November 1and 15, 2004 Recent Legal News


Fraud and Abuse


Right to Die

Medical Marijuana


Peer Review




Tax Shelters



Pennsylvania Rules of Conduct
Penn. Supreme Ct.

The Pennsylvania Supreme Court has announced new trial court rules to encourage remitters in non-economic damages of med mal cases.  The Rule of Civil Procedure 1042.72 allows the defendant to challenge as excessive an award of non-economic damages.  This takes effect December 4, 2004. The defendant has the burden to show the amount awarded deviates substantially from reasonableness.

Sewell v St. Francis
Cook County Illinois Court

A two year old boy who suffered a birth injury and will never walk or talk or eat on his own has been awarded $32 million by a jury.  This is the highest birth injury amount ever paid in the county.  The money will be placed in a court supervised fund and go toward the care of the child.  The boy's single mom will move to a handicapped accessible house and also buy a handicapped accessible van.  Also named in the suit were the OB and the OBs employer, Rush Prudential HMO.  The child was in distress and the jury did not believe the OB should have waited for a vaginal delivery which did not occur for two hours after the child was seen by the OB. 

Hagarty v Children's Hospital

Hagarty died in 1995 after 89 surgeries secondary to intestinal problems.  The Children's Hospital in Wauwatosa, Wisconsin and the family had an offer which was refused in 2000.  The jury awarded the family $17.4 million which is now $28 million due to interest.  The ED physician was liable for 25%, and the hospital resident liable for the rest.  The amounts were $3.2 million for medical expenses and funeral costs, $7 million for the patients two years of pain and suffering, $7 million for the parents pain and suffering and $150,000 for the death of the girl.  I assume the Hospital will be liable for the resident and possible the ED physician as well.

Howard v Zamorano
Mich. Ct. App.

The Michigan Court overruled the trial court and overturned the jury verdict against a physician on an informed consent issue.  The surgeon did not inform the patient that the surgery might not be successful.  The court of appeal stated that the issue is would a reasonable person decline the surgery if they were told the fact omitted.  Here, the only alternative would be blindness and any reasonable person would have chosen the chance for sight over blindness.

Brown v St. Vincent Hosp.
Ala. Supreme Ct.

 The hospital was given a summary judgment that it was liable for the acts of an independent practitioner physician.  The patient was injured at his birth and claimed the physician was the apparent agent of the hospital because the hospital had advertised their birthing section, the mother had contacted the hospital about which OBs were accepting new patients and the office building that the OB practiced was named the same ass the hospital.  Not enough said the Court.

  Nichols v Good Samaritan Hosp.
CA Ct. App.

The mother developed while in the hospital fever, and recurring fetal distress.  The OB went into another surgery.  The nurses continued to call the OB with reports on the declining condition of the case but failed to call in another physician.  The court stated that the nurses had a duty to call in another OB when the original did not respond and their failure to do so caused the injury.  

Families v Winchester Hospital
To Be Filed

Two undisclosed families were given the wrong babies at the hospital for breast feeding.  The hospital states it has a policy but the policy was not followed and they fired the health care provider.  The hospital has filed a report to the state and has apologized to the families involved.  Fortunately neither woman has any infectious disease.  There will be a suit filed and settled.  Only in the People's Republic.        

Women v Rosalind Franklin Med School

The above Medical School which used to be Chicago Medical School was sued for closing down a program using anti-cancer vaccine for breast cancer patients.  The program was started by a grant of a Dr. Georg Springer of $18 million.  The school does not know the long term effect and wants to get rid of the program.  They are willing to ship the vaccine anywhere the patients say.  The case is an injunction to prevent the school from closing the program.  More on this case to follow.  

Meador v MDs
Filed Va. Court

In an interesting twist Virginia has a law that compensated injured newborns but only if born in a hospital.  This child was born at home and so does not qualify for compensation under the program.  The parents are therefore suing the physicians.  The child was born at home unexpectantly. The malpractice suit filed four years ago and put on hold while the child was in the program accuses the physicians of not checking the the mother after she fell.  The did examine her and sent her home where she delivered the next day. 

