Thomas v. Nationwide Children’s Hosp., Inc. — Jan. 2017 (Summary)

DISCOVERY – PEER REVIEW

Thomas v. Nationwide Children’s Hosp., Inc.
Case No. 2:14-cv-1236 (S.D. Ohio Jan. 19, 2017)

The United States District Court for the Southern District of Ohio granted the parents of two children, who were former patients at a hospital, their motion to compel against a hospital that refused to produce documents and limited one of its employee’s deposition, claiming that the information was privileged under the state’s peer review statute.

The issue arose out of the parents’ filing suit against the hospital, claiming that the hospital conspired to violate the rights of the parents and children who sought medical treatment at the hospital by ordering additional medical tests not for the purpose of diagnosing and treating the children but rather to gather evidence for possible criminal prosecution for child abuse.  After the parents requested information regarding the assessments of patient complaints that the hospital received about child abuse diagnoses, the hospital objected to providing certain information and documents, arguing that internal assessments of medical care were protected by the peer review privilege.

Both parties agreed to set aside a ruling on the issue pending other discovery, but the issue reemerged following the deposition of a nurse, who at the time was acting as a Performance Improvement Coordinator in the emergency department during the children’s visit.  The nurse’s role in her capacity was to review customer satisfaction and, if the resolution of a conflict involved writing a letter, the nurse would make an entry into a database system maintained by the hospital.

During the deposition, the hospital would not allow the nurse to answer any questions pertaining to the contents of any information in the database system.  Even though the nurse responded to a letter from the parents, writing that her team had reviewed the situation and concluded that the procedures performed were appropriate and followed hospital and state-mandated procedures, the hospital refused to allow the nurse to answer any questions regarding exactly how she investigated and arrived at her conclusion, citing protection under the peer review privilege.

The court ultimately concluded that the peer review privilege was inapplicable under the circumstances.  The parents’ letter to the nurse merely asserted that a number of additional tests, which were performed unnecessarily and done without their consent, were described inaccurately on their bill and asked for an explanation of why these tests were performed.  Therefore, neither the letter nor its response made any mention of the quality of the care provided or the competency of the physicians involved.

Because the parents’ letter did not question the competence of the health care providers who performed the procedures, but rather queried why the procedures were performed in the first place, the letter, in effect, sought information regarding the hospital’s administrative procedures, not its quality review process. Noting that the peer review statute applies only to activities that are actually peer review proceedings and not to every activity that a hospital labels peer review,  the court concluded that the nurse should have been permitted to answer the foundational questions about the process itself that did not involve determining whether any provider had acted professionally or competently. As such, the court granted the parents’ motion to compel and denied the hospital’s motion to strike.

U.S. ex rel. Polukoff v. St. Mark’s Hosp. — Jan. 2017 (Summary)

FALSE CLAIMS ACT – QUI TAM

U.S. ex rel. Polukoff v. St. Mark’s Hosp.
Case No. 2:16-cv-00304-JNP-EJF (D. Utah Jan. 19, 2017)

The United States District Court for the District of Utah granted three motions to dismiss brought by a medical center, physician, and hospital in a qui tam lawsuit under the False Claims Act (“FCA”).  The relator alleged that the physician violated the FCA by performing medically unnecessary patent foramen ovale (“PFO”) closures and subsequently billed the government for the procedures through Medicare and Medicaid.  In addition, the relator alleged that the medical center and hospital were liable for fraudulently billing the government for hospital costs associated with the alleged unnecessary PFO procedures.

The physician was initially employed by the medical center, but after violating an agreement to discontinue performing PFO closures in noncompliance with the medical center’s policies, the physician resigned and began performing PFO closures at another hospital.  The relator began working for the physician’s practice before the physician resigned at the medical center.  While serving as an employee of the physician’s practice and entertaining the possibility of purchasing the physician’s practice, the relator obtained the physician’s billing documents and a hard drive with eight years of billing records, which he used as the basis for his qui tam claim.

