March 15, 2003 Recent Legal News





Informed Consent

Insurance Bad Faith


Peer Review

Artificial Insemination

Fraud and Abuse

Interference With Business

Medical Mary Jane

Medical State License


Zolezzi v PacifiCare
CA Ct. App

Zolezzi was in PacifiCare's Medicare + Choice plan and fractured his arm.  Two plan Orthopods recommended against surgery and PacifiCare refused a third opinion.  Zolezzi went anyway to a non-plan MD and the physician recommended surgery. After being refused payment for the third opinion and for the surgery, Zolezzi hd the surgery at her own expense and an ALJ upheld PacifiCare.  Zolezzi sued in state court and PacifiCare demanded arbitration.  The trial court found for Zolezzi since the arbitration agreement did not conform to state law and therefore PacifiCare had waived arbitration.  The Court of Appeal agreed. To trial.

Izenberg v St. Joseph Hosp Physicians
CA Ct App

Dr. Izenberg sued the medical group for underpayment of services and interference with his attempt to purchase an interest in the group.  He stated he was not notified of his delisting.  St. Joseph several months later asked for arbitration under two contracts. One contract was between Izenberg and Bristol Park which was assigned to St. Joseph Heritage.  The other was between the medical group and St. Joseph Heritage.  Both had arbitration clauses.  The Group had performed discovery prior to asking for arbitration.  The trial court stated that since the group had used discovery to get information they otherwise were not privileged to arbitration was out.  The Appeals Court reversed stating both contracts had arbitration clauses and that there was no waiver due to discovery.  The reason for the lack of waiver was the permissive discovery in the arbitration clauses.  

Flaum v Superior Ct.  
CA Ct App 

Orlando was admitted to RGR Convalescent Center, signed a contract with an arbitration clause and stayed for several months.  He was then transferred to a hospital for several weeks and then transferred back to RGR.  He stayed for one day, did not sign a new contract and went back to the hospital where he died.  The daughter sued for multiple torts and RGR sued to compel arbitration.  The trial court went with RGR.  The appeals court ruled for RGR since the agreement was on a separate paper that Orlando signed and the time in the hospital did not invalidate the original arbitration agreement.        Top


Thomas v Med. Ctr. Physicians
Idaho Supreme Ct.

Thomas, a shareholder in Medical Center Physicians, complained to the group about the treatment by another physician.  He saw a patient of the other physician's  and wrote a supposedly inflammatory note in the chart disagreeing with the care the other physician had provided the patient.  He was admonished by the QA committee but the problems with the other physician were not addressed.  Thomas was terminated and his stock bought back under the buy-sell agreement.  Thomas then sued for wrongful termination and retaliatory discharge.  The trial court ruled for the Corporation on all claims.  The Supreme Court reversed and stated that since the complaints were probably of a public policy nature the jury should decide the case and to trial they will go. 

Roy v Bledsoe County Hosp.
6th Circ.

Dr. Roy, an ED physician, had a contract that called for routine scheduled ED coverage.  He then increased his coverage as a favor to the hospital.  He then had some disagreements with administration which caused him to one day not see patients.  He was terminated.  The jury found that the hospital terminated him without good cause.  The appeals court agreed that the hospital broke the contract and the physician's  doing a favor for the hospital did not modify the contract. Another stupid hospital administrator who will have difficulty finding and keeping physicians and blame someone else.     

Richardson v Rush Pres. St. Luke's
7th Circ.

Richardson was fired for violations of misusing funds.  He claimed violations of Civil Rights.  Richardson did not bring any evidence to support disparate claims and lost.  Rush also won their suit against Richardson for fees that were misused and the unpaid medical school loan.



Kilroy v Star Valley Med Ctr.
Dist. Ct. Wyoming

Kilroy took his child to the ED for flu.  The child was examined by the ED physician, treated with an antibiotic and discharged.  The child died several hours later.  Kilroy sued for several things, one of which was EMTALA violation.  The court stated that EMTALA was not a federal malpractice act and dismissed the suit.  The Court also found that the hospitals practices were not exactly followed but the variations were minor and no disparate treatment was present.  Also since the hospital did not state that an emergency medical situation existed, they did not need to "stabilize". 