Long v Jaszczak
ND Supreme Ct.

 The North Dakota Supreme Count has agreed that the paper consent that hospitals use to have patients sign for consent does nothing.  It is the duty of the physician and not the hospital to give informed consent to the patient.  Just because a patient signs the ineffective form does not mean the hospital is liable for not giving informed consent. 

Davis v Haugland
DC Polk County Iowa

This is a suit worth watching.  Dais is suing the doctor and hospital for deciding which heart pacemaker to implant.  The patient received a pacemaker from Medtronic which failed.  The suit will go into how hospitals decide which instruments they will purchase.  The suit states that her doctor was forced by the hospital to use the Medtronic pacemaker when Guidant's would have been better for her.  The suit discusses kickbacks to hospitals if they use a pacemaker a certain number of times.  The doctor had complained to the ethics committee of the hospital in the past about the coercive contract.  To make matters worse the plaintiff is a nurse at the system that owns the hospital and knows all the deals. 

Nelson v Drew/King

Drew/King continues to make the news.  This time for a lawsuit against the County for the death of a 28 year old whose nurse turned down the volume on the monitor and then falsified the records.  It's not a matter of if the County will lose, it's only how much.  

Breeding v Oraee
Va. Trial Ct.

Breeding had a stroke and was told she would be fine with medication and treatment.  She was 52 years old.  She did not receive anything and had another stroke that killed her.  The family sued her physicians Drs. Samad Oraee and Mert Kivanc of Falls Church Virginia for malpractice.  Neither received any test results from the hospital nor prescribed any meds when she was seen in the office.  Mrs. Breeding made $90,000 annually.  The decision was for $1.5 million in lost income and $250,000 each to the husband and the two daughters.  The judge reduced the amount to the Virginia med mal cap of $1.65 million. 

Garland Hospital v Rose
Texas Supreme Ct.

The Texas Supreme Court ruled that any suit for negligent credentialing by a hospital is the same as a quality of care issue.  As such, it must abide by all the rules of the Texas Medical Liability and Insurance Improvement Act.  One of the rules of the Act is that expert testimony must be given regarding the credentialing process. The case was remanded to determine whether the expert report regarding negligent credentialing satisfied the Act.       Top

Fraud and Abuse

US v Alvarado Hospital
Trial Starts

This case is about the hospital, a Tenet institution, giving illegal remuneration to physicians for practicing at the hospital.  The trial is expected to last three months and all parties have pled not guilty.  The hospital physician recruiter has been charged with requiring the recruited physicians to pay her 10% of what they were paid.  The hospital paid guaranteed salaries to the physicians and their recruiting medical groups, as well as equipment an office overhead.  This may be illegal as there were no shortages of physicians in the area only those practicing at the hospital.  

Tenet has stated the physician payments were not bribes, but were legitimate relocation costs.  The trial opens in the beginning of November.  In the meantime it is being tried in the press. 

Tenet also lost their bid to have the trial tossed on technicalities.

US v Ahmad, MD
Plea Bargain

 Dr. Vimiesh Ahmad pled guilty to filing false claims to the feds and the Washington state programs.  She always filed at the highest level no matter what she did.  She was fined $1 million and barred from practicing medicine in the United States.  She also agreed to a prison sentence of one year and one day, which makes her a felon.  

US v Temple Univ. Physicians

The Group of physicians admitted no wrongdoing but agreed to settle and pay Uncle Sam $1.9 million for improperly billing Medicare. 

US v Massenburg
SD W. Va.

 A salaried physician signed blank and undated claim forms for Medicare.  The issue was the intent of the physician.  The physician did not have close contact with the medical center and the US did not prove conspiracy, just stupidity.  Since the physician was on salary, he did not owe any money to the feds.   

