May 1, 2002 


Peer Review

Fraud & Abuse


Expert Witness


Assisted Suicide

Managed Care

Hospital Liens


Peer Review

Laurino v Syringa Hosp.
9th Circ

Laurino M.D. sued the hospital over their termination of his privileges.  There was prolonged discovery and then his attorney resigned.  After the statute had run on Laurino's time to respond he hired a new attorney and appealed the defendants successful motion to dismiss.  he stated in an affidavit that he was going through a divorce, had difficulty hiring an attorney and was moving as excuses for not responding in a timely fashion.  The 9th stated they believed him and ordered the lower court to not to dismiss the action.

Fraud & Abuse

Last year was a real moneymaker for the Feds with Fraud and Abuse.  They won in $1.7 Billion in various actions and took in $1.36 Billion. This was the larges take ever.  The government also filed 445 criminal and 188 civil indictments, also new records.

The FTC is planning on cracking down on hospitals and physician groups that have gone together in order to get higher prices from insurance companies.  In the next few weeks there will be reported larger case settlements than the one recently imposed on the OB/GYN Napa County, California group. The FTC will be paying particular attention to local areas where a hospital and its staff clearly dominates.

US v PacifiCare

PacifiCare has agreed to pay $87.3 million for overcharging Federal Employees Health Benefits Program.  The company stated the money will not be a major burden due to significant reserves.  This was a qui tam case and the whistleblower will get $3.5 million of the settlement.

Arthur Anderson

There is a law against any medical organization or provider using an organization that has been temporarily excluded from the Medicare or Medicaid program.  Arthur Anderson has been excluded.  This means that no entity operating under a Corporate Integrity Agreement may start, renew or extend contracts with Arthur Anderson.  Existing contracts may remain, states the OIG. 

US v Jackson Hospital

Jackson Hospital of Ripley, West Virginia has settle a whistleblower suit for $750,000.  The hospital was accused of paying physicians kickbacks for referrals and erroneous cost reports.  The whistleblower is a formerly employed pediatrician at the hospital.  The hospital is now being sold to a Tennessee firm due to lack of money.  The new company is planning to aggressively recruit physicians and invest in new equipment for the hospital.    

US v Bainbridge Management Co.
Fed. Ct.  

The management company behind the now defunct Edgewater and Grant Hospitals in Chicago is beginning its trial for fraud.  Edgewater paid homeless people to come to the hospital for unneeded tests and even surgery. The hospital also paid physicians for doing their cases at the hospital.  The fines shuttered both hospitals even though only one was doing the illegal acts.  Grant Hospital has just been sold.    Top


Benton, et al v Wichita Surgical
Kans. Sup. Ct.

Four surgeons have left the Wichita Surgical Specialist Group and formed their own group.  They have been sued for a violation of their non-compete clause.  The Group states that other surgeons can be hired but the people that left took confidential business information, goodwill, reputation and referral sources.  They also took half of the cardiac surgery in Wichita.  There is a temporary injunction pending before a judge to stop the four from practicing in the community until after the fall trial on the merits of the case.  The restrictive covenant states that two of the doctors will not practice in Sedgwick County for two years and the other two can not practice within 75 miles of Wichita for two years.  I believe that this is too great a distance and the covenant should be dismissed as against public policy.        

Decalonne v GI Consultants
ND Ind.

A medical group was sued by their former administrator for wrongful discharge for being a whistleblower against the group. A motion for summary judgment by the group was tossed since the administrator told the group board what they were doing was possible fraud, had told the group's outside counsel of the potential fraud.  These actions were enough to make a case for the possibility that he may be protected under the False Claims Act.  the court also stated that all that is required for the protection is internal reporting not necessarily to the government.  

Jersey v John Muir Hospital
CA Ct. App.

Jersey was an at-will nurse at the hospital.  While taking care of a trauma patient she was assaulted by the patient and became disabled.  After the patient left the hospital she sued the patient for assault and emotional distress.  When the hospital found out, they wrote Jersey that the suit was inappropriate and asked her to drop the suit.  She refused and was fired.  She then sued the hospital for wrongful termination.  The trial court and the court of appeals both agreed with the hospital that what she was doing was against an unwritten policy.  The hospital meanwhile has sued the patient for its money paid to Jersey in her Worker's Compensation leave claim. Jersey won a significant amount in her suit against the patient for the sexual assault claim. The patient did not use the head injury as a defense in that suit.  The case will be appealed to the California Supreme Court.      

