Prothro v. Prime Healthcare Servs. (Summary)

AMERICANS WITH DISABILITIES ACT

Prothro v. Prime Healthcare Servs., No. 3:13-CV-108-RCJ-WGC (D. Nev. Oct. 16, 2013)

Finding that it lacked subject matter jurisdiction, the United States District Court for the District of Nevada dismissed a lawsuit brought by an interventional cardiologist who claimed that a hospital failed to adequately accommodate his disability (dyslexia) in violation of the Americans with Disabilities Act and retaliated against him for complaining about the failure to accommodate by subjecting him to onerous peer review and reporting him to the National Practitioner Data Bank.  The physician also claimed that the hospital violated a settlement agreement (entered into some time after the physician requested a hearing regarding a suspension) because the agreement stated that the hospital would comply with the ADA, which it did not.

The district court held that the ADA did not apply because the physician was not an employee of the hospital but, rather, an independent member of the medical staff.  In support of its conclusion, the court noted that the physician had signed several applications for reappointment that explicitly stated they were not for employment and that the acceptance of an application did not result in employment by the hospital.  The court went on to note that the hospital contractually agreed to provide the physician with ADA-type rights by stating such in the settlement agreement.  But, enforcement of those rights would need to be accomplished through a breach of contract claim and did not, through mere reference to the ADA, give rise to a federal cause of action.  With no federal claim in dispute, the court dismissed the case for lack of subject matter jurisdiction.

Hospitalists of Nw. Mich., P.L.C. v. Fischer (Summary)

PHYSICIAN EMPLOYMENT TERMINATION

Hospitalists of Nw. Mich., P.L.C. v. Fischer, Nos. 301962, 302126 (Mich. Ct. App. Oct. 10, 2013)

The Court of Appeals of Michigan affirmed in part and reversed in part a lower court’s ruling on a professional physician corporation’s action seeking payment of a member physician’s outstanding loan balance and other amounts allegedly owed, agreeing that the loan agreement between the corporation and the physician, requiring the physician to make monthly payments and allowing the corporation to accelerate the loan upon default of the payments, was still in effect, as the physician’s obligation to repay the loan arose under an agreement separate from his employment agreement and the separation agreement that he ultimately executed at the end of his employment affirmed that the loan agreement remained in full force and effect.

Although the physician argued that the corporation waived its default events under the loan agreement when the physician’s employment ended, the separation agreement provided that remaining provisions of his employment agreement, including terms of his compensation and the repayment of the loan, remained in full force and effect. However, the court did agree with the physician’s argument that the additional money sought by the corporation for “overhead expenses” was mischaracterized and miscalculated because it incorrectly treated the physician as an employee who was terminated for cause, with no entitlement to the money he collected on his accounts receivable, which was inconsistent with the court’s proper determination that the physician was terminated pursuant to a separation agreement that entitled him to keep the accounts receivable and have it applied against his outstanding loan balance.

Methodist Hosp. v. Halat (Summary)

PHYSICIAN EMPLOYMENT TERMINATION

Methodist Hosp. v. Halat, No. 01-13-00121-CV (Tex. App. Oct. 10, 2013)

The Court of Appeals of Texas affirmed a lower court’s denial of a hospital’s motion to dismiss, finding that a physician’s claims of breach of contract and other claims related to his employment contract were not health care liability claims. The physician accepted a position with the hospital largely due to the benefits offered, including five weeks of paid vacation each year, which were summarized in an employment agreement. After multiple amendments to the employment agreement, the final version provided only one method of termination, a without cause provision that either party could exercise provided that 120 days’ advance written notice was given to the other party.

