De v. Catholic Healthcare West (Summary)

EMPLOYMENT DISCRIMINATION – RESIDENCY PROGRAM

De v. Catholic Healthcare West, B247458 (Cal. Ct. App. May 20, 2014)

A California appellate court affirmed a lower court’s decision granting a hospital’s motion for summary judgment in a lawsuit brought by a resident with ADHD.  The third-year internal medicine resident signed a one-year employment agreement with the hospital. For the first nine months of the agreement, the resident’s performance was unsatisfactory in the areas of professionalism, patient care, medical knowledge, communication, and interpersonal skills.  The hospital decided to terminate her from the program, and she appealed. At her appeals hearing, the resident brought to the hospital’s attention, for the first time, that she has ADHD. The hospital allowed the resident to return to work with a highly supervised, reduced workload. The resident did not show any signs of improvement, so the hospital allowed her employment agreement to expire. The resident asked for an extension of time to finish her residency, but the hospital declined. The resident then filed this action alleging, under California law, she was discriminated against due to her disability and that the hospital failed to engage in the interactive process to make and provide reasonable accommodations.

The court held that the resident could not perform the essential duties of the job, even with or without a reasonable accommodation; therefore she was not qualified for the position or protection under the antidiscrimination statute. Furthermore, she could not perform those duties in a manner that would not endanger the health or safety of others even with reasonable accommodations. The hospital also demonstrated that it engaged in a good faith interactive process to determine effective accommodations, once they were requested. Lastly, the court held the resident’s request for an extension of her residency was unreasonable, because there was no indication that she ever would have been competent to treat patients in the ICU or complete the other remaining required rotations without putting patients at risk.

Ridenour v. Glenbeigh Hosp. (Summary)

PEER REVIEW PRIVILEGE – INCIDENT REPORT

Ridenour v. Glenbeigh Hosp., No. 100550 (Ohio Ct. App. May 15, 2014)

An Ohio appellate court affirmed a lower court’s decision granting a patient’s motion to compel production of an incident report that was prepared by a nurse at the hospital.  The patient, while under the hospital’s care, suffered a seizure, fell and sustained life-altering brain injuries.  The patient’s family sued the hospital for negligence and sought discovery of the incident report.  The Court of Appeals held that the report was not generated exclusively for peer review, citing the fact that the original document was forwarded and retained by the director of human resources and that the peer review committee only received a copy.  Thus, the lower court was correct in holding that the peer review privilege did not apply and compelling the production of the document.

Young v. Tri-City Healthcare Dist., No. D063980 (Summary)

*Annotation*

Young v. Tri-City Healthcare Dist., No. D063980 (Cal. Ct. App. May 15, 2014)

The California Court of Appeal denied the surgeon’s request for attorney’s fees stemming from the hospital’s anti-SLAPP motion. The surgeon contended that the hospital’s motion was frivolous and for the sole purpose of harassing him. The court held that at the time the motion was brought, the interpretation of the anti-SLAPP statute could have given the hospital and its counsel an objective reasonable belief that the substance of the surgeon’s claims arose from a protected activity; hence it could not be frivolous. As to the surgeon’s allegation that the anti-SLAPP motion was for the sole purpose of harassing him, the court held that the record did not offer any adequate subjective support for this claim.

Young v. Tri-City Healthcare Dist., No. D059605 (Summary)

ANTI-SLAPP LITIGATION

Young v. Tri-City Healthcare Dist., No. D059605 (Cal. Ct. App. Oct. 17, 2012)

The California Court of Appeal denied a hospital’s anti-SLAPP motion in connection with a medical staff privileging matter involving a cardiac surgeon.  The surgeon’s ability to interact with others and his patient care came into question. After an investigation of these issues, the Medical Executive Committee (“MEC”) recommended terminating his privileges, and a hearing before a judicial review committee upheld the termination. While an appeal to the board was pending, the surgeon continued his behavior and was summarily suspended. The MEC confirmed the decision, the surgeon exhausted his internal appeals, and his privileges were terminated. The surgeon then petitioned for a writ of administrative mandate and reinstatement in court.

Among other things, he claimed that he was denied fair procedure in the handling of his summary suspension and that the decision of the hospital lacked substantial support. The hospital filed an anti-SLAPP motion against this claim, alleging that the peer review proceedings underlying the claim constituted protected speech. (The anti-SLAPP statute permits a motion to strike claims based on an act in furtherance of free speech or right to petition.)

The court held that while the act of public officials voting on a particular decision constituted an exercise of free speech rights protected under the anti-SLAPP statute, not all decisions made through such procedures “arise” from protected activity within the meaning of the statute. The appellate court found that the district’s decision did not constitute free speech and was not protected under the anti-SLAPP statute. Thus, it reversed the trial court’s decision and remanded for further proceedings.

