C.A. ex rel. Applegrad v. Bentolila (Summary)

PATIENT SAFETY ACT/PEER REVIEW/DISCOVERY

C.A. ex rel. Applegrad v. Bentolila, No. A-32-12 (071702) (N.J. Sept. 29, 2014)

The New Jersey Supreme Court reversed an earlier decision by the superior court, which had ordered a hospital to produce a memorandum it prepared as part of an investigation into the delivery of an infant. The court ruled that the memorandum was privileged under the New Jersey Patient Safety Act (“New Jersey PSA”).

In reviewing the legislative history of the New Jersey PSA, the court noted that the goal was to provide a basic framework for analysis and reporting of serious adverse events. The New Jersey PSA specifically creates a privilege for certain types of communications related to the evaluation and reporting of adverse events in the health care setting. In its analysis of the law, the court explained that the New Jersey PSA was intended “to encourage health care workers to candidly disclose their observations and concerns, and promote self-critical evaluation by professional and administrative staff.”

The document at issue was entitled “Director of Patient Safety Post-Incident Analysis” and had resulted from a round-table discussion following the infant’s delivery. The superior court had concluded that this document was not privileged because it did not meet all of the requirements stipulated by the New Jersey PSA regulations: no physicians were present for the round-table discussion and the findings recorded in the document were never presented to the Patient Safety Committee.

The court overruled this decision, noting that the New Jersey PSA regulations had not yet been adopted at the time the round-table discussion took place. The court reasoned that health care facilities were not required to anticipate the later regulatory standards, and concluded that the hospital had met the substantial requirements of the New Jersey PSA. It concluded that the document was privileged, was not subject to discovery and should not be used for any purpose in the case, including as a resource for the trial judge.

Roe v. Children’s Hosp. Med. Ctr. (Summary)

NEGLIGENCE

Roe v. Children’s Hosp. Med. Ctr., SJC-11533 (Mass. Oct. 1, 2014)

The Supreme Judicial Court of Massachusetts affirmed a lower court’s dismissal of negligence claims brought against a hospital by patients. The court held that the hospital did not owe a duty to the future patients of a physician who had left the hospital’s employ and began practicing at a different hospital in another state.

The defendant, a children’s hospital in Massachusetts, had employed a pediatrician from 1966-1985. He resigned in 1985 and relocated to North Carolina. In 2009, twenty-four years later, after being accused of performing medically unnecessary genital examinations, the physician surrendered his license and agreed not to practice. Eleven former patients sued the Massachusetts hospital claiming that the hospital failed to supervise the physician during his employment. The patients also alleged that the hospital knew or should have known that the physician was conducting inappropriate genital examinations and failed to report the physician to various licensing authorities.

The court held that the hospital did not owe a duty to the future patients. The court explained that while the hospital owed a duty to supervise and monitor the physician while he was employed at the hospital, as well as a duty of reasonable care to prevent minor patients from foreseeable harm, there has never been a recognized duty that required an employer to prevent future harm to unknowable future patients by its former employee. Notably, the court held:

“While the responsibilities of medical providers to vulnerable patients might extend beyond those of other service-providing employers, the geographic and temporal breadth of the duty the plaintiffs seek to impose reaches too far and would potentially expose the employer to liability to an essentially limitless class of unknown parties for acts committed long after the employer had any ability to supervise, monitor, or discipline the former employee’s conduct.”

Interestingly, the court did not answer the question of what, if any, duty the hospital might have had with respect to inquiries made by prospective employers with regard to allegations of abuse that might have been made about the physician during his employment.

Carson v. Univ. of Chi. Med. Ctr. (Summary)

DISCRIMINATION

Carson v. Univ. of Chi. Med. Ctr., No. 12 C 5753 (N.D. Ill. Sept. 29, 2014)

The United States District Court for the Northern District of Illinois dismissed a former employee’s race discrimination claim, holding that the employee failed to show that similarly situated employees were treated more favorably or that any alleged racial animus was a proximate cause of her termination. Plaintiff, an African-American, was employed as the director of the infusion therapy unit at the hospital. The employee received multiple deficient performance reviews and was placed on a performance improvement plan to improve her collaboration, teamwork, and communication.

Thereafter, the hospital performed a “climate assessment” on the employee’s unit in response to complaints from 11 of her subordinates. After the climate assessment, the hospital’s director of human relations terminated the employee because the employee did not follow the requirements of her performance improvement plan and she created a work environment that was intimidating, humiliating, belittling and unprofessional.

The employee sued claiming race discrimination. The employee alleged that other employees were treated more favorably after a “climate assessment,” and co-workers allegedly made racist comments to her.

