N.H. Hosp. Ass’n v. Burwell — Mar. 2016 (Summary)

MEDICAID REIMBURSEMENT

N.H. Hosp. Ass’n v. Burwell
Civil No. 15-cv-460-LM (D.N.H. Mar. 11, 2016)

The District Court for the District of New Hampshire granted hospitals’ and a trade association’s request for a preliminary injunction enjoining the federal government from enforcing the policy contained in FAQs 33 and 34 clarifying the Centers for Medicare & Medicaid Services 2008 rules concerning the audit and enforcement procedure for calculating hospital-specific disproportionate-share hospital (“DSH”) payments in the Medicaid program.  Specifically, the hospitals and trade association petitioned the government to repeal the policies referenced in FAQs 33 and 34 regarding the inclusion of private health insurance and Medicare payments in the calculation of Medicaid shortfall.  The district court agreed that the potential harm cited by the hospitals, the reduction in prospective DHS payments and the recoupment of DHS overpayments made in previous years, were both fairly traceable to the federal government’s enforcement of policy outlined in FAQs 33 and 34 and could both be redressed by the preliminary injunction.  The hospitals provided statements from a number of state officials who indicated they would not act if the federal government was enjoined from enforcing the policies articulated in FAQs 33 and 34.

In evaluating the hospitals’ argument that the policy found in FAQs 33 and 34 violated the Medicaid statute under a Chevron analysis, the district court agreed with the federal government that the Secretary was granted the authority to define the term “cost” found in § 1396r-4(g)(1) and that “cost” could include payments from private insurance and Medicare.  The district court held, however, the government failed to show how interpreting “cost” to include payments from private health insurance or Medicare resulted in a reasonable interpretation of the statute.  Such an interpretation seemed to be directly contrary to the plain language of the statute itself.

The district court also found the hospitals demonstrated they were likely to prevail on the merits based upon their argument that the policy articulated in FAQs 33 and 34 substantively altered the obligations imposed by CMS’s 2008 regulations.  The district court held the Secretary’s interpretation of the statute was plainly erroneous.  The Preamble to the 2008 regulations stated numerous times that nothing in that rule was to change the way that hospital-specific DHS payments were to be calculated.  Furthermore, the protocol referenced in the Preamble that was intended to assist states and auditors calculate hospital-specific DHS payments did not include payments by private health insurance or Medicare as “data elements” to be considered.  As such, the district court found that the policy articulated in FAQs 33 and 34 should have been enacted through the notice and rulemaking process, because that policy substantially altered the formula for calculating hospital-specific DHS payments, was binding upon state Medicaid agencies, and effectively amended the 2008 rule.

The court agreed that the hospitals would suffer irreparable harm if the preliminary injunction was not granted because the state would recoup payments from the hospitals based upon the policy referenced in FAQs 33 and 34 and the hospitals had no means to recover these payments under state or federal law.  The district court also found the balancing of the equities favored granting the hospitals the preliminary injunction.  If the state proceeded to recoup DHS overpayments, a number of not-for-profit hospitals argued they would need to cut services and could fall out of compliance with their bond covenants.  The district court found the hospitals’ hardship outweighed the hardship faced by the Secretary because the federal government would simply need to adjust the amount of money paid to the state if the government were to prevail.  The district court granted the hospitals a preliminary injunction enjoining the government from enforcing the policy articulated in FAQs 33 and 34 and directing the federal government to inform the state Medicaid program that the federal government would not seek to recoup any DHS funds provided to New Hampshire based upon the state’s noncompliance with FAQs 33 and 34.  Additionally, in a separate decision on March 28, 2016, the district court dismissed the federal government’s motion to dismiss the hospitals’ complaint, citing the reasons outlined above.

