Rumble v. Fairview Health Servs. – March 2015 (Summary)

DISCRIMINATION

Rumble v. Fairview Health Servs., No. 14-cv-2037 (SRN/FLN) (D. Minn. Mar. 16, 2015)

The United States District Court for the District of Minnesota denied a hospital’s motion to dismiss a patient’s discrimination claim under the Affordable Care Act (“ACA”). Plaintiff, a transgender patient, alleged discriminatory mistreatment when he presented to the emergency room of the defendant hospital. The hospital moved to dismiss the case, arguing that the ACA does not provide a cause of action for transgender patients, and furthermore any alleged discriminatory treatment was performed by an independent contractor physician.

The court held that the ACA provides a cause of action for transgender discrimination. The ACA incorporates four civil rights statutes, one of which prohibits discrimination on the basis of sex. The court explained that this specific statute’s prohibition extends to gender stereotyping, and that the patient had sufficiently alleged that his disparate treatment was based on his gender identity.

Additionally, the court held that a hospital may be liable under the ACA for an independent contractor physician’s actions if the actions effectively barred the patient’s access to reasonable medical care, an appropriate person at the hospital knew of the physician’s actions and was deliberately indifferent, and, lastly, if the hospital had substantial control over the physician and the emergency room. The court explained that two hospital employees knew of the physician’s actions and did nothing to prevent them, and the hospital had sufficient control over the emergency room and the physician. Therefore, the patient’s claim survived the hospital’s motion to dismiss.

Golden v. Sound Inpatient Physicians Med. Grp. – March 2015 (Summary)

INTERFERENCE WITH CONTRACTUAL RELATIONS

Golden v. Sound Inpatient Physicians Med. Grp., No. 2:14-cv-00497-TLN-EFB (E.D. Cal. Mar. 17, 2015)

The United States District Court for the Eastern District of California dismissed a hospitalist’s suit alleging that a hospitalist group interfered with her prospective economic advantage and violated the state professional code forbidding unfair competition.

The hospitalist had previously held a contract to provide a medical center with her services. After the contract expired, the medical center replaced her with another group. The hospitalist then entered into agreements with several doctors to provide hospitalist services for their patients. The hospitalist provided the medical center with a list of these doctors and requested the medical center to admit their patients under her care. The new group allegedly instructed medical center staff to ignore the list and admit these patients under the care of the new group. The hospitalist brought suit claiming that the new group interfered with her prospective economic advantage and participated in unfair competition.

The court dismissed both claims, holding that the hospitalist did not allege sufficient facts to state a claim that the new group’s conduct rose to the required levels of wrongfulness. The court explained that to interfere with another’s economic relationship, the alleged interfering act must be wrongful by some legal measure. However, the court allowed the hospitalist to amend the complaint to allege the necessary facts.

U.S. v. Aurora Health Care, Inc. – March 2015 (Summary)

PEER REVIEW PRIVILEGE

U.S. v. Aurora Health Care, Inc., No. 14-MC-77 (E.D. Wis. Mar. 20, 2015)

This case arose out of an investigation by the United States government into whether a hospital had knowingly submitted false claims for reimbursement to federal healthcare programs. The government had subpoenaed the hospital for production of certain relevant documents, but the hospital had refused to turn over files that related to the peer review and evaluation of its health care providers.

Weighing the interest of both parties, the court noted that the government’s claim against the hospital did not allege any particular misuse of the peer review process itself. However, it reasoned that blocking access to these materials could hinder the investigation that was already underway, especially since some of the materials might reveal whether the hospital knew its physicians were submitting false claims.

The court ultimately decided in favor of the government. It concluded that participants in peer review proceedings usually understand that their comments may be disclosed under certain circumstances, whether to the individual under review or to government officials, and reasoned that disclosure under these circumstances would probably not cause any deterioration of peer review proceedings. The court refused to apply the peer review privilege to protect these documents and ordered the hospital to comply with the subpoena. For the same reasons, the court declined to recognize a similar self-critical review privilege. However, the court did note that the hospital would not be liable under state law for disclosing this information, since it was obeying the order of a federal court.

Johnson v. Bishof – March 2015 (Summary)

EMTALA

Johnson v. Bishof, No. 1-13-1122 (Ill. App. Ct. Mar. 13, 2015)

The Appellate Court of Illinois for the First District, Fifth Division, affirmed a lower court’s granting of summary judgment against a patient who alleged that she was treated negligently and in violation of the Emergency Medical Treatment and Active Labor Act (“EMTALA”).

