Stein v. Tri-City Healthcare Dist. (Summary)

FALSE CLAIMS ACT – RETALIATION

Stein v. Tri-City Healthcare Dist., No. 3:12-CV-2524-BTM-BGS (S.D. Cal. Aug. 27, 2014)

The United States District Court for the Southern District of California denied a hospital’s motion to dismiss its former in-house counsel’s False Claims Act (“FCA”) retaliation, civil rights violation, and intentional infliction of emotional distress claims. Plaintiff, former in-house counsel for the defendant government hospital, was allegedly terminated after he warned upper management and the hospital’s Board about potential FCA violations. The hospital asked counsel for his resignation and counsel refused. Instead, counsel requested time off and stopped going to work. Soon after, the hospital terminated him without offering him a hearing. Counsel claimed this incident caused him physical and emotional distress.

The hospital argued that counsel’s warnings about potential FCA violations were actually part of his job and not protected activity that would trigger FCA whistleblower protection. The hospital also argued that any information counsel offered about potential FCA violations was protected by the attorney-client privilege. Next, the hospital argued that counsel’s civil rights were not violated because he quit his position, so a due process hearing was not required. Finally, the hospital argued that its conduct was not outrageous and counsel did not suffer severe or extreme emotional distress.

The court held that for counsel’s conduct to be protected under the FCA, he must have done more than his normal job. The court held that counsel proffered enough evidence to show that he acted outside his normal duties and chain of command so that a reasonable jury could find that he put the hospital on notice that his activities qualified for whistleblower protections under the FCA. Furthermore, the court held that counsel could potentially prove his claims without disclosing the content of privileged communications and, if he could not, the court will seal the courtroom and transcripts. Next, the court held that a material issue of fact existed as to whether counsel actually quit his job, or he was terminated. Finally, the court held a jury could find that the hospital’s conduct was outrageous and counsel experienced severe or extreme emotional distress.

The court also stated that the hospital potentially violated counsel’s civil rights and right to a due process hearing and would not let him work part-time or have a flexible schedule. According to the court, this conduct could be found to be so outrageous “that it is beyond the bounds of a civilized society.” The court also ruled that counsel alleged severe and emotional distress that was “beyond the stress of everyday life” because counsel suffered anxiety and panic attacks after being allegedly terminated.

DeLouis v. Iowa Bd. of Med. (Summary)

BOARD OF MEDICINE

DeLouis v. Iowa Bd. of Med., No. 13-1623 (Iowa Ct. App. Aug. 27, 2014)

The Court of Appeals of Iowa affirmed a lower court’s dismissal of a physician’s request that the Iowa Board of Medicine rescind her Settlement Agreement, holding that the physician was on notice of the terms and conditions of the agreement and accepted them. Plaintiff, a physician, was accused of violating the prohibition on prescribing a controlled substance for a family member. The board presented the physician with a Statement of Charges and a Settlement Agreement, which explicitly stated that the physician “voluntarily waives any rights to a contested case hearing on the allegations contained in the Statement of Charges and waives any objections to the terms of this Order.”

The Board of Medicine, pursuant to federal law, reported the Settlement Agreement to the National Practitioner Data Bank (“NPDB”), after which the physician’s medical malpractice insurance carrier dropped her coverage. About 60 days later, the physician requested the Board of Medicine to rescind the Settlement Agreement and its report to the NPDB because she did not know that a report would be made to the NPDB and she did not understand the nature or the importance of the charges against her. The Board of Medicine denied the physician’s request, and the physician asked the lower court to review the Board of Medicine’s decision. The lower court held that the physician did not seek judicial review of the Settlement Agreement in a timely manner. The physician appealed.

The appellate court affirmed the lower court’s dismissal, holding that the Settlement Agreement was the final agency action in a contested case proceeding, so a petition for review should have been filed within 30 days of the agreement. The court relied on the fact that the Settlement Agreement explicitly stated that it was a “contested case proceeding.” Additionally, the court held that the NPDB report did not extend the deadline for a petition for judicial review because it was not an “other agency action.” The physician agreed to the terms of the Settlement Agreement and the Board’s rules provide that it will report final decisions to the NPDB.