The court ultimately found that the relator failed to allege that the physician, medical center, and hospital knowingly made an objectively false representation to the government that caused the government to remit payment.  The relator alleged that the medical center, hospital, and physician represented to the government that the closures performed by the physician were medically reasonable and necessary, which was objectively false.  However, the court reasoned that the relator’s contentions were based on his own subjective medical opinion which could not be proven to be objectively false.

The relator relied on recommendations issued by the American Heart Association/American Stroke Association to support his claim of when the procedures performed by the physician were not medically reasonable or necessary, but Medicare does not require compliance with an industry standard.  Because the government had not created an objective standard, the relator was only able to rely on his own subjective and ambiguous “reasonable and necessary” standard, but violations of the FCA cannot be sustained absent an objectively false representation.  Thus, the court found that the relator’s claims failed as a matter of law and the court dismissed all the causes of action asserted against the physician, hospital, and medical center.

U.S. ex rel. Worthy v. E. Me. Healthcare Sys. — Jan. 2017 (Summary)

FALSE CLAIMS ACT – QUI TAM

U.S. ex rel. Worthy v. E. Me. Healthcare Sys.
2:14-cv-00184-JAW (D. Me. Jan. 18, 2017)

The United States District Court for the District of Maine granted in part and denied in part a hospital’s motion to dismiss claims related to alleged False Claims Act (“FCA”) violations brought by a former hospital employee.

The defendant hospital employed the relator, a certified professional coder and manager of patient accounts, for a period of two years, during which time the relator worked in the billing department with the hospital’s third-party billing contractor.  There, the relator alleged she was instructed to intentionally manipulate claims that were unpaid by Medicare by deleting necessary information, adding incorrect code modifiers to services, and unbundling services in order to bypass edits and increase reimbursement.  The relator then alleged that upon receiving this increased reimbursement, the hospital did not refund the overpayment, as required by law.

It was also alleged that the hospital coders were directed by management to identify high-value, unpaid claims, alter the codes, and resubmit the claims for higher reimbursement.  Examples of this allegation included that the hospital changed discharge status indicators, billed duplicative facility fees by unbundling three-day and same-day claims, created dummy accounts to cover up the fraudulently modified claims, rebilled paid claims, upcoded claims, and bypassed Medicare’s automatic withholding of payment in accident or injury cases by removing the injury information from the claims.

The relator claimed that she reported her concerns regarding the pattern of claim modification to the hospital’s officers, but that the officers did not address the billing practices.  When another third-party billing contractor assumed responsibility for the hospital’s outpatient billing, it was alleged that the billing company had knowledge of the hospital’s allegedly illegal practices and that it also began engaging in the same types of fraudulent billing practices.  The relator again raised concerns, but these, too, allegedly went unheeded.  The relator was terminated and then sued the hospital and independent billing contractors for retaliatory, constructive discharge and FCA violations.

The hospital made a motion to dismiss the relator’s claims on the theory that the relator had failed to provide facts specific enough to raise the inference that the hospital’s conduct rose to the level of an FCA violation.  However, the court refused to dismiss the relator’s FCA claims based on the Supreme Court’s recent Escobar decision and First Circuit Court of Appeals rulings.

With respect to the three-day and same-day claims, the court focused on whether compliance with the required bundling of services was a “condition of payment” under the Medicare statute and whether Medicare would have paid the hospital for the claims if it was aware that it had been unbundled contrary to statutory requirements.  The court held that it was “at least…plausible” that Medicare would not have paid the claims if it were aware of the hospital’s alleged fraudulent billing and active concealment of inappropriately submitted claims.  Because the billing practices were allegedly carried out with the third-party contractors’ actual knowledge that their actions were improper, and because the hospital’s alleged “reckless disregard” or “deliberate ignorance” of the truth allowed the fraud to persist, the court determined that the hospital was sufficiently aware of the violations for FCA liability to attach.

The hospital also argued that the relator failed to meet the FCA’s particularity requirement, that is, the relator did not provide enough specific evidence of wrongdoing to survive the hospital’s motion to dismiss her FCA claim.  The court disagreed.  By naming the specific staff members involved, enumerating the different types of fraudulent billing that took place, discussing how the manipulation of claims occurred, and delineating the period of time during which this all occurred, the court found the relator’s allegations established the “who, what, when, where, and how of the alleged fraud” and, therefore, were sufficient to avoid dismissal.