The patient presented to a hospital’s emergency room complaining of back spasms and severe pain after slipping on ice. During her medical examination, according to the patient’s complaint, the physicians expressed their belief that she may have been faking or exaggerating her symptoms. After examining the patient, the doctors diagnosed her ailment as a muscle spasm, wrote her a painkiller prescription, and discharged her. She returned to the hospital soon after, where she was diagnosed with a spinal cord contusion and paralysis. She filed claims against the county and the physicians who examined her, alleging negligence, negligent infliction of emotional distress, and a violation of EMTALA. All of these claims were dismissed on summary judgment by the lower court.

The court of appeals affirmed the lower court’s decision to dismiss all claims. Though the physicians misdiagnosed the client, they were found to be immune from negligence allegations under the Tort Immunity Act. The court found that an incorrect diagnosis does not, on its own, mean that the physicians were negligent. For similar reasons, the court affirmed the dismissal of the claims for negligent infliction of emotional distress. Furthermore, the court found no evidence to show that the treatment prescribed to the patient was negligent, given the physician’s diagnosis of muscle spasms. The court refused to impose a legal duty on physicians to believe the sincerity of a patient when medical judgment suggests otherwise. Finally, the court upheld the dismissal of EMTALA claims because, even though there was a misdiagnosis, the physicians did perform medical screening on the patient as required when she entered the emergency room.

Cypress Med. Ctr. Operating Co. v. Cigna Healthcare – March 2015 (Summary)

THIRD PARTY REIMBURSEMENT DISPUTES

Cypress Med. Ctr. Operating Co. v. Cigna Healthcare, No. 12-20695 (5th Cir. Mar. 10, 2015)

The U.S. Court of Appeals for the Fifth Circuit affirmed in part, vacated in part, and remanded a suit brought by a hospital against an insurance company for violations of the Employee Retirement Income Security Act (“ERISA”), the Texas Insurance Code, and the Racketeer Influenced and Corrupt Organizations Act (“RICO”).

The insurance company maintains a cost-sharing agreement, in which the insurance company covers 80% of a patient’s medical costs if the patient was treated by an in-network provider. When a patient is seen by an out-of-network provider, the insurance company covers only 60% of the medical costs, and the patient pays the remaining 40%. The hospital was opened and operated as an out-of-network provider after an unsuccessful attempt to negotiate with the insurance company. The hospital then implemented a “prompt pay discount” program, offering patients a discounted rate if they paid their medical costs within a short time. The hospital implemented this approach in order to achieve greater success in collecting patients’ medical bills. Though the hospital applied an extreme discount under this prompt pay program, the insurance company was still expected to pay 60% of the total medical bill before factoring in the discount. The insurance company would be charged 60% of the full amount, and then the remaining bill would be discounted and sent to the patient. After becoming aware of this, the insurance company began reimbursing the hospital at the same drastically reduced rates that were used under the prompt pay discount.

The hospital filed claims against the insurance company for violating ERISA and RICO, and the insurance company submitted a counterclaim arguing that the hospital had violated ERISA. The district court dismissed the hospital’s ERISA claims for lack of standing and determined that the insurance company’s ERISA claims were time-barred. The district court also dismissed the hospital’s claims for breach of contract.

The court of appeals found that the hospital did have standing to bring ERISA claims, holding that the patients of the hospital were injured by the insurance company’s actions, creating a concrete injury sufficient to create standing. The court vacated the district court’s judgment and remanded to allow the hospital’s claims of ERISA violation to be fully developed. In holding that the hospital had standing to bring ERISA claims, the court vacated the grant of summary judgment against the hospital and remanded for the district court to consider the hospital’s claims of preemption. The court determined that the district court was, however, correct in dismissing the hospital’s RICO claims. The court also affirmed the district court’s determination that the insurance company was barred from bringing ERISA claims by the two-year statute of limitations.

U.S. v. Universal Health Servs. Inc. – March 2015 (Summary)

FALSE CLAIMS ACT

U.S. v. Universal Health Servs. Inc., No. 14-1423 (1st Cir. Mar. 17, 2015)

The United States Court of Appeals for the First Circuit overturned a lower court’s dismissal of a False Claims Act (“FCA”) claim, holding that the relators adequately stated that a clinic fraudulently misrepresented its compliance with state regulations when it submitted claims for payment.

Relators’ daughter was sent to defendant, a mental health clinic, for therapy after experiencing behavioral problems at school. The daughter began therapy sessions with a counselor, who held no professional license. The daughter was transferred to a different counselor after the relators complained of her care. The second counselor was also unlicensed. Next, the daughter was transferred within the clinic to a therapist, who held herself out as a Ph.D. In actuality, the therapist trained at an unaccredited online school and had her application for a professional license rejected. Nonetheless, the therapist diagnosed the daughter with bipolar disorder.

