Nahas v. Shore Med. Ctr. – May 2015 (Summary)

PROFESSIONAL REVIEW ACTION DISPUTE

Nahas v. Shore Med. Ctr., Civil No. 13-6537 (RBK/AMD) (D.N.J. May 29, 2015)

The United States District Court for the District of New Jersey granted in part and denied in part a surgeon’s motion requesting permission to amend his complaint, which alleged unlawful activity by a medical center and several of its physician leaders with respect to their refusal to reinstate, and subsequent suspension of, the surgeon’s clinical privileges. The court had dismissed the surgeon’s original, 50-page complaint in full on the basis that it failed to state a claim upon which relief could be granted. Subsequently, the surgeon amended the complaint, expanding it to fill 127 pages by detailing additional facts, removing a few claims, and adding several new legal theories pursuant to which he seeks relief. The surgeon also took the opportunity to name additional defendants, including the Medical Executive Committee. The medical center and other defendants opposed the surgeon’s motion to amend the complaint, on the basis of futility.

In reaching its decision to allow some of the surgeon’s claims to move forward, while dismissing others on the basis that they fail to state a claim, the court made a few interesting findings. First, it held that the surgeon’s Section 1, Sherman Act claim was pled sufficiently to survive dismissal – even if it was not yet clear that he would be able to prove his claims at trial. In that claim, the surgeon alleged that the members of the MEC acted in concert to adopt new criteria that would bar the surgeon from “restoring” his privileges. It dismissed the Section 2, Sherman Act claim, however, noting that the surgeon failed to plead sufficient allegations of intent by the parties to monopolize a relevant market.

The court also allowed the surgeon’s claim for racial discrimination to survive dismissal, noting several allegations of the surgeon: First, that other, similarly-situated but non-Arab physicians were allowed to resume their privileges after a period of absence, while under the supervision of a proctor – but that he was not given the same allowance. Second, the court observed that the medical center and its physician leaders may have departed so significantly from their normal procedures that their course of action is evidence of an impermissible purpose.

Finally, the court noted that New Jersey law allows surgeons to state a claim for judicial review of private hospitals’ decisions to deny staff privileges. Accordingly, the court will entertain the surgeon’s claim that the medical center denied the surgeon’s privileges in an arbitrary and capricious manner that violated his right to fundamental fairness.

Colo. Med. Soc’y v. Hickenlooper – June 2015 (Summary)

SUPERVISION OF CRNA SERVICES

Colo. Med. Soc’y v. Hickenlooper, Supreme Court Case No. 12SC671 (Colo. June 1, 2015)

The Supreme Court of Colorado affirmed the dismissal of a lawsuit brought by the Colorado Medical Society and Colorado Society of Anesthesiologists, both of which were challenging the governor’s decision to opt out of the requirement, under federal regulations, that hospitals, critical access hospitals, and ambulatory surgery centers may bill Medicare for anesthesia provided by CRNAs only if those CRNAs are supervised by a physician. While the court held that the medical associations did have standing, it found that they failed to state a claim. Notably, the court clarified that the governor’s decision to opt out of the federal regulations’ requirement for CRNA supervision did not constitute an interpretation of Colorado law governing the supervision of CRNAs (a matter which was disputed by the medical associations and governor).

Baker v. Banner Health – May 2015 (Summary)

FALSE CLAIMS ACT/NONPHYSICIAN SUPERVISION OF RADIOLOGY SERVICES

Baker v. Banner Health, Civil Action No. 12-cv-3029-WJM-CBS (D. Colo. May 28, 2015)

The United States District Court for the District of Colorado granted a qui tam relator’s motion for partial summary judgment in a lawsuit she brought alleging violation of the False Claims Act by a medical center and its medical group, on the basis that they inappropriately billed Medicare for external beam radiation therapy despite having no qualified physician on the premises. The medical center argued that it could provide Medicare-reimbursable radiation therapy in the absence of a specialized physician as long as an advanced practice nurse (“APN”) supervised the procedure. The relator argued, on the other hand, that federal regulations allow “direct supervision” to be done by a non-physician practitioner only if the non-physician practitioner may “personally furnish” the relevant service in accordance with state law. In this case, the court noted that Colorado regulations do not permit non-physician practitioners to personally furnish radiation therapy services. Accordingly, the medical center was not permitted to bill Medicare for radiation therapy services provided without the presence of a specialized physician. The court noted that its decision did not resolve the question of intent, a matter which must also be considered in determining liability under the False Claims Act.

