2003 KANSAS BAR ASSOCIATION
ANNUAL SURVEY
CASE LAW UPDATE - HEALTH LAW
  
 
I. CASE LAW
 
 
A. Advance Directives
 
 
1. Wilson v. Wesley Medical Center, 2002 U.S. Dist. LEXIS 18524 (D. Kan.)
 
Plaintiff sued for negligence and civil rights violations arising from defendant's refusal to terminate his brother's life support. Plaintiff presented Wesley with a durable power of attorney and Wesley questioned its validity. Wesley filed to have the Sedgwick County Court determine the validity of the durable power of attorney. The court found it invalid but urged the parties agree on an appropriate course of treatment. The brother died during this process. The court dismissed plaintiff's 1981 claims finding that because the court found the durable power of attorney invalid it could not form the basis for a 1981 claim. It declined to exercise supplemental jurisdiction over the negligence claims.
 
B. Collections
 
 
1. Coffeyville Regional Medical Center v. Franklin, 2002 Kan. App. LEXIS 846, 54 P.3d 980 (2002) (decision without published opinion).
 
Franklin was sued to recover costs of services to his wife. The trial court granted judgment for plaintiff which was affirmed. The appellate court held that recovery was appropriate under the doctrine of necessaries and that the doctrine contractually bound Franklin as an additional obligor.
 
C. Comparative Negligence
 
 
1. Cook v. Lancaster, 2003 Kan. App. LEXIS 150, 64 P.3d 469 (2003) (decision without published opinion).
 
Cook was injured in an automobile accident and underwent orthopedic surgery at Wesley Medical Center. He was placed on antibiotics and transferred to a rehabilitation center. Cook was readmitted to Wesley with cramps and constipation and then persistent diarrhea, fever and elevated blood count. Tests were performed to determine the infectious agent and were repeated when the first tests were negative. Cook died. Defendant argued that he was entitled to an instruction comparing Cook's negligence but the appellate court disagreed, finding that there was no evidence to suggest Cook was negligent in providing information about his condition.
 
E. Damages
 
 
1. Wildermuth v. Staton, 2002 U.S. Dist. LEXIS 8034 (D. Kan).
 
This is a personal injury action arising out of a motor vehicle accident. Defendant moved for an order in limine related to medical expenses that were not paid by the parties or were written off by Medicare. The plaintiff argued the collateral source rule. Judge Waxse held Bates would apply equally to Medicare.
 
2. Schwartz v. Abay, 2002 Kan. App. LEXIS 324, 43 P.3d 831 (2002).
 
On a motion for judgment notwithstanding the verdict, the trial court set aside the jury's award for future medical expenses. The Court of Appeals affirmed, finding no reasonable basis upon which a jury could have computed its award. Plaintiff claimed sufficient evidence because he had three previous back surgeries and was a high risk for re-injury or further surgery. But the Court found that the risk could not be specifically related to defendant's removal of the wrong disc.
 
F. EMTALA
 
 
1. Nelson v. Calvin, 2002 U.S. Dist. LEXIS 14164 (D. Kan.).
 
Plaintiffs sued under EMTALA and for negligence after their infant son died of menningocemia. The hospital was granted summary judgment on plaintiffs' claims of failure to screen and stabilize. The hospital argued that plaintiffs' experts only discussed standard of care and causation and failed to render any opinion related to whether the hospital followed its own medical screening policies. The court found that expert testimony was essential on that issue. The court also focused on the content of the expert reports, finding that later verbal opinions were untimely since the hospital, based upon the content of the reports, did not attend the expert's deposition. The court also denied a motion to strike plaintiffs' experts, finding the expert, according to a post-deposition affidavit, spent at least 50% of his time in clinical practice based upon his clinical administrative duties.
 
2. St. Anthony Hospital v. Health and Human Services, 309 F.3d 680 (10th Cir. 2002).
 
HHS imposed an EMTALA penalty after St. Anthony's on-call surgeon refused to accept a patient. The emergency room physician had referred the sending physician directly to the surgeon instead of accepting the patient. In spite of a procedural deficiency, the Tenth Circuit upheld the penalty. During the process to determine whether a violation occurred, St. Anthony was not provided an opportunity to address the care issues with the peer review organization. The Tenth Circuit termed this as "troubling." However, it found that it could affirm the penalty because it did not consider the PRO report in its deliberations and that it was confident that even if St. Anthony had addressed the issues with the PRO, the result would have been the same.
 