The court dismissed the employee’s discrimination claim, holding that the employee failed to show that similarly situated employees were treated more favorably, and any alleged racial animus was a proximate cause of her termination. The employee did not provide any evidence that other employees who received a climate assessment were similarly situated to her, or received better treatment. Additionally, the court stated that there was no link between any alleged racial comments and the person who made the termination decision. Lastly, the court stressed that the hospital provided a legitimate reason for terminating the employee – she did not perform her job satisfactorily.

Alexander v. Avera St. Luke’s Hosp. — Sept. 2014 (Summary)

DISCRIMINATION

Alexander v. Avera St. Luke’s Hosp.
No. 13-2592 (8th Cir. Sept. 30, 2014)

The United States Court of Appeals for the Eighth Circuit affirmed a lower court’s dismissal of a pathologist’s claims brought under the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Family and Medical Leave Act, and the state Human Relations Act. In dismissing the claims, the court held that the pathologist was not covered under these statutes because he was an independent contractor, not an employee.

The pathologist had contracted with the hospital to provide pathological services beginning in 1994. Consistent with the contract, the pathologist was to be a member of the hospital’s medical staff and adhere to the hospital’s bylaws and procedures. The initial and all of the subsequent contracts explicitly stated that the pathologist was an independent contractor.

The hospital terminated the contract with the pathologist in 2011 and entered into an employment contract with two new pathologists. According to the opinion, the pathologist had suffered a heart attack in 2008, had undergone heart surgery in 2009, and was hospitalized for bipolar disorder in 2010.

The hospital sought to dismiss the various discrimination claims against it. The lower court determined that the pathologist was not an employee of the hospital, but was an independent contractor, and dismissed the claims because the statutes do not protect independent contractors. The pathologist appealed.

The court affirmed the lower court’s ruling, holding that no reasonable jury would find that the pathologist was an employee. The hospital had no right to control the manner in which the pathologist rendered his services, including his work schedule or hiring of assistants. Furthermore, the agreement explicitly referred to him as an independent contractor, he received no employment benefits, and he reported his income as a self-employed independent contractor.

Frost Street Med. Assocs. v. San Diego Internal Med. Group (Summary)

EXCLUSIVE CONTRACT

Frost Street Med. Assocs. v. San Diego Internal Med. Group, No. 37-2010-00101456-CU-BT-CTL (Cal. Ct. App. 4^th Dist. Sept. 18, 2014)

The California Court of Appeals for the Fourth District denied a physician group’s action that challenged a hospital’s determination to enter into an exclusive agreement with a rival physician group. The court held that the hospital’s determination was quasi-legislative and managerial in nature, to be given deference, and found that the hospital acted rationally and in good faith.

The court reviewed the key steps of the process used to determine who should be given the exclusive contract. This included a demonstrated need for the exclusive contract, the criteria determined for a request for proposal, and the procedural processes used throughout the endeavor. The court found that the hospital and physician groups involved acted reasonably and that it was not the court’s place to second-guess rationally based hospital managerial, quasi-legislative decisions. The court noted the appropriateness of deference to be given to the decisionmakers’ special expertise in the field of hospital administration.

Sutcliffe v. Mercy Clinics, Inc. (Summary)

CONTRACT CLAIM

Sutcliffe v. Mercy Clinics, Inc., No. 13-1974 (Iowa Ct. App. Sept. 17, 2014)

A district court had denied a health care system’s motion to compel arbitration on a breach of contract action. On appeal, the Court of Appeals of Iowa reversed and remanded this decision.

The plaintiff is a licensed family practitioner who had worked for the health care system involved for many years. Upon the construction of a new clinic, the health care system made an oral agreement with the practitioner, offering him compensation in addition to the existing terms of his written agreement. As a part of this oral agreement, the practitioner was to work at the health care system’s newly constructed clinic. The practitioner agreed, but did not receive the promised additional compensation. The practitioner then sued for breach of contract.

The court found that the arbitration clause in the practitioner’s written agreement was enforceable under the Federal Arbitration Act (“FAA”). Although both parties were in Iowa and medical services were provided in Iowa, the practitioner treated Medicare patients at the clinic. The court found that the interstate commerce involved in federal Medicare reimbursements was sufficient to invoke the application of the FAA.

Bulwer v. Mount Auburn Hosp. (Summary)

DISCRIMINATION CLAIM

Bulwer v. Mount Auburn Hosp., No. 11-P-1583 (Mass. App. Ct. Sept. 24, 2014)

The Appeals Court of Massachusetts reversed a lower court’s dismissal of a physician’s discrimination and breach of contract claim against a hospital, holding that there were genuine issues of material facts and that a jury should decide if the hospital acted with racial intent.