Prairie Eye v Butler
Ill. App. Ct.  

In an interesting state ruling on restrictive covenants, the Illinois Court of Appeal ruled that the restriction was legal.  Butler is a glaucoma specialist who entered an agreement with Prairie Eye in Springfield, Illinois.  In the agreement was a covenant not to compete clause for two years and within a ten mile radius of any office of Prairie.  It included an attorney fee provision and also extended the period of non compete from the time the competition ended for an additional two years.  Butler opened an office within two miles of Prairie.  Prior to joining the practice an injunction was held not allowing Butler to see any Prairie patients except those he had from the time prior to their relationship.  This was upheld by the Court of Appeals even though the Illinois Supreme Court had ruled there could be no covenant between a law firm and its departing attorneys.  There was a counterclaim by Butler against Prairie for recession due to breach of contract.  Butler continued to breach the covenant during the time of the appeal.  Butler lost and had to pay Prairie $1,654,700 for loss of business, $164,432 in attorney fees and had the covenant start over.  In some other states, such as California, it is illegal to enforce a covenant not to compete with an employee or an partner who is not selling good will.          Top

Expert Witness

Rolfe v New Britain Hosp.
Conn. Superior Ct.

Rolfe sued the hospital and physicians for medical malpractice.  Rolfe's experts were deposed by the defendants who agreed to pay for their time.  The defendants refused to pay for the experts preparation time and the experts sued.  This lawsuit led to the the court granting the motion to pay for the preparation time. I hope they also made the hospital and physician defendants pay costs and the other side's attorney fees.        Top


Malone v Gliatech, Inc. 
Wash. Superior Ct.

Malone had back surgery with placement of a substance called ADCON-L which was to help healing.  Two months prior to the surgery the product was recalled by the manufacturer Pharmacia Corp. for contamination with aluminum shavings.  The product led to severe disability and pain.  Gliatech stopped distributing the material several days prior to the surgery but did not issue a recall.  Two days after the surgery, they did issue the recall.  Gliatech also entered a plea agreement with the FDA for failing to submit four adverse event reports and a misleading report that omitted data from a clinical trial.  He complained of severe pain the day following the surgery.  He was re-operated without success.  

Antelope Valley

In a settlement whose parties are confidential there was a settlement of $500,000.  The facts were that the person presented nine times in three weeks either by phone or in person to the health care organization.  The symptoms were flu-like and eventually hallucinations.  The chest x-rays showed progressive infiltrations.  He was treated with over the counter meds and later with various medications.  Eventually he was given an appointment with a pulmonologist but died prior to the appointment.  At autopsy he had "Valley Fever". This disease is treatable if caught early but has a 60% fatality rate if not caught in time.  I hope people learn that it is cheap to get an early consult.       

Bishop v Hoffman-LaRoche
Fla. Superior Ct.

The family of Bishop, the Florida teenager who flew a plane into a Tampa highrise to commit suicide and to show support with the terrorists is suing the maker of Accutane, an acne drug he was taking.  They are being reasonable in their demands.  The suit is only for $70 million.  He had been taking the drug for 9 months when he did his stupid act.  Several months earlier while still on the medication his writing about the 9/11 disaster was anti-terrorist and then he became pro-terrorist.  Accutane has been implicated in birth defects and out of the millions of people using the drug there have been around 150 suicides.  This is about the same percent as in the general population.  The parents of the suicide victim also attempted suicide in the past.  In the only case to go to trial regarding the drug causing a suicide has been won by the company.        

Bankruptcy Not Protection
Church v Hanft
SD Fla.

A patient sued the physician for medical malpractice.  The physician pled bankruptcy.  The patient petitioned the court to except the judgment from the bankruptcy.  The court agreed stating the dumb doctor or his equally dumb attorney did not tell the patient he had no malpractice insurance (it's not required in Florida), did not purchase the required bond in lieu of the insurance and that he was practicing without a license was basically fraud.        

Uluam v MetroWest Medical Center     
Mass. Settlement

In one of the largest payouts in Massachusetts' history the parents of a five year old who became brain damaged and quadriplegic received $7.5 million.  The child underwent a hernia operation.  An anonymous telephone call tipped off the parents to get an attorney.  The investigation showed malpractice and alterations of the medical records.  HCA paid $4.5 million and three physicians paying the additional $3 million.  The settlement occurred the week before trial.  The State's $20,000 cap on malpractice does not apply to for-profit hospitals.  The problem occurred post-surgery when she began having blood in her airway.  This was compounded by a nurse giving her water which caused vomiting and aspiration.  an airway was place but too far down which blew out one lung causing tamponade and cardiac arrest.      

