Colon Health Ctrs. of Am., LLC v. Hazel — Jan. 2016 (Summary)

CERTIFICATE OF NEED

Colon Health Ctrs. of Am., LLC v. Hazel
No. 14-2283 (4th Cir. Jan. 21, 2016)

Virginia requires health care providers to obtain a certificate of need (“CON”) to establish or expand medical facilities and services in the state. Two out-of-state medical imaging providers brought an action against Virginia government officials claiming that this requirement discriminated against out-of-state providers in violation of the Fourteenth Amendment and the Commerce Clause. The district court held that the requirement was not discriminatory and that it did not place an undue burden on interstate commerce. The Fourth Circuit court agreed, noting that the providers would have needed to prove that the CON requirement, if enforced, would negatively impact interstate commerce to a greater degree than intrastate commerce. The court held that the CON law equally affects in state and out of state potential medical providers.

Evanston Ins. Co. v. Agape Senior Primary Care, Inc. — Jan. 2016 (Summary)

PROFESSIONAL LIABILITY INSURANCE – CREDENTIALS FRAUD

Evanston Ins. Co. v. Agape Senior Primary Care, Inc.
No. 14-2268 (4th Cir. Jan. 15, 2016)

A physician used a false identity, including the credentials of a physician friend who was out of the country, to gain employment with a group that employs physicians and nurse practitioners to provide services to nursing homes and assisted living facilities. The group and the imposter were insured under the same professional liability policy, but when the insurer learned of the identity theft, it attempted to rescind coverage for the imposter and the physician on the basis that the misrepresentations made by the imposter on the insurance application was sufficient to rescind coverage for everyone covered by the policy, including the entire group. The federal appellate court upheld the lower court’s determination that principles of equity demand that coverage for the group and other co-insureds should remain intact, as they had engaged in no wrongdoing, though coverage for the imposter could be rescinded.

Wharton Physician Servs. v. Signature Gulf Coast Hosp., L.P. — Jan. 2016 (Summary)

NON-COMPETE CLAUSES

Wharton Physician Servs. v. Signature Gulf Coast Hosp., L.P.
No. 13-14-00437-CV (Tex. App. Jan. 14, 2016)

The Court of Appeals of Texas affirmed summary judgment in favor of a hospital in a lawsuit brought by the hospital’s former hospitalist group. The group alleged that the hospital violated the non-compete clause in the parties’ contract when its new hospitalist group hired two physicians who were previously employed by the first hospitalist group within six months of when the hospital terminated the group’s contract. The group sought liquidated damages pursuant to the contract’s terms, which the hospital refused to pay. Finding in favor of the hospital, the court held that while the parties’ contract was enforceable generally, the non-compete clause was unenforceable because there was no additional consideration for that clause given outside the main contract for hospitalist services. In other words, the fees to be paid under the contract were all attributable to hospitalist services provided – and no additional amounts could be attributed to the non-compete itself. Further, the court held that even if the non-compete was enforceable, there was no breach of that provision because the hospital did not employ the physicians – its new hospitalist group did. The court noted that the hospital could not have bound a non-signatory party, such as the new hospitalist group, to a contract term. The mere fact that the new hospitalist group had a contract to provide services at the hospital did not make it an affiliated organization that would be bound by a non-compete in one of the hospital’s contracts.

Helfer v. Associated Anesthesiologists of Springfield, LTD — Jan. 2016 (Summary)

RETALIATORY DISCHARGE – WHISTLEBLOWER

Helfer v. Associated Anesthesiologists of Springfield, LTD
No. 10-3076 (C.D. Ill. Jan. 14, 2016)

The United States District Court for the Central District of Illinois denied an anesthesia group’s motion for summary judgment in a lawsuit brought by one of its former anesthesiologists, who alleged he was terminated in retaliation for raising concerns about the anesthesia group to Medicare.

While the anesthesiologist worked with the group for almost 20 years, according to the court opinion, the tension between the anesthesiologist and the other members of the group came to a head in 2008, a year or so prior to the termination. The partners believed the anesthesiologist to be isolated from the group and difficult to work with and were concerned that he used more narcotics during surgeries than other members of the group. But, most of all, the partners were displeased that the anesthesiologist had, on two occasions, contacted third parties regarding concerns he had with the group’s business practices. First, he contacted the IRS about the group’s health savings account. In the second instance, he contacted the CEO of the hospital where the group provided services to discuss the way the group was billing epidurals. In both cases, the anesthesiologist’s contact resulted in the entities auditing the group. Following these events, the group’s executive committee met with the anesthesiologist and told him that if he had a concern, he should bring it up to the group rather than discuss it with third parties, unless he had the group’s authorization. The partners reiterated this message to the anesthesiologist at their next shareholder meeting.

