Chattanooga-Hamilton Cnty. Hosp. Auth. v. UnitedHealthcare Plan of the River Valley, Inc. — Nov. 2015 (Summary)

Chattanooga-Hamilton Cnty. Hosp. Auth. v. UnitedHealthcare Plan of the River Valley, Inc.
No. M2013-00942-SC-R11-CV (Tenn. Nov. 5, 2015)

A hospital that was a non-contract provider for a Tenncare MCO’s beneficiaries claimed the MCO was underpaying the hospital for emergency services. The hospital claimed that, under the Deficit Reduction Act of 2005, the MCO was obliged to pay the hospitals which rates were negotiated by contract “the average contract rate that would apply under the State plan for general acute care hospitals or the average contract rate that would apply under such plan for tertiary hospitals” for emergency services. Tenncare had submitted two amendments to the state Medicaid plan to CMS, requesting the reimbursement for emergency outpatient services provided by non-contract providers to be set at “74% of the 2006 Medicare rates for those services,” and reimbursement regarding inpatient hospital admissions at non-contract provider hospitals required as a result of emergency outpatient services to be set at “57% of the 2008 Medicare Diagnostic Related Groups (DRG) rates.” CMS approved both of these amendments, and Tenncare promulgated regulations consistent with these amendment plans.

The hospital filed a complaint with the Chancery Court requesting declaratory judgment that the MCO was required by Tennessee law to pay the hospital “at the rate equal to the prevailing average contract rate payable by TennCare MCOs” for EMTALA-mandated services and “at a reasonable rate of reimbursement for” services provided to patients not mandated by EMTALA. The hospital also brought claims of unjust enrichment and breach of contract in relation to the underpayments. The MCO contended that because the hospital was challenging the applicability of the Tenncare regulations, the hospital’s complaint must be dismissed because the hospital failed to obtain a declaratory judgment from Tenncare, thereby failing to exhaust its administrative remedies as required by the Uniform Administrative Procedures Act (“UAPA”). Additionally, the MCO asserted a defense of set-off and recoupment, arguing it had paid the hospital for non-contract EMTALA-mandated services in excess of $6 million. The trial court dismissed all of the claims, holding the court was without jurisdiction until the hospital exhausted its administrative remedies. The Court of Appeals reversed, holding the dispute between the hospital and the MCO was “merely a disagreement over the interpretation of the regulations,” and that the hospital was not required to exhaust its administrative remedies. The MCO appealed the decision to the Tennessee Supreme Court.

On appeal, the Tennessee Supreme Court held that the resolution of the hospital’s claim would “necessarily require” the trial court to render a declaratory judgment concerning the validity of the Tenncare regulations, and the court was unable to do so until the hospital had exhausted its administrative remedies with Tenncare. The hospital was required to exhaust its administrative remedies despite Tenncare not being a party to the suit between the hospital and MCO. The court did reverse the trial court’s decision to dismiss the hospital’s claims for money damages and the MCO’s counterclaim for recoupment, noting the validity of the Tenncare regulations is implicit in each of these claims. Therefore, the court remanded these claims to the trial court to be held in abeyance pending the resolution of the Tenncare proceedings.

Miller v. Huron Reg’l Med. Ctr. Inc. — Nov. 2015 (Summary)

Miller v. Huron Reg’l Med. Ctr. Inc.
No. 4:12-CV-04138-KES (D.S.D. Nov. 5, 2015)

A physician who was subject to a report in the National Practitioner Data Bank filed claims against a hospital alleging breach of express contract, breach of implied contract, negligence, and defamation. The claims arose from a dispute between the hospital and a general surgeon who voluntarily reduced her surgical privileges after a request from the MEC to do so. While the surgeon was told that her voluntary reduction in privileges was not a reportable event, the hospital ended up reporting her reduction in privileges to the National Practitioner Data Bank after determining that she was under investigation.