In re Mem’l Hermann Hosp. Sys. – May 2015 (Summary)

PEER REVIEW PRIVILEGE

In re Mem’l Hermann Hosp. Sys., No. 14-0171 (Tex. May 22, 2015)

The Supreme Court of Texas ordered a hospital to turn over certain protected peer review documents to a physician who was suing the hospital alleging a number of anti-competitive actions.

The documents were requested by a cardiothoracic surgeon who had resigned from the medical staff of the hospital and sued, claiming restraint of trade, disparagement, tortious interference with prospective business relations, and defamation. According to the surgeon, who had pioneered “off-pump” and robotic-assisted heart surgeries at the hospital, administration engaged in a “whisper campaign” to destroy his professional reputation after it became known that he also intended to practice at the newly opened competing hospital in town. The surgeon alleged that representatives of the hospital spread rumors about his mortality rate, ceased all promotion and marketing of his practice, and presented manipulated data of his mortality rate to his cardiology colleagues, upon whom he relied for referrals. The campaign culminated with the CEO of the hospital system publicly ridiculing the surgeon, stating the surgeon was targeted for his “affiliation” with the rival hospital system and the destruction of the surgeon’s reputation was a “preemptive warning” to other physicians.

The Texas Supreme Court held that while the state peer review privilege was applicable to the documents requested, the anticompetitive exception to the peer review privilege, which limits the provision of confidentiality under the privilege, applied to a number of the documents that had been requested. Specifically, the court determined that documents containing data on mortality rates of other cardiovascular surgeons, physician volume, plans to review mortality data, references to appropriate parameters for calculating mortality data, and maps identifying the locations of physicians and hospitals in the geographic area were not privileged because they were considered relevant to anticompetitive actions pleaded by the surgeon.

Lai v. Gottlieb Mem’l Hosp. – May 2015 (Summary)

NATIONAL PRACTITIONER DATA BANK

Lai v. Gottlieb Mem’l Hosp., No. 1-14-2319 (Ill. App. Ct. May 22, 2015)

The Appellate Court of Illinois affirmed a lower decision denying a physician’s request for an injunction against a hospital seeking to prevent the hospital from filing a report with the National Practitioner Data Bank (“NPDB”).

The litigation arose out of the hospital’s summary suspension of the physician’s surgical privileges which was based on complications that a patient experienced. Shortly after the hospital’s medical executive committee voted to uphold the suspension and terminate the physician’s privileges, the physician resigned from the medical staff. The hospital informed the physician that because he did not request a hearing of the summary suspension, two reports would be filed with the NPDB, one related to the summary suspension action which became final when he did not request a hearing and one related to his resignation because it occurred while he was under investigation. The physician’s request for the injunction sought to enjoin the hospital from filing either report based on his argument that the summary suspension process did not comply with state law.

The trial court held that the physician’s resignation while under investigation was a separate and distinct matter from the summary suspension and that the hospital was required to report that resignation whether or not appropriate procedures that complied with state and federal law had been followed for the summary suspension action. The appellate court agreed, noting that the reporting of a physician’s surrender of privileges during an investigation is a separate and distinct legal question from a hospital’s authority to report a summary suspension after a physician has had an opportunity to exercise his or her due process rights. Here, the physician’s due process rights were not violated because the hospital agreed not to report the physician’s summary suspension to the NPDB until defendant exercised the proper procedures.

Brandner v. Bateman – May 2015 (Summary)

IMMUNITY – PHYSICIAN ACTION

Brandner v. Bateman, No. S–15513 (Alaska May 15, 2015)

The Supreme Court of Alaska affirmed a lower court’s ruling granting summary judgment to several doctors who had been sued by one of their colleagues. The lawsuit arose after a hospital terminated a physician’s privileges over a violation of hospital policy.

