Recent Legal Opinions

April 1, 2001

Three States Medical Societies Sue Insurers

Millman Robertson Guidelines Misused



Fraud and Abuse


Right to Die

HMO Lawsuits

Commercial Insurance and Fraud

US Supreme Court Search and Seizure

States sue entities

Peer Review Lawsuits

Plaintiff v Hospital 


Medical Malpractice Shorts

Three State Medical Societies Sue Insurers

California, Georgia and Texas Medical Societies have banded together with individual doctors in seven states to sue in federal court eight insurers.  The insurers are Aetna, Cigna, Coventry Health Care, Humana, United Health, Health Net, PacifiCare and Wellpoint. The basis for the suit is a pattern of racketeering activity to deny necessary medical care. The complaint states the insurers used cost based criteria to approve or deny claims. The guidelines used are from Millman & Robertson and InterQual. The complaint also alleges that insurer reviewers were paid a bonus for denying a certain percentage of claims no matter if they were medically necessary. This suit is only one of several.  There is also a suit waiting for class action status by consumers and another suit by Connecticut Medical Association against insurers in that state.  There are also cases against Kaiser and Aetna in California state courts.  Recently a federal circuit panel in New York agreed to hear a  law suit against Prudential for breach of contract, fraud, and deceptive trade practices. The medical societies are finally taking action when the legislator's will not. See next story.                Top

Millman Robertson Guidelines Misused

Batas v Prudential
NY Appellate Division

A class suit against Prudential and its HMO has been allowed to go forward.  The HMO utilized the Millman Robertson guidelines by a nurse to refuse to pay for the time in the hospital needed by two patients. No physician was ever consulted by the nurses. The first case refused more time in the hospital requested by the patient's physician following a hysterectomy for a 3 1/2 pound fibroid. The nurse only allowed 48 hours as that is what the book stated should be allowed.  The second case was a pregnant woman with Crohn's Disease that was not allowed to be hospitalized. One week later her intestines ruptured and significant emergency surgery was required. Four days later Prudential again sought hospital discharge. Stupidity costs a lot of money. Does your hospital use these guidelines?        Top


In Placer County in rural California a judge reduced a drug conviction for use of marijuana from a felony to a misdemeanor. The judge fined the person $2,700 and ordered 120 days of alternative sentencing (no jail time). The DA had recommended dropping the charges on this defendant and another both of which had physician's notes. 

The California Supreme Court has agreed to hear a case involving whether Prop. 215 is an absolute or an affirmative defense that must be specifically pled by the user of marijuana.  This should help clear the murky waters surrounding the use of marijuana for medical purposes.

The US Supreme Court has also agreed to hear the Oakland case deciding whether or not Proposition 215 and its progeny are legal.  Top

Roberts v Galen of Virginia
DC WD Kentucky

In a case sent back to District Court from the US Supreme Court, the jury decided in favor of the hospital.  The hospital had discharged a patient six weeks after admission to a nursing home.  The original ruling was for the plaintiff at the 6th Circuit level.                

Breord v Catholic Med. Ctr. of Brooklyn
E.D. N.Y.

A pregnant female miscarried after several trips to the hospital ED and her physician's office.  She sued under EMTALA.  She lost since she did not offer any evidence that the hospital deviated from their usual screening procedures. There was no evidence that showed her symptoms of mild abdominal pain and passing water constituted an emergency. The federal court then remanded back to state court the woman's claims of malpractice and negligent infliction of emotional distress.    Top

Fraud and Abuse

HCA, after settling a fraud and abuse charge for $840 million with the Feds is now under scrutiny again for new fraud charges.  These may cost the company many more hundreds of millions of fines. This does not seem to be a good time of buy the stock. Also, think of the good that money may do if given to the Medicare program.   

In another story Medicare states that physicians have been double billing, but blame there own internal lack of monitoring for the double payments. The doctors have not returned the double payments unless contacted by the inspector general.   

U.S. V Mackby
9th Circ.

