Shah v. Orange Park Med. Ctr., Inc. — Sept. 2016 (Summary)

RACIAL DISCRIMINATION/SHAM PEER REVIEW

Shah v. Orange Park Med. Ctr., Inc.
Case No. 3:14-cv-1081-J-34JRK (M.D. Fla. Sept. 16, 2016)

The United States District Court for the Middle District of Florida dismissed a lawsuit brought by a physician who claimed that he was subjected to racial discrimination by the hospital at which he worked, as well as by the staffing company that employed him, because he was prevented from holding leadership positions at the hospital, was provided unequal benefits and pay (such as reimbursement of licensing and CME fees), and was subjected to “sham” peer review based on alleged disruptive conduct.  The physician alleged that the work environment became so intolerable that he was forced to resign his employment – a “constructive discharge” – and the hospital then retaliated by terminating his privileges pursuant to the coterminous language of his employment agreement.

The court dismissed all of the physician’s discrimination and retaliation claims because he failed to allege even a modicum of facts from which a court could plausibly infer that racial discrimination had occurred.  For example, the physician did not describe any leadership positions that he had sought and been denied, nor did he allege the qualifications for leadership positions and whether he even satisfied those.  Further, while the physician alleged that his licensure and CME fees were not paid, he did not allege that he ever requested reimbursement of any fees, nor did he allege that any non-Asian-Indian physicians had received reimbursement of similar fees.  Finally, the court found that the plaintiff’s allegation of constructive discharge based on discrimination and retaliation did not contain the required evidence of severe harassment and hostile work environment.  According to the court, while it may be uncomfortable to be subjected to peer review, criticism, and hearings, such activities do not constitute an adverse employment action, nor are they sufficient to support a claim of constructive discharge.

According to the court, the physician’s own conclusion that an action was taken against him on the basis of his race could not, alone, lead to a plausible suggestion of discrimination.  Because the plaintiff failed to state any claims upon which relief could be granted, the court granted the defendants’ motions and dismissed the plaintiff’s federal claims with prejudice.  Having dismissed all of the physician’s federal claims, the court also determined not to exercise jurisdiction over the physician’s state law claims and therefore dismissed the physician’s claims for protection under the state whistleblower statute (he alleged that his reports of quality concerns were ignored and met with sham peer review accusations) without prejudice.

Morales-Ramos v. Hosp. Episcopal San Lucas Guayama, Inc. — Sept. 2016 (Summary)

EMTALA

Morales-Ramos v. Hosp. Episcopal San Lucas Guayama, Inc.
Civil No. 13-1614 (BJM) (D.P.R. Sept. 13, 2016)

The United States District Court for the District of Puerto Rico granted in part and denied in part a hospital’s motion for summary judgment against a patient alleging, among other jurisdictional claims, transfer and screening violations under the Emergency Medical Treatment and Active Labor Act (“EMTALA”).

The court found that summary judgment was not appropriate, with respect to the patient’s EMTALA screening claim, because the hospital deviated from its standard protocol of connecting a fetal monitor to every pregnant woman with over 20 weeks of gestation. The patient, who was 37 weeks pregnant, was in the hospital’s emergency room from 1:50 a.m. to 3:30 a.m., which should have resulted in a fetal monitor being connected for at least 100 minutes. However, the fetal monitor showed that it was connected for only 50 minutes. Accordingly, the court reasoned that even though a doctor from the hospital maintained that the patient was connected the entire time, the evidence at the very least created a genuine issue of material fact.

The court further reasoned that a reasonable jury could also find that the hospital’s failure to document the patient’s vital signs constituted a deviation from standard protocol. While the patient’s vital signs were properly documented upon her arrival at the hospital, the record reflected three instances in which the patient’s vital signs were not properly documented. Additionally, the court stated that a reasonable jury could also find that the hospital did not follow the proper screening procedures required before a doctor can decide to transfer a patient. A doctor from the hospital testified that before deciding to transfer or make arrangements to transfer a patient, the patient’s laboratory test should be examined. However, the hospital began making arrangements to transfer the patient approximately 20 minutes before she arrived at the hospital’s emergency room.