Hi-Lex Controls, Inc. v. Blue Cross Blue Shield of Mich. (Summary)

ERISA

Hi-Lex Controls, Inc. v. Blue Cross Blue Shield of Mich., Nos. 13-1773, 13-1859 (6th Cir. May 14, 2014)

The United States Court of Appeals for the Sixth Circuit affirmed a grant of summary judgment and award in favor of Hi-Lex Controls, Inc. (“Hi-Lex”) in its lawsuit against Blue Cross Blue Shield of Michigan (“Blue Cross”).  The Sixth Circuit held that Blue Cross had breached its fiduciary duty to Hi-Lex under the Employee Retirement Income Security Act of 1974 (“ERISA”) by falsely inflating hospital claims with hidden surcharges, an act constituting “self-dealing.”

This dispute arose out of an arrangement between Blue Cross and Hi-Lex in which Blue Cross served as third-party administrator for Hi-Lex’s self-funded Health and Welfare Benefit Plan.  Under the terms of their contract, Blue Cross agreed to process healthcare claims for Hi-Lex’s employees and to grant those employees access to its provider networks.  Hi-Lex paid monthly “administrative fees” to Blue Cross in exchange for these services.  Two years after entering this agreement, Blue Cross decided to increase its revenue by adding hidden surcharges to the hospital claims paid by clients.  In 2011 (18 years after implementing this billing method), Blue Cross disclosed the existence of the fees to Hi-Lex in a letter, describing them as “administrative compensation.”

Hi-Lex sued Blue Cross, alleging violations of ERISA.  The trial court, in a bench trial, awarded Hi-Lex over $6 million in damages and prejudgment interest.  Blue Cross appealed.  The Sixth Circuit affirmed the lower court’s judgment, concluding, among other things, that Blue Cross was a fiduciary for ERISA purposes because Blue Cross held plan assets of the Hi-Lex Plan and that Hi-Lex’s suit was not barred by the statute of limitations.

U.S. ex rel. Ryan v. Lederman (Summary)

FALSE CLAIMS ACT

U.S. ex rel. Ryan v. Lederman, No.04-CV-2483 (E.D. N.Y. May 13, 2014)

The United States District Court for the Eastern District of New York denied in part and granted in part the federal government’s motion for summary judgment in a False Claims Act (“FCA”) suit brought against a physician.  The government claimed that the physician performed over 300 below-the-neck stereotactic radiosurgeries and billed them to Medicare despite local coverage determinations by the Part B carrier that below-the-neck stereotactic radiosurgeries were not covered.

In ruling on the government’s motion for summary judgment, the court concluded that the physician’s claims were false for two separate reasons.  First, since the Medicare Part B carrier’s local coverage determination was conclusive, the physician’s submission of claims for the below-the-neck stereotactic radiosurgery procedures was false.  Second, the physician’s coding of the procedures made his claims for payment false because the codes used did not cover procedures performed below the neck.  Nonetheless, the court held that whether the doctor had knowledge (for FCA purposes) that he was submitting false claims could not be resolved on summary judgment even though the physician received feedback, and was thus on notice, that below-the-neck procedures were not reimbursable under Part B.

However, the court granted the government’s motion for summary judgment for its payment based on mistake of fact and unjust enrichment claims against the physician.  The court pointed out that these claims were essentially duplicates of the FCA claim, but without the intent requirement.

United Nurses of Children’s Hosp. v. Rady Children’s Hosp. – San Diego (Summary)

COLLECTIVE BARGAINING/ARBITRATION

United Nurses of Children’s Hosp. v. Rady Children’s Hosp. – San Diego, No. 13-CV-2133-LAB-JMA (S.D. Cal. May 9, 2014)

The United States District Court for the Southern District of California denied an employee union’s motion to compel arbitration of certain issues.  A respiratory therapist (“RT”) was issued a final warning by her hospital employer for multiple instances of misconduct, placed on an improvement plan, and transferred from the neonatal emergency transport team to a clinical position with lower pay.  The union filed a grievance and a demand for arbitration on behalf of the RT.  In the grievance, the union challenged the hospital’s actions against the RT.  The arbitration process, however, never materialized because the parties could not agree on a statement of issues.  Specifically, the parties could not agree on whether the RT’s transfer amounted to discipline under the collective bargaining agreement (“CBA”).  The union argued that the hospital’s refusal to agree to its framing of the statement amounted to the hospital refusing to arbitrate whether the RT’s transfer was for disciplinary reasons and, if so, was for just cause.  The court held that the hospital did not refuse arbitration because it agreed to arbitrate whether the transfer was a violation of the CBA. This would allow the arbitrator to also address whether the transfer was for disciplinary reasons.  According to the court, rather than refusing to arbitrate, the hospital refused to give up an argument about the nature of the transfer and, regardless of the argument’s propriety, the hospital could not be forced to relinquish it.