A physical therapy clinic in Larkspur, California was found guilty of violations of the False Claims Act (FCA) by instructing the billing company to use his father's PIN number in boxes 24k and 33 of the claim form for services performed by the office.  Mackby was an unlicensed individual but his father was an MD. Dr. Mackby had no knowledge of the use of his PIN. A violation of the FCA occurs when a false claim is presented to the US for payment with knowledge the claim was false. It doesn't matter if the service was performed or not. The false insertion of information into box 24k, where the PIN of the performing person goes and box 33 where the PIN of the billing entity is entered, is enough for a false claim. The defendant was found guilty and fined $729,000. The 9th upheld the verdict but remanded back for the amount of the fine.   Top

Allen v Healthcare Partners Medical Group

In a blow to MICRA, the California malpractice reform legislation, a judge in Orange County Superior Court has ruled that a case against a medical group does not qualify for MICRA protection since the group does not hold a medical license. This may effect physician partnerships and managed care groups. The physician's medical group, Healthcare Partners was the only named defendant. This case, as a Superior Court case, holds no precedential value.  The appeal will be interesting.  If this holds medical partnerships will dissolve and Permanente Medical Group will probably dissolve unless the legislature would intervene. Top

Right to Die

Time Magazine recently printed an article on the Wedland case.  I reviewed this case several months ago.  The case is now to go to the California Supreme Court to determine if someone without an advanced directive and who is not completely comatose has the right to have a feeding tube removed.  This case pits the wife who states that her husband had expressed his desire not to live if he could not be a father and husband.  The patient's mother states that her son would not want the tube removed.  This is one of the most important medical ethics cases to be heard in many years and potentially may be heard by the US Supreme Court.                     Top

Cooley v Granholm 
ED Michigan

 In this Michigan case the US Court of Appeal ruled there is no fundamental right to physician assisted suicide and the law that would allow the prosecution of physicians for participating is legal. Top            

HCA v Miller
Tex. Ct. App.   

In this interesting case the parents of a severely impaired newborn requested no heroic live saving measures prior to the child's birth.  They were overruled by the hospital rules and lifesaving tactics were utilized with the result being a severely mentally retarded newborn.  The parents were allowed to deny care only for urgently needed care AND if the child was terminal.  Their child was not terminal.  Top

HMO Lawsuits

A NY Appeals court has held that an HMO can be held liable for injuries caused by an employed physician. This is true in NY state even though the law specifically states that HMOs are not medical entities.        Top

Commercial Insurers and Fraud

Blue Cross and Blue Shield Association that represents 46 of the nations Blues have recovered more than $130 million from fraud settlements in 1999.      

In a another case Allstate has won $8.2 million in a fraud case against six physicians who ran nine Southern California clinics.  The physicians were found guilty of fraud by altering medical records and bills to support PI lawsuits against Allstate.      Top

US Supreme Court Search and Seizure
Ferguson v City of Charleston

In a 6-3 decision the US Supreme Court ruled that the testing of pregnant female urine samples for cocaine without their consent and turning the result over to the police is a violation of the 4th Amendment.  This is true even if the intent was the welfare of the fetus and mother.  The hospital was not a police entity but was a state hospital and acted like police. This case was  distinguished from "special needs" cases since the hospital did not inform the patients of the nature and purpose of the urine testing and the primary purpose of the program was prosecution to force pregnant women into treatment.                      Top

State Sue Assisted Living Entity

The Connecticut state's attorney has filed reckless endangerment charges against a assisted living company that evicted an Alzheimer's patient while he was at his physician's office. The patient, a diabetic, was forced to live with his family who were not equipped to care for the patient.  The patient subsequently died. The facility denies all charges.            Top

Peer Review Lawsuits

McLeay v Bergan Mercy Health Sys
Neb. FED. Ct. App.

A general surgeon was notified the medical staff was investigating an unspecified number of his patients.  Two months later he was informed that he was to be monitored for surgeries. Later at an ad hoc meeting he was told of the names of the eight patients treated over the past 15 months that constituted the basis for the monitoring. No files or charts were available for review to rebut any charges. The doctor was told he would remain on monitoring for one year and he could do a laundry list of minor procedures without monitoring. 
One month later he again met with the committee and was asked to sign the prior months minutes. The minutes included a statement that the doctor would be removed from the ED call list. Several days later after a meeting to which he was not asked to attend he was shown the minutes of that meeting and again signed the minutes. The hospital Board approved the restriction and then there was a report to the NPDB. The doctor responded to the hospital's letter to the NPDB stating the information was inaccurate.  
One year after the doctor was first informed of the matter, he hired an attorney.  The attorney drafted a lawsuit against the hospital and then the doctor was invited to another meeting but only without his attorney.  The doctor refused and was then summarily suspended.  Another NPDB report was sent regarding the summary suspension due to incompetence, negligence, and malpractice. 
The physician then sued on various counts and won $451,000 for breach of agreement and $1 for breach of by-laws. This trial included expert witness testimony regarding the need for NPDB reporting.
On appeal the appellate court struck down the verdict due to prejudice of allowing the expert witness testify on a matter that did not need an expert witness. The court also made several comments reflecting on the quality of the hospital's lawyers work.
This case shows that physicians should at the earliest possible time obtain legal counsel familiar with peer review.  If done early, none of the hospital's lack of due process would have occurred.

