Mead v. Salem Mem’l Dist. Hosp.

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

BOBBIE L. MEAD,

Plaintiff,

v.

SALEM MEMORIAL DISTRICT HOSPITAL
and
CHUKWUEMEKA M. EKEKE, M.D.,

Defendants.

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No. 4:07CV452 TIA

MEMORANDUM AND ORDER

This matter is before the Court on the Motion to Dismiss filed by Defendants Chukwuemeka

M. Ekeke, M.D., and Salem Memorial District Hospital. The parties consented to the jurisdiction

of the undersigned pursuant to 28 U.S.C. § 636(c).

Facts

The facts in the light most favorable to the Plaintiff, as the non-moving party, are as follows:

On or about April 14, 2005, Plaintiff, Bobbie Mead, presented to the Emergency Department

at Salem Memorial District Hospital “with neurological signs and symptoms, including but not limited

to left sided weakness and came under the care and treatment of defendant Ekeke[.]” (Complaint, p.

3, ¶ 9) After examining Plaintiff, Defendant Ekeke discharged Plaintiff with a diagnosis of “mild TIA,

left calf strain.” (Complaint, p. 3, ¶ 10) Plaintiff was later “transported to St. John’s Hospital via air

ambulance with a diagnosis of acute stroke.” (Complaint, p. 3, ¶ 11) According to the Plaintiff, he

suffered permanent and progressive neurological injury and damage, including but not limited to

paralysis, as a result of the stroke. (Complaint, p. 3, ¶ 11)

On March 22, 2008, Plaintiff filed a two-count Complaint against Defendants seeking

damages for alleged negligent medical treatment. Count I alleges medical negligence under Missouri

law. Count II alleges a violation of the Emergency Medical Treatment and Labor Act (“EMTALA”).

With regard to the EMTALA claim, Plaintiff asserts that Defendants (1) failed to provide an

appropriate medical screening examination within the capability of the emergency department of

Defendant SMDH; (2) failed to appropriately diagnose Plaintiff’s emergency medical condition, thus

placing Plaintiff’s health in serious jeopardy which resulted in serious bodily function and/or organ

impairment and dysfunction; and (3) failed to stabilize or to provide stabilizing treatment of Plaintiff

by failing to provide such medical treatment of the condition as was necessary to assure, within

reasonable medical probability, that no material deterioration of Plaintiff’s condition was likely to

result. (Complaint, pp. 9-10). On April 25, 2007, Defendants filed a Motion to Dismiss for Lack of

Subject Matter Jurisdiction, arguing that the allegations contained in Count II of Plaintiff’s Complaint

are insufficient to invoke federal jurisdiction under the EMTALA.

Standards for Ruling on a Motion to Dismiss

When ruling on a motion to dismiss under Rule 12(b)(6), the allegations in the complaint must

be construed in plaintiff’s favor.1 Duffy v. Landberg, 133 F.3d 1120, 1122 (8th Cir. 1998) (citations

omitted). Further, “[a] complaint should not be dismissed for failure to state a claim unless it appears

beyond doubt that the plaintiff can prove no set of facts in support of the claim that would entitle

plaintiff to relief.” Werner Enterprises, Inc. v. MNX Carriers, Inc., 163 F.3d 490, 491 (8th Cir. 1998)

(citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). A court may properly dismiss a complaint only

1 Although Defendants maintain that their Motion to Dismiss is based upon lack of subject
matter jurisdiction under Rule 12(b)(1), the majority of their Brief and Reply Brief argue that
Plaintiff’s Complaint fails to state a claim under the EMTALA. Therefore, the undersigned will
review the Motion under Rule 12(b)(6).

2

where the allegations on the face of the complaint reveal “‘some insuperable bar to relief.’” Duffy,

133 F.3d at 1122 (quoting Frey v. City of Herculaneum, 44 F.3d 667, 671 (8th Cir. 1995)).

Discussion

In their Motion to Dismiss, Defendants maintain that Plaintiff Complaint fails to state a claim

for a violation of the EMTALA; therefore, this Court is without jurisdiction to entertain Plaintiff’s

Complaint. In response, Plaintiff asserts that, under federal pleading standards, he has alleged a

failure to provide an appropriate medical screening examination such that he may be allowed to

establish evidence from which a jury could conclude that Plaintiff was treated differently than other

patients. (Memo. in Opposition, Doc. # , pp. 2-3)

After considering the Complaint, the Motion to Dismiss, and the responses thereto, the

undersigned finds that dismissal is appropriate. Congress enacted the Emergency Medical Treatment

and Active Labor Act (“EMTALA”) in 1986 to “address a distinct and rather narrow problem – the

‘dumping’ of uninsured, underinsured, or indigent patients by hospitals who did not want to treat

them.” Summers v. Baptist Med. Ctr. Arkadelphia, 91 F.3d 1132, 1136 (8th Cir. 1996); 42 U.S.C.

§ 1395dd. The Eighth Circuit Court of Appeals has clearly stated that EMTALA does not create “a

general federal cause of action for medical malpractice in emergency rooms.” Id. at 1137. Indeed,

the court in Summers affirmed the rule that “EMTALA is not a federal malpractice statute and it does

not set a national emergency health care standard; claims of misdiagnosis or inadequate treatment are

left to the state malpractice arena.” Id.

