Council for Urological Interests v. Burwell – June 2015 (Summary)

STARK LAW

Council for Urological Interests v. Burwell, No. 13-5235 (D.C. Cir. June 12, 2015)

The United States Court of Appeals for the District of Columbia Circuit called into question the current prohibition of “per-click” leases under federal regulations implementing the Stark law. The court noted that the per-click ban may be inconsistent with Congressional intent as expressed in the legislative history of the Stark law, and directed that the matter be remanded to the Department of Health and Human Services (“HHS”). HHS will be required to reevaluate whether the per-click ban is consistent with Congressional intent.

In contrast, the court approved HHS’s definition of an “entity furnishing designated health services.” Under the current definition, an entity that either performs or bills for designated health services is considered to be “furnishing” such services. The court found this to be a permissible construction of the statute, and noted that this definition closes “a loophole otherwise available to physician-owned entities that would allow circumvention of the purpose of the Stark Law merely by having the hospital bill Medicare for the services.”

Magnini v. Centegra Health Sys. – June 2015 (Summary)

VICARIOUS LIABILITY

Magnini v. Centegra Health Sys., No. 1-13-3451 (Ill. App. Ct. June 10, 2015)

A patient who was injured as a result of gastric bypass surgery brought a medical malpractice suit against a hospital (where the surgery was performed and the patient received follow-up care) and against several physicians related to her surgery and after care. The patient sought to recover against the hospital based on vicarious liability. In order to succeed on this theory, the patient needed to prove that the physicians were “agents and employees” of the hospital.

The court held in favor of the hospital because a bariatric services agreement and medical director services agreement between the hospital and the physicians indicated that the hospital did not retain the right to control the manner in which the physicians treated their patients. Also, the court observed that an agency relationship did not exist simply because the physicians were required to comply with the hospital’s medical staff bylaws. Furthermore, despite the fact that one physician was a hospital administrator in addition to a physician, because those duties were “distinct and separate” from the individual’s duties as a physician, the physician was not acting as an agent or employee of the hospital. Thus, the hospital was not held liable for the physicians’ actions.

King v. Burwell Update – June 2015 (Summary)

AFFORDABLE CARE ACT

King v. Burwell, No. 14–114 (Argued March 4, 2015—Decided June 25, 2015)

The U.S. Supreme Court decided 6-3 that health insurance tax credits are lawfully available to individuals in states that have a federal exchange.  Chief Justice Roberts wrote that “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them.  If at all possible we must interpret the Act in a way that is consistent with the former, and avoids the latter.”

See July 2014 U.S. Court of Appeals Case Summary Here.

Whitlow v. Rideout Mem’l Hosp. – June 2015 (Summary)

OSTENSIBLE AGENT

Whitlow v. Rideout Mem’l Hosp., No. C074810 (Cal. Ct. App. June 9, 2015)

The Court of Appeal of the Third District of California reversed summary judgment in favor of a hospital that claimed an emergency room physician who failed to treat a decedent’s brain hemorrhage was an ostensible agent of the hospital.

The patient, who came to the hospital crying, in excruciating pain and exhibiting high blood pressure, nausea, vomiting and dizziness, was asked by a hospital employee to sign a form stating the physicians and surgeons furnishing services to patients were independent contractors and were not employees or agents of the hospital. Signs in the emergency room also displayed this information. The physician misdiagnosed the hemorrhage and the patient died two days later. The court held the “mere existence of a boilerplate admissions form,” signage, and insignia on the physician’s clothing did not conclusively show the decedent should have known her treating physician was not the hospital’s agent.

Damgaard v. Avera Health – June 2015 (Summary)

CORPORATE NEGLIGENCE

Damgaard v. Avera Health, Civ. No. 13-2192 (RHK/JSM) (D. Minn. June 3, 2015)

The United States District Court for the District of Minnesota granted partial summary judgment in favor of two health care corporation defendants in a medical malpractice action, dismissing claims of direct corporate negligence against both defendants, vicarious liability against the parent corporation, and vicarious liability against the subsidiary corporation based on its failure to follow policies or procedures.

The plaintiff-patient presented to the hospital to deliver a baby and, during labor, the baby suffered from inadequate oxygen to the brain. The baby is now five years old and suffers from cerebral palsy, seizures, and a developmental delay and, as a result, is unable to feed herself, walk, or control her bodily functions. The plaintiff filed a medical malpractice lawsuit against the parent health care corporation and the subsidiary health care corporation, which employed the physician, based on corporate negligence.

