Supreme Court of New Jersey Overturns Huge Judgment Awarded to Group Affected by Hospital’s Exclusive Contract with Competitor
The Supreme Court of New Jersey reversed the lower courts and, in doing so, reversed a $24.3 million judgment that had been awarded at trial to a neurosurgery group suing the hospital where it had lost the ability to provide care to unassigned ED patients and to access certain specialized equipment (e.g., the Gamma knife) due to the hospital’s award of an exclusive contract to another group.  The court concluded that the group could bring a claim for violation of an implied covenant of good faith and fair dealing, but the lower courts had improperly instructed the jury about the claim, thus leading to confusion about whether the jury’s verdict was based on the Medical Staff Bylaws as the underlying contract.  The court clarified that the Medical Staff Bylaws could not form the underlying basis for that claim and if the neurosurgery group were to succeed on this claim at retrial, it would need to prove that a different implied contract existed between the parties (one based on their course of dealings, not on the existence of the Medical Staff Bylaws).  The court also noted that certain emails were disclosed by the hospital accidentally during the litigation discovery process – emails that were privileged by the attorney-client privilege – and the lower courts improperly allowed those emails to be retained by the neurosurgery group and discussed by the group’s lawyer during trial.  Having reversed the lower court holdings, the matter was remanded for retrial consistent with the Supreme Court opinion. Comprehensive Neurosurgical v. The Valley Hosp. 

Federal Court Denies Summary Judgment After Clinic Tells Physician That Her Discrimination Lawsuit Is Destructive to Her Remaining in the Department
The United States District Court for the Middle District of Pennsylvania partially granted and partly denied a clinic’s motion for summary judgment in a lawsuit brought by a physician who alleged equal pay and retaliation claims.

The clinic hired the physician after salary negotiation, at which point her pay was structured as a set base salary with additional incentive salary based on FTEs performed. The clinic subsequently altered its pay structure to a set base salary model, with annual merit raises awarded by clinic department chairs based on a combination of factors. After the change, the physician began to complain that she was targeted by her department chair and received reduced patient assignments. She was placed on a performance improvement plan (PIP) and, as a result, had half of a merit raise withheld. The physician filed a charge of discrimination against the clinic, alleging age discrimination, sex discrimination, and retaliation in violation of federal and state law.

In denying summary judgment to the clinic on some of the physician’s claims for pay disparities, the court noted that the clinic’s arguments regarding the compensation structure that was used to set physician salaries prior to 2016 were insufficient to explain the reason for the unusual disparity between the physician and her male colleagues.  The court rejected the clinic’s defense that pay disparity was based on a bona fide seniority system, stating that the clinic failed to plead that the seniority system explained exponential differences in the pay of the physician and other employees and failed to produce salary records for other physicians. The court also rejected the argument that the physician’s pay was based on free-market negotiation, noting that similar cases turned on the presence of market factors like different economic conditions or the educational or employment backgrounds of candidates, none of which were alleged. Further, the clinic owner’s assertion that no new physicians would be brought in at salaries equal to or higher than current employees was evidence that physician salaries were not set by the market.  The court also rejected the argument that the pay discrepancy was due to disparities in merit, quantity, or quality of the physician’s production, because the clinic failed to produce evidence regarding RVU production by comparable physicians where it alleged that the physician had failed to meet RVU benchmarks.

In also denying summary judgment on the physician’s claims for retaliation (she claimed she was placed on a PIP in retaliation for complaining of discrimination), the court noted a department chair’s comments to the physician that her filing a charge of discrimination was “destructive” to her remaining in the department and pressuring her to choose between repairing her relationship with her department chair or pursuing legal action (comments that the court called legally improper). The court also noted that the clinic was unable to produce a nondiscriminatory reason for the PIP, sufficient to overcome the physician’s claims of retaliation.  Notably, the clinic failed to identify the rules the physician allegedly violated to justify placing her on a performance improvement plan.  The court also noted evidence that the chair stated he had not issued a PIP for more than a decade prior to this and yet he issued two PIPs to the plaintiff physician within just two months of her making a claim of discrimination. Vrabec v. Geisinger Clinic

Appellate Court of Illinois Holds That Hospitals Wishing to Avoid Apparent Agency Liability for Independent Contractor Doctors Must Provide Consent Forms at a Time That Allows Patients to Meaningfully Seek Care Elsewhere
In a malpractice lawsuit brought by the mother of a patient who died after receiving emergency treatment at a hospital, the Appellate Court of Illinois reversed summary judgment that had been granted in favor of the hospital on the mother’s claims that the physician who treated her son was the apparent agent of the hospital (and, thus, the hospital should be held liable for the physician’s alleged negligence).  In reaching its determination to reverse summary judgment for the hospital, the appeals court held that genuine issues of material fact existed over whether the hospital held out the physician as its agent (there was substantial evidence of an extensive advertising campaign emphasizing the quality of physician care at the hospital) and whether the patient reasonably relied on the hospital as providing the physician as its agent.  While the hospital argued that its consent form (stating the physician was an independent contractor) was determinative of the matter, the mother presented evidence that she was not provided the form until more than two hours after arriving at the hospital, after her son was already being treated and after she was informed that the relevant doctor was assigned as her son’s treating physician.  Rejecting the hospital’s argument that the patient had the choice to leave the hospital when presented with the form, the court stated that there was a question of fact regarding whether the form was provided at a meaningful time, as taking the child to another hospital at that point in time was likely “an illusory choice at best.” Brayboy v. Advoc. Health & Hosp. Corp.