Kane v. Healthfirst, Inc. (Summary)

QUI TAM

Kane v. Healthfirst, Inc., Civil Action No. 11-2325 (ER) (S.D. N.Y. June 27, 2014)

The U.S. Attorney for the Southern District of New York filed a qui tam complaint-in-intervention alleging that a not-for-profit healthcare corporation erroneously submitted 900 claims to Medicaid and failed to timely reimburse the U.S. government.

The healthcare corporation discovered that a software compatibility error had caused its billing programs to automatically generate incorrect bills to secondary payers, including Medicaid. An individual, who became the relator, was asked by the corporation to examine the bills to determine which had been improperly submitted to the Department of Health. The relator discovered that more than 900 incorrect claims had been submitted, totaling over $1 million, as a result of this software error. Four days after the relator e-mailed his analysis to the corporation’s management, he was fired. The corporation did not move forward in addressing these erroneous claims. After two years and a Civil Investigative Demand seeking information, the corporation only reimbursed the federal government for 300 incorrect claims.

The qui tam complaint alleges that the corporation intentionally or recklessly failed to rectify the mistaken claims caused by the software error, and failed to timely reimburse the Department of Health for the money paid by Medicaid to cover these false claims.

Sidibe v. Sutter Health (Summary)

ANTITRUST

Sidibe v. Sutter Health, No. C 12-04854 LB (N.D. Cal. June 20, 2014)
The U.S. District Court for the Northern District of California dismissed a complaint from a class action lawsuit alleging that a healthcare system was involved in anticompetitive conduct in violation of antitrust law.

The company that owns and operates the largest network of hospitals in the area was alleged to be involved in anticompetitive behavior by initiating the use of “tying arrangements,” in which the company required hospitals to include high-priced plans in their health plan networks.

The court found that the complaint did not plead sufficient facts to support the proposed inquiry into the adequacy of the relevant geographic markets in question. Also, the complaint suggested that geographic markets be examined by the location where health plan members actually go. The court found, however, that the Sixth Circuit mandates analyzing geographic markets by examining the availability of substitute products.

Additionally, the complaint failed to properly define the geographic markets by stating that they were roughly congruent with the Dartmouth Atlas of Health Care’s definition of “hospital service area.” The court was unconvinced by this definition, and held that the Dartmouth Atlas was not sufficient to define relevant terms for antitrust purposes. Because the relevant geographic markets were not properly identified or supported in the complaint, the factual allegations stemming from the faulty definitions were dismissed entirely.

In re Colo. Med. Bd. v. Office of Admin. Courts (Summary)

PEER REVIEW LICENSURE

In re Colo. Med. Bd. v. Office of Admin. Courts, No. 13SA209 (Colo. June 23, 2014)
The Colorado Supreme Court reversed the lower court’s order compelling the production of peer review documents, holding that the Colorado Medical Board review committee’s records are protected from all forms of subpoena and discovery, including one as a result of an administrative hearing. After a medical license applicant was denied licensure by the Colorado Medical Board (“Board”) she sought review of the Board’s decision through an administrative hearing. The applicant requested the Board’s “Letters of Concern” that it had produced for similarly situated applicants because she believed the letters contained relevant information to her licensure denial. The Board objected to this request by raising the statutorily provided peer review privilege. The administrative judge ordered, and the district court agreed, that the Board was to produce the letters, reasoning that the peer review privilege only applies to civil suits and not administrative hearings. The Colorado Supreme Court held that the peer review statute protects the records of a professional review committee, the Board, from all forms of subpoena and discovery. Furthermore, an administrative hearing of an adjudicatory nature is considered a civil suit under the peer review statute.

Taylor v. Jewish Hosp. & St. Mary’s Healthcare, Inc. (Summary)

VICARIOUS LIABILITY

Taylor v. Jewish Hosp. & St. Mary’s Healthcare, Inc., Civil Action No. 3:13-CV-00361-CRS (W.D. Ky. June 11, 2014)

A federal district court in Kentucky reached different conclusions with respect to the liability of two hospitals for the acts of their emergency physicians. The court ruled that one hospital could be liable for the acts of an emergency physician because he had an agency relationship with the hospital. However, the court found that an emergency physician at the second hospital was not its agent, so the second hospital could not be liable for his actions. The court also ruled that neither hospital violated the Emergency Medical Treatment and Active Labor Act (“EMTALA”).