G. Evidence
 
 
1. Vierthaler v. Lincoln Center Obstetrics & Gynecology, P.A., 2003 Kan. App. LEXIS 12, 61 P.3d 124 (2003) (decision without published opinion).
 
After defendant terminated plaintiff's employment contract, plaintiff sued for breach of contract and tortious interference with contractual relations. The jury found for plaintiff and defendant appealed on evidentiary issues. One issue involved admitting the AMA Code of Medical Ethics into evidence. The Court of Appeals upheld the admission of the evidence finding it relevant and admissible under the learned treatise rule.
 
H. Experts
 
 
1. Parker v. Central Kansas Medical Center, 2003 U.S. App. LEXIS 3443 (10th Cir.) (unpublished)
 
Parker was admitted to the emergency room and a surgeon was contacted to care for her. The surgeon refused care unless Parker agreed to release her medical records to him and let him assume all responsibility for her care. Parker opted to transfer to another hospital, then sued under the Emergency Medical Treatment and Active Labor Act and for negligence. Parker had identified a treating physician as a fact witness, then attempted to use her as an expert. The district court granted defendant's motion to strike portions of the physician's testimony and refused more time for plaintiff to identify experts. The Tenth Circuit affirmed summary disposition for the defendant, finding that while a treating physician may testify about standard of care and causation related to his treatment, he cannot do so without being designated as an expert when the testimony related to treatment by another provider.
 
2. Watkins v. McAllister, 2002 Kan. App. LEXIS 1026, 59 P.3d 1021 (2002).
 
The trial court granted defendant's summary judgment motion, finding plaintiff failed to present expert evidence. The trial court also struck deposition testimony from plaintiff's screening panel submission. Both rulings were affirmed. Plaintiff's expert wrote a letter stating the defendant's failure to recognize warning signs of a serious process in plaintiff's lumbo-sacral spine and a delay in treatment resulted in a cauda equina syndrome. In his deposition two years later, the expert testified that he was without the necessary medical information to determine whether the breach of the standard of care and delay in treatment caused injury to the plaintiff. A month later the expert reviewed his deposition and signed an affidavit stating his opinions were the same as expressed in his letter. The court stated that the deposition clarified the initial letter and the affidavit gave no legal or factual justification for departure from the deposition testimony.
 
3. Hollander v. Sandoz Pharmaceuticals, 289 F.3d 1193 (10th Cir. 2002).
 
This is a products liability suit alleging that the drug Parlodel caused plaintiff to have an intracerebral hemorrhage shortly before she gave birth to her second child. The district court ruled that plaintiff's experts testimony was inadmissible under Daubert. The 10th Circuit noted that its review was confined to determining whether the district court's application of Daubert manifested a clear error of judgment or exceeded the bounds of permissible choice under the circumstances. The court noted that this standard could result in the same evidence being excluded or being permissible depending on the particular judicial viewpoint. It held the trial court did not err in finding that the fact bromocriptine is similar to ergot alkaloids and erogot alkaloids are vasoconstrictive did not equate to bromocriptine being a vasoconstrictor; therefore the evidence was unreliable.
 
I. Fraud and Abuse
 
 
1. United States v. McClatchey, 316 F.3d 1122 (10th Cir. 2003).
 
The Tenth Circuit reversed and remanded the defendant's sentence for conspiracy and violations of the Medicare anti-kickback laws. The Court of Appeals held that the offense level was proper under U.S. Sentencing Guidelines Manual 2B4.1, as it was not clearly erroneous to consider only $50,000 of the $150,000 paid under a 1993 contract to be the relevant bribe for sentencing purposes. The trial court's downward departure was erroneous, however, as (1) there was no evidence that defendant was the only person who could assist his disabled son; (2) the duration of defendant's criminal behavior precluded an aberrant behavior departure; and (3) a combination of family circumstances and aberrant behavior could not justify departure, given the lack of support for either factor.
 
