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I. INTRODUCTION TO HEALTH LAW AND POLICY A. Introduction 1. Features of health care : a. Big business. b. Major chains set up clinics on-site. (ex. Walgreens) Nurse practitioners c. Expensive i. Health care inflation always exceeds general inflation. d. US worse than other countries that devote less money to health care. e. Insufficient financial incentives for MDs to improve health care quality. 2. Series of efforts to improve health care a. Provide financial incentives. Medicare/Medicaid won’t pay extra-care costs associated with some never events. i. Eventually backs off b/c of arguments that it’s not easy to control. b. Pay for Performance (Hasn’t been shown to work.) c. Ranking health-care systems i. US News Best Hospitals Rankings; Consumer Reports; Thomson Reuters; Zagats; Govt-run websites ii. Controversy over how the calculations are made. iii. Other factors in where people live. iv. MD-physician relationship is personal, trust built up, not easy to disturb. v. Research shows ratings have limited impact on patient behavior. vi. MDs file lawsuits challenging the rankings, claiming they’re unreliable. vii. Rankings encourage MDs not to tell, which lowers the quality of care. 3. Rationale Given for Medical Malpractice Litigation a. Promote patient safety i. Identify dangerous conditions ii. Bring malpractice epidemic to light iii. Provide incentive for patient safety iv. Teach how to avoid injuries & give incentive to do so 1

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I. INTRODUCTION TO HEALTH LAW AND POLICYA. Introduction

1. Features of health care :a. Big business.b. Major chains set up clinics on-site. (ex. Walgreens) Nurse practitioners c. Expensive

i. Health care inflation always exceeds general inflation.d. US worse than other countries that devote less money to health care.e. Insufficient financial incentives for MDs to improve health care quality.

2. Series of efforts to improve health care a. Provide financial incentives. Medicare/Medicaid won’t pay extra-care costs

associated with some never events. i. Eventually backs off b/c of arguments that it’s not easy to control.

b. Pay for Performance (Hasn’t been shown to work.)c. Ranking health-care systems

i. US News Best Hospitals Rankings; Consumer Reports; Thomson Reuters; Zagats; Govt-run websites

ii. Controversy over how the calculations are made.iii. Other factors in where people live.iv. MD-physician relationship is personal, trust built up, not easy to disturb.v. Research shows ratings have limited impact on patient behavior.

vi. MDs file lawsuits challenging the rankings, claiming they’re unreliable. vii. Rankings encourage MDs not to tell, which lowers the quality of care.

3. Rationale Given for Medical Malpractice Litigation a. Promote patient safety

i. Identify dangerous conditionsii. Bring malpractice epidemic to light

iii. Provide incentive for patient safetyiv. Teach how to avoid injuries & give incentive to do so

b. Promote traditional American valuesi. Provide a system to right wrongs, access to justice

ii. Promote personal responsibility & accountabilityiii. Need a right, not enough to be angry

c. Provide needed compensationd. Avoid governmental intrusion

4. Defining Sickness & Health -- Note that this is important because we need a definition of health in order to assess the quality of care needed to promote or restore it. A malpractice suit or medical quality audit depends on an ability to distinguish a bad from a good medical care outcome. a. WHO definition: a state of complete physical, mental and social well-being and not

merely the absence of disease or infirmityb. Health as the performance by each part of the body of its “natural” function. Disease

is a biological malfunction, and illness a subset of disease. (Borse)c. Illness a socially constructed deviance—something more than mere biological

abnormality. To be ill is to have deviant characteristics for which the “sick role” is appropriate. Thus, illness has many ramifications. First, it affects the individual. It

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also relieves responsibility. ... Our understanding of illness also affects society: Defining a condition as an illness to e aggressively treated, rather than as a national condition of life to be accepted and tolerated, has significant economic effects.