A patient presented to the emergency department of the first hospital with severe abdominal pain and was diagnosed with pneumonia. After being tested and prescribed an antibiotic, the patient was discharged. He returned a few days later, complaining of shortness of breath and a sharp pain in his chest. He received an x-ray and a new prescription, and was once again sent home. When the patient still didn’t feel better, he went to a second hospital complaining of the same symptoms. After ordering a chest x-ray, a second-year resident diagnosed the patient with atypical pneumonia, prescribed another antibiotic, and sent him home. A few days later, the patient was found collapsed on the floor, and he was rushed to the hospital, where he was pronounced dead. An autopsy showed that he died of a pulmonary thromboembolism.

The patient’s mother alleged, in separate claims, that both hospitals were negligent in providing her son medical care. The first hospital sought summary judgment on this claim, arguing that the independently contracted physicians were not employees, and therefore not agents. The court found that a genuine issue of fact existed regarding whether the hospital exercised a high level of control over the physicians in a way that might implicate them as agents. Among other things, the court found that the first hospital’s ability to prohibit an emergency physician from providing services, and its incentive compensation plan with the group that employed the emergency physician, suggested a high level of control. This led to the court’s denial of the hospital’s request for summary judgment so that further determination could be made by a jury.

The court did grant summary judgment to the second hospital on the same claim, however, holding that the patient’s signed consent form stating his awareness that the physicians are not hospital employees is sufficient to show that the resident was not an agent of the hospital.

The plaintiff alleged that both hospitals violated EMTALA by failing to provide sufficient testing or care to the patient. However, the court granted summary judgments to dismiss both claims, ruling that, while additional testing may have been advisable, the health care facilities could not be deemed to have had actual knowledge of the emergency medical condition other than pneumonia. Because there was no actual knowledge of the emergency medical condition, the necessary elements for an EMTALA claim could not be established.

Copeland v. MidMichigan Reg’l Med. Ctr. (Summary)

RELEASE FORMS

Copeland v. MidMichigan Reg’l Med. Ctr., Docket No. 314880 (Mich. Ct. App. June 5, 2014)

The Court of Appeals of Michigan ruled that a release form signed by a physician as part of his application for appointment and clinical privileges barred his claim against a hospital for defamation. The court also ruled against the physician on his claims for disability discrimination and breach of contract.

The dispute between the hospital and physician arose after an anonymous individual at the hospital alleged that a neurosurgeon was “slurring his speech and acting erratically” during surgery. The hospital issued a precautionary suspension and required the physician to participate in a substance abuse assessment program. He was found not to have an impairment. The neurosurgeon sued the hospital for breach of contract, defamation, and discrimination under the Michigan Persons with Disabilities Act. In addition, he sued the anonymous informant for defamation and tortious interference with a business relationship.

The trial court concluded that the neurosurgeon’s defamation and tortious interference claims were barred by a release agreement he had signed as part of his application for clinical privileges. This release agreement extended immunity to the hospital for all claims related to summary suspensions or matters of professional competence. Although these claims were unsuccessful, the neurosurgeon was able to compel the hospital to disclose the informant’s identity during discovery. The trial court ruled that Michigan’s peer review statute did not protect the informant’s identity, as it was considered background information and was not part of the peer review deliberations.

The court’s analysis of the neurosurgeon’s disability discrimination claim was slightly more complicated. The neurosurgeon had argued that the hospital discriminated against him because he suffered from hepatitis C. To win on his claim of discrimination, the neurosurgeon needed to prove that his disability was not related to his ability to use privileges at the hospital. The trial court ruled that hepatitis C was related to his ability to use privileges, as the condition had forced him to take time off from work in the past. The appellate court disagreed, ruling the hospital clearly did not regard the neurosurgeon as disabled, since it had reinstated him with full medical privileges despite his hepatitis C-related leave of absence. The appellate court concluded that the hospital had suspended the physician on the basis of perceived substance abuse, which is not a disability under the Persons with Disabilities Act.

Lastly, the court ruled that the neurosurgeon’s remaining breach of contract claim was barred by the Health Care Quality Improvement Act.

Frances v. Nexion Healthcare at McKinney, Inc. (Summary)

AGE DISCRIMINATION

Frances v. Nexion Healthcare at McKinney, Inc., Case No. 4:13cv210 (E.D. Tex. June 17, 2014)

A federal district court in Texas granted in part and denied in part a hospital’s motion to dismiss claims alleging that a former vocational nurse was dismissed due to age discrimination.

The nurse, a 61-year-old male, worked at the health care facility since 2010, where he received satisfactory performance reviews. In the summer of 2011, he was given the choice to be either demoted or terminated. The nurse resigned and was replaced by someone younger.

The court denied the health care facility’s motion to dismiss claims of discriminatory discharge or demotion. The court found that the nurse presented sufficient allegations to support the action, so long as evidence is presented at trial to show that his employment would have been made objectively worse by his employer’s actions.