Instead, EMTALA provides a medical screening requirement, which states that “the hospital

must provide for an appropriate medical screening examination within the capability of the hospital’s

emergency department . . .” 42 U.S.C. § 1395dd(a). In addition, the statute requires that when the

3

hospital determines that a person has an emergency medical condition, “the hospital must provide

either such treatment as may be required to stabilize the medical condition, or for transfer of the

individual to another medical facility . . .” 42 U.S.C. § 1395dd(b)(1)(A) and (B). With regard to

proper screening procedure, the Summers court held, “[a]n inappropriate screening examination is

one that has a disparate impact on the plaintiff. Patients are entitled under EMTALA, not to correct

or non-negligent treatment in all circumstances, but to be treated as other similarly situated patients

are treated, within the hospital’s capabilities.” 91 F.3d at 1138. As for treatment to stabilize the

medical condition, the court noted that “stabilization” requires the hospital to first determine that the

individual has an emergency medical condition. Id. at 1140; see also Baber v. Hospital Corp. of

America, 977 F.2d 872, 883 (4th Cir. 1992) (“the plain language of the statute dictates a standard

requiring actual knowledge of the emergency medical condition by the hospital staff”). The statute

defines “emergency medical condition” as:

(A) a medical condition manifesting itself by acute symptoms
of sufficient severity (including severe pain) such that the absence of
immediate medical attention could reasonably be expected to result in
– (i) placing the health of the individual . . . in serious jeopardy, (ii)
serious impairment to bodily functions, or (iii) serious dysfunction of
any bodily organ or part;

§ 1395dd(e)(1)(A). In short, EMTALA imposes two obligations on hospitals: (1) appropriate

medical screening examination to determine whether a serious medical condition exists; and (2) if

such serious medical condition does exist, stabilization of the medical condition prior to transferring

or discharging the patient. Vickers v. Nash Gen. Hosp., Inc., 78 F.3d 139, 142 (4th Cir. 1996).

In the instant case, Plaintiff contends in Count II, Emergency Medical Treatment and Labor

Act, that Defendants failed to provide an appropriate medical screening examination; failed to

4

appropriately diagnose Plaintiff’s emergency medical condition; and failed to stabilize or provide

stabilizing treatment of the Plaintiff. These allegations fail to state a claim under EMTALA.

As previously stated, a claim under EMTALA requires a showing of a lack of uniform

treatment with other similarly situated patients. Summers, 91 F.3d at 1138. Nowhere in Plaintiff’s

Complaint does he mention that there was any disparate treatment involved. See Vickers, 78 F.3d

at 144 (“disparate treatment of individuals perceived to have the same condition is the cornerstone

of an EMTALA claim”). Instead, Plaintiff’s primary claim is that Defendants failed to properly treat

and/or diagnose Plaintiff’s condition, which is not a proper basis for stating a claim under EMTALA.

Id. at 1137; see also Vickers, 78 F.3d at 142.

Further, Plaintiff does not allege, as required by EMTALA, that the hospital determined or

had any actual knowledge that Plaintiff had “an emergency medical condition,” which the hospital

failed to stabilize. The Plaintiff alleges that the Defendants failed to provide such medical treatment

“as was necessary to assure, within reasonable medical probability, that no material deterioration of

plaintiff’s condition was likely to result.” As the foregoing discussion demonstrates, however, the

standard articulated by Plaintiff is not the standard required under EMTALA.

Plaintiff argues that Power v. Arlington Hosp. Ass’n is analogous to the Plaintiff’s case. 42

F.3d 851 (4th Cir. 1994). In that case, the Fourth Circuit Court of Appeals determined that the

plaintiff “presented evidence from which a jury could conclude that she was treated differently from

other patients . . .” Id. at 856. The plaintiff came to the emergency room complaining of pain,

inability to walk, and chills. The hospital discharged her with pain medication. When the plaintiff

returned to the ER the next day, she was in unstable condition with virtually no blood pressure. The

hospital then diagnosed her with septic shock and admitted her to intensive care. Id. at 853. A

5

physician testified at trial that an appropriate medical examination for a patient with the plaintiff’s

symptoms included a blood test, which the hospital did not administer. Id. at 855.

While the facts of Power may be somewhat analogous with the facts now before this Court,

Plaintiff has failed to state a claim for relief under EMTALA on the face of the complaint. See

Duffy v. Landberg, 133 F.3d 1120, 1122 (8th Cir. 1998) (A court may properly dismiss a complaint

where the allegations on the face of the complaint reveal “some insuperable bar to relief.”). Nowhere

does Plaintiff mention in the Complaint that the Defendants provided him with disparate treatment.

Further, nothing in the Complaint indicates that the Defendants had any knowledge of an “emergency

medical condition.” Finally, the Court notes that the Eighth Circuit Court of Appeals in Summers

rejects the reasoning in Power and instead finds the reasoning in the Fourth Circuit’s later opinion in

Vickers more persuasive. 91 F.3d at 1139, n.4 (“In fairness to the plaintiff, we observe that Power

v. Arlington Hospital Ass’n, 42 F.3d 851 (4th Cir. 1994), comes close, on its facts, to supporting his

position. We find the reasoning of the Fourth Circuit’s later opinion in Vickers, which analyzes

explicitly the problems of interpreting EMTALA that we have discussed in this opinion, more

persuasive.”). The Court therefore finds that Count II, based upon EMTALA, must be dismissed

under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be

granted. Further, because the only claim remaining is a state claim for medical negligence, this case

must be dismissed for lack of subject matter jurisdiction.

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Accordingly,

IT IS HEREBY ORDERED that Defendants’ Motion to Dismiss [Doc. #12] is GRANTED.

Plaintiff’s EMTALA claim is DISMISSED for failure to state a claim, and the remaining state law

claim is DISMISSED for lack of subject matter jurisdiction.

/s/ Terry I. Adelman
UNITED STATES MAGISTRATE JUDGE

Dated this 23rd day of January, 2008.

7

Med. Emer. Care Assoc. v. Comm’r of Internal Revenue,

Med. Emer. Care Assoc.
v. Comm’r of Internal Revenue,
No. 8259-01 (T.C. May 19, 2003)

The
United States Tax Court held that a medical service corporation was entitled
to relief from employment tax liability even though the tax forms submitted
were untimely. The medical service corporation contracted with hospitals to
furnish physicians to staff ER rooms. A dispute arose as to whether the physicians
should be classified as employees or independent contractors under the Internal
Revenue Code. The IRS notified the provider that the physicians should be classified
as employees. The provider, however, treated the physicians at all times as
independent contractors and thus sought relief for tax liability purposes.
The IRS argued that because the provider filed the tax forms beyond the filing
date, the provider was not permitted relief. The court held that, based on
statutory interpretation of the Internal Revenue Code, untimely filing did
not prevent relief under the
code.