When the physician sent the hospital his resignation letter, he stated that he was providing 120 days’ notice to terminate the agreement without cause and that he was also applying 680 hours of his accrued paid time off to those 120 days, meaning he would not work any more shifts. In the letter, the physician explained his reasons for resigning, which included not being allowed to use his vacation time and thinking that the intensive care unit was poorly run. The day after the physician sent his letter of resignation, the hospital informed him that it was terminating his employment immediately, for cause, and that he would not receive any further compensation.  The physician sued for breach of contract and the hospital, characterizing the lawsuit as one involving health care liability claims, sought to have the suit dismissed because the physician had not filed an expert report as required by statute.

The court disagreed, holding that the physician’s claims were not health care liability claims, and therefore did not require the physician to file an export report within 120 days after filing suit. According to the court, the physician’s allegations did not concern the “treatment, lack of treatment, or other claimed departure from accepted standards of medical care, health care, or safety or professional or administrative services directly related to health care,” as was required by law for health care liability claims.

Regents of Univ. of Cal. v. Superior Court (Summary)

MEDICAL INFORMATION PRIVACY

Regents of Univ. of Cal. v. Superior Court, No. B249148 (Cal. Ct. App. Oct. 15, 2013)

The California Court of Appeal granted a university’s petition and issued a writ of mandate directing a lower court to vacate its opinion involving its interpretation of a state medical information privacy statute and enter a new opinion dismissing the action.

A patient filed a class action complaint against the university after receiving a letter informing her that a university hospital physician’s home was broken into and an external hard drive containing patient information had been stolen. The patient claimed that this was a violation of a state law prohibiting health care providers from disclosing a patient’s medical information without authorization except in certain specified circumstances. The lower court held that the patient had sufficiently stated a claim under state law.

The appellate court held that the lower court read the state law too narrowly. The court stated that state legislators intended an action based on state law to require a plaintiff to “plead and prove” that the medical information was released. The court made a distinction between “to release,” which has its own cause of action, and “to disclose,” which has a different cause of action. The court held that negligently releasing information also encompassed the negligent storage of information that allowed a third party to gain access to the information.

While the appellate court held that negligent storage of information was actionable under state law, the patient still did not have enough information to support her claim. The court held that the state law required more than an allegation that the university lost possession of the records to support a claim of negligent release of information and that there was no way for the patient to know whether or not an unauthorized individual viewed her medical records after the hard drive was stolen. Since the patient failed to allege sufficient facts, the appellate court found that the lower court should have dismissed the patient’s claim.

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On November 11, 2013, the California Court of Appeal issued an order modifying its opinion and denying rehearing but indicating that there was no change in its judgment. Regents of the Univ. of Cal. v. Sup. Ct., B249148 (Cal. Ct. App. Nov. 13, 2013).

Rocky Mountain Med. Mgmt., LLC v. LHP Hosp. Group, Inc. (Summary)

TORTIOUS INTERFERENCE/ANTITRUST

Rocky Mountain Med. Mgmt., LLC v. LHP Hosp. Group, Inc., No. 4:13-cv-00064-EJL (D. Idaho Sept. 30, 2013)

The United States District Court for the District of Idaho granted in part and denied in part a hospital’s motion to dismiss the tortious interference and antitrust claims of a consultant who sold his surgery center to a hospital.

The consultant owned a surgery center and a consulting company.  The hospital bought the surgery center and employed the consultant.  The consultant terminated his employment after a few years, and shortly thereafter, began pursuing the development of a new surgery center that would compete with the hospital.  The consultant contacted an anesthesia group that held an exclusive contract with the hospital to provide services at the new surgery center.  The anesthesia group also had a contract with the consultant’s consulting company in which the consulting company provided practice management and billing services to the group.  The hospital allegedly told the anesthesia group that it would terminate the exclusive contract it had with the hospital if the group did not terminate its contract with the consulting company.  Subsequently, the anesthesia group terminated its agreement with the consulting company.

