Stewart v. Am. Ass’n of Physician Specialists, Inc. — Nov. 2015 (Summary)

PROFESSIONAL ASSOCIATIONS

Stewart v. Am. Ass’n of Physician Specialists, Inc.
Case No. 5:13-cv-01670-ODW (DTBx) (C.D. Cal. Nov. 30, 2015)

The United States District Court for the Central District of California granted in part and denied in part a professional organization’s motion for summary judgment while denying a physician’s motion for summary judgment over claims arising from the termination of the physician’s membership from the organization.

The physician was notified that the organization would be holding a meeting of its Disciplinary Committee to consider charges against her of conduct injurious to the best interests of the organization. The physician did not attend the meeting, but sent a letter to each member of the organization’s Board refuting the charges. The physician also alleged that there was a conflict of interest due to the composition of the Disciplinary Committee, which would prevent a fair hearing from occurring. Ultimately, the Board voted to terminate the physician’s membership from the organization.

The physician alleged that the organization breached its contract with her, violated several civil rights laws, engaged in fraud, and defamed her, among other causes of action. The organization argued that the business judgment rule protected its decision to terminate the physician’s membership because the decision was based on the information available at the time, and was made in good faith. The court declined to grant summary judgment based on the business judgment rule because the physician’s allegations created enough of a factual dispute. Thus, the physician’s allegations of fraud, bad faith, and conflicts of interest were allowed to proceed. The court dismissed the physician’s civil rights claims under Title VII and the Fair Employment and Housing Act, but allowed her gender discrimination claims to go forward.

Powell v. City of Ocean City — Dec. 2015 (Summary)

IMMUNITY

Powell v. City of Ocean City
Civil Action No. 14-4365 (D.N.J. Dec. 1, 2015)

The United States District Court for the District of New Jersey denied motions for summary judgment and to dismiss made on behalf of a defendant hospital and nurses against claims brought by a former patient.

The patient was arrested and detained for driving under the influence. After being unable to produce a reading on a breathalyzer and produce a sufficient urine specimen, the patient was brought to the hospital to undergo a blood test. The patient alleged that the defendant police officer was present during and participated in her catheterization without proper sterilization or dress, which resulted in her contracting MRSA. The hospital argued immunity under a New Jersey statute that shields medical personnel and facilities involved in obtaining bodily substances specimens from both civil and criminal liability under certain circumstances. However, the specimens must be obtained in a medically acceptable manner.

The court was unpersuaded that the motions should be granted because there were still questions of fact as to whether the catheterization was necessary and whether the catheterization was performed in a medically acceptable manner.

Elkharwily v. Franciscan Health Sys. — Dec. 2015 (Summary)

HCQIA IMMUNITY

Elkharwily v. Franciscan Health Sys.
Case No. 3:15-cv-05579-RJB (W.D. Wash. Dec. 1, 2015)

The United States District Court for the Western District of Washington denied a health system’s motion to dismiss a lawsuit brought by a physician who alleged he experienced loss of income and employment benefits after the health system denied his application for privileges and revoked his temporary privileges, as a result of it discovering his bipolar disorder and the fact that he had commenced a wrongful termination action against his former employer.

The physician alleged that an employee from the health system told him his mental illness was a “red flag” and the appellate review board “denied and resisted” giving the physician a chance to complete a proctorship to alleviate the health system’s concerns. Further, an employee from the health system allegedly informed the physician’s prospective employer that they “should watch what type of people” they bring to work at the hospital. Finally, the physician alleged the health system made a false report to the National Practitioner Data Bank (“NPDB”) indicating the physician “fail[e]d to demonstrate the scope and adequacy of his experience or his current clinical skill and competence.” The physician filed suit, claiming defamation and violation of the Washington Law Against Discrimination (“WLAD”), Rehabilitation Act, Title VI, and Section 1981.

With regard to the physician’s defamation claim, the district court rejected the health system’s argument of immunity under the Health Care Quality Improvement Act, noting that if the health system only had reports from coworkers indicating the physician was competent (as the physician alleged), a reasonable inference could be made that the health system knew its NPDB report was “false” because it did not substantiate any of the information the health system had in its possession.