Broughton v St. John
Mich ED

The patient claim was dismissed after she went to the ED for headaches and related symptoms.  She had a CT scan which was normal and was discharged.  She had a brain infarct with permanent damage.  Again, the court stated that there was no different treatment and that no emergency was found.         Top

Informed Consent

Stalsitz v Allentown Hosp.
Penn. Superior Ct.

Stalsitz had leg blood clots.  he went to the hospital where he was placed in a study using TPA to dissolve peripheral clots.  The procedure worked but the patient continued o have problems due to decreased circulation.  An angioplasty was performed and this resulted in another clot which again dissolved with TPA.  The patient continued to have problems and sued for negligence and lack of informed consent with TPA.  The jury found that the defendants were negligent but the negligence did not increase any risk of harm to the plaintiff.  The plaintiff appealed and the Superior Court ruled as the trial court.  The main discussion centered on the year of the incident, 1992 and the year when the Legislature passed the informed consent act encompassing non-surgical procedures, 1996.  Since there were no laws about the nature of the consent at the time of the procedure, the trial court was correct.        Top

Insurance Bad Faith

Dardinger v Anthem Blue Cross 
Ohio Supreme Court

Dardinger had metastatic brain cancer that failed to respond to radiation therapy.  His neuro-oncologist recommended a series of twelve Intra Arterial Chemotherapy sessions.  Anthem agreed but changed it's mind after the third treatment.  They refused to pay for any more even though the treatment was working and said the agreement on the first three were in error since it was experimental.  An appeal was filed in August 1997 but did not respond with the formal denial until mid-November, five days after the patient died.  The husband sued in state court for breach of contract and bad faith.  The jury awarded $1320 for breach of contract and $2.5 million on bad faith with an additional $49 million in punitive damages.  Anthem appealed.  The appeals court agreed with the trial court except for a new trial for damages finding that the parent company Anthem Insurance was merely a guarantor on the contract between Anthem Blue Cross and the patient.  The Supreme Court  reversed and decreased the punis to $30 million. The court stated that the jury could find Anthem placed profit over patients and the new award was not excessive.  They also found that the insurers reprehensibility sufficient to warrant substantial punitive damages. The court went on to state that $10 million should go to plaintiff and the remainder to cancer research at Ohio State University.         Top


Dias v Brigham Med Assoc.
Mass. Supreme Ct.

Dias was 32 weeks pregnant when involved in a car accident.  She was seen in the ED by the physician and then went to L&D.  She delivered a stillborn son.  She sued the physician, an independent contractor, and the physicians medical group for malpractice.  The trial court issued a summary judgment for the medical group but the Supreme Court reversed since respondeant superior applies to the physician's employer.  This was within the scope of the employment.  

Aranda v Children's of Dallas
Superior Ct.

The Aranda family is suing Children's Hospital of Dallas for the same transplant error as happened at Duke.  The hospital lab mixed up the blood between the mother and father of the child.  The wrong parent gave part of the liver to the child. To make matters even worse the cause of the faulty liver was a surgical problem when they removed a hamartoma. The mother is the one days after the transplant who noted the wrong blood type.  The baby died.        Top 


US v The Louisiana Clinic

Two employees filed an qui tam suit angainst the Clinic for false billing.  The clinic filed a motion not allowing non-party patient's medical records be obtained due to confidentiality and that the government not be allowed access to any records since they had not intervened.  The court stated that the plaintiffs sued on Federal law claims and there is no privilege under federal law.  Even though not yet in effect, HIPAA presents a strong federal policy of protecting patient medical records.  Since there were not more stringent state requirements, the court allowed the production of the records with restrictions.  The court also ruled that even though the government had not intervened, they still had a right to receive documents and could use them for any legitimate oversight activity.        Top

Peer Review

Freilich v Upper Chesapeake Health
4th Circ

Freilich has unrestricted at Harford Hospital for 18 years.  When she applied for reappointment the hospital Board refused to reappoint her citing the ethics and behavior language in the medical staff bylaws.  The doctor had been critical in the past of hospital quality of care. Plaintiff sued 14 individuals and the hospital for denying her reappointment due to her patient rights advocacy.  She stated that HCQIA was unconstitutional.  All claims were dismissed by the district court and she appealed.  The 4th Circuit ruled that this was a straight physician hospital dispute and that her due process and equal protection challenges to HCQIA were not valid.  She stated that since HCQIA allows hearsay during the hearing procedure and the denial of privileges without a finding of incompetent behavior would require the court to rewrite a statute that passes the rational review phase.  She attempted to state the reasonableness standard of the HCQIA were vague and this was also tossed since it is the peer review panel and not the physician that must meet the reasonableness standard.  The claims against the hospital were thrown out for lack of standing of the physician to advocate for her dialysis patients.   This case basically throws out any further attacks on HCQIA and its ability to utilize the reasonableness approach.  It also allows, at least in Maryland, the ability of the hospital to not allow physicians who criticize the methods or patient care to be on the staff.  I believe the most important thing this shows is that the medical staff must review their bylaws and change those which are written by the hospital paid attorney to ones that are done by neutral attorneys.  Remember, "If not for the grace of God, go I".        

KPH Consolidation v Romero
Texas Ct. App.

Romero was injured during surgery and filed a malpractice claim against the physicians and the hospital.  All settled except the hospital on the negligent credentialing claim.  The surgeon was a known addict of prescription drugs.  The plaintiff stated the hospital acted with malice since it knew about the addiction.  The jury awarded damages including $12 million in punitive for malicious credentialing.  The hospital appealed. The Texas Court of Appeal reversed since malice requires two prongs.  The first is objective, an extreme risk of harm and a subjective prong, the defendant knew and was indifferent to the extreme risk of harm.  In this case since the problem was addiction which could have been handled in several different ways the subjective arm fell.  There was no evidence of indifference by not suspending the surgeon. The Court sent the issue back for new trial.    

Fuste v Riverside Healthcare 
VA Supreme Ct.

Two employed physicians had a dispute with their employer and the physicians terminated their employment.  The plaintiffs sued multiple defendants for among other things defamation.  The trial court tossed out all the claims and the Supreme Court reversed on some.  The defendants stated that the statements were either opinions or privileged.  The Supreme Court stated that the statements regarding the physicians abandoning their patients and their medical competence rose to defamation per se.  This only requires general and not specific damages. Since these statements were made during a credentialing process, the defendants said they were privileged.  The court said that they are not privileged if made maliciously and that is a question of fact for the jury.  

Plummer v Community Gen. of Thomasville
NC Ct. App.

Plummer had worked at the hospital for over ten years until the hospital entered into an exclusive contract for anesthesia services with another group.  The hospital terminated Plummer with the required 90 day notice.  Plummer requested and was denied a hearing request.  Plummer then sued for multiple business issues multiple defendants including the new exclusive contractee.  All claims were tossed by the court, but it is interesting the the new contractee had already declared bankruptcy.  The Court of Appeal affirmed the dismissal of all claims including Plummer stating he was required to be given a hearing.  The court stated the the loss of the contract was not the legal equivalent of losing his staff privileges.  He retained his privileges but only could not exercise them. 

Patel v Permian Cardiology Grp.
US Supreme Court

The high court refused review of a 5th Circuit ruling that a public hospital who gave a hearing to a physician after a suspension.  The hearing after the suspension was reasonable since the physician posed a danger to patients.  

Wieters v Roper Hosp
4th Circ.   

 A surgeon had his privileges suspended after he complained about the poor care in the hospital.  The hospital accused him of being disruptive.  The District and the 4th both agreed on summary judgment for the hospital under the HCQIA.  The surgeon was unable to rebut that the hospital was acting in the furtherance of quality of care.  The court also said that the hospital does not have follow it's bylaws to the letter, as long as the process is fair and HCQIA immunity applied.

Blau v Catholic Healthcare West
CA Ct. App.

Blau had his privileges suspended as a disruptive physician, not playing well with others.  There were no quality of care concerns.  He was summarily suspended and never went through full judicial review prior to filing suit.  He needed to exhaust his administrative remedies.  This case is unpublished and therefore can not be used for precedence.  The California Medical Association filed an Amicus but on different cases than Blau.  This court also stated that B&P Code 809 only refers to medical disciplinary causes and not administrative actions.  They characterized this as an administrative decision.  I feel this is bad law and am glad that it can not be used for precedence.         

Quini V Paradise Valley Hosp.
CA Ct. App

Quini had been suspended for medical cause and for not seeking timely reinstatement from a medical leave of absence.  He was give several judicial reviews which had agreed with his termination and then finally terminated by the governing board. The courts all agreed in this unpublished opinion with the dismissal by the governing board.  In one of the interesting aspects of the case, the court utilized Oskooi v Fountain Valley Regional Hospital, 42 Cal. App. 4th 233.  This case stands for the proposition that the courts are to give deference to the hospital unless the findings are so lacking in evidentiary support as to render them unreasonable.   In the present case there were credible experts on both sides regarding a person who bled to death after a liver biopsy.  The court also noted that since Dr. Quini did not object to an expert from the other side who was part of the same hospital system during the hearing, he can not do it during the appeal.  This should act as reminder to all attorneys to file the necessary objections at the appropriate times. 

Bhard-Waj v United Health
       NY App.

The physician's privileges were revoked after being reported patient neglect.  He went through multiple committees prior to the final discipline. All continued the revocation.  The Court stated there was no evidence of bad faith and it was unlikely that he would prevail at court.  It therefore denied the asked for injunction against the hospital.  Top

Artificial Insemination

Benitez v Brody, MD
CA Ct. App.

A lesbian has the right to sue a physician who refused to  artificially inseminate her.  She was referred to another physician who also refused to inseminate her.  This led to the patient going outside the plan and paying alot of money out of pocket.  The lesbian accused the physician of violating California civil rights statutes which prohibit businesses and physicians from discriminating against homosexuals.  The physician had refused to perform the insemination for religious reasons. Benitez now has a one year old son. This is the opening salvo in the Pandora's Box.        Top

Fraud and Abuse

US v Sharp Memorial Hosp.

Sharp Memorial Hospital in San Diego has agreed to pay $6.2 million to the feds in settlement that is overcharged for heart and kidney transplants.  They will also have a five year Corporate Integrity Agreement, an expensive eye over the shoulder agreement.  This is a whistle blower suit by a nurse who stated that Sharp billed for salaries of employees who spent less than 10% of their time working with the transplant patients.  Sharp also charged unwarranted charges for inclusion in the Medicare program.  The nurse will get 20% of the fee and another nurse leaves the profession.        Top

Interference With Business

Tynberg v Desert Hosp.
CA Ct. App.

Tynberg, a urologist at the hospital, sued the hospital for recruiting an additional urologist into the community.  The jury found for the hospital but the judge granted a new trial since the physician had a 20 year relationship with the physicians and the jury's verdict could not be sustained.  The appeals court reversed the need for a new trial since the urologist failed to produce any evidence that the hospital induced anyone not to refer to him.    

Parnell v Adventist Health
CA Ct. App

A patient sued a hospital for unfair business practices for putting a lien on his recovery of money from a person with which he was involved in an accident.  The hospital had already been paid the contracted amount by the patient's insurer.  The court overturned prior state case law that allowed the hospital to obtain the full balance of services, not just the contracted rate. The court allowed the patient's suit to go to trial.         Top

Medical Mary Jane

Raich v Ashcroft

Two women who take medical marijuana sued Attorney General Ashcroft to be able to grow and use marijuana for their medical problems.  The judge tossed the case since it was a federal court and he had to follow the US Supreme Court rulings.  He expressed sympathy but could not follow the California law allowing the use of marijuana for medical reasons.  The women will continue to use the drug.        Top

Medical State License

Solomon v Admin. Review Bd.
NY App.

The Board revoked the physician's license due to gross incompetence.  The Court stated that the decision was supported by the evidence.  He also knowingly withheld information on applications for medical staffs.        

Spuza v Dept. Health
Fla. Dist. Ct.

The Florida Department of Health revoked the physician's license for receiving kickbacks in exchange for Medicare referrals.  The Department had an informal hearing on the matter before revoking the license.  They refused a formal hearing and Spuza appealed.  The issue is whether his conviction of the Medicare has any bearing on the practice of medicine.  The Court ruled that there needs to be a formal hearing before an ALJ.        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.