The court denied the hospital’s motion pertaining to the breach of express contract, finding that the surgeon did not receive a hearing as required by the Medical Staff bylaws. While the hospital sought immunity under the Health Care Quality Improvement Act for the surgeon’s negligence claim, the court denied immunity, finding that a reasonable jury could hold that the surgeon was not under an official investigation – and thus not subject to reporting – at the time she agreed to reduce her privileges. Further, because the hospital and medical staff leaders knew the surgeon was not under investigation at that time, the court found that a reasonable jury could find that the hospital was aware of the false information contained in the adverse action report. Finally, the court did not dismiss the surgeon’s claim for defamation against the hospital because a reasonable jury could find that the hospital knew that false information was in the adverse action report filed with the National Practitioner Data Bank.

In re Matter Under Investigation — Nov. 2015 (Summary)

In re Matter Under Investigation
No. 15-509 (La. Ct. App. Nov. 4, 2015)

A nurse anesthetist applied for privileges at a hospital and as a part of the process was required to submit references. Peer review references are to be confidential according to statute. After the applicant was denied privileges at the hospital, he sought to obtain a review letter from a reference at the anesthesia program where he attended school. The applicant thought he received a bad reference after being involved in a lawsuit against the school. He was denied access to the letter, as the peer references were deemed confidential under the state’s peer review statute. He then filed a complaint with the sheriff’s office for criminal defamation.

The sheriff’s office sought a search warrant to obtain the letter. A temporary judge granted the search warrant but placed the seized documents under seal based on his own concerns about the legality of the warrant. When the regular trial judge returned, he held a hearing and granted the hospital’s motion to quash the warrant and ordered that the letter be returned to the hospital.

The sheriff’s office appealed, but the Court of Appeals affirmed the trial court’s holding that the letter be returned, as the information sought was clearly protected by law.

Tate v. Univ. Med. Ctr. of S. Nev. — Nov. 2015 (Summary)

Tate v. Univ. Med. Ctr. of S. Nev.
Case No. 2:09-cv-01748-LDG (NJK) (D. Nev. Nov. 4, 2015)

UPDATE:  reconsideration denied, 2:09-cv-01748-JAD-NJK (D. Nev. May 4, 2016)

The United States District Court for the District of Nevada granted in part and denied in part summary judgment on a physician’s Section 1983 civil rights action, breach of contract, and breach of the covenant of good faith and fair dealing. The court held that the Health Care Quality Improvement Act of 1986 (“HCQIA”) did not provide immunity for the hospital from monetary damages to the physician’s claim alleging a violation of procedural due process rights under Section 1983. However, the court granted the hospital immunity as to the remaining contract claims. It reasoned that the language of HCQIA precluded application of immunity for damages brought “under any law of the United States relating to the civil rights of any persons or persons”; and a claim brought pursuant to Section 1983 was consistent with this portion of the statute. The court also determined that the medical staff could not be held liable for the contract claims.

Scott v. Sarasota Doctors Hospital, Inc. — Nov. 2015 (Summary)

Scott v. Sarasota Doctors Hospital, Inc.
No. 8:14-cv-1762-T-30TBM (M.D. Fla. Nov. 5,  2015)

The United States District Court for the Middle District of Florida denied a hospital’s motion for summary judgment on a hospitalist’s gender discrimination and retaliation claims. The hospitalist was employed by a physician services provider who assigned her to work at the hospital full time. While she was subject to a number of informal complaints about her “abrupt” and “curt” behavior, none of the concerns regarding the hospitalist’s behavior were ever reviewed through formal channels. She was, however, being encouraged to consider positions at other hospitals by her medical director, and the hospital was actively seeking a replacement for her. Feeling she was being treated differently than her male colleagues, who she alleged were given opportunities to respond to complaints and correct their behavior, the hospitalist filed a charge of gender discrimination against the hospital. Then, after having a confrontation with the hospital’s human resources generalist, the hospitalist was escorted from the hospital. The hospital then informed the physician services provider that it wanted the hospitalist permanently removed from the hospital because of her ongoing behavioral issues. The hospitalist was later terminated by her employer.

