Gaskill v. VHS San Antonio Partners (Summary)

MEDICAL STAFF PRIVILEGE ACTIONS

Gaskill v. VHS San Antonio Partners, No. 04-14-00153-CV (Tex. App. Dec. 17, 2014)

The Court of Appeals of Texas reversed a trial court’s dismissal of a physician’s lawsuit challenging the suspension of his privileges. The physician sued the hospital after the hospital issued a formal “Notice of Involuntary Reduction of Medical Staff Privileges” against him, which left him unable to work at any hospital. The physician requested a hearing, but the parties ultimately decided to mediate the dispute by sending several of the physician’s cases to external review. After the external review concluded that there had been no deviation from the standard of care, the physician’s privileges were fully restored; however, he then sued the hospital for breach of contract, defamation, business disparagement, and intentional infliction of emotional distress, alleging that the suspension had damaged his business and his reputation.

In the trial court, the hospital system filed a motion to dismiss, arguing that the physician’s claims had no basis in law. The trial court agreed, granting the motion and awarding the hospital $8,320.50 in attorney’s fees. The physician appealed, arguing that this dismissal had been improper because he was not given adequate notice of the upcoming motion to dismiss.

The appellate court agreed. It explained that under the Texas Rules of Civil Procedure, the physician was entitled to at least 14 days’ notice of the hearing on the motion to dismiss. In this instance, the hearing was held without giving any formal prior notice of the date and time of the hearing to the physician. Consequently, the physician was deprived of his due process rights to respond to the motion to dismiss. The appellate court reversed the trial court’s dismissal and remanded for further proceedings.

Abrahamson v. Ill. Dep’t of Fin. and Prof’l Regulation — Dec. 2014 (Summary)

DUE PROCESS – MEDICAL LICENSURE ACTIONS

Abrahamson v. Ill. Dep’t of Fin. and Prof’l Regulation
No. 13-1921 (7th Cir. Dec. 11, 2014)

The U.S. Court of Appeals for the Seventh Circuit affirmed a trial court’s decision to dismiss a due process claim against the Illinois Department of Financial and Professional Regulation (“department”) filed by a physician after the department rejected his application for a medical license for the second time in nearly 20 years.

The physician had first applied for a medical license in 1986 after graduating from medical school, completing three years of surgical residency, and passing his boards. The department denied this initial application after discovering that he had fabricated his medical school transcript and had lied about his academic credentials and his applications for other state licenses. When the physician applied again in 1998, the department denied his application and explained that, at that time, he had insufficient current professional experience upon which it could grant the license. The physician sued and, after protracted litigation, obtained an order from a circuit court instructing the department to assess his capacity to practice medicine and to determine what sort of additional training he would need to obtain a license. Following that review, the department informed the physician that he needed to pass the current medical boards and complete another two years of residency. After unsuccessfully appealing this in the state court system, the physician then filed a due process claim in federal court. The trial court dismissed the claim, reasoning that the physician was really just conducting a “collateral attack” on the state court judicial decisions, concluding that only the Supreme Court of the United States could overturn the state court rulings.

The Seventh Circuit affirmed the trial court holding on appeal. It explained that the physician was asking for relief that it could not give, because he was essentially trying to use the federal courts to upset a judgment by the state courts. Consequently, it refused to overturn the lower court’s decision.

Knapik v. Mary Hitchcock Mem’l Hosp. (Summary)

PEER REVIEW PRIVILEGE

Knapik v. Mary Hitchcock Mem’l Hosp., No. 5:12-CV-175 (D. Vt. Dec. 12, 2014)

The United States District Court for the District of Vermont denied a former resident’s motion for contempt and sanctions against a hospital for withholding documents. Plaintiff, who had been in a residency program at defendant hospital, alleged that she was wrongfully terminated by the hospital for whistleblowing activity which involved her sending a letter the hospital had sent to a different resident that was critical about that resident’s performance to the fellowship program that the resident had applied to as the plaintiff resident was aware that the information had not been disclosed to the fellowship program. During discovery, the former resident requested, and a court ordered, the hospital to disclose internal e-mails regarding certain medical residents’ employment records and feedback about their performances. The hospital provided some, but not all, requested documentation, arguing and that the information that was not provided was privileged under the state’s quality assurance and peer review privileges. The former resident then sought sanctions against the hospital for failing to produce the documents. Ultimately, the missing documentation was submitted to the court for in camera review to determine whether they were privileged.