Mead v. Holder (Summary)

HEALTH CARE REFORM

Mead v. Holder, Civil Action No. 10-950(GK) (D.D.C. Feb 22, 2011)

The United States District Court for the District of Columbia granted the United States government’s motion to dismiss a suit brought by individual taxpayers challenging the individual mandate provision of the Affordable Care Act (“ACA”) as unconstitutional and violating the Religious Freedom Restoration Act (“RFRA”).

The district court first concluded that the taxpayers were proper individuals to bring such a suit because of allegations that the individual mandate would inflict the future injury of having to make annual shared responsibility payments under the ACA and the present injury of needing to rearrange their current finances in anticipation of the mandatory payments.

However, the district court determined that the government had the authority under the Commerce Clause of the Constitution to enact the individual mandate. This determination was based on the court’s findings that both the decision to buy and the decision not to buy health insurance were “clearly economic ones” and “the aggregate of individual decisions not to purchase health insurance substantially affects the national health insurance market.” Furthermore, the individual mandate did not violate the Necessary and Proper Clause of the Constitution because “individual mandate provision is an appropriate means which is rationally related to the achievement of Congress’s larger goal of reforming the national health insurance system.” Conversely, the government could not rely on the General Welfare Clause of the Constitution because it intended the individual mandate to operate as a penalty and not a tax.

Lastly, the district court held that RFRA was not violated by the enactment of the individual mandate, holding that it “does not place a substantial burden on the exercise of [the] plaintiffs’ Christian faith, and even assuming that it does, [the mandate] is the least restrictive means of serving a compelling governmental interest.”

 

 

Mead v. Salem Mem’l Dist. Hosp.

Mead v. Salem Mem’l Dist. Hosp., No. 4:07CV452 TIA (E.D.Mo.
Jan. 23, 2008)

The United States District Court for the Eastern District of Missouri dismissed
an Emergency Medical Treatment and Active Labor Act ("EMTALA") claim
brought against a hospital by a patient whose stroke was misdiagnosed, resulting
in him being discharged and suffering severe injuries. In support of dismissal,
the court noted that EMTALA is not meant to provide a cause of action for general
malpractice. In this case, the patient’s EMTALA claim failed because the complaint
failed to allege that: (1) the patient was given disparate treatment when compared
to other similarly situated patients, and (2) the hospital had determined or
had any actual knowledge that the patient had an "emergency medical condition" which
it failed to stabilize.

 

Med. Mgmt. Group of Orlando, Inc. v. State Farm Mut. Auto. Ins. Co.

IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FIFTH DISTRICT JANUARY TERM 2002

CASE NO. 5D01-1123

MEDICAL MANAGEMENT GROUP
OF ORLANDO, INC.,

Appellant,

v.

STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,

Appellee.
_________________________________/

Opinion filed February 8, 2002

Appeal from the Circuit
Court for Orange County,
Belvin Perry, Jr., Judge.

Lester J. Perling and Teri L. DiGiulian, of
Broad and Cassel, Ft. Lauderdale, for Appellant.

Paul L. Nettleton and Nancy C. Ciampa, of
Carlton Fields, P.A., Miami, for Appellee.

HARRIS, J.

Medical Management Group of Orlando, Inc. (hereinafter ”MMGO”) sued State Farm

Mutual Automobile Insurance Company (hereinafter “State Farm”) for PIP benefits under an

arrangement MMGO had with Premier Advanced Imaging Network, which performed the MRI

involved in this action. The trial court granted summary judgment in favor of State Farm and

this appeal followed.

The underlying facts are these. Ginel, insured by State Farm, was injured in an

automobile accident. Her doctor recommended an MRI at an “MRI facility in Orlando.”

Somehow this recommendation was made known to MMGO, which is not a medical provider

but had referred the patient to Premier under an arrangement whereby MMGO “leased”

space, equipment and services from Premier, which performed the MRI. Premier billed

MMGO $350 for the MRI and MMGO, in turn, billed State Farm $1,400 for it.

MMGO justifies this arrangement as a free enterprise commercial venture based on

the common law right of assignment, claiming an assignment of the patient’s right under his

insurance policy and an assignment from Premier of its right to bill a commercially reasonable

fee. We agree with the trial judge that the arrangement is nothing more than a fee-splitting

scheme to compensate for MRI referrals prohibited by section 817.505, Florida Statutes.

W e also agree with the court in Federated National Insurance Co. v. Physicians

Charter Services, 788 So. 2d 403 (Fla. 3d DCA 2001), that a company such as MMGO is not

entitled to be compensated for PIP benefits. Section 627.736(1)(a) provides that the insurer

must pay 80% of the “medically necessary medical . . . services.” We do not find that

providing referral and billing services constitutes medical services under the PIP provisions.

This is similar to the Medicare limitation on the requirement to pay for “medical care.” In

Central States, Southeast and Southwest Areas Health and Welfare Fund v. Pathology

Laboratories of Arkansas, P.A., 71 F. 3d 1251 (7th Cir. 1995), the court recognized a

distinction between services which were medical and those which were merely professional

components of the billing. There is simply nothing medically necessary about a billing which

compensates for the referral to a particular MRI provider and/or the cost of billing for the

provider’s services.

AFFIRMED.

2

COBB and ORFINGER, R.B., JJ., concur.

3

Mead v. Legacy Health Sys. (Summary)

MEDICAL MALPRACTICE – PHYSICIAN PATIENT RELATIONSHIP – ER CALL

Mead v. Legacy Health Sys., No. A130969 (Or. Ct. App. Oct. 28, 2009)

The Oregon Court of Appeals reversed a circuit court decision and ruled that an on-call neurosurgeon, who gave advice over the telephone to an emergency room physician concerning a specific patient’s care, had a physician-patient relationship with the patient in the ER.

The surgeon’s insistence that he did not expect that the physician would rely on his advice was not sufficient to vitiate the relationship because of his "on-call status" in combination with his analysis of the information provided to him by the physician and because he provided a medical opinion. Specifically, the on-call surgeon told the physician to have the patient "admitted for observation and pain management under her physician’s name."