The district court first examined the three tortious interference claims.  The court dismissed the tortious interference of a contract claim because the contract between the anesthesia group and the consulting company contained an “at-will” termination provision.  Thus, the termination of the contract itself cannot be considered a breach without other facts to support a breach of the covenant of good faith and fair dealing.  The court then turned to the intentional interference with prospective economic advantage claim, relative to the development of the new surgery center.  The court did not dismiss this claim, finding that it was reasonable to infer that the consultant was delayed in developing the surgery center because he lost revenue when the anesthesia group terminated the contract with the consulting company.  Finally, the court addressed the intentional interference with prospective economic advantage claim, relative to the termination of the contract between the anesthesia group and the consulting company.  The court did not dismiss this claim, rejecting the hospital’s argument that it was pursuing the legitimate purpose of attempting to eliminate a potential competitor.  The court found that the consulting company was not in competition with the hospital or its surgery center, so the hospital’s interference with the contract between the anesthesia group and the consulting company was not in pursuit of a legitimate business interest.

The court granted in part and denied in part the hospital’s motion to dismiss the antitrust claims. It dismissed the antitrust claims of the consulting company, holding that it lacked standing because it was not a consumer or participant in the market for surgical services.  However, the court did not dismiss the antitrust claims of the consultant, finding that the consultant was a potential participant in the surgical services market, and noted that he had owned and operated a surgery center in the past.

U.S. ex rel. Gale v. Omnicare, Inc. (Summary)

QUI TAM

U.S. ex rel. Gale v. Omnicare, Inc., No. 1:10-CV-00127 (N.D. Ohio Oct. 1, 2013)

The United States District Court for the Northern District of Ohio denied two motions from a prescription drug company attempting to bar a former employee’s qui tam action.  The former employee claimed that the drug company gave skilled nursing facilities illegal discounts in exchange for referrals of other patients with government-reimbursable drug costs.

The drug company moved to exclude all evidence of Medicare Part D and Medicaid reimbursements at trial, arguing that the former employee did not specifically plead these damages or provide sufficient notice that he was pursuing these damages.  The court found that while the former employee did not specifically state that he was pursuing these damages, he could seek them because the damages were based on the same wrongful conduct described in the complaint.  Also, the court found that the drug company was given sufficient notice that the former employee would be pursuing these damages.

The court also held that the former employee’s Medicare Part D and Medicaid damages were not barred by election of remedies, res judicata and release, based on the settlement in a previous qui tam case by another relator.  The court found that the drug company did not assert the election of remedies and res judicata defenses in its answer, as required, and although it did assert release, it withdrew that defense.  The court may grant leave to the drug company to assert one of the defenses “if justice so requires.”  The court held that justice did not require, since with only three weeks until the trial, the former employee would not have enough time to properly respond to the drug company’s amended complaint.

U.S. ex rel. Singh v. Bradford Regional Med. Ctr. — Sept. 2013 (Summary)

QUI TAM

U.S. ex rel. Singh v. Bradford Regional Med. Ctr.
Civil No. 04-186 Erie (W.D. Pa. Sept. 30, 2013)

The United States District Court for the Western District of Pennsylvania granted a physician qui tam relators’ fee application and ordered a medical center to pay attorneys’ fees and expenses based on the mandatory fee shifting statute in the False Claims Act.

The medical center did not argue that the amounts were unreasonable, but instead requested that the amounts be reduced based on hardship and/or other inequities.  The court denied the request, stating that the argument is not sufficient to permit the court to lower the award.

Also, the court denied the reduction even though another company was involved in the litigation with the medical center, since that company had yet to incur liability as it did not settle any claims for alleged violations of the False Claims Act.

Evans v. Jones (Summary)

ACCESS TO PEER REVIEW MATERIALS

Evans v. Jones, No. 12-0921 (W. Va. Oct. 4, 2013)

The Supreme Court of Appeals of West Virginia affirmed the circuit court’s dismissal of claims brought by an obstetrician against attorneys for a hospital for, among other things, violation of the state peer review privilege, violation of an affirmative duty to keep information confidential and malicious prosecution.