Saint Alphonsus Med. Ctr. – Nampa, Inc. v. St. Luke’s Health Sys., Ltd. — Mar. 2016 (Summary)

ANTITRUST – ATTORNEY’S FEES

Saint Alphonsus Med. Ctr. – Nampa, Inc. v. St. Luke’s Health Sys., Ltd.
Case No. 1:12-CV-00560-BLW (D. Idaho Mar. 28, 2016)

The District Court for the District of Idaho unwound a merger between a health system and medical group brought by another hospital and the state of Idaho due to the potential anticompetitive effects of the merger.  In a subsequent proceeding to determine whether the plaintiff hospital was entitled to attorney’s fees, the district court rejected the defendant hospital’s argument that 80% of the attorney’s fees sought by the plaintiff hospital were related to matters never ruled upon by the court.  The district court stated it was appropriate to “defer to the winning lawyer’s professional judgment,” and that the “vast majority” of the work performed on behalf of the plaintiff hospital was related to the anticompetitive effects the merger would have on the adult primary care market.  However, the district court reduced the attorney’s fees awarded to the counsel for the plaintiff hospital by 10%, holding that this amount of the work represented time the attorney did not spend working on relevant issues.

The district court rejected the health system’s and medical group’s argument that the attorney for the plaintiff hospital exaggerated the number of hours the attorney spent on the case.  Although the government and private plaintiff were found to spend approximately 229% of the total time spent by the hospital preparing for the case, the district court held that opposing counsel’s billing records were not dispositive on the issue.  Based upon billing information the hospital had submitted in a prior case and the lack of evidence presented by the hospital to support its claim, the district court rejected the hospital’s argument that the reported hours spent by the private plaintiff and government were unreasonable.

The district court also found an award of attorney’s fees for travel expenses to be appropriate.  Although the Idaho Court of Appeals had recently held attorney’s fees would only be awarded as a sanction, the district court found the complicated healthcare antitrust case warranted specialized counsel not available within the jurisdiction.  Additionally, because the district court placed the parties on a fast track discovery schedule, the attorneys often needed to travel extensively to meet tight deadlines.  The district court found the travel costs sought by the private plaintiff’s counsel to be reasonable.  The private plaintiff was also entitled to interest on the attorney’s fees award until paid by the hospital.

Barot v. Susquehanna Physician Servs. — Mar. 2016 (Summary)

PHYSICIAN COMPENSATION

Barot v. Susquehanna Physician Servs.
No. 4:14-CV-00673 (M.D. Pa. Mar. 28, 2016)

The District Court of the Middle District of Pennsylvania denied a motion brought by a gastroenterologist compelling his former employer to produce the meeting minutes of the employer’s physician compensation committee that pertained to other physicians.  The hospital had already provided the gastroenterologist with the meeting minutes where the gastroenterologist’s compensation had been discussed.  However, the hospital refused to release the meeting minutes where the compensation of other physicians was discussed, arguing those minutes were confidential and not relevant to the gastroenterologist’s claim.  The district court agreed, noting that the other physicians did not seek the same amount of compensation as the gastroenterologist, nor did they practice in the same field of medicine.  The district court held the meeting minutes discussing other physicians’ compensation were not relevant to the gastroenterologist’s breach of contract claim.

Brahm v. DHSC, LLC — Mar. 2016 (Summary)

DISCOVERY OF MEDICAL RECORDS

Brahm v. DHSC, LLC
No. 2015CA00165 (Ohio Ct. App. Mar. 21, 2016)

In a medical negligence claim against a hospital and treating physician, the husband of a deceased patient made a number of discovery requests to the hospital, including information concerning the physician’s and the hospital’s catheterization department’s complication rates with percutaneous coronary interventions.  The trial court denied the request and instead ordered the hospital to submit the documents to an in camera review to determine if the documents were “confidential in whole or in part.”  The hospital appealed the trial court’s decision, informing the court it would be unable to provide the complication statistics because that information was only contained in non-discoverable quality assurance and peer review files.  However, the Court of Appeals of Ohio dismissed the appeal, holding that a trial court’s order for a hospital to submit documents for an in camera review by the court did not constitute a final appealable order.  The court of appeals noted the trial court did not order the hospital to release any documents, and the issue of whether or not certain information was privileged was not yet decided.  The dissent disagreed, arguing the disclosure violated the meaning of the statute per se.

