February 15, 2004 Recent Legal News


Managed Care


False Advertising




Fraud and Abuse




Patients v Hutchinson Cancer Center
Trial starting

The trial by five patient's families who died during the now infamous Protocol 126 trials.  The trial had a result of death of 84 of the 85 patients enrolled.  The researchers owned stock in the company whose product was being used.  The major issue is informed consent or more specifically lack of informed consent.  From 1981 to 1993 about 20 leukemia patients died because of bone marrow graft failure, an unusual occurrence under most circumstances.

Farmer v Aoyama
Wash. Superior Ct.

  Dr. Aoyama of Ballard, Washington, was found guilty of medical malpractice for late detection of cancer.  This cost $1 million.  However, he also lied in court and at least nine times changed his medical records.  For this the judge fined him an additional $17,500 and ordered him to write an article for the Washington State Medical Association on why what he did was wrong.   

Schwaller v Maguire
Ohio Ct. Appeal

Schwaller had breast lift surgery by Maguire.  Several months later she was dissatisfied and sued for malpractice, lack of informed consent and battery.  The defendants won summary judgment and the plaintiff appealed.  She did not appeal the claim of informed consent and so she lost that one.  She attempted to show battery because the patient had an undisclosed addiction to narcotics and therefore could not give informed consent.  The procedures originally consented to caused her no harm and she lost on battery.  She also lost the malpractice case due to lack of proof.

Fluck v Coffman
La. Ct. App.

 Coffman, an OB/GYN performed a bladder suspension on Fluck.  Post operatively it was discovered that the catheter accidentally was sewn in.  Attempts to remove the catheter by the nurse and physician were unsuccessful and a urologist was called.  The urologist, on his white horse, rode in and again saved the day by removing the suture cystoscopically.  Fluck sued the hospital and Coffman for negligence.  Summary Judgment was given to the defendants in both the trial court and court of appeal.  The Supreme Court reversed stating there was a genuine issue of material fact and remanded.  After trial the court dismissed the claim stating there was no evidence Coffman breached the standard of care. The Court of Appeal again affirmed the lower court stating that Coffman's pulling on the catheter was not a compensable injury.  Fluck also attempted to show lack of informed consent since he did not tell her about the possibility of suturing in the catheter.  That was tossed since he did tell her about other more dangerous potential complications and she consented to those. The rule is that lack of informed consent happens when if a reasonable person was told about the complication that occurred, they would have rejected the surgery.  That was not true here.   

Doe v Morristown Mem. Hosp.
N J Not Yet Filed

  A sixteen month old girl died instantly after a first year trainee physician hooked a nebulizer up to an IV line.  This occurred because of physician fatigue.  There is no mention as to how long the resident had been awake and if it was within the rules set in place last year regulating how many hours a resident may be on call without rest.    

Bidwell v Camacho
Ramsey County Minn. Superior Ct.

Camacho operated on Bidwell to remove a brain aneurysm but operated on the wrong side of the brain.  He realized his mistake during the surgery and closed the wrong side, then successfully removed the aneurysm.  The patient complained of seizures, memory problems and inability to hold a job.  The jury awarded $200,000 for past lost wages and non-economic injury.  Then they awarded $400,000 for future medical expenses and lost earning plus $250,000 for future non-economic injury.  The total was $850,000.  The jurors found that the hospital, United of St. Paul was not negligent.  The physician had his privileges at the hospital revoked.  The hospital should have been partially negligent for not having systems in place to catch the error or if they did have policies, not following them.  This is the basis for root cause analysis.         Top

Managed Care

Physicians v Cigna

Judge Moreno has agreed to the proposed settlement between the physicians who sued the managed care companies and Cigna, one of the named defendants.  The company has to spend $400 million to change their reimbursement practices, pay physicians $70 million in unreimbursed money, and pay $15 million to a foundation administered by various state medical societies to look at physician important health related issues. 

Dept. of Managed Health v Blue Shield
Cal. Superior Ct.