Following in camera inspection of the e-mails, the court held that the e-mails were covered by the quality assurance privilege because they related to performance feedback and evaluations of medical residents by peers and advisors. The court stated that the privilege protects both formal and informal feedback and evaluations, such as e-mails, from disclosure. The former resident argued that one particular e-mail should be disclosed because a physician discussed it with her and thereby waived the privilege. The court rejected this argument because the privilege is held by the hospital, not its employees, hence only the hospital is able to waive it. In addition, due to the privileged nature of the documents, the court also declined to impose sanctions against the hospital.

Picard v. Am. Bd. of Family Med. (Summary)

PRODUCTION OF DOCUMENTS

Picard v. Am. Bd. of Family Med., No. 13-CV-14552 (E.D. Mich. Dec. 5, 2014)

The United States District Court for the Eastern District of Michigan denied a physician’s motion to compel against a certification board holding that review of the certification board’s actions is limited to the physician’s specific claim. Plaintiff, a physician who was a recovering alcoholic, erroneously lost his license to practice medicine by the Michigan Board of Medicine after he self-reported a relapse. The state medical board reversed its decision and restored the physician’s license to a full and unrestricted status. The physician additionally signed a monitoring agreement with the state Health Professionals Recovery Program. The certification board revoked the physician’s board certification status after his license was suspended by the state medical board as one of its prerequisites for certification is that physicians have unrestricted medical licenses. The physician appealed the certification board’s decision on the basis that the suspension by the state medical board had been determined to be in error and that his license had been fully restored. The certification board then informed the physician that his certification would not be reinstated until he completed his monitoring agreement with the Health Professionals Recovery Program, as the monitoring agreement was viewed as a restriction on his license. As a result, the physician was then terminated by his employer due to the fact that he was no longer board certified, which was mandated by his employment contract. The physician sued the certification board arguing that the board had violated his due process rights, and in this portion of the lawsuit, the physician was seeking to compel the board to provide documentation concerning all physicians who had been granted or denied certification by the board due to the fact that they were subject to monitoring agreements. The court denied the motion, holding that the physician’s claim should be limited to the record regarding the certification board’s decision as to the physician alone and that any information regarding other physicians would be irrelevant to the physician’s due process claim.

Birnbaum v. Tarzana Anesthesia Med. Grp. Inc. (Summary)

DISABILITY DISCRIMINATION

Birnbaum v. Tarzana Anesthesia Med. Grp. Inc., B253705 (Cal. Ct. App. Dec. 16, 2014)

The California Court of Appeal upheld a lower court’s dismissal of an anesthesiologist’s disability discrimination claim holding that the anesthesiologist failed to allege that he was an employee of a medical group, rather than an independent contractor. The anesthesiologist was under contract with defendant, a medical group. The contract stated that the anesthesiologist was an independent contractor for the first two years, after which, the medical group would vote to admit the anesthesiologist into the medical group’s partnership. After the two years, the partnership vote was scheduled, but the anesthesiologist was diagnosed with cancer and unable to work for a few months and the vote never took place. The anesthesiologist returned to the medical group and requested a scheduling accommodation in which he would not be assigned to surgeries that lasted more than two hours. Several months later, the medical group asked that he sign an addendum to his contract regarding the scheduling of shorter cases, which he did not execute. Nearly 18 months after he returned to work at a reduction of hours, the medical group voted not to make the anesthesiologist a partner or renew his contract. The anesthesiologist sued, claiming disability discrimination and failure to accommodate under a state antidiscrimination statute. The medical group argued that the anesthesiologist was not an employee, thus he was not protected by the antidiscrimination statute. The lower court agreed with the medical group and dismissed the complaint; the anesthesiologist appealed.