5. Myths of Health Care (Alain Enthoven) a. Can diagnose, answer questions precisely, & prescribe correct treatment

i. certainty vs. uncertaintyb. There is a “best” treatment (so it is up to a doctor to know and use that treatment)c. Medicine is an exact scienced. Standardized steps that should be taken/medical care a standard producte. “More” care is better than less care (even though more can be harmful)f. Money is no objectg. Much of medical care is a matter of life and death (even though mostly about

“quality of life”)B. Quality in Health Care

1. Hospital had a duty to the patient to mandate medical clearance before the procedure was done. Bonnie Bowser Hypo (57-58)

a. Facts: Fell & severely injured elbow. Surgeon scheduled for corrective surgery next day. High risk candidate. After anesthesia administered, rapidly deteriorated, died. Autopsy: anesthesia “cause of death” as severely “medically compromised”

i. Expert: elbow operation not justified; obvious riskb. Surgeon’s duty to the pt extends beyond technical proficiency to include the

bigger picture. 2. Three major approaches to quality assessment:

a. The “structure”: resources and system designi. The relatively stable characteristics of the providers of care, of the tools

and resources they have at their disposal, and of the physical and organizational settings in which they work.

ii. Easiest evaluation to do but least useful b/c connection not necessarily direct.

b. The process of care: interaction between physician and patienti. Benefits: can specify criteria and standards of good care, establish a range

of acceptable practice, assures documentation, attributes responsibilityii. Cons: Weakness of the scientific basis for much of accepted practice;

emphasis on the need for technical interventions may lead to high cost of care; interpersonal process is slighted by focus on technical proficiency.

c. Outcomes: A change in a patient’s current and future health care status that can be attributed to antecedent health care.

i. Pros: focuses on what works, integrated—considers patient’s actions.ii. Cons: duration/timing/extent of outcomes often hard to specify; often hard

to credit a good outcome to a specific medical intervention; outcome often known too late to affect practice.

iii. What constitutes a successful outcome? What order of priority?1. Avoidance of death/Prolongation of life2. Reduction of pain/Elimination of pain3. Reduction of symptoms/Removing these symptoms

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4. Gratification of patient’s desires? psych state?a. Promoting security/integrity of body/person

5. Avoiding unnecessary costsa. Promoting efficiency in health care

6. Promoting the greater gooda. Innovation? General health of population?

7. What role for patient’s wishes/goals? Always objective or subjective too?

3. Possible Indicators of Good/Poor Quality Health Care a. Hospital mortality & morbidity rates

i. People come in w/diff conditions, some dying b/c of underlying conditions and not b/c of MDs

b. Adverse events that affect patients i. Distinguishing between adverse events and preexisting conditions

c. Formal disciplinary actions by med boardi. A lot of events don’t end up w/board—MDs take care of their own

d. Malpractice awardsi. Clientele of one hosp more willing to sue than others

ii. Most people that experience an adverse event don’t suee. Process evaluation of performance in treating a particular condition

i. Subjective, time-consuming, difficult to assessf. Physician specialization

i. Assumes specialization is better. Could fail to appreciate other risks.g. Patient self-assessment of own care

i. Something could go wrong that’s not MD’s fault.h. Scope of hospital services as evaluated by external source such as JCAHOi. Marketj. Efficiency? How much do we spend per person and for what results?

4. Means for Monitoring and Improving Health Care? a. Better health care providers

i. training, CME requirements, Hippocratic Oathb. Better informed patients

i. full disclosure, informed consent, “report cards”c. Better internal quality controls

i. staff privileges, risk management, medical & administrative committees, administrative oversight

d. Greater external oversighti. Joint Commission, accreditation; government regulation, certification

e. Greater 3rd party oversighti. managed care, insurance, employers

f. Greater medical profession oversighti. ethical standards, licensing boards, clinical standards of practice

g. Recourse to judicial systemi. malpractice suits, abuse/neglect statutes, criminal proceedings

5. Medical Practice Variation and the Nature of Quality in Medicine

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The phenomenon of medical practice variation highlights the role of uncertainty in the setting of medical standards. John E. Wennenberg has studied medical practice variation based on studies of three categories of care

a. “Effective care” : Interventions that are viewed as medically necessary on the basis of clinical outcomes evidence and for which the benefits so outweigh the risks that virtually all patients should receive them.

b. “Preference-sensitive care” : treatments, such as discretionary surgery, for which there are two or more valid treatment alternatives, and the choice of treatment involves tradeoffs that should be based on patients’ preferences. Variation in such care is typified by elective surgeries, such as hip fracture, knee replacement, or back surgery.

c. “Supply-sensitive care” : Services such as physician visits, referrals to specialists, hospitalizations and stays in intensive care units involved in the medical (non-surgical) management of disease. In Medicare, the large majority of these services are for patients with chronic illness.

