January 2001

Legal News

Case Anti-HMO
Federal Fraud and Abuse against HCA
MD v Health Plan or Hospital, several cases
Louisiana Case of Creutzfeldt-Jakob
Breach of Privacy
Urologist Wins Libel Suit
Peer Review Records-Important Case from Texas
Blood Transfusion and HIV
MD and HIV-Refusal to operate
Corporate Practice of Medicine Act
California Hospitals and the State
Kaiser Sued for Pill Breaking Policy
Hospital Vicariously Liable for ED Physician
Informed Consent
Lack of Interpreter
Malpractice Verdicts Gone Nuts
Medical Societies v Aetna
Sexual Harassment & Licensure

Bauman v. Aetna
N.J. Court

The Baumans are the couple that testified in Congress regarding their newborn daughterís death after being forced to leave the hospital immediately after the birth of the child. This led to the end of "drive thru" deliveries. The courts have allowed the Baumans to sue Aetna for malpractice in state and not federal court. California is one of seven states that allow malpractice suits against HMOs. The case is to tried this summer.


In the largest settlement in fraud and abuse history HCA has agreed to pay the government $840 million in fines. This includes $95 million in criminal penalties. This money goes out of the health care dollars and into the general government fund. Think of all the uninsured and other medical priorities that could be helped with this and other monies the OIG generates.

MD v Health Plan or Hospital, Several Cases

Adjan v SummaCare Health Plan
Ohio Court of Common Pleas

The AMNews December 18,2000 issue reported on a case where a physician was fired by a health plan, Summa, due to high utilization. There was no issue of quality of care. Dr. Adjan was called a "Marcus Welby" and several weeks prior to his termination Summa gave him a 100% quality rating. Dr. Adjan was found to have a higher utilization profile than his peers and refused to sign an improvement plan promising to lower utilization costs. His removal from the panel cost about 12% of his patients. This made his practice unprofitable and forced him to sell to other physicians who have temporarily hired him. The president of the PHO that holds the Summa contract did not learn of the termination until after the fact and stated that the PHO has not terminated Dr. Adjan.

Marshall v Spectrum Medical Group

A physician was terminated from his medical group and sued to discover his credential files. The Maine district court ruled for the physician. The hospital not the group stated the physicians could not have his credential record due to HCQIA and state law protecting peer review. The court stated that HCQIA did not apply since protection is only for information that goes to NPDB. The state law also did not apply since it only applies to malpractice and this case was for abuse of the peer review process.

Khoury v Trumbull PHO
Ohio Ct. App.

The physician was denied entry to a PHO because he was too slow a surgeon. The court agreed with the PHO since this was a business decision denying based on economic reasons.

Doe v Lodi Community Hospital
Ohio Ct. App.

The physician held a contract with the hospital and with a medical group to provide emergency services. The physician-hospital contract was terminated and the medical group was requested not to assign the physician to the hospital. The physician was then terminated from the medical group. The reason for the termination was theft of another employeeís wallet. The theft was caught on videotape. The hospital was in its right since there was a "without cause" termination clause in the contract. The same was true of the medical group contract.

Louisiana Case of Creutzfeldt-Jakob (CJD)
Rebert v Tulane

In the first of what will probably be multiple cases a patient has sued Tulane University for possible exposure to CJD. The university, after operating on the brain of a patient with the disease did the routine instrument sterilization and not the necessary one hour autoclave followed by submersion in sodium hydroxide for one hour. The hospital did not learn of the original patientís CJD until after the patient died and an autopsy was performed. Eight neurosurgical patients were potentially infected.

Breach of Privacy

Kennestone Hospital v Hopson
Supreme Court Georgia

Mrs. Hopson was a patient as Kennestone for drug treatment pursuant to a divorce decree. The husband wanted to terminate alimony and requested the hospital provide records. The wife did not file an objection within 10 days and the hospital provided the records. The hospital then sued Mrs. Hopson for unpaid medical bills. The wife countersued for invasion of privacy. The Georgia Supreme Court stated the wife did not waive her privacy rights by remaining silent. The hospital attorney did not do his/her due diligence.

