Hurwitz v. AHS Hosp. Corp. (Summary)

HCQIA IMMUNITY

Hurwitz v. AHS Hosp. Corp., No. A-5112-12T2 (N.J. Super. Ct. Nov. 24, 2014)

The Superior Court of New Jersey affirmed a trial court’s dismissal of a surgeon’s lawsuit against a hospital, concluding that the hospital and the participants in its internal review processes were immune to the suit under federal and state law. The surgeon’s lawsuit had alleged several causes of action, including breach of contract, breach of an implied covenant of good faith and fair dealing, and violation of due process rights.

Concerns over the surgeon’s work first emerged during 2010, after an outside expert found problems with the surgeon’s treatment of two patients. The Medical Executive Committee (“MEC”) voted unanimously to commence a formal investigation of the matter. Several months later, the investigating committee determined that the surgeon’s care exhibited delays in managing surgical complications and poor documentation of care plans. It concluded that these shortcomings had resulted in adverse outcomes for the patient.

This chain of events eventually culminated in a hearing and appeal. The hearing panel issued a report to the board of trustees, concluding that the surgeon demonstrated poor surgical judgment, lack of attentiveness to patients, untimely post-operative management of surgical complications, and a failure to provide adequate documentation. The board revoked the surgeon’s clinical privileges and he opted to take legal action.

The trial court dismissed the surgeon’s lawsuit, ruling that the surgeon had failed to present enough evidence to overcome the hospital’s legal protections under state and federal law. It reached the same conclusion for the surgeon’s lawsuit against the participants of the hospital’s internal review processes. On appeal, the surgeon argued that this decision was premature and that the court should have given him an opportunity to conduct depositions.

The appellate court upheld the trial court’s decision. It concluded that the hospital and other defendants were clearly within the scope of the federal Health Care Quality Improvement Act, which provides immunity for participants in certain qualified professional review actions. In addition, it found that New Jersey state law also extended a similar form of immunity protection to the hospital and its peer reviewers. It disagreed with the surgeon’s argument that the trial court should have permitted him to conduct depositions, explaining that the surgeon had already had an opportunity to conduct some amount of discovery. It noted that strong public policy reasons supported the decision to limit discovery under certain circumstances, with the aim of encouraging a “free flow of evaluative communications within a hospital…in an effort to improve future patient care.”

Zeman ex rel. U.S. v. USC Univ. Hosp. (Summary)

QUI TAM SUIT

Zeman ex rel. U.S. v. USC Univ. Hosp., No. CV 11-05755 DDP (MRWx) (C.D. Cal. Nov. 12, 2014)

The U.S. District Court for the Central District of California granted a hospital’s motion for summary judgment against a qui tam suit filed by a patient.

The patient, a Medicare beneficiary, had undergone several outpatient orthopedic surgeries at an ambulatory surgical center owned and operated by the hospital, with occasional return visits for follow-up care from her surgeons. A dispute arose after the patient received bills for some of these follow-up visits. The additional fees amounted to approximately $95.63.

The patient argued that the bills were illegal under the Medicare regulations, which prohibit charges for follow-up care within 90 days of certain kinds of major surgery. Based on this, the patient brought a qui tam complaint for violation of the False Claims Act, alleging that the hospital knowingly presented false or fraudulent claims to Medicare and used false records to get such claims approved. The hospital disputed this and insisted that it had only billed for legitimate facility fees.

In discovery, the patient further alleged that the hospital did not qualify for “provider-based status” under the Medicare regulations, and thus could not be eligible for any exceptions to the 90-day global surgery rule. The court was unpersuaded, concluding that the patient’s legal position was “untenable” and failed to provide the hospital with fair notice. In particular, it explained that the patient could not proceed under her newly raised theory about the hospital’s “provider-based status” because she had not pleaded it in the complaint. Since this “provider-based status” claim was the crux of the patient’s argument, the court ruled against her and granted the hospital’s motion for summary judgment.

