U.S. ex rel. Antoon v. Cleveland Clinic Found. (Summary)

FRAUD & ABUSE

U.S. ex rel. Antoon v. Cleveland Clinic Found., No. 3:12-CV-027 (S.D. Ohio Oct. 16, 2013)

The United States District Court for the Southern District of Ohio granted a hospital’s motion to dismiss the Anti-Kickback and False Claims Act (“FCA”) lawsuit brought by a patient-turned-relator who alleged that his hospital and physician engaged in fraud by stating that his surgeon personally performed the patient’s prostate surgery and billing for the procedure as such, even though other physicians and a physician assistant were allowed to participate.  Further, the patient/relator claimed that the hospital and physician engaged in an unlawful kickback scheme with a robotics supplier, pursuant to which the supplier paid kickbacks in exchange for the doctor recommending robotic surgery and inflating the quality of procedures performed with the robot.

Among other things, the court found that the relator could not maintain a false certification FCA claim (i.e., a suit alleging that the claim submitted to Medicare was a false claim because the care was provided in a manner that violated a statute or rule) based upon alleged violation of the conditions of participation by the hospital or doctor.  Rather, the relator would have had to allege violation of a statute or rule that created a condition prerequisite to payment.

Further, the court held that the relator (who had filed his complaint pro se) failed to adequately plead many of the technical elements of an FCA claim.  For example, the relator stated that a claim was filed, but did not identify the specific claim, the date it was submitted, or the specific services billed.  Likewise, he alleged no injury as a result of the alleged false claim.

The court concluded that the relator was not the original source of the information underlying his FCA claim because there had been numerous malpractice allegations brought against the doctor alleging that he falsely inflated the positive outcomes for robotic surgery and was paid by the robotics supplier.  Further, the doctor had authored publications on robotic surgery in which he admitted to having a financial relationship with the supplier.

Romine v. St. Joseph Health Sys. (Summary)

EMTALA

Romine v. St. Joseph Health Sys., No. 12-6587 (6th Cir. Oct. 24, 2013)

The United States Court of Appeals for the Sixth Circuit affirmed a lower court’s decision to grant a hospital’s motion for summary judgment, finding that a patient had failed to provide sufficient evidence to establish a causal relationship between the hospital’s alleged violation of the Emergency Medical Treatment and Active Labor Act (“EMTALA”) and his injury.

The patient had lacerated his hand and went to the hospital’s emergency department.  While at the emergency department, the patient was informed by the receptionist there were no beds available, while the patient waited and insisted that all he needed was an examination.  After waiting about ten to 12 minutes, the patient went back home, only to have to return to the hospital emergency department because of his profuse bleeding.  The same receptionist told the patient that he would have to wait.  A nurse then noticed the patient’s significant injury and took him into the emergency room for treatment.  While the staff managed to temporarily stop the bleeding, they decided that the patient would need to be airlifted to another hospital for more treatment.  At this new hospital, the patient got the treatment he needed, but was instructed not to use the injured hand for one month, during which time he was unable to work.

The court found that the patient had not provided adequate evidence of causation for his EMTALA suit because he failed to provide expert testimony to prove that his harm, missing one month of work, resulted from the hospital’s delay in treating him.  The court noted that in cases such as this, a layperson cannot distinguish between whether the harm was caused by the initial injury or the delay in treatment and, accordingly, expert testimony is required.  Furthermore, the court held that the patient failed to provide evidence that the hospital acted with an “improper motive” – which is an essential element of an EMTALA claim in that jurisdiction – because he made no allegations that he received a different standard of care than other patients.

The court also rejected the patient’s argument that CMS’s preliminary determination letter, which found that the hospital had violated EMTALA, was binding in this case.  Notably, said the court, the CMS preliminary determination letter makes no findings about whether the violation caused a patient’s harm or whether the hospital had improper motive.  In addition, because the preliminary decision is preliminary and has not been adjudicated within the agency, it is not the sort of agency decision that would be entitled to preclusive effect in later lawsuits.

Shervin v. Partners Healthcare Sys., Inc. (Summary)

CONFIDENTIALITY OF CERTIFYING BOARD PEER REVIEW INFORMATION

Shervin v. Partners Healthcare Sys., Inc., No. 1:13MC23 (M.D. N.C. Oct. 15, 2013)

The U.S. District Court for the Middle District of North Carolina denied a residency program’s motion to compel the American Board of Orthopedic Surgery (“ABOS”) to disclose records about an orthopedic surgeon who was suing the residency program for gender discrimination.  The physician’s lawsuit, in part, claimed that the residency program (and its affiliated entities) placed her on probation as part of its gender discrimination and may have contributed negative information to the ABOS or failed to submit any information, thereby impacting her ability to sit for Part II of the Boards.