 In a recent decision the court overruled itself.  Originally the court stated that Blue Shield did not have to pay for Xenical for an obese patient. In response to the court decision the state passed a law requiring an HMO to receive state permission to exclude drugs or other medical treatments from coverage.  This led to the judge to change the verdict.  She now changed the verdict again since the original verdict was prior to the passage of the law.  The law took effect January 2, 2003.   

Ochs v PacifiCare
CA Ct. App.

  Ochs, an emergency room physician, sued PacifiCare after the demise of an IPA FHN.  FHN owed Ochs alot of money for seeing their patients in the ED.  Ochs was not contracted with FHN or PacifiCare. Ochs lost since in California the insurer is not liable for the bills if they have paid money to an IPA and the IPA goes bankrupt.  I have no idea why he didn't go after the patients for payment as this had been decided by the California courts in the past.      Top


Mufreesboro Med. v Udom
Tennessee Ct. App.

Dr. Udom worked at the medical clinic under a two year contract.  The contract had a non compete clause that lasted for 18 months following the end of the contract.  Dr. Udom attempted to open a practice within the banned 25 miles and within the forbidden time frame.  The clinic went to court to enjoin the doctor from opening his practice.  The court gave the physician two choices.  The first was to honor the contract and move and the second was to buy out one year of the contract for his annual salary under the contract of $126,000.  Dr. Udom opted to buy out the contract and deposited the money into an escrow account at the court.  The clinic appealed the action and the higher court said the lower court was wrong and upheld the non-compete clause.  The high court then sent the matter back to the trial court to determine a higher amount for the buyout. 

St. Agnes V PacifiCare
CA Supreme Ct.

PacifiCare wanted the contract between itself and the hospital to be declared void and sued for that decision.  The contract had an arbitration clause. St. Agnes then filed in state court against PacifiCare for breach of contract.  PacifiCare then wanted that arbitrated.  The trial court ruled for St. Agnes.  The Court of Appeal ruled for PacifiCare since repudiation is not enough to overcome the strong public policy in favor of arbitration.  The Supreme Court agreed with the Court of Appeals stating that PacifiCare did not initiate the action that it now wants to arbitrate.  

Cheek v United Healthcare
Maryland Supreme Court

Cheek was hired as a senior sales executive for United.  In its job offer, arbitration was stated and in the employee handbook there was also a discussion of arbitration.  The acknowledgment was signed.  A year later Cheek was terminated.  Cheek sued for breach of contract.  United filed to compel arbitration which was granted by the trial court.  Cheek appealed and had the ruling reversed for lack of consideration.  The employment was not deemed to be consideration and the contract was one of adhesion.  The State Supreme Court ruled that United reserved the right to modify the contract unilaterally in regard to the arbitration agreement, therefore making the agreement illusory.  

Gentry v Norton Healthcare

 Gentry, a nurse at Audubon Hospital in Kentucky, was fired from her position for "flushing a IV line with saline".  She also just happens to be the legislative director f or Nurses Professional Organization, who was attempting to organize the nurses at Audubon.  The NLRB did not believe the reason for the firing was legitimate and ordered her reinstated back pay and payment of her attorney fees.  The latter is very rare.  Gentry was also reported to the state nursing board that went against its own hearing panel and put her on probation.  She took that to court and won and then won a second time when the board appealed the case.  Norton will appeal the decision because "they believe they are right".  This will increase the legal fees Norton will pay to their own attorney as well as those they will need to pay to Gentry.  They need to cut their losses and stop listening to their attorney.  

Residents v National Resident Matching Program

The case of the residents suing under antitrust laws the matching program that does not allow them to barter for their services has been trimmed.  The AMA and AHA along with the Council of Specialty Societies, American Board of medical Specialists, Yeshiva University and Washington University Medical Center all have been dropped by the judge.  The main players still remain and the class action suit has been allowed to go forward.  The trial lawyer and hospital lackey, Sen. Kennedy, is considering legislation that would provide retroactive antitrust protection for teaching hospitals. 

