U.S. ex rel. Herren v. Marshall Med. Ctr. – May 2015 (Summary)

FALSE CLAIMS ACT

U.S. ex rel. Herren v. Marshall Med. Ctr., No. 2:12–cv–00098–JAM–KJN (E.D. Cal. May 12, 2015)

The U.S. District Court for the Eastern District of California granted in part and denied in part a motion to dismiss in a lawsuit over illegal billing procedures. A nurse filed this suit against a hospital and two of its affiliated physicians, alleging a variety of issues with physician oversight, double billing, and billing for visits which never occurred. She claimed that she had repeatedly brought these concerns to the physicians and hospital administration, but had been told that the practices would continue. In addition, she claimed that the hospital had terminated her employment in retaliation for her actions.

The court dismissed the wrongful termination claims that the nurse had filed against the physicians and their medical practice. It emphasized that the nurse was not an employee, contractor, or agent of the physicians, and therefore could not pursue a wrongful termination claim against them. The court also dismissed several of the nurse’s claims over a lack of sufficient information. It explained that allegations of fraud must contain a sufficient degree of detail in order to survive a motion to dismiss, and determined that several of the nurse’s claims had failed to meet this standard.

However, the court concluded that some of the nurse’s claims contained enough information to survive a motion to dismiss. Specifically, it noted that she had provided sufficient facts to support allegations that the physicians knowingly billed for patient visits that did not occur and that the physicians had engaged in improper billing for certain kinds of medication.

The hospital raised numerous arguments in its defense. For example, it argued that it was exempt from the Medicare physician supervision requirements because it was a small rural hospital. It also claimed that it should not be held liable because it had reasonably believed it was in compliance with all applicable laws and regulations. The court disagreed. It found that there was no evidence that the hospital received a federal designation as a rural hospital during the relevant period, and it further noted that the hospital had never sought any kind of governmental review or approval of its billing practices. Also, the court ruled that the hospital could have violated both state and federal law by mixing expired drugs with viable drugs and giving the resulting mixture to patients for treatment.

Hamby v. Health Mgmt. Assocs. – May 2015 (Summary)

TORTIOUS INTERFERENCE/STATE DECEPTIVE TRADE PRACTICES ACT

Hamby v. Health Mgmt. Assocs.
No. CV-14-667 (Ark. Ct. App. May 6, 2015)

The Court of Appeals of Arkansas affirmed in part and reversed in part a lower court’s dismissal of a physician’s claims, including tortious interference and violations of the Arkansas Deceptive Trade Practices Act (“DTPA”), against a health system, holding that the physician had sufficiently alleged facts to support his claims. The physician was employed by a group that provided emergency medical services at one of the health system’s hospitals. The physician alleged that the health system was engaged in a scheme to increase profits at the hospital by requiring emergency department physicians to unnecessarily and improperly increase patient admissions and medical testing. According to the physician’s complaint, the health system pressured his employer to terminate his employment because he refused to comply with the alleged scheme.

On appeal of the lower court’s dismissal of the physician’s claim, the court of appeals determined that the physician sufficiently alleged his claims for tortious interference and violations of the DTPA. The court of appeals held that the physician’s allegations that the health system was disappointed with the hospital’s admission numbers, the employer began chastising the emergency-department physicians at the hospital for missing opportunities to order additional billable testing, and the physician was subject to quality reviews of his charts and eventually terminated for what were characterized by the health system as “low ER metrics” were enough to support his claims at the motion to dismiss stage.