The court also ruled that the relator produced sufficient evidence that the court could infer collusion among the hospital and its third-party contractors to defraud the government.  The nonexistence of an express agreement was immaterial, the court added.

The court further found that the relator’s retaliation claim was sufficient to deny the hospital’s motion to dismiss.  Having informed management on multiple occasions of the violations of Medicare, the court found that the hospital’s actions toward the relator (i.e., unfounded accusations of poor work ethic and hiring a replacement for the relator without warning) led to the relator’s subsequent forced resignation.  Because there was an “infused management structure” between the hospital and its third-party contractor, the court determined that the contractor qualified as a joint employer for purposes of the retaliation claim.  Accordingly, the court denied the hospital’s and that third-party contractor’s motions to dismiss the retaliation claims under state law and under the FCA.

While the court denied the hospital’s and contractors’ motions to dismiss with respect to the FCA claims, it granted the defendants’ motions to dismiss the relator’s request for attorney’s fees and damages related to the constructive discharge claim.  The court also granted a motion to dismiss the relator’s claim against the other contractor with whom, the court ruled, she did not have a joint employer relationship.

Thomas v. Tenet Healthsystem GB, Inc. — Jan. 2017 (Summary)

MALPRACTICE PHYSICIAN AND HOSPITAL

Thomas v. Tenet Healthsystem GB, Inc.
No. A16A2167 (Ga. Ct. App. Jan. 18, 2017)

The Court of Appeals of Georgia reversed a lower court’s dismissal of a former patient’s amended complaint against a hospital.  The patient was taken to the hospital after being involved in a car accident and, upon arrival, the attending physician requested that a cervical CT scan be taken.  The scan was sent to a physician, who reviewed the scan at his home.  The physician communicated from his home to the attending physician that there were no fractures present in the scan.  Subsequently, the attending physician directed a nurse to remove the patient’s cervical spine collar and discharge the patient from the hospital.  When the patient’s brother arrived to pick her up, the patient was slumped over and unresponsive.  After being readmitted, it was discovered that the patient did in fact have a fracture in her cervical spine, and the removal of her cervical spine collar resulted in neurological damage, which rendered the patient a quadriplegic.

During discovery, the patient discovered that the hospital had a policy requiring physicians to remove cervical spine collars, and the nurse who removed her cervical spine collar had been trained on the policy.  Consequently, the patient sought to amend her complaint, alleging negligence against the hospital.  The lower court dismissed the complaint, reasoning that the claim was barred by the statute of limitations.

The court reasoned that because the patient’s original complaint alleged that the collar was removed by the hospital’s personnel, the hospital had fair notice of the same general fact situation from which the simple negligence claim arose.  In addition, both the original and amended complaints set out allegations about the improper removal of the cervical spine collar by an employee of the hospital, so the claim in the amended complaint arose out of the same conduct, transaction, or occurrence set forth in the original complaint.  Thus, the court reversed the judgment of the lower court and allowed the patient to amend her complaint.

Ramirez v. Long Beach Memorial Med. Ctr. — Jan. 2017 (Summary)

MALPRACTICE PHYSICIAN AND HOSPITAL

Ramirez v. Long Beach Mem’l Med. Ctr.
No. B265548 (Cal. Ct. App. Jan. 19, 2017)

The California Court of Appeal for the Second District affirmed the judgment of a lower court which held that plaintiffs who brought a wrongful death action could not conduct further discovery after summary judgment had been granted by the lower court for all but one defendant.

The plaintiffs represented a decedent who was rushed to the emergency room of the defendant hospital after being shot in the leg.  The hospital physician instructed the unit secretary to contact the on-call vascular surgeon.  After contacting the incorrect vascular surgeon initially, the unit secretary succeeded in reaching the correct vascular surgeon who arrived at the hospital, after a short delay, and operated on the decedent.  Prior to the vascular surgeon’s arrival and again after the four-hour surgery was complete, the decedent suffered heart attacks.  He was pronounced dead following the second heart attack.

