Nehra v. Rush Univ. Med. Ctr. — Oct. 2015 (Summary)

PHYSICIAN EMPLOYMENT CONTRACTS

Nehra v. Rush Univ. Med. Ctr.
Case No. 14 C 7445 (N.D. Ill. Oct. 20, 2015)

The United States District Court for the Northern District of Illinois granted in part and denied in part a university’s motion for partial summary judgment on a claim for breach of contract made by a urologist. The urologist was hired by the university and signed a Faculty Employment Agreement (“FEA”), which conferred the status of faculty member with the title of professor. The agreement permitted the urologist’s termination either by mutual agreement or for cause.

One year later, the urologist was appointed to the position of Chairperson of the Department of Urology, the details of which were set forth in an offer letter. The offer letter, which provided for a five-year appointment term, stated that the FEA would continue to be in effect with an amended effort allocation section to reflect his new duties. Importantly, the offer letter was silent on termination. Within the next year, the university removed the urologist from the position of Chairperson and notified him that his clinical privileges would cease shortly thereafter, at which point, the urologist sued, alleging breach of contract. Four months later, the university notified him that it would not renew his FEA when it expired and that he was being placed on administrative leave.

The parties disputed how the urologist’s FEA and the offer letter interrelated when it came to termination or non-renewal. The offer letter did not say anything about whether or why Rush could terminate the urologist from the department chairperson position. The court ruled that it could not resolve the dispute at this stage, given multiple ambiguities and because extrinsic evidence and discovery could help fully resolve the issue. However, the court did grant summary judgment on two issues relating to recoverable damages. First, the court held that the urologist could not recover damages for breach of contract that extend beyond the date of the trial. Second, the urologist could not recover damages for loss of reputation even if he prevailed on his breach of contract claim.

Scates v. Shenandoah Mem’l Hosp. — Oct. 2015 (Summary)

FALSE CLAIMS ACT

Scates v. Shenandoah Mem’l Hosp.
No. 5:15-cv-00032 (W.D. Va. Oct. 19, 2015)

An ultrasound technician at a hospital filed a complaint against her former employer for terminating her employment in retaliation for her complaints about allegedly false billing practices for ultrasound exams. The ultrasound technician reported to her supervisor that there was an inconsistency between the hospital’s ultrasound practices and the number of ultrasound photos required by the Current Procedural Terminology (“CPT”) codes. The technician complainant also reported concerns about a fellow employee to the hospital and the hospital told her that it would take no action against the employee because it would seem retaliatory. The hospital’s reasoning was related to prior complaints that the accused employee had made against the complainant technician in the past.

In responding to the hospital’s motion to dismiss, the court held that to proceed with the claims, the complainant had to allege sufficient facts to raise a plausible inference that there was an objectively reasonable possibility that the conversations between her and her employer were in furtherance of a False Claims Act (“FCA”) suit or an effort to stop an FCA violation. The court noted that the complainant “only highlighted ‘inconsistencies’ in billing practices, and never asked the hospital to change its ultrasound policies, objected to these policies, nor mentioned her belief that the hospital’s billing policies might be illegal.”

As such, the court held that the complainant failed to show how the conversations with her employer would have induced fear in the employer of an FCA claim. The court also held that the complainant did not meet any of the three exceptions for wrongful termination claims in the Commonwealth of Virginia, given that she failed to cite any statute that would support her claim, failed to show how her termination was in violation of public policy according to statute, and failed to show how her behavior was a refusal to engage in criminal conduct. Thus, the court dismissed the complainant’s wrongful termination claim with prejudice, but did allow her leave to amend on her FCA retaliation complaint against the hospital.

Southern Baptist Hosp. of Fla., Inc. v. Charles — Oct. 2015 (Summary)

PATIENT SAFETY AND QUALITY IMPROVEMENT ACT

Southern Baptist Hosp. of Fla., Inc. v. Charles
Case No. 1D15-0109 (Fla. Dist. Ct. App. Oct. 28, 2015)

The Florida District Court of Appeal, First Circuit granted a hospital’s petition for certiorari review, quashed the discovery orders of a lower court compelling the production of a hospital’s occurrence reports, and held that the occurrence reports were protected as Patient Safety Work Product under the Patient Safety and Quality Improvement Act (“Patient Safety Act”).

The hospital develops “occurrence reports” of events that are not consistent with the routine operations of the hospital (or care of a patient) or that could result in an injury. These occurrence reports are collected and maintained under the hospital’s Patient Safety Evaluation System and submitted to a Patient Safety Organization, consistent with the process outlined in the Patient Safety Act.