Urologist Wins Libel Suit

Graham v Oppeneimer
Ga. District Court

Dr. Graham, an urologist, sued Dr. Oppenheimer, a pathologist, for libel and won $675,000. Dr. Graham found a Yahoo posting stating he had taken kickbacks from a urology company giving the company all the pathology and was forced to resign from Emery University. The poster of the message was Dr. Oppenheimer, a staff pathologist at the company but now operates his own lab, Prost-Data.

Peer Review Records

Kingsley v Sachitano
Supreme Court Alabama

A physician sued three physicians for negligence and wantonness in peer review. He requested peer review documents for his case. His argument was that the documents were necessary for a fair trial. The court disagreed stating that Alabama law forbids the use of peer review documents in any civil dispute. In California the records are only protected against malpractice and not all civil cases.

Schultze v Humana
Texas Superior Court

The Dallas Morning Star on 12/3/00 reported a fascinating case of Dr. Schultze, a 73 year old outspoken practitioner who won $ 20 million from Humana. He was outspoken in his criticism of Humanaís mandatory hospitalist program and was then deselected from Humana. He filed suit alleging slander, interference with business and cancellation of his contract. The Humana attorney stated he was fired for medical concerns and put into the record some of the Humana peer review records. This left the door open for all the records to come in. The jury decision, after finding that the peer review panel of eight physicians reviewed Dr. Schultzeís records monthly for two years prior to ending his contract, stripped the reviewers of their immunity and opened them up for individual suits. This was done because the jury believed the reviewers had acted with malice or unreasonably and is the first case in the nation to do so since the 1982 Patrick decision by the US Supreme Court. As a sideline Kentucky recently passed a law making it illegal for insurers to mandate hospitalists.

Blood Transfusion and HIV

Kotofsky v Albert Einstein Med. Ctr.

The patient became HIV positive from a blood transfusion. He sued the hospital for failing in their duty to obtain an informed consent by not telling him the incidence of HIV in unknown donors and failing to explain other options. The patient had no expert witness but the court allowed the suit to proceed stating it was more a straight negligence than a malpractice case, so no expert is required.

MD and HIV-Refusal to Operate under the ADA

US v Detwiler
Settlement in Oklahoma

An Oklahoma Surgeon was fined $10,000, made to pay $40,000 to a patient, sign a consent decree not to refuse to treat patients because of their disabilities and was made to attend training on infection control and the treatment of patients with HIV. The physicianís attorney called the settlement "extortion". The prosecution stated that the patient went for a back condition and was refused surgery. The defense stated the patient did not need back surgery, concealed information about his condition, and was hostile. The timing of this case was prior to the Supreme Court determining HIV was protected under the ADA. Does anyone smell a setup here?

Corporate Practice of Medicine Act

Steinsmith v Medical Board of California

Dr. Steinsmith was working for a clinic that had a fictitious name but was owned by non-licensed people. Steinsmith knew by words and deeds that the arrangement was not okay under the Corporate Practice Act. He continued to work there and eventually was fined $500 and ordered to "cease and desist" by the MBC. Dr. Steinsmith appealed to an ALJ who concurred. The fine was then appealed to the Court of Appeal who also concurred. This case shows that if a physician works for a clinic, the physician should and must know who are the true owners of the clinic. If the physician does not know and the clinic is owned by non-physicians, they may be fined or place their license in jeopardy.

California Hospitals and the State

In an end to a ten year law suit California has agreed to pay hospitals $350 million for a 15 year period of underpayment of MediCal outpatient care. The State will also raise the rates they are paying for this care.

Kaiser Sued for Pill Breaking Policy

Six Kaiser patients have filed suit against Kaiser for the policy of having patients break pills to obtain the right dosage. If pills cost the same no matter what the dosage, Kaiser has the patient use the higher dose pill and then break the pill to get the correct dosage. This may cause harm to the patient if the pill does no break correctly. There is no medical necessity for this practice, only a financial one. Kaiser states it is not a policy but is voluntary and only effects about 10 in 1000 medications.


