U.S. ex rel. Troxler v. Warren Clinic, Inc. (Summary)

FRAUD AND ABUSE

U.S. ex rel. Troxler v. Warren Clinic, Inc., No. 11–CV–808–TCK–FHM (N.D. Okla. Nov. 5, 2014)

The United States District Court for the Northern District of Oklahoma granted a motion to dismiss filed by a physician group and affiliated hospital in defense of a qui tam lawsuit. The lawsuit was filed by a physician formerly employed by the group, who argued that the group violated the False Claims Act by permitting “unqualified personnel” to obtain and record patients’ History of Present Illness (“HPI”) during office visits. The physician claimed that this was a violation of the Evaluation and Management Services Guide (“Guide”) published by the Department of Health and Human Services, which does not specifically authorize non-physicians to obtain a patient’s HPI.

The court found this argument unpersuasive. It noted that the physician’s lawsuit was based on a “lone provision” in the Guide that had not been demonstrated to have a legally binding effect on healthcare providers. Furthermore, it explained that even if the Guide were legally binding, perfect compliance with HPI regulations is not a condition of payment. Consequently, the court held that a failure to meet the Guide’s requirements could not possibly give rise to a false claim. The court dismissed the physician’s lawsuit with prejudice.

U.S. ex rel. Mastej v. Health Mgmt. Assocs., Inc. (Summary)

FRAUD AND ABUSE

U.S. ex rel. Mastej v. Health Mgmt. Assocs., Inc., No. 13-11859 (11th Cir. Oct. 30, 2014)

The United States Court of Appeals for the Eleventh Circuit affirmed in part and reversed in part a district court’s dismissal of a qui tam complaint against a hospital. The complaint alleged that the hospital had entered into illegal financial relationships with ten physicians, in violation of the False Claims Act, the Stark Law, and the Anti-Kickback Statute. The financial relationships allegedly included lucrative on-call contracts for six neurosurgeons who were not required to provide on-call services and a golf trip benefit for all ten physicians.

The qui tam relator who filed the claim was formerly the CEO at one of the hospital’s campuses; prior to that, he served as the Vice President of Acquisitions and Development. By virtue of these positions, the relator was familiar with the hospital’s billing practices and with its policies on the use of corporate jets. According to the relator, the hospital sought payment from Medicare for services rendered to patients who had been illegally referred by the ten physicians. In addition, the hospital illegally certified to the government that it was supplying medical services in compliance with applicable laws.

The hospital did not contest that the financial incentives were paid as alleged. Rather, it argued that the complaint had failed to state fraud with particularity. Under the federal rules of civil procedure, lawsuits alleging fraud must explain the circumstances of the fraud with “particularity” – i.e., must explain the fraud with a certain fullness of detail. The hospital argued that the complaint failed to establish that any of the ten physicians ever referred patients, or that the hospital ever submitted any false claim for an illegally referred patient, or that the government ever paid any false claim for an illegally referred patient.

The court focused on the significance of the relator’s former roles and duties as an employee of the hospital. It concluded that his complaint had adequately established the existence of fraudulent claims during his time as an employee; however, it agreed with the hospital that the complaint gave “no factual basis” for his claim that the physicians continued to refer patients or submit false claims after he left.

The relator attempted to overcome this by invoking a new version of the False Claims Act. The court was unpersuaded. It noted that the relator had never mentioned the newer version of the False Claims Act in any part of his complaint, and explained that even under the newer law he would still need more evidence to prove that false claims were made after he left the hospital. Consequently, it affirmed the district court’s dismissal of those claims that occurred after the relator left his employment with the hospital, but reversed the district court’s dismissal of the other claims and remanded the case for further proceedings.

Adams-Ezaro v. Hosp. San Gerardo — Oct. 2014 (Summary)

EMTALA

Adams-Ezaro v. Hosp. San Gerardo
No. 13-1918 (FAB) (D. P.R. Oct. 30, 2014)

The United States District Court for the District of Puerto Rico denied a hospital’s motion to dismiss an Emergency Medical Treatment and Active Labor Act (“EMTALA”) claim which alleged that the hospital violated EMTALA’s screening provision. Plaintiff is the estate of a patient who died in the emergency room of the defendant hospital after sustaining several gunshot wounds. The patient died while waiting for an ambulance to transfer him to another hospital. The estate alleged that the hospital violated EMTALA’s screening provision because it did not provide the patient with surgical and radiological consultations, perform a thoracotomy, or try to identify the source of his bleeding and hypotension. Additionally, the plaintiff alleged that the hospital did not follow its protocols for patients with gunshot wounds or its Advance Trauma Life Support program. The court held that the allegations that the hospital violated EMTALA’s screening provision were plausible and that discovery in the case was warranted.