Importantly, the court noted that the "on-call status" alone was not enough to give rise to a physician-patient relationship; rather, the on-call physician must affirmatively participate in the care of the patient for a relationship to arise.

 

Meadowwood Nursing Facility v. Ohio Dept. of Job & Family Svcs.

[Cite as Meadowwood Nursing Facility v. Ohio Dept. of Job & Family Services, 2005-Ohio-1263.]

IN THE COURT OF APPEALS OF OHIO

TENTH APPELLATE DISTRICT

Appellant-Appellant,
(Cross-Appellee),

Meadowwood Nursing Facility,

v.

Ohio Department of Job and
Family Services,

Appellee-Appellee.

(Cross-Appellant).

:

:

No. 04AP-732
: (C.P.C. No. 02CVF-8915)

: (REGULAR CALENDAR)

:

:

O P I N I O N

Rendered on March 22, 2005

Geoffrey E. Webster, and J. Randall Richards, for appellee.

Jim Petro, Attorney General, Joy D. Harris, and Rebecca L.
Thomas, for appellant.

APPEAL from the Franklin County Court of Common Pleas.

SADLER, J.

{¶1} Appellant, Meadowwood Nursing Facility, (“Meadowwood”), is appealing

from an order of the Franklin County Court of Common Pleas, pursuant to R.C. 119.12,

which affirmed in part and reversed in part an August 5, 2002 order of the director of

appellee, Ohio Department of Job and Family Services (“ODJFS”) imposing Medicaid

settlement reports upon Meadowwood for the years 1988, 1989, 1990 and 1994.

{¶2} Pursuant to R.C. Chapter 5111 and Title XIX of the Social Security Act,

ODJFS administers the Medicaid program in Ohio. Meadowwood submitted cost

No. 04AP-732

reports that were reviewed and audited by ODJFS according to R.C. 5111.02 and Ohio

2

Adm.Code 5101:3-1 and 5101:3-3. The audits resulted in final settlement reports

issued August 28, 2001, covering the following periods: (1) January 1, 1988 through

December 31, 1988; (2) January 1, 1989 through December 31, 1989; (3) January 1,

1990 through December 31, 1990; and (4) July 1, 1993 through June 30, 1994. The

final settlement report and audit report for 1988 concluded that Meadowwood owed

ODJFS $22,262.43. (Exhibit J.) The final settlement report and audit report for 1989

concluded that Meadowwood owed ODJFS $39,397.94. (Exhibit K.) The final

settlement report and audit report for 1990 concluded that ODJFS owed Meadowwood

$1,010.68. (Exhibit L.) No amount was due either party for July 1, 1993 through

June 30, 1994. (Exhibit M.)

{¶3} Meadowwood requested a hearing on the final settlement reports, which

was held on March 18, 2002 and the four final settlement reports were consolidated for

the hearing. On June 30, 2002, the hearing examiner issued a report and

recommendation which concluded, as follows:

a. For the period January 1, 1988, to December 31, 1988:
$22,262.43 is due and payable to the Department by the
Respondent;

b. For the period January 1, 1989, to December 31, 1989:
$39,397.94 is due and payable to the Department by the
Respondent;

c. For the period January 1, 1990, to December 31, 1990,
$1,010.68 is due and payable to the Department by the
Respondent;

d. For the period July 1, 1993, to June 30, 1994, no funds
are owed to either the Department nor the Respondent.

No. 04AP-732

(Report and Recommendation, June 30, 2002.)

On August 5, 2002, the ODJFS Director issued an adjudication order, in

{¶4}

3

which he adopted the hearing examiner’s report and recommendation with one

modification, as follows:

[W ]ith respect to the reimbursement period January 1, 1990
through December 31, 1990 the examiner concluded that the
sum of $1010.68 was due the department from the provider.
This conclusion is modified to reflect that $1010.68 is due
the provider from the department for this period.

(Adjudication Order, Aug. 5, 2002.)

{¶5}

Meadowwood filed a notice of appeal to the common pleas court and the

common pleas court reversed ODJFS’s order with respect to the agency’s disallowance

of certain interest expenses relating to the cost ownership in 1988 and 1989 but

affirmed the order in all other matters.

{¶6} Meadowwood filed an appeal to this court and raises the following

assignments of error:

ASSIGNMENT OF ERROR NO. I

The lower court abused its discretion when it failed to find
that
the department misapplied
its prima
facie case
standard.

ASSIGNMENT OF ERROR NO. II

The
the
finding
in
its discretion
trial court abused
department’s decision supported by reliable, probative and
substantial evidence and is not in accordance with the law
(sic).

{¶7} ODJFS filed a notice of cross-appeal and raises the following cross-

assignment of error:

No. 04AP-732

4

ODJFS’s Assignment of Error on Cross-Appeal

The trial court erred in concluding that ODJFS failed to prove
the correctness of its audit findings with respect to the
interest expense associated with the cost of ownership for
1988 and 1989.

{¶8} R.C. 119.12 provides the standard of review for the common pleas court,

as follows: “The court may affirm the order of the agency complained of in the appeal if

it finds, upon consideration of the entire record and such additional evidence as the

court has admitted, that the order is supported by reliable, probative, and substantial

evidence and is in accordance with law. In the absence of such a finding, it may

reverse, vacate, or modify the order or make such other ruling as is supported by

reliable, probative, and substantial evidence and is in accordance with law. * * *”

{¶9}

In Lorain City Bd. of Edn. v. State Emp. Relations Bd. (1988), 40 Ohio

St.3d 256, 260-261, the Ohio Supreme Court set forth the standard of review for an

appellate court as follows:

In reviewing an order of an administrative agency, an
appellate court’s role is more limited than that of a trial court
reviewing the same order. It is incumbent on the trial court to
examine the evidence. Such is not the charge of the
appellate court. The appellate court is to determine only if
the trial court has abused its discretion. An abuse of
discretion ” ‘* * * implies not merely error of judgment, but
perversity of will, passion, prejudice, partiality, or moral
delinquency.’ ” State, ex rel. Commercial Lovelace Motor
Freight, Inc., v. Lancaster (1986), 22 Ohio St.3d 191, 193
* * *. Absent an abuse of discretion on the part of the trial
court, a court of appeals must affirm the trial court’s
judgment. See Rohde v. Farmer (1970), 23 Ohio St.2d 82
* * *.