The hospital argued it was entitled to summary judgment on the hospitalist’s discrimination claims because it was not her employer. However, utilizing various legal theories, the district court determined that the hospital was a joint employer of the hospitalist. Next, the hospital argued that even if it were found to be an employer during the relevant time, the hospitalist’s gender discrimination claim failed because she failed to show that the hospital treated similarly-situated males more favorably. The court disagreed with this reasoning as well, citing the fact that a male physician who had exhibited similar behavior had been offered counseling, anger management classes, etc. before he was terminated. Therefore, there was sufficient evidence to make the issue of discriminatory intent one for a jury.

 

U.S. ex rel. Jajeh v. John J. Stroger Hosp. of Cook Cnty. — Oct. 2015 (Summary)

FALSE CLAIMS ACT

U.S. ex rel. Jajeh v. John J. Stroger Hosp. of Cook Cnty.
No. 13-cv-4728 (N.D. Ill. Oct. 30,  2015)

The United States District Court, Northern District of Illinois dismissed a physician’s claims under the False Claims Act for fraud and retaliation brought against a hospital that previously employed the physician. The physician alleged that his former supervisor at the hospital disbursed funds from NIH issued research grants in an illegal manner and in violation of NIH policy. The physician also alleged that after he made complaints to the hospital and the FBI about the alleged improprieties, his former supervisor retaliated against him by suspending the physician’s nurse practitioner and restricting the physician’s job duties. The hospital contended that the physician’s claims were barred by the False Claims Act statute of limitations. The court agreed, holding that the physician had not filed either his fraud or retaliation claims within the applicable statute of limitations period.

Blum v. Morristown Med. Ctr. — Oct. 2015 (Summary)

MALPRACTICE/PRIVILEGED DOCUMENTS

Blum v. Morristown Med. Ctr.
Docket No. A-3017-14T3 (N.J. Super. Ct. App. Div. Oct. 30, 2015)

The Superior Court of New Jersey, Appellate Division affirmed in part and remanded in part the trial court’s rulings that four documents in a medical malpractice case were not confidential. A patient who suffered numerous complications after undergoing gastric bypass surgery sued the physician who performed the surgery and the hospital where the surgery was performed. The patient claimed that the hospital failed to ensure that the surgeon had necessary liability insurance, and that it “failed to exercise reasonable care in the appointment, re-appointment, and…granting of clinical privileges to [its] medical staff.”

At issue in this appeal was whether the trial court erroneously classified the four specific documents as non-confidential and improperly ordered the hospital to turn over the documents to the patient. The first document was a letter from the State Board of Medical Examiners (“BOME”) concerning the surgeon after he was discharged by the medical center. The confidentiality of this document under state law depended on whether the BOME rendered a final disposition, which was not clear from the appellate record. Accordingly, the court remanded the discoverability of the document to the trial court for further consideration. The second and third documents were a fax cover sheet and a transmittal letter from the hospital where the physician previously practiced to the defendant hospital. The court determined that the portions of the documents merely repeating information already contained the hospital’s privilege log were discoverable. However, it remanded to the trial court the issue of whether the remaining portions of those documents were confidential, because the trial court had failed to provide an analysis, under the applicable common law. The fourth document was a string of internal e-mails pertaining to the credentialing process. These were also remanded for further consideration under common-law analysis.