Levitin v. Northwest Community Hosp. (Summary)

PEER REVIEW PRIVILEGE

Levitin v. Northwest Community Hosp., N.D. Ill. (No. 13 C 5553 Oct. 31, 2014)

The U.S. District Court for the Northern District of Illinois ruled that the state’s peer review privilege did not apply in a federal employment discrimination lawsuit brought by a physician. The physician claimed that the hospital peer review committees discriminated against her – the only female, Russian, Jewish surgeon on staff – while ignoring similar actions of non-Russian, non-Jewish male surgeons. To prove her claims, she sought peer review records regarding surgeons who she claimed were similarly situated to her. The court first held that any documents not generated specifically for peer review, such as credentialing and personnel files, did not fall under the scope of documents covered by the peer review privilege. Furthermore, the court found that the peer review privilege did not apply to the documents in this case because the information sought is relevant to Title VII claims of discrimination. According to the court, the interest of eradicating discrimination outweighs the interest of promoting candor in the peer review process. When the hospital raised concerns that the peer review documents would be broadly distributed once produced, the court assured that the peer review materials would remain protected from widespread dissemination.

Newby v. Bon Secours St. Francis Family Medicine Residency Program (Summary)

DUE PROCESS

Newby v. Bon Secours St. Francis Family Medicine Residency Program, No. 3:14V459 (E.D. Va. Oct. 27, 2014)

The U.S. District Court for the Eastern District of Virginia dismissed claims brought by an African-American resident who resigned after failing her first year rotations three times alleging that she was denied her due process rights under the Fourteenth Amendment. To prove her claim, the plaintiff was required to show that she was denied a right guaranteed by the Constitution under the color of state law. The court ruled that she failed to show that she had a constitutionally protected right to continue in her graduate program or that the Residency Program or Residency Directors who gave her unfavorable recommendations were state actors or acting under color of state law.

NOTE:  There are two documents for this case: 1 – is an order and 2 – is the Report and Recommendation.

1. Order
2. Report and Recommendation

Simpson v. Cedar Springs Hosp., Inc. (Summary)

QUALITY MANAGEMENT PROGRAM – COLORADO STATE LAW PRIVILEGE

Simpson v. Cedar Springs Hosp., Inc., No. 13SA124 (Colo. Oct. 14, 2014)

The Supreme Court of Colorado held that a trial court erred in ruling that the state’s quality management privilege only applies to hospitals with authoritative documentation of approval from the Colorado Department of Public Health and Environment (“CDPHE”). The court concluded that Colorado hospitals have an approved quality management program so long as they are licensed by the CDPHE.

This legal issue arose during the discovery phase of a medical malpractice case against a hospital and affiliated psychiatrists. A former patient sued the hospital after the psychiatrists allegedly prescribed inappropriate medications to him, causing severe adverse reactions. When the patient requested the minutes from two meetings of the hospital’s quality management committees, the hospital refused, citing the state’s quality management privilege. In the trial court, the patient argued that the quality management privilege did not apply to these meetings because the hospital failed to submit a schedule for implementation of its quality management plan, a necessary requirement under CDPHE regulations.

In response, the hospital explained that a quality management program is required for a hospital to maintain its CDPHE license. Since the CDPHE permitted the hospital to keep its license throughout all of the time periods relevant to the case, the hospital argued that this amounted to de facto approval of the quality management program. The court sided with the hospital, concluding that the trial court misunderstood the purpose of the quality management privilege, which is meant to promote frank and honest discussions about quality management. The Supreme Court of Colorado further noted that nothing in the privilege statute or regulations suggested that the quality management privilege would only attach to a facility that complies with every CDPHE regulation; therefore, the hospital did not lose the privilege simply by failing to turn its schedule in on time. The Supreme Court of Colorado reversed the trial court’s order and permitted the hospital to refuse to disclose the documents.

Pal v. Jersey City Med. Ctr. (Summary)

HCQIA IMMUNITY

Pal v. Jersey City Med. Ctr., No. 11-6911 (SRC) (D. N.J. Oct. 24, 2014)

The United States District Court for the District of New Jersey granted a renewed motion for summary judgment filed by Jersey City Medical Center and an affiliated physician in a discrimination case brought by a female physician of Indian origin. The physician argued that her application for privileges was denied on account of her gender and national origin. She sued the medical center and affiliated physician for breach of contract, defamation, and a conspiracy to violate her civil rights.

The district court concluded that her breach of contract and defamation claims were barred by the Health Care Quality Improvement Act of 1986 (“HCQIA”), which grants limited immunity from suits from money damages to participants in certain professional peer review actions. The court explained that denial of her application was considered to be a “qualified professional peer review action” under the HCQIA, and noted that she had failed to demonstrate that the other physicians acted improperly with regard to her application.