Turning to the patient’s EMTALA transfer claim, the patient claimed that she was suffering from abruption placentae, which presented a life-threatening medical condition for the patient and her unborn child. The court noted, however, that the patient failed to include any evidence that the hospital was aware of her condition at the time of the transfer. The court was unconvinced by the patient’s argument that the doctor at the hospital must have known, reasoning that the patient was attempting to impose liability on a theory of constructive knowledge. The court concluded that summary judgment was appropriate because the patient failed to show any evidence indicating that the hospital knew that she was suffering from the life-threatening condition. Therefore, in light of their findings, the court granted the hospital’s motion for summary judgment with respect to the patient’s EMTALA transfer claim, and denied summary judgment with regard to their EMTALA screening claim.  Since the federal court had jurisdiction over the plaintiff’s EMTALA screening claim, it retained supplemental jurisdiction over the plaintiff’s state law, medical malpractice claim.

Joseph v. S.C. Dept of Labor, Licensing and Regulation — Sept. 2016 (Summary)

PHYSICAL THERAPY

Joseph v. S.C. Dept of Labor, Licensing and Regulation
Appellate Case No. 2014-001115 (S.C. Sept. 14, 2016)

The South Carolina Supreme Court, in a 3-2 decision, reversed the circuit court’s grant of summary judgment and ruled that judicial and regulatory interpretations of Section 40-45-110(A)(1) of the South Carolina Code violated the constitutional rights of physicians and physical therapists by prohibiting physicians from employing and referring patients to physical therapists while allowing physical therapists to employ and refer patients to other physical therapists.  In reaching this result, the court also overruled its 2004 precedent in Sloan v. South Carolina Board of Physical Therapy.  In Sloan, the court prevented physicians from employing and referring patients to physical therapists, while allowing physicians to employ and refer patients to other practitioners, on the assumption that such relationship would create a conflict of interest and lead to overuse of physical therapy services.

A physical therapist and two orthopedic surgeons sought declaratory judgment from a 2011 Position Statement issued by the South Carolina Board of Physical Therapy on the applicability of Section 40-45-110(A)(1) of the South Carolina Code to physician-physical therapist referrals.  The Position Statement, based on a perceived legislative desire to avoid overuse of physical therapy by self-interested referrals, permitted physical therapists to refer patients to other physical therapists, while maintaining the prohibition on physician-physical therapist referrals.  The Position Statement and Sloan, together, allowed practitioners other than physical therapists to provide treatment to referred patients as direct employees of physicians and also permitted physical therapists to employ and refer patients to other physical therapists, but prohibited physicians from employing physical therapists.

The court found that the appellant health care providers had  standing to challenge the 2011 Position Statement because the limitation on collaboration between physicians and physical therapists restricted their respective rights to practice.  The appellants asserted both equal protection and due process violations, claiming that the decision negatively affected both their rights to practice and their legal relationships among other providers.  Regarding the equal protection claim, the court determined that there was no “rational relationship” between the harm that the legislature sought to prevent (conflicts of interest and misuse of health care services) and the means adopted in Sloan to prevent the harm (barring physician-physical therapist referrals).  Because other health care professionals, such as occupational therapists and nurse practitioners, could collaborate with physicians and treat referrals, the court held that Sloan’s prohibition on physician-physical therapist referrals constituted a violation of equal protection and accordingly overruled Sloan.

Regarding the due process claim, the court held that the South Carolina Board of Physical Therapy’s 2011 Position Statement violated the state’s Administrative Procedures Act.  The court found that the Position Statement constituted a regulation-equivalent “binding norm” and, as such, its enactment required that the Board give notice and provide those affected with an opportunity to be heard.  Because the Board did neither of these, it violated the appellant health care providers’ due process rights.  Finally, the court held that Section 40-45-110(A)(1) of the South Carolina Code prohibits only referral-for-pay situations rather than all physician-physical therapist referral relationships.

