Holmes v. E. Cooper Cmty. Hosp., Inc. (Summary)

MEDICAL STAFF ATTORNEY FEES AND COSTS

Holmes v. E. Cooper Cmty. Hosp., Inc., No. 27370 (S.C. Mar. 26, 2014)

The South Carolina Supreme Court upheld a lower court’s summary judgment in favor of a defendant-hospital and against a plaintiff-physician and upheld the court’s sanctions that were imposed against the physician.

The physician, an ophthalmologist and attorney, was a member of the hospital’s consulting staff.  In 2006, the physician sought advancement from the courtesy staff to the active staff at the hospital.  The hospital’s credentialing committee found that the physician was unqualified to advance, but she was permitted to remain on the courtesy staff.  In 2008, the physician again sought advancement to the active staff, and the hospital determined that her application was incomplete, and requested that she voluntarily resign from the courtesy staff.  The physician refused to resign, and instituted a lawsuit challenging the hospital’s decision.

The lower court held that the physician’s claims arose out of the hospital’s peer review process and that courts do not have jurisdiction over the decisions of private hospitals concerning the staff category and privileges of practitioners.  Furthermore, the lower court ordered sanctions against the physician for attorneys’ fees and costs in the amount of $53,447.15 because the case law was clear that courts did not have such jurisdiction and found that the lawsuit was frivolous.  The lower court also enjoined the physician from filing any further actions against the hospital without first posting a bond.

The physician appealed the award of sanctions to the South Carolina Supreme Court.  The court found that the physician’s first lawsuit previously determined the issue on its merits and this estopped the plaintiff from making the exact same argument against the hospital in the second lawsuit.  Moreover, the court upheld the sanctions because not only was this repeated challenge frivolous, but the physician was already sanctioned as a result from bringing this type of claim against the hospital.

Gentilello v. Dallas Cnty. Hosp. Dist. (Summary)

SOVEREIGN IMMUNITY

Gentilello v. Dallas Cnty. Hosp. Dist., No. 05-13-00150-CV (Tex. App. Mar. 24, 2014)

The Court of Appeals of Texas affirmed a trial court’s ruling that a hospital had sovereign immunity in a physician’s claim alleging that he was removed from the call schedule and retaliated against for reporting practices that violated Medicaid rules and regulations.

The physician was employed by a medical center and also provided services at the hospital.  In accordance with an agreement between the medical center and the hospital, physicians employed by the medical center who provided services at the hospital were required to follow the policies and procedures of the hospital, including its corporate compliance policy and procedures.  One such procedure required that employees, contractors, and agents were to report potential or suspected incidents of fraud and violations of law to the hospital.  The physician filed a lawsuit which alleged that after he reported the practices that violated Medicaid rules and regulations, the hospital removed him from its call schedule and conspired with the medical center to retaliate against him for reporting the violations.  The hospital then entered into a settlement agreement with the physician and, under the terms of the agreement, the physician was allowed to reserve his right to maintain his retaliation claim under state law.

After the settlement, the hospital asserted that since it is a state entity, the physician’s retaliation claim is barred by sovereign immunity, and the trial court agreed.  On appeal, the physician’s contention was that the language of the settlement agreement indicated that the hospital waived its sovereign immunity; however, the appeals court found that the agreement did “not contain clear and unambiguous language waiving sovereign immunity.”  The physician also argued that the hospital waived sovereign immunity by its “extraordinary, egregious, and inequitable” conduct; however, the appeals court also declined to conclude that a state entity, such as the hospital, could waive sovereign immunity by its conduct.  Finally, the court found that whether the hospital is liable under the terms of the state’s Medicaid fraud prevention laws is irrelevant absent a waiver of sovereign immunity.

Sood v. Univ. of Iowa (Summary)

ADMINISTRATIVE REMEDY

Sood v. Univ. of Iowa, No. 13 – 0870 (Iowa Ct. App. Mar. 26, 2014)

The Iowa Court of Appeals affirmed a lower court’s grant of summary judgment in favor of a defendant university hospital and its board of regents and against the plaintiff, a former physician employee, on the physician’s breach of contract claim.

The physician filed a lawsuit against the hospital and its board for breach of contract, among other things, alleging that the hospital failed to follow its rules and regulations in revoking the physician’s clinical privileges and reducing his compensation.  The lower court granted summary judgment in favor of the hospital and the board and the physician appealed.

The appeals court found that the hospital and the board were state administrative agencies that had (1) established their own grievance and appellate policies; and (2) adopted specific rules in relation to the appointment and termination of physicians, the qualifications necessary to obtain staff membership and the grant, modification or termination of clinical privileges.