Magnini v. Centegra Health Sys. – April 2015 (Summary)

VICARIOUS LIABILITY

Magnini v. Centegra Health Sys., No. 1-13-3451 (Ill. App. Ct. Apr. 29, 2015)

The Appellate Court of Illinois affirmed a lower court’s dismissal of a medical negligence case brought by a patient against a hospital. The court held that the hospital was not liable for the acts of the physicians who performed the patient’s surgery because the physicians were independent contractors. In her suit, the patient claimed that she suffered numerous complications resulting from a gastric bypass surgery performed by the physicians and that the hospital was vicariously liable for the physicians’ alleged negligence. The hospital moved to dismiss the case, arguing that it could not be vicariously liable for the physicians’ conduct because of the physicians’ independent contractor status. The court agreed and rejected the patient’s arguments that the hospital controlled the physicians’ provision of medical care to patients through the following: (1) a medical director services agreement with one of the physicians, (2) an exclusive bariatric services agreement with the group which employed the physicians, and (3) the hospital’s medical staff bylaws. With respect to the medical staff bylaws, the court observed that the document concerns matters “that are collateral to patient care decisions, which remain in the exclusive control of physicians.” Similarly, the court concluded that the medical director services agreement explicitly indicated that the physician was an independent contractor and the hospital did not exercise any control over the methods by which the physician would perform his responsibilities. Finally, the exclusive agreement for bariatric services did not contain any evidence “to negate the doctors’ status as independent contractors.”

McCord v. HCA Health Servs. of Tenn., Inc. – April 2015 (Summary)

HCQIA IMMUNITY – PROFESSIONAL REVIEW ACTION

McCord v. HCA Health Servs. of Tenn., Inc., No. M2014-00142-COA-R3-CV (Tenn. Ct. App. Apr. 27, 2015)

The Court of Appeals of Tennessee affirmed in part and reversed in part a lower court’s dismissal of a surgeon’s claims against a hospital, following revocation of his surgical privileges, for breach of contract, defamation, common law and statutory disparagement, and intentional interference with existing and prospective business relationships. In addition, he sought a declaration that the hospital unjustifiably revoked his privileges, as well as an order from the court to reinstate his privileges and to require the hospital to report this reinstatement to the National Practitioner Data Bank (“NPDB”).

According to the hospital, the surgeon first came under scrutiny during June 2011, when an evaluation raised concerns over how many of his patients were returning for removal of spinal hardware within one year of implantation. The surgeon’s one-year hardware removal rate was approximately 7.5%, which was favorable in comparison to the national average of 10%. However, it was high compared to his colleagues at the hospital, where the next-highest surgeon had a hardware removal rate of only 1.5%. This issue ultimately led the hospital’s Medical Executive Committee to recommend permanent revocation of his privileges.

Under the bylaws, the surgeon was entitled to request a hearing, but on the day the hearing was scheduled, the surgeon’s attorney informed the hospital that he would not be present at the hearing because he did not believe it would be fair. The hearing proceeded without him, resulting in the permanent revocation of his privileges.

After reviewing the record, the trial court determined that the surgeon had voluntarily waived his breach of contract claims by failing to appear at the hearing. It also granted the hospital’s motion to dismiss the remaining claims for lack of subject matter jurisdiction, ruling that the surgeon could only sue after challenging these claims in accordance with the procedures outlined by the Health Care Quality Improvement Act (“HCQIA”).

The Court of Appeals upheld the trial court’s dismissal of the breach of contract claim. However, it disagreed with the trial court’s handling of the surviving non-contract claims. It concluded that under the HCQIA regulations practitioners have the option to dispute the accuracy of reports filed to the NPDB, but are not required to do so.

Instead, the Court of Appeals explained that the hospital was properly entitled to summary judgment against the surviving claims. It emphasized that the surgeon could only prevail on these claims by providing some evidence that the hospital had made a false statement or representation in its report to the NPDB. The court held that the surgeon had failed to meet his burden of producing evidence sufficient to support these claims.