In a medical malpractice action, the plaintiff sought discovery of these reports pursuant to Amendment 7. Amendment 7 was a ballot initiative adopted in 2004 which amended the Florida Constitution and gives individuals “a right to have access to any records made or received in the course of business by a health care facility or provider relating to any adverse medical incident.”

The lower court concluded that the occurrence reports, even though they existed in the protected space of the hospital’s Patient Safety Evaluation System, were not Patient Safety Work Product and, thus, not privileged under the Patient Safety Act because they were created or maintained pursuant to Florida statutory and regulatory requirements. The court of appeal disagreed, finding that the reports were entitled to protection under the Patient Safety Act because they met the statutory definition for Patient Safety Work Product. Specifically, the documents were entitled to protection as Patient Safety Work Product, regardless of whether state law or regulation required their creation and maintenance, because they were placed into the hospital’s Patient Safety Evaluation System, where they remained pending submission to a Patient Safety Organization. The court of appeal also held that Amendment 7 was expressly and impliedly preempted by the Patient Safety Act.

Doe v. Rogers — Oct. 2015 (Summary)

NATIONAL PRACTITIONER DATA BANK

Doe v. Rogers
No. 12-01229 (TFH) (D.D.C. Oct. 9, 2015)

The United States District Court for the District of Columbia granted in part and denied in part a motion to dismiss filed by the Secretary of the Department of Health and Human Services (“HHS”) in a suit brought by a surgeon alleging that the Secretary unlawfully accepted, maintained, and continued to release an inaccurate, fraudulent, and untimely Adverse Action Report that was submitted to the National Practitioner Data Bank (“NPDB”) by the physician’s prior employer. This litigation arose out of an emergency laparoscopic appendectomy in which the surgeon mistakenly removed a segment of a 14-year-old patient’s Fallopian tube. Shortly after, the surgeon “voluntarily suspend[ed]” his surgical privileges and, then, “tendered a short letter of resignation.” Two months later, the hospital submitted a report to the NPDB indicating, among other things, that the surgeon resigned while under investigation.

After unsuccessfully challenging the report with the NPDB, the surgeon brought a suit for damages and declaratory and injunctive relief against HHS, the NPDB, and three NPDB officials. The surgeon asserted a litany of claims, including a claim that the NPDB’s actions regarding the report were unlawful because although it was classified as a “voluntary surrender of clinical privileges, while under, or to avoid, investigation relating to professional competence or conduct,” there was no evidence that an investigation was occurring either before or at the time the surgeon surrendered his surgical privileges and resigned. The court disagreed, referencing the administrative record which contained substantial evidence that an investigation was underway at the time of his resignation.

The court also rejected the surgeon’s argument that an investigation was not commenced because there was no formal request for an investigation by the Credentials Committee, per the medical staff bylaws. The court observed as follows: “Nowhere…does the Health Care Quality Improvement Act, [HHS] regulations implementing the Act, or the NPDB Guidebook state that, to qualify as an ‘investigation’ for the purpose of the mandatory reporting requirements, the Hospital’s actions must be taken in accordance with its own internal bylaws or policies. The reportable event is based on an ‘investigation’ as that term is contemplated by the statute, not as contemplated by a health care entity’s individualized and internal governing documents. To hold otherwise would result in ad hoc reporting and reporting inconsistencies across the multitude of health care entities throughout the nation.”

Similarly, the court dismissed the surgeon’s argument that the NPDB should have rejected the report because it was untimely. According to the court, “[b]ecause the statute imposes a significant sanction for the failure to submit a report – i.e., the potential loss of immunity pursuant to the [Health Care Quality Improvement Act] – the clear message is that Congress intended to compel all reporting required by the statute.” The court also found that the surgeon’s due process rights were not violated by defendants concluding that, among other things, “[t]he harm in this case…is the result of private hospitals responding to information contained in the [NPDB] and not the result of government action that changed [the surgeon’s] [employment or clinical privileges] status.” However, the court remanded to the Secretary the question of whether the statement that “the hospital’s quality assurance review of this matter indicates departures by the physician from standard of care” was reportable.

