Marsh v. Anesthesia Servs. Med. Grp., Inc. (Summary)

INTENTIONAL INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE

Marsh v. Anesthesia Servs. Med. Grp., Inc., D064024 (Cal. Ct. App. June 6, 2014)

A California appellate court reversed a lower court’s ruling that was in favor of a physician group that dismissed an anesthesiologist’s claims of intentional interference with prospective economic advantage.

 The anesthesiologist’s claim of intentional interference with prospective economic advantage was predicated on defamatory statements allegedly made by the group.  The anesthesiologist argued that these statements had caused two plastic surgeons to stop using her services, causing her economic harm.

 The lower court had dismissed the anesthesiologist’s claim, ruling that she had not adequately linked the group’s defamatory statements with the plastic surgeons’ decision to stop using her services.  The California appellate court reversed this part of the lower court’s decision, concluding that the anesthesiologist had adequately linked the conduct of the plastic surgeons with the statements made by the group, and that she could continue her lawsuit for intentional interference with prospective economic advantage.

U.S. ex rel. Judd v. Quest Diagnostics, Inc. (Summary)

FALSE CLAIMS – QUI TAM

U.S. ex rel. Judd v. Quest Diagnostics, Inc., No. 10-4914 (KM) (D.N.J. May 30, 2014)

The U.S. District Court for the District of New Jersey granted in part and denied in part a diagnostic testing laboratory’s motion to dismiss the qui tam allegations of false claims brought by a physician who alleged that the lab provided his office practice with free supplies and discounted lab services in order to induce the referral of Medicare and Medicaid patients to the lab.

In seeking dismissal, the lab first argued that the doctor’s claims were barred by the public disclosure provision, which prevents a relator from bringing a qui tam action if the fraudulent scheme underlying that action has already been publically disclosed, unless the relator is an original source of the information.  The court held that the claims underlying this lawsuit had already been publically disclosed in two prior lawsuits, but also held that the relator in this case was an original source of information with respect to the specific fraud that occurred at his own medical practice (with the relator providing substantial details of the fraudulent scheme as it was implemented at his office, including identifying specific tests and equipment provided to the practice for free, as well as identifying a number of claims submitted to Medicare/Medicaid by the practice for equipment that had been provided to the practice at no cost by the lab).

The court went on to note that the doctor did not have direct or independent knowledge regarding other medical providers who allegedly entered into similar arrangements with the lab and, therefore, held that the doctor was not an original source of information with respect to any such claims.  Further, the court held that the doctor had not pled with specificity any false claims submitted by the lab to the federal government and, accordingly, the court dismissed all false claims allegations based on claims allegedly submitted by the lab (as opposed to those submitted by the physician’s medical practice).

Pacific Radiation Oncology, LLC v. Queen’s Med. Ctr. (Summary)

BREACH OF BYLAWS & UNFAIR COMPETITION

Pacific Radiation Oncology, LLC v. Queen’s Med. Ctr., Civil No. 12–00064 LEK-KSC (D. Haw. May 30, 2014)

The United States District Court for the District of Hawai’i denied a motion by plaintiff physicians to dismiss counterclaims by a hospital and its board and managers for breach of contract and unfair competition in violation of Hawai’i law.

The breach of contract claim was based on the Medical Staff Bylaws, which included a covenant not to sue the hospital for any matter relating to clinical privileges.  The hospital and its board of managers argued that this provision entitled them to countersue the physicians who filed a lawsuit challenging the hospital’s policy that only employed radiation oncologists could exercise clinical privileges.

The hospital’s unfair competition counterclaim alleged that the plaintiff physicians were improperly diverting patients from the hospital to radiation oncology facilities in which the physicians held an ownership interest, which the hospital alleged constituted “free riding.”

Tabata v. Charleston Area Med. Ctr., Inc. (Summary)

BREACH OF PATIENT CONFIDENTIALITY

Tabata v. Charleston Area Med. Ctr., Inc., No. 13–0766 (W. Va. May 28, 2014)

The West Virginia Supreme Court of Appeals reversed a lower court’s ruling that a group of patients did not meet the criteria for a class action lawsuit.  The dispute emerged after a medical center accidentally published patients’ personal and medical information on a public website.