The fact that the court of appeals, or this court, might have
arrived at a different conclusion than did the administrative
agency is immaterial. Appellate courts must not substitute

No. 04AP-732

5

their judgment for those of an administrative agency or a trial
court absent the approved criteria for doing so.

{¶10} On questions of law, however, the common pleas court does not exercise

discretion and the court of appeals review is plenary. Univ. Hosp., Univ. of Cincinnati

College of Medicine v. State Emp. Relations Bd. (1992), 63 Ohio St.3d 339, 587 N.E.2d

835, paragraph one of the syllabus.

{¶11} In Our Place, Inc. v. Ohio Liquor Control Comm. (1992), 63 Ohio St.3d

570, 571, 589 N.E.2d 1303, the court defined the evidence required by R.C. 119.12, as

follows:

(1) “Reliable” evidence is dependable; that is, it can be
confidently trusted. In order to be reliable, there must be a
reasonable probability that the evidence is true. (2)
“Probative” evidence is evidence that tends to prove the
issue in question; it must be relevant in determining the
issue. (3) “Substantial” evidence is evidence with some
weight; it must have importance and value.

{¶12} By the first assignment of error, Meadowwood contends that the common

pleas court abused its discretion when it failed to find that ODJFS misapplied its prima

facie case standard. Ohio Adm.Code 5101:6-50-09(A)(4) provides that any audit report,

report of examination, exit conference report or report of final settlement issued by

ODJFS and entered into evidence is to be considered prima facie evidence of what it

asserts. Meadowwood argues that the report of examination, audit reports and final

settlement reports introduced by ODJFS at the hearing lost the presumption of prima

facie status when ODJFS presented witness testimony in addition to the documents.

{¶13} The hearing examiner found that the presumption of Ohio Adm.Code

5101:6-50-09 is not extinguished solely by the fact that ODJFS presents a witness to

testify. The presentation of evidence on some audit findings did not deprive ODJFS of

No. 04AP-732

all applicable presumptions. However, to the extent that the witness testifies with

6

respect to discernible audit factors, then the presumption has no effect. The hearing

examiner reviewed the testimony and found that “there appears to be no instance where

the presence or absence of this evidentiary provision makes a significant difference in

the outcome of these consolidated cases.” (Report and Recommendation, at 6.) The

hearing examiner concluded, “Weighing the testimony of Mr. Krout (sic) and his

accountant, against the testimony of the Department’s audit personnel, I found

substantial credible evidence supporting the audit findings, with or without the

presumptions contained in O.A.C. 5101:6-50-9.” (Report and Recommendation, at 7.)

Thus, the prima facie evidence was immaterial to the hearing examiner’s decision.

{¶14} Prima facie evidence has been defined as that which is “sufficient to

support but not compel a certain conclusion and does no more than furnish evidence to

be considered and weighed but not necessarily accepted by the trier of facts.”

Cleveland v. Keah (1952), 157 Ohio St. 331, 337, 105 N.E.2d 402. But such evidence

is not conclusive, rather, “[t]he term denotes evidence which will support, but not

require, a verdict in favor of the party offering the evidence.” Krishbaum v. Dillon

(1991), 58 Ohio St.3d 58, 64, 567 N.E.2d 1291.

{¶15} In Cotterman v. Ohio Dept. of Pub. Welfare (1986), 28 Ohio St.3d 256,

503 N.E.2d 757, the Ohio Supreme Court examined the prior version of the regulation

and defined the effect of the rule in a case involving alleged overpayments appellant

received for Medicaid services rendered. The state’s case was premised on 123

sample cases collected randomly from appellant’s Medicaid records and during the

hearing, the state presented evidence concerning 17 of the cases. The issue was

No. 04AP-732

whether the state lost its presumption of a prima facie case with respect to all 123

7

cases, or just the 17 cases to which evidence was presented. The court evaluated Ohio

Adm.Code 5101:3-50-22 and determined that the provision placed the burden of

production, not the burden of proof, on the appellant to rebut each sample case. The

Supreme Court found that the presumption applies separately to each sample case

contained in a valid report of examination. However, where evidence is presented by

the Ohio Department of Public Welfare, now ODJFS, “with respect to a case or cases,

the presumption would ab initio be inapplicable.” (Emphasis sic.) Cotterman, at 258

citing Ayers v. Woodard (1957), 166 Ohio St. 138, 140 N.E.2d 401, paragraph three of

the syllabus.

{¶16} Thus, in this case, the hearing examiner applied Cotterman appropriately.

In fact, it appears that the prima facie evidence was immaterial to the decision.

{¶17} Meadowwood also argues

that without

the presumption, ODJFS’s

witnesses needed to identify, authenticate or lay a foundation for the audit reports,

reports of examination, exit conference reports and reports of final settlement.

However, these exhibits were certified copies and pursuant to Evid.R. 901 and 902 this

was unnecessary. Meadowwood’s first assignment of error is not well-taken.

{¶18} By the second assignment of error, Meadowwood contends that the

common pleas court abused its discretion in finding ODJFS’s decision is supported by

reliable, probative, and substantial evidence and in accordance with the law.

Meadowwood argues there are five areas where the decision is in error, including the

following: (1) the disallowance of accrued real estate taxes for 1988; (2) the

disallowance of renovation interest expense for 1988 and 1989; (3) the disallowance of

No. 04AP-732

return on equity component for 1988 and 1989; (4) the miscalculation of Meadowwood’s

8

private pay rate for 1989; and (5) the disallowance of medical supplies for 1990.

{¶19} In the Medicaid audit setting, a provider must provide supporting

documentation that demonstrates that the reported cost was actually incurred, that it is

reasonable, allowable and related to patient care. See R.C. 5111.27(B)(3). The

Provider Reimbursement Manual Part I, § 2304 requires providers to maintain

documentation that is current, accurate and in sufficient detail to support reported costs

in order to be audited.