The district court also held that the record did not support a civil rights conspiracy claim, since there was no evidence indicating a conspiracy to deny her application for a discriminatory purpose.

Mendez v. Shah (Summary)

PEER REVIEW – SELF-CRITICAL ANALYSIS

Mendez v. Shah, No. 13-1585 (D. N.J. Oct. 23, 2014)

The United States District Court for the District of New Jersey upheld a magistrate judge’s decision ordering an orthopaedics group to turn over part of a physician’s employment file. The dispute arose after a former patient sued a physician employed by the orthopaedics group, alleging that a medical device implanted during her back surgery had malfunctioned.

The orthopaedics group had withheld certain documents relating to the physician’s peer review activities, arguing that these were considered “self-critical analysis” and were protected from discovery under the law. In determining whether to order disclosure of the peer review documents, the magistrate judge sought to balance the need for disclosure against the public interest in confidentiality. The magistrate judge weighed various legal factors, including the extent to which the information was available from other sources, the degree of harm suffered by both parties, the public interest in preserving the free flow of information, and whether disclosure would result in a chilling effect on future evaluations. Ultimately, the magistrate judge sided with the patient, reasoning that there was no evidence that the physician would be harmed by disclosure of this information.

The district court upheld the magistrate judge’s decision, explaining that he had correctly balanced and applied each of the relevant legal factors in his decision-making; furthermore, it concluded that his decision was neither clearly erroneous nor contrary to the law. The court denied the appeal of the magistrate judge’s decision and issued an order requiring disclosure of the documents.

Shrub v. Univ. of Tex. Health Science Ctr. at Houston-School of Med. (Summary)

ADA

Shrub v. Univ. of Tex. Health Science Ctr. at Houston-School of Med., No. 4:13-CV-271 (S.D. Tex. Oct. 24, 2014)

The United States District Court for the Southern District of Texas dismissed a medical student’s Americans with Disabilities Act and Rehabilitation Act claims against a university, holding that the student failed to establish that he suffered from a disability, that his alleged disability was a motivating factor in the medical school’s decision to remove him from the program, or that he was “otherwise qualified” to continue enrollment in the medical program. The student alleged that he suffered from obsessive compulsive disorder and severe anxiety and was a visual learner. The student requested his professors’ PowerPoint slides to aid his “visual learning disability.” Every professor provided him access to their slides except for one. The student alleged that this lack of accommodation caused his anxiety to worsen, which led to blinding migraines. The student took a medical leave of absence and was admitted to the hospital. Rumors began to swirl around campus that the student was suicidal. After his discharge, the university requested a copy of his discharge summary and a report from his psychiatrist that he was not a danger to himself or others before resuming classes. The student intentionally did not comply with this request, and was withdrawn from the university. The student sued claiming that the university discriminated against him based on his “visual learning disability.”

The court stated that besides the student’s own claims there was no evidence that he suffered from a disability that limits any of his major life activities. Additionally, by the student’s own admissions, he failed to cooperate with the university and provide it a certification of fitness from his treating psychiatrist because he thought it was unreasonable and “grossly overbroad.”

U.S. ex rel. Guardiola v. Renown Health (Summary)

FALSE CLAIMS/QUI TAM CASES

U.S. ex rel. Guardiola v. Renown Health, No. 3:12-cv-00295-LRH-VPC (D. Nev. Oct. 16, 2014)

The United States District Court for the District of Nevada upheld its own jurisdiction to hear a qui tam complaint against a hospital, in which the hospital’s former compliance director alleged billing fraud involving government-funded health insurance programs. In particular, the former director accused the hospital of submitting short-stay inpatient claims that actually should have been billed as outpatient claims.

The hospital sought to have the claims dismissed for lack of jurisdiction, arguing that the public disclosure bar, which requires a court to dismiss a qui tam complaint if it is based on allegations or transactions that have been previously disclosed to the public, applied because some of the billing fraud issues had been identified through RAC audits. The hospital also claimed that those billing fraud issues had already been disclosed to 585 physicians associated with the hospital and had therefore become public knowledge.

The court disagreed. It explained that these disclosures were not public because they were only made to physicians who were connected with the hospital. It specifically noted that these physicians had an economic incentive to protect the information from disclosure to outsiders. However, it also concluded that even if the disclosures were considered public, it would still have jurisdiction due to the “original source” exception. The original source exception permits the “original source” of the publicly disclosed information to bypass the public disclosure bar. Since the qui tam relator in this case had direct and independent knowledge of the hospital’s billing practices, the court reasoned that she was an original source and could continue to pursue her lawsuit against the hospital and denied the hospital’s motion to dismiss.