On appeal, the court held that the anesthesiologist was not protected by the antidiscrimination statute because he was in fact an independent contractor and not an employee of the medical group. The court explained that the medical group did not exercise control over the anesthesiologist when he performed his professional services. The anesthesiologist did not receive employment benefits from the medical group, the mutually agreed upon contract explicitly stated that the anesthesiologist was an independent contractor, and the medical group did not mandate performance of certain procedures, or direct his practice of anesthesia services other than his scheduling.

U.S. ex rel. Schaengold v. Mem’l Health, Inc. (Summary)

FALSE CLAIMS ACT

U.S. ex rel. Schaengold v. Mem’l Health, Inc., No. 4:11-cv-58 (S.D. Ga. Dec. 8, 2014)

A federal district court in Georgia granted in part and denied in part a motion to dismiss filed by a hospital against part of a lawsuit filed by the federal government. Specifically, the hospital moved to dismiss the government’s claim for recovery under the reverse false claims provision of the False Claims Act.

As a key part of its reverse false claims case against the hospital, the government drew upon certain cost reports submitted by the hospital. It alleged that these cost reports not only falsely certified compliance with the federal Stark law, but also concealed the hospital’s obligations to refund overpayments to the government. In addition, because the hospital worked in tandem with several different subsidiaries, the government argued that liability extended to the entire “unitary health system” rather than solely to the hospital that submitted the cost reports.

The court found this argument unpersuasive. It concluded that the government had not provided sufficient evidence to justify a decision to set aside the hospital’s corporate structure. In addition, it explained that the government had not given any evidence that the other subsidiaries were directly involved in submitting the false claims in dispute.

Although it did not allow the government to hold the entire health system liable, the court did allow the government to continue its lawsuit against the hospital that had submitted the cost reports. It reasoned that the government had provided “sufficient indicia of reliability” to the court, particularly about illegal referrals that were made by physicians, to overcome the hospital’s motion to dismiss. Consequently, it denied the hospital’s motion to dismiss the reverse false claims allegations against itself, but allowed the hospital to dismiss the claims made against its affiliates and subsidiaries.

The court also granted the government’s request for leave to cure any pleading deficiencies in the complaint. The government has 20 days to replead its claims.

Appleyard v. Governor Juan F. Luis Hosp. Med. Ctr. (Summary)

EMPLOYMENT AGREEMENTS

Appleyard v. Governor Juan F. Luis Hosp. Med. Ctr., S. Ct. Civ. No. 2014-0056 (D.V.I. Dec. 2, 2014)

The Supreme Court of the Virgin Islands affirmed a trial court’s ruling denying an orthopedic surgeon’s request for a preliminary injunction against a hospital. The surgeon requested the injunction in order to prevent the hospital from terminating her from its medical staff.

Issues arose after the hospital’s Medical Executive Committee received nine separate complaints about the behavior of the surgeon, five of which it deemed to be valid. Based on these complaints, the chair of the committee wrote to the surgeon to instruct her that she needed to undergo a psychiatric and psychological evaluation. After the surgeon failed to undergo the required evaluation, the hospital’s interim chief executive officer placed her on suspension.

The surgeon sued, alleging that she was suspended as retaliation for two complaints she had made, one about verbal harassment and one about a physician’s failure to admit a patient properly. However, a major obstacle for the surgeon was the expiration date on her employment agreement. Her hearing with the court was scheduled for August 1, 2014, but the employment agreement expired on July 31, 2014. Consequently, even if the court prevented the hospital from terminating her, it could not force the hospital to re-enter another employment agreement.

To overcome this problem, the surgeon argued that the court should instead follow the date that was set on her relocation agreement with the hospital, which lasted until July 31, 2015. She claimed that the documents should be read together since they were executed simultaneously. However, the lower court concluded that there was no evidence to show that the relocation agreement was meant to extend her employment agreement for another year. It denied her request for a preliminary injunction. On appeal, the Supreme Court of the Virgin Islands upheld the decision. It noted that there were errors in the way that the lower court handled certain public policy issues implicated in the case, but determined that there was no reason to disturb the overall decision to deny the preliminary injunction.