Mena v. Idaho State Bd. of Med. — Mar. 2016 (Summary)

PHYSICIAN LICENSE

Mena v. Idaho State Bd. of Med.
No. 43125-2015 (Idaho Mar. 23, 2016)

The Supreme Court of Idaho reversed the Idaho State Board of Medicine’s (the “Board”) decision to impose sanctions on a physician’s license to practice medicine under the Disabled Physician Act.  The physician had reports filed against him alleging that he was abusing drugs or alcohol, as well as complaints about his record keeping, late dictations, and possible inadequate medical care.  The Board began an investigation regarding the physician’s ability to perform certain medical procedures.  Based on the state Disabled Physician Act, the Board determined that some level of impairment existed and ordered 11 sanctions to the physician’s license to practice medicine.

The physician appealed the Board’s decision to the state courts, which upheld the Board’s action.  However, that decision was reversed by the Idaho Supreme Court.  Under the Disabled Physician Act, the Board needed to prove, through expert testimony, that the physician had a mental illness and that the mental illness made the physician unable to practice medicine with reasonable skill or safety.  However, the Board failed to provide the required expert testimony on these issues.  The Idaho Supreme Court reasoned that the Board’s own evaluation of the evidence demonstrated that there was insufficient evidence to support its order.  The supreme court vacated the lower court’s ruling and ordered the lower court to remand the matter back to the Board which was to reconsider the action in light of the Idaho Supreme Court’s opinion.

Griffith v. Aultman Hosp. — Mar. 2016 (Summary)

DISCOVERY OF MEDICAL RECORDS

Griffith v. Aultman Hosp.
No. 2014-1055 (Ohio Mar. 23, 2016)

The Supreme Court of Ohio held that the physical location of patient data is not relevant to the determination of whether that data qualifies as a “medical record” under the statute setting forth procedures by which a patient may obtain a copy of his or her medical record.  This litigation arose as a result of a son’s request for a copy of his father’s complete medical record, after the father died in the intensive care unit of the hospital.  The initial medical record given to the son did not contain cardiac-monitoring data, which was not kept in the medical records department.  The hospital argued that because the data was not kept within the medical records department it did not fall under the statutory definition of a medical record.  The court disagreed, reasoning that the Ohio legislature did not limit the definition of medical record in the statute to data held in the medical records department.  As such, the physical location of the data was not relevant.  Instead, the court ruled that the definition of what qualifies as a medical record focused on “whether a healthcare provider made a decision to keep data that was generated in the process of the patient’s health care treatment and that pertained to the patient’s medical history, diagnosis, prognosis or medical condition.”  The court then reversed the lower court’s ruling in favor of the hospital and remanded the case back to the trial court for further proceedings consistent with the court’s opinion.

Reid v. KentuckyOne Health, Inc. — Mar. 2016 (Summary)

HCQIA IMMUNITY

Reid v. KentuckyOne Health, Inc.
No. 2015-CA-000092-MR (Ky. Ct. App. Mar. 18, 2016)

A surgeon received a letter from the hospital’s Surgery Quality Assurance and Investigation Committee that all of his cases would be subject to a focused review.  Two months later, the surgeon was told by the Medical Executive Committee that he could no longer perform any further surgical procedures at the hospital unless he was accompanied by an actively practicing and board certified general surgeon or endoscopist.  The physician did not exercise his clinical privileges under the conditions imposed and did not renew his medical staff appointment.  However, he then sued the hospital claiming that the conditions imposed by the MEC constituted a breach of contract, intentional infliction of emotional distress, and tortious interference.  The trial court concluded that the hospital was entitled to immunity under the Health Care Quality Improvement Act (“HCQIA”), because it had conducted “professional review activities.”