Jones-McNamara v. Holzer Health Sys. — Nov. 2015 (Summary)

FALSE CLAIMS ACT

Jones-McNamara v. Holzer Health Sys.
No. 15-3070 (6th Cir. Nov. 2, 2015)

The United States Court of Appeals, Sixth Circuit affirmed the district court’s order granting summary judgment to a health system in a False Claims Act retaliation suit brought against it by a former employee. The former employee, who held the position of Vice President for Corporate Compliance, alleged that she was terminated because of her complaints to the CEO and others that an ambulance company was providing, in violation of the Anti-Kickback Statute, embroidered jackets to individuals working at the health system and hot dogs and hamburgers for the health system’s health and wellness fairs. In granting summary judgment to the health system, the court concluded that the former employee did not engage in protected activity under the False Claims Act anti-retaliation provisions because she did not have an objectively reasonable belief that the conduct violated the Anti-Kickback Statute. According to the court, “[i]t cannot plausibly be suggested that one jacket valued at $23.50 and occasional services of hotdogs and hamburgers could induce a reasonable person to prefer one provider over another.” The court also determined that the former employee failed to provide evidence of a connection between the gifts and referrals to that ambulance company.

Koenig v. Aetna Life Ins. Co. — Oct. 2015 (Summary)

ERISA

Koenig v. Aetna Life Ins. Co.
No. 4:13-CV-0359 (S.D. Tex. Oct. 29, 2015)

The United States District Court, Southern District of Texas granted a health insurer’s motion for summary judgment in a suit brought against it by a physician-owned hospital asserting violations of the Employee Retirement Income Security Act (“ERISA”). The hospital was an out-of-network provider for the insurer and offered a “prompt pay discount,” through which out-of-network patients could receive a reduction in their coinsurance payment by either paying up front or within a limited time after admission. After several years of processing claims through a subsidiary or a third-party vendor, the health insurer began processing the hospital’s claims in-house. The hospital alleged its claims for healthcare services were “significantly reduced” after the switch, and sued arguing that these substantial underpayments were a violation of ERISA.

As a preliminary matter, the court concluded that the hospital’s prompt pay discount (which closely followed the Office of Inspector General’s Advisory Opinion No. 08-03) did not violate Texas state law. The court indicated that nothing in the law prohibited the hospital from discounting the patient’s bill, and the hospital presented patients with all of the information necessary to acquire properly executed assignments under ERISA. However, the court rejected the hospital’s assertion that the insurer underpaid its claims by inconsistently reimbursing the same or similar services, noting the plans at issue vested the discretionary authority to determine eligibility and construe plan benefits solely with the insurer.

Butt v. Iowa Bd. of Med. — Oct. 2015 (Summary)

DISRUPTIVE BEHAVIOR/STATE BOARD SANCTIONS

Butt v. Iowa Bd. of Med.
No. 14-1764 (Iowa Ct. App. Oct. 28, 2015)

The Court of Appeals of Iowa affirmed sanctions imposed by the Iowa Board of Medicine (“Board”) on a physician for his inappropriate conduct but remanded to the lower court for an order directing the Board to strike certain parts of its decision and to amend its National Practitioner Data Bank (“NPDB”) report on the physician.

The Board sanctioned the physician after it found that the physician engaged in unethical and unprofessional conduct when he threatened a nurse by telling her he would “crush her” and when he asked an employee if she would leave her husband to have his baby. The physician appealed the Board’s sanctions and findings and the Court of Appeals reversed certain of those findings and remanded to the Board “to determine the propriety of the discipline imposed.” On remand, the Board added that it “believe[d] that such conduct interferes with, or has the potential to interfere with, patient care and/or the effective functioning of health care staff.” The Board then decided to reinstitute the prior sanctions, which the physician again appealed. Ultimately, the Court of Appeals held the Board’s statement with regard to patient care was a new finding of fact and not supported by the evidence, reversed the Board’s decision, and remanded to the district court for an order directing the Board to strike the sentence. The Court of Appeals also took issue with the Board’s decision to answer “Yes” to the following NPDB question regarding the physician: “Is the Adverse Action Specified in this Report Based on the Subject’s Professional Competence or Conduct, Which Adversely, or Could Have Adversely Affected, the Health or Welfare of the Patient?” According to the court, there was no evidentiary support for the “Yes” answer. The Court of Appeals remanded to the district court with instructions to the Board to amend the answer to “No.”