To defend the lawsuit, the residency program sought ABOS records concerning any information submitted to ABOS by the residency program, as well as any information provided by hospitals where the resident had gone on to work.  The program argued that such records were relevant because if the physician had problems at her post-residency hospitals, that would undermine her suggestions that the deficiencies during residency were a pretext for discrimination.

The court refused to order the ABOS to release the documents, noting that if the residency program wanted to obtain information about the physician’s performance at post-residency hospitals, it could contact those hospitals directly.  Further, the court noted that the ABOS has a strong interest in maintaining the confidentiality of peer review information submitted to it and to compel the disclosure of such information would undermine ABOS’s ability to fulfill its mission to protect the public by evaluating the initial and continuing qualifications of orthopedic surgeons.

Lopez-Krist v. Salvagno (Summary)

VICARIOUS LIABILITY/ ACTUAL AND APPARENT AGENCY

Lopez-Krist v. Salvagno, Civil Action No. ELH-12-01116 (D. Md. Oct. 17, 2013)

The United States District Court for the District of Maryland refused to grant summary judgment for either party in a lawsuit brought by the mother of a patient whose leg was amputated due to the alleged negligence of the orthopedist on call for the emergency department. The mother claimed that the hospital should be held liable since the physician was the actual or apparent agent of the hospital.  The hospital argued that the orthopedic surgeon was an independent contractor member of the medical staff and, in turn, that it could not be held vicariously liable for his negligence.

In considering whether the orthopedist was an actual agent of the hospital, the court considered the contracts and relationships between the two.  It noted that the orthopedist would be considered a “servant” of the hospital if the hospital had sufficient control over the activities of the orthopedist. It looked at the existing contracts between the orthopedic surgeon, his professional association, and the hospital, which dealt with pay-for-call and directorship of the joint replacement program, and noted that the hospital had at least some degree of control over the physician’s practice and his schedule. The court found that whether or not this amounted to actual authority was a question of fact for the jury, which could not be determined at the summary judgment stage of the case.

The district court also denied summary judgment on the issue of apparent authority.  In support of her claim for apparent agency, the mother alleged that the informed consent form was on hospital letterhead and the services of the orthopedic surgeon were provided in the ER, which was located physically within the hospital.  The hospital, on the other hand, argued that the patient was brought to the hospital by the ambulance – not because he chose the hospital specifically.  Accordingly, according to the hospital, the patient and his mother never relied on any representations of agency when choosing a hospital (and, in fact, did not choose the hospital at all).   Noting that the facts were in dispute, the court held that summary judgment would be inappropriate and the issue would need to be decided by a jury.

Koch v. Sheehan (Summary)

LICENSURE ACTION / MEDICAID EXCLUSION

Koch v. Sheehan, 2013 N.Y. Slip Op. 06804 (N.Y. Oct. 22, 2013)

The Court of Appeals of New York affirmed a lower court’s determination that the state Office of the Medicaid Inspector General (“OMIG”) acted arbitrarily and capriciously when terminating a physician’s participation in Medicaid following the physician’s entrance into a consent order with the Bureau of Professional Misconduct (“BPMC”) involving two professional misconduct charges.  The court disagreed with the lower court’s reasoning, however.

The lower court had held that it was arbitrary and capricious for the OMIG to terminate the physician from participation in Medicaid based solely on the consent order, since the BPMC allowed the physician to continue practicing pursuant to that consent order.  The lower court held that the OMIG would have to conduct its own independent investigation before deciding to exclude the physician.

The court of appeals disagreed.  It held that the OMIG had clear statutory authority to use its discretion to exclude an individual from the Medicaid program based on the individual’s plea of no contest to professional misconduct charges, without any necessity for the OMIG to conduct an independent investigation.  The court noted, however, that exclusion by the OMIG is not automatic for all physicians who enter into a consent order with the BPMC.  Rather, the OMIG is expected to use its discretion when deciding whether to exclude a physician based on a BPMC consent order.  Accordingly, it is necessary for the OMIG to document the exercise of its discretion in cases where it chooses to exclude.  Applying those conclusions to the case at hand, the court held that it was arbitrary and capricious for the OMIG to exclude this physician from the Medicaid program on the basis of the BPMC consent order without explaining why it was relying on the consent order to reach the decision to exclude.

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.