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.

 

Miss. State Bd. of Med. Licensure v. Harron (Summary)

PHYSICIAN LICENSURE

Miss. State Bd. of Med. Licensure v. Harron, No. 2013-SA-00654-COA (Miss. Ct. App. Sept. 16, 2014)

The Court of Appeals of Mississippi overturned a lower court’s decision and held that a physician was more than just an expert witness in silicosis litigation when he diagnosed potential plaintiffs with silicosis, thus he is subject to the Mississippi State Board of Medical Licensure. Plaintiff, a physician who was licensed to practice medicine in Mississippi, was employed to screen potential plaintiffs for asbestosis and silicosis-related diseases in preparation for multidistrict litigation that was held in Texas. The physician was listed as the diagnosing physician on 2,600 of the claims. He testified that he allowed medically untrained secretaries and typists to interpret his reports, insert a diagnosis, stamp his signature on the reports and send them out with no review by the physician.

During the ensuing litigation, the physician was dismissed as an expert witness and sanctioned by the court for his lack of quality controls that produced results that were “staggering, implausible, and not scientifically plausible.”

The Texas Medical Board instituted disciplinary proceedings against him as a result of these activities and he agreed to surrender his Texas license to practice medicine. The defendant, the Mississippi State Board of Medical Licensure, then investigated the physician, found that he engaged in unprofessional conduct in the Texas ligation that was likely to defraud or harm the public, and barred him from renewing his Mississippi medical license. The physician appealed, and the lower court found in favor of the Physician, holding that the Mississippi State Board of Medical Licensure did not have jurisdiction because the physician’s conduct occurred out of state and his conduct was in the capacity of an expert witness, not a practicing physician.

The trial court’s decision was reversed by the Mississippi Court of Appeals. The court of appeals held that the physician was more than just an expert witness for the potential plaintiffs; he was actually practicing medicine when he diagnosed them with silicosis. Therefore, the Mississippi State Board of Medical Licensure had proper jurisdiction. Furthermore, the court of appeals stated that the Mississippi State Board of Medical Licensure was correct when it found the physician had engaged in unprofessional behavior when he “recklessly” diagnosed patients with silicosis.

In re Guardianship of Tschumy (Summary)

CONSENT

In re Guardianship of Tschumy, No. A12-2179 (Minn. Sept. 17, 2014)

The Supreme Court of Minnesota affirmed the court of appeals’ ruling that a court ordered guardian may consent to the removal of a ward’s life support system when all interested parties agree that removal is in the ward’s best interest. The district court appointed a guardian to an incapacitated patient pursuant to a state statute. This appointment included “the power to give any necessary consent to enable the ward to receive necessary medical…care.” Subsequently, the patient suffered an “anoxic brain injury” in which the prognosis was “dire.” The patient’s treatment team was in unanimous agreement that he suffered irreversible brain damage and would not survive. The court appointed guardian petitioned the court to authorize the removal of life support to the patient. The district court held that the medical power granted to a guardian does not grant the guardian the unrestricted authority to direct the removal of life support. The guardian appealed, and the court of appeals stated that absent a limitation in the guardianship order, the medical consent power granted under the statute includes the power to authorize the removal of life support without further authorization from the court.

The Supreme Court of Minnesota affirmed the court of appeals holding. The Supreme Court explained that the guardian had the consent to authorize life-sustaining treatment, thus a reasonable interpretation of “consent” would include the authority to withdraw life-sustaining treatment. Moreover, absent any express language in the guardianship order, the guardian had the authority to remove the life-sustaining treatment without court approval when all interested parties agree that the removal is in the ward’s best interest. This is consistent with prior court decisions authorizing family members of incapacitated patients to make similar decisions.

Kazmi v. Dep’t of Fin. and Prof’l Regulation (Summary)

PHYSICIAN LICENSURE

Kazmi v. Dep’t of Fin. and Prof’l Regulation, No. 1-13-0959 (Ill. App. Ct. Sept. 10, 2014)

The Appellate Court of Illinois confirmed a decision by the Illinois Department of Financial and Professional Regulation (“Illinois Board of Medicine”) to revoke a physician’s license to practice medicine in the State of Illinois. In so doing, the Court of Appeals reversed the decision of a lower court, which had struck down the initial revocation by the Illinois Board of Medicine as overly harsh and limited the punishment to a suspension of the physician’s license for a minimum of nine months.

At trial, the physician admitted that he had made numerous misrepresentations on his application for an Illinois medical license. These misrepresentations included fabricated employment histories, omissions of various disciplinary and performance problems in past residencies, the failure to disclose a suspension for prescribing controlled substances for his wife, and residencies that he had never completed. The court also noted that the state of Ohio had barred this physician from ever obtaining a medical license because of similar problems.

Based upon these facts and circumstances, the court concluded that the physician’s misrepresentations had prevented the Illinois Board of Medicine from conducting any meaningful assessment of his fitness to practice medicine. The court explained that fraud had “tainted the process from the outset” and that any sanction short of revocation would permit the physician to keep a license he was never entitled to in the first place. Concluding that the Illinois Board of Medicine exercised its authority in an appropriate fashion, the court reversed the lower court’s decision and reinstated the original revocation of the physician’s license to practice medicine in Illinois.