Yarbrough v. Nw. Memorial Hosp. — Aug. 2016 (Summary)

APPARENT AGENCY

Yarbrough v. Nw. Memorial Hosp.
No.1-14-1585 (Ill. App. Ct. Aug. 19, 2016)

In answering a certified question from a lower court, the Appellate Court of Illinois for the First District, Fifth Division held that a hospital can be held vicariously liable under the doctrine of apparent agency for the acts of the employees of an unrelated, independent clinic that is not a party to the present litigation.

This interlocutory appeal arose in the context of a malpractice case that was based on a premature birth of a baby girl.  The infant’s mother had received prenatal care at a federally funded clinic that was not affiliated with the defendant hospital, but at which she had been informed that she would deliver her baby and receive certain aspects of her pregnancy care, such as ultrasounds and other diagnostic testing at defendant hospital.  The mother experienced complications prior to the delivery and ultimately she delivered the infant at only 26 weeks’ gestation, with the infant experiencing numerous complications.

She and the infant’s father sued a number of defendants for various malpractice-based claims; however, the claim at issue in this appeal was the allegation that despite the fact that the hospital was not affiliated with the federally funded clinic, the hospital should nonetheless be held liable for the allegedly negligent acts by certain healthcare providers who provided the mother’s prenatal care at the clinic under the theory of apparent authority. The defendant hospital argued that the theory of apparent authority could not possibly apply here as the allegedly negligent conduct did not occur at the hospital, but at an unrelated and independent clinic.

The court disagreed, determining that the infant’s parents had sufficiently pled the elements of an apparent authority claim, noting a number of factors, including that the defendant hospital promotes itself as a “community oriented hospital that collaborates with neighborhood centers,” including the clinic where the mother received her prenatal care, the hospital publicized its relationship with that clinic on its website, the hospital promoted the fact that “100%” of the prenatal patients at the clinic delivered at the defendant hospital, and that per an affiliation agreement between the hospital and the clinic, the hospital was designated as the primary site for any acute care services that clinic patients required and also called for a hospital representative to sit on the clinic board.

Laster v. Henry Ford Health Sys. — Aug. 2016 (Summary)

APPARENT AGENCY

Laster v. Henry Ford Health Sys.
Docket No. 324739 (Mich. Ct. App. Aug. 23, 2016)

The Court of Appeals of Michigan reversed a lower court’s denial of a request for summary judgment in favor of a health system in a malpractice lawsuit filed by a patient who was attempting to hold the health system liable for the acts of an independent contractor physician on the theory of vicarious liability.

The patient had come to the emergency room complaining of sharp abdominal pain, nausea, vomiting, and a history of Crohn’s disease.  Following a CT scan, the emergency department contacted the on-call general surgeon, believing the patient had appendicitis.  The surgeon required the patient to sign a consent form prior to performing an appendectomy, which stated, among other things, that she acknowledged that the surgeon was not an employee of the hospital.  Following the procedure, the patient continued to experience complications.  Ultimately, after two additional surgical procedures, it was determined the patient was suffering from a bowel perforation, secondary to her Crohn’s disease.  The patient alleged that the surgeon was negligent in evaluating her condition and performing surgery because he failed to diagnose and treat the perforation of her bowel, and further alleged that the health system was vicariously liable for the doctor’s malpractice, claiming that the on-call policy of the hospital, under which the surgeon came to be involved in her care, was evidence of sufficient control over the surgeon to establish liability on behalf of the health system under the theory of apparent agency.

The court disagreed, concluding that the health system had very little control over the surgeon, noting that he was free to treat patients how he saw fit, he billed his patients directly, and that he was part of an entirely separate group practice with its own staff and employees. Additionally, the hospital never compensated the doctor for his services, and he was free to obtain privileges at other hospitals. Accordingly, the court reasoned that because the patient’s claim was based on the doctor exercising professional judgment, over which the hospital had no control, the court held that the doctor was not an agent of the hospital. Consequently, the court reversed the lower court’s decision to deny the health system’s motion for summary disposition and remanded back to the lower court with instructions to grant the summary disposition in favor of the health system.

Scott v. Memorial Health Care Sys., Inc. — Aug. 2016 (Summary)

EMTALA

Scott v. Memorial Health Care Sys., Inc.
No. 15-6173 (6th Cir. Aug. 22, 2016)

The United States Court of Appeals for the Sixth Circuit affirmed a lower court’s grant of summary judgment on an Emergency Medical Treatment and Active Labor Act (“EMTALA”) claim in favor of a hospital against an executrix representing herself and her deceased husband.