The Kentucky Court of Appeals reversed the trial court’s finding that the hospital’s actions constituted a “professional review action” not “professional review activities.”  The court ruled that the conditions that were imposed on the surgeon so severely restricted his clinical privileges at the Hospital that they constituted a “professional review action.”  The appellate court then questioned whether the hospital was entitled to HCQIA immunity because the hospital did not appear to meet all of the standards required by HCQIA, including a hearing.  Therefore, the appellate court remanded the case back to the trial court for further consideration of the pertinent provisions of HCQIA.

Brown v. Rush Univ. Med. Ctr. — Mar. 2016 (Summary)

BREACH OF CONTRACT

Brown v. Rush Univ. Med. Ctr.
No. 1-15-0192 (Ill. App. Ct. Mar. 18, 2016)

Two physicians brought claims against their former employer, a medical center, a physician’s association, and the former chair of the medical center’s dermatology department.  The physicians alleged breach of contract and quantum meruit claims against the medical center.  Additionally, the physicians claimed intentional interference with prospective economic advantage and violation of the Illinois Consumer Fraud Act against the medical center and the former dermatology chair.

The physicians claimed that when they left and started their own practice their former employer did not share the location or information regarding their new practice to their patients from the medical center.  The trial court accepted the chair’s reasoning that he did not share the information because the practice was not up and running at the time the information was given to him.  Furthermore, he did not share the information immediately after the opening of the new practice because he was not made aware once it had begun operating.  The trial court agreed with the defendants that this was not intentional interference with the plaintiffs’ business.  Following the bench trial, the physicians appealed the rulings by the trial court, including the trial court’s decision to not allow certain evidence to be used in the case, including tax returns and other financial evidence.  Additionally, the physicians wanted to file a third complaint and were denied.  The appellate court affirmed the decision.

Fabian v. Hosp. of Cent. Conn. — Mar. 2016 (Summary)

TITLE VII

Fabian v. Hosp. of Cent. Conn.
No. 3:12-CV-1154 (SRU) (D. Conn. Mar. 18, 2016)

The United States District Court for the District of Connecticut denied a hospital’s motion for summary judgment on Title VII discrimination claims made by an orthopedic surgeon. The surgeon was a transgender woman who alleged that the hospital declined to hire her because she disclosed her identity as a transgender woman.  The court was faced with the question of whether the surgeon was an employee and subject to the protections of Title VII, and if Title VII applied to transgender identity.

The court denied summary judgment to the hospital on the basis of the surgeon not being an employee.  The court ruled that the hospital had not shown, as a matter of law, that the surgeon was not an employee.

The court also concluded that Title VII applies to transgender identity because it is equivalent to discrimination “because of sex.” The court went on to conclude that whether the hospital discriminated against the surgeon on the basis of her gender identity is a question for a jury.

Cent. Kan. Med. Ctr. v. Hatesohl — Mar. 2016 (Summary)

CORPORATE PRACTICE OF MEDICINE

Cent. Kan. Med. Ctr. v. Hatesohl
Nos. 113,675, 113,834 (Kan. Ct. App. Mar. 18, 2016)

A family practitioner entered into an employment agreement with a medical center that was operating as an Ambulatory and Surgical Center.  The physician resigned his position and the medical center filed a suit for breach of the non-compete agreement that was part of the employment agreement.  Additionally, the former employer/medical center filed suit against the physician’s new employer for breach of the non-compete agreement.

The district court held in favor of the physician and his new employer on the grounds that the employment agreement between the physician and the medical center was unenforceable because the center was not licensed properly to allow a family practitioner to practice at the facility.  The appellate court reversed, finding that the district court misunderstood the corporate structure of the medical center and the licensing of the medical center and thus the court’s conclusion that the employment agreement was unenforceable was erroneous.