After several months, the daughter’s school informed the relators that the daughter must see a psychiatrist if they wished for her to continue enrollment. The “therapist” referred the relators to a “psychiatrist” within the clinic. The “psychiatrist” prescribed the daughter medication for her bipolar disorder, which caused a fatal adverse reaction. Relators later found out the “psychiatrist” was actually only a nurse and not under the supervision of any clinic staff psychiatrists. Moreover, the only psychiatrist the clinic had on staff was not even board-certified.

Relators brought suit, claiming that the clinic violated the FCA when it received payments from the state despite the fact that it was in violation of 14 separate regulations promulgated by the state department of health. The lower court dismissed relators’ suit, holding that the regulations relators rely on were conditions of participation, not conditions of payment.

The court overruled the lower court, holding that the court’s distinction was incorrect because relators’ claims dealt with conditions of payment. One of these conditions for payment, under the state department of health regulations, is to ensure appropriate supervision. Here, relators alleged that counselors, the therapist, and the psychiatrist did not receive proper supervision from the clinic. Additionally, relators alleged that the clinic failed to maintain a properly licensed psychiatrist on staff, which is a material condition to receive payment under the state department of health regulations.

Cooper v. Pottstown Hosp. Co. – March 2015 (Summary)

FRAUD AND ABUSE

Cooper v. Pottstown Hosp. Co., Civil Action No. 13-01137 (E.D. Pa. Mar. 13, 2015)

The United States District Court for the Eastern District of Pennsylvania dismissed an Anti-Kickback Statute violation claim brought by a surgeon against a hospital, holding that the surgeon was trying to manufacture an Anti-Kickback Statute violation.

While employed as an independent contractor at the hospital, the surgeon entered into a contract to provide on-call services at the hospital. Subsequently, the surgeon obtained a financial interest in a competing surgical facility. The hospital terminated the surgeon’s on-call contract after he refused the hospital’s requests for him to divest his interest in the facility. Soon after, the hospital entered into another on-call contract with the surgeon that allowed him to retain his financial interest in the surgical facility, as long as he did not gain employment with another hospital within 30 miles. That same month, the hospital terminated the surgeon’s employment contract due to his financial interest in the competing surgical facility. The surgeon secured new employment at another hospital within the 30-mile radius, so the hospital terminated his second on-call contract. The surgeon brought suit, claiming that the hospital’s on-call contracts were covert ways of inducing exclusive referrals to the hospital, in violation of the Anti-Kickback Statute.

The court dismissed the surgeon’s claims, stating that the surgeon failed to plead facts to show that the hospital’s on-call contracts were not just business arrangements, but instead were intended to induce referrals. The surgeon’s compensation was never in exchange for the referral of patients to the hospital or above fair market value. Furthermore, the second on-call contract allowed him to retain his financial stake in the competing surgical facility, which is inconsistent with the surgeon’s theory that the hospital intended to induce the surgeon to refer patients to it exclusively.

In re Karakashian – March 2015 (Summary)

MISREPRESENTATIONS

Chaganti v. Mo. Bd. of Registration for the Healing Arts, WD 77746 (Mo. Ct. App. Mar. 10, 2015)

In re Karakashian, Docket No. BDS 8660-07 (N.J. Super. Ct. App. Div. Mar. 16, 2015)

These two cases involve judicial review of disciplinary actions taken by state medical boards against physicians. In Chaganti, the Missouri Board of Registration for the Healing Arts took disciplinary action against a physician who had omitted prior hospital affiliations on an application for staff privileges. In Karakashian, the New Jersey State Board of Medical Examiners took action against a physician for failing to disclose the existence of a pending investigation against his practice on an application for staff privileges.

In Chaganti, the hospital revoked the physician’s privileges after discovering that he had failed to list his affiliations with three other hospitals on a reapplication for active staff privileges.   Upon learning of this, the Missouri Board of Healing Arts conducted a hearing on the matter. The Missouri Board concluded that although the physician had not intentionally failed to update his information, he had acted in a manner that constituted “unprofessional conduct.” Reviewing this decision on appeal, the Missouri Court of Appeals reversed, holding that the Board had no lawful basis to assert a disciplinary action for unprofessional conduct in the matter. The court emphasized that the definition of “unprofessional conduct” was “somewhat circular” and that the physician had not received adequate notice that he could be disciplined for this omission.

