U.S. House of Representatives v. Burwell — May 2016 (Summary)

AFFORDABLE CARE ACT

U.S. House of Representatives v. Burwell
No. 14-1967 (RMC) (D.D.C. May 12, 2016)

The United States District Court for the District of Columbia entered summary judgment in favor of the United States House of Representatives in a suit brought against the Secretary of the United States Department of Health and Human Services (“HHS”) and the United States Treasury.  The court enjoined the use of unappropriated monies to reimburse cost-sharing subsidies offered by insurers under Section 1402 of the Affordable Care Act.  Section 1402 of the Affordable Care Act requires insurers offering qualified health plans through the Affordable Care Act exchanges “to reduce deductibles, coinsurance, copayments, and similar charges for eligible insured individuals enrolled in their plans, with the government providing reimbursement to insurers for these cost-sharing reductions.”

The court distinguished Section 1401 of the Affordable Care Act, which provides tax credits to subsidize health insurance for certain individuals, noting that these tax credits are permanently funded by law.  However, the Section 1402 cost-sharing subsidies are annually funded.  Thus, paying out reimbursements for these subsidies by HHS and the Treasury without an annual appropriation from Congress violates the Constitution.  The court concluded that “Congress authorized reduced cost sharing but did not appropriate monies for it, in the FY 2014 budget or since.  Congress is the only source for such an appropriation, and no public money can be spent without one.”  The court stayed its injunction pending any appeal by the parties.

Sunderland v. Bethesda Health, Inc. — May 2016 (Summary)

ADA – TITLE III

Sunderland v. Bethesda Health, Inc.
No. 13-80685-CIV-HURLEY (S.D. Fla. May 11, 2016)

The United States District Court for the Southern District of Florida granted a hospital’s motion for summary judgment in a suit seeking, among other things, injunctive relief brought by former patients who were hearing disabled.  The patients claimed that the hospital “failed to provide interpreting services adequate to ensure effective communication with them during each of their respective hospital stays, and that this lack of effective communication violated their rights under Title III of the [ADA]…and section 504 of the Rehabilitation Act of 1973….”

The patients argued that the hospital excluded them from, or denied them the benefits of, “the hospital’s services or programs by failing to provide live, on-site [American Sign Language] interpreter services after plaintiffs expressed dissatisfaction with the efficacy of [the hospital’s Video Remote Interpreting Computer on Wheels] and a preference for live, on-site interpreters.”  According to the court, there was sufficient evidence presented to create a genuine issue of fact that the hospital’s “default reliance on VRI as an auxiliary aid resulted in patient comprehension failures – known to hospital staff – and corresponding impediments to each patient’s ability to meaningfully understand and participate in his or her own course of medical treatment.”  Nonetheless, the court concluded that the patients did not have standing to seek injunctive relief because they could not “show the existence of a ‘real and immediate’ threat of future hospitalization at a [hospital] facility.”

FTC v. Penn State Hershey Med. Ctr. — May 2016 (Summary)

ANTITRUST

FTC v. Penn State Hershey Med. Ctr.
No.:  1:15-cv-2362 (M.D. Pa. May 9, 2016)

The United States District Court for the Middle District of Pennsylvania denied a motion for a preliminary injunction filed by the Federal Trade Commission (“FTC”) seeking to enjoin Penn State Hershey Medical Center (“Hershey”) from taking any steps to consummate its proposed merger with Pinnacle Health System (“Pinnacle”).

The court first held that the FTC had failed to set forth a relevant geographic market and, thus, failed to establish a prima facie case under the Clayton Act.  According to the court, the FTC’s four county “Harrisburg Area” relevant geographic market “is unrealistically narrow and does not assume the commercial realities faced by consumers in the region.”  In coming to this conclusion, the court relied upon, among other things, evidence indicating that over half of Hershey’s revenue is generated from patients outside the FTC’s proposed geographic market.  The court also “weighed the equities” in the case and concluded that “[a]fter a thorough consideration of the equities in play, we find the majority of these factors [involved in the merger] weigh in the public interest.”  In support of this conclusion, the court noted that the merger would alleviate some of Hershey’s capacity constraints and assist the hospitals in responding to the movement toward risk-based contracting with payors.  The court ended its opinion by observing as follows:  “Our determination reflects the healthcare world as it is, and not as the FTC wishes it to be.  We find it no small irony that the same federal government under which the FTC operates has created a climate that virtually compels institutions to seek alliances such as the Hospitals intend here.  Like the corner store, the community medical center is a charming but increasingly antiquated concept.  It is better for the people they treat that such hospitals unite and survive rather than remain divided and wither.”  One day after this opinion was issued, on May 10, 2016, the FTC filed a motion for injunction pending appeal of the district court’s decision.