{¶20} Meadowwood claimed $12,969 in property taxes for 1988 and ODJFS

disallowed $4,641. (Exhibit J.) Susan Risner-Tufts, the Auditor in charge of the audits

in question testified that in 1988, Meadowwood’s property taxes were adjusted to allow

an amount of one year even though the tax bills submitted were for the previous year.

(Tr. at 26.) Meadowwood had submitted two tax bills and cancelled checks. (Tr. at 28.)

She used the 1987 taxes to benefit Meadowwood since she could not verify the 1988

taxes. (Tr. at 28.) Normally, taxes are reported on an accrual basis, which is when one

reports a cost in the period the goods are received rather than a cash basis, which is

when one reports the costs in the period one pays for the goods. However, since no

documentation was submitted to verify the expense in 1988, the auditor allowed the

1987 amount.

{¶21} Meadowwood’s accountant testified that the real estate taxes are a “pass-

through.” (Tr. at 191.)

What that means is they take whatever the expense is,
divide it by the number of days involved in the cost report,
and come up with a rate. Now, right, wrong, or indifferent a
lot of times those accruals have to be adjusted somewhere

along the line. Maybe they should have been adjusted a
little bit more in the previous year or whatever the case may
be, but this is a mere correction.

9

No. 04AP-732

(Tr. at 191-192.)

{¶22} Although the accountant testified that the $12,969 was an adjustment for

prior years, no documentation was provided to verify the costs. Meadowwood argues

that it did provide documentation because Exhibit 2 contains four tax bills. However,

these bills contain no date, although the accountant testified that one of the four, which

listed the tax due as $4,164 and another of $4,362.94 were for 1988. However, these

do not support the $12,969 that was claimed as a cost.

{¶23} Meadowwood did not provide documentation to ODJFS to support all of its

claimed tax costs for 1988 and the common pleas court did not abuse its discretion in

finding that ODJFS properly disallowed the unsupported amount. The first part of

Meadowwood’s second assignment is not well-taken.

{¶24} In the second part of the second assignment of error, Meadowwood

contends that the common pleas court abused its discretion in finding ODJFS’s decision

supported by reliable, probative, and substantial evidence and in accordance with the

law regarding the disallowance of renovation interest expense for 1988 and 1989. In

1988, Meadowwood claimed $15,469 in amortization and interest expenses related to

renovations and ODJFS disallowed $7,304 (Exhibit J), and in 1989, Meadowwood

claimed $19,823 in amortization and interest expenses related to renovations and

ODJFS disallowed $10,733 of these expenses. (Exhibit K.) ODJFS disallowed

Meadowwood’s claims of renovation interest expenses on the basis that no original

documentation was obtained from the lending institution with regard to the borrower of

No. 04AP-732

the money, the purpose of the loan, whether it was reasonable and necessary and

10

related to patient care. (Tr. at 30-34.) During the exit conference process,

Meadowwood did produce documentation. However, the hearing examiner and the

common pleas court found the documentation was still insufficient to demonstrate that

the claimed interest expenses were reasonable, allowable and related to patient care.

{¶25} At that time, the Provider Reimbursement Manual, Part I, § 202.1

provided, as follows:

To support the existence of a loan, the provider should have
available a signed copy of the loan contract which should
contain the pertinent terms of the loan such as amount, rate
of interest, method of payment, due date, etc. Where the
lender does not customarily furnish a copy of the loan
contract, correspondence
from
the
lender stating
the
pertinent terms of the loan such as amount, rate of interest,
method of payment, due date, etc. will be acceptable.

{¶26} Meadowwood’s owner, John Crout, testified that he had not provided

documentation demonstrating that the loan proceeds were related to patient care or that

they were to be used for the operation of the nursing home. (Tr. at 150-151.) The

accountant testified that the closing statement from the loan was supplied to ODJFS to

support the purpose of the note. The closing statement indicated a loan from Kentucky

National Bank that refinanced loans from Society Bank. (Tr. at 238-239.)

{¶27} The auditor’s notes indicate that Meadowwood’s auditors acknowledged

that the documentation did not connect the claimed interest payments to particular loans

or loan amounts to determine the purpose. (Tr. at 99-100; Exhibit P. at DA-12.)

{¶28} Meadowwood argues that it supplied sufficient documentation because it

supplied a letter from Society Bank showing balances and interest paid in 1988 (Exhibit

3); a handwritten depreciation schedule (Exhibit 4); a letter from Society Bank

No. 04AP-732

establishing that an additional $300,000 in equity was required at the time of financing

11

in 1984 (Exhibit 5); the 1984 mortgage and note to Society Bank signed by Crout’s

great-aunt and the satisfaction in 1989 (Exhibit 6); terms of the 1989 loan from Kentucky

National Bank (Exhibit 9); statement of mortgage account from Society Bank which

indicates the satisfaction in 1989 (Exhibit 10); an amortization schedule for the cost of

ownership loan from Kentucky National Bank but no identifying information that the

document was produced by the bank (Exhibit 11); the loan closing statement for the

loan from Kentucky National Bank (Exhibit 12); a handwritten schedule allocating

interest and expenses for renovation and cost of ownership between two cost centers

(Ex. 14); statements from Society Bank regarding the interest in 1989 (Exhibit 15); an

amortization schedule for the refinance of the renovation loan from Kentucky National

Bank but no identifying information that the document was produced by the bank

(Exhibit 16); and a handwritten amortization schedule (Exhibit 17). However, none of

these documents demonstrate that the loan proceeds were related to patient care or

that they were to be used for the operation of the nursing home as required by the

auditors.

{¶29} Meadowwood also argues that in the years prior to 1988 and 1989 and

subsequently in 1990, ODJFS allowed the same expense, based on the same records.

However, the other years are irrelevant here, ODJFS could have mistakenly allowed the

expense. We are concerned with whether the expense was properly disallowed in 1988

and 1989 and whether the common pleas court abused its discretion in finding that

ODJFS’s decision was supported by reliable, probative, and substantial evidence and in

No. 04AP-732

accordance with the law. Meadowwood’s second part of the second assignment of

12

error is not well-taken.

