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.

Tinal v. Norton Healthcare, Inc. – May 2014 (Summary)

Patient Safety and Quality Improvement Act of 2005 (“PSQIA”)

Tinal v. Norton Healthcare, Inc., Civil Action No. 3:11-CV-295-S (W.D. Ky. May 7, 2014)

The Tinal opinion, one of the first to interpret the PSQIA, involved a discovery dispute in a lawsuit brought by a pharmacist alleging that the defendant health system unlawfully terminated her employment in violation of the Americans with Disabilities Act. The health system contended that the pharmacist was terminated because she made a series of errors in dispensing medications.   Because the plaintiff had to prove she was treated differently than other similarly-situated employees, she sought root cause analyses and records involving errors of other pharmacists as well as her own in order to show disparate treatment.

Norton refused to produce the requested documents, claiming that they were privileged as “patient safety work product” under the PSQIA. A magistrate judge ordered Norton to produce a privilege log listing each of the documents that it was withholding along with a general description of the contents of the privileged documents. Norton produced a privilege log listing 84 documents. Seventy-seven of the documents were listed as medication event reports. The form on which the reports were submitted was described but the content of each individual report was not. The description included the following sentence: “The unique information with each report is not generally described within this privilege log because the factual relevancy of the event is not an element for the Patient Safety Work Product privilege.”

The plaintiff claimed that the patient safety work product privilege does not apply to her employment discrimination case given the legislative history of the PSQIA and the well-established policy in favor of complete discovery in federal civil rights and discrimination cases.

Norton argued that so long as it processed the information at issue as part of a patient safety evaluation system (“PSES”) for report to a patient safety organization (“PSO”), and the information itself falls within the designation of patient safety work product it is confidential and absolutely protected. Norton further argued that because the language of the PSQIA is plain and unambiguous, there was no reason, and would be improper, for the court to construe its meaning by examining the common law meaning of its terms or referring to the PSQIA’s legislative history.

The court acknowledged that the impetus behind the PSQIA was to limit medical malpractice exposure of health care providers and there is no indication in the legislative history of the Act that Congress had in mind the possibility that the patient safety work product privilege would ever be asserted in the context of a federal civil rights action. Nonetheless, the court held that the documents at issue were privileged under the plain language of the statute.

 

Landrum v. Delta Reg’l Med. Ctr. – March 2015 (Summary)

AMERICANS WITH DISABILITIES ACT

Landrum v. Delta Reg’l Med. Ctr., Civil Action No. 4:13-cv-180-JMV (N.D. Miss. Mar. 6, 2015)

The U.S. District Court for the Northern District of Mississippi granted summary judgment in favor of a medical center, dismissing a former employee’s allegations that the medical center retaliated against him, in violation of the ADA, for complaining about the treatment of mentally disabled patients. In his lawsuit, the employee claimed that he had reported concerns that mentally ill patients were being inadequately supervised and requested a reasonable accommodation to provide a safe environment for them. He further alleged that he was terminated as a result, in violation of the Americans with Disabilities Act (“ADA”). The medical center sought summary judgment, arguing that the ADA does not protect employees from retaliation when they raise concerns about the treatment of non-employees. In the end, the court held that the issue is whether the employee engaged in activity protected under the ADA and, therefore, was protected under the Act. In this case, the issue was whether the employee was protected under the ADA for complaining to a hospital that its supervision/treatment of mentally ill patients should be different that that dictated by the hospital’s current protocols. Quoting the United States Court of Appeal’s decision in Frielich v. Upper Chesapeake Health Inc., the court noted that “[e]very disagreement over the adequacy of hospital expenditures or the provision of patient care is not an ADA issue. If it were, courts would be drawn into medical resource disputes quite beyond their expertise and hospital personnel would be diverted by litigation from their primary task of providing medical attention to those in their charge.” Finally, the court concluded: “this court does not overlook the importance of maintaining adequate levels of patient care, but it is not the role of a federal court under the ADA to umpire disagreements between a hospital and staff over what constitutes the most appropriate manner of patient care.”

 

Simpson v. Beaver Dam Cmty. Hosps. – March 2015 (Summary)

RACIAL DISCRIMINATION

Simpson v. Beaver Dam Cmty. Hosps., No. 14-2269 (7th Cir. Mar. 11, 2015)

The United States Court of Appeals for the Seventh Circuit affirmed summary judgment in favor of a hospital that was sued for racial discrimination by a physician who withdrew his application for medical staff appointment after being informed by the Chief of Staff that there were a number of red flags related to his application and, if the application were denied, he would be reported to the National Practitioner Data Bank.

In the lower court’s decision, Simpson v. Beaver Dam Cmty. Hosp., Inc., No. 13-cv-40-bbc (W.D. Wis. May 9, 2014), the U.S. District Court for the Western District of Wisconsin discussed the physician’s allegations of racial discrimination prior to granting summary judgment to the hospital. Specifically, in 2010, the physician, who was African-American, was offered employment in a clinic affiliated with the hospital, dependent on his attainment and maintenance of medical staff membership and clinical privileges. During the credentialing process, several “red flags” arose regarding the physician’s application, including his need to take an oral exam to obtain a medical license in the state of Wisconsin, a negative reference describing his disruptive behavior, two medical malpractice claims which were filed when the physician was not insured, and a probationary period during his residency. Following a “heads-up” call from the Chief of Staff, to prevent a report to the National Practitioner Data Bank in the event his application were to be denied, the physician withdrew his application.