At trial, the plaintiffs sued for malpractice and negligence, claiming that the delay in administering treatment to the decedent was the proximate cause of his death.  Both the plaintiffs and defendants summoned expert witnesses to testify.  At the summary judgment stage, the court found that the actions of the vascular surgeon, nurse, and on-call service all comported with their respective standards of care.  This ruling foreclosed any future litigation over the vicarious liability of the hospital for the actions of the exculpated individuals.

The plaintiffs requested additional discovery with respect to the on-call list and the unit secretary, the only other individual who took part in the care of the decedent the night of his death and who did not obtain a summary judgment ruling.  The plaintiffs premised this request for additional discovery on the unit secretary’s alleged negligence which, they argued, could be imputed to the hospital.  The court, however, disagreed.  The court held that the plaintiffs failed to raise an inference of negligence on the part of the hospital because there was no evidence that the unit secretary was in charge of creating or managing the hospital’s on-call list and, therefore, was not liable for the delay that resulted from contacting the incorrect physician.  Further, the plaintiffs’ expert witnesses made no argument during discovery regarding the unit secretary’s standard of care and, even if they had, the court found that the expert witnesses would have lacked foundation to competently attest to the “internal emergency room procedures regarding preparation and maintenance of a list of on-call physicians.”

Finally, the court pointed out that the delay in treatment was not, alone, sufficient evidence to bolster any inference of negligence committed by the hospital.  Because the plaintiffs’ expert witnesses did not produce any evidence of how the delay in treatment deviated from the standard of care in emergency room hospitals, the court found the plaintiffs’ allegations of the hospital’s negligence unfounded.  Accordingly, the court affirmed the lower court’s denial of the plaintiffs’ motion for further discovery and affirmed the award of summary judgment in the hospital’s favor.

Emergency Med. Care Facilities, P.C. v. BlueCross BlueShield of Tenn., Inc. — Jan. 2017 (Summary)

EMTALA

Emergency Med. Care Facilities, P.C. v. BlueCross BlueShield of Tenn., Inc.
No. 15-1014 (W.D. Tenn. Jan. 19, 2017)

The United States District Court for the Western District of Tennessee refused to accept federal jurisdiction over a lawsuit brought by a provider of emergency care services (hospital emergency department screenings and treatment) against a Medicaid MCO, challenging the MCO’s unilateral decision to limit payments for emergency medical screenings performed in hospital emergency departments to $50 whenever the visit is afterwards determined to be non-emergent.

The MCO claimed that since the limit on payment was dictated by the state of Tennessee’s Medicaid managed care system, it was a directive from the state and had the force of law and, in turn, was automatically incorporated into the parties’ contractual agreement.  The provider of emergency care services disagreed that the payment cap had the force of law and instead argued that the MCO breached the contract by unilaterally implementing the payment change.  But, in the alternative, the emergency care provider claimed that if the cap on payment implemented by the MCO did have the force of law, then it was contrary to state law defining “emergency medical condition,” as well as the federal Emergency Medical Treatment and Active Labor Act (“EMTALA”).  In response to this argument, the MCO issued a notice to remove the lawsuit from state to federal court, on the basis that the arguments made by the provider of emergency care services referred to federal law and, in turn, presented federal questions.

The federal court declined jurisdiction.  Among other things, the court held that simply because the contract between the MCO and the provider of emergency care services required the provider to abide by EMTALA did not mean that federal question jurisdiction exists.  Accordingly, it remanded the case to state court for further proceedings.

Offor v. Mercy Med. Ctr. — Jan. 2017 (Summary)

EMPLOYMENT DISCRIMINATION

Offor v. Mercy Med. Ctr.
No. 16-839 (2d Cir. Jan. 20, 2017)

The United States Court of Appeals for the Second Circuit affirmed in part, vacated in part, and remanded in part the ruling of a lower court on a physician’s racial discrimination, retaliation, and hostile work environment claims.