After arriving at the hospital’s emergency room, medical staff noted that the decedent was slurring his speech and exhibiting a facial droop. After running several diagnostic tests, the decedent was diagnosed with Bell’s palsy, a medical condition that is not related to a stroke. However, less than two hours later, the decedent experienced additional changes in his mental status which led to a finding of an occluded artery, and a transfer was initiated to another hospital for more advanced treatment.  After being released from the second hospital, the decedent died eight months later after suffering a second stroke.

The executrix alleged that the hospital violated EMTALA by providing inappropriate screening when her husband arrived at the emergency room suffering stroke-like symptoms and failing to offer treatment to stabilize his condition.  She further alleged that the hospital failed to provide the proper written certification for the transfer and failed to forward the decedent’s medical records in a proper and organized fashion.

The court, however, held that the executrix’s failure to provide expert medical testimony showing that the harm that the decedent suffered was not the result of the stroke he had, but was the result of the hospital’s failure to provide an appropriate screening, the hospital’s failure to stabilize him properly, or the hospital’s deficiencies in the transfer process “dooms” her EMTALA claims. The court concluded that the executrix failed to establish that the subsequent decline of the decedent’s condition was not attributable to the earlier stroke or its natural progression, but rather to the later medical steps that the hospital’s staff did or did not take. As a result, the court affirmed the lower court’s grant of summary judgment.

Moore v. Grady Memorial Hosp. Corp. — Aug. 2016 (Summary)

RACIAL DISCRIMINATION

Moore v. Grady Memorial Hosp. Corp.
No. 14-14719 (11th Cir. Aug. 19, 2016)

The United States Court of Appeals for the Eleventh Circuit affirmed in part and reversed in part a motion to dismiss granted to a hospital by a lower court in a lawsuit filed by a surgeon alleging, among other things, racial discrimination in connection with the summary suspension of his privileges at the hospital.

The surgeon, who is of African American descent, was employed by a medical school which entered into an affiliation agreement with the defendant hospital. Shortly after he began performing surgeries at the hospital, a dispute occurred about whether procedures that he was performing were bariatric procedures, which were not authorized because the hospital did not have a program in place to support bariatric procedures.  While that dispute was ongoing, the surgeon complained to the director of the operating room that surgeons associated with another medical school that had an affiliation agreement with the hospital were being given greater access to operating rooms than those affiliated with his employer medical school which disparity, he claimed, was based on the fact that the majority of the surgeons affiliated with his medical school were African American. Shortly thereafter, the surgeon received a letter informing him that his clinical privileges were suspended due to his continued performance of unauthorized bariatric procedures.  After the medical executive committee determined to continue his suspension, the surgeon sued alleging racial discrimination and retaliation.

The lower court dismissed the claims, finding that the surgeon did not demonstrate the existence of a contractual relationship that had been impaired by the allegedly discriminatory acts – the summary suspension of his privileges, the diversion of patients to white physicians, and failing to provide operating rooms to African American physicians.  On appeal, the primary issue was whether such a contractual relationship existed.  The surgeon claimed that the acts impaired a third-party contract – his employment contract with the medical school – because as part of that contract, he had to maintain clinical privileges at the hospital.  The court agreed, finding that the surgeon pled sufficient factual allegations to support the discrimination claims and reversed the lower court’s dismissal of the doctor’s retaliation claim with directions to re-examine.

Howes v. Yankton Med. Clinic, P.C. — Aug. 2016 (Summary)

ANTITRUST

Howes v. Yankton Med. Clinic, P.C.
No. 4:15-CV-04177-KES (D.S.D. Aug. 17, 2016)

The Southern Division for the United States District Court for the District of South Dakota denied a medical clinic’s motion to dismiss a lawsuit filed by a deceased patient’s estate alleging federal antitrust claims of unlawful tying and monopolization.

The patient and his wife, who is the executrix of his estate, were involved in litigation that had been previously filed against the medical clinic involving widespread claims of malpractice due to the performance of unnecessary spine surgeries by an orthopedic surgeon at the clinic. The patient later began seeing a pulmonologist at the clinic for treatment of sleep apnea.  After the patient had to miss a follow-up appointment that was required by the insurance provider for continued use of a BiPAP machine, the pulmonologist’s office refused to reschedule his appointment unless they paid the entire outstanding balance, even though the patient’s wife showed the pulmonologist the patient’s Medicare card and informed him that they had an agreement for a monthly payment plan. Subsequently, the patient’s condition deteriorated from his stress over the lack of access to treatment, and he died.

The wife alleged that the pulmonologist’s refusal to treat the patient was an intimidation tactic in response to the couple’s involvement in the unnecessary spine surgery lawsuit against the clinic. The court denied the clinic’s motion to dismiss, finding that the executrix had sufficiently pled her antitrust claim. The executrix satisfied the interstate commerce element of the claim because several of the other plaintiffs in the unnecessary surgery case resided in other states and because the clinic accepted federal funding through Medicare.  With regard to showing antitrust injury, the court noted that due to the monopoly power of the clinic, the quantity of services available to the decedent in the relevant market was zero; therefore, antitrust standing was established by properly pleading that the clinic used its monopoly power to deny the decedent care so that the clinic could gain an improper advantage in the separate spine surgery litigation.