Sambasivan v. Kadlec Med. Ctr. (Summary)

Sambasivan v. Kadlec Med. Ctr., No. 31858-3-III (Wash. Ct. App. Nov. 18, 2014)

The Court of Appeals of Washington reversed a lower court’s entry of summary judgment in favor of a hospital against a lawsuit filed by a cardiologist. The cardiologist, a native of India, claimed that the hospital had retaliated against him for a discrimination lawsuit he had filed in June 2008. The hospital argued that the cardiologist could only assert a federal retaliation claim if he could identify an impaired contractual relationship under which he had rights. The hospital explained that there was no contractual relationship, since the bylaws were not a contract. In addition, the hospital argued that the cardiologist could only win a retaliation claim under state law if he could show that the retaliatory action was taken in the context of an employment relationship or independent contractor relationship. It explained that the cardiologist had neither sort of relationship with the hospital.

The cardiologist countered by arguing that his case was not based on the bylaws, but was instead founded on the impairment of his capacity to contract to perform emergency department call coverage services for the hospital and the loss of his ability to serve future patients. The court found that this evidence was sufficient to overcome summary judgment and to permit the physician to present a jury issue about his loss of future call contracts and the loss of his contracts with future patients. The court noted that the cardiologist was permitted to bring state and federal retaliation claims because he was performing services as an independent contractor under the Emergency Department Call Coverage Agreement. The court reversed and remanded for trial.

Hamdan v. Ind. Univ. Health N. (Summary)

RACIAL DISCRIMINATION

Hamdan v. Ind. Univ. Health N., No. 1:13-cv-195-WTL-MJD (S.D. Ind. Nov. 5, 2014)

The U.S. District Court for the Southern District of Indiana granted in part a hospital’s motion for summary judgment against a discrimination lawsuit filed by a cardiologist. The cardiologist, a practicing Muslim of Palestinian descent, sued for race discrimination, intentional infliction of emotional distress, and defamation. In particular, he claimed that hospital employees had made derogatory and discriminatory remarks about him on numerous occasions and had filed false complaints that harmed his professional reputation.

Against the claim of race discrimination, the hospital emphasized that its bylaws did not create any sort of contractual relationship between itself and the cardiologist. The court was unpersuaded, determining that enough of a contractual relationship existed between the parties to fall within the scope of the federal antidiscrimination law. In addition, the court concluded that the cardiologist had presented sufficient evidence to go to trial on a so-called “cat’s paw theory” of liability, which applies to situations where a biased subordinate “dupes” an organization’s formal decision-makers into taking discriminatory employment actions. In this case, it determined that catheterization lab (“Cath Lab”) employees who were motivated by racial animus could have tricked the hospital into investigating the cardiologist. Therefore, it denied the hospital’s motion for summary judgment on the race discrimination claim.

In defense against the defamation claim, the hospital argued that it was entitled to immunity under federal and state law because the complaints provided information to a professional review committee. The court did not agree, instead concluding that the cardiologist had raised genuine issues of fact as to whether the Cath Lab employees made complaints in good faith. It did grant the hospital’s motion for summary judgment against a specific defamation claim filed against another physician.

The court denied the hospital’s motion for summary judgment on the intentional infliction of emotional distress (“IIED”) claim. It explained that its denial of summary judgment against the cardiologist’s other claims entailed that the IIED claim would survive as well. In addition, the court denied the cardiologist’s competing motion for summary judgment on the race discrimination claim, ruling that the matter would need to go to a jury trial for resolution.

Williams v. City of Philadelphia (Summary)

PEER REVIEW PRIVILEGE

Williams v. City of Philadelphia, No. 08-1979 (E.D. Pa. Nov. 4, 2014)

The District Court for the Eastern District of Pennsylvania required a company to produce mortality and sentinel event reviews in a class action suit brought by prison inmates.

Prison inmates alleged that overcrowding and triple-celling resulted in a dangerously unhealthy and unsafe environment, amounting to unconstitutional conditions of confinement. The prison inmates submitted a discovery request to the City of Philadelphia, seeking mortality and sentinel event reviews for the deaths of those in custody between the dates of January 2012 and December 2013. The city then sought to obtain the requested information from a contracted medical services provider. However, the medical services provider refused to turn over the documents, arguing that the documents are not discoverable because they are privileged and protected under the state’s peer review privilege law.

The court upheld the long-standing practice of refusing to recognize the peer review privilege in the federal court, finding that the medical services provider made no significant showing as to why the reviews should be withheld from discovery. The court also determined that the safety and efficiency of the prison system were sufficiently important, outweighing any potential harm that may be caused by disclosure.