Emanuel Med. Ctr., Inc. v. Dominique (Summary)

SLAPP

Emanuel Med. Ctr., Inc. v. Dominique, No. F066648 (Cal. Ct. App. Aug. 27, 2014)

The California Court of Appeals affirmed a trial court’s order to strike a hospital’s cross-complaint against an employee under the anti-SLAPP (“Strategic Lawsuit Against Public Participation”) statute.

An employee was hired by the hospital to create and manage a cardiovascular services department. After several encounters with a surgeon who was angry at being asked to report his schedule, the employee was told she was being investigated due to her managerial style. Soon after, she alleged that she was told that she had “lost the support of her staff,” was placed on administrative leave, and was informed that her employment would be terminated. The employee filed a complaint for wrongful termination. The hospital discovered that the employee had continued to access her company e-mails even after being notified of her termination. The hospital, therefore, filed a cross-complaint alleging that she stole proprietary information by e-mailing work e-mails to her personal e-mail account. The employee sought to strike this cross-complaint, arguing that the employee’s e-mails were a means of gathering evidence for her attorney, which is a protected activity. The court agreed with this assertion and struck the hospital’s claims.

The appellate court affirmed the trial court’s decision to strike the hospital’s cross-complaint. The court found that the employee’s act of accessing and collecting e-mails was protected under the anti-SLAPP statute, because it arose from the protected act of filing a complaint and because it was a means of communication with her attorneys in preparation for bringing an action. However, the court clarified that forwarding e-mails to oneself does not constitute protected activity. Additionally, the court concluded that the hospital did not make the requisite showing that the access to e-mails was unlawful or resulted in any actual damage.

Nath v. Tex. Children’s Hosp. (Summary)

ATTORNEY’S FEES

Nath v. Tex. Children’s Hosp., No. 12-0620 (Tex. Aug. 29, 2014)

The Supreme Court of Texas upheld sanctions imposed on a physician, holding that there was sufficient evidence for the lower court to require the physician to pay the hospital’s and college of medicine’s attorney’s fees because the physician brought frivolous, time-barred claims. The court, however, remanded the case to determine whether the behavior of the hospital and the College of Medicine caused their legal expenses to accrue. The court pointed out that the defendants waited four years to file a summary judgment motion after they became aware that the physician’s claims were frivolous and time-barred. During these four years, the physician filed six amended complaints to which the defendants were required to respond, inflating their attorney’s fees to $1.4 million.

See Dissenting Opinion Here

Tibbs v. Bunnell (Summary)

PSQIA

Tibbs v. Bunnell, No. 2012-SC-000603-MR (Ky. Aug. 21, 2014)

The Supreme Court of Kentucky reversed a decision issued by the state’s Court of Appeals regarding the disclosure of a surgical nurse’s post-incident event report. The incident report was requested as part of a medical malpractice and wrongful death lawsuit filed by the estate of a deceased patient.

The medical malpractice action concerned an elective spine surgery performed at the University of Kentucky Hospital. The patient died due to complications from the surgery; later that day, a surgical nurse at the hospital generated a post-incident event report. When the patient’s estate requested peer review and incident reports related to the death, the physicians argued that the surgical nurse’s report was protected by the Patient Safety and Quality Improvement Act of 2005 (“PSQIA”). The PSQIA is a federal statute that protects information reported to patient safety organizations for the purposes of quality improvement and patient safety.

The Court of Appeals ruled that the PSQIA only protects documents employing a “self-examining analysis,” and had ordered the circuit court to review the surgical nurse’s report in order to see whether it was protected by the law. The Supreme Court of Kentucky reversed this decision, ruling that the nurse’s incident report was not protected by the PSQIA because its collection, creation, maintenance, and utilization was mandated by Kentucky law as part of its oversight of healthcare facilities. The Supreme Court of Kentucky concluded that information normally contained in an incident report is not privileged under the PSQIA.