Shervin v. Partners Healthcare Sys., Inc. — Oct. 2015 (Summary)

GENDER DISCRIMINATION

Shervin v. Partners Healthcare Sys., Inc.
No. 14-1651 (1st Cir. Oct. 9, 2015)

The United States Court of Appeals for the First Circuit affirmed a jury verdict in favor of a healthcare system and others in a suit brought by a female physician claiming gender discrimination and retaliation. The physician was part of the Harvard Combined Orthopedics Residency Program. In her fourth year of her residency, she was put on probation. The probation was imposed after a colleague raised specific patient care issues and expressed concerns about the physician’s professionalism and technical competence. According to the opinion, the program’s director imposed probation without attempting less significant interventions because of the physician’s “stoic response to his concerns” and “in his 35 years of supervising residents, he had never disciplined a woman resident and not seen her cry.” The physician alleged that this incident “marked the beginning of a steady stream of retaliatory and discriminatory acts that clouded the remainder of her residency” and ultimately adversely affected her job prospects.

On appeal, the physician argued, among other things, that the district court erred in calculating the statute of limitations for her discrimination and retaliation claims. The physician contended that her claims did not accrue until the probation hindered her ability to obtain a medical license. The court disagreed, stating that the statute of limitations for a cause of action for discrimination begins “upon the time of the discriminatory acts, not upon the time at which the consequences of the acts [become] most painful.” Further, the physician not only had immediate notice of the adverse effects of the probation but also recognized the gravity of the probation based off of her efforts to reverse it immediately. The court also found that several evidentiary rulings were not improper and that the district court did not abuse its discretion in giving the challenged jury instruction.

Pharm. Research & Mfrs. of Am. v. U.S. Dep’t of Health and Human Servs. — Oct. 2015 (Summary)

340B

Pharm. Research & Mfrs. of Am. v. U.S. Dep’t of Health and Human Servs.
No. 14-1685 (RC) (D.D.C. Oct. 14, 2015)

The United States District Court for the District of Columbia granted a motion for summary judgment filed by Pharmaceutical Research and Manufacturers of America (“PhRMA”) in a suit it filed against the United States Department of Health and Human Services (“HHS”) challenging an interpretive rule issued by HHS regarding the 340B discount drug program.

The 340B program places price caps on the medications that drug manufacturers sell to certain healthcare facilities, including Critical Access Hospitals (“CAHs”). However, a section of the Patient Protection and Affordable Care Act excluded CAHs from having 340B program pricing for medications designated as orphan drugs.

HHS issued an interpretive rule allowing CAHs to have 340B program pricing for an orphan drug when the orphan drug is used for a purpose other than the rare diseases for which it was developed and designated. PhRMA objected to this interpretive rule and moved for summary judgment, arguing that the rule was a final agency action that conflicted with the plain language of the 340B program statute.

The issue before the court was whether the orphan drug exclusion to the 340B program pricing for CAHs applied to any use of the orphan drug or whether the exclusion was limited to when the orphan drug was actually used for the rare disease or condition for which it has been designated.

The court granted PhRMA’s motion for summary judgment, holding that HHS’s interpretive rule was, indeed, a final agency action and that it contravened the plain language of the 340B program statute, which excluded any use of orphan drugs from 340B program pricing.

Shannon v. Testen — Oct. 2015 (Summary)

PEER REVIEW

Shannon v. Testen
No. COA15-64 (N.C. Ct. App. Oct. 6, 2015)

The North Carolina Court of Appeals affirmed the dismissal of an ophthalmologist’s claims that a social worker, a counselor, and a state-sponsored peer review agency breached their statutory duties and violated his statutory due process rights under federal and state peer review statutes. The court held that the ophthalmologist failed to show that any of the defendants acted in bad faith, as well as holding that neither the state nor the federal peer review statutes provided a private cause of action.

The hospital where the ophthalmologist practiced temporarily suspended his privileges and referred him to a psychiatrist and psychologist in response to two incidents at the hospital. After this initial evaluation, the hospital referred the ophthalmologist to a state-sponsored peer review agency. The ophthalmologist met with a social worker and a counselor, both employees of the peer review agency. After meeting, the social worker and counselor both wrote a letter to the state medical board and the hospital recommending that the ophthalmologist immediately receive further professional evaluation. This letter allegedly contained factual errors and omissions regarding the two incidents with the ophthalmologist. In a second letter written a few months later, both repeated their call for the ophthalmologist to receive further evaluation, noting they had received information from the ophthalmologist’s earlier psychiatric evaluations and found the information to be “informative and concerning.” After receiving the second letter, the hospital informed the ophthalmologist that his privileges would not be reinstated. Also, the ophthalmologist surrendered his medical license to the state medical board.

