October 1, 2004 Recent Legal News



Due Process Violation

Peer Review


Right to Die

Fraud and Abuse




Physicians v Aetna
11th Circ

The 11th Circ would not overturn the deal made between the physicians and Aetna for their predatory methodology.  The Maryland Medical Society objected and appealed the case.  The Circuit stated the settlement of $170 million was fair.

New Mexico v Henry, MD
Guilty Plea

Dr. Jesse Henry, Jr.  has pled guilty of seven counts of involuntary manslaughter.  The seven deaths were as a result of overprescribing medications.  His wife and receptionist was also charged.  The prosecution said that in one nine day period that over 200 people visited Dr. Henry's clinic and spent an average of 8.7 minutes in the doctor's office.  That's more than some HMOs.  Dr. Henry will be sentenced later and will give up his medical license as well as probably receive probation.        Top 


Atty v MD
Supreme Ct. Nevada

Nevada has on the ballot a measure that would cut back attorney fees in med mal cases as is the case in California.  The measure would also limit the non-economic damages to $350,000 without the exceptions previously passed.  The lawyers took the measure to the supreme court and the court is now asking the Secretary of State to back up the truthfulness of the statement that physicians are leaving the state in an alarming rate.  

The Nevada Supreme Court did rule that the ballot needed to revised.  There is no difference in the ballot measure but only in the wording of the explanation.  The Secretary of State is considering issuing a complaint against the Nevada Supreme Court for its bias towards the trial attorneys.  The Court stated the explanation had to be changed or the measure removed from the ballot.  The wording was redone to conform to the Supreme Court but the trial lawyers are again filing suit to keep the measure off the ballot.  They contend that the re-write is not good enough.  It never will be for them as it limits their income.  It also seems that the Supreme Court justices receive money for their re-election and most comes from the gaming industry, trial lawyers and lobbyists, with the latter two making up 40% of the total.  This doesn't pass the smell test.

After the gaffe earlier in the week, the Nevada Supreme Court came to their collective senses and allowed the revised now pro attorney explanation on the November ballot.  They refused to hear another trial lawyer's argument to pull the measure off the ballot.   

Foundation for Rights v GE Medical ALJ

The Foundation for Taxpayer and Consumer Rights filed an action against GE Medical Protective Insurance Company over their proposed 29.2% rate increase.  The ALJ reduced the rate to 11.8% and the Insurance Commissioner approved the new rate.  California has a law that the public may challenge any insurance rate increase over 15%.  The difference in the two rates reflected GE's national experience versus its California costs which are much lower.     

Matsuyama v Birnbaum
Mass. Ct.

 A jury awarded over $1 million to the family of the deceased plaintiff after the physician attorney for the plaintiff argued that the physician failed to  order appropriate tests due to payments from an HMO if costs were kept down.  The HMO stated that they were not on trial, which is true.  The concept of the HMO was on trial and lost.  It is ultimately the physician who must do the right thing, no matter the cost to the HMO. The problem is the physician will not lose money either.  He will lose his ego and the insurance company will lose the money which will ultimately be paid by all the physicians.  

Watkins v Thompson
Ohio Supreme Ct.

Watkins had a stroke and sued his physician Thompson.  Not only did he sue but so did everyone else in the family.  The question is whether the malpractice cap of the physician's insurance policy applies to each individually or to them all collectively.  This answer is the policy only covers the patient and the rest of the family get zip.  The trial attorney predicts that this decision will make the plaintiff attorney file separate claim for each cause of action.  Of course, there is nothing to keep the judge from then consolidating them again.  

Sheldon v Damie
NJ Super. ct.

The husband of a patient who died sued for malpractice against the physician and the hospital.  He claimed the hospital was liable under the theory of apparent agency.  The Court bought it stating that in med mal cases where the plaintiff may die or be incapacitated the question of whether or not the plaintiff believed the physician was the agent of the hospital was a matter for the jury to decide.  In most cases it is a matter of law and the judge decides.         Top

Due Process Violation

James v Nocona Hospital
ND Texas

In an interesting bit of lawyering the plaintiffs (the families of 22 patients allegedly murdered by a nurse at the hospital) filed a lack of due process to life, liberty and property.  The defendants all moved for dismissal as the action should sound in malpractice and they are exempt.  The court said that the nurse was working as a nurse in the hospital and therefore the hospital is on the hook.  The hospital allowed customs to develop into policies which allowed the nurse to do her thing.  There was no malpractice and the case can go to trial.        Top

Peer Review

Hayes v Cedars Sinai
CA Ct App

Hayes, an OB had been on administrative leave and then submitted an application for privileges.  He was refused and also refused a fair hearing.  He sued to get the fair hearing and of course won.  The hospital tried to illegally deny the fair hearing since it was administrative.  The court saw through the ruse and said it was based on medical competency and therefore the physician is allowed a hearing.  The court also allowed the doctor to recoup his appeal costs from the hospital.

County of LA v Civil Service 
CA Ct. App.

In this case it was determined that in an administrative hearing there hearing officer can only be removed if there is actual bias and not just for the appearance of bias.  Since the hospital could not show actual bias by the hearing officer in favor of the physician, there would be no new hearing.  (See next Case)

Yaqub v Salinas Valley 
CA Ct. App.