Additionally, the court found that the nurse alleged sufficient facts to support the nurse’s claim of constructive discharge under the Age Discrimination in Employment Act. Once again, the court reminded the nurse that he will be required to support his claim with evidence to show that he felt compelled to resign in the situation.

Finally, the nurse was held to have first exhausted all of his administrative remedies, as the allegations in his EEOC complaint were consistent with the pleadings brought before the court.

Semertzides v. Bethesda N. Hosp. – June 2014-2015 (Summary)

ANTITRUST/WHISTLEBLOWER/INTENTIONAL INFLICTION/HOSTILE WORK ENVIRONMENT

Semertzides v. Bethesda N. Hosp., No. 1:14-CV-135 (S.D. Ohio June 9, 2014), aff’d, No. 14-3669 (6th Cir. June 4, 2015)

The United States District Court for the Southern District of Ohio dismissed a surgeon’s antitrust, whistleblower, intentional infliction of emotional distress and hostile work environment claims which were filed against a hospital after it terminated the surgeon’s clinical privileges.

 The hospital’s surgical advisory committee raised questions about the surgeon’s competence that turned into an investigation and which ultimately led to his clinical privileges being terminated.  The surgeon filed a lawsuit, alleging, among other things, that the review committee was led by his competitors who wanted to eliminate him from competition.

 The court held that the surgeon’s antitrust claim failed because he did not state that the peer review process produced anticompetitive effects concerning a particular product or service, since the complaint discussed general surgical procedures and adhesion surgeries, but never specified the affected service.  The antitrust claim also failed because the surgeon did not define a relevant geographic market, since the claim addressed the county the hospital was located in, the tri-state area, and the entire United States, but never concluded which one was affected.

 The court also ruled that the whistleblower claim failed because it did not allege that the hospital had ever submitted a false claim to the government for payment, that the intentional infliction of emotional distress claim failed because the alleged conduct the hospital engaged in was not “extreme and outrageous…beyond all possible bounds of decency, and which is utterly intolerable in a civilized community” and that the hostile work environment claim failed because the surgeon’s complaint did not contain any allegations indicating that the hospital discriminated against him based on a protected characteristic.

Ohio State Dental Bd. v. HealthCare Venture Partners, LLC (Summary)

DISCOVERY/ALCOHOL TREATMENT RECORDS

Ohio State Dental Bd. v. HealthCare Venture Partners, LLC, No. 14AP-165 (Ohio Ct. App. June 10, 2014)

The Court of Appeals of Ohio affirmed a trial court’s decision that a state dental board could obtain the treatment facility records of a dentist who entered Board-ordered treatment for alcohol dependency issues.

The dentist was investigated after he was found to have performed oral surgery with a blood alcohol content of 0.18 mg/dl.  A few months later, the dentist was arrested for driving with a blood alcohol content well over the legal limit.  The Board ordered the dentist to submit to evaluation at a treatment facility to determine if he suffered from alcohol abuse or dependency that would negatively affect his ability to practice dentistry, and he signed a release form which permitted the facility to disclose information to the Board.  A physician at the treatment facility determined that the dentist was impaired due to alcohol dependency, and the dentist’s license was subsequently suspended by the Board.  After the suspension, the Board subpoenaed the dentist’s treatment facility records for use at his hearing, and the facility refused to comply.  The trial court ruled in favor of the Board, ordering the treatment facility to hand over the dentist’s records.

The appellate court affirmed the trial court’s ruling, holding that the Board provided sufficient good cause for the disclosure of the records, as the public interest for the full disclosure of the dentist’s alcohol dependence outweighed any potential injury to the dentist, his doctor-patient relationship, or his treatment service.  There was no alternative way that the information could have been obtained effectively, and because the dentist signed the waiver, it is clear that he had little expectation of confidentiality when he entered the treatment facility.  Additionally, the appellate court found that disclosure of the information may be allowed if it is in connection with litigation or administrative proceedings.

Hagen v. Siouxland Obstetrics & Gynecology, P.C. – May 2014 (Summary)

EMPLOYMENT TERMINATION/ WRONGFUL DISCHARGE

Hagen v. Siouxland Obstetrics & Gynecology, P.C., No. C 11-4047-MWB (N.D. Iowa May 30, 2014)

In a lawsuit disputing the appropriateness of a physician’s termination from his group practice, the United States District Court for the Northern District of Iowa denied the group practice’s post-trial motion for judgment as a matter of law or, in the alternative, for a new trial.