Conn v. Rebustillo — May 2016 (Summary)

NEW JERSEY PATIENT SAFETY ACT PRIVILEGE

Conn v. Rebustillo
No. A-1421-15T3 (N.J. Super. Ct. App. Div. May 4, 2016)

The Superior Court of New Jersey, Appellate Division reversed a trial court order compelling a hospital to disclose the underlying facts of a root cause analysis submitted to the New Jersey Department of Health and Senior Services (the “Department”) pursuant to the New Jersey Patient Safety Act.  The issue arose in a medical malpractice action brought by the wife of a patient who died after falling from his hospital bed.  During discovery, the plaintiff filed a motion to compel the discovery of a root cause analysis prepared by the hospital and submitted to the Department.  The hospital filed for a protective order.  The trial court granted the motion to compel in part, requiring the hospital to provide the “underlying facts” of the root cause analysis.  On appeal, the appellate court reversed this order, finding that the privilege under the Patient Safety Act is “absolute” and “not subject to review to determine whether the health care facility complied with the ‘process requirements’ set forth in the [Patient Safety Act].”

Thornhill v. Jackson Parish Hosp. — May 2016 (Summary)

EMTALA

Thornhill v. Jackson Parish Hosp.
No. 15-01867 (W.D. La. May 4, 2016)

The United States District Court for the Western District of Louisiana granted summary judgment to a hospital in an Emergency Medical Treatment and Active Labor Act (“EMTALA”) suit brought by the administrator of the estate of a deceased patient.  The patient was admitted to the hospital after presenting to the emergency department with shortness of breath and decreased level of consciousness.  His family requested that the hospital transfer the patient to another hospital.  During the transfer, the patient died.  The administrator of his estate sued, arguing that the hospital violated EMTALA by not providing an appropriate transfer.  The court rejected this argument and granted summary judgment to the hospital.  In doing so, the court accepted the Centers for Medicare & Medicaid Services’ interpretation of EMTALA found in the EMTALA regulations.  Those regulations state that a hospital’s obligation to stabilize a patient ends when the hospital, in good faith, admits a patient in order to stabilize a patient’s emergency medical condition.  According to the court, because the patient was admitted for inpatient treatment, “and because there is no indication [the hospital] took this action in bad faith, the hospital satisfied its duty to Plaintiffs under EMTALA.”

Tenet Healthsystem Desert, Inc. v. Eisenhower Med. Ctr. — May 2016 (Summary)

ERISA

Tenet Healthsystem Desert, Inc. v. Eisenhower Med. Ctr.
D069296 (Cal. Ct. App. May 3, 2016)

The California Court of Appeal affirmed in part and reversed in part a number of fraud claims brought because an ERISA trust did not reimburse a hospital for medical services for a patient who was a member of a medical center’s plan but was denied coverage by the ERISA trust.

The hospital contended that the medical center failed to disclose that the patient had a blood alcohol level far exceeding the legal limit, which would adversely implicate his ability to obtain coverage for his injuries. This resulted in an improper authorization of approximately 50 days of services for the patient as medically necessary, because the hospital was not notified until it was too late to seek other avenues of reimbursement or alternative places of treatment for the patient.

The trial court determined that the amended complaint lacked the necessary specificity to survive a demurrer and was otherwise defective. The court of appeal agreed with many of the claims dismissed by the trial court. However, it reversed the dismissal of negligent misrepresentation and unfair competition law claims. The court reasoned that these claims stated sufficient factual allegations.

UMC Physician Network Servs. v. Leins — May 2016 (Summary)

PHYSICIAN CONTRACT TERMINATION

UMC Physician Network Servs. v. Leins
No. 07-14-00254-CV (Tex. App. May 2, 2016)

The Court of appeals of Texas affirmed in part a lower court’s ruling  upholding a jury verdict in favor of a physician who alleged breach of physician grievance procedures. The court also reversed in part the lower court’s ruling awarding recovery of $100,000 in future damages.

This litigation arose from a physician whistleblower who alleged that he was terminated in a manner that violated the physician grievance procedures because the termination was undertaken without proper notice and the physician was not given the chance to appeal in front of a committee. The court determined that the physician was entitled to $9,000 in damages to recover lost income, benefits, and other expenses sustained in the past.

The court of appeals reversed the lower court’s judgment that the physician was entitled to $100,000 in future damages. It reasoned that the physician failed to establish causation between the medical center’s breach and any future damages.