The court found that since the physician’s breach of contract claim stemmed from (1) the hospital’s opinion of his job performance; and (2) the hospital’s alleged failure to follow its own procedures when it revoked his clinical privileges, the physician’s claim necessarily implicated the hospital’s administrative procedures and thus was not actionable in state court unless the physician exhausted those procedures.

U.S. v. Shoemaker (Summary)

ANTI-KICKBACK

U.S. v. Shoemaker, Nos. 12-60754, 12-60791 (5th Cir. Mar. 25, 2014)

The United States Court of Appeals for the Fifth Circuit reversed a trial court’s ruling and reinstated the criminal convictions of Earnest Levi Garner (“Garner”) and Raymond Lamont Shoemaker (“Shoemaker”) (collectively, “defendants”) and remanded the case to the trial court for sentencing.

The defendants were alleged to have engaged in a bribery and kickback scheme involving a community hospital.  Garner, the owner and operator of a nurse staffing business, alleged that David Chandler (“Chandler”), the chairman of the hospital’s board of trustees, requested that Garner pay him $5 for every nursing hour billed at the hospital in return for Chandler securing Garner business.  It was alleged that, about once a month, Garner would pressure Chandler to increase the hours billed and Chandler would lobby Shoemaker, the hospital’s chief operating officer and later its chief executive officer, accordingly.  In total Garner paid Chandler $268,000 and the hospital paid Garner’s company $2.3 million for nursing service.  Shoemaker was then alleged to solicit kickbacks and bribes and for making false statements in a subsequent transaction.

After an FBI investigation, Garner and Shoemaker stood trial for various federal crimes, including, among others, conspiracy and federal program bribery.  After the jury returned guilty verdicts on all counts against the defendants, the trial court entered judgments of acquittal and, in the alternative, granted new trials as to the conspiracy charges against the defendants and the bribery charges against Garner.

The appeals court held that Chandler was an agent of the hospital for the purposes of federal law and thus any bribes sought to influence his decision-making were sufficient to establish a conspiracy.  Also, Chandler was a director, who was authorized to act on behalf of the hospital with respect to its funds and, more specifically, he scheduled and set the agenda for hospital board meetings, contacted department heads for reports at board meetings, worked closely with Shoemaker, approved a $50,000 raise for Shoemaker and signed a contract on behalf of the hospital providing a nonprofit with the right to purchase the hospital.

The appeals court also held that the conspiracy claims were actionable notwithstanding the lack of direct evidence linking Garner and Shoemaker.  Chandler testified that Shoemaker requested money of him, that Garner verbally agreed to let him pay Shoemaker, and that he did in fact pay Shoemaker.  This testimony was sufficient to establish a conspiratorial relationship and the trial court’s rejection of such testimony amounted to an impermissible judgment of credibility.

U.S. ex rel. D’Alessio v. Vanderbilt Univ. (Summary)

FALSE CLAIMS ACT

U.S. ex rel. D’Alessio v. Vanderbilt Univ., No. 3:11-00467 (M.D. Tenn. Mar. 19, 2014)

The United States District Court for the Middle District of Tennessee denied defendant’s motion to dismiss a lawsuit filed by three physicians (“relators”) under the federal False Claims Act.  The court held that the relators’ first-hand knowledge of defendant’s specific false billing practices and procedures was sufficient to create a strong inference of purported fraud notwithstanding the absence of specific instances of fraud in relators’ complaint. In addition, the court found the “public disclosure bar” and “original source” requirements did not preclude the relators’ lawsuit because they possessed first-hand knowledge of relevant events that was acquired while they provided services for defendant.

Doss v. St. Claire Med. Ctr. (Summary)

EMPLOYMENT DISCRIMINATION

Doss v. St. Claire Med. Ctr., No. 12-92-HRW (E.D. Ky. Mar. 14, 2014)

The United States District Court for the Eastern District of Kentucky found a hospital was entitled to summary judgment on a race discrimination claim as well as a retaliation claim made by a former employee.

The employee was given 90 days’ notice of her termination, in accordance with her employment contract, as a Chief Certified Nurse Anesthetist.  The reasons for termination were ineffective leadership, not acting in a harmonious manner and failure to effectively evaluate and supervise staff. The employee alleged she was terminated because she was an African-American woman.  She also claimed two racial remarks created a hostile work environment, and she was retaliated against because she complained about the remarks.

The hospital conceded the employee was in a protected class and she experienced an adverse employment action. However, the hospital argued, and the court agreed, that the employee did not perform her job satisfactorily and she was not treated differently than similarly situated employees. The court relied heavily on the fact that two Caucasian males in similar positions to the employee also lost their jobs due to performance. The court went on to hold that even though the two racial remarks were deplorable, they were not severe and pervasive enough to establish a hostile work environment. Lastly, the court held there was an absolute lack of evidence of any connection between the employee’s complaints of racial remarks and her termination of employment because the complaints were submitted after her notice of termination.

