Fowler v. Coast to Coast Health Care Servs., Inc. — Feb. 2016 (Summary)

WHISTLEBLOWER, DEFAMATION

Fowler v. Coast to Coast Health Care Servs., Inc.
Civil Action No. 3:15-CV-00071-GFVT (E.D. Ky. Feb. 8, 2016)

The United States District Court for the Eastern District of Kentucky granted in part and denied in part a motion to dismiss claims of whistleblower retaliation and tortious interference with a business relationship brought by the former director of clinical services of a health system against a physician staffing organization. The staffing organization provided physicians to staff the emergency department of the health system. The director made numerous allegations of fraud and misconduct against the staffing organization and its employees. First, the director reported to the health system CEO that one of the emergency room physicians failed to treat a patient who came to the emergency room. Second, the director reported the staffing organization had made a fraudulent claim for services to her insurance provider because none of the staffing organization’s physicians performed any services in relation to her husband’s cataract surgery. Finally, the director sent a peer review report criticizing some of the staffing organization’s physicians to the medical executive committee of the health system. The following month, the director alleged the staffing organization threatened to terminate its contract with the health system because of the “slanderous and libelous comments by [the health system]’s staff.” Approximately one week later, the health system fired the director. The director filed claims of whistleblower retaliation and tortious interference with a business relationship against the staffing organization.

The district court granted the staffing organization’s motion to dismiss the former director’s whistleblower claim, holding the Kentucky whistleblower statute does not apply to a third party who is not an employer. However, the district court denied the staffing organization’s motion to dismiss the director’s tortious interference with a business relationship claim, holding that the director’s at-will employment status did not bar her from bringing such a cause of action.

Am. Hosp. Ass’n v. Burwell — Feb. 2016 (Summary)

MEDICARE – TIMELY CLAIMS PROCESSING

Am. Hosp. Ass’n v. Burwell
No. 15-5015 (D.C. Cir. Feb. 9, 2016)

The United States Court of Appeals for the District of Columbia Circuit held that the Secretary of Health and Human Services is statutorily required to process Medicare claims appeals in a timely fashion and hospitals have the right to demand compliance by seeking a writ of mandamus ordering the Secretary to comply. Hospitals filed suit against the Secretary of HHS because of a massive backlog of undecided claims. The hospitals have a significant amount of money tied up during the appeals process and the statutory period within which the appeal should have been resolved has expired. The hospitals are unable to do renovations or buy needed materials such as ICU beds not knowing the status of their funding. The district court held that the writ was unwarranted because the political branches were working on a resolution to the problem. The case moved to the United States Court of Appeals, which stopped short of actually granting the writ. The Court of Appeals remanded the matter to the lower court for consideration of whether “compelling equitable grounds” exist to issue a writ of mandamus at this time. The court’s opinion strongly suggested, however, that if Congress and/or the Secretary do not solve this problem soon, a writ of mandamus will be inevitable.

Lawrence and Mem’l Hosp. v. Burwell — Feb. 2016 (Summary)

MEDICARE – RECLASSIFICATION RULE

Lawrence and Mem’l Hosp. v. Burwell
Docket No. 15-164-cv (2d Cir. Feb. 4, 2016)

The United States Court of Appeals for the Second Circuit held that a regulation issued by the Secretary of Health and Human Services violated the Medicare Act and the Administrative Procedure Act. The regulation in question is known as the “reclassification rule,” which provided that a hospital that has been reclassified from “urban” to “rural” may not receive additional reclassification by the Medicare Geographic Classification Review Board. Certain hospitals are able to be reclassified as “rural” in order to qualify for preferable drug pricing under Medicare’s Drug Discount Program. Without the “reclassification rule,” the same hospital could reclassify a second time back to “urban” to receive an increased wage index as an additional benefit, while keeping the preferable drug pricing status.

A hospital challenged the regulation in order to attempt to receive both “urban” and “rural” classifications. The court agreed with the hospital, reasoning that the plain language of the statute, and its legislative history, supported the hospital’s interpretation. The regulation was held to be invalid and the case was remanded to the district court to impose appropriate remedies.

