Yedidag v. Roswell Clinic Corp. – Feb. 2015 (Summary)

EMPLOYED PHYSICIANS – PEER REVIEW PROCESS

Yedidag v. Roswell Clinic Corp., No. 34,286 (N.M. Feb. 19, 2015)

The New Mexico Supreme Court upheld a lower court’s judgment on a jury verdict finding that a hospital violated the New Mexico Review Organization Immunity Act (“ROIA”) and “breached an implied promise in [a] surgeon’s employment agreement that he would not face adverse employment consequences” for participating in the medical staff’s peer review process when the hospital terminated the surgeon’s employment because of reports that he acted unprofessionally in a peer review meeting.

The hospital terminated the surgeon’s employment after it received a report that the surgeon, in his role on a peer review committee, had “verbally attacked” another surgeon whose work was under review. The hospital terminated the surgeon’s employment because of this report even though there were reports from other physicians on the peer review committee that the surgeon’s conduct “was not rude in any way” and “was not unusually contentious.”

The surgeon sued the hospital, claiming that the hospital violated ROIA by breaching an implied promise not to take adverse action against him for his participation in the peer review process. A jury found for the surgeon and awarded punitive damages, and the lower court entered a judgment on the jury’s findings. The state appeals court affirmed the lower court’s judgment, as did the state supreme court. The state supreme court held that the surgeon is able to bring a private cause of action against the hospital under ROIA. According to the court, “the acquisition and use of confidential peer review information for purposes of employee discipline is not a statutorily permissible use of peer review information.” Thus, the surgeon’s claim under ROIA was sustainable. The court also concluded that ROIA creates an implied promise that doctors participating in the peer review process will not suffer adverse employment consequences for that participation. Since the hospital terminated his employment for, according to the court, participating in the peer review process, it violated this implied promise. Lastly, the court upheld the jury’s reward of punitive damages. The court stated that it was reasonable for the jury to find that the hospital was indifferent to whether it would be violating the surgeon’s rights when it terminated him based on peer review information.

U.S. ex rel. Oughatiyan v. IPC the Hospitalist Co. – Feb. 2015 (Summary)

FALSE CLAIMS ACT – “UPCODING”

U.S. ex rel. Oughatiyan v. IPC the Hospitalist Co., No. 09C5418 (N.D. Ill. Feb. 17, 2015)

The United States District Court for the Northern District of Illinois granted in part and denied in part a physician group’s motion to dismiss a False Claims Act lawsuit brought by a physician who had formerly worked for the group as a hospitalist. The government intervened in the lawsuit,   which alleged that the physician group, along with its subsidiaries and affiliates, submitted false claims to the government by “upcoding” or billing Medicare and Medicaid for higher and more expensive levels of medical service than were actually performed. For example, the government alleged that one member of the physician group billed for 43 hours’ worth of services in a single day of work.

The physician group filed a motion to dismiss, arguing that the government’s complaint did not provide an adequate level of detail about the alleged fraud. The court agreed in part with the physician group. Analyzing this claim, the court explained that a lawsuit is generally expected to describe alleged fraud with a level of particularity roughly equivalent to that in the first paragraph of a newspaper story. In this case, the court concluded that the complaint had failed to explain what sort of role the group’s subsidiaries and affiliates played in the alleged false claims. Based upon this, it granted the physician group’s motion to dismiss, but only insofar as the lawsuit implicated its subsidiaries and affiliates. The rest of the government’s case was allowed to go forward.

Baney v. Fick – Feb. 2015 (Summary)

EMTALA

Baney v. Fick, No. 4:14-CV-2393 (M.D. Pa. Feb. 23, 2015)

The United States District Court for the Middle District of Pennsylvania dismissed an Emergency Medical Treatment and Active Labor Act (“EMTALA”) claim brought against a hospital by a former patient and his wife and declined to exercise jurisdiction over their remaining state law claims. The patient underwent a scheduled elective cervical spine neurosurgical procedure at the hospital. During the procedure, the patient’s esophagus was allegedly perforated. According to the complaint, the patient suffered “devastating permanent injuries” because the hospital did not properly manage the perforation and did not transfer him immediately to a tertiary care facility where cardiothoracic surgeons were available to address the perforation.

The hospital filed a motion to dismiss the EMTALA claim, which the court granted. The court noted that EMTALA’s medical screening and stabilization requirements only apply to individuals seeking emergency treatment. Per the court’s opinion, “EMTALA’s requirements are triggered when an ‘individual comes to the emergency department’ and an individual only does so if that person is not already a ‘patient.’“ Here, the patient had a scheduled appointment and was already a patient of the hospital when the emergency condition presented during his procedure. Accordingly, EMTALA did not apply, the court granted the hospital’s motion to dismiss, and declined to exercise supplemental jurisdiction over the plaintiffs’ state law claims.