In February 2011, certain patients received a letter from a local medical center informing them that some of their personal and medical information had been unintentionally placed on the Internet.  The information, which had been exposed since September 2010, included the patients’ names, dates of birth, contact details, social security numbers, and basic respiratory care records.  Although there was no evidence of unauthorized access, the local medical center admitted that someone could have found the information by conducting an “advanced internet search.”  The medical center offered to provide the affected patients with a full year of credit monitoring.

Some patients filed lawsuits alleging a breach of confidentiality and an invasion of privacy.  In addition, they attempted to initiate a class action lawsuit on behalf of the 3,655 patients affected by the breach.  The lower court ruled that the patients lacked standing to bring a claim because they could not show that they had suffered any kind of actual harm from the publication of their medical records.  Further, the lower court held that the patients did not meet the requirements for a class action lawsuit, including commonality (i.e., that the class, as a whole, has common issues of law or fact to raise in the lawsuit), typicality (i.e., that the representatives of the class have claims that are typical of the other members of the class), and predominance of common issues of law or fact (i.e., that the common issues of law or fact are greater than the individual issues that members of the class may have) among members of the class.

On appeal, the high court reversed the lower court decision, finding that patients have a legal interest in the confidentiality and privacy of their health information and, in turn, the plaintiff patients in this case had standing to bring a suit alleging violation of those interests.  Further, the court held that the patients satisfied the requirements for bringing a class action, noting that the claims of the entire class would be based on the same set of facts and would allege the same legal claims for violation of confidentiality and invasion of privacy.

Read the Supreme Court of West Virginia Opinion Here

Read the Dissenting Opinion of Justice Ketchum Here

 

Riley v. St. Mary Med. Ctr. (Summary)

DISCRIMINATION – AGE AND DISABILITY

Riley v. St. Mary Med. Ctr., No. 13-CV-7205 (E.D. Pa. May 27, 2014)

The U.S. District Court for the Eastern District of Pennsylvania granted in part a nurse’s motion to reconsider her claim that she was the victim of age discrimination.

The plaintiff, a 62-year-old nurse, worked in the defendant hospital for 10 years with generally positive work reviews.  She had a history of anxiety, colitis, insomnia, and cognitive disabilities.  In 2009, she complained to her supervisor that she was experiencing harassment at the hands of another nurse.  In 2011, the nurse received a poor annual evaluation that she claimed contained a significant amount of inaccurate information.  The nurse expressed her concern that she was being selectively discriminated against because of her age.  Shortly thereafter, the hospital began scheduling her for fewer shifts as the charge nurse, instead giving the position to a younger employee.  One week after the hospital hired a new, younger nurse in early 2013, the hospital terminated her for allegedly poor performance.  The nurse then filed a charge of discrimination with the Equal Employment Opportunity Commission, alleging age discrimination, disability discrimination, and retaliation.

In a prior opinion, the U.S. District Court for the Eastern District of Pennsylvania held that the nurse had not provided adequate factual support to substantiate her claims that she suffered from a disability. Because of this, she could not claim that any discrimination against her was based on a disability. See Riley v. St. Mary Med. Ctr., No. 13-cv-7205 (E.D. Pa. Apr. 23, 2014).

In this subsequent opinion, the court granted in part the nurse’s motion to reconsider, analyzing the nurse’s claims under the liberalized standard of the ADA Amendments Act of 2008 (“ADAAA”). The court determined that the nurse’s mere allegations that she had difficulty in sleeping, concentrating, communicating and thinking were sufficient to allege that she had a disability under the ADAAA.