U.S. ex rel. Helfer v. Associated Anesthesiologists (Summary)

FALSE CLAIMS – QUI TAM RELATOR

U.S. ex rel. Helfer v. Associated Anesthesiologists, No. 10-3076 (C.D. Ill. Aug. 25, 2014)

The United States District Court of the Central District of Illinois granted in part and denied in part an anesthesiology group’s motion to dismiss a lawsuit filed by a qui tam relator (“relator”). The relator, who had formerly served as a member of the anesthesiology group’s Board of Directors, alleged that the group’s billing practices were illegal under Illinois law and under the regulations issued by the Centers for Medicare & Medicaid Services (“CMS”).

Disputes arose after a business consultant advised the Board of the anesthesiology group to resubmit claims for epidural services administered for patients in labor. These proposed billing changes would indicate that an anesthesiologist had continuously performed the service from the time anesthesia was administered to the delivery of the child. The consultant further advised the Board that it could avoid review from insurance companies by capping its billing at ninety percent of the maximum amount that other anesthesia groups in the state were charging.

The relator, who was present for the discussion, reviewed the CMS regulations after the meeting. The relator came to the conclusion that the proposed billing practice would be illegal, since none of the anesthesiologists actually remained in the Obstetrics Department after beginning the epidural anesthesia service. When the relator aired his concerns with other physicians in the group, one said that he was “just trying to cause trouble.” The relator ultimately chose to contact CMS to see whether the proposed arrangement was legal. When the anesthesiology group learned about this, they informed the relator that he could either resign or be terminated. The relator chose to file a lawsuit, alleging violations of both state and federal laws.

The anesthesiology group and the other defendants succeeded in dismissing several claims due to procedural and jurisdictional defects. However, the court ruled that the relator had adequately alleged federal and state claims for retaliatory discharge, and also permitted the relator to continue his lawsuit for violations of both state law and the federal False Claims Act. In addition, the court held that the relator could sue for violations of the Illinois Insurance Claim Fraud Prevention Act, so long as the violations had occurred within the past eight years.

U.S. ex rel. Bartlett v. Ashcroft (Summary)

STARK LAW/ANTI-KICKBACK STATUTE

U.S. ex rel. Bartlett v. Ashcroft, No. 3:04-57 (W.D. Pa. Aug. 21, 2014)

The United States District Court of the Western District of Pennsylvania granted in part and denied in part a motion for summary judgment filed by two former employees in their lawsuit against the physician-owners of a CT scanning facility. The employees alleged that these physicians violated federal law by making prohibited patient referrals to a hospital. According to the employees, the hospital was paying $410 per CT scan in order to induce patient referrals.

Certain types of patient referral schemes are prohibited by the federal Anti-Kickback Statute and Stark Law, and healthcare providers are often required to certify compliance with these laws as part of their Medicare billing. Some jurisdictions hold that falsely certifying compliance with these laws can cause healthcare providers to become liable under the False Claims Act for every bill they submit to Medicare. In this case, the court granted summary judgment in favor of the employees on their claim that the CT scan payments violated the Stark Law. The court denied the employees’ motion for summary judgment regarding violation of the Anti-Kickback Statute and the False Claims Act. The court held that genuine disputes of material facts remained regarding these laws, and that they would need to be heard at trial.

Vosough v. Kierce (Summary)

BREACH OF CONTRACT/TORTIOUS INTERFERENCE

Vosough v. Kierce, No. L-6420-09 (N.J. Super. Ct. App. Div. Aug. 27, 2014)

The Superior Court of New Jersey reversed the judgment of a lower court regarding the obligations a hospital owed to independently contracted OB/GYN specialists.

Three independently contracted OB/GYN specialists brought a lawsuit against a hospital, arguing that an intolerable work environment, humiliation, and intimidation forced them to resign from their positions. The lawsuit alleged breach of contract, tortious interference with contract, and tortious interference with the prospective economic advantage. The OB/GYN specialists argued that they were entitled to compensation for the harassment they suffered at the hands of their supervisor. A jury verdict awarded damages to the OB/GYN specialists totaling $1,269,079. The hospital appealed the jury verdict.