Arapahoe Surgery Ctr., LLC v. Cigna Healthcare, Inc. (Summary)

ANTITRUST

Arapahoe Surgery Ctr., LLC v. Cigna Healthcare, Inc., No. 13-cv-3422-WJM-CBS (D. Colo. Feb. 20, 2015)

The United States District Court for the District of Colorado denied a motion to dismiss filed by several health insurers in an antitrust suit brought against them by a number of surgery centers. The surgery centers’ suit alleged that the insurers conspired with hospitals and others to restrain trade in violation of the Sherman Act and Colorado’s Antitrust Act. According to the complaint, the insurers joined a conspiracy with two hospitals to compel physicians not to refer patients to the surgery centers by threatening, and acting on these threats, to terminate the referring physicians’ contracts with the insurers.

The insurers filed a motion to dismiss the surgery centers’ Sherman Act and state law antitrust claims.      The court denied the motion, finding that the surgery centers adequately pled an agreement between the insurers and the hospitals, as well as conduct in furtherance of such agreement to demonstrate unlawful conspiracy under federal and state antitrust law. Further, the court concluded that the allegations in the surgery centers’ complaint were sufficient to show that the insurers’ agreement with the hospitals constituted a group boycott that may be considered per se illegal under Section 1 of the Sherman Act.

N.C. State Bd. of Dental Exam’rs v. F.T.C. (Summary)

ANTITRUST – STATE-ACTION IMMUNITY DOCTRINE

N.C. State Bd. of Dental Exam’rs v. F.T.C., No. 13-534 (U.S. Feb. 25, 2015)

The United States Supreme Court affirmed a decision by the United States Court of Appeals for the Fourth Circuit, holding that the North Carolina Board of Dental Examiners (“Board”) was not entitled to immunity from federal antitrust laws under the state-action immunity doctrine for the Board’s attempts to prevent non-dentists from offering teeth whitening services in the state.

Specifically, the Board had issued at least 47 cease-and-desist letters to various non-dentist teeth whitening service providers and product manufacturers. It justified this by arguing that teeth whitening is equivalent to “the practice of dentistry” for legal purposes, and that the unlicensed practice of dentistry is a crime.

The Federal Trade Commission (“FTC”) challenged these actions by filing an administrative complaint against the Board. The FTC claimed that the Board’s activities violated the federal antitrust laws. The Board asserted the state-action immunity doctrine, which permits state actors to engage in anticompetitive conduct under certain limited circumstances.

After a long series of appeals, the dispute between the Board and the FTC eventually reached the Supreme Court. The Court sided with the FTC, explaining that limits on state-action immunity are most important in circumstances where the Board has delegated regulatory power to active market participants. The Court illustrated its point by noting that eight of the ten members of the Board had themselves offered teeth whitening services at some time in the past. Because of this, the Court warned that market participants might be susceptible to hidden dual allegiances that affect their judgment.

Because a controlling number of Board members were active market participants with this kind of dual allegiance, the Court explained that the Board would only receive immunity if it acted under the active supervision of the state. The Board could not show that this active supervision requirement had been met. Therefore, it was not immune to the FTC’s antitrust challenge.

U.S. ex rel. Whipple v. Chattanooga-Hamilton Cnty. Hosp. Auth. (Summary)

FALSE CLAIMS ACT

U.S. ex rel. Whipple v. Chattanooga-Hamilton Cnty. Hosp. Auth., No. 13-6645 (6th Cir. Feb. 25, 2015)

The United States Court of Appeals for the Sixth Circuit reversed and remanded the lower court’s grant of summary judgment to a hospital in a False Claims Act suit brought against it, finding that the relator’s claims were not barred under the False Claims Act “public disclosure” rule.

The relator, a former “Revenue Cycle Consultant” and “Interim Director of Care Management” at the hospital, alleged that he had direct knowledge that the hospital was submitting fraudulent claims for reimbursement for, among other things, “inpatient care for patients who should have been billed on an outpatient or observation basis (short-stay claims).” The hospital argued that the relator’s claims were barred by the “public disclosure” bar of the False Claims Act, which precludes False Claims Act claims which have been previously publicly disclosed. Specifically, the hospital contended that the information underlying the relator’s claims was already disclosed to the government and others during an audit and investigation by the government into concerns that the hospital had improperly billed Medicare for inpatient admissions.

The lower court granted the hospital’s motion for summary judgment, but the Sixth Circuit reversed the lower court’s decision because the information garnered in the audit was only disclosed privately, and was not circulated to those not participating in the administrative audit or investigation. Similarly, the results of the internal investigation were submitted to the government but were not released into the public domain. Accordingly, the “public disclosure” bar did not apply.