Just three months later, concerned about the billing of epidurals to Medicare, the anesthesiologist brought his concerns to the president of the group. The group began looking into the anesthesiologist’s concerns. When the concerns were not resolved to the anesthesiologist’s satisfaction, within about a month, the anesthesiologist went ahead and e-mailed CMS directly about his concerns. After learning that the anesthesiologist had once again made unauthorized contact with a third party regarding the group’s billing practices, the decision was made to terminate his employment. Members of the group later testified that the anesthesiologist’s contact with Medicare was “part of a continued problem” of the anesthesiologist “repeatedly ignoring [the group’s] policy of bringing concerns to the group rather than contacting third parties.”

The anesthesiologist filed a qui tam action against the group, alleging violations of the False Claims Act, retaliatory discharge, and other causes of action. He later added the hospital as a defendant. After some litigation and procedural posturing, the lawsuit was boiled down to a claim by the anesthesiologist against the group, alleging retaliatory discharge in violation of the False Claims Act. The group filed a motion for summary judgment, alleging that the anesthesiologist had not presented sufficient information for a reasonable jury to find that he was terminated because of his contact with Medicare (the only actions of the physician that would have been protected by the False Claims Act).

In denying summary judgment, the court noted that a number of facts remained in contention which could allow a reasonable jury to find that the anesthesiologist’s termination was caused by his contact with CMS: that a motion to terminate was prepared and circulated to the partners just after the anesthesiologist contacted Medicare (even though a number of partners testified that they would have been willing to sign such a petition had it been brought at an earlier date); that no evidence existed to indicate the group was considering termination prior to the anesthesiologist’s contact with CMS; and, finally, that an e-mail by one of the partners specifically indicated that the partner was displeased with the anesthesiologist’s contact with Medicare and the fact that it could cause another audit and his suggestion that the anesthesiologist should be terminated.

Pac. Kidney & Hypertension, LLC v. Kassakian — Jan. 2016 (Summary)

NON-COMPETE ENFORCEMENT

Pac. Kidney & Hypertension, LLC v. Kassakian
Case No. 3:16-cv-0025-SI (D. Or. Jan. 19, 2016)

The United States District Court for the District of Oregon granted in part and denied in part a motion for a temporary restraining order (“TRO”) in a lawsuit alleging that a formerly employed nephrologist was violating the non-compete from her employment agreement by accepting employment with a direct competitor within the restricted area. While the court granted the TRO in part, thereby preventing the nephrologist from soliciting patients of her former employer, it refused to grant the TRO in full – noting that the public interest was a significant factor that had to be considered in this case. The court observed that nephrologists were in great demand in the geographic area and because there were not enough nephrologists to meet current demand, the nephrologist’s former patients would have to endure months-long waits to be seen by new nephrologists. The court also noted that the nephrologist’s new employer already had a long list of patients to be seen by the nephrologist and would not be relying on the nephrologist to build a patient base (in other words, there is no reason to believe the nephrologist would be soliciting the former practice’s patients).

Murphy v. Tuality Healthcare — Jan. 2016 (Summary)

RETALIATORY DISCHARGE – MILITARY SERVICE

Murphy v. Tuality Healthcare
Case No. 3:14-cv-01498-SI (D. Or. Jan. 15, 2016)

An anesthesiologist and National Guard member brought a suit against his former employer, a hospital, under the Uniformed Services Employment and Reemployment Rights Act (“USERRA”), alleging that he was terminated in retaliation for fulfilling a six-week obligation to the military (of course, the physician said nothing of the fact that days before leaving to fulfill his military service, he consumed alcohol while on call and then engaged in an altercation with another physician at the hospital where he was providing services, an incident which later led to him being disciplined by the state medical board). The USERRA protects service members who are deployed while holding civilian jobs to guarantee that when the individual returns from service he or she will still be employed, preventing discrimination against service members.

The hospital moved for summary judgment, arguing that the anesthesiologist was not an employee but an independent contractor and therefore was not entitled to protection under the USERRA. In response, the anesthesiologist claimed that despite a contract saying that he was an independent contractor, he was an employee. The federal district court held that the anesthesiologist was an employee, after considering six factors: (1) the employer’s right to control, (2) the employee’s opportunity for profit loss depending upon his managerial skill, (3) any investment in equipment or material required for the individual’s tasks, (4) whether the service the individual performs requires a special skill, (5) the degree of permanence of the individual’s working relationship, and (6) whether the service the individual performs is an integral part of the employer’s business. In reaching its determination that the anesthesiologist was an employee despite explicit contract language to the contrary, the court emphasized that the reality of how the physician worked at the hospital took precedent over the parties’ expressed intentions.

Brown v. Trover — Jan. 2016 (Summary)

STATUTE OF LIMITATIONS

Brown v. Trover
No. 2012-CA-001880-MR (Ky. Ct. App. Jan. 8, 2016)

A patient brought actions for medical negligence and fraud against a radiologist and claimed medical negligence, negligent credentialing, and fraud against the hospital that employed him (“Foundation”).

