U.S. ex rel. Schaengold v. Mem’l Health, Inc. (Summary)

FALSE CLAIMS ACT

U.S. ex rel. Schaengold v. Mem’l Health, Inc., No. 4:11-cv-58 (S.D. Ga. Dec. 8, 2014)

A federal district court in Georgia granted in part and denied in part a motion to dismiss filed by a hospital against part of a lawsuit filed by the federal government. Specifically, the hospital moved to dismiss the government’s claim for recovery under the reverse false claims provision of the False Claims Act.

As a key part of its reverse false claims case against the hospital, the government drew upon certain cost reports submitted by the hospital. It alleged that these cost reports not only falsely certified compliance with the federal Stark law, but also concealed the hospital’s obligations to refund overpayments to the government. In addition, because the hospital worked in tandem with several different subsidiaries, the government argued that liability extended to the entire “unitary health system” rather than solely to the hospital that submitted the cost reports.

The court found this argument unpersuasive. It concluded that the government had not provided sufficient evidence to justify a decision to set aside the hospital’s corporate structure. In addition, it explained that the government had not given any evidence that the other subsidiaries were directly involved in submitting the false claims in dispute.

Although it did not allow the government to hold the entire health system liable, the court did allow the government to continue its lawsuit against the hospital that had submitted the cost reports. It reasoned that the government had provided “sufficient indicia of reliability” to the court, particularly about illegal referrals that were made by physicians, to overcome the hospital’s motion to dismiss. Consequently, it denied the hospital’s motion to dismiss the reverse false claims allegations against itself, but allowed the hospital to dismiss the claims made against its affiliates and subsidiaries.

The court also granted the government’s request for leave to cure any pleading deficiencies in the complaint. The government has 20 days to replead its claims.

Appleyard v. Governor Juan F. Luis Hosp. Med. Ctr. (Summary)

EMPLOYMENT AGREEMENTS

Appleyard v. Governor Juan F. Luis Hosp. Med. Ctr., S. Ct. Civ. No. 2014-0056 (D.V.I. Dec. 2, 2014)

The Supreme Court of the Virgin Islands affirmed a trial court’s ruling denying an orthopedic surgeon’s request for a preliminary injunction against a hospital. The surgeon requested the injunction in order to prevent the hospital from terminating her from its medical staff.

Issues arose after the hospital’s Medical Executive Committee received nine separate complaints about the behavior of the surgeon, five of which it deemed to be valid. Based on these complaints, the chair of the committee wrote to the surgeon to instruct her that she needed to undergo a psychiatric and psychological evaluation. After the surgeon failed to undergo the required evaluation, the hospital’s interim chief executive officer placed her on suspension.

The surgeon sued, alleging that she was suspended as retaliation for two complaints she had made, one about verbal harassment and one about a physician’s failure to admit a patient properly. However, a major obstacle for the surgeon was the expiration date on her employment agreement. Her hearing with the court was scheduled for August 1, 2014, but the employment agreement expired on July 31, 2014. Consequently, even if the court prevented the hospital from terminating her, it could not force the hospital to re-enter another employment agreement.

To overcome this problem, the surgeon argued that the court should instead follow the date that was set on her relocation agreement with the hospital, which lasted until July 31, 2015. She claimed that the documents should be read together since they were executed simultaneously. However, the lower court concluded that there was no evidence to show that the relocation agreement was meant to extend her employment agreement for another year. It denied her request for a preliminary injunction. On appeal, the Supreme Court of the Virgin Islands upheld the decision. It noted that there were errors in the way that the lower court handled certain public policy issues implicated in the case, but determined that there was no reason to disturb the overall decision to deny the preliminary injunction.

Tibor v. Mich. Orthopaedic Inst. (Summary)

FALSE CLAIMS ACT

Tibor v. Mich. Orthopaedic Inst., No. 14-10920 (E.D. Mich. Dec. 5, 2014)

A federal district court in Michigan denied a motion to dismiss a surgeon’s claim of retaliation under the False Claims Act (“FCA”). The court found that the surgeon alleged sufficient facts to state a claim that she engaged in protected activity by voicing concerns about a proposed contract’s compliance with the Stark law and the FCA, and that her employment was terminated in retaliation for that protected activity.