Tibor v. Mich. Orthopaedic Inst. (Summary)

FALSE CLAIMS ACT

Tibor v. Mich. Orthopaedic Inst., No. 14-10920 (E.D. Mich. Dec. 5, 2014)

A federal district court in Michigan denied a motion to dismiss a surgeon’s claim of retaliation under the False Claims Act (“FCA”). The court found that the surgeon alleged sufficient facts to state a claim that she engaged in protected activity by voicing concerns about a proposed contract’s compliance with the Stark law and the FCA, and that her employment was terminated in retaliation for that protected activity.

Plaintiff was an orthopedic surgeon who was recruited to work at defendants, an orthopedic group and its primary hospital. The surgeon began to work at the group before her contract was finalized. After six weeks, the surgeon received her finalized contract, but two issues concerned her. The contract was back dated six weeks and contained a clause stating that the group would not compete in the imaging market and would refer patients exclusively to the hospital. The surgeon informed both the group and hospital that she believed that these provisions were a potential violation of the Stark law and the FCA. The group terminated the surgeon after she refused to sign the contract. The surgeon brought suit claiming that she was retaliated against for trying to prevent FCA violations.

Both the hospital and group brought a motion to dismiss arguing that the surgeon never engaged in a protected activity. Also, the hospital argued that the surgeon was not a hospital employee, and thus could not bring a retaliation action against it.

The court denied both motions and allowed the surgeon’s claim to proceed. The court found that the surgeon participated in a protected activity because her actions in raising concerns about the contract were an effort to stop a violation of the FCA. Also, the court denied the hospital’s argument that the surgeon could not bring a retaliation claim against it because she was not a hospital employee. The court stated that the FCA retaliation provision not only protects employees, but also independent contractors, such as the surgeon.

Bastidas v. Good Samaritan Hosp. (Summary)

DISCRIMINATION

Bastidas v. Good Samaritan Hosp., Case No. 13-cv-04388-SI (N.D. Cal. Dec. 8, 2014)

A federal district court in California granted a hospital’s motion to dismiss a surgeon’s racial discrimination claim. However, the court refused to dismiss the surgeon’s retaliation claims.

Plaintiff, a Colombian-born surgeon, had his surgical privileges limited following the death of a patient. Peer review proceedings were then commenced by defendant, a hospital.

In his discrimination lawsuit, the surgeon claimed that white surgeons were treated better than him. He also alleged that the hospital agreed to institute a proctoring program so he could regain his privileges; however, the program was never established. The surgeon argued that the cancellation of the program was a result of his lawsuit.

The court held that the surgeon failed to allege sufficient facts supporting the conclusion that white doctors were treated more favorably than him, specifically, that their treatment of patients would not trigger peer review action. However, the court held that the hospital’s failure to establish the proctoring program was an adverse employment action that could reasonably be considered retaliation against the surgeon for filing his discrimination lawsuit.

Lopreato v. Select Specialty Hosp.-N. Ky. (Summary)

AMERICANS WITH DISABILITIES ACT

Lopreato v. Select Specialty Hosp.-N. Ky., Civil Action No. 12-217-DLB-JGW (E.D. Ky. Dec. 3, 2014)

A federal district court in Kentucky dismissed Americans with Disabilities Act (“ADA”) claims against a hospital that refused to hire nurses with restrictions on their licenses based on past substance abuse, holding that the hospital followed a neutral company policy that was not pretext for discrimination.

Plaintiffs are two nurses with restrictions on their nursing licenses due to their history of drug use. These restrictions require direct supervision when administering narcotics. Defendant, a hospital, interviewed both nurses during which it asked whether there were any restrictions on their licenses. Both nurses answered affirmatively and the hospital did not inquire into the cause of such restrictions. The hospital decided not to hire them, stating that due to the position’s high demands, “nurses must be qualified to operate independently without constant direct supervision.” The nurses sued under the ADA claiming disability discrimination based on their history of drug use.

The court held that the hospital’s hiring policy was a legitimate, justifiable reason for not hiring the nurses. The company’s decision was based on whether a license was restricted, not the cause of such restriction. The hospital stated that it had previously seen such restrictions due to poor patient treatment or theft of medication, as well as previous drug abuse. The court stated that this was a legitimate reason and not pretext for disability discrimination.