Here the court went the opposite way and said that all that was needed to toss a hearing officer is the appearance of bias, not actual bias.  This case is somewhat over the top as the hearing officer is paid by the hospital (they all are), he served on the hospital Board fundraising committee, he has served on three hearings in the past and may serve again.  This led to the conclusion that the officer may have a financial interest in the case and favor the hospital.  In an interesting and appropriate comment the court didn't  comment on the composition of the Board Appellate Hearings but did comment on the Board attorney.  They stated that the same attorney that advised the medical staff should not advise the Board's hearing.  Dr. Yaqub got a new hearing which he will lose but the attorney will gain.  This case is complicated by the issue of Dr. Yaqub's resignation from the staff and subsequent "fair hearing."  It is possible that if the resignation had been accepted there should have been no hearing and he is not entitled to one.

Powell v Brownwood Hosp.
Texas Ct. App.

In a variation of the above case and it's occurrence in Texas the decision was different.  Dr. Powell had disruptive physician tagged on him and also a problem with a hernia surgery.  He was sentenced to go to a course and other concurrent meetings regarding his behavior.  The medical overlook would be routine.  Dr. Powell asked for a hearing for the punitive measures.  This was denied and then the wonderful hospital all of a sudden found some more stuff on him and recommended his staff removal.  He then got his hearing and was found innocent of all charges except one.  That was enough to kick him off the staff and he then sued for not getting a fair hearing after the original action.  He lost in the courts since it made no difference at that point in time.  The court also ruled importantly that the bylaws are not a contract between the physician and the hospital.

In Re Belmore 
Texas Ct. App.

In a malpractice case against an anesthesiologist and a hospital, the lower court ruled that the hospital had to produce incident reports, witness correspondence and personnel records.  The Ct. of Appeal stated the lower court judge should have inspected the records prior to allowing them to be given to the plaintiff.  The records may or may not be protected by the state peer review law.  The employment records should not be produced since no specific people's records were named and those people had not been given the right to object.  

Durham v Vinson
SC Supreme Ct.

In a malpractice case the plaintiff attorney could not ask the physician why he had refused to disclose his credential file to the plaintiff.  This was harmless error in this case since there was substantial evidence during the trial that the physician was deceitful.

Sutter Davis Hosp. v Sup. Ct. Yolo County
CA Ct. App.

In a malpractice case the plaintiff wanted information concerning an accident that led to the patient death.  The incident report was allowed by the lower court but not by the court of appeals.  The higher court stated that the report was part of an investigation related to patient accidents in the hospital and was used in quality control and therefore privileged.  I disagree with the case.  Incident reports are not done for peer review purposes but as part of the normal course of business and as such should not be protected.      Top


Blue Cross v Advanced Imaging
Filed Missoula Montana

Blue Cross believes there is an antitrust violation in Missoula, Montana.  There is only one legitimate radiology group in town.  They do all the outpatient radiology and also have exclusive contracts with the two hospitals in town.  The plaintiff want to split the group into two groups.  Sounds like Microsoft, but the judge didn't allow the split.        Top  

Right to Die

Schindler v Schiavo
Fla. Supreme Ct.

The Florida Supreme Court has ruled unanimously that the Florida law promulgated by Governor Jeb Bush to force the feeding tube into Nancy Schiavo is unconstitutional.  The court stated that the husband is the person who has the call, not the patient's parents or the state.  The decision was reached in an extremely quick time frame, only weeks after oral argument.  This means it wasn't a close call.        Top 

Fraud and Abuse

US v New York University

New York University billed for OB services performed by midwives and residents.  This is not allowed under the Medicaid rules.  The hospital paid $2.1 million to settle the case.  The hospital found the error when it did its own compliance checks and reported it to the authorities.          Top


Phoebe v Rehberg

In the September 1, 2004 edition I discussed the above case and the retaliation of the hospital system against the whistleblowers.  In the September 15, 2004 edition I spoke of the case that was decided by the Georgia Supreme Court against Albany Surgical, an ACS going against Phoebe Health.  I have recently received the following email from Mr. Rehberg.  I am not including the Time magazine article but you may find it on their web site.  This is the person along with his physician colleague who first contact Mr. Scruggs about the non-profit's charges to the uninsured.

"I am the "Rehberg" half of the above case (from Sept. 1, 2004), which I saw mentioned on your site.  I agree with your analysis, and I believe it will indeed be ruled a SLAPP suit under Georgia law.  The information which we distributed was extracted from their IRS form 990 and other public filings.  The media has now focused on Phoebe, and with no sympathy.  I am attaching a .pdf copy of an article which ran this week in Time magazine.  I am a CPA and forensic accountant, and fully believe my legal problems are in retaliation for working with Dick Scruggs on the concept of the nonprofit hospital litigation.
Thanks for following my case.  It is important that we do not let the hospitals deceive and force their will on the physicians and public which they serve.  Please forward the Time article to any colleagues that might be interested.
Charles A. Rehberg"      

The Cleveland Clinic had  its property tax exemption stripped from the Beachwood Family Health.  This will cost about $550,000 a year in property tax.  This is akin to the removal of the property tax exemption in Champaign, Illinois last year.  This could shake up the non-profits.  The Clinic may appeal the decision.      Top


US v Planned Parenthood
Plan to Appeal

The Justice Department is planning to appeal the decisions in the three Circuits that stated the partial Birth Law was unconstitutional.  The cases will be appealed to the US Supreme Court.  It will be interesting to see if the Court accepts the cases.        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.