With regard to the WLAD and Rehabilitation Act claims, the district court found the physician alleged sufficient facts to state a claim against the health system for disability discrimination, holding that bipolar disorder is considered a disability under both statutes, and the comments made by employees of the health system supported the argument that the physician was denied privileges because of his disability. The district court also upheld the physician’s Title VI claim, holding that the health system’s receipt of Medicare and Medicaid funds to employ physicians established that the health system was a recipient of federal funds and, therefore, subject to Title VI.

The district court did grant the health system’s motion to dismiss the physician’s anti-retaliation claim under the False Claims Act (“FCA”), holding that the court had no knowledge of any authority expanding FCA liability to a third party who was not involved with the whistleblowing activity. Additionally, the district court held the physician did not describe how the rejection of privileges was related to his whistleblowing activity against a former employer, and did not follow the unique procedure for FCA claims.

Frisco Med. Ctr., L.L.P. v. Bledsoe — Nov. 2015 (Summary)

HIPAA BREACH

Frisco Med. Ctr., L.L.P. v. Bledsoe
Case No. 4:12-CV-37/4:15CV105 (E.D. Tex. Nov. 30, 2015)

The United States District Court for the Eastern District of Texas granted summary judgment in favor of a hospital that sued its former Chief Operating Officer (“COO”) and her husband, the former Information Systems Administrator, claiming that the couple breached their fiduciary duties, breached their contracts with the hospital, and violated several federal, privacy and computer usage laws when they downloaded hospital files in the weeks and months leading up to their departure from the organization.

The hospital became aware of the downloads because the COO told the Human Resources Manager, after tendering her resignation, that she “knew where too many bodies were buried” – leading the hospital to conduct a security investigation. The report showed that in the prior months, the COO and her husband downloaded a slew of hospital documents into the cloud and onto their personal electronic devices, including protected health information, trade secrets, and peer review privileged documents.

Within months of completing its investigation, the hospital filed suit against the former COO and her husband. Less than a month prior to trial, the couple filed for bankruptcy – causing the hospital’s lawsuit to be put on hold. In turn, the hospital filed a second lawsuit, seeking to have the hospital’s claims against the COO and Information Systems Administrator, along with all attorneys’ fees and costs, declared non-dischargeable in bankruptcy on the basis that they fall within the exception in the bankruptcy code that excepts from discharge debts “for fraud or defalcation while acting in a fiduciary capacity.”

As the litigation continued, the two lawsuits were merged and the hospital filed for summary judgment on all claims. In the present opinion, the court grants summary judgment for the hospital – not only finding the COO and Information Systems Administrator liable for the underlying claims of breach of contract, breach of fiduciary duty, and violation of federal law, but also finding that the damages chargeable against them are not dischargeable in bankruptcy. Notably, the court held that the damages include over $1 million in attorneys’ fees and over $218,000 in forensic investigation costs.

Concord Med. Grp., Inc. v. Dallam-Hartley Cntys. Hosp. Dist. — Nov. 2015 (Summary)

BREACH OF CONTRACT – RESTRICTIVE COVENANT

Concord Med. Grp., Inc. v. Dallam-Hartley Cntys. Hosp. Dist.
No. 07-14-00297-CV (Tex. App. Nov. 24, 2015)

The Court of Appeals of Texas reversed summary judgment that had been granted to a hospital in a lawsuit brought by its previous ED group. The contract between the hospital and the ED group contained a provision restricting the hospital’s ability to allow the group’s physicians to work with the hospital independent of the medical group. Nevertheless, when that contract ended, the hospital allowed physicians who had worked under that contract to continue to work at the hospital pursuant to a different contract executed between the hospital and another group. The ED group alleged that this constituted breach of contract.

In overturning summary judgment for the hospital, the court rejected the hospital’s emphasis on whether the doctors were employed by the hospital – noting that the language of the contract demonstrated that it applied not only to employment of the physicians, but also to any “work” performed in the hospital.

Harris v. Advocate Health and Hosp. Corp. — Nov. 2015 (Summary)

MEDICAL MALPRACTICE – DISCLOSURES TO PATIENTS

Harris v. Advocate Health and Hosp. Corp.
No. 1-14-1773 (Ill. App. Ct. Nov. 19, 2015)

The Appellate Court of Illinois granted summary judgment/dismissal for a hospital that was sued by the estate of a patient who died after being struck by an automobile and then, upon admission to the hospital, accidentally overdosed by a nurse who administered 10 mg. of Versed, a sedative, without a doctor’s order.