2. Sternberg v. Secretary, Department of Health & Human Services, 299 F.3d 1201 (10th Cir. 2002).
 
The plaintiff psychiatrist was convicted in Kansas federal district court of mail fraud, money laundering and other violations related to defrauding Medicare for billing for services he did not perform, billing twice for the same service, and billing for services at an artificially high rate. The sentencing agreement that the plaintiff executed with the government stated that the plaintiff would apply for reinstatement to federal health care insurance programs and agree to an offset of monies after his release from prison. The plaintiff was sentenced to five years. Shortly after sentencing, the Department of Health and Human Services Office of Inspector General notified the plaintiff that it had decided to exclude him from participation in the Medicare program for a minimum period of fifteen years. The plaintiff appealed that decision through the administrative process, claiming that the government had previously promised to exclude him for a period coterminus with his prison term. The district court determined that the sentencing agreement did not constitute a promise by the government to limit the period of potential exclusion and was affirmed by the Tenth Circuit.
 
J. Federal Tort Claims Act
 
 
1. Kout v. United States, 2002 U.S. Dist. LEXIS 25074 (D. Kan.).
 
Plaintiff died after two visits to a Veteran's Administration Hospital. At the VA, Plaintiff was treated by a physician employed by an independent contractor. The United States moved for dismissal on the grounds that it was not the physician's employer. Plaintiffs claimed the government should be equitably estopped from asserting that the physician was an independent contractor because the U.S. delayed notifying them until the statute of limitations passed. The physician and his employer moved for dismissal claiming the limitations period had passed. The court found the physician to be an independent contractor. It also held the government was not estopped because the plaintiff had produced no evidence that the government knew of the physician's status prior to expiration of the limitation period. Further, the court granted the physician's and his employer's motions, finding that plaintiff's failure to originally name the physician and his employer was because they assumed he was a government employee, not a mistake about defendants' identities.
 
2. Haceesa v. United States, 309 F.3d 722 (10th Cir. 2002).
 
Hardy Haceesa's widow and daughter sued the United States under the Federal Tort Claims Act for failure to diagnose hanta virus at Northern New Mexico Navajo Hospital. The court found for plaintiff after a bench trial and defendant appealed the amount of damages awarded contending the New Mexico cap on medical malpractice damages was applicable, that its liability should be reduced because of subsequent acts by another health care provider, and that plaintiffs' failure to exhaust administrative remedies barred their claims. The Tenth Circuit remanded on all grounds. The plaintiffs argued that because the United States did not qualify under the statute by purchasing malpractice insurance, the statute did not apply. The Tenth Circuit found that other courts had ruled that state caps applied under these circumstances, that it was immaterial that the hospital was not insured under the Act because the financial responsibility of the United States government was assured and that the government would have to pay regardless of its participation in a fund. The court also found the cap applicable because the government was standing in the shoes of the hospital, thus suit was essentially against a health care provider. On the second issue, the Tenth Circuit agreed that the district court found the second provider was a successive, not concurrent tortfeasor, however, it still held that damages should have been reduced based on loss of chance. It also commented that the hospital was not the original tortfeasor; the cause of the decedent's harm was the virus. Finally, the appellate court found that plaintiff's administrative claims were not timely filed.
 
K. Insurance
 
 
1. Hickman v. Gem Insurance Co., 299 F.3d 1208 (10th Cir. 2002).
 
In this class action, the plaintiff claimed that the defendant insurance company had wrongfully refused to pay certain hospital room and board charges. The insurance policies generally provided that the insurance company would pay the lesser of billed charges or usual and customary charges, a term defined as the currently prevailing charge by a majority of health care providers within the same geographic area as determined by the company. The policies further provided that room and board should be limited to an average semi-private room rate. Because the insurance policies were employee benefit plans, the plaintiff's contentions were addressed in the context of the Employee Retirement Income Security Act of 1974 (ERISA) and rejected pursuant to established case law enforcing provisions that grant discretion to insurance companies to make similar determinations. Summary judgment granted to the defendant insurance company was affirmed.
 