{¶30} By the third part of the second assignment of error, Meadowwood

contends that the common pleas court abused its discretion in finding ODJFS’s decision

supported by reliable, probative, and substantial evidence and in accordance with the

law regarding the disallowance of return on equity component for 1988 and 1989. Ohio

Adm.Code 5101:3-3-22(F), at that time, permitted a Medicaid provider to be reimbursed

on the basis of its net equity, as follows:

The allowance for return on net equity payable to proprietary
facilities in the rate year shall be computed at the rate of one
and one-half times the average of interest rates of special
issues of public debt obligations issued to the federal
hospital insurance trust fund for the current cost reporting
period.

(1) The maximum net equity allowance payable is one dollar
per day.

(2) The maximum shall be reduced as necessary to comply
with rule 5101:3-3-18 (“Ceilings on long-term care facility
rate”) of the Administrative Code.

{¶31} Net equity is basically the difference between assets and liabilities. In this

case, in 1988, Meadowwood sought return on equity based upon $2,739,376 in net

equity, but ODJFS disallowed a portion of the claimed amount, resulting in a base

amount of $466,860. (Exhibit B; J.) In 1989, Meadowwood sought return on net equity

based upon $3,474,450 in net equity, but ODJFS disallowed a portion of the claimed

amount, resulting in a base amount of $368,091. (Exhibit C; K.) ODJFS allowed

Meadowwood a per diem of $.28 per day for return on equity for 1988 (Exhibit J) and

No. 04AP-732

$.21 per day for 1989. (Exhibit K.) Meadowwood contends that ODJFS improperly

13

disallowed $300,000 in equity.

{¶32} Meadowwood’s accountant testified that Exhibit 13 demonstrates a return

of equity calculation but there was an error.

At the end of 1988, I believe what had occurred is we had
inadvertently left off the additional collateral. We had it on
there in the beginning of ’88, and for some reason it did not
make it into the calculation at the end of ’88. Even with that,
Mr. Krout (sic), was entitled to $1.

So there was most cost reimbursement. However, we
discover (sic) when we were doing 1989, that we had
inadvertently left that off. So if you notice there’s exactly a
$300,000 difference between those numbers. That was
simply because we had left it off of the schedule from the
end of 1988. * * *

(Tr. at 209-210.)

{¶33} The $300,000 represented the additional collateral required for the

Society Bank loan, which was a mortgage on Crout’s great-aunt’s property. However,

the common pleas court determined that a provider should not be reimbursed for a

return on equity including real estate that does not relate to the operation of the home,

but merely was additional collateral for a loan. ODJFS disallowed the amount based

upon the fact that the property was not related to patient care and therefore, not

properly reported as part of Meadowwood’s equity. (See Exhibit Q, P-4.)

{¶34} Only a provider’s equity in assets that are related to patient care may be

included in the assets for the return on equity calculation. Provider Reimbursement

Manual § 202.1. In this case, Meadowwood provided no documentation that the asset

belonging to Crout’s great-aunt was related to patient care. Appellant’s third part of the

second assignment of error is not well-taken.

No. 04AP-732

14

{¶35} By the fourth part of the second assignment of error, Meadowwood

contends that the common pleas court abused its discretion in finding ODJFS’s decision

supported by reliable, probative and substantial evidence and in accordance with the

law regarding the calculation of Meadowwood’s private pay rate for 1989. ODJFS found

that in 1989, Meadowwood’s private pay rate was less than its Medicaid rate. A

provider is prohibited from collecting a higher daily-rate reimbursement for a Medicaid

consumer than it charges a private consumer. 42 C.F.R. 413.13. A provider is

reimbursed at either the amount that the provider charged for the service or the rate that

the provider normally charges to non-Medicaid patients, whichever rate is lower. See

42 C.F.R. 413.13.

{¶36} At the hearing, Meadowwood acknowledged that the rate for a private pay

resident in 1989 was lower than the rate it sought in reimbursement for Medicaid

residents. In its brief, Meadowwood argues that it charged private pay patients a basic

room rate of approximately $70.58 per patient day, which is less than the Medicaid per

diem rate, which includes the room and numerous services such as therapy and

supplies. Thus, Meadowwood argues that its private pay rate must be increased to

include items and services that are included in the Medicaid rate, but for which private

pay residents pay extra. (Tr. at 219-221.) However, at the hearing, Crout testified that

the rate charged residents was similar to the Medicaid rate but was based on the room

rate, plus supplies, medication and additional charges, such as incontinence supplies,

medical supplies that the resident needs to pay for individually, personal items and non-

prescription drugs. (Tr. at 125.) He stated that the private pay rate charged in 1989

was $70.58, as provided in Exhibit C, Schedule A-2. Thus, Crout testified that the rate

No. 04AP-732

already included the other services and was not the basic room rate. Having already

15

acknowledged that this rate is lower than the rate it sought in reimbursement for

Medicaid residents, the common pleas court did not abuse its discretion in finding that

there is reliable, probative, and substantial evidence to support ODJFS’s findings

regarding the return on equity. The fourth part of Meadowwood’s second assignment of

error is not well-taken.

{¶37} By the fifth part of the second assignment of error, Meadowwood contends

that the common pleas court abused its discretion in finding ODJFS’s decision

supported by reliable, probative and substantial evidence and in accordance with law

regarding the disallowance of medical supplies for 1990. Ohio Adm.Code 5101:3-3-

11(C) and (D) provided at that time, that items of a limited life expectancy, including

hypodermic needles, syringes, catheters, electric pads, dietary supplements,

incontinence pads and over-the-counter drugs were reimbursable through the facility

cost report mechanism. All other Medicaid-covered pharmaceuticals were reimbursable

directly to the pharmacy provider.

{¶38} Meadowwood offered Exhibit 19 to support its claim for medical supplies.

