s motion for judgment on the pleadings and dismissed the patient’s EMTALA claim.

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

DISCOVERY

Elkharwily v. Franciscan Health Sys.
Case No. 3:15-cv-05579-RJB (W.D. Wash. July 29, 2016)

The District Court for the Western District of Washington denied the motion to compel of plaintiff physician, who was denied appointment and clinical privileges by defendant health system.  The physician sought discovery of all emails and text messages concerning the physician between health system employees, agents, and attorneys, among others.

The health system’s contention was that the discovery request would be overly burdensome and expensive because it did not have an archiving system for emails that would be easily searchable. The court found that the physician failed to show the necessary good cause to compel such a burdensome discovery request.  However, the court held that upon a request by the physician to the health system, the physician could discover the archived emails and text messages of the health system if the physician paid the health system, in advance, the costs of retrieving and restoring the back-up tapes which contained the archived material.

Walters v. UPMC Presbyterian Shadyside — July 2016 (Summary)

NEGLIGENCE/DUTY TO REPORT

Walters v. UPMC Presbyterian Shadyside
Nos. 309 WDA 2015, 310 WDA 2015, 311 WDA 2015, 312 WDA 2015 (Pa. Super. Ct. July 21, 2016)

The Superior Court of Pennsylvania held that plaintiff co-executors of an estate made a prima facie showing of a duty on the part of defendant hospital and medical staffing agency to report an employee radiologic technologist’s criminal behavior to law enforcement.  Also, the court held that the hospital’s violation of regulations that require the reporting of diversions of controlled substances did not support a claim of negligence per se.

After a radiologic technologist, who was employed through a medical staffing agency, was discovered diverting controlled substances and substituting water in syringes for use by unsuspecting staff upon patients, the hospital banned the technologist from all of its facilities.  The hospital did not report the incident to the Drug Enforcement Agency (“DEA”) as required by regulation.  After the incident, the technologist obtained a license and employment in another state, where he continued to divert controlled substances and replace them with water in used syringes.  As a result of this diversion, a patient became infected with the technologist’s strain of Hepatitis C and died.  Co-executors of the decedent’s estate brought lawsuits for negligence and negligence per se against the hospital and medical staffing agency.

On the negligence claim, the hospital and medical staffing agency argued that there was no special relationship that created a duty of care between them and a patient who had not been treated at their facility.  Additionally, both warned that a duty in this context would subject hospitals to limitless liability.  The plaintiffs countered that there was a duty because the failure to report the illegal activity foreseeably led to the technologist continuing his harmful conduct in another facility.  The court agreed with the plaintiffs and found that it was highly foreseeable to the hospital and staffing agency that, left unchecked, the technologist would seek new employment with access to drugs to continue his practice of substitution.  Also, the court found that the hospital and medical staffing agency had a special relationship with the technologist that created a duty for them to report his behavior to the DEA or other enforcement agencies. However, the court did not find that the hospital and staffing agency’s failure to report constituted negligence per se.  Although the reporting requirement was intended to protect against the type of harm that resulted in this case, the court held that the requirement was not intended to protect the particular group to which the plaintiffs belonged, and thus it was not negligence per se.

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.”