Mansour v. State Med. Bd. of Ohio – May 2015 (Summary)

PHYSICIAN LICENSURE

Mansour v. State Med. Bd. of Ohio, No. 14AP-829 (Ohio Ct. App. May 5, 2015)

The Court of Appeals of Ohio reversed a state medical board’s suspension of a physician, holding that the board’s decision was not supported by reliable, probative, and substantial evidence. The plaintiff physician was charged with 66 counts of drug trafficking. He claimed that his twin brother stole and used his prescription pad. The physician complied with both the state criminal authorities and with the state medical board as they investigated the matter. Two months later, the physician submitted his licensure renewal application, to which he answered “no” to “whether at any time since signing his last application for renewal, “[h]as any board, bureau, department, agency, or any other body, including those in Ohio other than this board, filed any charges, allegations or complaints against you?” Three years later, the physician voluntarily sought evaluation for his alcohol use. The evaluation was sent to the state medical board and stated that the physician undergo a minimum 28-day stay at a board-approved residential treatment facility due to his diagnosis of alcohol abuse, pathological gambling, and depression. The board then summarily suspended the physician’s licenses.

The physician admitted himself to the board-approved residential treatment facility to undergo treatment. The treatment center found no data to indicate a diagnosis of alcohol abuse or dependency and no evidence of pathological gambling. It did find that the physician suffered from depression. Upon his release, the physician requested a hearing to reinstate his medical license. The physician submitted his records from the treatment facility, a letter stating that he did not intend to deceive the board by answering no on the application because he was not aware that an indictment would be considered a “charge, allegation, or complaint against him.” Furthermore, he stated that the state medical board was already aware of the indictment because it investigated it and he fully cooperated. Lastly, the physician requested the medical board to turn over his answers to its investigation in order to show that he never intended to deceive it. The board stated that the physician’s own investigation answers were privileged so he was unable to subpoena them.

During his hearing, the examiner found that the physician was not impaired due to substance abuse and that he was not unable to practice medicine by reason of mental illness. However, the examiner concluded that the physician violated the licensing statute by making false or misleading statements in his license renewal application and recommended that the physician be suspended for a year. The board agreed with the recommendation, but doubled the suspension due to its concerns about his depression. The physician appealed the medical board’s decision arguing that the board failed to prove that his misrepresentation was intended to deceive the board and that the board failed to base its conclusions on reliable evidence.

The court was “troubled” by the board’s decision and reversed it. The court explained that to violate the licensure statute, an applicant not only has to make a false statement, but has to make it with the intent to deceive. Here, the board failed to provide any evidence to show such intent. Not only was it reasonable that the physician misunderstood the question, but he also tried to show that he did not try to deceive the medical board by obtaining the records of the board’s investigation of him. The court scolded the medical board for refusing to allow the physician to obtain these documents on the basis of a privilege. An evidentiary privilege protects the privilege holder, here the physician, thus he is entitled to waive it in order to defend himself.

Next, the court pointed out that the examiner and the board did not find that the physician was unable to practice medicine due to a mental illness, yet the board suspended him because of concerns about his depression. The court held that the board’s decision was not based on reliable, probative, and substantial evidence.

Murphy v. Or. Med. Bd. – April 2015 (Summary)

PHYSICIAN LICENSURE

Murphy v. Or. Med. Bd., Nos. 091334, A152438 (Or. Ct. App. Apr. 29, 2015)

A cardiac anesthesiologist who consumed one to two glasses of wine at a restaurant while on call was found by the state medical board to have engaged in unprofessional conduct. The state medical board reported the cardiac anesthesiologist to the National Practitioner Data Bank (“NPDB”). The cardiac anesthesiologist alleged that the board’s decision violated his due process rights when it answered “Yes” in response to the NPDB’s question: “Is the Adverse Action Specified in This Report Based on the Subject’s Professional Competence or Conduct, Which Adversely Affected, or Could Have Adversely Affected, the Health or Welfare of the Patient?”

In Murphy v. Goss, No. 3:14-cv-01135-SI (D. Or. Jan. 26, 2015), the United States District Court for the District of Oregon dismissed (without prejudice) the cardiac anesthesiologist’s substantive due process claim against several members of a state medical board on the basis that those individuals were entitled to immunity under the Health Care Quality Improvement Act of 1986 (“HCQIA”) since the cardiac anesthesiologist did not allege that any of them had knowledge of the falsity of any report made to the NPDB.