2. Beck v. Blue Cross and Blue Shield of Kansas, 2002 Kan. LEXIS 170, 44 P. 3d 1237 (2002).
 
Beck, a chiropractor, was a contract provider with Blue Cross and Blue Shield from 1992 to 1996. A jury found that Blue Cross and Blue Shield breached its contract with Beck and awarded him $1,602,200.50. Beck had agreed to various payment limitations and billing procedures with Blue Cross and Blue Shield but claimed that defendant reimbursed chiropractors at a different level than other providers in violation of K.S.A. 40-2,101 (a mandated provider or freedom of choice law). The Supreme Court reversed and remanded with instructions to enter judgment for Blue Cross. It found that K.S.A. 40-2,101 did not prohibit insurers from entering into cost-control agreements.
 
3. Schwartz v. Kansas Health Insurance Association, 2003 Kan. LEXIS 201 (2003).
 
The Kansas Supreme Court upheld the preexisting condition exclusion of KHIA's policy. It defined treatment to include the use of medications used to treat an injury or disease and found the exclusion to be unambiguous. The court also found that the exclusion was not contrary to public policy.
 
L. Kansas Consumer Protection Act
 
 
1. State of Kansas v. DVM Enterprises, Inc., 2003 Kan. LEXIS 32, 62 P.3d 653 (2003).
 
The attorney general appealed a district court's determination that defendants' practices of internet sales of pharmaceuticals were not unconscionable under the Kansas Consumer Protection Act. In affirming, the Supreme Court held that the acts in question did not, by law, meet the definition of unconscionable under the Act.
 
M. Licensure
 
 
1. Lacy v. Kansas Dental Board, 2002 Kan. LEXIS 780, 58 P.3d 668 (2002).
 
The plaintiff challenged disciplinary action of the Kansas Dental Board suspending his license for thirty days based upon claims of false or misleading information in claim forms submitted to an insurance company and that the plaintiff had conducted a dental office without being present a majority of the hours that it was open. The Kansas Supreme Court found substantial competent evidence to support the decision of the Dental Board and that its interpretation of pertinent provisions of the Kansas Dental Practice Act was correct. The district court decision upholding the thirty-day suspension was thus affirmed.
 
N. Loss of Chance
 
 
1. Pipe v. Hamilton, 2002 Kan. LEXIS 703, 56 P.3d 823 (2002).
 
The Supreme Court reversed and remanded summary judgment for the defendant. The court found that plaintiff set forth a prima facie case on loss of chance. Plaintiff's wife died from complications from a small bowel obstruction. Plaintiff's expert opined that defendant breached the standard of care by not performing more tests to see if the decedent's condition was treatable, but that even if the standard of care was met, the chance of survival was very small with a mortality rate of 90 to 95%. The court held that a 5 to 10% chance of survival was sufficient to maintain a claim for loss of chance.
 
O. Medical Staff
 
 
1. Lloyd v. Quorum Health Resources, 2003 Kan. App. LEXIS 199, 65 P.3d 221 (2003) (decision without published opinion).
 
Lloyd sued for tortious interference with contractual relations, defamation and invasion of privacy after the hospital investigated him for disruptive behavior. No action was taken against Lloyd, but he sued. During litigation, Lloyd subpoenaed Board of Nursing records and the district court found they were privileged. This finding was not disturbed because of a lack of record on appeal. The Court of Appeals agreed that there was no claim based upon failure to follow peer review laws because the conduct investigated fell outside of those laws. The court further found that there was a duty to investigate Lloyd's conduct and therefore the action was subject to a qualified privilege. Without evidence of a personal or improper motive, summary judgment was warranted on plaintiff's defamation claim.
 
2. Conner v. Salina Regional Heath Center, 2003 U.S. App. LEXIS 2628 (10th Cir.) (unpublished).
 
Dr. Conner applied for reappointment to the medical staff of Salina Regional. Salina's peer review panel recommended denial and Conner sued. In the suit, Conner attempted to hold Salina Regional Health Center liable for denial of due process under 42 U.S.C. 1983. Conner based his state action claim on K.S.A. 65-4929 which designates health care providers as state officers. The district court held that the statute was enacted to provide antitrust protection, not to attribute Salina's actions to the state. The Tenth Circuit affirmed. Because there was no state action, the Tenth Circuit commented that the power to affirm, deny or modify an appointment or reappointment lies squarely on the hospital's governing board.
 