At the time of the patient’s hospitalization and death, the patient’s daughter was informed the patient died due to injuries sustained from the automobile accident. In fact, it was not until a couple of days after the patient died that the nurse manager of the ED told the ED’s medical director about the overdose. Following that revelation – and the subsequent internal investigation and remediation – it was determined not to inform the patient’s family of the overdose or the fact that it could have contributed to the patient’s death. A new disclosure policy was drafted, however, as a result of the Risk Management Committee’s consideration of this patient’s case – and that policy was implemented at a later date.

When the medical director of the emergency department inquired as to whether the deceased patient’s family had been notified, he was informed that the CEO would not make any disclosures. The medical director of the ED was fired a few months later and sued, claiming that his termination was in retaliation for his advocating that the patient be informed of the Versed incident. During the course of his lawsuit, which was ultimately settled for $1 million, an investigator working on behalf of the medical director’s lawyer contacted the patient’s daughter to obtain authorization to access the patient’s medical records. As a result of that contact, the patient’s daughter was first alerted to the Versed overdose – resulting in this lawsuit against the hospital.

During the course of the litigation, the hospital claimed that the statute of limitations had expired on the medical malpractice claim. The daughter claimed that the statute of limitations should be tolled due to fraudulent concealment by the hospital, which prevented the daughter from discovering the malpractice.

In rejecting the daughter’s claim of fraudulent concealment, the court noted that information concerning the Versed doses was present in the medical record and the hospital made no misrepresentations to the patient’s daughter that prevented her from learning of her claim. Nothing in the record suggested that the physician who spoke with the patient’s daughter at the time of the patient’s hospitalization and death knew of the Versed incident or intentionally concealed it. Furthermore, the court of appeals noted the daughter was unable to show that any of the hospital administrators who knew of the Versed incident also knew about the initial conversation that took place between the daughter and emergency room physician. The court of appeals further held that, regardless of evidence of fraudulent concealment, the patient’s daughter’s claim would still fail because she failed to exercise ordinary diligence in investigating her claim. The patient’s daughter and an attorney had received the medical records in 2000, at the time she sued the automobile driver, and they could have taken steps at that time to learn the cause of the patient’s death.

Rowen v. Gonenne — Nov. 2015 (Summary)

PEER REVIEW PRIVILEGE

Rowen v. Gonenne
No. 161021046; A149358 (Or. Ct. App. Nov. 12, 2015)

A patient and his wife sued a gastroenterologist, his professional corporation, and a surgical facility for malpractice after the patient suffered serious complications after a routine colonoscopy revealed polyps, which were removed and resulted in massive bleeding. The crux of the lawsuit was that the patient’s bleeding was caused by the gastroenterologist’s failure to advise him to stop taking blood thinners in advance of the procedure. In fact, the gastroenterologist’s decision not to require discontinuation of blood thinners prior to a routine colonoscopy was consistent with the surgical center’s policy and was based, at least in part, on the results of a benchmarking study of post-polypectomy bleeding in which the surgical center had participated. At trial, the jury found for the gastroenterologist. The patient and his wife appealed.

Among other things, the patient argued that the benchmarking study should not have been admitted into evidence because it was privileged pursuant to the state peer review statutes. The court of appeals disagreed, holding that although the study was delivered to the peer review body of the surgery center, it was not privileged under the state peer review statute because it was not “prepared for” the peer review body. The court of appeals was not persuaded that a notation on the report indicating the study had been “Discussed at the Quality Management Committee” demonstrated the study was prepared for the peer review body.

The court of appeals also held that the trial court appropriately denied the patient the ability to cross-examine the gastroenterologist on a research report that was published after the patient’s procedure, finding that even though the report could have impeached the gastroenterologist by suggesting he was not knowledgeable about recent research, introduction of the report would run the risk of misleading the jury into thinking that the gastroenterologist’s conduct should have been informed by the report – which was not available to the gastroenterologist at the time of the patient’s procedure.