Horton v. Or. Health and Sci. Univ. — Apr. 2016 (Summary)

NEGLIGENCE, CAUSATION AND FORESEEABILITY

Horton v. Or. Health and Sci. Univ.
110811209; A155917 (Or. Ct. App. Apr. 27, 2016)

The court of appeals of Oregon reversed the decision of a trial court to dismiss a mother’s negligence claim for harm she suffered after undergoing emergency liver transplant surgery. The surgery was necessitated by complications arising from her infant son’s transplant surgery, which was negligently performed by the hospital. The hospital allegedly assigned an inexperienced surgeon for the eight-month-old’s surgery, failed to appropriately mark the proper blood vessels for the procedure, failed to coordinate with the transplant team, and failed to promptly stop the bleeding from the incorrect vessels. The hospital informed the mother her son would need an emergency liver transplant and that she was a tissue match. The mother chose to undergo the surgery, and suffered complications as a result.

The court of appeals held that the mother alleged adequate facts to show she would not have volunteered for the emergency liver transplant surgery but for the failed liver surgery of her infant son. In making this determination, the court of appeals relied on Oregon case law where causation was found when plaintiffs were injured responding to a defendant’s negligence rather than being more directly affected by the negligence. The court of appeals also found the mother’s injury foreseeable, noting that the hospital’s alleged negligence of assigning an inexperienced surgeon to the infant’s surgery, not properly identifying the appropriate blood vessels, failing to promptly stop the bleeding from damaged blood vessels, and failing to coordinate with the transplant team made the need for an emergency transplant liver surgery to correct those errors a foreseeable risk of their conduct. Furthermore, because an emergency liver transplant would need to be performed with a tissue match and the mother was prompted to volunteer by her child’s need for the emergency liver transplant, the court of appeals held the mother had sufficiently alleged facts to be considered a foreseeable plaintiff from the hospital and physicians’ conduct.

Herrera v. JFK Med. Ctr. Ltd. Partnership — Apr. 2016 (Summary)

CLASS ACTION – FEES

Herrera v. JFK Med. Ctr. Ltd. Partnership
No. 15–13253 (11th Cir. Apr. 26, 2016)

The United States Court of appeals for the Eleventh Circuit reversed the decision of a federal district court to deny class certification to motor vehicle owners who sued three Florida hospitals for alleged deceptive and unfair trade practices related to unreasonable fees charged for radiological services.

The vehicle owners obtained personal injury protection (“PIP”) insurance policies of $10,000, as required by Florida law. After insurance pays the $10,000 policy limit, the insured is responsible for any remaining expenses. The vehicle owners claim the hospitals took advantage of these insurance policies by charging vehicle owners radiological service fees as much as 65 times higher than the usual, customary fees charged to non-PIP patients for similar radiological services.

The court of appeals held it would be “premature” to find, at the pleadings stage, that liability issues would not be common to a class. Although factual differences existed between the vehicle owners’ claims, the court of appeals noted that it would be “relatively easy” to determine that these rates were unreasonable across the board during discovery, the theory of liability alleged by the vehicle owners. Additionally, the court of appeals held that although damage calculations would vary between class members, the present lawsuit was not an “extreme case” where the damage calculation for each individual would be so “complex, fact-specific and difficult” that the burden on the court would be “intolerable.”

Fakorede v. Mid-South Heart Ctr., P.C. — Apr. 2016 (Summary)

FALSE CLAIMS ACT

Fakorede v. Mid-South Heart Ctr., P.C.
No. 15-1285 (W.D. Tenn. Apr. 26, 2016)

The United States District Court for the Western District of Tennessee granted a clinic’s motion to dismiss claims made by a physician that it violated the federal False Claims Act (“FCA”).  The physician had been recruited out of cardiology training and had entered into a recruiting assistance agreement and an employment agreement to practice cardiology at a hospital.  A dispute arose about how the hospital was handling an account that had been established pursuant to the agreement which would supplement the cardiologist’s net collections as he worked to establish his practice over the course of the three-year term of the agreement. In order to calculate the hospital’s obligations under the supplemental account, the clinic had to submit certain financial statements to the hospital.  Despite the fact that the cardiologist’s gross collections appeared to exceed the amount necessary to trigger a payment out of the supplemental account, the clinic directed the cardiologist to take draws from the account and to assign those monies to the clinic.

Following several requests, the cardiologist reviewed partial financial information in which he disputed the depreciation costs that would offset his collections that were calculated by the clinic.  After that review, the cardiologist requested a complete audit of the clinic’s financial practices. After several weeks of back and forth regarding the financial information, the physician was terminated by the clinic, which he claimed was in retaliation for his efforts to prevent violations of the FCA.

The court disagreed, finding that the requested audit was not a protected activity because none of the physician’s initial reports to those in authority at the hospital or the clinic alleged fraud. According to the court, the cardiologist’s allegations revealed nothing more than an attempt to minimize his personal financial liability under the recruitment assistance and employment agreements, not an effort to stop an FCA violation.