Woodruff v. Hawai’i Pac. Health (Summary)

PHYSICIAN EMPLOYMENT; CORPORATE INTEGRITY AGREEMENT

Woodruff v. Hawai’i Pac. Health, No. 29447 (Haw. Ct. App. Jan. 14, 2014)

The Intermediate Court of Appeals of Hawai’i affirmed a lower court’s judgment in favor of a medical group parent company, finding that a physician had not shown that the lower court erred in granting summary judgment for the parent company.

The physician’s employment at two medical groups was terminated after the medical groups’ parent company voluntarily reported to the government, per an integrity agreement with the OIG, that the physician had submitted invalid claims for payment by third party payors. The physician subsequently formed a new medical group and brought suit against the parent company’s successor and others, alleging defamation, breach of the physician’s employment contract, and anticompetitive and unfair practices, among others.

With regard to the physician’s defamation claims, the court found that the lower court did not err when ruling that the parent company had a qualified privilege with respect to the alleged defamatory statements and that they had not abused this qualified privilege.  The court reasoned that the parent company complied with the integrity agreement and retained an independent review organization to audit its billing practices and verify compliance with applicable standards. The parent company self-disclosed after reviewing the results of the audit in order to ensure compliance with the integrity agreement.  Further, the medical group had a duty to discuss the results of the investigation with others in ensuring compliance with billing requirements and the integrity agreement.  All of the actions performed in order to ensure compliance with the integrity agreement were protected by a qualified privilege.

The court further found that the lower court did not err in granting the parent company summary judgment with regard to the physician’s breach of employment contract claim because the physician was an at-will employee. The medical groups and parent company provided the physician with many documents, which the physician signed, specifically stating that her employment was at will.

The court also held that the lower court did not err in granting summary judgment on the physician’s employment claims, finding that the physician was not entitled to a hearing on the decision to terminate her employment, as the bylaws and any due process hearing requirement apply only to clinical and membership privileges, not employment termination.