Kim v. Humboldt Cnty. Hosp. Dist. — Nov. 2015 (Summary)

TERMINATION OF EMPLOYMENT

Kim v. Humboldt Cnty. Hosp. Dist.
Case No. 3:12-cv-00430-MMD-WGC (D. Nev. Nov. 12, 2015)

The District Court for the District of Nevada denied a hospital’s motion for summary judgment with regard to a general surgeon’s claim that her First Amendment rights were violated when her employment was terminated in retaliation for seeking re-election to the Board of Trustees.

While the surgeon was serving her first term, the Board adopted a new conflict of interest policy to address conflicts of interest arising from employees’ service on the Board. Pursuant to the new policy, hospital employees were prohibited from engaging in any employment, activity or enterprise, including service on the hospital Board, which was in conflict with their duties as employees. If a conflict of interest were to arise, the policy provided that an employee could either resign from employment before taking office or accept paid or unpaid leave. Shortly after the policy was passed and after the surgeon applied for re-election to the Board, the Board voted to terminate her contract based on its decision to move from a single surgeon arrangement to a surgical services group. The surgeon sued, claiming that the pursuit of a surgical group was pretext – and that she was really fired in retaliation for seeking re-election to the Board, which was an activity protected by the First Amendment of the Constitution.

Because neither party asserted that the surgeon’s employment was terminated based on the new conflicts of interest policy adopted by the Board, the court disregarded the parties’ arguments over whether that policy was, in and of itself, constitutional. It denied summary judgment to the hospital on the retaliation claim, noting that there was a genuine issue of fact under dispute concerning whether the hospital’s purported reason for termination (pursuit of a group contract) was pretext.

U.S. ex rel. Ortiz v. Mount Sinai Hosp. — Nov. 2015 (Summary)

FALSE CLAIMS ACT

U.S. ex rel. Ortiz v. Mount Sinai Hosp.
No. 13 Civ. 4735 (RMB) (S.D. N.Y. Nov. 9, 2015)

The United States District Court for the Southern District of New York denied a hospital’s motion to dismiss claims made under the False Claims Act (“FCA”).

The relators who brought forth the claims were employed by the hospital as patient coordinators. They alleged that during their tenure they witnessed on a near-daily basis instances where the radiology billing department billed Medicare and Medicaid fraudulently and improperly for services purportedly provided. Specifically, they alleged that department engaged in doctor swapping, upcoding, phantom billing, multiple billing, combination misbilling, and wrongful retention.

The hospital responded by arguing that the relators improperly obtained confidential patient records as the basis for their complaint; that the medical records integral to the complaint contradict the allegations; and that the allegations failed to plead sufficient facts.

The court reasoned that it was premature to conclude that the records were obtained improperly because there is a strong public policy in favor of protecting those who report fraud against the government. The court also stated that it would be inappropriate to discredit the factual allegations of a complaint merely because they are contradicted, and that the relators adequately pled their claims.

Wellness, Inc. v. Pearl River Cnty. Hosp. — Nov. 2015 (Summary)

CONTRACTS – ARBITRATION/MEDIATION

Wellness, Inc. v. Pearl River Cnty. Hosp.
No. 2014-CA-01696-SCT (Miss. Nov. 19, 2015)

The Supreme Court of Mississippi denied a defendant-contractor’s motion to compel mediation and arbitration in a lawsuit brought by a hospital.

The chief executive officer of the hospital and the contractor executed an agreement pursuant to which the contractor was to renovate certain areas of the hospital. The hospital sued the contractor, among others, for fraud, conspiracy and other causes of action. The contractor argued that the agreement contained a mediation and arbitration clause, and filed a motion to compel mediation and arbitration with the trial court. The hospital countered that there was not a valid mediation and arbitration agreement. The trial court denied the contractor’s motion and appealed the denial.

The Supreme Court of Mississippi reasoned that a valid mediation and arbitration agreement did not exist because, although the chief executive officer and the contractor executed the agreement, the hospital board’s minutes did not include sufficient reference to obligations to arbitrate. The language in the minutes was considered general and imprecise. Therefore, it was not enough to draw an enforceable arbitration clause from the meeting minutes.