3. Moore v. Gunnison Valley Hospital, 310 F.3d 1315 (10th Cir. 2002).
 
Moore was under summary suspension and certain admonitions at defendant hospital. He was not given an opportunity to appeal the admonitions and did not appeal the summary suspension. He sued under 42 U.S.C. 1983 for denial of due process. Defendant's claims of absolute judicial immunity were denied. The circuit affirmed the trial court holding that the Colorado Medical Practice Act did not extend the authority of the state medical board to hospital peer review committees.
 
P. Peer Review
 
 
1. Center for Legal Advocacy v. Hammons, 323 F.3d 1262 (10th Cir. 2003).
 
The Center for Legal Advocacy is Colorado's designated protection and advocacy organization under the PAMII Act. It sought hospital and physician peer review and quality assurance information after four patient suicides. The trial court held that the PAM II did not preempt state laws governing the disclosure of peer review records. The Tenth Circuit reversed finding, that the PAMII Act permits advocacy organizations access to peer review and quality assurance records preempting state law protections. To the same effect see Kansas Advocacy and Protective Services, Inc. v. Stormont-Vail HealthCare, Inc., No. 00-4135-RDR (Sept. 25, 2002).
 
Q. Statute of Limitations
 
 
1. Bradley v. Val-Mejias, 238 F. Supp. 2d 1242 (D. Kan. 2002).
 
Plaintiff experienced problems with his pacemaker after he was involved in an automobile accident in 1993. The pacemaker was inserted in 1991 and upgraded in 1992. Plaintiff visited defendant in 1997. In 1997 he testified during a social security disability hearing that the pacemaker caused him problems. His pacemaker was subsequently replaced by another physician in 1998. Plaintiff sued two physicians and their employer, GMED. The court granted GMED summary judgment on all of plaintiff's claims stemming from the acts of the physicians, but denied it on claims based upon a claim for negligence in the creation, management, retention and maintenance of plaintiff's medical records. GMED and one physician moved for dismissal on statute of limitations grounds. The court found that all of the plaintiff's claims against the one physician were barred. The physician's last contact with the patient was in 1997 and during that year plaintiff testified about his problems with the pacemaker. The fact the plaintiff did not know of the precise cause of his problems until later did not negate the fact his injury was reasonably ascertainable at an earlier date. Actual knowledge, according to the court, is not the standard. On plaintiff's fraudulent concealment claim, the court determined for the same reasons that the statute had run. Any concealment ceased to exist when plaintiff became aware of his injury.
 
R. Taxation
 
 
1. In Re Tax Appeal of HCA Health Services, Inc., 2002 Kan. App. LEXIS 715, 51 P.3d 1119 (2002)
 
HCA appealed from the denial of a sales tax exemption including an exemption for expenditures related to the purchase of leased equipment. HCA claimed it was entitled to a sales tax exemption under the Kansas Enterprise Zone Act. Under that act, the business must actually increase positions or employees by five. The court also held that the qualified sales tax exemption on leased property was equally applicable to the purchase of the leased property.
 
2. IHC Health Plans, Inc. v. Commissioner, 2003 U.S. App. LEXIS 6776 (10th Cir. 2003).
 
The 10th Circuit upheld the Tax Court's determination that IHC Health Plans, Inc., IHC Care, Inc.; and IHC Group, Inc. were not tax-exempt entities. Intermountain Health Care, Inc. (IHC) is a charitable, tax-exempt entity owning fifteen hospitals. Plans, Care and Group are subsidiaries. Plans consists of HMOs within IHC's integrated delivery system. Care is a direct contract HMO offering federally qualified health plans. Group is a separate federally qualified health plan. The commissioner found that Plan, Care and Group did not operate exclusively for exempt purposes. The 10th Circuit upheld that finding based upon the operations of Plans, Care and Group. The entities, according to the court, sell insurance products for a premium based upon risk; do not provide free or charitable care; and benefit only subscribers. Essentially, the entities arrange health care services for a fee and did not offer the services to the general public. Further, because the entities contracted with independent physicians for 80 percent of physician services, they were not an integral part of IHC to qualify for tax-exempt status.
 