The circuit court held that the patient did not file any of his claims against the radiologist within the statutory period and that no actions of the defendants prevented the patient from discovering any of his claims. The court also held that the claims against the Foundation for medical negligence and negligent credentialing were not timely filed. Additionally, the circuit court held that the patient presented no evidence to support his fraud claims against the Foundation.

The court of appeals held that the tort of negligent credentialing is not recognized in Kentucky and the court of appeals left the decision as to whether to recognize the tort of negligent credentialing up to the state supreme court. Additionally, the court held that the procedural error alleged by the patient, regarding notice for a motion for the summary judgment hearing was harmless and did not provide grounds to disturb the circuit court’s order granting summary judgment in favor of the Foundation. The court of appeals further held that the circuit court’s grant of summary judgment on the medical negligence claims, against both the radiologist and the Foundation, was proper because the claim was not filed within the one-year statute of limitations. The patient was on notice that he may have had a claim against the defendants when he learned that he was improperly diagnosed; not at a later date when he read an announcement that stated that patients who had been treated by the physician should present themselves as potential members of a class action lawsuit. Finally, the court held that the patient did not present any evidentiary support for his fraud claims against the Foundation and the radiologist; therefore, the court of appeals upheld the lower court’s grant of summary judgment.

Babchuk v. Ind. Univ. Health — Jan. 2016 (Summary)

DATA BANK REPORT

Babchuk v. Ind. Univ. Health
No. 15-1816 (7^th Cir. Jan. 11, 2016)

The clinical privileges of a radiologist who was the sole employee of a professional corporation that held an exclusive radiology agreement at a hospital that was affiliated with Indiana University were summarily suspended by a hospital peer review committee on the grounds that the radiologist delayed for eight days dictating a report on a woman who was in her 30^th week of pregnancy and who presented to the hospital’s emergency department. The woman was transferred to another hospital where she gave birth prematurely. While the physician disputed the allegations, during the eight-day delay, the hospital alleged that the physician attempted to make the ultrasound results “go away” by instructing hospital staff to delete the records of the results of the ultrasound. The summary suspension of the physician’s clinical privileges was made permanent by the MEC and his corporation’s exclusive agreement with the hospital was terminated.

The physician sued the hospital alleging that due to the hospital’s relationship with the state university, the hospital had violated the physician’s due process rights protected by 42 U.S.C. §1983. The physician also alleged that the hospital’s report to the National Practitioner Data Bank deprived him of due process.

The 7^th Circuit Court of Appeals affirmed the decision of the district court that granted summary judgment to the hospital. The circuit court ruled that the report to the Data Bank was appropriate. The court also held that since the hospital was not a state actor, 42 U.S.C. §1983 did not apply.

Colantonio v. Mercy Med. Ctr. — Jan. 2016 (Summary)

HCQIA IMMUNITY

Colantonio v. Mercy Med. Ctr.
2016 N.Y. Slip Op. 00147 (N.Y. App. Div. Jan. 13, 2016)

A physician’s hospital privileges were revoked after the hospital received numerous complaints from other physicians and staff members about the physician’s behavior. Among other things, the physician was alleged to have raised his voice in the Intensive Care Unit, made rude comments in front of patients, confused and intimidated the nurses, made the nurses feel uncomfortable, and made inappropriate entries in patient charts. The hospital met with the physician to discuss its concerns. When the disruptive behavior continued, the matter was first addressed in a preliminary meeting with the Medical Staff Credentials Committee and then the Medical Staff Executive Committee exercised its authority under the hospital’s medical staff bylaws to terminate the physician’s clinical privileges and medical staff membership.

The physician then sued, asserting 18 causes of action to recover damages for defamation based on allegations of false statements made by certain personnel at the hospital prior to, during and after the Credentials Committee meeting. The defendants moved for summary judgment and argued that because the comments occurred during a Credentials Committee meeting they were entitled to absolute or qualified privileged based on public policy. The lower court held that because that meeting was not a hearing, the communications were not subject to absolute privilege. However, the appellate court held that those communications were entitled to qualified privilege under the Health Care Quality Improvement Act because the physician failed to show during discovery that those communications were made with malice. The appellate court then ruled that summary judgment was appropriate.

Valles v. Albert Einstein Medical Ctr. — Aug. 2002 (Summary)

Valles v. Albert Einstein Medical Ctr.
Nos. 10 & 11 EAP 2001 (Pa. Aug. 28, 2002)

The Pennsylvania Supreme Court ruled that a hospital cannot be held vicariously liable for the failure of a physician to obtain informed consent from a hospital patient, regardless of whether the physician was employed by the hospital or served as an independent contractor member of the medical staff. The court noted that the relationship between physicians and patients is “highly individualized and dynamic,” and stated that interjecting an element of hospital control into such a relationship would be “improvident and unworkable.” Therefore, the court dismissed a claim against the hospital based on allegations that physicians at the hospital had failed to obtain the patient’s informed consent prior to performing an aortogram.