The concurrence suggested that Sloan and the 2011 Position Statement should be nullified by the court based on the South Carolina Board of Physical Therapy’s failure to adhere to the Administrative Procedures Act in either circumstance despite promulgating position statements that were analogous to regulations in substance and effect.

The dissent contested the majority’s decision on the basis that the appellants did not have standing and, on the merits, pointed to the inaction of the legislature as implicit approbation of the result reached in Sloan.

Moran v. Prime Healthcare Mgmt., Inc. — Sept. 2016 (Summary)

PATIENT BILLING

Moran v. Prime Healthcare Mgmt., Inc.
Case No. G051391 (Cal. Ct. App. Sept. 14, 2016)

The Court of Appeal of California reversed the trial court’s decision to dismiss a patient’s claims against a hospital for, among other things, wrongfully charging self-pay patients more than insured patients in violation of the Unfair Competition Law (“UCL”), and restitutionary relief under the Consumer Legal Remedies Act (“CLRA”).

A patient visited the emergency room on three different occasions as a self-pay patient, signed a financial liability contract, and was charged over $10,000 in medical bills. Prior to receiving the bill, the patient contacted the hospital to inform it that he was unemployed and uninsured, and asked the hospital to take his financial status into consideration when addressing his bill. The patient never received a response from the hospital. The patient then filed a complaint against the hospital alleging that self-pay patients are discriminated against when they are charged higher rates than insured patients; that self-pay patients reasonably relied on the belief that they would be charged the same amount as patients who received the same services; that self-pay patients reasonably expected to be billed no more than the reasonable value of the services they received, all in violation of the UCL; and that the hospital failed to inform the patients that they would be billed at an excessively higher amount than insured patients, in violation of the CLRA.

The patient’s first argument that self-pay patients are discriminated against when they are charged higher rates than insured patients failed because the hospital’s variable pricing is legislatively endorsed by the Business and Professions Code, which permits the use of variable pricing. Therefore, the patient cannot have a viable claim of violating the UCL based on variable pricing. The patient’s arguments of reasonably believing he would either be charged the same as other patients receiving the same services, or charged a reasonable value for those services failed for two reasons. First, the court determined that even if the patient read the contract he signed stating that he was financially liable, he could not have reasonably believed that he would pay the same as all other patients because the contract includes provisions for discounted payment policies such as charity care, and federal and state assistance. Second, the court determined that reliance on charges of reasonable value applies only when the agreement does not determine the charge, or include the method by which it is to be ascertained. The patient signed an express financial liability contract that did not include prices, but included means of determining the price. The patient also failed to show that he reasonably relied on a misrepresentation by the hospital that led him to believe that he would be charged the same as all other patients, which defeated his CLRA claim.

The patient’s UCL claim survives on his argument that the financial liability contract is unconscionable. The patient alleged that the hospital’s “pricing, billing and collection practices have a significant detrimental impact on the large population of self-pay emergency care patients.” Because the patients need the medical care, they are placed at a disadvantage, ultimately sign a contract that favors a more powerful party, the hospital, and become responsible for payments that far exceed the cost of actual care. The court determined that the patient stated a sufficient claim for the unconscionability of the financial liability contract. The hospital argued that the patient’s claim should fail because he was offered alternatives to pay a lower rate. The court determined both that the alternatives offered constituted a tangible burden, and that the patient showed sufficient proof of seeking a lower rate by contacting the hospital and informing it of his financial status.

Rowell v. Phoebe Putney Memorial Hosp., Inc. — Sept. 2016 (Summary)

EXCLUSIVE AGREEMENT

Rowell v. Phoebe Putney Memorial Hosp., Inc.
Case No. A16A1304 (Ga. Ct. App. Sept. 14, 2016)

The Court of Appeals of Georgia affirmed the trial court’s decision to grant a hospital and the hospital’s Vice President of Medical Affairs summary judgment, dismissing an anesthesiologist’s claims for, among other things, tortious interference with her existing contractual relationship and violation of the hospital bylaws.