--Doctors obviously make mistakes and some of these errors injure patients.-- The combined problems of variation in medical practice and lack of evidence of efficacy of many treatment approaches have launched a movement toward practice guidelines.-- Measuring appropriateness and developing parameters has its problems: it is easier to study overuse than underuse because of difficulties in defining relevant populations

Medical practice variation and the nature of quality in medicine:Wennenberg’s studies are based on studies of three categories of care:

(1) “effective care” – interventions that are viewed as medically necessary on the basis of clinical outcomes evidence and for which the benefits so outweigh the risks that virtually all patients with medical need should receive them.(2) “preference-sensitive care” – treatments, such as discretionary surgery, for which there are two or more valid treatment alternatives, and the choice of treatment involves tradeoffs that should be based on patients’ preferences. Variation in such care is typified by elective surgeries, such as hip fracture.(3) “supply-sensitive care” – services such as physician visits, referrals to specialists, hospitalizations and stays in intensive care units involved in the medical management of disease. In Medicare, the large majority of these services are for patients with chronic illness.

-- Measuring appropriateness and developing parameters has its problems: it is easier to study overuse than underuse because of difficulties in defining relevant populations; the scientific evidence is always incomplete, requiring reliance on expert judgment; and parameters are slow and expensive to develop in many areas of medical practice.- Consider the Berry case and its lessons for emerging standards of practice.

Berry v. Cardiology Consultants Inc:-- basically the plaintiffs sue for medical malpractice... say that a particular drug should not have been prescribed because it wasn’t approved by the Physicians Desk Reference (PDR) and an algorithm. But defendants counter by saying that these standards are not binding nor even

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applicable for doctors (written for non-doctors). Instead they have their own guidelines and algorithm that they followed.- Court: finds this to be adequately presented, and since the lower court/jury found this persuasive, then it holds fast. Affirms.-- This case shows how challenging it is for doctors/patients facing or seeking to make a malpractice suit: not always or even often clear what the best practice is.

--Electronic medical records: Note that the U.S. lags behind most European countries in the use of electronic medical records or EMRs, even though such records can provide physicians with immediate lab results and other necessary info for treating patients under critical conditions. The U.S. health care industry has been described as the “world’s largest, most inefficient information enterprise.”- The benefits of health information technology are substantial:

fewer medical tests; higher quality patient care; improved emergency care outcomes; more efficient prescription drug processing; fewer patient burdens; better disaster preparation; increased public health monitoring.

- The downsides:- expensive; it takes time to implement; lack of interoperability; risk of invasion of

privacy

Quality Control Regulation of Health Care:

-- Patient safety and well-being are directly dependent on the quality of health care institutions as much as on the quality of the individual patient’s doctor or nurse or therapist. The range of institutional factors that can pose a danger to patients extends from building design, maintenance, and sanitation through health information technology and management...- A variety of public and private efforts influence the quality of health care facilities. For many consumer goods and services, the market plays a significant role in setting an acceptable level of quality.- But in the face of market failure, state and federal governments often use a “command and control” system of licensure or certification for many key health care organizations through which the government sets standards, monitors for compliance, and imposes sanctions for violations.- State and fed governments are not the only plays in the quality arena, though. Private nonprofit organizations, for example, also offer voluntary accreditation processes through which facilities can measure their own compliance with standards accepted by their own segment of the industry.- Because these public and private mechanisms do not work the same across the variety of health care organizations and facilities that offers services to patients, need to assess what is best.

C. The Problem of Medical Error1. Iatrogenesis: injury caused by doctors and health care institutions.

a. Trad’l focus is on indiv MDs; misses many causes of poor quality health care.2. Prevalence of Medical Error

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a. In U.S., 1/3 of patients with health problems report experiencing medical mistakes, medication errors, or inaccurate or delayed lab results

b. A study published in the Archives of Internal Medicine (6/22/09) suggests that more than 6% of abnormal test results are not communicated to patients, & that mixing of electronic & paper records is a key driver of miscommunication.

c. According to the 2008 Leapfrog Hospital Survey, only 7% of hospitals fully meet Leapfrog medication error prevention (CPOE) standards & low percentages of hospitals are fully meeting mortality standards.