Looney v. Moore (Summary)

PEER REVIEW PRIVILEGE

Looney v. Moore, No. 2:13-CV-00733-KOB (N.D. Ala. May 12, 2014)

The United States District Court for the Northern District of Alabama denied a motion filed by class action plaintiffs seeking to compel the University of Alabama Birmingham (“UAB”) to produce records created by its institutional review board (“IRB”) in connection with a clinical research trial performed on premature infants with low birth weights.  The parents of the infants in the clinical research trial sued members of UAB’s IRB, claiming they were negligent and did not obtain informed consent.  In denying the motion, the court held that Alabama’s statutory peer review privilege applied to the IRB and the documents at issue were privileged because they involved quality assurance review.  The court also concluded that the state peer review privilege was not preempted by federal statutes and regulations governing IRBs because these sources made no mention of civil discovery, much less the peer review privilege.

Simpson v. Beaver Dam Cmty. Hosp., Inc. (Summary)

TITLE VII

Simpson v. Beaver Dam Cmty. Hosp., Inc., No. 13-cv-40-bbc (W.D. Wis. May 9, 2014)

The U.S. District Court for the Western District of Wisconsin granted a motion for summary judgment filed by a not-for-profit organization of integrated healthcare services (the “hospital”) in a suit brought against it by a physician alleging race discrimination under Title VII.

In 2010, the physician, who was African-American, was offered employment in a clinic affiliated with the hospital.  The physician’s employment was dependent upon his attainment and maintenance of medical staff membership and clinical privileges.  During the credentialing process, several “red flags” arose regarding the physician’s application, including his need to take an oral exam to obtain a medical license in the state of Wisconsin, a negative reference describing his disruptive behavior, two medical malpractice claims which were filed when the physician was not insured, and a probationary period during his residency.  To prevent a report to the National Practitioner Data Bank because of the likelihood that his application would be denied, the physician withdrew his application.

Thereafter, the physician sued the hospital, claiming that he was discriminated against because of his race.  The hospital filed a motion for summary judgment, which the court granted.  In ruling on the hospital’s motion for summary judgment, the court determined that the hospital’s concerns regarding the “red flags” were not unreasonable.  For example, the oral exam was a deviation from the normal licensure process and, as such, without evidence pointing towards a lack of sincerity, the hospital was well within its right to consider it.  Further, it was reasonable for the hospital to rely on the negative reference.  Similarly, the hospital was under no obligation to comply with the physician’s request not to contact a former employer who the physician assumed gave the negative reference.  The court also held that the hospital’s employment offers to three Caucasians after the physician withdrew his application could not support the physician’s claims.  None of the Caucasian physicians’ applications contained problems similar to the physician’s application.  As a result, the physician failed to show that the hired physicians were similarly situated.

Long v. Quorum Health Res., LLC (Summary)

DATA BANK/LIBEL AND TORTIOUS INTERFERENCE

Long v. Quorum Health Res., LLC, No. 2:13-cv-189 (D. Vt. May 5, 2014)

The United States District Court for the District of Vermont granted a hospital’s motion to dismiss and denied a physician’s motion for leave to amend his complaint in a case brought by the physician against the hospital, asserting claims for libel and tortious interference with prospective business relationships.  The suit was rooted in the hospital’s report to the National Practitioner Data Bank (“NPDB”) describing the physician’s voluntary surrender of his privileges during an investigation.

After the physician made allegations that someone at the hospital was deliberately contaminating several of his surgeries with bacteria and, consequently, infecting his patients, the hospital initiated an investigation to, in part, look into the physician’s allegations.  As a result of the investigation, the hospital prohibited the physician from performing surgeries pending completion of a psychiatric evaluation.  The physician resigned the next day.  The hospital submitted a report to the NPDB indicating the physician resigned while under investigation.  The physician sued the hospital and others in 2005.  The suit ultimately resulted in a $4 million settlement in favor of the physician.  However, the settlement did not require removal of the NPDB report. In 2011, the physician challenged the report, seeking review by the Secretary of the Department of Health and Human Services (“HHS”).  HHS requested additional information from the hospital, which was provided and included a chronology of events and internal correspondence.  Based on the information, HHS declined to remove the NPDB report and added a notation that the report was properly filed.  The physician filed a second suit alleging that the information provided by the hospital in response to HHS’s request was libelous.  The physician also asserted a claim for tortious interference.

In granting the hospital’s motion to dismiss in the second suit, the court, among other things, concluded that the physician’s claims were barred by the legal doctrine of res judicata because the claims were based on events that arose out of the same core of facts as the physician’s 2005 suit.  The court also denied the physician’s request for leave to amend his complaint to add additional causes of actions, including one under Vermont’s consumer fraud statute.  According to the court, the underlying facts did not fall within the purview of the state’s consumer fraud statute because the physician was not a consumer as defined by the statute.