The state supreme court held that the litigation privilege, which bars claims for civil damages against an opposing party’s attorney if the attorney acted during the course of representation of an opposing party, barred all of the obstetrician’s claims.  It found that the attorneys, one of whom represented the hospital in previous litigation with the obstetrician, and the other who served as outside counsel, properly accessed and used the peer review information related to that litigation.

Muzaffar v. Aurora Health Care S. Lakes, Inc. (Summary)

WHISTLEBLOWER/JURISDICTION

Muzaffar v. Aurora Health Care S. Lakes, Inc., No. 13-CV-744 (E.D. Wis. Oct. 4, 2013)

A physician brought a claim against a hospital for retaliation after he complained of patient transfers that he believed violated the Emergency Medical Treatment and Active Labor Act (“EMTALA”).  The physician, who had a contract with the hospital, alleged that while on call at the hospital certain transfers were made to the hospital without mandatory transfer paperwork in violation of EMTALA, and that the hospital retaliated against him after reporting those violations to the hospital’s medical executive committee.

The United States District Court for the Eastern District of Wisconsin found that there was a question whether the physician’s claim against the hospital for retaliation alleged a violation of the federal whistleblower statute.  The district court stated that the whistleblower protection, among other things, protects hospital employees from retaliation for reporting EMTALA violations.

The hospital argued that the physician was not a hospital employee, and the court found that raised a factual issue of jurisdiction.  Thus, the court found that additional information was required to determine whether it had jurisdiction in the case, and since the physician has the burden to establish jurisdiction, the court ordered the physician to provide additional information to respond to the factual challenge to jurisdiction raised by the hospital.

Flint Emergency Med., LLC v. Macon Cnty. Med. Ctr., Inc. (Summary)

BREACH OF CONTRACT

Flint Emergency Med., LLC v. Macon Cnty. Med. Ctr., Inc., No. 5:12-CV-105 (MTT) (M.D. Ga. Oct. 2, 2013)

The United States District Court for the Middle District of Georgia denied an emergency department group’s motion for summary judgment, and granted in part and denied in part a hospital’s motion for summary judgment, in a breach of contract claim and counterclaim.

The hospital and emergency department group entered into a contract in which the group would provide services for patients in the hospital’s emergency department, as well as a medical director, physicians, and midlevel providers for collections from professional fees billed.  The contract also provided for a base payment from the hospital to the emergency department group  as well as supplemental payments if patient volume fell below certain levels.  The hospital terminated the contract after approximately 1 ½ years, after which both parties alleged that the other had breached the contract – the hospital claimed that the emergency department group did not abide by the hospital’s policies and regulations and the group claimed that the hospital did not fulfill payment terms.

The emergency department group moved for summary judgment on the hospital’s counterclaim, arguing that the hospital cannot sue the group because the hospital unilaterally terminated the contract without notice and an opportunity to cure, as set forth in the contract.  The district court, in denying the motion, found that the contract did not set forth remedies in case of breach; rather, it set forth how the contract can be properly terminated, imposing notice and cure requirements as conditions precedent to a proper termination.  The court reasoned, per the agreement, that a party that terminates the contract without abiding by the notice and cure requirements breaches the agreement but does not preclude itself from asserting other claims for breach.  The court also reasoned that the contract did not require that either party give notice of a breach prior to suing on the alleged breach.

The hospital moved for summary judgment on the emergency department group’s claim of breach of contract, arguing that the group did not properly notify the hospital of the hospital’s breaching conduct.  The court found that the emergency department group had no affirmative obligation to notify the hospital, and denied this motion.  The hospital also moved for summary judgment on the emergency department group’s claim that the hospital breached the contract by employing several physicians and a nurse practitioner who had been employed by the group.  The court granted this motion, and found that while the contract stated that neither party could offer employment to each other’s providers, it specifically exempted providers who held privileges at the hospital prior to the contract.

Finally, the court held that whether the hospital owes the emergency department group outstanding subsidy payments must be resolved by a jury as it is a factual dispute.