The physician, an African-American female of Nigerian descent, alleged that while employed at the defendant hospital, she was denied vacation time and moonlighting hours due to her race and national origin.  Later, the physician was placed in a probationary program, where she alleged that the hostile work environment and discrimination persisted.  Eventually, the physician filed a complaint with the Equal Employment Opportunities Commission (“EEOC”) and was terminated by the hospital.

The court found that the physician’s claims of discrimination were not sufficient to survive a motion to dismiss because the physician’s comparators (other employed physicians who allegedly received better treatment than she did despite their supposedly equal status) were not, in fact, “similarly situated in all material respects.”  The physician also claimed a violation of the Family and Medical Leave Act (“FMLA”).  Because the physician brought her claim nearly three years after the hospital allegedly denied permission to take vacation time, the physician was required to prove that this denial was a “willful” violation of the FMLA.  The court pointed to the fact that the physician was eventually permitted to take the vacation time and that the hospital, at the time, offered reasonable explanations for denying her request.  Accordingly, the court affirmed the lower court’s dismissal of the claims that related to discrimination and the FMLA.

The court did, however, find evidence sufficient to raise an “inference of retaliatory intent” in the hospital’s decision to place the physician in a probationary program only a month after she had retained an attorney and attempted to exercise her FMLA rights.  Because the physician attempted to exercise her FMLA rights, was qualified for her position, and suffered an adverse employment action, the court vacated the lower court’s dismissal of the physician’s retaliation claim.

Stafford v. Burns — Jan. 2017 (Summary)

EMTALA

Stafford v. Burns
No.1 CA-CV 15-0476 (Ariz. Ct. App. Jan. 17, 2017)

The Court of Appeals of Arizona affirmed a lower court’s instruction that the parents of a deceased patient bore the burden of a heightened standard of proof.  The case arose out of a patient arriving at a hospital’s emergency room having ingested an unknown amount of methadone.  After hours of treatment and testing, the tending physician discharged the patient.  The patient was found dead the next day, and his parents subsequently filed a complaint against the tending physician, alleging that she negligently caused the patient’s death by discharging him prematurely.

The lower court returned a defense verdict in favor of the physician, to which the parents appealed arguing, in part, that because the physician did not provide medical care in compliance with the Emergency Medical Treatment and Active Labor Act (“EMTALA”), the lower court incorrectly required the parents show a heightened burden of proof.

At the outset, the court found that EMTALA applies whenever a person comes to the hospital for “what may be” an emergency medical condition.  Consequently, because the patient came to the hospital seeking treatment for what may have been an emergency medical condition, the physician was required to provide EMTALA mandated services.  Therefore, the lower court properly invoked a heightened burden of proof as required by an EMTALA claim.

Underwood v. Roswell Park Cancer Inst. — Jan. 2017 (Summary)

RACE DISCRIMINATION – RETALIATION

Underwood v. Roswell Park Cancer Inst.
Case No. 15-CV-684-FPG (W.D.N.Y. Jan. 13, 2017)

The United States District Court for the Western District of New York granted in part and denied in part motions to dismiss filed by a defendant hospital and hospitalist against claims of racial discrimination, whistleblower retaliation, hostile work environment, and breach of contract brought by a former staff physician.

Over the course of several years, the physician was subjected to various adverse employment events.  As early as 2008, the physician noticed that his salary, calculated by an objective determination of multiple clinical performance factors, was lower than that of his similarly-situated, white colleagues despite demonstrated successes in writing and receiving grants.  In addition to this, the physician’s outpatient office hours were reduced, he was restricted from accessing information on a hospital database that was necessary to conduct clinical research, was subjected to a peer review without notice, was removed from a leadership position, and refused to renew his staff privileges.  Following this series of events, the physician agreed to attend an advanced training course in order to regain his staff privileges.  After completing the course with positive reviews, the physician filed a charge of racial discrimination with the Equal Employment Opportunity Commission (“EEOC”).  The physician also expressed concern about the hospital’s urology department practices and requested an external review to assess potential patient care concerns.  These requests were ignored.  When the physician applied for re-credentialing, the hospital refused to approve his privileges.  The physician took an eight-month leave of absence at the hospital’s request and, when he returned to work, he was put under supervision.  The physician sued the hospital and the hospitalist, alleging discrete discrimination, hostile work environment, breach of contract, and retaliation claims.