Disability Rights North Carolina v. Frye Reg’l Med. Ctr. (Summary)

PEER REVIEW PRIVILEGE

Disability Rights North Carolina v. Frye Reg’l Med. Ctr., No. 5:13-CV-102 (W.D. N.C. Nov. 7, 2014)

The United States District Court of the Western District of North Carolina denied a hospital’s assertion of the peer review privilege on documents requested by a federal protection and advocacy agency (the “P&A”). The request involved documents related to a patient who died after an altercation with hospital staff that resulted in the individual being placed in restraints. The P&A initiated an investigation of the patient’s death for abuse or neglect. After the P&A requested the hospital’s root cause analyses and peer review documents, the hospital asserted that those records were protected by the state peer review statute.

The court denied the hospital’s peer review privilege assertion, holding that the statute did not apply to this circumstance. The court explained that the peer review privilege only applied in discovery or introduction of evidence in civil actions. The P&A’s request was pursuant to an investigation of the death of a patient with mental illness, not a civil lawsuit. Additionally, the state peer review statute is preempted by the federal Protection and Advocacy for Individuals with Mental Illness Act (“PAIMI”), which explicitly states that state laws limiting access for PAIMI proposes are prohibited.

Ware v. Bronson Methodist Hosp. (Summary)

INVASION OF PRIVACY

Ware v. Bronson Methodist Hosp., No. 307886 (Ct. App. Mich. Nov. 4, 2014)

A patient specified on her privacy authorization form that her personal information was not to be shared with a particular nurse at the hospital, the girlfriend of the patient’s ex-husband. However, the nurse did access the patient’s medical files. She proceeded to share the patient’s confidential information with the patient’s ex-husband. The patient then sued the hospital for vicarious liability, negligence, and breach of contract.

The court found that the hospital was not vicariously liable for the nurse’s private actions. The “vindictive” actions of the nurse were not in the scope of her employment and did not further the interests of the hospital. The court also determined that the trial court improperly judged the hospital’s patient confidentiality procedures, because the reasonableness of medical judgment cannot be evaluated by a jury. However, the court affirmed the trial court’s decision allowing a jury to hear arguments on the hospital’s enforcement of existing patient confidentiality procedures. Claims of enforcement do not address medical standards of care, meaning the jury should be permitted to hear and resolve the claim.

Click here to read the Court’s Majority Opinion

Click here to read the Dissenting Opinion

Hansen v. Jackson (Summary)

PHYSICIAN EMPLOYMENT

Hansen v. Jackson, No. 13-14-00039-CV (Tex. Ct. App. Nov. 6, 2014)

The Court of Appeals of Texas affirmed in part and reversed in part a lower court’s dismissal of a cardiovascular (“CV”) surgeon’s breach of contract, business disparagement, and tortious interference claims against a hospital. The CV surgeon was hired by a third-party employer to work exclusively at a hospital. The CV surgeon’s contract was for a five-year term. The third-party employer could only terminate the CV surgeon for cause during the first three years, then without cause for the remainder of the contract if “annual practice losses” exceeded $500,000. Furthermore, the CV surgeon was guaranteed due process rights if he was terminated for cause.

Two years into his contract, the hospital was acquired by a system. The system’s vice president recommended that the hospital terminate the CV surgeon’s contract based on his high “clinic losses” as compared to his base annual salary of $750,000. Around this time, the CV surgeon began feuding with the hospital’s cardiologists. The hospital requested that the third-party employer terminate the CV surgeon’s contract, citing his behavior with the cardiologists and the fact that his “clinic losses” were over the $500,000 threshold. The CV surgeon brought suit claiming that (1) the third-party employer breached their contract, (2) the hospital damaged his economic interests by disparaging him, and (3) the hospital interfered with his contract with the third-party employer.

While a trial court granted summary judgment in favor of the hospital, the appellate court held that the CV surgeon’s breach of contract and tortious interference claims should proceed to trial. The appellate court explained that the third-party employer did not conclusively establish the grounds on which it terminated the CV surgeon. If he was terminated for cause, then the CV surgeon was entitled to a due process hearing. If he was terminated without cause, then the third-party employer did not present evidence that “clinic losses” were actually “practice losses” as stated in the contract. Moreover, this ambiguity could prove that the hospital intentionally interfered with the CV surgeon’s contract. However, the ambiguity was not enough to show that the hospital acted with malice, as is required for a business disparagement claim.

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.