Plaintiff was an orthopedic surgeon who was recruited to work at defendants, an orthopedic group and its primary hospital. The surgeon began to work at the group before her contract was finalized. After six weeks, the surgeon received her finalized contract, but two issues concerned her. The contract was back dated six weeks and contained a clause stating that the group would not compete in the imaging market and would refer patients exclusively to the hospital. The surgeon informed both the group and hospital that she believed that these provisions were a potential violation of the Stark law and the FCA. The group terminated the surgeon after she refused to sign the contract. The surgeon brought suit claiming that she was retaliated against for trying to prevent FCA violations.

Both the hospital and group brought a motion to dismiss arguing that the surgeon never engaged in a protected activity. Also, the hospital argued that the surgeon was not a hospital employee, and thus could not bring a retaliation action against it.

The court denied both motions and allowed the surgeon’s claim to proceed. The court found that the surgeon participated in a protected activity because her actions in raising concerns about the contract were an effort to stop a violation of the FCA. Also, the court denied the hospital’s argument that the surgeon could not bring a retaliation claim against it because she was not a hospital employee. The court stated that the FCA retaliation provision not only protects employees, but also independent contractors, such as the surgeon.

Bastidas v. Good Samaritan Hosp. (Summary)

DISCRIMINATION

Bastidas v. Good Samaritan Hosp., Case No. 13-cv-04388-SI (N.D. Cal. Dec. 8, 2014)

A federal district court in California granted a hospital’s motion to dismiss a surgeon’s racial discrimination claim. However, the court refused to dismiss the surgeon’s retaliation claims.

Plaintiff, a Colombian-born surgeon, had his surgical privileges limited following the death of a patient. Peer review proceedings were then commenced by defendant, a hospital.

In his discrimination lawsuit, the surgeon claimed that white surgeons were treated better than him. He also alleged that the hospital agreed to institute a proctoring program so he could regain his privileges; however, the program was never established. The surgeon argued that the cancellation of the program was a result of his lawsuit.

The court held that the surgeon failed to allege sufficient facts supporting the conclusion that white doctors were treated more favorably than him, specifically, that their treatment of patients would not trigger peer review action. However, the court held that the hospital’s failure to establish the proctoring program was an adverse employment action that could reasonably be considered retaliation against the surgeon for filing his discrimination lawsuit.

Lopreato v. Select Specialty Hosp.-N. Ky. (Summary)

AMERICANS WITH DISABILITIES ACT

Lopreato v. Select Specialty Hosp.-N. Ky., Civil Action No. 12-217-DLB-JGW (E.D. Ky. Dec. 3, 2014)

A federal district court in Kentucky dismissed Americans with Disabilities Act (“ADA”) claims against a hospital that refused to hire nurses with restrictions on their licenses based on past substance abuse, holding that the hospital followed a neutral company policy that was not pretext for discrimination.

Plaintiffs are two nurses with restrictions on their nursing licenses due to their history of drug use. These restrictions require direct supervision when administering narcotics. Defendant, a hospital, interviewed both nurses during which it asked whether there were any restrictions on their licenses. Both nurses answered affirmatively and the hospital did not inquire into the cause of such restrictions. The hospital decided not to hire them, stating that due to the position’s high demands, “nurses must be qualified to operate independently without constant direct supervision.” The nurses sued under the ADA claiming disability discrimination based on their history of drug use.

The court held that the hospital’s hiring policy was a legitimate, justifiable reason for not hiring the nurses. The company’s decision was based on whether a license was restricted, not the cause of such restriction. The hospital stated that it had previously seen such restrictions due to poor patient treatment or theft of medication, as well as previous drug abuse. The court stated that this was a legitimate reason and not pretext for disability discrimination.