An anesthesiologist had an oral agreement to work on nights and weekends for the anesthesia group that was the exclusive provider of anesthesia services at the hospital.  After the anesthesiologist’s employer met with the Vice President of Medical Affairs (“VPMA”) due to concerns about the anesthesiologist’s patient care, the employer informed the anesthesiologist that the VPMA instructed him to stop the anesthesiologist from coming to work, and if she did come back to work, her privileges would be suspended. Following that conversation, the employer called the anesthesiologist back, told her she wasn’t fired, and that she needed to fight the hospital’s instruction. The anesthesiologist chose not to return to work and picked up her last paycheck.  The anesthesia group then terminated her malpractice insurance policy and as a result she no longer qualified for privileges under the Medical Staff Bylaws.

The anesthesiologist initiated an action against the hospital and the VPMA which included claims for tortious interference with her existing contractual relationship and violation of the hospital’s bylaws. In order for the anesthesiologist to succeed in her claim of tortious interference with her existing contractual relationship, she had to prove the VPMA acted with malice by suspending her privileges.

The VPMA met with the anesthesiologist’s employer to tell him that the hospital planned to investigate her patient care, and that the initiation of the investigation would result in a suspension of her privileges. The VPMA’s communications with the employer were made in good faith, as he was acting in the interest of patient safety; and though he had the right to suspend the anesthesiologist’s privileges, he ultimately did not do so. The anesthesiologist never returned to work; therefore, there was no need to initiate an investigation and suspend her privileges. The anesthesiologist failed to prove the VPMA acted with malice since there was no act; therefore, her tortious inference claim cannot stand.

The anesthesiologist also claimed the VPMA failed to follow the hospital’s bylaws because he did not consult with other members of the Executive Committee concerning her suspension before contacting her employer. When the anesthesiologist made the unilateral decision not to return to work, which resulted in the anesthesia group cancelling her malpractice insurance, a suspension of her privileges was no longer necessary because she was no longer qualified to have privileges at the hospital. Because the hospital never imposed a summary suspension of her privileges, the anesthesiologist was not entitled to the hearing rights that were set forth in the medical staff bylaws.  Therefore, the anesthesiologist did not have a claim for a violation of the bylaws based on a suspension of her privileges.

In re: Evanston Nw. Healthcare Corp. Antitrust Litig. — Sept. 2016 (Summary)

ANTITRUST – MERGER

In re:  Evanston Nw. Healthcare Corp. Antitrust Litig.
No. 07 C 04446 (N.D. Ill. Sept. 9, 2016)

The District Court for the Northern District of Illinois denied in part and granted in part a hospital’s motion for summary judgment on whether a Class action, alleging violations of Federal Antitrust laws, was barred by the applicable statute of limitations.

Defendant hospital merged with another hospital on January 1, 2000.  The hospital informed its customers and affiliated managed care organizations (“MCOs”) of the proposed merger by letter in December 1999.  The hospital, however, did not publicly disclose any intention to raise prices for its services and, in fact, had agreed to honor the same pre-merger rates, terms, and conditions after the merger.  Following the merger, the hospital began negotiating for higher prices in its existing contracts with MCOs.  The first renegotiated contract was signed February 23, 2000.  The Federal Trade Commission (“FTC”) filed an administrative complaint four years later, on February 10, 2004, alleging federal antitrust violations based on the anticompetitive effect of the merger and the hospital’s subsequent decision to substantially raise prices for health care services.  The FTC concluded that the hospital’s merger and price increases violated Section 7 of the Clayton Act.  A Class action lawsuit, filed after the FTC case concluded in August 2007, followed.  The Class alleged violations both of Section 2 and Section 7 of the Sherman Antitrust Act, which prohibit monopolization and anticompetitive mergers or acquisitions, respectively.  Defendant hospital contended that the antitrust violation claims asserted by the Class action lawsuit were barred by the applicable statute of limitations (four years).  The Class cited the Continuing Violations Doctrine and Discovery Rule as alternative theories for delaying or resetting the running of the limitations period.