Payne v Harris Methodist H-E-B
Northern District Texas

A neurosurgeon on provisional staff with proctored privileges had his appointment and privileges removed. He was given due process but filed an antitrust suit against the hospital and proctoring physicians as well as a defamation suit against the hospital for the NPDB report. All defendants were given summary judgment due to HCQIA protection. On appeal the physician attacked the quality of the information available when the decision was made.  The court stated that all that is necessary for protection is an objective reasonableness on the information available at the time. The court went on to say that if the medical staff reasonably believed that the physician's conduct could place a patient in imminent danger, summary suspension was appropriate.

Vakil v Anesthesiology Associates of Taunton, Inc
Mass. Ct. App.

An anesthesiologist had an employment contract with Taunton who in turn had an exclusive contract with a hospital. The anesthesiology group terminated the employment contract and Vakil requested permission to continue to perform anesthesia at the hospital.  This was denied due to the exclusive contract. Vakil sued the hospital, group and medical staff for various claims including failure to give him a hearing as required by the by-laws. The court found against Vakil on all counts including the lack of a hearing.  Since he lost privileges due to no longer being employed by the exclusive contractor and not for quality concerns he was not entitled to a hearing.

Palm Springs General Hospital v Valdes
Fla. Dist Ct. App.

THE DOCTOR WINS. A radiologist was told he was no longer able to read films at the hospital due to an exclusive contract of which he was not a part. Prior to terminating the radiologist and hiring the exclusive group, the hospital administrator stated he wanted the radiologist fired due to a missed finding that resulted in a patient death. The radiologist sued the hospital for not following their by-laws and giving him a hearing based on the missed finding. The jury agreed and awarded the radiologist $166,000.  On appeal the court stated that there was enough evidence to be heard so summary judgment was not applicable.  The jury verdict stood.    

Johnson v Galen Health
Ky. Ct. App.

 A MD challenged his termination of temporary privileges for a violation of his recruitment contract. The physician had lied on his application as well as other problems. After all internal appeals he was released and filed suit. The trial court upheld the termination and this was affirmed by the court of appeal. I don't understand how one who lies on an application or his attorney can have the gall to sue.

Kerrison v Kane Community Hospital
W.D. Pa.

An anesthesiologist was fired by his employer hospital for multiple events of poor patient care. He sued for racial discrimination but lost since he could not rebut the hospitals legitimate reason to terminate him. He felt since another physician on the final case was suspended and then restated while the affected doctor was not reinstated was discriminatory.  He forgot about the other cases used against him.

Marshall v Spectrum Med. Grp. 
District Ct. Maine

A physician sued his medical group for discrimination and wrongful termination under the ADA. He attempted to subpoena from a non-party his credential file and testimony about the peer review process against him. The hospital fought the subpoena under the peer review privilege. The court said the hospital had to comply with the subpoena since there is no federal privilege of information gathered in the peer review process.     

In re U of Texas Health Center
Texas Supreme Ct.

Patients who contracted an infection after open heart surgery sued the Center.  The patients requested in discovery the Infection Control Committee minutes. The Center stated these were privileged. The Court ordered an in Camera inspection by the Court.  Following the inspection the court without notice to the Center gave the records to the plaintiffs. The Center objected and the trial and appeals court allowed the plaintiffs to have the documents.  The Texas Supreme Court overturned the lower courts and stated the documents were privileged and not discoverable under Texas law.

Sabatier v Barnes

A physician terminated from a medical staff for quality reasons sued for ADA claims, defamation, breach of contract and unfair trade practices. The defendants subpoenaed another hospital, Jefferson, for production of their peer review records on the plaintiff.  Jefferson refused stating privilege. The Court ruled that Jefferson had to give up it's peer review records since there is no right to privilege under federal law. In the peer review records Jefferson was required to redact the patient identity.

