Beyond Health Care Reform | Faegre Baker Daniels LLP
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It was Bishop Berkeley who asked rhetorically, “If a tree falls in the forest and no one hears it, does it make a sound?”
The judge in Pediatric Nephrology Assocs. v. Variety Children’s Hospital didn’t mention either the Bishop or the tree, but he used the same approach to dispose of a case brought by a Florida nephrology partnership against a former partner and the children’s hospital where they all worked.
The trouble began when the hospital started its own nephrology group and hired one of the partners, Dr. Ramirez, away from the partnership. When the remaining partners refused to join the hospital’s new group, the hospital, with the help of Dr. Ramirez, posted an ad to recruit nephrologists.
The partnership filed a federal lawsuit alleging, among other things, that the ad violated the federal Lanham Act, which prohibits false advertising. What was the falsehood? For one thing, the ad included a statement that the nephrology section had over 8,000 visits a year and over 20 dialysis patients, “under the direction of Dr. Ramirez.” The partnership argued that those were the numbers for the whole partnership, not just Dr. Ramirez. So the ad was misleading.
The court said that it couldn’t decide whether the statements were true or false. But what it could decide—and this is where the tree comes in—was that there was no evidence that any consumers even saw the ad, let alone were deceived. And just as a falling tree makes no sound if there’s no one around to hear it, a false statement doesn’t violate the Lanham Act if there’s no consumer around to be deceived by it.
The court gave the defendants summary judgment on the Lanham claim and dismissed the rest of the claims because they were state rather than federal claims.
The case is Pediatric Nephrology Assocs. v. Variety Children’s Hosp., No. 1:16-cv-24138-UU (S.D. Fla., Nov. 13, 2017).
William Nash filed a whistleblowercase against his former employer but wanted to remain anonymous so that his new employer wouldn’t know that he is—you guessed it–a whistleblower.
William’s qui tam action alleged Medicaid fraud by his former employer. When the government declined to intervene, William decided not to pursue the case. He asked the court to keep the case under seal so that his current employer wouldn’t find out about it or, alternatively, to substitute John Doe for his name.
The court turned him down. First, the False Claims Act specifically directs the court to unseal a case when the government makes its decision whether to intervene. Second, there is a strong presumption of public access to judicial documents. William’s fear of retaliation is too attenuated and speculative to overcome that presumption. Besides, the FCA contains anti-retaliation provision that should protect William.
Nor would the court substitute John Doe for William’s real name. The public “has a right to know who is using their courts.”
William did score one small victory. The court allowed him to file a new version of the motion under consideration—one that deleted the name of his current employer. Ironically, that name had never been in the record until William filed the current motion.
Maybe the lesson is that you shouldn’t blow a whistle if you don’t want to draw attention to yourself.
The case is US ex rel. Nash v. UCB, Inc., No. 14-cv-2218 (TPG) (SDNY 2107).
Can any state rival Kentucky for keeping physicians in the headlines in recent days? Three big stories in a five-day span:
On October 30 the Franklin Circuit Court struck down as unconstitutional a new Kentucky statute establishing medical review panels to screen medical malpractice cases before they go to court.
On November 2, in a different case, the Kentucky Supreme Court parted ways with the majority of states by refusing to recognize negligent credentialing of physicians by hospitals as a separate cause of action.
And, of course, on November 3 Kentucky’s best-known physician, Senator Rand Paul, was physically attacked and seriously injured by an assailant. And the alleged assailant was—you guessed it—another physician, Dr. Rene Boucher.
In the first case Judge Phillip Shepherd ruled that the review panels constitute an impermissible barrier to the right of plaintiffs to have their cases heard in court. Governor Matt Bevin, a supporter of the statute, vowed to appeal the decision.
In the second case the state’s highest court didn’t say that a hospital can’t be liable for negligent credentialing. It said was that Kentucky does not recognize negligent credentialing as a “stand-alone tort.” Negligent credentialing is derivative of the physician malpractice that allegedly resulted from it. Therefore, plaintiffs will generally be required to prove the underlying physician negligence in order to state a claim for negligent credentialing.
The credentialing case is Lake Cumberland RegionalHospital v. Adams (Ky. Nov. 2, 2017).
Who says a background in English literature has no practical value? Certainly not the attorneys defending Dimensions Health in a class action filed on behalf of patients treated by an OB/GYN on the Dimensions medical staff. Their Memorandum in Support of Motion to Dismiss prominently invokes one of the Bard’s most famous lines.