The plaintiff, a practicing physician of 16 years in Belize, was accepted to the hospital’s residency program. With the exception of one rotation, the physician received strong evaluations about his knowledge, presentations, and patient interaction. In one of the physician’s rotations, he received three strongly negative evaluations. The physician’s subsequent rotation evaluation, however, explained that his behavior in the past had been misconstrued as arrogance in his zeal to impart instruction. This evaluation noted that the physician had demonstrated nothing but caring, concern, and team spirit. This observation was also expressed in the rest of the physician’s rotation evaluations.

The hospital notified the physician that his residency would not be extended for a second year because of concerns in the areas of patient care, interpersonal and communication skills, and practice-based learning. The hospital stated that it would allow the physician to finish out the year in the program. In response, the physician invoked his right to a hearing. After the hearing, the hospital terminated the physician, reversing its earlier decision to allow him to finish out the year. The physician sued, claiming racial discrimination and breach of contract due to the hospital failing to follow its own policies.

The court held that there were genuine issues of material facts and that a jury should decide if the hospital acted with racial intent. In testimony, the hospital’s director of psychiatry raised issues concerning possible institutional racism at the hospital. Also, a department chair noted that the physicians who gave this resident favorable evaluations were personally attacked by his detractors. The court also found that the hospital failed to provide the physician with the procedural safeguards guaranteed to him by the hospital’s polices.

Doctors Hosp. of Augusta v. Dep’t of Health and Hosp. (Summary)

EMTALA

Doctors Hosp. of Augusta v. Dep’t of Health and Hosp., No. 2013 CA 1762 (La. Ct. App. Sept. 17, 2014)

The Court of Appeal of Louisiana reversed the Louisiana Department of Health and Hospitals’ (“DHH”) determination that DHH does not have to reimburse Doctors Hospital, an out-of-state hospital, for the treatment the hospital rendered. The court held that the availability of comparable medical care in Louisiana is not a bar to an out-of-state hospital’s Louisiana Medicaid reimbursement, and doing so would contradict the Emergency Medical Treatment and Active Labor Act (“EMTALA”).

Doctors Hospital, located in Georgia, has a renowned burn unit. It was contacted by a Louisiana hospital, East Jefferson General Hospital (“East Jefferson”), to treat an emergency room patient who suffered second and third degree burns to 40% of her body. Neither hospital inquired into who the patient’s payor was. The patient was life-flighted to Doctors Hospital, where the patient received inpatient treatment for three months.

The patient was a Louisiana Medicaid recipient.   After the patient’s discharge, Doctors Hospital submitted a claim to Medicaid of Louisiana, which was ultimately denied. DHH rejected the claim on the grounds that the needed treatment was possibly available in Louisiana at two other hospitals, so that the patient did not necessarily have to be treated at Doctors Hospital, an out-of-state hospital. Additionally, DHH determined that, as the patient’s air ambulance transfer took three hours, this showed that the patient was not in an emergency medical condition.

The court found that DHH’s conclusions were arbitrary and capricious. First, the court stated that DHH disregarded the “overwhelming and undisputed evidence” that the patient suffered from an emergency medical condition. Next, the court found that under Louisiana law DHH had wrongly decided that an out-of-state hospital was barred from payment because the services were potentially available in the state. Furthermore, DHH never offered evidence that there was actually an available bed at an in-state burn unit. Lastly, the court pointed out that DHH’s interpretation contradicted EMTALA because it would require a participating hospital with specialized facilities to refuse acceptance of an appropriately transferred patient who requires such specialized care.

U.S. ex rel. Tahlor v. AHS Hosp. Corp. (Amended Opinion Summary)

QUI TAM/FALSE CLAIMS ACT

AMENDED OPINION (Correction of Clerical Errors in August 26, 2014 Additional Opinion)

U.S. ex rel. Tahlor v. AHS Hosp. Corp., Civ. No. 2:08-cv-02042 (WJM) (D. N.J. Sept. 10, 2014)

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ADDITIONAL OPINION

U.S. ex rel. Tahlor v. AHS Hosp. Corp., Civ. No. 2:08-cv-02042 (WJM) (D. N.J. Aug. 26, 2014)

The United States District Court for the District of New Jersey granted in part and denied in part motions to dismiss filed by multiple health care practitioners and providers accused of submitting false claims to Medicare. A physician advisor and nurse case manager, employees of one of the defendant hospitals, filed the lawsuit on behalf of the government.

Two separate alleged fraudulent schemes were in dispute. Under the first one, the health care providers allegedly billed Medicare for unnecessary inpatient hospital services. In particular, these providers billed for inpatient stays rather than “observation.” The second one involved allegations that patients were kept in the hospital for at least three days, so that Medicare would cover the patients’ post-hospital care at skilled nursing facilities.