Hunt v. Macon Orthopaedic & Hand Ctr., P.A. (Summary)

INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS

Hunt v. Macon Orthopaedic & Hand Ctr., P.A., Civil Action No. 5:14–CV–298 (MTT) (M.D. Ga. Feb. 17, 2015)

The U.S. District Court for the Middle District of Georgia denied a physician’s motion to dismiss a lawsuit for intentional infliction of emotional distress. The lawsuit was filed by a physician’s assistant who had formerly worked at the physician’s orthopedic clinic.

The physician’s assistant alleged that the physician had subjected her to harassment and verbal abuse for a period of three years. Specifically, she claimed that he regularly demeaned her in front of other employees, treated her less favorably than male employees, and had threatened to terminate her when she missed work to go to a previously scheduled and approved doctor’s appointment. When she eventually complained about this behavior to the clinic’s CEO, she was terminated a month later.

In its opinion, the court explained that a claim for intentional infliction of emotional distress generally requires the conduct at issue to be “extreme and outrageous.” The standard that courts use to assess this is to ask whether an average member of the community would find the behavior so egregious as to say, “Outrageous!” In this case, the court concluded that the incidents cited by the physician’s assistant were not extreme in isolation. However, it determined that these incidents, when viewed with the larger pattern of behavior, illustrated conduct that could potentially be seen as outrageous. It therefore denied the physician’s motion to dismiss the lawsuit.

Sood v. Graham (Summary)

EXHAUSTION OF ADMINISTRATIVE REMEDIES

Sood v. Graham, No. 13-1911 (Iowa Ct. App. Feb. 11, 2015)

The Court of Appeals of Iowa reversed and remanded a lower court’s ruling that the director of nuclear medicine at a university medical school violated another physician’s due process rights by revoking the physician’s clinical privileges at a university-affiliated hospital.

On appeal, the director argued that the due process claim against him was not legally valid because, among other things, the physician failed to exhaust the administrative remedies available to him.

The court agreed with the director, explaining that state employees generally must exhaust other state remedies before bringing a claim for deprivation of due process. In this case, the court noted that the physician had the opportunity to take advantage of post-termination procedures under the hospital’s bylaws and under the university’s operations manual. These procedures included a right to appeal to the board of regents and to petition later for judicial review. Since the physician never invoked any of the post-deprivation administrative procedures, he had failed to exhaust his other state remedies and his due process claim was held to be invalid. Also, since the physician had access to this post-termination process, it was not necessary for the hospital to afford him an elaborate pre-termination process.

Romney v. Franciscan Med. Grp. (Summary)

EMPLOYMENT AGREEMENT

Romney v. Franciscan Med. Grp., No. 71625-5-I (Wash. Ct. App. Feb. 17, 2015)

The Court of Appeals of Washington upheld an arbitration provision in an employment contract between a defendant medical group and its former employees.

The medical group entered into employment contracts with three individuals, which included an agreement to arbitrate all employment-related disputes between the parties. The employees brought claims of wage violations on behalf of themselves and a class of physicians, medical assistants and nurse practitioners, and at the same time requested that the court find the arbitration provision unconscionable. The medical group moved to compel arbitration, but the trial court found that the contract was unconscionable and invalid.

The appellate court reversed and remanded the trial court’s opinion, determining that the arbitration provision should be upheld even if other specific provisions of the employment agreement are found to be unconscionable. The court found that while other unconscionable provisions may be severed from an employment contract, those provisions should not affect the underlying arbitration provision. Also, the arbitration provision itself was found not to be procedurally or substantively unconscionable, because the terms were not one-sided. The court further determined that in a class action suit such as this, the arbitration provisions can be imposed on class members who did not sign the agreement.

Ducharme v. Nova Cas. Co. (Summary)

DISCOVERY/PEER REVIEW

Ducharme v. Nova Cas. Co., Civil Action No. 6:13-3108 (W.D. La. Feb. 10, 2015)

The United States District Court for the Western District of Louisiana quashed an insurance company’s subpoena against a hospital, holding that the information sought was protected by the peer review privilege.

Plaintiff was hit by a car insured by the defendant, an insurance company. The insurance company subpoenaed the hospital inquiring about the plaintiff’s treating physician’s disciplinary record. The hospital objected to the subpoena and moved to quash it.

The court held that the disciplinary record of the physician was protected by the peer review privilege because the information requested was within the ambit of the hospital’s personnel committee, had nothing to do with plaintiff’s personal injury claims and the insurance company was only seeking this information so it could impeach the treating physician if he testified at trial.