Saint Alphonsus Med. Ctr.–Nampa, Inc. v. St. Luke’s Health Sys., Ltd. (Summary)

MERGER

Saint Alphonsus Med. Ctr. – Nampa, Inc. v. St. Luke’s Health Sys., Ltd., No. 14-35173 (9th Cir. Feb. 10, 2015)

The U.S. Court of Appeals for the Ninth Circuit affirmed a district court’s ruling that a merger of two health care providers had violated §7 of the Clayton Act. Although the district court agreed with the hospitals’ claim that this merger could improve patient outcomes, it determined that the post-merger entity would have such a huge market share that it would create a “substantial risk of anticompetitive price increases” in the relevant market.

Under the Clayton Act, the party challenging the merger must first put forth a prima facie case that the merger is anticompetitive. The parties who are defending the merger then take on the burden of reing this claim and showing that the merger does not violate the Clayton Act. The Ninth Circuit noted that it is often very difficult for courts to assess what kind of impact a merger might have on competition at some later date. It emphasized the point with a quote commonly attributed to Yogi Berra: “It’s tough to make predictions, especially about the future.”

All of the parties in the case agreed that the relevant product market under review was adult primary care providers (“PCPs”), but they clashed over how to set the appropriate geographic boundaries. One key dispute centered on whether this merger would result in a small but significant price increase in the relevant market. St. Luke’s, a hospital involved in the merger, had argued that the district court erred by focusing its price analysis on the city of Nampa, Idaho. The hospital pointed to evidence that one-third of Nampa residents instead travel to Boise to see a primary care provider, and suggested that more residents would travel to Boise for better prices.

The Ninth Circuit disagreed. It noted that Nampa consumers often choose physicians on factors other than price alone, and reasoned that insurers would generally need local PCPs in order to market their health care plans. Consequently, it concluded that this merger presented a genuine risk of price increases in the market. Although it disagreed with the way the district court had handled its analysis of hospital-based ancillary services, the Ninth Circuit concluded that otherwise the district court had made an appropriate decision that was “amply supported by the record.”

Lastly, the court addressed counter-arguments brought up by St. Luke’s, emphasizing how the merger could benefit patients. The Ninth Circuit agreed that improving patient care was a “laudable goal,” but reiterated that “the Clayton Act does not excuse mergers that lessen competition or create monopolies simply because the merged entity can improve its operations.”   It affirmed the district court’s decision to order divestiture.

Elkharwily v. Mayo Holding Co. (Summary)

FALSE CLAIMS ACT/RETALIATION

Elkharwily v. Mayo Holding Co., Civil No. 12-3062 (DSD/JJK) (D. Minn. Feb. 5, 2015)

The United States District Court for the District of Minnesota dismissed a hospitalist’s False Claims Act (“FCA”) claim against a hospital, holding that the hospitalist was not engaged in a protected activity or that any fraud existed. After three months, the hospital terminated the hospitalist’s employment due to concerns about patient safety and his reliability. After accusing the hospital of blackmail and intimidation, the hospitalist brought suit, claiming that he was terminated in retaliation for reporting systemic fraud and malpractice in violation of the FCA. The hospitalist alleged that he informed the hospital that he did not agree with the emergency room doctors’ admission of patients; specifically, that they were unnecessarily admitted or coded incorrectly.

The court held that the hospitalist’s complaints did not rise to the level of a protected activity or that any fraud actually existed. The court stated that the hospitalist had failed to prove that any fraud occurred besides his own allegations. The hospitalist admitted that he had never seen the patients’ billing records or knew that a fraudulent bill was ever sent to Medicare or Medicaid for payment. Furthermore, the hospitalist never made any complaints to notify the hospital of actions taken in furtherance of an FCA claim. The court explained that any of the hospitalist’s alleged reports would be considered generalized grievances and fall short of allegations of fraud against the government. Thus, he could not be retaliated against.