In Murphy v. Goss, No. 3:14-cv-01135-SI (D. Or. Apr. 16, 2015), the court once again considered whether the cardiac anesthesiologist could pursue his claims against the state board and its members. In granting summary judgment to the state board and its members, again on the basis of HCQIA immunity, the court noted that there was no evidence that anyone at the state board had knowledge of the falsity of the NPDB report. The court rejected the cardiac anesthesiologist’s assertion that he should be permitted to proceed through discovery to trial, where a jury could decide whether to believe the state board employee (who declared that she had no actual knowledge that the report was false) or believe the cardiac anesthesiologist’s unsupported accusation that the employee did know that the report was false. According to the court, “[s]tanding alone, the mere assertion by Plaintiff that one of the Defendants had actual knowledge that the report was false is insufficient to survive a motion for summary judgment.”

In this most recent case, the Oregon Court of Appeals reversed the state medical board’s determination that the cardiac anesthesiologist engaged in unprofessional or dishonorable conduct by consuming alcohol while on call because it violated an underlying ethical obligation because the board failed to give the cardiac anesthesiologist notice of this allegation. The board sent a letter to the cardiac anesthesiologist stating that he was to be charged with violating a statutory provision that prohibits unprofessional or dishonorable conduct and an administrative law judge will conduct a hearing. The board explicitly stated that the cardiac anesthesiologist’s breaching of his employer’s drug-free workplace policy was the basis of its action.

The cardiac anesthesiologist learned that he was also being charged with violating an underlying ethical obligation not to drink alcohol when on call. The cardiac anesthesiologist requested an extension in order to prepare a defense for the new allegation. The administrative judge denied the request and allowed the board to proceed. In his proposed order, the administrative judge concluded that the cardiac anesthesiologist’s violation of the hospital’s policy did not constitute unprofessional or dishonorable conduct as defined by the statute, and that the board failed to establish the existence of a recognized standard within the medical profession prohibiting the consumption of alcohol while on call. The board ignored the administrative judge’s findings and disciplined the cardiac anesthesiologist, stating that the cardiac anesthesiologist failed to call any witnesses to refute the board’s ethical argument.

The court agreed with thecardiac anesthesiologist that he was prejudiced by the board’s inadequate notice of the charges. The court explained that the only charge the board had informed the cardiac anesthesiologist of was his alleged unprofessional or dishonorable conduct, without ever having mentioned an ethical argument. The court highlighted the cardiac anesthesiologist’s prejudice with the board’s own order stating that the cardiac anesthesiologist “did not produce one physician to testify that they consumed alcohol while on call at a hospital, or thought it was appropriate to do so.”

Sabit v. Abou-Samra – April 2015 (Summary)

ANTI-SLAPP

Sabit v. Abou-Samra, 2d Civil No. B249793 (Cal. Ct. App. Apr. 30, 2015)

The Court of Appeal for California affirmed a lower court’s dismissal of an intentional interference with a contract claim brought by a physician against a hospital. The plaintiff physician was employed at a private clinic and had privileges at the defendant hospital. The hospital summarily suspended the physician while it investigated an allegation that he did not render appropriate medical care to patients. The clinic terminated his employment. The physician brought suit against the hospital stating that the hospital intentionally interfered with his employment contract. The hospital filed a motion to strike the lawsuit under the state’s civil procedure code as a strategic lawsuit against public participation (“SLAPP”). The lower court granted the motion and the physician appealed.

The court affirmed the anti-SLAPP motion holding that this litigation was a challenge to the hospital’s protected free speech. The court explained that the hospital’s suspension of the physician was an activity and speech authorized by state law, and thus was protected activity. Additionally, the physician’s intentional interference with a contract claim failed because he had not established that the hospital knew of his employment contract with the clinic and it acted knowing that the contract would be disrupted.