The patient argued that the defendants were liable for direct corporate negligence based on a failure to adequately instruct, train, or supervise employees. The court disagreed, finding state law does not recognize direct corporate negligence. The court also stated that although negligent supervision is recognized, that requires a showing that the defendants failed to prevent the foreseeable misconduct of any employee, but here, plaintiff did not point to any evidence that suggested the physician’s alleged negligence was or should have been foreseeable to the defendants.

Although the defendants acknowledged that the subsidiary, as the employer of the physician, could be vicariously liable, the patient also argued that the parent company should be liable since it also was an employer of the physician. The court did not agree that the parent was also an employer, because the patient cited no evidence that the parent had control over the means and manner of the physician’s performance.

Finally, regarding the subsidiary, the court stated that the patient could not rely on the policies to establish vicarious liability because the state peer review statute provides that such policies cannot be admitted at trial. Also, the patient argued that the physician was negligent under the “borrowed servant” rule because she failed to provide appropriate trained and skilled personnel when she was not present, but the court found that the patient did not allege any negligence by the nurses.

Graves v. Ind. Univ. Health – June 2015 (Summary)

HCQIA

Graves v. Ind. Univ. Health, No. 49A05-1412-PL-560 (Ind. Ct. App. June 5, 2015)

The Indiana Court of Appeals affirmed a grant of summary judgment in favor of a hospital and two physicians who were defendants in a lawsuit filed by a plaintiff cardiologist who alleged breach of contract, tortious interference with a contract, civil rights violations and intentional infliction of emotional distress over the revocation of his clinical privileges.

The trial court found the hospital and two physicians were entitled to immunity under the Health Care Quality Improvement Act (“HCQIA”) on the breach of contract, tortious interference and emotional distress claims. On appeal, the cardiologist argued that immunity should not have been granted since he did not have an opportunity to present all of his witnesses because the hearing ran late. The appeals court found that the cardiologist raised no objections at the hearing, did not specify which witnesses he was unable to call, and did not request a continuance. The cardiologist also argued that he did not receive a fair hearing because one of the defendant physicians responded to the hearing committee’s questions after reviewing the medical records but without discussing the cases with the cardiologist. The appeals court rejected this argument, finding no requirement that the physician discuss the cases with the cardiologist prior to testifying and also finding that the cardiologist had the opportunity to cross-examine the physician.

On the civil rights violation claim, the cardiologist argued that the trial court erred in finding that he produced no evidence that the decision of the hospital to revoke his clinical privileges was a pretext to discrimination. The appeals court disagreed with the cardiologist, stating that in response to the overwhelming evidence provided by the hospital that it had legitimate, non-discriminatory reasons to revoke the cardiologist’s clinical privileges, he presented unsubstantiated and unsupported allegations.

Yocabet v. UPMC Presbyterian – June 2015 (Summary)

PEER REVIEW PRIVILEGE

Yocabet v. UPMC Presbyterian, Nos. 569 WDA 2014, 1230 WDA 2014 (Pa. Super. Ct. June 5, 2015)

The Superior Court of Pennsylvania consolidated two appeals made by a defendant hospital in a medical malpractice case, with the hospital claiming that the trial court erred by issuing two pretrial discovery orders that required the hospital to turn over to the plaintiffs certain materials. The first order found that a set of materials was not protected from discovery by the peer review privilege, while the second order found that another set was not protected by the attorney-client privilege. The appeals court affirmed the first order and reversed and remanded the second order for an in camera review of the materials.

The first set of materials consisted of documents and interviews submitted by the hospital to the state department of health, on behalf of the Centers for Medicare & Medicaid Services, to conduct an investigation into the hospital’s transplant program. The hospital argued that these documents were confidential under the state’s peer review statute, but the appeals court disagreed because the state department of health is not a professional health care provider and cannot conduct peer review.

The second set of materials consisted of documents, communications and other information relating to a hospital board meeting. The hospital argued that it was engaging in peer review during the board meeting because the information discussed at this meeting pertained to the transplant program and also that the attorney-client privilege applied because one or more attorneys attended the board meeting so the board could obtain legal advice.