Uche v. St. Lukes-St. Vincent’s Healthcare, Inc. (Summary)

DISCRIMINATION

Uche v. St. Lukes-St. Vincent’s Healthcare, Inc., No. 3:12-cv-865-J-32JBT (M.D. Fla. Feb. 5, 2015)

The United States District Court for the Middle District of Florida dismissed a hospitalist’s racial discrimination and retaliation claims against a hospital, holding that the hospitalist failed to provide any evidence that he was treated differently from another similarly situated individual. The hospitalist lost his clinical privileges at the hospital, after numerous complaints from nurses, patients, and hospital administration. The hospitalist continually failed to respond to nurses’ calls regarding care for his patients, write acceptable discharge orders, timely authenticate history and physical forms, and effectively communicate with patients. The hospital warned the hospitalist by summarily suspending him, but after his return, 60 new complaints were asserted against him in four and a half months, forcing the hospital to revoke his clinical privileges. The hospitalist alleged that the hospital discriminated against him based on his race and retaliated against him due to his complaints of racial discrimination.

The court held that there was no evidence that the hospitalist was treated any differently than a similarly situated individual. The court explained that there are no other similarly situated hospitalists to compare the plaintiff-hospitalist to due to the number of complaints, 358, against him. The closest individual only had 155. Furthermore, the court stated that the hospital had a legitimate nondiscriminatory reason for the revocation of his privileges, his continued failure to correct his behavior. Additionally, the hospitalist’s retaliation claim failed because there was no connection between the alleged racial discrimination complaints and the hospital’s final decision. The hospitalist asserted that the timing of both showed a causal relationship between the two, but the court noted that there was a six-month gap between the complaint and final decision, a period too long to establish relatedness.

Jones-McNamara v. Holzer Health Sys., Inc. (Summary)

FALSE CLAIMS ACT

Jones-McNamara v. Holzer Health Sys., Inc., No. 2:13–cv–616 (S.D. Ohio Jan. 23, 2015)

The U.S. District Court for the Southern District of Ohio granted a hospital’s motion for summary judgment against a lawsuit filed by its former Vice President of Corporate Compliance. The compliance officer sued the hospital for retaliatory discharge under the federal False Claims Act, plus five other state law claims.

In assessing her retaliatory discharge claim, the court explained that the compliance officer would have to show not only that she engaged in an activity protected under the law, but also that the hospital knew she had engaged in the activity and then “discharged or otherwise discriminated against her as a result of the protected activity.” The hospital argued that the compliance officer could not establish any of the required elements of retaliatory discharge, but the compliance officer insisted that she had evidence of retaliation.

To support her claim, the compliance officer introduced four different types of direct evidence. Most of this evidence consisted of e-mail chains from various administrators over the compliance officer’s investigation of a potential anti-kickback statute violation. Specifically, the compliance officer had been investigating whether an ambulance company improperly provided hot dogs to hospital employees.

The court sided with the hospital. First, it concluded that none of the compliance officer’s evidence directly supported her claim of retaliation. Next, it explained that even if it gave her the benefit of the doubt and decided there was at least a prima facie case of retaliation, there existed ample reasons why the hospital might have legitimately terminated her employment instead. For example, she had failed to disclose that she had a brother who also worked for the hospital, she had actively sought to conceal that she now lived in Ohio so that she could continue serving on a committee as Virginia’s representative, and she had repeatedly called the CEO “Brett” instead of his actual name, “Brent.” Moreover, she often sent out e-mails indicating that an anti-kickback violation existed, but then admit that she had issued this opinion before completing her investigation of the matter. When the CEO instructed her to complete her investigation before putting a conclusion in writing, she disregarded his advice and continued to send out e-mails announcing that she had found a violation.

The court stated that it had reached a simple conclusion. The court explained that the hospital claimed it had fired the compliance officer because she was a “difficult flake” and noted that the compliance officer had failed to provide evidence that would discredit this rationale. Consequently, she could not establish that the hospital had discharged her for engaging in a protected activity.

Furthermore, the court concluded that no reasonable juror could possibly find that the hospital’s reasons for firing her were mere pretext. It granted the hospital’s motion for summary judgment against the retaliation claim and denied the compliance officer’s motion for partial summary judgment. Since the retaliatory discharge claim was the only federal cause of action, the court declined to hear her state law claims and dismissed them without prejudice.

Murphy v. Goss – Jan. 2015 (Summary)

HCQIA

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 a cardiac anesthesiologist’s substantive due process claim against several members of a state medical board, holding that the medical board was shielded by immunity pursuant to the Health Care Quality Improvement Act of 1986 (“HCQIA”).

Plaintiff, a cardiac anesthesiologist, was found by the state medical board to have engaged in unprofessional conduct by consuming alcohol while on cardiac call. The state medical board reported the cardiac anesthesiologist to the National Practitioner Data Bank. The cardiac anesthesiologist, while not challenging the validity of the state medical board’s determination, alleged that the board violated his due process rights when it reported to the National Practitioner Data Bank that his conduct adversely affected, or could have adversely affected, the health or welfare of a patient.