Valfer v. Evanston Nw. Healthcare – April 2015 (Summary)

PEER REVIEW IMMUNITY

Valfer v. Evanston Nw. Healthcare, No. 1-14-2284 (Ill. App. Ct. Apr. 30, 2015)

The Appellate Court of Illinois affirmed a lower court’s dismissal of a breach of contract claim brought by a physician against a hospital, holding that the hospital is immune from liability pursuant to the state peer review statute. The hospital found that 50% of the physician’s cases lacked demonstrable indication for surgical intervention, and did not reappoint him due to patient safety concerns. The physician brought suit alleging breach of contract and sought monetary damages. The hospital argued that it followed its bylaws and that it was immune under the state’s peer review statute. The court agreed and dismissed the case. The physician appealed, arguing that the hospital was not immune because its acts were willful and wanton, thus it was not protected by the statute.

The court held that the physician failed to plead or prove some type of physical harm, as is required by the statute to prove willful and wanton conduct. The court explained the peer review statute shields a hospital from civil liability unless it acted willfully and wantonly. The statute explicitly defines willful and wanton as a deliberate action that shows a disregard for a person’s safety. Here, the physician failed to plead that his, or any patients’, safety was threatened, thus he failed to show that the hospital’s conduct satisfied the statutory definition of willful and wanton.

Mullen v. Chester Cnty. Hosp. – April 2015 (Summary)

ADA

Mullen v. Chester Cnty. Hosp., Civil Action No. 14-2836 (E.D. Pa. Apr. 30, 2015)

The United States District Court for the Eastern District of Pennsylvania denied a hospital’s motion to dismiss an Americans with Disabilities Act (“ADA”) claim brought by a nurse, holding that a jury could reasonably find that the hospital discriminated against her on the basis of her disability and that it retaliated against her when she filed a lawsuit. The plaintiff nurse suffered from Lupus and a congenital heart defect which occasionally caused her to become dizzy, lightheaded and faint. During one of these instances, the nurse was put into an empty bed and given an I.V. without a physician’s order. The nurse alleged that she was unable to deny this treatment, even though it violated the hospital’s protocol and the state nursing practice guidelines. The hospital investigated the incident and determined that the nurse may have asked for the I.V. or at least consented to the treatment. After the hospital’s investigation, it terminated the nurse’s employment. A month later, the nurse requested paperwork for a lawsuit and the very same day the hospital reported the nurse to the state’s nursing board. The nurse brought suit alleging that she was discriminated against due to her disability and that the hospital retaliated against her by reporting her to the nursing board in violation of the ADA. The hospital moved to dismiss the case.

The court denied the motion and held that this case was to be decided by a jury. The court explained that a reasonable jury could find that the nurse was discriminated against because the hospital’s motivation for terminating her was its belief that she was too sick to work. Furthermore, a jury could find that she was discriminated against because the nurses who administered the care were not terminated. Additionally, the court held that a jury could find that the hospital reported her to the nursing board in retaliation of her starting a lawsuit. The court explained that the timing of both could allow a jury to find that the hospital violated the ADA’s retaliation provision.

Hall v. Flannery – May 2015 (Summary)

PEER REVIEW PRIVILEGE

Hall v. Flannery, Case No. 3:13-cv-914-SMY-DGW (S.D. Ill. May 1, 2015)

The United States District Court for the Southern District of Illinois ruled against a hospital that argued that audit logs for a patient’s medical records were protected by the state’s peer review statute. The plaintiff patient alleged that she received two different medical charts in her medical record during discovery. The plaintiff then requested the audit log of her medical record to determine who had the ability to edit her records. The defendant hospital argued that the medical record’s audit logs are protected by the state’s peer review statute.

The court ordered the hospital to turn over the audit log because audit logs are created in the hospital’s ordinary course of business and not specifically for a peer review committee.