There’s no denying that “Dr. Akoda” is a fraud in many respects. For one thing, his name is Igberase, not Akoda. In 1991, 1995, and 1998 he obtained Social Security numbers by using fake names and identifying information. In 2012 CMS denied his application for Medicare enrollment because he used a fake Social Security number.
In 2016 he pleaded guilty to using someone else’s Social Security number to secure his Maryland medical license. He also admitted to using multiple false names, dates of birth, and Social Security numbers over the years to apply for federal educational loans for his children, gain Educational Commission for Foreign Medical Graduates approval, enter a residency program, and practice medicine.
“Dr. Akoda” secured OB/GYN privileges at Dimensions in 2012 and practiced there until 2016. The complaint against Dimensions relies primarily on the theory of negligent credentialing: Dimensions should have known that “Dr. Akoda” was a fraud.
Faced with “Akoda’s” long history of fraud, is Dimensions conceding negligence? Not on your life. Dimensions notes that the man did, in fact, hold a medical license to perform the services the plaintiffs complain of. So what difference does it make whether his name is Akoda or Igberase?
This is where Shakespeare on Medical Staff Credentialing comes in. Dimensions argues,
As Shakespeare wrote over 400 years ago, “What’s in a name? That which we call a rose by any other word would smell as sweet.” Whether the patients knew him as “Akoda” or “Igberase,” both names denote the exact same person, and that person was a licensed physician ….
The case is Russell v. Dimensions Health, Case No. 8:17-cv-03106-TDC (D. Md.).
If the facts recited by a federal court in its 148-page order are correct, two Florida plaintiffs’ law firms have given new meaning to the term frivolous filing. As a consequence of the filings, the court imposed sanctions of $9.1 M, in addition to a public reprimand and an ethics referral to the Florida bar.
How frivolous were the filings? The firms’ approximately 3,700 cases against tobacco companies included 588 personal injury complaints for dead plaintiffs, 15 unauthorized complaints, 18 plaintiffs revealed to be nonsmokers, 36 plaintiffs who never lived in Florida, 28 cases that had been previously tried, 90 cases barred by the statute of limitations, and 572 plaintiffs who failed to respond to the court’s questionnaires to confirm the legitimacy of the cases filed on their behalf.
The absurdity of the situation was amply demonstrated when, in the middle of one of the trials, sitting juror Shirley Larramore discovered to her surprise that she was listed as plaintiff in another of the cases. Not only had she not authorized the case; the lawyer’s own notes revealed that she had told him not to pursue it.
The court is confident that it can collect the $9.1 M because it still holds $45 M in escrow from the $100 M settlement in 2015. The two firms that were fined are entitled to an as-yet-undetermined part of the $45 M.
The case is In Re Engle Cases, No. 3:09-cv-10000 (M.D. Fla.).
Lancet Indemnity’s $1 M med mal policy had a standard clause requiring the insured, Dr. Ishtiaq Malik, to cooperate and assist Lancet and appointed counsel in investigating and defending claims. But when the family of decedent Juan Castillo sued him for malpractice, Malik could not have been less cooperative or provided less assistance. He moved to Pakistan and never acknowledged any correspondence about the case.
Citing his lack of cooperation, Lancet disclaimed coverage. No appearance was entered for Malik or Lancet, and plaintiffs were granted a default judgment on the issue of liability. When the court scheduled a hearing to determine damages, Lancet’s motion to intervene was granted. Damages were determined to be $2.56 M.
Plaintiffs sought declaratory judgment that Lancet was liable under the policy despite its position that Malik’s failure to cooperate voided coverage. On Oct. 16 the court issued its opinion in favor of plaintiffs, holding Lancet liable under the policy.
The court noted that the applicable clause did not state that failure to cooperate voids the policy. Rather, only failure to cooperate “that prejudices our [i.e., Lancet’s] ability to defend” voids the policy. Under Maryland law prejudice means actual prejudice.
Therefore, Lancet had the burden of proving actual prejudice. Lancet had failed to carry the burden, offering no more than speculation that it couldn’t have defended the case adequately with medical records and experts. As the court saw it, Lancet merely chose not to participate in the liability phase of the case just as it chose to participate in the damages phase.
The court declared that Lancet is liable to plaintiffs pursuant to the policy’s terms.
The case is Mora v. Lancet Indemnity, No. 8:16-cv-00960 (D. Md.).
The False Claims Act has a scienter requirement: it makes it illegal to knowingly present a false claim to the government.
So if a company innocently presents a false claim, it can’t be guilty of violating the Act, right? Well, not exactly. The answer may depend on whether the company later discovers the error and what it does about it.