The court held that members of the state medical board were protected by HCQIA immunity. The court explained that the defendants were entitled to HCQIA immunity unless they knew the report contained false information. Here, the cardiac anesthesiologist failed to allege that the state medical board members had actual knowledge of any false information contained in the report.

Omni Healthcare, Inc. v. Health First, Inc. (Summary)

ANTITRUST

Omni Healthcare, Inc. v. Health First, Inc., No. 6:13-cv-1509-Orl-37DAB (M.D. Fla. Jan. 22, 2015)

The U.S. District Court for the Middle District of Florida denied a health system’s motion to dismiss in an antitrust suit brought by a number of physicians and practice groups. The plaintiff physicians alleged that the defendant system, which was described in the complaint as a “fully integrated” healthcare corporation consisting of a hospital, an insurance company and a physician group, engaged in an anti-competitive scheme to monopolize health care markets in Southern Brevard County, Florida.

The court held that the physicians had sufficiently alleged antitrust injury because they claimed to have suffered a competitive injury due to the actions of the defendants. The court rejected the defendants’ arguments that plaintiffs had to be “consumers or competitors” to allege antitrust injury. The court also found that the physician groups adequately defined the relevant product and geographic markets, ruling that they sufficiently alleged the product dimensions and geographical boundaries of the service market. Finally, the court found that the plaintiffs stated a plausible claim for conspiracy when they alleged that physicians who refused to join the system or enter into an exclusive referral arrangement with it were blacklisted.

Stein v. McGowan (Summary)

DEFAMATION

Stein v. McGowan, No. 1:12-cv-605 (S.D. Ohio Jan. 21, 2015)

The United States District Court for the Southern District of Ohio denied a defendant physician’s motion for summary judgment in a defamation suit brought by another physician.

The plaintiff was a director and officer of a cholesterol treatment center (“CTC”) and a metabolic and atherosclerosis research center (“MARC”). When he began to plan for his retirement, he brought in the defendant physician to begin taking over his responsibilities at both the CTC and MARC. After beginning her work at the CTC and MARC, the defendant claimed that the plaintiff prescribed pills in high amounts, and directed patients to cut the pills in half. She also claimed that the plaintiff reported different doses on the patient’s chart than he actually prescribed. The defendant said she did not approve with the practice of containing the patients’ CTC charts with the MARC clinical trial charts, as she believed it was a violation of HIPAA. After working at CTC and MARC for several months, the defendant met with staff members, where she accused the plaintiff of engaging in insurance fraud and posing a threat to patient safety. The defendant also expressed her concerns to her nephew and the Ohio Board of Pharmacy. She was fired soon after that.

The court held that the defendant was not entitled to summary judgment because factual disputes existed as to whether she was entitled to a qualified privilege to shield statements made in the scope of employment. Also, the court determined that there was a dispute over whether the defendant acted in good faith, and whether she discussed her concerns about plaintiff with third parties without legitimate reasons.

Baptist Mem’l Hosp.-N. Miss., Inc. v. Lambert (Summary)

EMPLOYMENT CONTRACT

Baptist Mem’l Hosp.-N. Miss., Inc. v. Lambert, No. 2013–CA–01002–COA (Miss. Ct. App. Jan. 27, 2015)

The Court of Appeals of Mississippi affirmed a lower court’s grant of summary judgment in favor of a physician against a hospital’s counterclaim for breach of contract. The dispute between the physician and the hospital arose when the hospital began to receive complaints from staff and patients about the physician’s angry and abusive behavior. Some of these complaints alleged that the physician had problems with his hands shaking and would sometimes become so insecure and hesitant that he would “freeze up” during surgery.

The CEO of the hospital requested that the physician attend an interview. During this interview, the physician agreed to enter the Mississippi Professional Health Program (“MPHP”), which eventually referred him for treatment at a recovery center. The recovery center evaluator recommended that the hospital place the physician in a monitoring contract with the MPHP for at least five years, and also warned that the physician was currently unfit to practice medicine with reasonable skill and safety.

The hospital suspended the physician’s clinical privileges once it received this evaluation. It then exercised an option to terminate his employment contract. The physician sued the hospital and the recovery center after he lost his job, but the claims were dismissed for failure to comply with the Mississippi Tort Claims Act.