In Karakashian, the New Jersey Attorney General was conducting an investigation of the physician over alleged acts of negligence and violation of professional standards. While his case was under review by the Office of Administrative Law, the physician applied for renewal of staff privileges at a hospital. He failed to disclose the existence of the investigation on this renewal application. The New Jersey Board of Medical Examiners ultimately concluded that the physician had made false and deceptive statements and suspended him for two years and assessed civil penalties and costs. Reviewing this decision on appeal, the New Jersey Superior Court affirmed the Board’s ruling. The court agreed with the Board’s reasoning that discipline was required under these circumstances in order to ensure that physicians act in a trustworthy fashion with patients and hospitals.

These cases illustrate how courts in different states can resolve similar cases in different ways. Here, the Missouri Court of Appeals held that the Board could not assert a disciplinary action over the physician’s omission of other hospital affiliations. In contrast, the New Jersey Superior Court upheld the Board’s disciplinary action over a physician’s omission of a pending investigation.

Chaganti v. Mo. Bd. of Registration for the Healing Arts – March 2015 (Summary)

MISREPRESENTATIONS

Chaganti v. Mo. Bd. of Registration for the Healing Arts, WD 77746 (Mo. Ct. App. Mar. 10, 2015)

In re Karakashian, Docket No. BDS 8660-07 (N.J. Super. Ct. App. Div. Mar. 16, 2015)

These two cases involve judicial review of disciplinary actions taken by state medical boards against physicians.  In Chaganti, the Missouri Board of Registration for the Healing Arts took disciplinary action against a physician who had omitted prior hospital affiliations on an application for staff privileges. In Karakashian, the New Jersey State Board of Medical Examiners took action against a physician for failing to disclose the existence of a pending investigation against his practice on an application for staff privileges.

In Chaganti, the hospital revoked the physician’s privileges after discovering that he had failed to list his affiliations with three other hospitals on a reapplication for active staff privileges.   Upon learning of this, the Missouri Board of Healing Arts conducted a hearing on the matter. The Missouri Board concluded that although the physician had not intentionally failed to update his information, he had acted in a manner that constituted “unprofessional conduct.” Reviewing this decision on appeal, the Missouri Court of Appeals reversed, holding that the Board had no lawful basis to assert a disciplinary action for unprofessional conduct in the matter. The court emphasized that the definition of “unprofessional conduct” was “somewhat circular” and that the physician had not received adequate notice that he could be disciplined for this omission.

In Karakashian, the New Jersey Attorney General was conducting an investigation of the physician over alleged acts of negligence and violation of professional standards. While his case was under review by the Office of Administrative Law, the physician applied for renewal of staff privileges at a hospital. He failed to disclose the existence of the investigation on this renewal application. The New Jersey Board of Medical Examiners ultimately concluded that the physician had made false and deceptive statements and suspended him for two years and assessed civil penalties and costs. Reviewing this decision on appeal, the New Jersey Superior Court affirmed the Board’s ruling. The court agreed with the Board’s reasoning that discipline was required under these circumstances in order to ensure that physicians act in a trustworthy fashion with patients and hospitals.

These cases illustrate how courts in different states can resolve similar cases in different ways. Here, the Missouri Court of Appeals held that the Board could not assert a disciplinary action over the physician’s omission of other hospital affiliations. In contrast, the New Jersey Superior Court upheld the Board’s disciplinary action over a physician’s omission of a pending investigation.

Winger v. Meade Dist. Hosp. – March 2015 (Summary)

TERMINATION OF TEMPORARY PRIVILEGES

Winger v. Meade Dist. Hosp., Case No. 13-1428-JTM (D. Kan. Mar. 9, 2015)

The United States District Court for the District of Kansas granted a hospital’s motion for summary judgment against a due process claim filed by a former employee. The former employee, a physician, sued the hospital after it terminated his employment.

At issue in the case was whether or not the termination deprived the physician of his due process rights. The hospital argued that the physician had explicitly received “limited temporary privileges” and had no rights to any particular procedures under either his employment agreement or the bylaws. Furthermore, the hospital explained that it terminated the physician after receiving reports that he deviated from the standard of care.

The court agreed with the hospital. It focused on the fact that the physician had agreed to receive only temporary privileges, and noted that the bylaws recognize that certain staff members hold “temporary” status and can be terminated without a hearing or appeal. In addition, it recognized that the physician had been under review for providing substandard care to two patients and that he had declined to participate in the hospital’s third party peer review process. Moreover, the physician had instead sent confidential patient information, without authorization, to another doctor for review.

The court ruled that the physician failed to show any deprivation of due process. It granted summary judgment to the hospital.