Noting that the Pennsylvania legislature had not adopted similar amendments to its Human Relations Act, the court held that the nurse continued to allege inadequate facts about her alleged disability to sustain a claim under that Act.  Specifically, the court noted that a claim for discrimination under the Pennsylvania Human Relations Act would require the nurse to allege that her impairments prevent or several restrict her from doing activities that are of central importance to most people’s lives.  Conclusory allegations that the nurse was, at times, limited in her ability to enjoy several major life activities was not sufficient.

Nayak v. St. Vincent Hosp. & Health Care Ctr. (Summary)

EMPLOYMENT DISCRIMINATION

Nayak v. St. Vincent Hosp. & Health Care Ctr., No. 1:12–cv–00817–RLY–DML (S.D. Ind. May 22, 2014)

The United States District Court for the Southern District of Indiana granted in part and denied in part a hospital’s motion for summary judgment regarding a former employee’s allegations of discrimination on the basis of disability, gender, and national origin.

The court held that the former employee, an OB/GYN resident, had not presented enough evidence to support claims of discrimination and retaliation on the basis of national origin.  The court concluded that the evidence presented in the case simply demonstrated the existence of “a possible cultural divide between American and Indian styles of communication and hospital norms” – not intentional discrimination.  The court dismissed her claim that she was terminated in retaliation for complaining about a hostile work environment because there was no evidence that the resident had complained to anyone with decision-making authority.

The court denied the hospital’s motion for summary judgment on the resident’s claims of gender and disability discrimination based, in part, on a document written by one of the supervising physicians which stated that the hospital terminated the resident’s contract because of “a medically complicated pregnancy and significant concerns regarding her academic progress.”  The court found that “this is direct evidence of discrimination” and that a reasonable jury could conclude that the plaintiff was terminated because of her medically complicated pregnancy in violation of both Title VII, which prohibits employment discrimination on the basis of sex, and the Americans with Disabilities Act.

Hamilton v. Sheridan Healthcorp, Inc. (Summary)

EMPLOYMENT DISCRIMINATION

Hamilton v. Sheridan Healthcorp, Inc., No. 13-62008-CIV (S.D. Fla. May 25, 2014)

The United States District Court for the Southern District of Florida granted the defendant’s motion for summary judgment on the plaintiff’s federal and state racial discrimination and retaliation claims.

The plaintiff, an African-American anesthesiologist, alleged that the defendant discriminated against him on the basis of race when it moved him from night shift to day shift, subjected him to monitoring, cut his pay and ultimately terminated him.  The defendant moved for summary judgment, arguing that the plaintiff was not able to show that the defendant treated a similarly situated employee more favorably.  The court agreed that the plaintiff failed to make out a prima facie case of discrimination because he provided no evidence of similarly situated individuals with similar histories of disciplinary and job performance issues.

Turning to the plaintiff’s retaliation claim, the court held that the defendant had a legitimate non-retaliatory basis for the plaintiff’s termination – his failure to return to work when he said he would after being granted leave.  The court rejected the plaintiff’s argument that the defendant’s deviation from its standard termination procedures demonstrated that its “proffered reason for his termination is unworthy of belief.”

Ervine v. Desert View Reg’l Med. Ctr. (Summary)

DISABILITY DISCRIMINATION

Ervine v. Desert View Reg’l Med. Ctr., No. 12-15059 (9th Cir. May 29, 2014)

Plaintiff, individually and on behalf of his wife’s estate, sued the hospital where his wife was treated for cancer and her physician, alleging that their refusal to provide a sign language interpreter violated the Americans with Disabilities Act (“ADA”) and Rehabilitation Act.

The plaintiff sought an injunction under Title III of the ADA, ordering the hospital and physician to provide appropriate aids to him to ensure effective communication.  The U.S. Court of Appeals for the Ninth Circuit held that without the “imminent prospect of a future injury,” the plaintiff lacked standing and the claim could not go forward.  Although the plaintiff and his wife may have suffered past injuries, the plaintiff was not currently seeking admission to the hospital and his wife was no longer a patient.  As a result, there was no prospective harm an injunction could cure and the claim was dismissed for lack of jurisdiction.