Univ. of Va. Med. Ctr. v. Jordan — Feb. 2016 (Summary)

WRONGFUL TERMINATION

Univ. of Va. Med. Ctr. v. Jordan
No. 0790–15–2 (Va. Ct. App. Feb. 2, 2016)

The Court of Appeals of Virginia affirmed the ruling of a hearing officer that a state-employed nurse who accessed the medical record of her sick ex-husband, at his request and after he signed appropriate authorization forms, should be reinstated and awarded back pay.

The ex-husband suffered from an advanced stage of multiple myeloma, and he was treated for this disease at the same medical center where the nurse was employed. The nurse and her ex-husband remained close after their divorce, and he executed a number of documents providing the nurse with access to his medical records, including a durable power of attorney, an advanced medical directive, and an authorization form. At her ex-husband’s request, the nurse accessed his medical record to help him understand the significance of some of his test results. An internal audit by the medical center revealed the nurse had accessed her ex-husband’s medical record four times. When questioned by the medical center, the nurse explained she had accessed the records on her ex-husband’s behalf. The ex-husband corroborated the story.

The medical center sought to fire the nurse for “serious misconduct” resulting from numerous violations of company policy. The nurse filed a grievance challenging the medical center’s action, and a hearing officer ruled in her favor. The hearing officer’s decision was affirmed by the Department of Human Resources Management and the circuit court. The medical center then appealed to the court of appeals.

The medical center framed the issue for the appellate court as follows: “The fundamental questions on appeal are whether the Medical Center may develop and enforce policies containing rules that limit employee access to an electronic medical record which it owns and is its property under Virginia law and whether any employee of the Medical Center can authorize another employee to intentionally violate prohibitions and rules established in those policies.”

The court of appeals noted that under state law governing the review of personnel actions by state agencies, it had no authority to second-guess whether the hearing officer correctly interpreted agency policy. The court of appeals could only review whether the hearing officer’s decision was “contradictory to law.” The court ruled that it was not contradictory.

The court of appeals held the nurse was acting as an agent on behalf of her ex-husband when she accessed his medical records for his benefit and at his direction. Furthermore, the court of appeals held that no provision in HIPAA prevented the disclosure because the nurse was acting on her ex-husband’s behalf and he had filled out the necessary authorization form.

The medical center argued that it would be impossible to audit and account for these types of disclosures. The court of appeals rejected the argument, noting that an internal audit had revealed the disclosures and that the medical center need not account for disclosures of patients’ private health information that is made to patients themselves.

Sumner v. Summerlin Hosp. Med. Ctr. LLC — Feb. 2016 (Summary)

EMTALA

Sumner v. Summerlin Hosp. Med. Ctr. LLC
No. 2:14-cv-02121-JAD-VCF (D. Nev. Feb. 1, 2016)

The federal district court for Nevada dismissed an EMTALA complaint against a hospital, joining the many other courts who have ruled that EMTALA does not create a federal cause of action for malpractice. The litigation arose out of the death of a 91-year-old patient. The patient was taken to the emergency room where she complained of chest pain. After receiving a CT scan, the family was assured that she was not in immediate danger and that there was no life-threatening condition. However, early the next morning, she died from gallbladder torsion.

The family argued that the hospital violated EMTALA’s screening and stabilization requirements. However, the court disagreed because EMTALA violations do not occur if a hospital fails to detect or misdiagnoses an emergency condition. Furthermore, the court added that allegations of substandard care are cognizable under state tort law, not under EMTALA. The judge declined to exercise supplemental jurisdiction in relation to the remaining state law claims and remanded these claims back to a Nevada state court.

Lopreato v. Select Specialty Hosp. – N. Ky. — Jan. 2016 (Summary)

AMERICANS WITH DISABILITIES ACT

Lopreato v. Select Specialty Hosp. – N. Ky.
No. 15-5011 (6th Cir. Jan. 29, 2016)

A federal appellate court ruled in favor of a hospital on two nurses’ claims under the Americans with Disabilities Act (“ADA”). The nurses had been terminated by a prior employer for drug diversion, and they entered a rehabilitation program run by the Kentucky Board of Nursing. Their licenses were restricted as a result of their participation in the rehabilitation program.

Later, they applied for employment with the hospital. The hospital’s practice was not to hire nurses “who have current or previous restrictions or disciplinary action on their licenses regardless of the reasons for the disciplinary action or restriction.” The court ruled that the hospital’s practice was “legitimate and nondiscriminatory, even though [the nurses] licenses were restricted because they were participants” in the drug rehabilitation program.