As to the applicability of the statute of limitations, the court held that, under Section 5 of the Clayton Act, the FTC’s lawsuit tolled, or temporarily froze, the running of the limitations period while the government’s case was ongoing.  Defendant hospital argued that even given this interruption, the Class action would still be barred because the merger took place on January 1, 2000 and the FTC action commenced on February 10, 2004.  The court held that the Class action claims were not barred under either the Second Circuit’s “accrual-on-purchase” approach or under the Discovery Rule because, under both theories, the date of injury or discovery did not occur until sometime on or after February 23, 2000.  Under the “accrual-on-purchase” theory, the Class suffered injury only when they were forced to pay the “supracompetitive prices” demanded by the defendant hospital following the merger.  The statute of limitations, therefore, would begin to run once the Class members had begun to make payments.  Alternatively, the court held that the Discovery Rule, which sets the beginning of the limitations period on the date the injury was discovered, not when it actually occurred, also would apply to both the Section 2 and Section 7 claims.  Thus, the Class’s claim did not ripen until the Class members realized that the merger had caused the injury. Under the Discovery Rule, therefore, the Class would not be barred from filing the claim.  Because the lawsuit would not be barred under either theory, the court ruled that the applicability of the Class’s Continuing Violations Doctrine was valid, with respect to both the Class’s Section 2 and Section 7 claims, but moot.

On the merits of the case, the court held that the Class’s Section 7 claim was valid under the “hold-and-use” doctrine.  Under this theory, the defendant hospital’s merger, while not itself anticompetitive, opened the door for the defendant hospital to renegotiate MCO contracts at much higher prices, thereby causing injury to the Class post-merger.  Because the court found that defendant hospital had no intention to raise prices before it consummated the merger, the injury to the Class could not have occurred on the date of the merger, but only after the MCO contracts were signed and higher prices were charged to members of the Class.

However, the court granted the defendant hospital’s motion for summary judgment, in part, holding that the statute of limitations barred any claims arising before the FTC filed its February 10, 2004 complaint.

Telesford v. Md. Provo-I Med. Servs., P.C. — Sept. 2016 (Summary)

DISCRIMINATION

Telesford v. Md. Provo-I Med. Servs., P.C.
Civil No. 13-cv-01359 (APM-DAR) (D.D.C. Sept. 2, 2016)

The United States District Court for the District of Columbia granted in part and denied in part a hospital’s motion for summary judgment, permitting several African-American physician assistants’ racial discrimination claims to move forward, while dismissing their retaliation claims.

In this case, a white male replaced an African-American as medical director of the emergency department.  Shortly thereafter, a white male physician assistant was promoted to Lead PA, a position that was not advertised to the other physician assistants. The medical director claimed the promoted physician assistant was recommended along with two African-American physician assistants, but was chosen because he was the most qualified. When the medical director learned the other physician assistants were displeased with the promotion, he then changed his story and claimed the promoted physician assistant was actually hired by a corporation that the hospital contracted with to provide doctors and physician assistants. As a result, seven African-American physician assistants filed a discrimination claim with the Equal Employment Opportunity Commission (“EEOC”).

Prior to the PAs filing their discrimination claims, the medical director had announced a new, poorly received, compensation structure for the physician assistants. When the physician assistants expressed dissatisfaction with the new compensation structure, the medical director pointed to the at-will termination clause of their employment contracts and threatened to consider their refusal to agree to the new compensation structure as their resignation. The compensation structure was ultimately made optional and the physician assistants who did not agree with the structure were reimbursed, with interest, any payments they did not receive, but would have received under the previous compensation structure.

Despite this, the African-American physician assistants claimed that they were being retaliated against, through the imposition of a new compensation structure and threat of termination, because they filed discrimination claims. The court concluded that the physician assistants’ retaliation claim could not survive because the threat of termination is not enough to qualify as retaliation, and any adverse effects resulting from their forced commitment to the new compensation structure were remedied.

The court refused to dismiss the PAs’ racial discrimination claims, however.  Particularly notable was an African-American nursing director’s testimony concerning the promotion, which called the medical director’s motivations into question. She testified that the medical director first acknowledged that the other physician assistants were unhappy with the promotion, but claimed it was not his fault because he did not hire the promoted physician assistant. But she testified that, on a separate occasion, the medical director was prepared to suggest that she recommended and supported the white physician assistant for the position, when in fact she had not.

