Cales v. Baptist Healthcare Sys., Inc. — Jan. 2017 (Summary)

PRODUCT LIABILITY – OFF-LABEL USE

Cales v. Baptist Healthcare Sys., Inc.
No. 2015-CA-001103-MR (Ky. Ct. App. Jan. 13, 2017)

The Court of Appeals of Kentucky affirmed a lower court’s dismissal of a patient’s product liability claims against a health care system and manufacturer of a medical device, but reversed and remanded her medical negligence claims.

The case arose out of the physician’s off-label use of the Infuse Device.  The FDA approved the Infuse Device, and, as approved, the label provided: “these components must be used as a system.  The Infuse Bone Graft component must not be used without the LT-Cage Lumbar Tapered Fusion Device Component.” As a system, the device consisted of BMP, a BMP/Sponge and an LT-Cage.  During the patient’s surgery, the performing physician utilized a Capstone fusion cage with the BMP/Sponge rather than the LT-Cage.

Consequently, the patient brought two product liability claims, alleging that the health system only purchased a portion of the medical device, which was unreasonably dangerous and defective, the health care system’s hospital breached its duty to act as a reasonably prudent hospital, and, in reselling the medical device, the manufacturer should have known that the device would be used off label.  Furthermore, the patient asserted medical negligence claims alleging that the health care system either knew or should have known of the risks of using the device, and that she would not have consented to the off-label use of the device.

Addressing the product liability claims, the court agreed with the lower court’s dismissal of the claim because the claims were pre-empted by federal law.  Once the FDA has approved a medical device, the Medical Device Amendments of 1976 permit off-label uses and allow a health care provider to use the device in any manner deemed appropriate.  Thus, the FDA approval pre-empts any contention that the BMP/Sponge was defective or unreasonably dangerous.

Turning to the medical negligence claims, the court held that the health care system owed a duty to the patient.  After establishing that the performing physician was an agent of the hospital, the court reasoned that the off-label use of a medical device and the need to inform a patient are questions of fact to be decided by a jury.  Therefore, the court affirmed in regard to the dismissal of the product liability claims, and reversed and remanded to the lower court the medical negligence claims.

U.S. ex rel. Napoli v. Premier Hospitalists PL — Jan. 2017 (Summary)

FALSE CLAIMS ACT

U.S. ex rel. Napoli v. Premier Hospitalists PL
Case No. 8:14-cv-2952-T-33TBM (M.D. Fla. Jan. 12, 2017)

The United States District Court for the Middle District of Florida denied a physician, billing entity, and a hospitalist organization’s motion (collectively, the “organization”) to dismiss against the relators of a qui tam action.  The three relators, a nurse practitioner, former vice president of the hospitalist organization, and former medical administrator of the hospitalist group alleged violations of the False Claims Act by the organization.

The court held that the relators sufficiently pled with particularity improper billing practices by the organization which allegedly led to false claims being presented to and paid by the government.  While none of the relators were able to personally submit fraudulent bills, they each had access to documents and were in a position to observe the organization’s billing practices.  During the relators’ employment with the organization, the relators allegedly discovered improper billing practices and interviewed other employees for confirmation of their findings.

Additionally, the court found that the relators pled with sufficient particularity that a conspiracy existed between members of the organization.  The relators alleged that members of the organization were well aware through its communications with the billing entity that it was billing Medicare and Medicaid for patients never being seen, yet billed like they had.  Also, the relators alleged that they personally spoke with the owner and manager of the billing solutions and confirmed that they were aware of the policies.  As such, the court concluded that the relators sufficiently alleged that a member of the organization took an overt step of submitting a false claim to be paid, and which was a sufficient pleading with particularity of an FCA violation capable of withstanding the organization’s motion to dismiss.

Volk v. DeMeerleer — Dec. 2016 (Summary)

Petersen v. Supreme Court of Washington — Oct. 1983 (Summary)

Thurlow v. York Hosp. — Jan. 2017 (Summary)

FALSE CLAIMS ACT RETALIATION

Thurlow v. York Hosp.
Docket No. 2:16-cv-179-NT (D. Me. Jan. 10, 2017)

The United States District Court for the District of Maine denied a hospital’s motion to dismiss and granted a physician’s motion to amend his complaint alleging retaliation in violation of the federal False Claims Act (“FCA”), as well as two state law claims, against the hospital following the physician’s termination.