In reversing the district court’s grant of summary judgment on the Rehabilitation Act claim, the appeals court ruled that the claim was not barred by the statute of limitations.  The appeals court held that each denial of an interpreter was a discrete and independent wrong.  Although the first denial occurred more than two years before the suit was filed, subsequent denials occurred within the actionable two-year window.

Sapssov v. Health Mgmt. Assocs., Inc. (Summary)

FRAUD AND ABUSE

Sapssov v. Health Mgmt. Assocs., Inc., Nos. 2:12-cv-46-FtM-29DNF, 2:12-cv-163-FtM-29DNF (M.D. Fla. May 21, 2014)

The United States District Court for the Middle District of Florida dismissed plaintiffs’ class action complaint for violations of the Securities and Exchange Act of 1934.  Plaintiffs purchased the publicly traded common stock of the defendant between July 27, 2009 and January 9, 2012 (the “Class Period”).  The defendant is a publically traded corporation that operates 70 acute care hospitals and other health care facilities throughout the United States.

Plaintiffs alleged that defendant violated the Securities and Exchange Act by failing to disclose a scheme to defraud Medicare, which resulted in inflated revenue during the Class Period.  Specifically, plaintiffs alleged that defendant pressured its physicians to admit Medicare beneficiaries regardless of medical necessity, in order to collect higher reimbursement rates, and this increase in revenue inflated its stock price.  Once the fraudulent scheme was disclosed through two subpoenas from the U.S. Department of Health and Human Services, Office of Inspector General, a “60 Minutes” investigative segment and a report from an equity analyst, the defendant’s stock price dropped dramatically, resulting in significant losses for the plaintiffs.

The court held that even though plaintiffs’ complaint contained the required particular circumstances constituting fraud, material misrepresentations, and the intent to defraud, plaintiffs failed to show a causal connection between the material misrepresentations and a subsequent decline in stock value.  The court agreed with defendant that the reports by financial groups did not reveal any information that was not already made public.  The court also held that the drop in price after the subpoenas did not show causation because an investigation, without more, does not prove a material misrepresentation or reliance on it.  Finally, the court ruled that the drop in the stock price after the “60 Minutes” segment was irrelevant because it aired 11 months after the Class Period.

U.S. ex rel. Heesch v. Diagnostic Physicians Group (Summary)

FALSE CLAIMS ACT

U.S. ex rel. Heesch v. Diagnostic Physicians Group, No. 11-0364-KD-B (S.D. Ala. May 22, 2014)

The U.S. District Court for the Southern District of Alabama granted in part and denied in part a motion to dismiss the United States’ Complaint in intervention filed by a health system, its clinic and its clinic subsidiaries in a False Claims Act suit.

The health system created a clinic in order to acquire physician practices and to establish clinic subsidiaries.  The clinic established two clinic subsidiaries.  With the approval of the health system and its board, the clinic entered into contractual agreements with individual physicians and physician groups to provide physicians to the two clinic subsidiaries.  Allegedly, both clinic subsidiaries subsequently entered into agreements with a physician group whereby the subsidiaries billed Medicare for testing and designated health services that were referred by group physicians, and often performed by subsidiary personnel on subsidiary equipment.  The payments made to the group allegedly were in turn paid to the referring physicians, and thus resulted in group physicians receiving payment for referral of designated health services, some of which group physicians did not personally perform, in violation of the Stark Law.

The court held that the government had pled facts with sufficient particularity against the subsidiary clinics and denied the motion to dismiss with regard to them.  However, the court held that the government’s generalized allegations that (1) the health system created the clinic and the clinic in turn created the subsidiaries; (2) there was an overlap among officers, executives and employees within all organizations involved; and (3) some of the shared leadership knew about the improper arrangement were insufficient to support a claim for vicarious liability against the health system and clinic.

• Read the Order of U.S. District Judge Kristi K. DuBose, dated May 22, 2014, adopting the Report and Recommendation dated April 11, 2014.
• Read the Report and Recommendation of U.S. Magistrate Judge Sonja F. Bivins dated April 11, 2014.