Driscoll v Stucker
La. Ct. App.

A resident sued his training program and it's director on due process and breach of contract grounds.  The director rescinded a letter of recommendation needed for board certification.  The court ruled the resident had a property interest which was protected under due process.  Under due process the resident was allowed a hearing to refute the rationale for rescinding the letter.  The court also stated the director was personally responsible since he denied the resident's rights.  There was no immunity since there was no due process.  Top

False Advertising

Macedo v Russo, MD
NJ Supreme Ct.

The case centered on whether or not professionals should be held liable for false advertising.  The trial lawyers said yes and the medical society said no.  The court agreed with the physicians.  The Consumer Fraud Act covers auto dealers and not professionals.  The patient sued the physician for false advertising because he stated in his advertisement that he would send patients to fully licensed physicians.  The physician who saw the patient was a resident and not fully licensed.  There was no malpractice or injury in the case.        Top


Sadler v Dimension Healthcare
Maryland Supreme Ct.

Sadler, an OB/GYN applied for and was granted temporary privileges at Prince George Hospital, a private hospital.  Her performance was questionable and she stayed on provisional status for more monitoring.  The MEC eventually, after reviewing all information including outside evaluations, decided not to offer her an extension of her provisional privileges.  She was then given notice and opportunity to be heard at an ad hoc committee, an Appellate Review Committee and the Board.  She lost in all.  She then sued in state court for tort claims and that her privileges were illegally terminated.  The trial court granted summary judgment to the hospital.  The Court stated that the "substantial evidence test" was the correct standard to judge the hospital.  The Court of Appeal agreed.  The Supreme Court reversed stating the "substantial evidence test" is not the correct standard. Usually courts give great deference to the hospital and its medical judgment.  Here the plaintiff sued under common law grounds and not just for an injunction.  The court said there was an increasing predominant view that the bylaws were a contract between the hospital and the physician.  In tort or contract cases there must be a showing that there is no genuine dispute of any material fact and the defendant is therefore entitled to judgment as a matter of law.  

Tarin-Godoy v Cruz
Tex. Ct. App.

The Medical Director of the El Paso Psychiatric Center ( EPPC) suspended Dr. Cruz, who was on courtesy status.  The suspension was over a possible abandonment of a patient.  Dr. Cruz won and then sued Tarin Godoy, the Medical Director.  One of the main issues of the law suit was slander and intentional infliction of emotional distress.   Tarin claimed sovereign immunity and the court turned him down.  He appealed.  The Court of Appeal stated that in order to enjoy the immunity, he had to prove the organization was a state actor.  He failed here.  He then went for individual immunity as a government official.  For immunity to apply to a government official, he must prove he acted in good faith and that no reasonable person would not have agreed with his position.  This failed since he filed two conclusionary affidavits without specifics or factual details.  Cruz stated that she did not abandon the patient since the patient's father had fired her prior to her going on vacation and she had notified the nursing staff and named the physician who would see the patient.  Summary judgment not allowed and to court. 

Physicians v Baptist Health
DC Ark. Filed

Six cardiologists in Little Rock filed suit against Baptist hospital in federal court under the antikickback statutes.  The six were removed from the hospital due to economical credentialing since they have an indirect interest in a competing hospital.  The suit asks for an injunction to allow them to continue to practice at the hospitals.  The hospital stated the physicians who are part of a clinic that owns 14.5% of the specialty heart hospital.  

Lee v Trinity Lutheran Hosp.