The physician had come under scrutiny during 2010, when the Alaska State Medical Board received a report that he had threatened an employee in the governor’s office over a child support matter. The Medical Board ordered the physician to submit to psychiatric and medical evaluations in order to assess his ability to practice medicine. These evaluations confirmed that the physician was fit to practice and the investigation was resolved.

Then, in early 2011, the physician allegedly made a series of strange, “disjointed” statements at an executive committee meeting, raising concerns at the hospital over his ability to practice. When the executive committee ordered him to undergo psychiatric evaluation, he explained that he had recently had one and had been found fit to practice. The hospital reviewed the records of this evaluation and discovered the involvement of the Medical Board.

Under hospital policy, the physician was required to report any condition the Medical Board placed on his ability to practice. The executive committee determined that requiring the physician to submit to a psychiatric evaluation placed a condition on his ability to practice medicine, and therefore voted to terminate the physician’s hospital privileges over his failure to report. After an unsuccessful appeal to the hospital’s fair hearing panel, the physician filed this lawsuit. He sued not only the hospital, but also the doctors on the executive committee, the hearing panel, and the witnesses who testified at the hearing.

On appeal, the Alaska Supreme Court held that the individual doctors were immune to the lawsuit. It found that the doctors had made reasonable efforts to ascertain the facts upon which their recommendations were based, had acted in the reasonable belief that their recommendations were warranted, and had acted in a manner not motivated by malice. It emphasized the key point that the executive committee and hearing panel had relied on a reasonable reading of hospital policy and had imposed a corresponding sanction. Consequently, even if the sanction seemed unduly harsh (as the plaintiff-physician argued on appeal), the panel did not act inappropriately in terminating his privileges. The court affirmed the entry of summary judgment on all of the physician’s claims against the individual doctors.

Mohan v. Orlando Health, Inc. – May 2015 (Summary)

NEGLIGENT CREDENTIALING

Mohan v. Orlando Health, Inc., No. 5D13–3869 (Fla. Dist. Ct. App. May 15, 2015)

The Fifth District Court of Appeal of Florida reversed a trial court’s ruling dismissing a patient’s negligent credentialing claims against a hospital. These claims arose out of a medical malpractice lawsuit alleging that a physician had mistakenly removed a patient’s ureter instead of his appendix.

Although the operation took place at South Lake Hospital (“South Lake”), the patient had sued Orlando Health for negligent credentialing, arguing that Orlando Health was liable because it had assumed control of governance at South Lake. Orlando Health denied this charge and argued that South Lake was solely responsible for all decisions related to its medical staff and credentialing.

The court found that the contract between Orlando Health and South Lake did not conclusively establish that South Lake was solely responsible for its credentialing decisions. It highlighted certain contractual provisions that required South Lake to consult with Orlando Health in determining the qualifications and duties of its personnel and noted that Orlando Health was responsible for day-to-day operational management of the hospital.

In addition, the court explained that Orlando Health could be liable to the patient based on its business relationships with South Lake and with South Lake’s CEO and board members. Specifically, the court ruled that Orlando Health could be liable to the patient based on its partnership/joint venture affiliation with South Lake and ruled that Orlando Health might be vicariously liable for the actions of the CEO and the board members, since it had an employment relationship with these individuals. The case has been remanded to the lower court for further proceedings.

U.S. ex rel. Herren v. Marshall Med. Ctr. – May 2015 (Summary)

FALSE CLAIMS ACT

U.S. ex rel. Herren v. Marshall Med. Ctr., No. 2:12–cv–00098–JAM–KJN (E.D. Cal. May 12, 2015)

The U.S. District Court for the Eastern District of California granted in part and denied in part a motion to dismiss in a lawsuit over illegal billing procedures. A nurse filed this suit against a hospital and two of its affiliated physicians, alleging a variety of issues with physician oversight, double billing, and billing for visits which never occurred. She claimed that she had repeatedly brought these concerns to the physicians and hospital administration, but had been told that the practices would continue. In addition, she claimed that the hospital had terminated her employment in retaliation for her actions.