The court found that none of the OB/GYN specialists’ claims should have even survived summary judgment. The hospital was found to have violated its own bylaws, specifically a policy to treat others with dignity and respect, by failing to discipline a belligerent and unreasonable supervisor. However, the state common law does not protect an employee from a hostile work environment created by a disagreeable supervisor. Also, because the OB/GYN specialists were contracted with the hospital itself, the specific supervisors could not be held personally liable for their actions. That the supervisors may have performed their duties poorly, or to the dissatisfaction of the OB/GYN specialists, did not mean that they were acting outside the scope of employment. Additionally, the court found that the hospital was not contractually obligated to the OB/GYN specialists beyond the guaranteed 60-day notice of termination. The terms of the at-will employment contract did not bind the hospital to pay anticipated lost wages for an indefinite period of time.

Adams v. Cedars-Sinai Med. Ctr. — Aug. 2014 (Summary)

PEER REVIEW – SUSPENSION – FAILURE TO EXHAUST

Adams v. Cedars-Sinai Med. Ctr.
No. B247957 (Cal. Ct. App. Aug. 22, 2014)

The California Court of Appeal for the Second District, Division 3, affirmed a trial court’s motion to strike a physician’s claim that he was denied the right to practice medicine, finding that the hospital’s activity was protected by the anti-SLAPP statute.

Members of a hospital staff began noticing strange and paranoid behavior from a physician, who was videotaping hospital visitors because he believed he was being followed by the FBI. The hospital’s Chief Medical Officer summarily suspended the physician, providing him with both oral and written notice. The physician was given a letter advising him that he could invoke his peer review hearing rights within 30 days of this notice. Two weeks later, another letter was sent to the physician, reminding him of his right to request a peer review hearing, and alerting him that if he failed to request a hearing, the right would be deemed waived. The physician never requested a hearing during this time period. After a lengthy suspension, the hospital reinstated the physician’s privileges. The physician then sued the hospital for denying him the right to practice medicine during the time of his summary suspension. The hospital then filed a motion to strike under the anti-SLAPP statute, which the trial court granted.

The court agreed with the trial court’s ruling, holding that the hospital’s suspension of the physician was a part of the peer review process, and was therefore protected conduct. The court also held that the suspension constituted peer review even though it was conducted by a single administrator, the hospital CMO, because the hospital bylaws granted him the power to make suspensions in the peer review process. Therefore, the hospital was found to have met its burden to invoke anti-SLAPP protection. The court additionally held that the trial court’s ruling was appropriate because the physician failed to exhaust the administrative remedies made available to him upon his suspension.

Shaw v. Superior Court of L.A. Cnty. (Summary)

RETALIATION

Shaw v. Superior Court of L.A. Cnty., No. B254958 (Cal. Ct. App. Aug. 21, 2014)

The California Court of Appeal granted a writ of mandate and ruled that a former hospital employee is entitled to a jury trial on claims of improper retaliation.

A former hospital employee complained to the healthcare operating system about issues regarding quality of care, services provided, and certification and licensure of healthcare professionals. Soon after voicing her complaints, the employee was terminated. The employee then brought claims against the hospital, seeking a jury trial. However, the request for a jury trial was denied, and the court concluded that the former employee’s cause of action was purely equitable. The former employee then challenged the denial of the jury trial by petitioning for a writ of mandate.

The court found that a writ relief should be granted to resolve the issue of statutory interpretation regarding the Health and Safety Code. In addressing the code’s statutory interpretation, the court held that both the language and the legislative history behind the statute reflect the original lawmakers’ intent that a jury trial be granted. The court reached this conclusion by determining that the legislature added the language at issue specifically to broaden the scope of remedies available to harmed employees, and to give the court greater discretion. Additionally, the court found that the former employee’s cause of action was based in law rather than equity. Because her damages stemmed from the hospital’s statutory violation, her cause of action is triable before a jury.