Thereafter, the physician sued the hospital, claiming that he was discriminated against because of his race. In ruling on the hospital’s motion for summary judgment, the court determined that the hospital’s concerns regarding the “red flags” were not unreasonable. For example, the oral exam was a deviation from the normal licensure process and, as such, without evidence pointing toward a lack of sincerity, the hospital was well within its right to consider it. Further, it was reasonable for the hospital to rely on the negative reference. Similarly, the hospital was under no obligation to comply with the physician’s request not to contact a former employer who the physician assumed gave the negative reference. The court also held that the hospital’s employment offers to three Caucasians after the physician withdrew his application could not support the physician’s claims. None of the Caucasian physicians’ applications contained problems similar to the physician’s application. As a result, the physician failed to show that the hired physicians were similarly situated.Top of Form

On appeal, the Seventh Circuit upheld the grant of summary judgment in favor of the hospital. Notably, the court found the Chief of Staff’s heads-up call to constitute an adverse employment action, stating that the Chief’s “warning indicated that it would be futile for Simpson to maintain his application. The writing was on the wall.” Nevertheless, the court held that Dr. Simpson could not maintain a case of racial discrimination because he offered no direct evidence of racial discrimination. The court emphasized that comments by the Chief of Staff wishing Dr. Simpson good luck in finding a future opportunity that is a “better fit” are not expressly or impliedly discriminatory. Further, the hospital had legitimate, nondiscriminatory concerns about the physician’s application and those concerns were not refuted by the physician.

 

U.S. ex rel. Gravett v. Methodist Med. Ctr. of Ill. – March 2015 (Summary)

QUI TAM – FALSE CLAIMS ACT, ORIGINAL SOURCE

U.S. ex rel. Gravett v. Methodist Med. Ctr. of Ill., Case No. 12-1008 (C.D. Ill. Mar. 4, 2015)

The United States District Court for the Central District of Illinois dismissed a False Claims Act lawsuit brought by an ED physician against the hospital where he used to work, holding that, with respect to the patients treated after the physician stopped working at the hospital, the physician could not establish that he had any direct, independent knowledge of the patients and their treatments. In fact, the court held, the physician was not the original source of information on which the claims were based. Instead, the physician had gathered the information supporting those claims from the U.S. Attorney’s Office (to whom the information had been disclosed by the hospital during prior investigations).

With respect to false claims alleged to have been made with respect to patients treated while the physician was working at the hospital, the court held that the physician failed to plead sufficient particularity. Specifically, the court noted that the physician merely speculated that, after using a software program to upcode the services actually provided by physicians, the hospital caused false claims to be submitted for Medicare reimbursement. The failure to provide specific information concerning at least one false claim actually submitted to the government was deemed fatal to the physician’s claims.

 

In re Otero Cnty. Hosp. Ass’n. – March 2015 (Summary)

CREDENTIALING & PEER REVIEW DISASTER

In re Otero Cnty. Hosp. Ass’n., Case No. 11-11-13686 JL (Bankr. D. N.M. Mar. 18, 2015)

NOTE:  The court’s first opinion was issued February 27, 2015.  Then, on March 18, 2015, the court issued this amended opinion, effectively replacing the earlier February 27 opinion.

The United States Bankruptcy Court for the District of New Mexico held that a hospital management company breached a duty of care when its CEO received notification from an external physician regarding the experimental nature of the surgeries being performed by one of the hospital’s physicians, yet failed to request an investigation by the hospital MEC.

This case arose because a number of patients suffered damages as a result of being unwittingly subjected to experimental spinal procedures by an anesthesiologist trained in pain management. Due to the large number of lawsuits, the hospital filed for Chapter 11 bankruptcy. After settling with other defendants, the lawsuit of the 47 united patient plaintiffs remains pending against the hospital management company alone. The hospital management company argued that it should not be held liable because its CEO was not responsible for any medical or credentialing decisions at the hospital, did not have the authority to provide medical services to patients of the hospital, and was not directly involved in any clinical decisions.

The Bankruptcy Court disagreed. In a lengthy opinion that discusses in detail the various roles of hospital board, management and medical staff leadership, the court noted that even though the CEO did not have responsibility for directing the medical judgment of employees, the CEO did have the duty to appropriately involve the medical staff in evaluating medical issues and to inform the board and the medical staff about issues relating to patient safety that were known or should have been known.

The court noted that soon after the anesthesiologist began working at the hospital, his proctor accused him of performing experimental surgeries on unknowing patients. The CEO considered the matter, but merely accepted the opinions of the anesthesiologist himself and another physician who had adopted the anesthesiologist’s experimental methods, rather than referring the matter for further review by the medical staff leadership.