If the company discovers the error, any overpayment by the government becomes a reverse false claim. Why reverse? Because instead of asking the government for a payment, the company is holding a payment that rightfully belongs to the government. The company is supposed to pay it back, and it has 60 days to do so.
That seems to be what’s behind the September settlement agreement among the federal government, the State of Florida, First Coast Cardiovascular, and whistleblower Doug Malie. The agreement recites that governmental authorities contend that they overpaid First Coast and that First Coast discovered the error but failed to repay the overpayments within the required 60 days.
The agreement recites that First Coast doesn’t admit liability but agrees to pay $449,000 to resolve the matter. That’s a lot of money, particularly when you consider that the Justice Department’s Oct. 13 press release pegs the overpayments at “over $175,000.” That suggests that First Coast is paying over two and a half times the amount of the overpayments it received. Doug gets 20% of the $449,000.
The case is US ex rel. Malie v. First Coast Cardiovascular, No. 3:16-cv-01054 (M.D. Fla.).
On Oct. 16 the Georgia Supreme Court ruled that the statute covering children “conceived by means of artificial insemination” doesn’t cover children born by means of in-vitro fertilization (IVF). Why? Well, for one thing, the statute was enacted in 1964, and the court says that IVF was unknown until the 1970s. So in 1964 the legislature couldn’t conceive of IVF.
The statute creates an irrebuttable presumption of legitimacy for all children born during wedlock or the usual gestation period thereafter who were conceived through artificial insemination, provided both spouses consented to the procedure in writing.
David and his wife Jocelyn consented to IVF in writing. Four days before a divorce decree was entered, Jocelyn underwent the procedure using donor ova and donor sperm, and 29 weeks later Baby S was born. Jocelyn filed a paternity action against David and sought child support. She won summary judgment on the paternity issue.
When David appealed, the Georgia Supreme Court ruled in his favor, holding that while the legislature meant to protect children born through artificial insemination, it could not have meant to protect those born through IVF because it was unaware of IVF. The court reasoned that if the legislature had later wanted to cover IVF children, it would have amended the statute to cover them. But it didn’t.
The result is that David doesn’t have to pay child support and Baby S doesn’t have a father—at least not one anybody can identify.
The case is Patton v. Vanterpool, No. S17A0767 (Ga., Oct. 16, 2017).
On September 22 the FDA issued Warning Letter CMS# 532236 to Nashoba Brook Bakery, of Concord, Mass. Among several infractions cited in the letter was one for the misbranding of granola bars—misbranding that must be corrected within 15 days to avoid penalties.
What was this dangerous misbranding? The granola bar label included love as an ingredient. And, as the warning letter points out, “love is not a common or usual name of an ingredient.” Then what is it? Well, the letter explains, it is “intervening material because it is not part of the common or usual name of the ingredient.”
Maybe you knew that love isn’t actually an ingredient. But did you know that it’s intervening material?
A case in a Louisiana federal court addressed an unusual question: what if circumstances at a hospital require that you, rather than hospital personnel, be the one to tell your mother she has only two weeks to live? Do you have a claim under federal disability law?
It happened when Katrina Labouliere’s mother was diagnosed with stage 4 liver cancer and given only two weeks to live. Katrina says that because her mother was deaf, she had asked the hospital for an interpreter, but none was provided. She says that she asked the nurses to use the Video Remote Device, but they didn’t know how to operate it.
The upshot was that Katrina, proficient in sign language, was the one who delivered the bad news to her mother. Katrina sued the hospital and others on behalf of her mother’s estate, alleging denial of accommodation for her disability as required by the Rehabilitation Act of 1973 and the Affordable Care Act, as well as a state statute.
But she didn’t stop with claims on the estate’s behalf. She also sued on her own behalf, alleging that the failure to accommodate her mother’s disability resulted in harm to her—Katrina.
She alleged that she can’t sleep; has nightmares; suffers from depression, anxiety, and panic attacks; and avoids jobs as a sign language interpreter.
The court dismissed the estate’s state law claim as premature, but ruled in favor of the estate on the federal statutes, denying the motion to dismiss. Katrina’s personal claims didn’t fare as well. The court acknowledged the validity of the concept of associational standing—standing on the part of an individual deprived of a benefit because of association with a disabled person. But the court ruled that the defendants were not required to provide any benefit to Katrina, so they couldn’t be liable for denying a benefit. Her personal claims were dismissed.
The case is Labouliere v. Our Lady of the Lake Foundation, No. 16-00785-JJB-EWD (M.D. La. Sept. 29, 2017).