Anestis v. United States (Summary)

DUTY TO TREAT

Anestis v. United States, Civil Action No. 11-28-DLB-REW (E.D. Ky. Dec. 3, 2014)

A federal district court in Kentucky ruled that Kentucky law imposed a duty on a health care clinic to treat an individual with a medical emergency, even though the clinic did not have emergency facilities. The court reasoned that the clinic was one of four divisions within the Lexington Veteran’s Administration (“VA”) network, all of which shared a common name, geography and bureaucratic element of control. The court indicated that its ruling was limited to VA facilities, since they serve a narrow patient base.

In the case, a veteran arrived at the clinic complaining of trauma and emotional distress. Though he was in need of emergency care, the veteran was turned away because he was not enrolled in the VA system. Upon returning home, the veteran assaulted his wife and committed suicide. The veteran’s estate sued the VA for its failure to provide treatment. Partial summary judgment for duty and breach was granted to the veteran’s estate.

The court denied the government’s motion to reconsider, affirming the standard that, while hospitals usually have no duty to admit a patient without an order from a physician, there is a duty to treat in a medical emergency. Though the state does not have any official definition of what constitutes a medical emergency, for purposes of providing emergency care, the court used the definition provided in the Emergency Medical Treatment and Active Labor Act. The court held the VA to this standard, finding that it should have provided emergency care, even though the clinic did not have emergency facilities. The court found that the clinic was part of the Lexington VA system, and noted that “[w]hen a healthcare provider serves a particularly small cross-section of the community, as the Lexington VA does, it is reasonable to impose upon it a duty to provide emergency care, whether or not an individual seeks treatment at the correct location.”

Shelbyville Hosp. Corp. v. Mosley (Summary)

RECRUITMENT AGREEMENTS

Shelbyville Hosp. Corp. v. Mosley, No. 4:13-cv-088 (E.D. Tenn. Nov. 24, 2014)

The United States District Court for the Eastern District of Tennessee granted in part and denied in part a hospital’s motion to dismiss an orthopedic surgeon’s claims for breach of contract, intentional interference with a business relationship, and negligent misrepresentation. Plaintiff, an orthopedic surgeon, was recruited by defendant, a hospital, to open a practice at a clinic owned by the hospital. The surgeon alleged that during negotiations the hospital supplied him with false information regarding the practice’s potential profitability and indicated that there would be an x-ray service and facility available to him. But after opening his practice, he alleged, the hospital removed the x-ray equipment that had previously been located next door, failed to replace signage referring to the previous orthopedic practice, placed a competing surgeon in his office space, and otherwise interfered with his attempts to successfully establish his practice. The hospital sued the surgeon for breach of the recruitment agreement, seeking to recoup guarantee payments that had been paid. The surgeon counterclaimed for breach of contract, intentional interference with a business relationship, and negligent misrepresentation.

The court dismissed the breach of contract claim on the basis that the recruitment agreement (the contract) did not address the issues which the surgeon complained hurt his practice (that the hospital removed the x-ray equipment that was located next to his practice, failed to replace signage from the old practice, and removed an ice maker and copier from his practice) and, in turn, could not form the basis of a breach of contract claim. The court allowed the surgeon’s claim for fraud in the inducement to move forward, however, noting that his claim could be successful if he can show that the hospital knowingly misrepresented the financial prospects for his orthopedic practice (by providing inaccurate figures regarding earnings by the prior group).

Perry v. Naples HMA, LLC (Summary)

RACIAL DISCRIMINATION/EMPLOYMENT/ED STAFFING

Perry v. Naples HMA, LLC, No. 2:13-cv-36 (M.D. Fla. Nov. 19, 2014)

The United States District Court for the Middle District of Florida granted judgment as a matter of law in favor of a hospital system, with respect to a number of claims, in a lawsuit brought by an African-American, female physician who alleged racial discrimination motivated the hospital system to request her removal as the medical director of the hospital system’s emergency department.   In support of her claims, the physician alleged that although the satisfaction ratings for the Emergency Department steadily increased under her supervision, the CNO, director of nursing, and others refused to answer to her and manufactured false accusations about the quality of her services. Soon after raising her concern that she was being treated discriminatorily, the hospital requested that the ED staffing organization remove the director from her assignment to the hospital, pursuant to a contractual provision allowing the hospital to require removal of any health care professional if it believed removal to be in the hospital’s best interest.

