July 1, 2013 Recent Legal News





Peer Review and Employment



FTC v Actavis
US Supreme Court

In this case Solvay pharmaceudicals paid Actavis so it would not produce a generic AndroGel for some years.  This is called reverse payment or a pay for delay agreement since Actavis was challenging the patent of Solvay.  The court overturned lower court decisions that stated this was legal and allowed the FTC to sue for potential antitrust.  The Court also changed the way these agreements are looked at under the law.  They will be under the "rule of reason" and not a "quick look".        Top


Massachusetts v Life Ins of North America

The company agreed to pay the state $5.25 million for allegedly using deceptive practices to sell policies.  This is the second agreement between the parties.  This is due to the company not complying with the original agreement.  The company states they did not sell health insurance and believes they lived up to the original agreement.

US v San Diego Hospice

San Diego Hospice is in bankruptcy and the feds claim first right for monies as it states it is owed $112 million for false claims.  This is a whistleblower suit.  The other creditors are challenging the feds on their amount owed since the feds gave no data for their claim. 

US v Sacred Heart Hospital

 In one of the worst scams I have ever read about Chicago's Sacred Heart Hospital has been accused of doing unnecessary tracheotomies on patients to receive more money.  In the scam the pulmonologists kept the patients too sedated to breathe on their own and then had the tracheotomies performed.  This would garner the for profit hospital about $160,000 per case.  The hospital owner, CFO and five physicians have been charged with Medicare fraud.  The CEO owner has resigned as CEO.

US v Chan

Dr. Alfred Chan , an Oncologist in Lakewood, Washington, as agreed to pay $3.1 million to settle charges that he and his wife overbilled Medicare about $1 million.  This triple damage award was to punish the Chans for overbilling for the oncology drugs used and for remaining outside the US in Taiwan to avoid criminal prosecution.  This was a whistleblower case from a former employee who will receive $620,000.

US v Awada

 The government has filed charges against Dr. Hussein Awada and Dr. Luis Colazo for illegal distribution of drugs.  The two are from Warren, Michigan.  They also are charged with Medicare fraud for billing illegally.  They are said to have used recruiters to get patients for the clinic for unnecessary testing and procedures.  $600,000 in funds and three autos were seized during the raid.

US v Eppelbaum

A federal jury convicted Dr. Lawrence Eppelbaum of Roswell, Georgia, for fraud, money laundering and tax fraud.  He controlled a questionable charitable entity that provided free travel for patients from around the country to come to his clinic to be treated for back pain.  The patients were flown to Atlanta for treatment then went to Florida for four days at a hot springs and then returned to Atlanta for more treatment.

US v Barson

Dr. Dennis Barson and his clinic administrator Darin Juarez of Houston have been indicted on Medicare fraud for filing false claims for items never performed.  Juarez is already serving time for impersonating a physician and the current crime carries a potential 10 years in prison and a $250,000 fine.

US v Saoud

Dr. Allen Saoud of Bridgeport, West Virginia, was convicted of 28 counts of health fraud and multiple other crimes.  He was dumb enough to continue to see Medicare patients after being excluded for 10 years in 2005.  He faces huge jail time and large fines and reimbursements.        Top


Patients v Endo Health

The company has set aside and paid $55 million to settle an unknown number of suits regarding the use of mesh for female incontinence.  In view of the payment Endo reduced its earnings forecast and reduced its employees by 15%.

Los Angeles v WellPoint

The LA city attorney sued WellPoint for several billion dollars for illegally rescinding health insurance policies.  The company has agreed to pay a pittance of $6 million for their conduct.  Of course the conduct is now illegal under Obamacare and the company had all their rescissions reviewed by a third party with most reversed.  Blue Shield had previously paid $2 million for the same cause.

O'Connor v Jordan Hospital
D Mass.

O'Connor, a RM at the hospital was fired after she turned in the hospital to the CMS for an illegal transfer.  She had worked at the hospital for 38 years as a nurse and in the Quality Control office.  After she turned in the hospital she got many criticisms of her work by the hospital and was then terminated.  She sued for multiple claims and all were dismissed except for the wrongful termination.  She won in summary judgment.  The case will now go to settlement or trial.

Bartlett v Mutual Pharmaceutical Company
United States Supreme Court

The high court in a 5-4 decision stated that generic drug makers were required by the federal government (FDA).  Therefore, charges that the drug was unsafe could not stand.  The patient had a horrific side effect from the generic of Clinoril.  This follows a 2011 verdict that states generic drug makers who use the same label as the brand name can not be sued for failing to warn.          Top


Karkalas v Pennsylvania Medical Board
Pa. Commonwealth Ct.

The physician filled prescriptions on line without a good faith exam and kept no records of his actions.  He was caught and the Board fined him $2500 and had him complete 10 hours of continuing education.  Instead of being happy with the slap on the wrist he appealed the ruling.  The court ruled that the physician broke the law in not keeping records and the punishment stood.  I wonder how much that cost the physician in time and money.