The court concluded that the attorney-client privilege can apply to a meeting of the governing board of an organization and that the board of directors of a professional health care provider can conduct peer review. Therefore, the appeals court ordered that the requested documents from the second set of materials be reviewed in camera to determine whether and to what extent the privileges apply to any of the materials.

S. Health Corp. of Hous. v. Crausby – May 2015 (Summary)

TORTIOUS INTERFERENCE

S. Health Corp. of Hous. v. Crausby, No. 2014-CA-00603-COA (Miss. Ct. App. May 26, 2015)

The Court of Appeals of the State of Mississippi reversed a jury’s finding that a hospital and its administrators conspired to tortiously interfere with an emergency room nurse’s employment relationship by acquiescing to the demand of the chief of staff that the nurse be fired. However, the court affirmed the jury’s finding that the chief of staff slandered the nurse by making false allegations against her to hospital administrators.

The court held no conspiracy existed because firing the nurse was not an unlawful purpose, nor was it a lawful purpose accomplished by unlawful means. In affirming the jury’s finding that the chief of staff slandered the nurse, the court rejected his argument that the comments he made to the administrators about the nurse were protected by a qualified privilege. Although the court found that the chief of staff was commenting on the emergency room in which he occasionally worked, the court held the jury was entitled to believe that his comments were made with malice, sufficient to overcome the qualified privilege.

Stern v. St. Anthony’s Health Ctr. – June 2015 (Summary)

AMERICANS WITH DISABILITIES ACT – REASONABLE ACCOMMODATION

Stern v. St. Anthony’s Health Ctr., No. 14-2400 (7th Cir. June 4, 2015)

The United States Court of Appeals for the Seventh Circuit affirmed a district court’s grant of summary judgment to defendant health center, which terminated its Chief Psychologist due to short-term memory deficiencies that rendered the psychologist unfit for duty. The psychologist sued the health center under the Americans with Disabilities Act (“ADA”), claiming that the health center failed to engage with him in an interactive process to find reasonable accommodations that would permit him to continue his employment. The health center argued that the reasonable accommodations suggested by the psychologist were contingent upon eliminating essential functions of the Chief Psychologist position, which is not something that is required by the ADA. The court agreed with the health center, noting that even though job restructuring can be required as a reasonable accommodation, it is typically done for duties that take up less than five percent of a person’s work time. Here, the responsibilities that the psychologist wanted to have eliminated from his job duties were supervisory and administrative and took up anywhere from 45 to 80 percent of the Chief Psychologist’s time.

Farnsworth v. HCA, Inc. – May 2015 (Summary)

FALSE CLAIMS ACT – RETALIATION

Farnsworth v. HCA, Inc., No. 8:15-cv-65-T-24-MAP (M.D. Fla. May 29, 2015)

The United States District Court for the Middle District of Florida dismissed a retaliation claim brought by a Vice President of Quality and Risk Management (the “VP”) under the False Claims Act after she was placed on administrative leave for insubordination and was never allowed to return to work. She alleged that she was departed not because of insubordination but, rather, because during her five-month tenure with the organization, she uncovered a number of compliance failures on the part of the hospital that employed her and reported many of those failures to surveyors and government agencies. Many of the compliance failures, she alleged, constituted violations of the False Claims Act because they resulted in improper bills to Medicare and Medicaid.

The court recited the many compliance issues alleged by the VP, including but not limited to: that the hospital’s medical records personnel were actually employed through a third party rather than through the hospital itself, that medical records were improperly altered, that residents performed treatment without appropriate supervision by physicians, that research was conducted without full MEC and Board approval, and that an incident of sexual abuse at the hospital was not promptly reported to the state. Having recited the allegations, the court noted that while the alleged activities of the hospital may be “bad acts or practices,” in many cases the VP did not allege that she tried to do anything to stop those practices or report them to her supervisors so that they could correct them. For the few activities she did report, and for which she alleged she suffered retaliation, she failed to assert a sufficient connection to a bill that was submitted to Medicare or Medicaid. Having found the VP’s allegations to be largely “extraneous, irrelevant, and inflammatory allegations that have no bearing on her FCA claim,” the court dismissed the lawsuit, granting the VP leave to amend her complaint to focus on those instances in which she reported a billing violation to her supervisors.