The court held that the physician’s claims of discrete discrimination were subject to the 300-day statute of limitations.  Therefore, despite the fact that the alleged acts were ongoing and continuous over a period of several years, only those within the statutory period were actionable.  The physician’s claims of disparate treatment, though not included in his initial EEOC complaint, were not dismissed by the court because they were “reasonably related” to the claims set forth in the EEOC filing, regardless of whether or not the claims in that filing were exhausted.  Accordingly, the court denied the defendants’ motions to dismiss the claims that were “reasonably related” to the exhausted EEOC claims.

The court next denied the hospital’s motion to dismiss the charges of discrimination.  The hospital argued that most of the actions in the complaint related to the hospitalist rather than the hospital itself.  The court disagreed; the court found that the facts provided by the physician in his complaint demonstrated that the hospital “authorized or ratified the employment actions” taken against the physician by the hospitalist.  As such, the hospital’s motion to dismiss was denied.  Furthermore, the court held that the physician’s agreed-upon attendance at the advanced training course in return for staff privileges that were never renewed, as promised, demonstrated a likelihood of discriminatory conduct sufficient to justify denying the hospital’s motion to dismiss.  Looking at “all the circumstances” – including the physician’s comparatively low salary and derogatory remarks directed toward him – the court additionally determined this amounted to a sufficient amount of evidence to deny the hospital’s motion to dismiss with respect to the hostile work environment claim.

The court then dismissed the hospital’s motion to dismiss with respect to the state law retaliation claim.  The physician’s repeated concerns to hospital management regarding patient care and other questionable institutional practices, and the hospital’s subsequent severance of the physician’s privileges, indicated that the hospital’s conduct may have constituted retaliation in response to the physician’s whistleblowing.  Therefore, the court denied the hospital’s motion to dismiss.

The court dismissed the physician’s state law claim for breach of contract because the termination of staff privileges section of the agreement was not bound to abide by the hospital’s by-law policy.

The court also denied the hospitalist’s motion to dismiss the discrete discrimination allegations against him on the basis of qualified immunity as well as the retaliation claims.  The court found that the hospitalist failed to demonstrate, solely on the facts contained in the complaint, that he was entitled to such immunity.  Additionally, the court found that the coerced leave of absence, data access restrictions, and supervised privileges instituted by the hospitalist against the physician following the physician’s EEOC filing all raised sufficient evidence of potential retaliation.

Davis v. Johnson — Jan. 2017 (Summary)

MEDICAL STAFF APPOINTMENT – RETALIATION

Davis v. Johnson
No. 5:16-cv-262-DPM (E.D. Ark. Jan. 10, 2017)

The United States District Court for the Eastern District of Arkansas granted a defendant hospital’s motion to dismiss a claim brought by a physician alleging that the hospital retaliated against him for filing a previous lawsuit, in not considering a request for restoration of his privileges.

A hospital terminated a physician’s privileges following patient care concerns.  The physician sued the hospital in federal court, alleging racial discrimination.  While the physician sought restoration of his hospital privileges, he filed another lawsuit against the hospital in state court.  At the pre-application stage, the hospital considered the fact that the physician had filed the second lawsuit as evidence that the physician was “unwilling” to collaborate with the hospital.  Citing this and the physician’s lack of recent experience, the hospital rejected the physician’s application.  The physician sued the hospital claiming retaliation.

The court rejected the physician’s retaliation claims, citing recent precedent from the 8^th Circuit.  A retaliation claim, the court held, “requires a plausible allegation that the [hospital’s] reliance on the lawsuit [is] the ‘but-for’ cause” for rejecting an application for staff privileges.  Because retaliation was not the sole motivation behind its decision to reject the physician’s application for staff privileges, the decision not to consider the application for renewal of privileges could not serve as the basis for a retaliation claim under 42 U.S.C. §1981.  The court declined to rule on the physician’s state law retaliation claim or Freedom of Information Act claim.