U.S. ex rel. Donegan v. Anesthesia Assocs. of Kan. City, PC — Aug. 2016 (Summary)

QUI TAM RELATOR

U.S. ex rel. Donegan v. Anesthesia Assocs. of Kan. City, PC
No. 15-2420 (8th Cir. Aug. 12, 2016)

The United States Court of Appeals for the Eighth Circuit affirmed a group of anesthesiologists’ motion for summary judgment against a relator, who brought a qui tam action, alleging that the anesthesiologists violated the False Claims Act by submitting Medicare reimbursement claims for anesthesia services knowing that they did not comply with the Medicare conditions of payment.

The relator maintained that the anesthesiologists failed to comply with the Medicare regulation requiring anesthesiologists to personally participate in the most demanding aspects of the anesthesia plan, including induction and emergence, because the anesthesiologists were, essentially, never present with patients during emergence but rather during the patient’s time in the Post-Anesthesia Care Unit (“PACU”). The relator claimed that despite knowing of their noncompliance, the anesthesiologists nevertheless sought Medicare reimbursement.

Taking into account that the conclusion that the regulation in question is ambiguous and that during discovery, medical experts for both parties agreed that “emergence” is a medical term referring to a post-surgery recovery process that can extend into the recovery room, the court concluded that the anesthesiologists’ interpretation – emergence meaning the patient’s continued recovery in the PACU – was objectively reasonable. Because an objectively reasonable interpretation is insufficient to give rise to a False Claims Act, the court affirmed the lower court’s grant of summary judgment.

Commonwealth of Ky., Cabinet for Health and Family Servs. v. Owensboro Med. Health Sys., Inc. — Aug. 2016 (Summary)

MEDICAID

Commonwealth of Ky., Cabinet for Health and Family Servs. v. Owensboro Med. Health Sys., Inc.
No. 2015-CA-000229-MR (Ky. Ct. App. Aug. 12, 2016)

The Court of Appeals of Kentucky affirmed a lower court’s ruling to reverse and remand the Cabinet Secretary of Kentucky’s Health and Family Services’ final order denying a health system’s reimbursement for Medicaid services.

The health system submitted a claim for payment to the Medicaid program after a treating physician admitted a patient on an inpatient basis for testing and treatment. Over a year later, the health system was notified that reimbursement for the patient was being retroactively denied because the Cabinet’s medical necessity review determined that the patient could have been treated on an outpatient basis. After several appeals, the Cabinet Secretary issued a final order affirming the decision to deny payment for the inpatient admission, which the health system appealed once more.  A trial court remanded the case back to the Secretary for a determination of whether the services provided might be reimbursable as outpatient care, which resulted in this action.

The court rejected the Cabinet’s argument that because Kentucky chose not to cover or reimburse providers for days on which an inappropriate level of care was provided, they had no authority to pay for services provided at an inappropriate level of care. The court reasoned that medically necessary outpatient care was not to be treated the same as medically unnecessary inpatient care, and it would be inappropriate to force the health system to absorb the cost of the medically necessary treatment it provided to a Medicaid beneficiary simply because the services were provided on an inpatient basis rather than an outpatient basis. Additionally, the court rationalized that an inappropriate level of care, in the appropriate context, referred to services provided on an inpatient basis that should have been provided by a skilled nursing or intermediate care facility, not services that should have been provided on an outpatient basis. Thus, based on this reasoning, the court affirmed the lower court’s ruling.

Deborah Heart & Lung Ctr. v. Virtua Health, Inc. — Aug. 2016 (Summary)

ANTITRUST

Deborah Heart & Lung Ctr. v. Virtua Health, Inc.
No. 15-2032 (3d Cir. Aug. 17, 2016)

The United States Court of Appeals for the Third Circuit affirmed the federal district court’s entry of summary judgment against a charity hospital, which claimed that a health system, a hospital, and a group of cardiologists (collectively, “defendants”) violated Section 1 of the Sherman Act and also brought claims for tortious interference and unfair competition.

The charity hospital alleged that when a group of cardiologists, who once had a relationship with the charity hospital that resulted in the transfer of numerous patients, entered into an exclusive agreement to provide cardiovascular services with another hospital, the arrangement constituted an illegal restraint on trade. The charity hospital maintained that the arrangement forced some consumers to obtain procedures at the other hospitals when, in a competitive market, the consumers would have chosen the charity hospital.