The employed physician voiced complaints about the work of a fellow surgeon whom the physician had suspected of performing unnecessary procedures, falsifying notes, and improper coding.  When the hospital informed the physician that it was merging two hospital-owned practice groups and that the physician would have to work alongside the surgeon about whom he had complained, the physician once again voiced complaints and refused to work with the surgeon.  Three months later, the hospital terminated the physician without cause and without notice.  Despite no longer being a hospital employee, the physician remained a member of the medical staff.  Almost eight months after the termination, the hospital’s President asked the physician to sign a “behavioral compact” if he wished to talk with the President about the hospital’s surgical services.

The physician sued the hospital, claiming that his termination from the hospital was retaliation for his complaining about the surgeon’s activities.  Although the physician initially failed to timely serve the complaint on the hospital, the court ultimately allowed the complaint to be filed.  The hospital then filed a motion to dismiss, after which the physician filed a motion to amend his complaint, which now included more detailed factual allegations and the new two state law claims.

The hospital first argued that the court should deny the physician’s motion to amend his complaint because of the physician’s lack of due diligence in filing his initial complaint.  The hospital claimed that the physician’s initial failure to timely file his complaint, as well as his filing a motion to amend after the hospital had already submitted its motion to dismiss, demonstrated a lack of due diligence.  The hospital also argued that the physician’s expanded factual allegations and new state law claims should have been included in his first complaint, and that these omissions also demonstrated a lack of due diligence that warrant the court to deny the physician’s motion to amend.  The court disagreed with all three of the hospital’s due diligence arguments, and found that the physician’s motion for leave to file an amended complaint was not an obvious attempt to “unnecessarily extend th[e] lawsuit.”

The hospital next argued that the court should deny the physician’s motion to amend his complaint because the physician’s FCA claim was “futile.”  The hospital claimed that there was not sufficient “temporal proximity” between the adverse employment action against the physician (i.e., his termination) and the physician’s statutorily protected activity (i.e., preventing the surgeon from defrauding the federal government).  The court did not agree with this temporal proximity argument, stating that a three-month gap between the protected activity and the adverse employment action supports a plausible inference of retaliation.  Furthermore, the court found that the hospital’s insistence that the physician sign the behavioral compact further supported a plausible inference that the hospital “harbored a retaliatory animus” toward the physician.

Accordingly, the court denied the hospital’s motion to dismiss and granted the physician’s motion to amend his complaint alleging FCA retaliation and state law violations.

 

Diakow v. Oakwood Healthcare, Inc. — Jan. 2017 (Summary)

DISABILITY AND AGE DISCRIMINATION

Diakow v. Oakwood Healthcare, Inc.
Case No. 15-11411 (E.D. Mich. Jan. 9, 2017)

The United States District Court for the Eastern District of Michigan denied in part and granted in part a physician’s and a hospital’s respective motions for summary judgment regarding the physician’s allegations that the hospital had violated the Americans with Disabilities Act (“ADA”) and the Age Discrimination in Employment Act (“ADEA”) by not renewing the physician’s on-call contract.

In December 2008, when the physician was 80 years old, she entered into a two-year on-call physician contract with the hospital.  This on-call contract provided an hourly wage for nighttime on-call emergency department coverage.  This contract was extended twice, through 2013.

In the interim, the physician sustained a leg injury.  Following this injury, the physician began to use a wheelchair to cover longer journeys through the hospital, and a nurse reported that the physician had difficulties getting to and performing surgeries.  The hospital eventually asked the physician to undergo a medical evaluation with a specialist.  Additionally, during one of her on-call services, the physician opted to not assist in an emergency procedure.

As a result of these occurrences, in June 2013, the hospital did not renew the physician’s on-call contract.  The physician did, however, maintain her staff privileges at the hospital.  At this time, the physician was 85 years old.  The physician now alleges that she was terminated in violation of the ADA and ADEA.

The court analyzed three aspects of the physician’s ADA disability claim: (i) whether the physician could perform the “essential functions of the job”; (ii) whether the hospital’s request that the physician undergo a medical evaluation was job-related and consistent with business necessity; and (iii) whether the hospital’s failure to renew the physician’s on-call contract was an ADA violation.  After taking into consideration such things as the on-call physician job description, witness testimony, and hospital communications, the court determined that there were genuine and disputed questions of fact regarding all three aspects of the physician’s ADA claim.  As such, the court denied summary judgment to both the physician and the hospital on all three.

