February 15, 2001 Legal News
The University of California hospitals have agreed to pay a fine of $22.5 million to settle a complaint of overcharging the government. The complaint alleges facility billed for services rendered by house staff that are not eligible to bill Medicare. The complaint also alleges upcoding without relevant medical information. Prior to the settlement UC had already spent $15 million on litigation expenses and additional audits. UC Davis share is $2.4 million, UCLA $8.5 million, UCI $4.1 million UCSD $3.7 million and UCSF $3.6 million. This is but one of 30 investigations of teaching hospitals and only about 10 have been completed.
In an interesting case a physician hospital administrator had been found guilty of fraud for breach of fiduciary duty and unjust enrichment. Dr. Randolph Gillum was the administrator of the now bankrupt Tri-City Health Center in Dallas, Texas. Dr. Gillum purchased a CT scanner for $145,000 and sold it to the hospital for $ 800,000. He also controlled two construction companies that did hospital work that cost $5 million but billed 12 million while concealing these profits from the hospital. These increased costs were passed on to Medicare as actual expenses. Dr. Gillum was fined $1 million to Medicare and an additional civil penalty of $10.8 million to the hospital. The trial continues to see if triple damages apply and whether any other civil monetary damages apply. Since this was a civil trial more damages are allowed than in a criminal case and no jail time is given. If Dr. Gillum claims bankruptcy, fraud awards may not be discharged.
In a case against a Texas nursing home for patient neglect the home and its parent Horizon/CMS Healthcare were found guilty and ordered to pay $312 million to the patient’s family. The patient passed away with malnourishment and 16 bedsores some down to the bone. Texas has no limit on punitive damages in criminal abuse and neglect of the elderly. There will be an appeal of the verdict since the nursing home was not allowed to put on any defense. The judge was punishing them for not timely turning over records to the plaintiff’s side.
An Ohio prosecutor is going to charge someone at a Bellbrook nursing home with manslaughter and reckless homicide. The nursing home had delivered to it several tanks of nitrogen instead of oxygen. Apparently no one checked the labeled tanks and four residents died after receiving the nitrogen instead of oxygen.
A story in the February 13, 2001 states that TAP is seeking a settlement with the government of fraud charges over Lupron. TAP had given the drug to physicians and the physicians had charged the insurance companies for the drug. This was a pattern of TAP to curtail the use of the rival drug, Zoledex. The government believes they will get a fine of close to the record $840 million paid by HCA last year. This is especially true if TAP wants to continue to market the drug to Medicare patients. It is a felony for physicians to bill for drugs they received free. So far about 100 urologists have been contacted and are under investigation. Several have already been indicted. The law provides for $250,000 fine and/or 10 years for EACH violation.
Century City Medical Plaza v Sperling, et al.
This case was a real estate matter where Century City sued the physicians for back payments. The arbitrator award Century City money damages and published its findings to both parties. The arbitrator later, before the award was confirmed by the superior court, amended the award to allow interest and attorney fees. The trial court stated this could not be done and that decision was overturned by the Court of Appeals. The case went back to the trial court to allow the entering of the additional damages against the physicians. This may happen in any case going to arbitration.
Hale, MD v Southern California IPA Medical Group
The IPA sold all its assets to a third party. The suit by the shareholder Hale alleged the directors of the IPA had conflicts of interest and were not disinterested parties, ignored higher offers refused to follow up on other potential purchasers and misrepresented the transaction in a special shareholder meeting to approve the sale. The trial court stated that Hale had to put up a $50,000 bond for each defendant sued or a total of $250,000. Hale refused stating the law only required an aggregate total of $50,000. The trial court agreed with the IPA but the Court of Appeal overturned and stated only a $50,000 bond in the aggregate applied. The bond is required for defendant expenses if the court finds there is no reasonable probability the corporation will benefit from the action. The case was remanded back to the trial court for trial if the bond is posted. This case may be important if anyone wants to buy your IPA and your board does not appear to do due diligence.