  US v Raithatha
6th Circ.

Dr. P. G. Raithatha sold his medical clinic to MAHC for 1/6 of the stock of the entity.  He then falsified reports, illegally induced patients to the clinic, ordered unnecessary lab tests and instructed his staff to intentionally upcode.  His bad behavior cost the government $256,00.  He was sentenced to 27 months in prison.  The 6th Circuit agreed with the lower courts and allowed the penalty to stand.  Top


Medical Staff v Provena Danville
Filed Illinois

In an interesting case involving the malpractice crisis in Illinois, the Danville hospital in 1993 changed its rules to require the medical staff to have 1 million three million insurance policies or be removed from the staff.  The medical staff intentionally never placed that change in their bylaws.  Now there are some physicians who can afford lesser insurance amounts but not the hospital demanded ones.  The medical staff is now suing the hospital to determine if they can unilaterally change the rules and if the bylaws are a contract.  The attorney for the staff is planning to take this to the Court of Appeal to get a published ruling on the issue of the bylaws.

The US Judicial Panel on Multidistrict Litigation stated their was no reason the suits against the non-profits for overcharging the uninsured needed to be deemed a class action.  Phoebe Hospital, the culprit that started the whole thing, stated they have always stated the case had no merit.  They are again wrong.  The case may or may not have merit but this decision does nothing to reach the merits of the suit, just the ability of the attorneys to try all the suits together.   

In a separate decision a Federal judge dismissed the case against Baptist Health in Alabama.  The reason had nothing to do with the merits but the case had already been heard in the State Courts and could not be tried again in the Federal Court.  The plaintiffs had lost in the state court case.  

McKenzie v PeaceHealth
Dist. Ct.

 McKenzie Willamette Medical Center had sued the PeaceHealth System for antitrust in their monopolization of services in Lane County, Oregon.  The hospital won $16.2 million in damages and PeaceHealth is now facing the forced disbandment of its physician group.  PeaceHealth is not known for its niceties and this decision is probably well deserved.  They are awaiting the final decision on their medical group before deciding whether or not to appeal.  

Friends of Drew/King v LA County

In a suit to prevent the closing of the hospital's trauma unit the issue of race has been raised.  In anyone who has followed the story there has been no race issue but ineptitude by the County and the hospital personnel.  The attorney who filed the suit should know he will lose but will get other cases from this.           Top

Right to Die

Schiavo v Bush
Florida Supreme Court

The Florida Supreme Court has denied Governor Bush's request for a re-hearing on the terrible Terri Schiavo case.  The Court had previously ruled unanimously that Mrs. Schiavo's husband had the right to make the decisions for her and the state could not intervene.  The Circuit Court also refused a new trial but delayed the order until December 6, to allow time for the parents to appeal.  Probably this only delays the inevitable.  If it goes to the US Supreme Court, I hope the Court makes sure this could never happen again.    

Ashcroft v Oregon
US Supreme Court Filed

On the last day allowed for filing before the US Supreme Court, the justice department filed a suit challenging Oregon's law that physicians could not be punished for following the assisted suicide law.  The 9th Circuit had allowed the law to stand. 

Showing why they lost the recent election, Democratic lawmakers in California are planning to introduce legislation to allow physician-assisted suicide ala Oregon.  They will introduce this next month prior to the decision of the US Supreme Court on the Oregon law.  A political ploy which will be used for political gain only. I happen to be for the Oregon law, but against doing something just for show.         Top

Medical Marijuana

Chavez v Superior Ct.
CA Ct. App.

Chavez was tried and convicted of the use and distribution of marijuana.  He was out on bail when his home was raided and more marijuana was found.  Those charges were dropped and Chavez sued for the return of the marijuana.  Chavez is a registered medical marijuana user with a recommendation from a physician for the use of the weed.  The lower court and now the court of appeal both turned down the request for the return because he had more marijuana than was allowed under the California law.  The Count stated it was not up to them to split what could or could not be returned. Since he had too much, he gets none.        Top


Payman v Lee County Hosp.