The court next analyzed the physician’s ADEA age discrimination claim.  Even after proceeding as if the physician had shown a prima facie case of age discrimination, the court found that the physician was not able to identify how the hospital’s rationale for failing to renew her on-call contract (i.e., that she could not perform the requirements of the position) was a pretext for engaging in age discrimination.  As such, the court granted the hospital’s motion for summary judgment on the physician’s ADEA age-discrimination claim.

Torres v. Faxton St. Lukes Healthcare — Jan. 2017 (Summary)

NEGLIGENCE

Torres v. Faxton St. Lukes Healthcare
6:16-CV-439 (LEAD) (N.D.N.Y. Jan. 3, 2017)

The United States District Court for the Northern District of New York ruled that a physician and hospital owed a duty to family members of a patient who were killed by the patient after he was released from the hospital’s Emergency Department in an impaired mental state.  Accordingly, the court rejected the physician’s and hospital’s motions to dismiss the lawsuits filed against them by the estates of the slain family members.

The case arose out of the physician’s and hospital’s care of a former patient. After being detained following a violent altercation with his uncle, the former patient was transported to the hospital for a mental health evaluation. Before leaving the hospital, the officer that detained the patient provided his contact information to the physician and stated that the police should be notified prior to the patient’s release. Subsequently, the attending physician issued a restraint order based on his determination that the patient might pose a danger to himself and ordered a CT scan.

After the CT scan and drug screening, the attending nurses noted that the patient remained cognitively impaired, combative, and aggressive. However, two hours later the physician mistakenly ordered the patient’s discharge from the hospital, even though the hospital staff had continued to observe the patient acting erratically. The patient was discharged from the hospital a few hours later with a diagnosis of anxiety and panic attacks. Once he returned home, the patient murdered his sister, aunt, and uncle.

The court rejected the physician’s argument that he did not owe the patient’s family members a duty of care.  The court reasoned it is the risk of harm to identifiable third parties who the physician knows or should know are relying on the physician’s treatment decisions that outlines the nature of the duty in these cases. Accordingly, because the physician was aware of the circumstances under which the patient was removed from, observed the patient’s violent behavior while at the hospital, and failed to perform or request a mental evaluation, the court found that the physician knew or should have known that the decedents were relying on him to exercise proper medical judgment.

Additionally, the court reasoned, that under the circumstances, the hospital also owed the decedents a duty, finding that the estates plausibly alleged that the hospital owed the decedents a duty to control the patient or notify the police of the patient’s discharge.

Taylor v. Hy-Vee, Inc. — Dec. 2016 (Summary)

PATIENT SAFETY AND QUALITY IMPROVEMENT ACT

Taylor v. Hy-Vee, Inc.
Case No. 15-9718-JTM (D. Kan. Dec. 22, 2016)

The United States District Court for the District of Kansas denied in part and granted in part a pharmacist’s motion to compel a grocery store pharmacy (“pharmacy”) to produce documents, including incident reports and documents related to the return of prescription medications, in the pharmacist’s case involving claims for age and gender discrimination.

The pharmacy refused to produce the requested incident reports, arguing they were privileged as Patient Safety Work Product under the federal Patient Safety and Quality Improvement Act (“Patient Safety Act”).  The pharmacy contracted with a Patient Safety Organization (“PSO”) for the submission of medication errors through the PSO’s software program.  The pharmacy also maintained a record of medication errors, as required by Kansas Pharmacy Act’s Continuous Quality Improvement Program, in incident reports.  The pharmacist contended that the Patient Safety Act’s privilege did not protect the incident reports because they existed separately from the information submitted to the PSO.  The court rejected this contention, instructing that “what a pharmacy ultimately does with data collected and reported to a PSO is not relevant.  Such data is designated ‘patient safety work product’…and there is nothing in the [Patient Safety Act] to suggest data can lose that designation.”  The court continued by noting “[a]lthough it is used as part of defendant’s internal and state-mandated quality improvement system, the court is satisfied that defendant has met its burden of demonstrating that the data was developed for reporting to a PSO” (emphasis in original).  The court concluded that the information was protected by the Patient Safety Act privilege and properly withheld on that basis.

However, the court rejected the pharmacy’s position that documents reflecting the return of prescription medications were unduly burdensome to identify and produce.  According to the court, the documents were solely accessible by the pharmacy and could reasonably bear on the issue of whether the pharmacist’s termination was unlawful.