Hill Medical Corporation v Wycoff, MD
Hill is a corporation of radiologists. Wycoff is a shareholder with 100 shares of stock purchased for $10,200 promissory note in 1978. He was one of 14 shareholders and had no management authority. In 1996, the group had a stock repurchase plan in place where the selling shareholder would be paid the fair market value of the stock and had a 3 year 71/2 mile covenant not to compete clause. Fair market value is assets minus liabilities. There was no good will in either the purchase or the selling price nor was it carried on the corporation books. Wycoff quit in 1998 and sold his stock to the corporation for $217,000. He signed up to do radiology at another place less than 71/2 miles away. Hill sued Wycoff to enforce the covenant not to compete. The trial court ruled for Wycoff by stating the covenant was illegal and an appeal ensued. The Appeals court affirmed the trial court. The common law in California has a settled policy for open competition. The Business and Professional code 16600 states the general rule that all covenants not to compete are void. Section 16601 sets out the exception to 16600. This states that if goodwill is sold the covenant will hold. The sale of goodwill must be either express or implied by the totality of the deal. If one who owns all the shares sells or controls the company, the goodwill is sold. Here Wycoff is only one of fourteen and had no management authority. The use of fair market value did not include goodwill. Therefore, the exception did not hold and the covenant was void. There was also a question in this case if the restrictions of the covenant were reasonable. Since the court held the covenant was unenforceable, they did not rule on the reasonableness of the covenant. This case may make many buyout provisions tied to a covenant not to compete invalid. Top
MD May Sue Hospital for Defamation
Wheeler v Methodist Hospital
Dr. Wheeler, an OB/Gyn was placed on a practice improvement plan that required consultation with another physician prior to treatment of patients. One of his patients had a successful outpatient procedure and requested to go home. Dr. wheeler unsuccessfully attempted to consult with another physician and let the patient go home. The Chief of Staff called and summarily suspended Wheeler. Wheeler stated that he resigned. The medical staff and hospital stated that since he resigned while under investigation he would be reported to the NPDB. Wheeler sued Methodist for defamation due to the report. The suit was filed after the one-year statute of limitations for defamation. Wheeler asked for discovery of the bylaws and the practice Improvement Report along with other items to prove malice. The trial court tossed the case. The Appeals court reinstated the case since the NPDB report was republished twice in the year following the submission. This lengthened the statute of limitations to one-year after the last republication. The Appeals court also instructed the trial court to allow discovery of the above items so Wheeler may attempt to prove malice, a requirement to come out of the HCQIA immunity given to the hospital. The case now goes back to the trial court for the discovery and then trial if malice can be proved. Top
Providence Alaska Medical Center of Anchorage lost an antitrust suit for an exclusive contract with a group of anesthesiologists. One of the group testified that his colleagues wanted to eliminate competition from other physicians. Top
Lewis v Capalbo & Beth Israel Medical Center
Lewis, a pregnant female, was a patient of Dr. Capalbo. Ms. Lewis was admitted to Beth Israel Hospital in early labor. She was examined by Dr. Capalbo, who then left the hospital. Ms. Lewis was placed on a fetal monitor. Approximately 12 hours later Ms. Lewis delivered a baby girl. The delivery was precipitous with Ms. Lewis holding the baby’s head and an unidentified physician completing the delivery. This was in 1986. The newborn’s Apgar was 8 at one minute and 9 at five minutes. In respiratory effort she had a score of 1(an irregularity) at one minute and 2 ( normal) at five minutes. The same was true for skin color. Shortly after birth she was admitted to the neonatal ICU with respiratory problems and remained there for 12 days. The consent form signed by Ms. Lewis stated that the delivery could be by associates of Beth Israel of Dr. Capalbo’s choice. The child was alleged to have newborn respiratory distress, seizure disorder and language based learning disability. Dr. Capalbo believed she had no duty to the patient to be present at the delivery because of the consent form. Dr. Capalbo did sign the discharge forms as the attending physician. The appellate court ruled that Dr. Capalbo had a duty of care to the patient and that the case should go back to trial court to determine if she breached the duty to the patient.
In a Phoenix trial for manslaughter regarding the death of a patient undergoing an abortion the patient’s attorney provided evidence that the patient bled to death from a ruptured uterus and the physician knew and should have responded in a more timely manner to the emergency. The physician’s attorney then cross-examined the state’s expert but did not change any of the expert’s testimony. The defense now starts its case and got a break when the judge ruled the physician’s past record could not be placed into evidence. The Arizona Republic, however, published the news that the physician has a "stained medical record with another patient death, other botched abortions and the loss of his medical license in the past in Arizona and Ohio." This, of course, will not influence the non-sequestered jury. Also involved in the trial is the clinic supervisor who did not schedule a recovery room nurse for that day and left the patients with medical assistants.
In England the second mix-up in a week resulted in a patient death. The first case was an 18-year-old patient with leukemia who died after receiving Vincristine intra-thecally instead of intravenously. The second death was in a different hospital where a patient was given an intravenous injection of an epidural pain medicine. England has about 850,000 medical errors a year. Last year the British Health Service paid out about $580 million in compensation. Top
Consent to Treatment
HCA v Miller
The issue of parental consent being overridden by the hospital is the basis for this case. The parents refused permission for heroic treatment of their not yet born infant with severe impairments. The parental consent is only needed for non-urgent care or urgent care when a physician has certified that the child’s condition is terminal. In this case the care was urgent but no determination had yet been made as to whether or not the child was terminal.
Stupidity of a hospital and physician. Mr. Wood had prostate cancer under treatment at Lenox Hill Hospital, a private New York City hospital. Mr. Wood felt faint and was taken by ambulance to Metropolitan Hospital, after asking to go to Lenox Hospital. Once at Metropolitan he refused treatment and again asked to be transferred. He instead was hospitalized for observation. The next morning Mr. wood again asked to be transferred. He was told he was too sick and could not leave. He was placed in leather restraints and sedated. When he managed to get out of the leather restraints, he was tied down. Mr. woods asked repeatedly for the Metropolitan physicians to contact his Lenox physician. The Lenox physician was never contacted. He was held at Metropolitan for nine days and billed $21,000. Suprise! Mr. Woods has filed a $10 million lawsuit against Metropolitan for false imprisonment and all the usual accompanying charges. This case will never go to trial, as the hospital will settle for several million to avoid paying a lot more and the continuation of the horrible publicity. The tort of false imprisonment is an intentional tort that carries a high potential for punitive damages. Many intentional torts are not covered by malpractice insurance. TopGenetic Testing and the Power of the Press and legal Proceedings
In the February 10, 2001 New York Times a story ran regarding the Burlington Northern Santa Fe Railway company doing genetic testing on all employees who claim carpal tunnel syndrome. The EEOC filed suit again Burlington and the test was done with consent to draw blood, not for genetic testing. To date about 125 people have claimed carpal tunnel and the company has done 18 genetic tests. The suit states that workers were threatened with discipline if they refused the tests. The company probably wanted to show a genetic predisposition to carpal tunnel and therefore deny Worker Compensation claims. The EEOC sued as an ADA case.
On February 13, 2001 another article stated Burlington was stopping all testing. 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.