The court held the ophthalmologist had failed to show the defendants acted in bad faith by allegedly failing to include certain facts and interview certain witnesses, noting that such actions were more akin to carelessness, not “willfulness” required for a showing of bad faith. The court also held that neither the Health Care Quality Improvement Act nor the state peer review statute provided the ophthalmologist with a private cause of action. The court also noted that even if the state peer review statute did give the ophthalmologist a private cause of action, the memorandum of understanding between the hospital and the state medical board indicated the activities of the peer review agency would be carried out “in accordance with due process,” thereby satisfying their statutory obligation.

Hessein v. Am. Bd. of Anesthesiology, Inc. — Oct. 2015 (Summary)

DUE PROCESS

Hessein v. Am. Bd. of Anesthesiology, Inc.
No. 15-2249 (3d Cir. Oct. 7, 2015)

The United States Court of Appeals for the Third Circuit affirmed summary judgment against an anesthesiologist who brought violation of due process claims, Sherman and Clayton Act claims, and state law claims of defamation, tortious interference with contract, and breach of contract against the American Board of Anesthesiology (“Board”) and two of its members.

The anesthesiologist had his license temporarily suspended in two states as a result of an indictment for conspiracy, theft by deception, and numerous counts of health insurance fraud. The Board then revoked his certifications in anesthesiology and pain management.

The court held that the violation of due process claims must fail because the Board was a private association, not a state actor. The court also rejected the anesthesiologist’s claim that the Board and state medical boards conspired to disrupt his practice and revoke his certifications, noting those decisions were independent actions of each entity. The court further rejected the argument that the Board had a monopoly on the specialties of the anesthesiologist, stating the anesthesiologist was not seeking to end the anti-competitive behavior; he was seeking to join it. Lastly, with regard to the anesthesiologist’s state law claims, the court held the Board applied its rules and regulations regarding the revocation of the anesthesiologist’s certification fairly and in good faith. The court found that the Board breached no duty of care owed to the anesthesiologist, breached no contract with him, and did not defame him by posting on the Board’s website that the anesthesiologist’s certifications had been revoked.

Schindler v. Reg’l Health Physicians, Inc. – Sept. 2015 (Summary)

BREACH OF CONTRACT

Schindler v. Reg’l Health Physicians, Inc., No. CIV. 13-5027-JLV (D.S.D. Sept. 23, 2015)

The United States District Court for the District of South Dakota granted partial summary judgment to defendant hospital on breach of contract claims made by a neurosurgeon.

When the neurosurgeon began to experience health problems, the hospital provided a number of measures to accommodate him while he worked. However, eventually, the hospital notified the neurosurgeon that it planned to suspend his surgical privileges to perform elective instrumental cervical and lumbar fusion procedures except those procedures in an emergency situation. The neurosurgeon took a voluntary leave of absence in lieu of the suspension. The hospital terminated the physician immediately “for cause,” due to a failure to maintain medical staff privileges necessary to perform surgery at the hospital, without notice and a period to cure.

The neurosurgeon filed a breach of contract action, based on lack of notice and opportunity to cure, among other things. The court ruled that the hospital was not obligated to give the neurosurgeon notice that he breached his employment contract and a 30-day right to cure, ruling that the voluntary leave of absence constituted a suspension or loss of appointment and privileges, which was subject to the “for cause” immediate termination under the employment agreement, with no notice or opportunity to cure.

Grenier v. Stamford Hosp. – Sept. 2015 (Summary)

EMTALA

Grenier v. Stamford Hosp., Civil Action No. 3:14-cv-0970 (VLB) (D. Conn. Sept. 29, 2015)

The United States District Court for the District of Connecticut denied a hospital’s motion to dismiss failure to screen and failure to stabilize claims, under EMTALA.

A patient was brought to a hospital’s emergency department and was heavily intoxicated. Later, she was discharged after she sobered up. Minutes later, she was readmitted because the staff noticed she was stumbling and walking with an unsteady gait. The patient continued to have difficulty speaking and walking, however no diagnostic tests or treatments were administered. Eventually, it was discovered that the patient had a stroke, but by the time it was diagnosed she could not be revived.

The court did not dismiss the failure to screen claim because it fairly alleged that the various testing and screening done by the hospital deviated from the type of examination normally performed. Also, the court did not dismiss the failure to stabilize claim because there were stark differences between the medical entries claiming she was alert and observations stating she was stumbling.