Emlich v. OhioHealth Corp. — Dec. 2016 (Summary)

HCQIA IMMUNITY

Emlich v. OhioHealth Corp.
Case No. 2:14-cv-1697 (S.D. Ohio Dec. 22, 2016)

The United States District Court for the Southern District of Ohio granted a hospital’s motion for summary judgment in a suit brought by a physician asserting numerous claims, including claims under the Sherman Act and the False Claims Act, after the hospital terminated the physician’s clinical privileges and medical staff appointment.

The physician had a history of quality of care concerns at the hospital dating back to 2004.  A number of the issues raised were sent out for external review, which found that the physician’s treatment fell below “generally accepted standards of care” and contributed to patients’ injuries or deaths.  Concerns were also raised about the physician’s professional conduct, including instances in which the physician failed to respond to his pager, to see his patients on daily hospital rounds, and to enter daily progress notes on his patients.  The Medical Executive Committee (“MEC”) formed an ad hoc committee to investigate the physician’s quality of care and professional conduct issues.  The ad hoc committee found that the concerns were substantiated and serious.  The ad hoc committee recommended the termination of the physician’s appointment and clinical privileges.  The MEC accepted the ad hoc committee’s recommendation.  The physician requested and was granted a hearing which took place over six days.  During the hearing, the physician was provided with a list of the MEC’s witnesses and exhibits, represented by legal counsel, permitted to call nine witnesses, allowed (through his counsel) to cross-examine witnesses, given a transcript of the hearing at its conclusion, and allowed to file a post-hearing brief.  The hearing officer approved the recommendation of the MEC to terminate the physician’s appointment and clinical privileges.  In turn, the MEC voted unanimously to reaffirm its original recommendation.  On appeal to the hospital’s board of directors, the board affirmed the MEC’s recommendation.

The physician sued asserting that the hospital’s termination of his privileges originated in the physician’s disagreement with the hospital’s decision to move to a closed-model for the hospital’s ICU and because he complained about what he considered to be fraudulent billing practices.  The hospital filed for summary judgment, arguing that it was immune under the Health Care Quality Improvement Act (“HCQIA”).  The court granted the hospital’s motion finding that the hospital acted in the reasonable belief that the action furthered quality health care.  According to the court, the MEC had a reasonable belief that terminating the physician’s privileges would further quality health care considering “five separate external reviews, involving six different patients, documented numerous deficiencies” in his care, including several avoidable deaths.  The court also concluded that the hospital engaged in a reasonable effort to obtain the facts and afforded the physician fair and adequate notice and hearing as required for HCQIA immunity to attach.  With respect to the fair and adequate notice requirement, the court observed that the hospital “established that [it] fully complied with the [HCQIA] safe harbor requirements.”  The court also rejected the physician’s claim that two of the members of the ad hoc committee were direct competitors of his since the direct competition prohibition under HCQIA only applied to the hearing officer and not members of the ad hoc committee.

Finally, the court noted that the physician did not allege “that he has complied with any of the procedural prerequisites for bringing a claim under the [False Claims Act].”  Nonetheless, the court ordered the physician to show cause within 30 days as to why his False Claims Act should not be dismissed.

Hernandez v. Crespo — Dec. 2016 (Summary)

MEDICAL MALPRACTICE ARBITRATION AGREEMENTS

Hernandez v. Crespo
No. SC15-67 (Fla. Dec. 22, 2016)

The Supreme Court of Florida remanded a case to the court of appeal, concluding that a medical malpractice arbitration agreement between a patient and a health clinic was void as against public policy because it excluded required provisions of Florida’s Medical Malpractice Act.  While 39 weeks pregnant and having contractions, the patient was turned away from her appointment at the health clinic because she arrived a few minutes late.  Three days later, and before her rescheduled appointment, the patient delivered her child stillborn.  After the patient notified the clinic of her intent to sue, the clinic sought to compel binding arbitration based on a signed agreement between the patient and the health care clinic.

The court approved the district court’s finding that the arbitration agreement between the patient and the clinic was against public policy because the agreement changed the “cost, award, and fairness incentives” of the state’s Medical Malpractice Act, which contains statutory requirements for arbitration of medical malpractice actions.  The court found that the arbitration agreement contravened the Act by, among other things, failing to have the clinic assume the majority of the costs of arbitration and failing to require the clinic to pay interest on damages.