The court dismissed certain claims that had been dealt with in a prior phase of the lawsuit. However, the court denied motions to dismiss the remaining claims, concluding that the relators had alleged sufficient facts for this portion of the lawsuit to proceed to discovery. The court also rejected the defendants’ argument that the statute of limitations precluded some claims from being litigated. The court held that an administrative order issued earlier in the case was sufficient to toll the statute of limitations. Finally, the court denied a motion to strike regarding certain allegations involving incorrect claims. The court stated that the allegations were not sufficiently immaterial or prejudicial to warrant striking them from the lawsuit.

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ORIGINAL OPINION

U.S. ex rel. Tahlor v. AHS Hosp. Corp., No. 2:08-cv-02042 (D. N.J. Oct. 31, 2013)

The U.S. District Court for the District of New Jersey granted in part and denied in part a hospital’s motion to dismiss the qui tam False Claims Act (“FCA”) claims brought by a  physician and a case manager (the “Relators”).  The Relators argued that the hospital was billing Medicare for expensive inpatient practices when it should have been billing for less expensive observation services. Months after the physician filed his original complaint in court, the hospital declined to renew his contract, which he alleged was in retaliation for his lawsuit. Before the physician’s appeal, the government intervened and entered into a partial settlement with the hospital and its parent corporation.

The district court dismissed the Relators’ improper billing claims based on the FCA’s “public disclosure bar.”  Although the information was kept secret for business purposes, the court held that audit communications by a recovery audit contractor were essentially a public disclosure of the fraudulent information. Further, the Relators were not an original source of the information, needed to overcome the public disclosure bar, because they did not have direct and independent knowledge of the Medicare billing. The court noted the settlement reached between the hospital and the government put the government on notice that improper billing was occurring.

The district court also held that the Relators did not have enough information to allege that the hospital was knowingly engaged in the fraudulent billing of Medicare.

 

U.S. ex rel. Tahlor v. AHS Hosp. Corp. (Additional Opinion Summary)

QUI TAM/FALSE CLAIMS ACT

ADDITIONAL OPINION

U.S. ex rel. Tahlor v. AHS Hosp. Corp., Civ. No. 2:08-cv-02042 (WJM) (D. N.J. Aug. 26, 2014)

The United States District Court for the District of New Jersey granted in part and denied in part motions to dismiss filed by multiple health care practitioners and providers accused of submitting false claims to Medicare. A physician advisor and nurse case manager, employees of one of the defendant hospitals, filed the lawsuit on behalf of the government.

Two separate alleged fraudulent schemes were in dispute. Under the first one, the health care providers allegedly billed Medicare for unnecessary inpatient hospital services. In particular, these providers billed for inpatient stays rather than “observation.” The second one involved allegations that patients were kept in the hospital for at least three days, so that Medicare would cover the patients’ post-hospital care at skilled nursing facilities.

The court dismissed certain claims that had been dealt with in a prior phase of the lawsuit. However, the court denied motions to dismiss the remaining claims, concluding that the relators had alleged sufficient facts for this portion of the lawsuit to proceed to discovery. The court also rejected the defendants’ argument that the statute of limitations precluded some claims from being litigated. The court held that an administrative order issued earlier in the case was sufficient to toll the statute of limitations. Finally, the court denied a motion to strike regarding certain allegations involving incorrect claims. The court stated that the allegations were not sufficiently immaterial or prejudicial to warrant striking them from the lawsuit.

AMENDED OPINION (Correction of Clerical Errors in August 26, 2014 Additional Opinion)

U.S. ex rel. Tahlor v. AHS Hosp. Corp., Civ. No. 2:08-cv-02042 (WJM) (D. N.J. Sept. 10, 2014)

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ORIGINAL OPINION

U.S. ex rel. Tahlor v. AHS Hosp. Corp., No. 2:08-cv-02042 (D. N.J. Oct. 31, 2013)

The U.S. District Court for the District of New Jersey granted in part and denied in part a hospital’s motion to dismiss the qui tam False Claims Act (“FCA”) claims brought by a  physician and a case manager (the “Relators”).  The Relators argued that the hospital was billing Medicare for expensive inpatient practices when it should have been billing for less expensive observation services. Months after the physician filed his original complaint in court, the hospital declined to renew his contract, which he alleged was in retaliation for his lawsuit. Before the physician’s appeal, the government intervened and entered into a partial settlement with the hospital and its parent corporation.

The district court dismissed the Relators’ improper billing claims based on the FCA’s “public disclosure bar.”  Although the information was kept secret for business purposes, the court held that audit communications by a recovery audit contractor were essentially a public disclosure of the fraudulent information. Further, the Relators were not an original source of the information, needed to overcome the public disclosure bar, because they did not have direct and independent knowledge of the Medicare billing. The court noted the settlement reached between the hospital and the government put the government on notice that improper billing was occurring.

The district court also held that the Relators did not have enough information to allege that the hospital was knowingly engaged in the fraudulent billing of Medicare.