This case arose after a physician became enraged over the death of a fetus that was supposed to be under the care of one of the physician’s practice partners.  The physician made loud comments about the competence of the hospital nurses and his practice partner at the hospital where the pregnant patient was being treated and loudly spoke about his opinion that the nurses had killed the baby.  After the incident was over, the physician reported his practice partner and the nurses to the hospital, told the patient that his practice partner and the nurses had committed malpractice and she should get a lawyer, and spoke with several attorneys about reporting the incident to the state medical board.  A few days later, his group practice notified him that his employment was terminated.

The physician sued the group practice and its individual physician shareholders, claiming that he was wrongfully terminated, in violation of Iowa’s public policy, for stating an intention to report his practice partner’s negligence to the state medical board, for reporting his partner’s and the nurses’ negligence to the hospital, for disclosing to a patient that she may have been the victim of malpractice, and for consulting with attorneys regarding whether he should make a report to the state medical board.  At trial, the jury held the group practice liable for wrongful discharge, finding that its termination decision was based on the physician report to the hospital, disclosure to the patient, and consultation with attorneys.  The jury awarded the physician $1,051,814 for past lost earnings.

Both parties filed post-trial motions.  The group practice moved for a judgment as a matter of law, or alternatively a new trial.  It argued, among other things, that Iowa law did not recognize any of the activities set forth in the jury’s verdict (reporting negligence to a hospital, disclosing malpractice to a patient, and consulting with an attorney about whether to make a report to a state medical board) as protected conduct.  The federal district court acknowledged no Iowa precedent on this issue, but after certifying the question for the Iowa Supreme Court and having that court decline to answer the certified question, the district court determined that such action is protected conduct actionable under Iowa wrongful discharge law.

Interestingly, the court also rejected the group practice’s argument that the jury should have been instructed that it could find wrongful discharge only if it determined the group practice had no overriding business justification for the termination.  The court held that its instruction that the jury should consider whether there were other “legitimate reasons or motives for the discharge” was sufficient.  Despite this, without explanation, the court held that its ruling (which prevented the group practice from offering testimony from a list of witnesses who would have corroborated the practice’s testimony that the physician displayed a long history of inappropriate and disruptive behavior) was not erroneous and, even if it were, it was harmless.

For more on the history of this interesting case, see:

Hagen v. Siouxland Obstetrics & Gynecology, P.C., No. C 11-4047-MWB (N.D. Iowa Aug. 29, 2013)

Hagen v. Siouxland Obstetrics & Gynecology, P.C., No. C 11-4047-MWB (N.D. Iowa Mar. 20, 2013)

Hagen v. Siouxland Obstetrics & Gynecology, P.C., No. C11-4047-MWB (N.D. Iowa Dec. 7, 2012)

King v. Garfield Cnty. Pub. Hosp. (Summary)

EMPLOYMENT TERMINATION

King v. Garfield Cnty. Pub. Hosp., No. 12-CV-0622-TOR (E.D. Wash. June 6, 2014)

The United States District Court for the Eastern District of Washington denied a defendant-public hospital’s motion for reconsideration regarding its ruling that a plaintiff-nurse was entitled to due process after his employment was terminated for a positive drug test.

 The nurse was prescribed painkillers with codeine after a dental procedure.  In the days that followed, another employee suspected that the public hospital’s supply of morphine had been diverted and diluted, and the hospital subsequently administered a drug test to its employees.  The nurse was found to have high levels of morphine in his system, and was subsequently put on leave, then terminated.  It was later found that while there was morphine in the nurse’s system, the results were not consistent with the use of morphine from the hospital, and thus the test results were inaccurate.

 In a prior opinion, the district court found potential merit in the nurse’s claims that his termination without a hearing was in violation of his right to due process, and that even though the nurse was later able to find employment elsewhere, a name-clearing hearing was still deemed appropriate because the accuracy of the termination charges was contested, the charges had been made subject to public disclosure, and the accusations were connected to his termination.  (See King v. Garfield Cnty. Pub. Hosp., No. 12-CV-0622-TOR (E.D. Wash. May 1, 2014)).

 In this subsequent opinion, the hospital argued that the due process protections were not triggered because the defamation did not occur within the course of termination.  The court disagreed, finding a strong inference that the nurse was terminated as a result of the inaccurate drug test.

 The hospital argued also that the termination was not publicly disclosed, as the nurse’s test results were confidential.  However, the court found that placing stigmatizing information in an employee’s personnel file, which is classified as public record, is sufficient to constitute publication.  Additionally, though the statement of the failed drug test was not technically false, the court held that it created a strong and stigmatizing inference of drug diversion.  Because the defamatory events were public, inaccurate, and within the course of the nurse’s termination, the court maintained that the nurse was entitled to a name-clearing hearing.