Zipkin v. Kaiser Found. Health Plan (Summary)

ARBITRATION

Zipkin v. Kaiser Found. Health Plan, B245252 (Cal. Ct. App. Mar. 25, 2014)

The California Court of Appeal compelled arbitration between a medical group and its former employee, reversing the lower court’s order.

In June 2011, an OB/GYN called a meeting to complain about inadequate patient care. Later that month, she was accused of providing care to a nonmember. She was put on administrative leave and terminated in November 2011.  She filed a complaint, claiming various code violations as well as intentional infliction of emotional distress. The medical group filed a motion to compel arbitration consistent with the arbitration clause in her signed partnership agreement. The lower court found that the arbitration clause was both procedurally and substantively unconscionable.

The appellate court found that even though the arbitration rules were not attached to the arbitration agreement, this was not procedurally unconscionable because the physician had access to those rules online. The court did find that the arbitration clause was a contract of adhesion; however, it involved only a minimal degree of procedural unconscionability.  The court held the arbitration agreement was not substantively unconscionable because it was not “so one sided as to shock the conscience.”  However, the court did note that provisions of the agreement regarding attorney’s fees and amendment were highly substantively unconscionable, but that they could be severed from the contract.

Colantonio v. Mercy Med. Ctr. (Summary)

DEFAMATION

Colantonio v. Mercy Med. Ctr., 2014 N.Y. Slip Op. 02009 (N.Y. App. Div. Mar. 26, 2014)

A New York appeals court affirmed a previous order of a lower court denying a medical center’s motion to dismiss the plaintiff’s complaints of defamation.

The plaintiff, a physician, alleged that the defendants defamed him by making false statements to the National Practitioner Data Bank.  The appeals court ruled that the plaintiff’s allegations of malice are sufficient to state a cause of action for purposes of a motion to dismiss. Additionally, the court held that the defendants were not entitled to dismissal because no documentary evidence was presented to utterly refute the plaintiff’s allegations.

The defendants also argued that the one-year statute of limitations barred the plaintiff’s defamation claims against statements that appeared in a 2010 report. The defendants argued that these statements were originally published in 2009, and are therefore barred due to the single-publication rule. However, the appeals court affirmed the lower court’s decision not to apply the time-bar, as the subject statements differed in scope, detail, and description from the original publications.

Villare v. Beebe Med. Ctr. (Summary)

MEDICAL STAFF BYLAWS

Villare v. Beebe Med. Ctr., No.: 08C-10-198 JRJ (Del. Super. Ct. Mar. 19, 2014)

The Superior Court of Delaware ruled that medical staff bylaws do not create an enforceable contract.  The court reasoned that the bylaws expressly state that “‘[a]ppointment to the Medical Staff is a privilege and not a right’ and otherwise set forth the process to acquire Medical Staff privileges. In other words, the Bylaws provisions at issue are not written to provide a basis for breach of contract, but to set forth a procedural process.”  Accordingly, the court granted the hospital’s motion for summary judgment against a surgeon’s breach of contract claim.

Perry v. Schumacher Grp. of La (Summary)

DISCRIMINATION/WRONGFUL TERMINATION

Perry v. Schumacher Grp. of La., No. 2:13-cv-36-FtM-29DNF (M.D. Fla. Mar. 13, 2014)

The United States District Court for the Middle District of Florida granted an ER staffing group’s motion to dismiss a female, African-American physician’s claims of racial discrimination, gender discrimination, retaliation, trade libel, negligence, breach of contract, and breach of implied duty of good faith and fair dealing, finding that the physician failed to adequately allege her claims. The physician alleged that she was not treated equally to her male, Caucasian counterpart and that certain officers of the health group had issues with her because of her race and gender, falsely claiming that she was not acting in compliance with her role. Eventually, the group terminated the physician’s employment, giving her the required 60 days’ notice, but then informing her that her last shift would occur before the 60 days were over.

The court found that the physician had failed to state a claim of negligence.  She could not adequately allege – as required by Florida law to state a claim of negligence – that she was permitted to recover on the theory of supervisory authority, that the breach of the agreement created a foreseeable zone of risk, and that there was a misrepresentation of material fact or that she justifiably relied upon the misrepresentation.

The court also found that the physician failed to state a plausible claim for breach of contract because the agreement rendered her unable to rely on the general principles governing a claim for breach of contract as it imposes duties and obligations on the physician.  The court reasoned that she could assert a breach of contract claim under the doctrine of prevention of performance; however, the physician failed to allege that the group attempted to avoid liability under the agreement or perform any of its obligations under the agreement.  Finally, the court found that the physician failed to allege a breach of the contract because she simply alleged that the health group failed to comply in good faith with the agreement, which is not a plausible claim for breach of the implied duty of good faith and fair dealing.