d. “[O]nly modern malnutrition injures more people than iatrogenic disease.” i. “[I]atrogenic disease comprises all clinical conditions for which remedies,

physicians, or hospitals are the pathogens, or “sickening” agents.”3. Harvard Medical Practice Study in New York (1990)

a. Significant level of iatrogenic injuryi. Much of which does not lead to a tort suit or other action

b. Reviewed 30,121 1984 NY hospital recordsi. Injuries resulting from medical management/interventions: 3.7%

ii. 25% of all adverse events resulted from negligent care, 1% of all casesiii. Majority of adverse events resulted in minimal/transient disability, but

14% died, 9% disability > 6 months (0.2%)iv. Negligent adverse events assoc w/51% of all deaths from medical injury

c. Extrapolating: in 1984 in NY, medical injury contributed to deaths of more than 13,000 patients, permanent total disability of 2,500

d. Identified number of risk factorsi. over 65, self-pay group (n.s.), 10-fold difference between hospitals

e. Nature of adverse events: i. 47% during surgery (negl more likely in non-surg setting)

f. More severe the negligence, greater the likelihood of serious disabilityg. Eight times as many patients suffered from injury from negligence as filed

malpractice claimi. 1 in 16 who suffered injury from negligence received tort compensation

ii. More recent studies: most malpractice claims do involve medical error & those that lack evidence of error usually denied compensation

4. To Err Is Human: Building a Safer Health System (1999)a. “As many as 98,000 people die in any given year from medical errors that occur

in hospitals”; Medical errors the 5th leading cause of deathb. Pre-release scoop by NBC; Sensational headlines; saturation coverage

5. Frequently Cited Medical Errors

What can be done to prevent accidents?-- One idea is the “aviation model: -First, in terms of system design, aircraft designers assume that errors and failures will occur, so the systems are designed to “absorb” them, building in multiple buffers, automation, and redundancy.-Second, procedures are standardized to the maximum extent possible. Specific protocols must be followed for trip planning, operations and maintenance. Pilots go through a thorough checklist every time. Required maintenance is specified and is undertaken frequently.

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- Third, the training, examination, and certification process is highly developed and rigidly and frequently enforced. Take proficiency exams every 6 months.- Finally, safety in aviation has been institutionalized. The FAA knows that pilots won’t report errors if consequences for doing so. So they have a confidential reporting system.-The medical model, in contrast: (1) has very little to no investment in absorption systems, no standardization, lots of training, no institutionalization of safety (doctors don’t want to report errors either because results in less prestige for individual and the profession, as well as liability).

4 recommendations:-Establishing a national focus to create leadership, research, tools and protocols to

enhance the knowledge base about safety.-Identifying and learning from errors through immediate and strong mandatory reporting

efforts, as well as the encouragement of voluntary efforts, both with the aim of making sure the system continues to be made safer for patients

-Raising standards and expectations for improvements in safety through the action of oversight organizations, group purchasers, and professional groups;

- Creating safety systems inside health care organizations through the implementation of safe practices at the delivery level. This level is the ultimate target of all the recommendations.

Eliminating “Never Events” – serious, preventable costly events that should never happen (such as wrong-site surgery)

a. Wrong-site Surgeryi. Survey of hand surgeons (n = 1000)

1. 20% operated on wrong site at least once in career2. another 16% prepared to do, but caught at last minute3. highest workloads had highest incidence

ii. Causes1. bilateral symmetry2. interval of time from exam3. abnormalities on both sides4. disregarding patient/family member5. “sidedness” of X-rays & other imagery6. “a surgeon is sometimes wrong, but never in doubt”7. absence of double-checks in the system8. override of double-checks

iii. Wrong-Side/Wrong-Site, Wrong-Procedure, and Wrong-Patient Adverse Events: Are They Preventable? (Seiden & Barach (2006))

1. “devastating, unacceptable, & often result in litigation”2. 20 times more frequent than previously believed3. 1300-2700 occur annually in U.S.4. 2004 Joint Commission: hospital staffs must take an operating

room “timeout” to verify patient’s identify, confirm procedure to be performed, & ensure all needed equipment present

5. Current prevention strategies inadequatea. 1 hospital w/this policy had 14 wrong-site errors in 18 mos

b. The Forgotten Sponge, etc.

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i. 1 study estimated 1 per 10,000 surgeriesii. 2/3 actual sponges, other 1/3 were surgical instruments

iii. 1 case for each typical large hospitaliv. Solutions?

