Singularity Health Law Blog

IRS SPOILS PHYSICIAN RECRUITMENT CONTRACTS

One of the hallmarks of physician recruitment contracts offered by hospitals and physician groups is the incentive of "foregiveness" of "loans" offered t phy;sicians who are financially underwritten as an inducement to relocate and entier profesioal practice ina particular location. Typically, there is a subidiy of the practice for a few years followdd by a three year or so period of continuing practice ofbligaiton in the community, during which the origional subsidy "loan" is written of over time and the physician is given Form 1099C (cancellation of dept) in the later years of the guarantee arrangement.

Last April, a United States District Court judge in the State of Washington, agreed with the Internal Revenue Service that those kinds of "loans" were in fact compensation and not loans at all. It held that the physician group was liable for failure to withhold from the payments to its physicians. The case was The Vancouver Clinic, Inc. v. The United States of America, 111 AFTR 2d paragraph 2031-632 (2013 DC Wash.).

The Hon. Rondal B. Leighton entered summary judgment in favor of the IRS,holding that because both the group and the physician at the inception had no expectatoin that the incentives would be repaid and that there would never be a repayment of the "loan", it was not in fact a loan.

These kind of incentive arrangments will in the future likely to be designed to have the look and feel of actual loans with effective promissory notes and periodic payments over the term of the loan agreements, including the early years. This is just aother level of complexity in the three dimensional chess game of the multiagency oversight regulation of health care systems.

SMILE: HOSPITAL PHOTO BANNED UPHELD BY NLRB

Given the ubiquity of cell phone cameras, it is not an infrequent experience for relatives visiting patients in hospitals to take pictures of the patients, nurses and others present in the facility.  Doctors and nurses have even been known to pose with patients for group photos.  In 2007, Flagstaff Medical Center in Flagstaff,  Arizona became concerned about the use of cameras in the hospital and banned the “use of cameras for recording videos of patients and/or hospital equipment, properties or facilities.

 

FACEBOOK FIRING FRENZY?

The rise of the Facebook generation with its attendant practice of sharing its secrets and concerns with friends and foes in social media has lead to a whole new area of potential employment litigation.   More employers are now looking at social media interchanges like Facebook and LinkedIn to develop background information on potential hires.  From an employer’s perspective that makes a great deal of sense. There are amazing things that are shared on the Internet.

 

THE GREAT NURSE ANESTHETIST “OPT OUT” DEBATE

 

 

Under Medicare rules Certified Registered Nurse Anesthetists (“CRNAs”) must be supervised by a physician, typically an anesthesiologists or perhaps by a surgeon in rural areas where anesthesiologists are not available.  Medicare has a state “opt out” provision which permits CRNAs to practice without supervision of a physician.  To date, 15 states have chosen to opt out and others like Colorado are considering doing the same.  Anesthesiologists are compensated for supervising CRNAs and can supervise up to 3 at a time because they are not required to be in the same room.

UNION LIABILITY FOR LAUNDERING HOSPITAL DIRTY LINEN IN PUBLIC?

    A California Court of Appeals struck down a $17 million dollar defamation judgment in favor of Sutter Health against a union, Unite Here, which was engaged in a labor dispute with a nationwide laundry company, Angelica Textile Services, Inc. Unite Here engaged in a type of secondary picketing, attempting to apply pressure on Sutter Health to pressure Angelica to submit to union demands.  Unite Here directed its fire on the lucrative birthing services of the Sutter Hospitals. It developed what was identified as the Sutter Escalation Plan,” mailing postcards to prospective clients of the Sutter birthing centers or “wealthier women between 25 and 40 who are registered to vote.” The postcards warned that the laundry service (Angelica) used by Sutter did not ensure its lines were free from harmful pathogens and urged potential Sutter Health patients to protect their newborns because Sutter may not be taking adequate precautions against potential infections. One side of the postcard stated: “EXPECTING? You may be bringing home more than your baby if you deliver at a Sutter birthing center.”

    

PHYSICIAN PRACTICE GROUP –COVENANTS NOT TO COMPLETE

 The enforceability of covenants not to compete in physician practice group employment

agreements vary from state to state. These covenants continue to develop legal angst as courts

try to balance the protection of legitimate practice group interests against an individual

physician’s right to practice his or her profession in a continuing location.  There is also

the rights of patients to continue access to their preferred physicians to be considered

(although patient interests are rarely identified as specific elements in court decisions). 

The Montana Supreme Court, in Dr. James Mungus et al v. Great Falls Clinic LLP, 2009 MT 426

(MT, December 15, 2009) reversed a summary judgment granted in favor of the physicians seeking

a declaratory judgment that their covenants not to compete were unenforceable.

 

COMPLIANCE CODE OF CONDUCT – CONTEXT OR PRETEXT

 In Mark Thompson v. Quorum Health Resources, Inc., 1:06-cv-001658, (W.D.Kentucky, Bowling Green Div , Dec. 7, 2009), the U.S. District Court rejected the Defendant Quorum’s motion for summary judgment in a retaliation action brought by a former Quorum hospital CEO, who claimed that Quorum terminated him in retaliation for his filing an earlier Qui Tam lawsuit against Quorum. Qui Tam suits are “private attorney general” cases brought to collect funds under the federal False Claims Act for fraud against the federal government.. In the Qui Tam case, Mr. Thompson asserted that Quorum fraudulently selected a Group Purchasing Organization for its hospitals which benefited Quorum to the detriment t of individual hospitals.  That case was dismissed with prejudice.

 

Supreme Court Holds Arbitration Agreement Under F.A.A.Cannot Be Reviewed For Erroneous Conclusion of Law

There is a growing tendency to incorporate mandatory arbitration clauses in employment and other agreements as an alternative mechanism to resolve disputes. Some arbitration agreements go so far as to self define the scope of judicial review of an arbitrator’s decision. Not infrequently, there is a tension in a case between the equities or basic fairness and the law. An arbitrator, after all, is supposed to be arbitrary. He or she is supposed to quickly and economically cut through the "Gordian knot" of a dispute and do what is right.

"Arbitrition"* In Healthcare Disputes.

           In 1991, the United States Supreme Court gave strong impetus to the enforcement of arbitration agreements in employment contracts when it held that unequal bargaining power between employers and employees was an insufficient reason to hold that arbitration contracts are never enforceable in the employment context.  In Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) the court held that an age discrimination act claim can be subject to compulsory arbitration. (*The overlay of cumbersome judicial like process on equitable decision making.)

Colorado Nurse Unable To Show Employer Violation Of Public Policy Based on Violations of Private Organization Code of Ethics.

      Todays posting is by Mark Wiletsky. For more information on this case or wrongful discharge claims generally, please contact Mark Wiletsky at (303) 473-2864 or [email protected]. 

     In Colorado, and many other states, it is unlawful to force “at-will” employees to choose between their job and violating an important public policy.  Thus, an employee who is terminated for refusing to perform an illegal act, or for exercising an important right or privilege, may be able to assert a claim for wrongful discharge in violation of public policy.  This type of claim, developed by the courts, can be difficult to anticipate because it is often unclear whether an employee’s actions or statements are protected by public policy.  A recent decision from the Colorado Court of Appeals, however, provides some useful guidance and limits when dealing with such claims.