Reynolds v Maine General Health, 218 F.3d 78

A patient taken to a hospital following a MVA. He was hospitalized for a significant time and then discharged. He later died from a PE due to a possible hypercoagulable state. He sued under EMTALA because he did not have an adequate MSE since he was not asked nor screened for the disorder. The judge here, as in other circuits, stated that this was a malpractice case and did not fall under the federal EMTALA rules.

Hospital Vicariously Liable for ED Physician

Barrigan v Providence Memorial Hospital, Tx. App. Nov. 22, 2000

The parents of a child injured due to negligence of the ED independent contractor physician sued the hospital. The parents were told by their PCP to go to the hospital ED. The PCP did not show up and the ED staff recommended the child see the ED physician. The "Conditions of Admission" signed by the mother stated the ED physicians were independent contractors. The court ruled the hospital could be sued since there was a question of adequate notice. The notice was in eight-point type, in English only (not the parentís primary language), and signed in an emergency situation.

Informed Consent

Ketchup v Howard
 Ga. App. Nov. 29, 2000

The Georgia appellate court stated a new rule for that jurisdiction. The court stated that an informed consent must be enough that a reasonable person standing in the patientís position would have received enough information to decline treatment. This is the same test that is used in California. The other test is one of showing what the standard physician in the community would have told the patient.

Lack of Interpreter

Freydel v New York Hospital
2nd Circ. (NY)

A deaf Russian patient sued the hospital for failure to provide a Russian sign interpreter. The case was brought under the ADA. It was for monetary damages and an injunction to keep it from happening again. The hospital won the damage part since they had in place a system for arranging for interpreters and made efforts to obtain an interpreter. The injunction was also tossed since it would only be speculation that the patient would return to the hospital in the future for any services.

Malpractice Verdicts Gone Nuts

The Philadelphia area just was the home of a $100 million malpractice judgement against two hospitals. St. Lukeís Hospital of Bethlehem will be responsible for $90 million will appeal the result. This case was a disaster. A premie, now 5 years old, had a nurse insert a catheter in the wrong umbilical artery. The child suffered severe brain damage and had to have her left arm amputated. In the last three months there have been verdicts of $55 and $50 million. The plaintiff attorneys say there is no need for tort reform and medical community believes otherwise. Since jury awards are high settlements are also high. There are now problems with physician recruitment into this area and others leaving. All sides agree that there will be more malpractice cases in the future as physicians have to practice medicine faster and hospitals have reduced their staff. Pennsylvania has no malpractice caps.

A 17-year-old went to the hospital for a T&A, stopped breathing six hours later and died the next day. He had sleep apnea and was obese. The surgeon and anesthesiologist were exonerated. The hospital was hit with $9 million, including $4 million in punitive damages. The nurse gave morphine to the patient while he was in respiratory distress, did not call any physician for two hours and did not relay the severity of the condition.

In West Virginia the Supreme Court has upheld malpractice caps of $1 million on non-economic damages. The court stated that the legislature made the law and itís up to them to change the law.

Wisconsin has also upheld the $350,000 limit on non-economic damages in medical malpractice cases.

Medical Societies v Aetna

In an arbitration proceeding 14 New York medical societies won an undisclosed amount of money from Aetna for late claims. The Wall Street journal article stated that Aetna paid all back monies plus expenses to those physicians who agreed to the arbitration. There were only 100. What happened to the remainder of physicians? Why didnít they join in? Could they be Aetna employees? This may be a good lesson as to why California has the Corporate Practice of Medicine prohibition.

Sexual Harassment & Licensure

Addei v State Bd. For Prof. Med. Conduct
New York App. Div

Dr, Addeiís medical license was revoked for allegations that he raped a patient, sexually harassed five co-workers and falsified hospital employment applications. The rape charge was not substantiated but he lost his license on the basis of the sexual harassment charges. He sued to overturn the Boardís ruling on the basis of lack of jurisdiction since the harassment was a non-quality of care issue. The court stated that the harassment fell under the moral unfitness for a license. However, the court overruled the Board stating the punishment was so disproportionate to the offense of touching through the clothes of another in an atmosphere of flirtation as to shock the court sense of fairness. The case was sent back to the Board for reconsideration of the penalty.

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.