The Court tossed a case by the physician who was terminated by the hospital employer.  The physician sued without an attorney for RICO damages in state court.  The hospital removed the case to federal court to consider the federal RICO charges.  The physician then dropped the RICO charges to get the case back to state court.  The Federal Court retained the case since the physician changed for the sole purpose of manipulating jurisdiction.  The physician had filed 22 cases in state and federal court in the past.

Hosseinipour v KY River Health Dept.
KY Ct. App.

The hospital recruited the physician and offered him employment or working with him in any possible way if he chose private practice.  He chose private practice and over several years his practice dwindled.  He blamed the hospital since they allowed other physicians of his specialty to come in and opened a prenatal clinic which did not involve him.  He said he was targeted by the hospital for quality review, allowed the other physicians to bring in locums when he was available to care for the patients and interfered with his ability to make a living by opening the clinic.  The court found no contract between the entities and that statements by the prenatal staff abut problems with the physician were not defamatory.  

Carswell v Oconee Med Ctr.
Ga Ct. App.

The center hired a pediatrician and the contract guaranteed a fixed income per month.  Any excess income went to the medical center.  The pediatrician failed to pay over $100,000 and the center sued.  The pediatrician said the statute of limitation had run on all but the final month.  The center said the months were all together.  The court said the statute had run on all but the final month since the monies were divisible into units.  The center should fire their attorney.  

Private Healthcare v Torres
Conn Ct. App.

Torres, a physician, was under contract to Private in a series of yearly contracts.  He was convicted of stealing information from patients credit cards and making calls to porno sites.  He was fined $5000 and completed counseling.  Private fired him and he appealed to a ALJ.  The ALJ ruled for the physician as he was rehabilitated and the firing needed to be for cause, was against public policy and did not pose a risk to patients. Private appealed to the trial court who sided with Private since the ALJ's decision violated public policy against theft.  Torres appealed and the Court of Appeals reversed the lower court stating the ALJ did not violate public policy and enough evidence had been offered to support the ALJ decision.

Kruger v Regence Blueshield
Wash. Ct. App.

Attorneys should look down the road and see the landmines.  Kruger Orthopedics stated that Regence owed it $10,000.  Kruger sued even though their was an arbitration agreement.  The trial court denied Regence's motion to compel arbitration. The Court of Appeal overturned the trial court but stated that the agreement was unfair.  The arbitration agreement stated that all determination of Regence shall be afforded deference and the standards to be applied by the arbitrator shall be whether Regence has acted arbitrarily and capriciously.  These were too one sided and so are removed from the agreement.  Regence would have been better off to pay the money instead of their attorney and the loss of the biased contract. 

Burns v Universal Health  
SC Ct. App.

Burns, a nurse, was hired by hospital and signed an employment handbook.  After hospital #2 bought the hospital Burns was fired for insubordination.  She sued on multiple counts but only two went to trial and jury.  One was breach of the covenant of good faith and fair dealing and the other was slander.  She won $32,000 on the former and lost the latter.  The hospital applied for and was granted JNOV since there was no contract.  An appeal followed.  The Ct. of Appeal stated the handbook was indicia of a contract and was vague enough to need to be interpreted by a jury. Therefore the JNOV was overturned.    

Pollack v Skinsmart Dermatology
Penn. trial Ct.

 Pollack, a dermatologist worked with two other physicians but there was no contract.  The physicians left and started their own practice.  The took with them copies of the patient names and information.  The new company made $700,000 off these patient lists.  Pollack sued and won.  Patient list in Pennsylvania are a part of the business and a trade secret.   They can not be removed or copied without consent.  This is important for all physicians to realize and the correct way of doing business is to send letters to all patients stating the physician is leaving and how the patient may transfer their records.  It is unethical and maybe illegal not to tell the patient who requests the information where their physician has gone.   Top

Peer Review

Duwel v Charles Town Hosp.