Following this dismissal, the hospital brought its own lawsuit against the physician, claiming that he had failed to perform in accordance with the terms of his employment contract. The lower court granted summary judgment in favor of the physician, concluding that the physician’s obsessive-compulsive personality disorder made it impossible for him to perform in accordance with the contract.

On appeal, the hospital argued that the lower court had erroneously granted summary judgment. The Court of Appeals sided with the physician. It explained that even though the hospital was technically correct about the failure to plead the appropriate legal defenses, the practical impact of this was minimal – the physician could correct it simply by filing another motion in the lower court.

Two of the judges dissented from this ruling. In the dissenting opinion, they explained that the court had failed to distinguish the difference between a mental impairment and an actual disability resulting from a mental impairment. They argued that the mere existence of this mental disorder would not be enough to excuse the physician from his obligation to perform under the contract, and emphasized that the hospital’s claim should have been heard on the merits instead of dismissed through summary judgment.

Virk v. Maple-Gate Anesthesiologists, P.C. (Summary)

ARBITRATION

Virk v. Maple-Gate Anesthesiologists, P.C., No. 14-CV-381S (W.D. N.Y. Jan. 19, 2015)

The United States District Court for the Western District of New York enforced an arbitration clause against an anesthesiologist and his anesthesiologist group, holding that the clause was valid and controlled the parties’ dispute. Plaintiff, an anesthesiologist, was a shareholder and employee of defendant, an anesthesiologist group. The anesthesiologist group terminated the anesthesiologist after he was precautionarily suspended from the primary hospital at which the group practiced. The anesthesiologist sued the hospital and got the precautionary suspension annulled and expunged from his personal file. The anesthesiologist group still upheld the anesthesiologist’s termination. The anesthesiologist brought suit against the group. The group moved to compel arbitration pursuant to the anesthesiologist’s employment agreement. The anesthesiologist argued that the arbitration claim was superseded by a subsequent employment agreement, the dispute was not covered by the arbitration clause, and the arbitration clause conflicted with statutory pre-litigation requirements.

The court held that the anesthesiologist’s arbitration clause was valid and governed his dispute with the anesthesiologist group. The court explained that the arbitration clause was unambiguous and never expressly superseded by a subsequent employment agreement, so it must be enforced. Additionally, the dispute did not fall into any “exclusion from arbitration” explicitly stated within the employment agreement. Furthermore, the employment agreement waived any statutory pre-litigation requirements.

Woods v. State ex rel. Mont. State Hosp. (Summary)

DUTY TO WARN

Woods v. State ex rel. Mont. State Hosp., No. DA 14-0054 (Mont. Jan. 13, 2015)

The Supreme Court of Montana affirmed a lower court’s grant of summary judgment in favor of a state hospital on a “failure to warn” claim by the estate of a woman who was shot to death by a former mental patient of the hospital. The court held that no actual threat of violence was made to trigger a mental health professional’s statutory duty to warn. A patient with a history of self-harm was involuntarily committed to a state mental hospital after he was found unconscious in his house due to heavy drinking and ingesting pain medication. During a counseling session with a mental health professional of the hospital, the patient admitted to having an alcohol dependency problem. The patient said that when he was intoxicated he would become aggressive towards his then girlfriend. After continued sessions over a two-week period, the mental health professional observed that the patient had realized the seriousness of his alcohol problem and was planning to follow through with outpatient treatment. The patient was released. Four months later, at a bar, he saw his ex-girlfriend with a male companion. The patient followed the two as they left. Outside, the patient assaulted the male companion, and fired multiple gunshots at his ex-girlfriend’s vehicle, killing her. The patient then shot himself. Plaintiff, patient’s ex-girlfriend’s estate, brought suit against the hospital claiming that the hospital failed to warn the patient’s ex-girlfriend of the risk of violent behavior by the patient pursuant to a state statute.

The court affirmed the lower court’s dismissal of the claim, holding that there was no actual threat of physical violence by specific means to trigger the statutory duty to warn. The court explained that the patient must have made a specific expression or gesture against the ex-girlfriend to trigger the duty to warn. The fact that the patient may have presented a potential danger to the ex-girlfriend under certain circumstances, including his continued alcohol abuse and the end of their intimate relationship, was not sufficient, in the court’s opinion, to trigger a mental health professional’s statutory duty to warn.