The court dismissed the wrongful termination claims that the nurse had filed against the physicians and their medical practice. It emphasized that the nurse was not an employee, contractor, or agent of the physicians, and therefore could not pursue a wrongful termination claim against them. The court also dismissed several of the nurse’s claims over a lack of sufficient information. It explained that allegations of fraud must contain a sufficient degree of detail in order to survive a motion to dismiss, and determined that several of the nurse’s claims had failed to meet this standard.

However, the court concluded that some of the nurse’s claims contained enough information to survive a motion to dismiss. Specifically, it noted that she had provided sufficient facts to support allegations that the physicians knowingly billed for patient visits that did not occur and that the physicians had engaged in improper billing for certain kinds of medication.

The hospital raised numerous arguments in its defense. For example, it argued that it was exempt from the Medicare physician supervision requirements because it was a small rural hospital. It also claimed that it should not be held liable because it had reasonably believed it was in compliance with all applicable laws and regulations. The court disagreed. It found that there was no evidence that the hospital received a federal designation as a rural hospital during the relevant period, and it further noted that the hospital had never sought any kind of governmental review or approval of its billing practices. Also, the court ruled that the hospital could have violated both state and federal law by mixing expired drugs with viable drugs and giving the resulting mixture to patients for treatment.

Hamby v. Health Mgmt. Assocs. – May 2015 (Summary)

TORTIOUS INTERFERENCE/STATE DECEPTIVE TRADE PRACTICES ACT

Hamby v. Health Mgmt. Assocs.
No. CV-14-667 (Ark. Ct. App. May 6, 2015)

The Court of Appeals of Arkansas affirmed in part and reversed in part a lower court’s dismissal of a physician’s claims, including tortious interference and violations of the Arkansas Deceptive Trade Practices Act (“DTPA”), against a health system, holding that the physician had sufficiently alleged facts to support his claims. The physician was employed by a group that provided emergency medical services at one of the health system’s hospitals. The physician alleged that the health system was engaged in a scheme to increase profits at the hospital by requiring emergency department physicians to unnecessarily and improperly increase patient admissions and medical testing. According to the physician’s complaint, the health system pressured his employer to terminate his employment because he refused to comply with the alleged scheme.

On appeal of the lower court’s dismissal of the physician’s claim, the court of appeals determined that the physician sufficiently alleged his claims for tortious interference and violations of the DTPA. The court of appeals held that the physician’s allegations that the health system was disappointed with the hospital’s admission numbers, the employer began chastising the emergency-department physicians at the hospital for missing opportunities to order additional billable testing, and the physician was subject to quality reviews of his charts and eventually terminated for what were characterized by the health system as “low ER metrics” were enough to support his claims at the motion to dismiss stage.

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

VICARIOUS LIABILITY

Magnini v. Centegra Health Sys., No. 1-13-3451 (Ill. App. Ct. Apr. 29, 2015)

The Appellate Court of Illinois affirmed a lower court’s dismissal of a medical negligence case brought by a patient against a hospital. The court held that the hospital was not liable for the acts of the physicians who performed the patient’s surgery because the physicians were independent contractors. In her suit, the patient claimed that she suffered numerous complications resulting from a gastric bypass surgery performed by the physicians and that the hospital was vicariously liable for the physicians’ alleged negligence. The hospital moved to dismiss the case, arguing that it could not be vicariously liable for the physicians’ conduct because of the physicians’ independent contractor status. The court agreed and rejected the patient’s arguments that the hospital controlled the physicians’ provision of medical care to patients through the following: (1) a medical director services agreement with one of the physicians, (2) an exclusive bariatric services agreement with the group which employed the physicians, and (3) the hospital’s medical staff bylaws. With respect to the medical staff bylaws, the court observed that the document concerns matters “that are collateral to patient care decisions, which remain in the exclusive control of physicians.” Similarly, the court concluded that the medical director services agreement explicitly indicated that the physician was an independent contractor and the hospital did not exercise any control over the methods by which the physician would perform his responsibilities. Finally, the exclusive agreement for bariatric services did not contain any evidence “to negate the doctors’ status as independent contractors.”