Duwel was targeted for peer review and then given the opportunity to take a leave of absence and no vote would be taken on his privileges.  The problem is that the person who told him that was wrong.  The Credentials Committee stated that there was nothing in the bylaws that allowed a leave under these circumstances.  The said he could relinquish his privileges and then would have to reapply for privileges again.  He did quit the staff and the hospital reported him to the NPDB fro resigning while under investigation.  The physician sued for involuntary resignation.  The court said the physician knew that the resignation was a way to avoid a vote on his quality of care.  

Diaz v Provena Hospital
Ill. App. Ct.

Evelyn Diaz received a summary suspension at Provena Saint Joseph Hospital in Kane County, Illinois.  She sued after the hospital board gave her a permanent suspension.  The basis of her suit was lack of due process and asked for replacement on the medical staff and a TRO to prevent the hospital from reporting the action to the Data Bank.  She won her suit but then allowed her privileges to lapse.  This lapse allowed the hospital to report Dr. Diaz to the Bank for allowing her privileges to lapse while under investigation.  She contested that the hospitals could not do this since there had already been a final decision and she could resign without being reported.  In fact, the TRO had prohibited a final decision and therefore technically the investigation was still in progress.  She lost and the report not only stated that she left the staff while under investigation but also described why the report could not be done earlier.  The HHS even got into the act by submitting an Amicus brief for the hospital.  

Depaul v St. Elizabeth Health Ctr.
Ohio App. Ct.

 A person was injured in negligence in a hospital, not malpractice.  She requested the incident report of the occurrence and was denied.  In Ohio risk management reports and their contents are protected and not to be admitted into evidence.  This privilege is absolute. 

Sutter Davis v Superior C.
Ca. Ct. App.

Patient in the ICU was under physician orders to have side rails up and be observed.  He attempted to get out of bed, fell and broke his hip.  a law suit commenced on elder abuse and the nurse on duty testified that she made out an incident report.  The plaintiff requested the report under discovery.  The trial court allowed the incident report since no peer review or any committee of the medical staff reviewed the report.  The Court of Appeal stated that the report was for the medical staff whether or not they looked at the individual report and is therefore protected un Evidence Code 1157.  The court went on to state that even though the Code is for malpractice cases , the issue is public policy of encouraging candor and the report is still protected.    

Angelico v Lehigh Valley Hosp
US Supreme Ct.

Angelico was denied surgical privileges at the hospital and sued for antitrust.  The 3rd Circ. stated that the statements the physician wanted to enter in the trial court were not entitled to be entered under any exception to the hearsay rule.  The 3rd also stated that the physician had failed to rebut the presumption that the hospital was entitled to immunity under HCQIA.  The Supreme Court denied to review the case and the 3rd Circ, decision is unpublished.     Top


John B. Superior Ct
Cal. Ct. App.

The wife sued the husband in state court for infecting her with HIV.  She wanted the names of the partners the husband was with.  The trial court allowed the request along with the employment and medical records of John.  The trial court allowed the request.  John appealed and won unless the wife does not ask for the identities and only the incidents.  This is to see if John injured her by not using ordinary care in conducting his sexual behavior.  The Court rejected John's  request for medical privacy since he states he has a negative HIV test and has placed his medical records in controversy.  

U. of Colorado v Denver Publishing
D. Colo.

Denver was going to publish a peer review report it had obtained.  The university sued to prevent the publication and to assert the federal HIPAA laws.  The court denied the injunction and Denver published the peer review report.  The University also lost on HIPAA as there is no private right of action in the HIPAA law. 

Limbaugh v Florida
Fla. Ct. App.

Russ Limbaugh's medical records were seized by Florida under a search warrant to determine whether he obtained meds from multiple physicians. They were placed under seal and then Russ was notified.  He objected by asserting his right of privacy.  The Courts stated that when medical records are seized under a valid search warrant there is no right of privacy and the patient is not allowed prior notice and a hearing on the seizure.       Top


Cicio v Does/Vytra
2nd Circ.