ODJFS disallowed $26,742.19 in medical supply costs on the basis that those items

should have been billed directly to Medicaid and were not reimbursable through the cost

report. See Exhibit H. Meadowwood argues that ODJFS disallowed all of the medical

supply costs reported by Meadowwood because some of the invoices contained direct-

bill items and some of the invoices were illegible. However, ODJFS allowed

approximately 80 percent of the reported costs and only disallowed approximately 20

percent of the reported costs. Exhibit 19 contains many invoices that are illegible and

No. 04AP-732

others that contain items that are appropriate for direct billing, not reimbursable through

16

the cost report, such as morphine.

{¶39} Meadowwood’s accountant testified that the medical supplies cost

increased from $23,000 to $130,000 from 1989 to 1990 with the same number of beds.

(Tr. at 250.) The hearing examiner then asked the accountant about a particular invoice

for morphine and PCA supplies and a lump charge of $1,445.88, and whether the

accountant had a duty to present a total that did not include the morphine to the

auditors. The accountant responded, that legend drugs were not normally reimbursable

and, “I would error (sic) on the side of Mr. Krout (sic) in the sense that if we couldn’t

break it out, to allow the Department to throw out these items if for some reason – we

would only put in those costs that we understood were supplies, etcetera.” (Tr. at 258.)

When asked if he sent ODJFS any information that allowed the department to know

how much was allocated to morphine, in this instance, he replied, “No, I don’t believe

so, sir” because “I don’t think we had any way of telling. I don’t believe we have any

way of knowing.” (Tr. at 260.) The documents provided to ODJFS did not establish that

the medical supplies were allowable expenses through the cost report. The common

pleas court did not abuse its discretion in finding ODJFS’s decision supported by

reliable, probative, and substantial evidence and in accordance with law regarding the

disallowance of medical supplies for 1990. The fifth part of Meadowwood’s second

assignment of error is not well-taken.

{¶40} By the assignment of error on cross-appeal, ODJFS contends that the

common pleas court erred in concluding that ODJFS failed to prove the correctness of

its audit findings with respect to the interest expense associated with the cost of

No. 04AP-732

ownership for 1988 and 1989. However, ODJFS did not file a timely appeal. App.R.

17

3(C)(1) provides that a party that seeks to change the judgment shall file a notice of

cross-appeal within the time allowed by App.R. 4. The judgment entry was filed July 14,

2004 and notice was sent within three days. ODJFS had 30 days from the filing of the

judgment entry to file the notice of cross-appeal since Meadowwood filed its notice of

appeal on July 20, 2004. There is no notice of cross-appeal within our record on

appeal, however,

the computer docket demonstrates

that one was

filed on

September 1, 2004. This is clearly untimely, thus, ODJFS’s cross-appeal is dismissed.

{¶41} For the foregoing reasons, Meadowwood’s two assignments of error are

overruled, ODJFS’s cross-appeal is dismissed and the judgment of the Franklin County

Court of Common Pleas is affirmed.

ODJFS’s cross-appeal dismissed;
judgment affirmed.

PETREE and FRENCH, JJ., concur.

_____________

Med. Mgmt. Group of Orlando, Inc. v. State Farm Mut. Auto. Ins. Co.,

Med. Mgmt. Group of Orlando, Inc. v. State Farm Mut. Auto.
Ins. Co.,
No. 5D01-1123 (Fla. Dist. Ct. App. Feb. 8, 2002)

A woman who was insured by State Farm was injured in an automobile accident.
Her doctor recommended that she have an MRI. Somehow (not revealed in the court’s
opinion) Medical Management Group of Orlando (MMGO) learned of the doctor’s
recommendation and referred the woman to Premier Advanced Imaging Network (Premier).
Premier performed the MRI and billed MMGO $350. MMGO then billed State Farm
$1,400. State Farm refused to pay. MMGO sued under a state statute that requires
insurers to pay 80% of "medically necessary medical…services." MMGO
asserted that it was entitled to bill State Farm for the MRI pursuant to an
agreement whereby it "leased" space, equipment, and services from
Premier and then accepted assignment of Premier’s rights to bill a commercially
reasonable fee for its services.

The District Court of Appeal of Florida agreed with the trial court that the
arrangement "is nothing more than a fee-splitting scheme to compensate
for MRI referrals," which is prohibited by state law. Moreover, the court
found that the provision of referral and billing services does not constitute
a medically necessary medical service, and thus was not compensable as such.

Med. Mut. of Ohio v. Schlotterer (Summary)

DISCOVERY OF MEDICAL RECORDS

Med. Mut. of Ohio v. Schlotterer, No. 2008-598 (Ohio June 3, 2009)

The Supreme Court of Ohio granted an insurance company’s motion for a qualified protective order thereby allowing discovery of patient medical records in order to investigate suspected fraudulent billing. The case arose after the insurance company had reviewed the physician’s billing reports and determined that the physician had been overpaid by $269,576. The insurance company then filed an action against the physician for fraud and breach of contract. To establish the extent of the fraudulent billing, the insurance company filed a motion for a qualified protective order thereby seeking the production of patient records. The physician argued that these documents were protected by the physician-patient privilege.

However, the court found that the certificates of coverage issued to each of the patients included language agreeing to the release of medical information. The court held that the patients’ consent was valid, because it was "voluntary, express, and reasonably specific in identifying to whom the information is to be delivered." Therefore, the court concluded that the patients had waived the physician-patient privilege and the insurance company was entitled to the discovery of these records.

 

Meadowwood Nursing Facility v. Ohio Dept. of Job & Family Svcs.

MEDICAID – NURSING HOME

Meadowwood Nursing Facility v. Ohio Dept. of
Job & Family Svcs., No.
04AP-732 (Ohio App. March 22, 2005)

A nursing home filed an appeal alleging,
among other things, that the lower court was in error when it affirmed
the Department of Job and Family Services’ Medicaid cost report audit and final
settlement. The Ohio Court of Appeals upheld the decision of the lower
court, finding that the nursing home had not provided adequate documentation
to support the expenses it claimed on its cost report. The court concluded
that the unsupported amounts for accrued real estate taxes, renovation interest,
return on equity, and medical supplies were properly disallowed. In addition,
the court found the nursing home’s private pay rate was calculated correctly
and that the nursing home was in violation of federal regulations, as its
private pay rate was lower than its Medicaid rate.