Kingsley v Sachitano
Alabama Supreme Court

The plaintiff sued in state court for negligence in the peer review process and defamation. The physician plaintiff subpoenaed hospital records including peer review records.  The hospital objected.  the court ruled the records are privileged under Alabama law, even if it's not a malpractice case.            Top

Plaintiff v Hospital

Hendrix v Bexor County Hospital
Texas 31 SW 3rd 661

Fascinating case.  A county hospital was immune from suit for a sexual assault against the plaintiff by a hospital employee. The plaintiff was called to an exam room by the employee and asked to put on a gown with the opening in front, which she did.  The employee then came back in and fondled her breasts in the pretense of doing an exam. The employee had no privileges to do breast exams. The Texas Tort Claims Act immunizes governmental agencies from tort liability. California had a case several years ago where a radiology technician violated a female patient stating his penis was a vaginal ultrasound. The hospital was found not liable in that case because the technician was not acting within the scope of his employment.

Robinson v Health Midwest Development Group
Mo. Ct. App.

Plaintiff was injured in a auto accident with a patient who received a shot of Compazine. She sued the hospital stating the medical staff did not warn her not to drive following the shot and this caused the injuries. The trial court granted summary judgment for the hospital but this was overturned by the Court of Appeal that stated that there is a public policy protecting the general public and the third person could sue even though there was no direct relationship between the patient and the hospital.

Hospital v Aetna
Charlotte North Carolina

Presbyterian Hospital won a suit against Aetna for abruptly pulling out of a five year contract.  The plaintiff's economic expert believes the hospital would have been paid an additional $23 million for the additional two years of the contract. The award portion of the case will proceed shortly.  Aetna states the hospital suffered no damages.

KC Doctors sue Permanente

Three Kansas City physicians have sued as a class action Permanente for cheating doctors out of money. The physicians were shareholders in a Kaiser affiliate, Permanente Medical Group of Mid-America. The doctors contend that Kaiser intentionally misrepresented their financial situation at a shareholders meeting in order to close two clinics and transfer 15,000 patients to another group of clinics. The suit claims that Kaiser's actions cost them their jobs and diminished their stock value. The physicians also believe that Kaiser Kansas City made improper transfers of money to its parent company.      

A patient living in Broward County Florida has sued Jackson Hospital in Dade County for refusing to do a liver transplant on him. Jackson refuses all non-emergency Medicaid cases from out of county.  The cost of a transplant is about $250,000.  The payment from Medicaid is about $20,000. In a prior battle regarding heart transplants, the Florida legislature voted to pay a flat rate of $150,000.          Top


Humphrey v Memorial Hospital Assn.
9th Circ.

A medical transcriptionist with OC Disease was constantly tardy to work.  Her work itself was of good quality. After an accommodation for her disease by flexible start time she continued to be late.  She wanted to work from home but that was denied due to her disciplinary  action. She was then fired and sued under the ADA. The hospital won summary judgment since she had initially refused a leave of action to get treatment.  The 9th REVERSED stating there was enough material fact that the hospital did not do enough to satisfy alternative arrangements.  The case now goes back to the District Court.                                     Top

Medical Malpractice Shorts
Trial cases

Mejia v Community Hospital of San Bernadino

Misdiagnosis of neck injury by ED resulting in paralysis-$27,573,922.

Fikes v County of Alameda

Pregnant psychiatric technician kicked by improperly restrained patient causing multiple and permanent injuries to the unborn child-$3,500,000.       

An ophthalmologist in Orange County injured  patient doing a LASIK.  He left the LASER on too long burning the corneal flap. The patient needed reconstructive surgery.  A settlement resulted in a $725,000 projected value damage award.                 

A NC physician who was found not guilty in a medical malpractice case released a letter to all the physicians in his small town telling who the jurors were in his case. The jurors sued the physician and the court of appeal has let the case go forward in the allegation of obstruction of justice and intentional infliction of emotional distress.  The physician states he only released public information to his colleagues.  

A NJ Appellate Court has allowed patients to add fraud to their malpractice claims when the physician has falsified his/her credentials. The question to be put to the jury is a he said/she said problem.  The patient states the physician told him he had done 60 similar surgeries in the past 11 years and that he was board-certified. The physician stated he became boarded two years after the surgery in question and denied he had told the patient any of the  patient's allegations. The court relied on two prior NJ cases in making it's decision. In Perna v Pirozzi the surgeon didn't operate as promised but had another person perform the surgery.  This was fraud. The second case Tonelli v Khanna showed that where consent was obtained by fraud, battery was allowed. As an aside, fraud and battery are not routinely covered in malpractice policies.   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.



Copyright 2000 Allan Tobias MD JD,
This page last updated March 31, 2001