In one of the most dramatic turnarounds in this era of flip flops is this case.  Originally the court agreed that Mrs. Cicio could sue because the insurer refused to allow the necessary treatment.  The case was appealed to the Supreme Court who unanimously ruled in Aetna v Davila that the ERISA plan could not be sued for not giving necessary treatment and ERISA ruled.  The Supreme Court then remanded the Cicio case back to the 2nd Circuit who changed its ruling to state that Cicio could not sue the plan based on Aetna.  The Court stated the Cicios could have paid for the treatment and then sued for reimbursement under 502(a)(1)(B).  Under ERISA, you can't get more than the procedure would have cost. 

Carpenters Health v Vonderharr
Ca Ct. App.

Vonderharr was injured in an auto accident and ran up $155, 224 in medical costs.  Before the Union health insurer would pay the bill they had Vonderharr sign a lien agreement to be repaid out of any settlement with a third party.  Vonderharr got $30,000 from the driver and also settled with Ford.  Carpenter health attempted to collect its lien but Vonderharr refused. The insurer went to trial and since they were suing for legal  damages and not equitable relief they are preempted by ERISA.  Carpenter appealed as did Vonderharr for not allowing attorney fees.  The Court of Appeal ruled against Carpenter on all counts.  They lost under ERISA and on the attorney fees since under ERISA one who enforces their rights should ordinarily recover attorney fees unless special circumstances, which were not present here.   

Northern Buckeye v Lawson
Ohio Supreme Ct.

Although this is not an ERISA case I put it here to show the similarities and differences.  Lawson's daughter was in an accident and ran up a $86,000 medical bill.  The non-ERISA plan had a subrogation agreement that stated that prior to paying the bills the plan would be entitle to an offset against any monies won against third parties.  The Lawson's got $250,000 and would not pay the Plan since their daughter would not be made whole.  The law suit by the Plan went to the Ohio Supreme Ct. who stated that the contract provisions top any equitable make whole provisions.  The Plan gets paid.      Top


Gray v Superior Ct.
Ca. Ct. App.

Gray, a physician, was arrested for multiple offenses.  At the bail hearing the state attorney general's office turned up without prior notice and asked for relinquishment of the physician's license as a condition of bail.  the judge agreed.  The court of appeal did not.  The license can not be removed without due process of law including notice and hearing.        Top

Tax Shelters

IRS v Does
TRO, San Diego Cal.

The IRS has placed liens on over $500 million in assets of physicians and dentists who purchased tax shelters from Xelan, an investment company.  The company is now being criminally investigated.  It is owned by a San Diego dentist, Dr. L. Donald Guess.  The officers of the company were ordered to turn in their passports and not destroy any company records.  Several of the subsidiaries are already in bankruptcy.        Top       


United Healthcare in North Carolina has been fined $2.2 million by the state for failure to pay promptly. The money goes to the Department of Insurance.  United blamed it on a new claims system as most do when they have been caught with their hand in the cookie jar.  The problems of wrongly paid or non paid claims are millions of dollars.  United may have come out ahead by using the unpaid money and paying the fine.  The North Carolina Medical Society has a lawsuit pending against United and Blue Cross for the same unfair business practices.  Blue Cross has already paid $1.8 million in fines. 

California has a new Worker Compensation legislation that is due to be in effect 1/1/05.  It will attempt to reduce costs by forcing all physicians who wish to see these patients into a physician network.  The networks must include a variety of physicians, provide emergency and primary care within 15 miles or 30 minutes and provide specialist care within 30 miles or 60 minutes.  The California Applicants Attorneys who are affected by the new rules so they cannot send their clients to applicant friendly physicians have filed suit to prevent the legislation to take effect. Their ploy is to state that patients already in treatment will be forced to change physician.  This is not true.  The State only will use this prospectively.        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.