1. sponges with loops produced in 1940sa. attached to 2” metal ring hung outside operative fieldb. “harvest” when done

2. produced sponges with radiopaque dye a. shows up on x-rayb. x-ray every surgical site before suture

3. standard protocol with 4 separate counts4. detecto-wand, automatic sponge counters

c. Sending Patients Home Too Sooni. Most frequently associated with ERs

ii. 1 in 25 patients with myocardial infarction mistakenly sent home1. 12,000 people per year2. much higher death rate than MI victims who are correctly

diagnosed & hospitalizediii. Identified causes

1. “low risk” group more likely to be sent home, even though same troubling history, data

a. women, younger have fewer heart attacks so sent homeb. non-whites

2. Some physicians more likely to admit vs send homea. younger doctors less likely to admitb. “risk-seekers” more likely to send home

i. vs. risk-avoidersiv. Solutions?

1. Break decisionmaking into steps; make a system to weigh evidenced. Handoffs

i. Loss of Orders; Advance directives (DNRs) 1. transfer in facility (nursing home to hospital)2. shift change; new staff person; “Code”

ii. Failure to deliver reports from 1 dep’t to anotheriii. Discharge: patient misunderstands follow-upiv. Confusing orders for meds, etc.

1. sound-alikes, abbreviationsv. Solutions?

1. fewer handoffs2. standardized procedures (e.g., discharge, rounds)3. electronic records4. read-backs, SBAR, “rounds” on shift change, FDA

e. Adverse Drug Events (ADE) --#1 most frequent medical errori. Any problem resulting from a drug

1. side effect, improper usage, error in prescribingii. Poor handwriting

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iii. Popular medications with similar names1. e.g., Cerebyx v. Celebrex, Zyprexa v. Zyrtec2. FDA starting to push manufacturers to avoid3. “tall man” lettering for suffixes w/ same prefix (ClomiPHENE v.

ClomiPRAMINE)iv. Similar bottles w/ similar labelsv. Wrong doses/misleading instructions

1. “4 grams over 4 days”vi. Overlooked drug interactions

1. all drugs have side effectsvii. Multiple steps

viii. Conscious behavior v. automatic behavior1. errors/mistakes v. slips2. slips pose the greater threat in health environment

ix. Solutions?1. reprimand transgressor2. Computerized Physician Order Entry (CPOE)3. decision-support4. forcing functionsbut “revenge effect” if unwieldy5. assign boring, repetitive tasks to machines6. bar-coding7. adjust physical environment

f. Nosocomial Infectionsi. CDC: caregiver adherence to hand-washing standards averages around

50%; Some hospitals have less than a 20% adherence rateii. Solutions?

1. Provide alternative methods for disinfection2. Offering rubbing alcohol in ICU increased adherence from 40% to

60%3. Make disinfectant visible & easily accessible in patient room

6. Separating Complications from Errorsa. Complications frequent even with perfect technique

i. difficult to attribute bad outcome to poor techniqueb. Complications fewer when surgeon/ hospital do a lot of a procedurec. Steep learning curves for new techniquesd. Slips vs errors?e. Solutions?

i. “Centers of Excellence”? “boutique” hospitals?ii. Enhanced training, certification requirements?

iii. Use of simulators? 7. Strategies for Reducing Medical Errors

a. Electronic Medical Records—pp. 37-40i. Health Information Technology includes:

1. Electronic medical records: computer patient records2. Computerized Physician Order Entry: enter orders (drugs, tests)3. Electronic Prescribing: create/manage/process Rxs

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4. Clinical Decision Support Systems: offer “best practice” recsii. Standard of care required that the critical info be placed in the chart even

though it was available on the computers in the hospital. Might change with the increased implementation of EMRs. Johnson v. Hillcrest Health Center (2003)

iii. Benefits of HIT:1. Fewer medical tests2. Higher quality patient care3. Improved emergency care outcomes4. More efficient prescription drug processing5. Fewer patient burdens6. Better disaster preparation7. Increased public health monitoring

iv. Problems/Issues:1. Expensive—software, hardware, time spent learning the system.

Incentives problem. Once in place, economic savings may be substantial.

2. Lack of interoperability—no standardization yet.3. Privacy risks for patients.

b. Leape, “Error in Medicine” (1994)i. Accept errors as inevitable

ii. Reduce reliance on memoryiii. