May 1, 2003 Recent Legal News


Peer Review

Disability Benefits





Fraud and Abuse 


Contract Breach

Pharmacies v Massachusetts

Medical Marijuana



Peer Review

Patton v St. Francis Hosp.
Ga. Ct. App.

Patton had his privileges revoked by the MEC after a full peer review hearing.  He sued for damages and injunctive relief.  The hospital was granted summary judgment under HCQIA.  Patton appealed and lost.  The Court stated there was immunity under both the federal and state laws.  The Court used the four prongs of the HCQIA and stated that a death made the act in furtherance of health care,  they had a year long peer review which showed a reasonable effort to obtain the facts, the notice and hearing procedures were adequate and that Patton did not show enough evidence to overcome the presumption that the hospital believed its actions were reasonable.  This last one is an impossible burden.         

Conner v Salina Health Ctr.
10th Circ.

Conner was denied reappointment to Salina following a peer review panel recommended against the reappointment.  Conner filed suit that he was due federal due process even though the hospital was private.  The district court said it was private and there were no federal grounds and the hospital was not a state officer.  The 10th Circuit agreed that the plaintiff was deprived of no federal rights.  The court also found that traditionally peer review was not regulated by the state. 

Rubin v Chilton
NJ Super Ct.

Two pathologists were let go under an exclusive contract with another group. The lower court ruled for the hospital since the plaintiffs were independent contractors an not protected under state of federal anti-discrimination causes. The Superior Court reversed stating that the state law for refusing to do business with persons was intended to apply exclusively to non-employee relationships.

Campbell v Marion County Hosp. Dist.
SC Ct. App.

The physician sued the public hospital for the amount of monies paid to physicians recruited.  The hospital denied the request as a trade secret.  The lower court stated that the hospital should release the information but the physician should not re-release it.  The Court of Appeals stated that the physician could re-release the information since this would not impede the hospital's ability to recruit.   

Joliet Med. Grp. v Ensminger
Ill. Ct. App.

In another win for the physician over a medical group, the court found that a non-competitive clause in an employment contract was for an office not a hospital.  The contract stated that the physician would not practice within a two mile radius of the clinic.  He didn't but did see patients at a hospital within that radius. The Court ruled it is the office which was covered and the hospital was merely a place where he could engage in the practice of medicine. 

Maheshwari v Sharp Mem. Hosp.
Ca. Ct. App.

The physician applicant was denied due to quality of care concerns at another hospital.  Sharp asked questions and the physician did not give the requested information.  The hospital was within it's rights to take into account this lack of cooperation.      

Switzinger v Cmty. Health Network
Wi. Ct. Appeal

In a case that obviously concerns me and should concern all who are undergoing peer review, the physician hired an attorney not licensed in Wisconsin to represent him at a peer review hearing.  The hospital objected since this would be the unauthorized practice of law.  The trial court sided with the hospital.  The Appeals Court could not make up it's mind so certified the case for the Supreme Court to hear.  The question is whether helping a physician in peer review is the practice of law or is it medical knowledge and an ability to present scientific evidence to the panel.  I am looking forward to the result of this case.  

Center for Legal Advocacy v Hammons
    10th Circ

The agency was allowed the peer review records for four patients who committed suicide in a Colorado mental facility.  The Center is a federally mandated entity and the act states that these entities have the ability to investigate potential abuse.  They can get all records including state protected peer review records.   Top

Disability Benefits

Darland v Fortis Benefits
6th Circ.

In a case that many healthcare providers should be interested in, Darland was a vice president of a company.  He had significant back pain and saw his physicians who all recommended no working due to osteoarthritis.  He stopped working and applied for long term disability.  For 1 1/2 years he was paid benefits by Fortis.  Fortis then had him examined by their physician and he was found to only be entitled to a 24 month limit.  Darland challenged Fortis but there was no change in position.  Fortis recommended that Darland apply for Social Security disability since they would not cover him.  Two independent panels also found for Fortis and Darland then sued in federal court.  The district court ruled for Fortis and Darland appealed.  The 6th Circuit reversed.  They found Fortis had breached the arbitrary and capricious standard.  The Court looked at the statements of the physicians who actually examined Darland and the finding that the Social Security had also found Darland totally disabled.  The found it was inconsistent to deny benefits and then to have the plaintiff apply for and get Social Security to reduce their own payments while refusing to find Darland disabled under their policy.  Darland overrode the panel by stating that none of the members of either panel had examined him and greater weight should go to the conclusions of the physicians who actually examined him.  I know of several physicians who have been permanently disabled who the insurance company had attempted to stop payments.  We got those reversed.         Top


Regal Med. Grp. v Centennial Med Grp.
Ca Ct. App.

In a dispute over money and the time in which arbitration must filed the court ruled that if the original contract states that all claims arising out of the contract must be arbitrated then it means what it says.  Arbitration granted.        Top


Jensen v Lane County
9th Circ.

Jensen was arrested and sent for a mental health evaluation.  He was involuntarily confined.  After release Jensen sued for the involuntary confinement.  The lower court and the 9th both agreed that Jensen would need to show the psychiatrist breached the applicable standard of care for the involuntary confinement in order to sue.        

Cicio v Does (Vytra)
2nd Circ.

Cicio was denied a tandem transplant by Vytra Healthcare and the medical director as experimental for multiple myeloma.  The patient died.  A suit was filed for medical malpractice and dismissed in the district court after removal on ERISA grounds.  The 2nd Circuit reversed stating that the suit was on medical malpractice and not administrative grounds.  The letter rejecting the transplant was a medical decision.  The 2nd Circuit stated that the malpractice issue was a mixed issue involving both medical decisions and administrative ones.  This let the case go back to district court for proof of this concept.        

Eid v Duke
Md. Supreme Ct.

Eid was covered under a short term disability policy and had a surgical procedure performed.  The treating physician stated Eid would be off work for up to six weeks.  The company forwarded the information to their physician who determined without examining the patient that since he could walk with crutches, he was no longer totally disabled. Since he was told he had to return to work, he did and fell with an additional injury requiring more surgeries.  Eid sued for malpractice but the courts ruled that this was a fully administrative decision and was pre-empted by ERISA.  There was no medical advice asked for nor given.  This was not a mixed case since there was no patient physician relationship in this case.   

Morgado v Pfizer
NY lower Ct.

A jury told Pfizer to pay the plaintiff $2 million in compensatory damages for not telling the patient's physician about the dangers of Rezulin.  Pfizer will appeal as they have in all the other cases.        

Villazon v Prudential 
Fla. Supreme Ct.

In an unanimous decision the Florida Supreme Court ruled that a HMO can be sued for malpractice, even if they don't directly control the physician.  The Supreme Court sent the case back to trial court to determine if there is an agency relationship or not.  

Ramos v Preferred Med. Plan
Fla. Dist. Ct.

After the Villazon decision (above) the district court followed it stating that an HMO can be vicariously liable for it's physicians.  This is under the apparent agency test.  If the HMO holds out the physicians as the physicians are it's agents they are on the hook.  The HMO also screwed up by stating their physicians are not their agents in documents written in English and not Spanish, the patient's language.  Don't you believe some attorneys should be sued for malpractice over this or at minimum lose the account?

Rayburn v Orange Park Med. Ctr.
Fl. Ct. App.

In an equally stupid attorney maneuver the hospital lost the malpractice vicarious liability case.  They thought they were immune from suit but wasn't since they did not comply with the notice requirements of the statute and therefore were not entitled to its protections.  There needed to be a separate and conspicuous warning stating the emergency physicians was not a hospital employee and did not do it.        

Gonzalez v UCLA

The LA Times had a recent article regarding the death of Delaney Gonzalez, a 16 month old who came in for a simple cleft palate repair.  The article mentions a serious of mistakes by the hospital.  The first is a probable misplaced ET tube causing brain damage.  This was compounded by misread x-rays about the position of the tube.  The other was the removal of a CO2 analyzer that the staff thought was not working correctly, when it may have been.  No new analyzer was placed on the child. The hospital then entered a death certificate report of airway obstruction but not a misplaced ET tube.  That was done later be the coroner.  The suit has been filed.

Weier v Tarabishy

Normally I would not put a filed malpractice case into this newsletter since the newspaper article is only to get more business for the plaintiff's attorney.  This time the physician has been sued for the second time in four years for operating on the wrong leg.  The story does not state if the hospital is the same.  If it is they need to look closely at their processes in the pre-op and operating rooms.  This is a total system breakdown and not just malpractice by one individual surgeon. 

Scripps Clinic v Superior Ct.
Ca. Ct. App.

Any member who sued the Clinic for malpractice had their physician patient relationship ended.  The group dismissed a patient and was sued for discrimination, anti-competitive action and breach of fiduciary duty.  The first two were dismissed but the latter continues to determine if the Clinic gave enough time for the patient to find another physician.          Top


Conte v Girhard Ortho
Ca Ct. App.

In an interesting case the patient sued the physician for doing less than the consent allowed.  The patient wanted a repair of a glenoid fracture.  The time element between the date of injury and the date of repair was significantly more than recommended.  The patient signed a consent for the repaid and had an arthroscopic inspection of the area.  The physicians felt at the time of surgery that it should be left alone and closed.  The patient sued for battery, unconsented to touching of another on the basis that he had consented to repair and not only an inspection.  The Courts stated that as long as the physician did not do more than the consent there was no battery.  doing less than the consent allowed was within the consent.  Case dismissed.        Top


Hunt v Lincoln Mem. Hosp.
8th Circ.

Hunt's mother took him to the ED at Lincoln due to stepping on a nail.  He was examined and sent home.  Later he got an infection with osteomyelitis.  He sued under EMTALA.  The Court stated that he got an unbiased medical screening exam and that is all that is required under the statute.     

Roberts v Galen of Va.
6th Circ.

The patient's guardian sued under EMTALA for the transfer of a trauma patient to another hospital for long term rehab following an auto accident.  The patient's condition deteriorated after the transfer.  The trial court stated the physician had to have actual knowledge regarding the unstable condition for liability. The hospital won in a jury trial and the plaintiff appealed. The 6th Circuit said that if any employee knew about the deterioration and unstable condition, the hospital was liable.  In this case the physician knew and therefore the jury verdict stands.  Top

Fraud and Abuse

US v Bayer and Glaxo Smith Kline

In the largest ever Medicaid settlement for fraud the two companies have agreed to pay more than $344 million  for "lick and stick".  This means they sold re-labeled products to HMOs at deeply discounted amounts and then did not rebate Medicaid.  They were supposed to report their best prices to the government and to rebate to assure the Medicaid program would get the same low prices.  The companies did esparto labels for Kaiser and therefore did not report the low prices to the government.  

US v Brylowski, MD

A grand jury has indicted the physician, a Dallas psychiatrist, of filing false claims to Medicare.  He claimed he did sessions with patients and didn't.  He faces a $2.7 million fine and five years in the pokey.      

US v Rothman

The Pennsylvania orthopedic surgeon was accused of billing for surgeries done by residents.  These were done at Pennsylvania Hospital in Center City, Pennsylvania.  The physician and his management company will pay $1.6 million in the settlement. The doctor will pay $75,000 and the billing company the rest.  There will be also a CIA for five years.  

US v Abington Hospital  
US District Ct. Penn.

The feds have accused Abington Hospital of Pennsylvania of overbilling Medicare for lab tests over a nine year period.  They are suing for over $3 million.  Abington was nailed for the same thing in 1994 and paid a fee of $275,000 and then continued doing the same thing.  The suit accuses the hospital of upcoding and doing tests that were medically unnecessary. The hospital states it will defend itself but in fact will settle.        Top


Kent. Assn of Health Plans v Miller
US Supreme Ct.

The United States Supreme Court stated that where a state has an "any willing provider" law HMOs must take any physician who is willing to meet the HMOs criteria for pay.  This will open up all HMOs in those states to any physician and take away the flawed logic of the HMO that we will pay less but give you more.  That no longer can be assured.  Of course, the ruling has little effect as most HMOs have found their prior restrictive model  was flawed and have already opened up the groups for greater access.  Also the physicians have found out that they can leave the HMO network and do fine so none are clamoring to get in.  

Physicians v Cigna

This case on the illegal bundling of claims will go to mediation.  If medication is not successful it will remain in the federal court of Judge Moreno.        Top

Contract Breach

Lewis v Methodist Hosp.
7th Circ

The physician and hospital contracted for the hospital to do the billing for the physician.  There was a disagreement regarding the hospital's ability to do the billing and they were sued for $15 million by the physician.  The hospital claimed the statute of limitation had passed under the tort of negligent provision of services and the trial court bought it.  The Court of Appeal overturned and stated that the suit was for breach of contract and the longer statute held.  To trial.        Top

Pharmacies v Massachusetts
Suit Filed

Two of the big three pharmacies of the state along with a bunch of smaller ones have sued the state of Massachusetts to block the collection of a prescription tax.  The tax is a $1.30 per prescription fee.  The pharmacies state this is against federal law since on approval was obtained from the feds prior to instituting the tax which reduces the dispensing fees on Medicaid prescriptions.  Originally the pharmacies passed the tax on to their customers but the state threatened them and this practice ceased.  I was surprised they waited this long to sue for the injunction. 

The Massachusetts Attorney General, a major player in the People's Republic doesn't like to defend law suits.  He then uses his power to punish those who may disagree with the illegal state laws.  The Attorney General fined the chain stores for having the audacity to pass the illegal dispensing fees to their customers.  The chains paid the fees to get the customers from the middle of the fight.  The pharmacies are now suing the State over the fees.  Of course, there can be no connection between the initiation of the law suit and the State House proposed an additional $24 million cut in Medicaid prescription dispensing fees.  The Massachusetts pols are truly not nice people but they know who have the political clout and how to stay in office.   I still don't understand why the major pharmacies don't stop filling the Medicaid prescriptions.         Top

Medical Marijuana

Santa Cruz v Ashcroft
Filed in Federal Court

The City of Santa Cruz, California has filed a lawsuit against the DEA and Attorney General Ashcroft over the raids on medical marijuana collectives.  These are legal under California law.  The suit uses the pain and suffering of the medical marijuana users who have had their medication removed as one legal argument.  The other argument is the constitutional right of the state to regulate the health and safety of it's citizens as well as individual privacy.  These have been overturned in Federal Courts in the past but his is the first city to challenge the raids.  They are also using a novel theory.  They contend the US Supreme Court in Gluckenberg has agreed that people have the right to die and to be free of pain during their time of dying.      Top


Clackamas v Wells
US Supreme Ct.

The 9th Circuit has been overturned yet again.  The case revolves around who is considered an employee or employer under the ADA.  The ADA only holds if the company involved has over 15 employees.  The Clackamas Gastroenterology Group has less than 15 employees if the physicians are not counted.  Clackamas is a professional corporation with employee agreements with it's physicians.  The high court stated that the common law test of control should be the one used to determine if the physicians are employees or not.  The court thought the physicians would not be employees under the test but allowed the lower courts to make the decision.  

Levinger v Mercy Med. Ctr.
Idaho Supreme Ct.

An independent contractor anesthesiologist had his privileges revoked for erratic behavior.  He was diagnosed as bipolar and sued under the ADA to get his position back.  Some attorney is not too sharp since the ADA only applies to employees and not independent contractors.  The physician lost.         Top


Ostad v Oregon University
9th Circ.

The 9th Circuit gave its blessing to a plastic surgical resident who was fired from the residency program after questioning the chief's billing practices.  He won money from the university and punitive damages from the chief of service.  The moral is not to do retaliatory firings but to clean up your own act.        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.