Butt v Iowa Board of Medicine
Iowa Ct App

The copurt affirmed and reversed parts of the Board's ruling that the cardiologist engaged in unprofessional conduct for sexual harassment.  The Board thought they were above the law and did not have to hear all the evidence and could make up words to describe the offense.  The Board stated that the physician made unwanted phone calls but this is too vague a standard as it is only in the ears of hearer not a reasonable person.  The cardiologist said he made multiple calls to the nurse to apologize for past behavior.  The Board was told to determine a more appropriate disciplinary action.        Top

Peer Review and Employment

Sadler Clinic v Hart
Texas App Ct

Eighteen physicians sued the clinic for an illegal restrictive covenant that forbid the competition with the clinic while working there and for 22 months after.  There was a buy out provision so the physicians could get out of the covenant if they wished.  The lower court stated the buy out was unreasonable and therefore unenforceable.  The court of appeal stated that the lower court could not look at the monetary amount and say it was unreasonable.  The proper course was arbitration to determine the a reasonable buyout price.  The court also slapped the physicians by stating the suit stopped the time of the covenant and that 22 months will start again after the suit concludes.

Rouben v Parkview Hospital
ND Ind.

The physician was working as a locum tenens at the hospital and was alleged to have made inappropriate comments to several staff members.  The physician denied the allegations and left for another position at Gulfport hospital prior to any peer review action.  Gulfport found out about the problem at Parkview and rescinded the offer to Rouben.  Rouben sued Parkview for defamation and interference with business.  He lost the defamation since he signed a contract that had a release of liability and the peer review statute in the state allowed the peer review committee's work was confidential.  He lost the interference with business claim since the hospital did say both orally and in writing that he was not terminated.  The Gulfport hospital stated that they did not hire him since he had no Mississippi license, no med mal insurance and no professional reference.  Sounds like the lawyer should never have taken the case but money is money.

Alloush v Physician Cardiovascular Venture
Ohio Ct. App

In a really dumb case the cardiologist had to sue to get what is rightfully his.  The cardiologist was part of the joint venture and left practice.  He was paid off with the low amount since he was told he did not retire.  The rationale for the statement was he had resigned from the hospital but kept his license and treated family members.  The vast majority of physicians when they retire, quit practicing, retain their license and may occasionally treat their own family.  I hope the Venture loses a lot of money on this one.  The court ruled it is for a jury to decide.

University of Texas SW Med Ctr v Nassar
United States Supreme Court

In a ruling that will make it harder to prove discrimination in employment claims the high court ruled that the standard of causation is the "but for" standard not that discrimination was one cause of the employee termination.

Miller v Huron Med Ctr

Miller was in a battle with the hospital and wanted the hospital to supply him with a copy of an external review retained by the hospital on one case.  The hospital refused the request and the physician went to court.  The court ruled that if the hospital used the report for any adverse event to the physician including reporting him to the NPDB they must give him the report.  This seems like a fair decision but a hospital legal firm does not think so.  They believe that if a hospital reports a physician to the NPDB when the physician resigns during an investigation there would be no need to give up the report.  It seems the physician would have an adverse event with the report and would not have given up privileges if not for the external report.  This may even satisfy the "but for" mentioned in the above case.        Top


Hodes v Kansas

Dr. Hodes and his daughter Dr. Nauser have sued the state over the new law that blocks tax breaks for abortion providers and prohibits them from furnishing materials or instructors for public schools' human sexuality classes.  They are basing the suit on equal protection.  The two physicians do abortions and have filed suits before against rules that apply only to abortion providers.  That suit has stopped the state from enforcing the law.  The two state that the provisions of the new law will prevent women from getting abortions even in an emergency.  The state does fight these suits having spent at least $758,000 to outside attorneys to defend the state. 

Agency for International Development v Alliance for Open Society International
United States Supreme Court

Multiple groups that were receiving grants from the government to help combat AIDS in foreign lands had their funding cut since they did not follow the law not to use the money to promote prostitution or sex trafficking.  The high court said in a 6-2 decision said this was against the first amendment.  This may alienate certain governments and is counter productive as the groups use prostitutes to help with the program.  

Hobby Lobby v US

Hobby Lobby is a for profit company that is anti abortion has won a ruling that states religious individuals may enter the for  profit business realm while adhering to religious values.  This gets them and all the other Catholic organizations out of Obamacare.  The ruling also allows them not to have to comply with Obamacare or pay fines while any appeal takes place.  This was an injunction case where Oklahoma refused Hobby Lobby an injunction.  That ruling is now overturned.  The day after the ruling was announce Sebilius announced that religious organizations either must pay for birth control or buy insurance to pay for it for their employees.  The 10th circuit overrules Sebilius for companies in that circuit.  This will go to the US Supreme Court which is what the conservatives want.        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.