The court held that because the medical director’s motivations for hiring the white Lead PA could be called into question, a question of fact remained over whether his explanations for why the Lead PA was hired were pretext.

Casares v. Mercy St. Vincent Med. Ctr. — Aug. 2016 (Summary)

AGENT OF ESTOPPEL

Casares v. Mercy St. Vincent Med. Ctr.
No. L-15-1313 (Ohio Ct. App. Aug. 26, 2016)

The Court of Appeals of Ohio for the Sixth District reversed a lower court’s grant of summary judgment in favor of a patient who brought a medical malpractice lawsuit against a health center, physician, and hospital.

After fracturing his cervical spine in a swimming accident, the patient was transported to a nearby health center. Upon arrival, the patient was placed in the care of one of the health care center’s physicians, but was eventually airlifted to another hospital. Ultimately, the patient suffered permanent injury to his spinal cord and quadriplegia. The patient filed suit against both facilities, alleging that the physician at the first facility negligently failed to take any cervical spine fracture or spinal cord injury precautions, and failed to diagnose and treat his cervical fracture. Additionally, the patient maintained that the flight crew was negligent in failing to secure his cervical spine.  The patient claimed the physician, an independent contractor, acted as an ostensible agent of the health center, thus the health center was responsible under the doctrine of respondeat superior.

The court disagreed with the lower court’s finding that the patient failed to meet his burden of showing that he “looked to” the health center for care, as opposed to the physician, because his lack of consciousness had precluded him from doing so. The court held that a hospital may be held liable under the doctrine of agency by estoppel for the negligent acts of its independent contractors where the patient is unconscious and without notice of the independence of the physician at the time of paramedic transport. Therefore, the court reversed the lower court’s grant of the health center’s motion for summary judgment and remanded the case for further proceedings.

Young v. UC Health — Aug. 2016 (Summary)

STATUTE OF LIMITATIONS

Young v. UC Health
Nos. C-150562, C-150566 (Ohio Ct. App. Aug. 26, 2016)

The Court of Appeals for Ohio for the First District reversed a lower court’s ruling that the statute of repose, which bars medical claims more than four years after the alleged malpractice, was illegal.  The case had been brought by a patient who had surgery performed by a spine surgeon who had since fled the country.  As a result, two hospitals were also named as defendants.

The court held that the lower court erred by concluding that the claims asserted by the patient were not medical claims. The court reasoned that because the claims arose out of the medical diagnosis, care, or treatment of the patient, the allegations against the hospital constituted medical claims. Additionally, the court found that the lower court erred in holding that the statute of repose was unconstitutional. The court noted that the Ohio Supreme Court has found that the statute of repose is constitutional, and the lower court had no authority to find otherwise. Therefore, the court found that the medical claims against the hospital were barred by the statute of repose and granted the hospital’s motion to dismiss.

U.S. ex rel. Hockenberry v. OhioHealth Corp. — Aug. 2016 (Summary)

FCA

U.S. ex rel. Hockenberry v. OhioHealth Corp.
Case No.: 2:15-CV-666 (S.D. Ohio Aug. 25, 2016)

The United States District Court for the Southern District of Ohio dismissed a False Claims Act (“FCA”) suit filed against a health system by a physician.  The physician alleged that he personally witnessed physician-employees of the health system falsely enter notes in patient charges, which constituted a fraudulent billing scheme. However, the physician claimed that because of the Health Insurance Portability and Accountability Act (“HIPAA”), he could not provide patient names, dates of treatment, or content of treatment.

The court reasoned that the doctor failed to plead his FCA claim with particularity because he failed to identify any of the physicians involved in the alleged fraudulent activities. The court noted that his contention of not being able to offer any details was insufficient because he could have referred to the physicians and patients involved in the alleged fraud by their initials or requested that the court enter a HIPAA qualified protective order to avoid any violations.