II. KANSAS STATUTES
 
 
A. SB 34. Charitable health care provider is defined in the tort claims act to include dental services providers.
 
B. SB 44. Whenever there is a change in control of a not-for-profit hospital that may result in loss of its tax-exempt status or alters the original purpose of the hospital, all Kansas assets of the hospital must be transferred to a newly-formed foundation. The foundation's purpose will be to determine disposition of assets. This statute was enacted as support for the position of the Kansas Attorney General in opposing a proposed acquisition of Health Midwest by HCA. A Johnson County district court found the statute to be unconstitutional in Health Midwest v. Kline, Case No. 02-CV-08043.
 
C. SB 132. Automatic defibrillators may be used by any qualified person (defined as any person who has completed a basic first aid course with CPR, CPR course; or completed a course in use of automatic defibrillators; or has demonstrated proficiency).
 
D. SB 151. The definition of county and district hospitals includes joint enterprises for the provision of health care and hospital monies may be invested in such enterprises.
 
E. SB 225. Physical therapists must now be licensed in Kansas with the Board of Healing Arts working with a physical therapy advisory council.
 
F. HB 2207. Pharmacy technicians must now be registered with the state pharmacy board.
 
G. HB 2233. The Uniform Prescription Drug Information Card Act provides that health benefit plans issue cards with beneficiary and coverage data.
 
III. FEDERAL REGULATIONS
 
 
1. EMTALA. Hospitals and members of their medical staffs have struggled for many years with expansive interpretations of EMTALA by HHS. This trend was changed somewhat when the Centers for Medicare and Medicaid Services proposed changes to the EMTALA regulations to limit the scope of hospitals and physician obligations. 67 Fed. Reg. 31469-31485 (May 9, 2002). While proposed regulations generally have limited impact, these would now appear to reflect the official position of CMS. In addition, CMS issued official letters dated June 13, 2002 reflecting clarification of the State Operations Manual utilized for EMTALA surveys with reference to ph ysician on-call obligations.
 
2. HIPAA. The HIPAA privacy regulations, which became effective April 14, 2003, have drawn a substantial amount of attention by health care providers over the past year. The regulations generally define when health care providers may disclose patient health information either pursuant to a patient authorization or without such authorization and further define requirements applicable to the relationship between health care providers and those who provide services on their behalf that requires access to patient health information. This would include attorneys. The HHS final rule adopting HIPAA privacy standards was published at 67 Fed. Reg. 53181 (August 14, 2002). HHS separately published a final rule adopting HIPAA security standards, which address technical requirements related to access to electronic records, at 68 Fed. Reg. 8333 (February 20, 2003). The HHS final rule with regard to HIPAA transaction standards appears at 68 Fed. Reg. 8381 (February 20, 2003). The HHS final rule on procedures for investigation, imposition and hearings on HIPAA civil penalties was issued at 68 Fed. Reg. 18895 (April 17, 2003).
 
3. Stark. What is generally known as Stark II (42 U.S.C. 1395nn; 42 C.F.R. 411.350 et seq.) generally prohibits physician referrals for designated health services to health care entities with which the physicians have financial relationships unless the relationships meet specified requirements. A controversial aspect of the regulations as originally proposed is that certain compensation arrangements must be set in advance and that a percentage arrangement would not constitute compensation set in advance. This potentially impacted many physician agreements that provide compensation on a fluctuating basis, such as for example an arrangement that ties compensation to revenue billed or collected for physician services. CMS initially published a one-year delay of the effective date of the offending sentence in question that appears at 42 C.F.R. 411.354(d)(1) on December 3, 2001 and continued the delayed effectiveness of this provision until July 7, 2003 pursuant to a notice published at 67 Fed. Reg. 70211 (November 22, 2002).
 
 

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