Hammer v. Barth — Jan. 2016 (Summary)

VICARIOUS LIABILITY

Hammer v. Barth
No. 1-14-3066 (Ill. App. Ct. Jan. 25, 2016)

An Illinois appellate court ruled that a patient’s wrongful death claim against a hospital based on a theory of “apparent authority” could proceed. In the case, a wife filed a wrongful death complaint on behalf of her husband, alleging that the hospital where he received treatment was vicariously liable for the treating physician’s negligence. The court noted that the treating physician wore a name tag that identified her as a hospital employee and a lab coat with the hospital’s name. Also, while the consent form signed by the patient stated that some of the physicians were not employees of the hospital but were instead independent contractors, the form did not state that the treating physician was not an employee. Further, the court considered the manner in which the hospital’s website discussed its “team” of doctors. Based on these factors, the appellate court ruled that the patient’s claim could continue.

Monarch Healthcare v. Orr — Jan. 2016 (Summary)

COVENANT NOT TO COMPETE

Monarch Healthcare v. Orr
No. G050463 (Cal. Ct. App. Jan. 20, 2016)

A physician sold her medical practice to a health care company. The transaction was completed via an asset purchase agreement that included specific valuations for items such as furniture, fixtures, equipment and supplies. The purchase agreement stated that the assets being sold included “all of the goodwill of the medical practice.” However, the agreement did not allocate a specific portion or percentage of the purchase price to the element of goodwill as it did for the tangible items. The asset purchase agreement also included a covenant not to compete and a nonsolicitation clause. After the sale of the practice, the physician worked for the company that purchased her practice. After the physician’s employment ended, she opened her own practice. The company sued to enforce the nonsolicitation clause. The trial court granted a preliminary injunction as requested by the company. The court of appeal reversed this ruling. It held that because the asset purchase agreement did not include consideration for the goodwill of the physician’s medical practice, the covenant not to compete and nonsolicitation clause of the asset purchase agreement were not enforceable. The court of appeal also ruled that the employment agreement – which the physician admitted included a $100,000 signing bonus that was verbally discussed as compensation for the goodwill of her practice – did not constitute consideration for the noncompete and nonsolicitation covenants.

Dunn v. Dunn — Jan. 2016 (Summary)

PATIENT SAFETY AND QUALITY IMPROVEMENT ACT

Dunn v. Dunn
Civil Action No. 2:14-cv-601-MHT (M.D. Ala. Jan. 27, 2016)

The United States District Court for the Middle District of Alabama ruled that the documents, that a non-party correctional services corporation withheld on a case challenging prison conditions, were not protected by the state peer review privilege or by any other federal or state privileges, including the Patient Safety and Quality Improvement Act (“PSQIA”). The court noted that although the documents sought to be withheld may not have been essential to the case, their evidentiary value was likely significant. The documents drew on source material otherwise unavailable to the prisoners and were likely to be relevant to demonstrate the prison’s policies and practices toward mentally ill prisoners.

The court stated that the PSQIA was not intended to provide a blanket protection for all information and communications generated for quality control purposes. Furthermore, extending the privilege to quality assurance documents not submitted to a certified organization would destroy this incentive and undermine the purpose of Congress’s certification scheme.

P.W. v. Children’s Hosp. Colo. — Jan. 2016 (Summary)

WRONGFUL DEATH

P.W. v. Children’s Hosp. Colo.
Supreme Court Case No. 15SA151 (Colo. Jan. 25, 2016)

The Supreme Court of Colorado held that a hospital cannot assert comparative negligence and assumption of risk defenses in a wrongful death action arising from a patient suicide when the hospital had knowledge that said self-destructive acts were likely to occur. This litigation arose when a 16-year-old patient was admitted to a secure mental health unit, for the purpose of being prevented from attempting suicide. After being left unsupervised, the patient committed suicide. The court ruled that the hospital assumed an affirmative duty to protect the patient from self-harm, and the nature and scope of that assumption of duty subsumed the patient’s own duty not to harm himself. Therefore, because the patient could not have been at fault under these circumstances as a matter of law, the defenses were correctly dismissed.

The court emphasized that its holding was limited by the facts presented, and does not impose strict liability on hospitals caring for suicidal patients. The patient is still required to prove that the defendant had a duty to prevent foreseeable harm, that it breached that duty, and that the hospital’s breach proximately caused the harm.