The court concluded that the hospital management company breached its duty on two occasions, first, when the CEO circumvented the process for granting temporary privileges to initial applicants (granting those privileges prior to the application being considered by the Credentials Committee). A second breach of duty occurred when the CEO failed to inform the Medical Executive Committee of the proctor’s accusations regarding the experimental nature of the anesthesiologist’s procedures.

Lampenfeld v. Pyramid Healthcare, Inc. – March 2015 (Summary)

WHISTLEBLOWER

Lampenfeld v. Pyramid Healthcare, Inc., Civil Action No. 3:14-CV-0283 (M.D. Pa. Mar. 4, 2015)

The United States District Court for the Middle District of Pennsylvania dismissed whistleblower protection and wrongful termination claims brought against a drug and alcohol treatment facility by its detoxification program director/nurse manager, holding that the nurse manager was not a covered employee under the Commonwealth’s whistleblower statute and her termination did not violate public policy.

The nurse manager in this case alleged that she reported to the director of nursing that a physician was billing for patient assessments and medical examinations, even though he never actually performed them. Almost a year later, after investigating a patient complaint involving a medication and charting error, the nurse manager reported to the director of nursing that the patient’s complaint was the result of the same physician’s “professional incompetence” and that the “nursing staff are fed up with him.” The director of nursing took the opportunity to share these comments with the physician, at which point he indicated the trust relationship between himself and the nurse manager had been “irrevocably broken.” Four days later, the nurse manager was placed on suspension, for insubordination to a supervisor. A few days later, the nurse manager reiterated her concerns about the physician’s care and billing practices in a letter. Two days after that letter, the nurse manager was terminated for insubordination and for making false or malicious statements about the physician (the medical director) and the director of nursing.

The nurse manager sued, alleging violation of the False Claims Act’s prohibition on retaliation and Pennsylvania’s whistleblower statute, as well as wrongful discharge contrary to public policy (because she was under a duty to report the physician’s incompetence).

In dismissing the claim under Pennsylvania’s whistleblower statute, the court held that the statute did not apply to the drug and alcohol treatment facility. Specifically, the court noted that the whistleblower statute covers only employees of a “public body” – which is defined as a body created by, or funded in any amount by or through, the Commonwealth. Although the facility did receive reimbursements from Medicaid and TRICARE for services it provided, the court held that such reimbursement did not constitute funding by the Commonwealth as intended by the whistleblower statute.

Additionally, the court held that the nurse manager was not discharged contrary to public policy. Employment in the Commonwealth is at-will and the only exception to this doctrine is if the employee’s discharge violates clearly mandated public policy. The court explained that nowhere in the nursing statutes or regulations is there an affirmative duty to report alleged instances of medical negligence. Therefore, the nurse manager’s termination was not contrary to clear public policy.

Melez v. Kaiser Found. Hosps., Inc. – March 2015 (Summary)

ARBITRATION

Melez v. Kaiser Found. Hosps., Inc., No. 2:14-cv-08772-CAS (VBKx) (C.D. Cal. Mar. 2, 2015)

The United States District Court for the Central District of California granted a motion to compel arbitration filed by a hospital system in a wrongful termination suit brought by a former physician employee.

The physician began working for the hospital in 1991. After over a decade of working for the hospital, the physician was asked to sign a Dispute Resolution Procedure (DRP) agreement, which stated that any dispute regarding wrongful termination, discrimination, harassment or retaliation would be subject to binding arbitration. Though the physician objected to the terms of the DRP, she eventually signed it.

When the physician was terminated by the hospital, she filed claims including wrongful termination, age discrimination, retaliation, and harassment. The hospital then filed a motion to compel arbitration under the American Arbitration Association (AAA) rules. The physician opposed arbitration, arguing that the DRP agreement was unconscionable and therefore unenforceable.

In response to the argument that the DRP agreement was oppressive (the physician had to sign it if she wanted to continue her employment), the court recognized that the physician was highly educated and could seek employment elsewhere. Thus, the court held that the DRP agreement was “adhesive,” but was not “highly oppressive under the totality of the circumstances.”

The court also looked at whether the hospital’s failure to provide the physician with a copy of the AAA rules referenced in the DRP, and the fact that the AAA rules had been amended after she signed them, rendered the DRP agreement unconscionable. Ultimately, the court concluded that while the agreement was “procedurally unconscionable” it was not “highly so.”

The physician also argued that the DRP agreement was substantively unconscionable, in part because of the limitation on discovery. The court found that the physician had not presented evidence that the limitations on discovery would prevent her from vindicating her statutory rights. Therefore, the agreement was not substantively unconscionable.

The court reached the same conclusion with respect to the carve-out terms in the DRP agreement. Finding that the carve-out provisions were mutual, allowing certain actions by either party, the court ruled that the DRP agreement was not substantively unconscionable. Thus, the court found that the DRP agreement was not sufficiently procedurally or substantively unconscionable to overcome “liberal federal policy favoring arbitration agreements.”