 Lee sued Trinity after being removed from the hospital staff.  He obtained at the peer review hearing multiple expert testimony showing his competence.  The court said that was nice but the hospital had a huge amount of quality care concerns prior to disciplining the physician.  This means that they had reasonable cause under HCQIA and have immunity.    Top


Solomon v State Board 
Maryland Ct. of Special Appeal

Dr. Solomon was under investigation by the Maryland Medical Board after a patient complained.  The Board sent her a warning letter and later sent a subpoena for her appointment schedule.  She went o court to quash the subpoena and lost.  The Board then subpoenaed nineteen of her records that appeared on the appointment log. Solomon refused based on patient confidentiality.  The Board then charged Solomon with unprofessional conduct and failure to cooperate with an investigation.  A hearing before an ALJ recommended loss of license.  The Board agreed and the she appealed in state court.  The Court agreed with the Board.  The Board has the right and duty to investigate practitioners.  the subpoena was not overbroad. She lost her license. 

New Jersey Board v Rajiyah
NJ Medical Board   

The Board investigated a physician for failing to notify a family of a patient's death.  After the investigation they did not discipline the physician since there is no law stating the physician must notify the family.  The physician stated he did notify the family but the hospital stated the call was never made.  New Jersey has a rule that hospitals must have policies about death notification.  St. Barnabas did not.  They now do.  Watch out for a hospital who has been caught with its pants down and is trying to deflect blame.  Top


Hammond v Ashcroft

The Justice Department has subpoenaed medical records of 40 patients at Northwestern Hospital.  The judge has quashed the subpoena stating both federal and state privacy concerns.  The patients have no bearing on the case which is to fight the partial birth abortion ban signed into law last year.  

They have also subpoenaed records from New York hospitals and the judge stated they may have the records.  

Ashcroft has justified the request by stating they are needed to defend a new law banning partial birth abortion.  He wants to know about the medical necessity of the procedure when it was performed.  All hospitals are contesting the subpoenas, as they should.

Med. Group v Attorneys
Wisc. Lower Ct.

A Wisconsin medical group filed suit against the local attorneys who did not understand HIPAA and insisted their subpoenas must be accepted.  The court found for the medical group and assessed the attorneys for costs and the plaintiffs attorney fees.  The court will also notify the Bar about the outcome of the suit.      Top

Fraud and Abuse

Colorado v Mason

A Colorado attorney, yes an attorney, has been fined $!.6 million in a scheme to defraud nursing home seniors.  The scheme was to give free seminars in order to get an estate plan to rid the seniors of their estates in order to to on Medicaid for nursing homes.  The charge was an upfront $1950-$2500 fee.  The attorney can no longer bill Medicare or Medicaid and must say 10 mea culpas.  

US v Brown & Toland

The large San Francisco group of over 1500 physicians settled the charges of price fixing and antitrust violations.  The group signed a consent decree that stopped them from negotiating for the physicians without more integration.  The decree also voids any contracts the feds say have been negotiated illegally.  The groups PPO product will continue to go forward.   

US v St. Francis Hosp Greenville SC

In the largest settlement to date in a provider Self-Disclosure Protocol the above hospital has paid $9.5 million to settle allegations of false billing in their home health, hospice and DME programs.     Top


US v Northwestern Hospitals

The FTC has filed a complaint against the Northwestern.  The complaint stems from the system purchasing Highland Park Hospital and its antitrust potential to raise costs and lessen competition.  The FTC also accused a group of physicians at the hospital with price fixing.  The FTC has warned Northwestern that they either get rid of Highland Park or face the loss of all three of their Northern affiliated hospitals.        Top


CMA v California
USDC Sacramento

Under Gray Davis the state proposed a 5% cutback of MediCal, the state's Medicaid program.  The California Medical Assn. took this to court to enjoin the cut.  The rationale was the cut would cause many providers to drop out of the program leading to a major problem with care for the patients.  the court several months ago ruled with the Association.  The state asked for a reconsideration.  This was not granted.  The state will now go to the 9th Circuit to appeal the ruling.  If the state loses it will affect Governor Schwarzenegger's attempt to cut the funding even more to get the state back on even footing.        Top


DISCLAIMER: Although this article is updated periodically, it reflects the author's point of view at the time of publication. Nothing in this article constitutes legal advice. Readers should consult with their own legal counsel before acting on any of the information presented.