The court rejected the charity hospital’s position that its burden was to show that the effects of the arrangement had more than a de minimis effect on competition in the market, and found that the charity hospital failed to establish its actual burden of showing anticompetitive effects of the market as a whole. The court reasoned that all of the charity hospital’s arguments failed because the arguments pertained solely to the defendant’s patients rather than the undisputed relevant geographic market. Also, the charity hospital’s allegations failed because the charity hospital only showed the effects upon a small subset of the market rather than the broader effects upon the market as a whole.

Burns v. Georgetown Univ. Med. Ctr. — Aug. 2016 (Summary)

FELLOWSHIP

Burns v. Georgetown Univ. Med. Ctr.
Civil Action No. 13-898 (CKK) (D.D.C. Aug. 12, 2016)

The United States District Court for the District of Columbia granted a hospital and medical center’s motion for summary judgment in a suit brought by a former participant in a fellowship program, dismissing the fellow’s three contract-based claims as well as her three tort-based claims.

The fellow, who upon beginning her fellowship was an active duty member of the military, and her branch of service both entered into an agreement with the medical center prior to the fellow beginning the fellowship program. Eight months later, the fellow was handed a letter stating that she was being terminated, effective immediately, and per the fellow’s Fellowship Agreement, her branch of service would be notified. After negotiations, the fellow was allowed to submit a back-dated resignation letter. Subsequently, a second termination letter was given to the fellow, on the medical center’s letterhead, as well as the fellow’s branch of service. In response, the branch of service sent a form to the hospital asking if the fellow had ever been punished, to which the hospital responded yes and sent a Final Summative Assessment regarding the fellow’s time in the program.

With respect to the fellow’s contract-based claims, the court concluded that summary judgment in favor of the hospital was appropriate because the hospital was not a party to any of the contracts that formed the basis of the fellow’s claims. The court reasoned that an unambiguous reading of the contract at issue dictated an agreement between the fellow’s branch of service and the medical center. Additionally, the court rejected the fellow’s claim that the medical center breached the agreement by terminating the fellow without due process, failing to provide 30-day notice before the termination, and failing to provide a competent fellowship training program. The court concluded that the contract did not contain a due process requirement, there was no termination because the medical center allowed the fellow to retroactively exit the contract prior to her termination, and the contract contained no guarantee of a competent training program. Consequently, the court granted summary judgment on all three of the fellow’s contract-based claims.

The court also granted the hospital and medical center summary judgment on the fellow’s two defamation claims based on the last two forms sent to her branch of service and the intentional interference claim based on a theory of common interest privilege, which barred the defamation claims. The court maintained that the fellow was unable to overcome the common interest privilege because the record did not support her allegation of malice. The contents of the final documents delivered to her branch of service in the court’s eyes contained nothing more than a critical assessment of the fellow’s performance in professional language, which, consequently, did not rise to the level of defamation. Also, the court rejected the fellow’s argument that the final correspondence delivered to her branch of service was sent to interfere with her prospective economic advantage in her employment because the fellow was relying on future relations with her employer, which was speculative at best. Therefore, the court also granted summary judgment on the fellow’s additional tort-based claims.

Rush Univ. Med. Ctr. v. National Labor Relations Bd. — Aug. 2016 (Summary)

NLRB

Rush Univ. Med. Ctr. v. Nat’l Labor Relations Bd.
No. 15-1050 (D.C. Cir. Aug. 16, 2016)

The United States Court of Appeals for the District of Columbia Circuit denied an acute care facility’s petition for review of a self-determination election and granted the National Labor Relations Board (“Board”) cross application for enforcement.

The acute-care facility’s union, which has represented a unit of employees in different job classes at the facility, petitioned for a special election that would enable the acute care facility’s unrepresented Patient Care Technicians (“PCT”) to vote to become members of the union. The acute care facility opposed the proposed vote because, in its view, to comply with the Health Care Rule, the vote needed to encompass all unrepresented nonprofessional employees not just the PCTs. After the union’s regional director rejected the acute care facility’s position, the Board denied the health care facility’s request for review, which, consequently, led to the acute care facility’s refusal to negotiate. The Board ultimately found that the refusal to negotiate violated the National Labor Relations Act and brought suit.

The court rejected the acute care facility’s contention that the Board’s bargaining unit determination relied on an impermissible interpretation of the Health Care Rule. The court reasoned that when a union seeks to add unrepresented employees to what under the Health Care Rule is a preexisting nonconforming unit, the union does not have to accept all of the unrepresented employees who would fit within the same standardized unit in the rule. Therefore, the special election to allow the unrepresented PCTs to become members of the union was consistent with the Health Care Rule. Consequently, the court denied the acute care facility’s petition for review and granted the Board’s cross application for enforcement.