In dismissing the Title VII claim brought by the physician, the court noted that she was an independent contractor of the ED staffing organization (and not an employee) and, accordingly, even under a theory of indirect liability, the hospital could not be held liable for violation of Title VII (an employment law). For the same reason, the court rejected the physician’s claim that the hospital could be held liable as a “joint employer” with the ED staffing organization.

The court allowed the physician’s claim pursuant to §1981 of the Civil Rights Act (that the hospital discriminatorily interfered with her contract with the ED staffing organization) to continue. The court noted that §1981, unlike Title VII, protects an individual’s ability to enforce contracts (rather than employment relationships). The court held that if the hospital’s request to remove the physician from its ED was motivated by racial animus, that behavior would interfere with the physician’s ability to perform her contract with the ED staffing organization and would be subject to §1981.

Ingle v. Janick (Summary)

FALSE CLAIMS ACT – WHISTLEBLOWER PROTECTION

Ingle v. Janick, No. 2:14-cv-544-FtM-38DNF (M.D. Fla. Nov. 17, 2014)

The United States District Court for the Middle District of Florida denied a medical facility’s motion to dismiss an employee’s False Claims Act (“FCA”) lawsuit, holding that the employee does not have to actually file an FCA action to qualify for the Act’s whistleblower protection. The employee worked as an office manager at the defendant medical facility for over 30 years. The medical facility allegedly began to bill Medicare for ultrasound services that were performed by non-credentialed personnel. The employee claimed that she objected to this practice and informed the medical facility that this type of billing was illegal. Additionally, the employee informed the medical facility that she would not work there until it ceased this fraudulent activity. The medical facility never informed her of its changed practices and the employee resigned. The employee claimed that she was constructively discharged due to her objections and sued under the FCA whistleblower provision. The medical facility argued that the employee is ineligible for this protection because she never filed a qui tam lawsuit on behalf of the government, nor did she follow the FCA’s qui tam procedures.

The court held that in order to qualify for whistleblower protection under the FCA, the employee merely needed to engage in protected conduct that notified the medical facility that there was a distinct possibility of legal action against it. The standard does not require an actual FCA claim to be filed. The court went on to find that, in this case, the employee’s objection that the medical facility’s actions were illegal was enough to put them on notice that legal action was a distinct possibility.

Moore v. Grand View Hosp. (Summary)

EMTALA

Moore v. Grand View Hosp., Civil Action No. 13-2384 (E.D. Pa. Nov. 24, 2014)

The U.S. District Court for the Eastern District of Pennsylvania granted a hospital’s request for summary judgment on the Emergency Medical Treatment and Active Labor Act (“EMTALA”) claims brought by a patient whose fetus died two days after she was discharged from the hospital’s L&D unit.

The pregnant patient had been sent to the hospital after her private obstetrician noted, during her final prenatal visit, that the patient was suffering some of the symptoms of preeclampsia. After arriving at the hospital’s L&D unit, the patient was given several tests, including blood glucose, urinalysis, and electronic fetal monitoring. After several hours of monitoring, the attending physician reviewed the patient’s blood pressure and the fetal monitor tracing (but did not screen her for preeclampsia) and determined to discharge the patient. Two days later, the patient delivered a stillborn baby. Testing indicated that the baby died due to preeclampsia.

The patient and her husband sued the hospital and others, alleging malpractice and wrongful death. In addition, with respect to the hospital, they alleged that the hospital failed to screen and stabilize the patient, in violation of EMTALA. In granting summary judgment to the hospital on the EMTALA claim, the federal district court held that the hospital’s failure to screen and stabilize the patient for preeclampsia was not an EMTALA violation because the hospital provided the same screening to this patient that it routinely provided to other patients presenting with similar symptoms. Further, the patient could not sustain a claim for discharge prior to stabilization, since the hospital did not believe the patient had an emergency medical condition and, accordingly, did not believe it was discharging the patient in a non-stabilized condition.