Med Law Blog : Pennsylvania Health Care Lawyers & Attorneys : Tucker Arensberg Law Firm : Employee Benefits, HIPAA & HIT in Pittsburgh, PA

“The U. S. District Court for the Middle District of Pennsylvania ruled that Lewistown Hospital was not entitled to recover the legal costs incurred fighting the allegations of Dr. Alan D. Gordon under the Sherman Act because the hospital could not show the claims brought by the ophthalmologist were frivolous or unreasonable, or brought in bad faith.” BNA Health Care Daily, October 18, 2006.

The Health Care Quality Improvement Act (HCQIA), § 11113, provides as follows:

“In any suit brought against the defendant, to the extent that a defendant has met the standards set forth under § 11112 (A) of this title and the defendant substantially prevails, the court shall, at the conclusion of the action, award to a substantially prevailing party defending against any such claim the cost of the suit attributable to such claim, including a reasonable attorneys’ fees, if the claim, or the claimant’s conduct or the litigation of the claim, was frivolous, unreasonable, without foundation, or in bad faith. For the purposes of this section, a defendant shall not be considered to have substantially prevailed when the plaintiff obtains an award for damages or permanent injunctive or declaratory relief.”

Lewistown Hospital had alleged that Dr. Gordon was either frivolous or unreasonable and acted in bad faith. Dr. Gordon argued that, in order to prevail, Lewistown must prove that he was both frivolous and that he acted in bad faith. The court rejected that argument, interpreting the statutory conditions in the disjunctive manner based upon the presence of the word "or".

However, the court also concluded that feelings of hostility or revenge do not demonstrate bad faith and are not uncommon in adversarial proceedings stating “to find bad faith on the existence of such feelings alone, absent some indication that those feelings fuel litigation, believed to be baseless, just for the sake of litigation, would seem to award attorneys’ fees in almost every case.” The court opined that, in order to show bad faith, the plaintiff would have had to knowingly proceed when the claim was “baseless, known to be baseless, and motivated by improper purpose.”

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Restrictive covenants are often the most complicated clauses in a physician employment contract.  Medical practices and their lawyers are constantly striving to make these non-competition agreements more protective, more comprehensive and more enforceable.  Sometimes this "more is better" approach backfires! Continue Reading...

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Cowett v. TCH Pediatrics Inc. seems to endorse bad faith peer review, but a closer examination of the opinion should reveal a significant distinction between bad faith peer review and peer review involving legitimate peer review concerns in situations which also include bad faith motivations among the peer review entities.

After following the fair hearing procedures provided by the By-Laws of the parties (which included TCH Pediatrics Inc, Forum Health, Western Reserve Care System, and Tod’s Children’s Hospital), Dr. Cowett was terminated from the medical staff and then sued the parties, asserting numerous claims which were not specified in the appellate opinion addressing only the issue of HCQIA immunity at the summary judgment level. The Appellate Court granted summary judgment on behalf of the Defendants based upon the immunity provided by the federal Health Care Quality Improvement Act (HCQIA). Dr. Cowett asserted that immunity should not be available because the peer review process was conducted in bad faith, and the Opinion implies that evidence regarding the existence of bad faith was at least potentially present. However, the Court concluded that:

“Dr. Cowett believes Forum should not be immune from suit pursuant to HCQIA because it acted in bad faith when determining that his privileges should be revoked. However, the only relevant issues under HCQIA are with regard to the objective reasonableness of the hospital’s actions, not whether those actions were taken in good faith. No reasonable fact finder could conclude that Dr. Cowett could overcome the presumption that Forum’s actions were reasonable. Accordingly, the judgment of the trial court is affirmed.”

Therefore, the Court concluded that, since there was evidence upon which a reasonable conclusion could be founded justifying the peer review actions taken by the hospital as having been based upon the reasonable belief that they were in the furtherance of quality health care, evidence that the hospital had potentially bad faith motives was irrelevant.

This case appears to miss the focus of the Health Care Quality Improvement Act. In HCQIA, there are four standards for immunity. The Cowett case focuses on the first, i.e., whether there was a reasonable belief that the action was in furtherance of quality health care. Using this standard, any bad faith peer review can be justified so long the peer review entity is able to identify events which can be objectively classified as legitimate patient care concerns. However, there is another standard in HCQIA which requires a “reasonable belief that the action was warranted by the facts.” This can only be a relative standard, a subjective standard, because there cannot be a reasonable belief that one physician should be subjected to peer review for causing a certain event if other physicians are causing the same events and are not subject to peer review, assuming, of course, that the peer review entities are equally aware of both circumstances and choose to act in one but not in the other.

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A federal district court in Texas has ruled that Dr. Poliner can either accept a reduced damages award of $22 million or face a new trial. The U.S. District Court for the Northern District of Texas granted a motion by Presbyterian Hospital Dallas (Texas Health Systems) and Dr. James Knochel to reduce the damage award for Dr. Poliner from $366 million to $22.5 million. This process is a legal procedure known as “remittitur,” which process allows a judge to reduce a jury award if the court believes the amount to be excessive and unsupported by the facts. This new decision was handed down on September 18, 2006. It was available on the BNA Health Care Daily health law news service at http://op.bna.com/hl.nsf/?Open=psts-6tutrcon

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