Gordon v University of California
CA Superior Ct.

A newborn with jaundice and hypoglycemia was being kept for observation.  On the fifth day a circumcision was contemplated and the parents requested a consultation about the procedure.  They were asked to return in one hour for the consultation.  When they returned the circumcision was already done by a resident and too much skin had been removed.  The physicians also did not diagnose the baby as having hypopituitarism.  The combination of the botched circumcision and the hypopituitarism left him with a penis buried in the scrotum. They sued for battery since no consent for the circumcision had been obtained and then done negligently.  They won $1,429,000 that was not reduced since MICRA is not for an intentional tort, battery.  The jury returned the verdict in 1 1/2 hours after a 13 day trial.

Estrada v Robinson
CA Superior Ct.

This is a case of a physician doing an AFP exam on a pregnant woman with abnormal results.       

Two recent cases of foreign bodies left in patients after surgery have been filed against Stanford University.  Both foreign bodies were sponges.  The system states that if the count is not correct an x-ray will be obtained to locate the object. The hospital states this was done in both cases.  California law requires the reporting of foreign bodies to the state and Stanford did not do any reporting.     Top

Assisted Suicide

Oregon v Ashcroft
Fed. Ct.

A federal judge lambasted Attorney General Ashcroft stating he did not follow protocol with no hearings and making an edict.  The DEA licenses of physicians who practice assisted suicide under the state law are now safe.  This was an attempted end around the state law by one who usually is for state's rights.          Top

Managed Care

Sutter v 4 HMOs
New Jersey Superior Ct.

Dr. J. Sutter is suing four HMOs in a potential class action suit for delays, denied or reduced payment for services giving rise to decrease of quality of care and fraud.  Dr. Sutter has had problems with the bean counters in the past.  His first problem was when he wanted a quick result of a blood test but was told the patient had to be sent to the emergency room in order to get the test.  Stupidity of the highest order.  There were many other examples of HMO incompetence.  He had many letters to  medical directors that were never answered.  He had written letters to the Governor and the Insurance Commissioner with no action taken.  He then filed suit against Cigna, Horizon , Oxford and United Healthcare.  This should be interesting since there are arbitration agreements in some of the contracts between the physician and the HMOs.  The way to get around the arbitration agreement is if it would be fruitless.     

South Carolina Med. Assn. v Cigna
Superior Ct.

In their first case against a health insurer the medical association has sued Cigna for using software that automatically reduces or denies payments for services. In a separate suit two dozen physicians are suing for unspecified damages against the insurer.  Cigna gave the usual spin that they are working with physicians to improve the health care.  They continue to spout this mantra even though no one could possibly believe it.  A similar suit is pending against Cigna in Illinois, New York and Connecticut.  

Tennessee Medical v HMOs
Tennessee Superior Ct.

The Tennessee Medical Association and individual physicians have filed suit against Aetna, BlueCross BlueShield of Tennessee, United Healthcare and Cigna which together cover 70% of the managed health in the state.  The complaints are harm to the patients by the business practices of refusing to pay for medical necessary treatment.  They also accuse the companies of downcoding on a unilateral basis.  The claim is for the use of computers that automatically downcode or deny claims.  The poor insurers state the suit may mean the patients will have to pay more for services.  Aren't the insurers tired of this slogan?       

Lefler v United Healthcare of Utah
DC Utah

In this case United was sued for their use of co-payments based on a percentage of the provider's usual and customary charge.  This was instead of the insurers use of a decreased fee.  What this did is to make the consumer pay more than the usual percentage that they believed they would have to pay. The court said the insurer was self serving but the rule was not arbitrary or capricious and therefore was legal.         Top

Hospital Liens

McMeans v Scripps
CA. App.

In a published opinion that has gone against other opinions in the state the appellate court ruled that a hospital could only collect what it was entitled to under its insurance contract.  It could not lien the proceeds of an accident claim for its usual and customary charges.  This decision will need to to the California Supreme Court for clarification.            Top


In re Grand Jury Subpoena
ED Va.

In an interesting case the Federal Court has ruled that they do not have to follow state medical record privacy rules and there are no federal medical records privacy ones.  There is only a balancing act between the right of privacy and the governments interest in obtaining the records.  In this case the hearing going on in closed session diminished the right of privacy and the hospital had to turn over the medical records.       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.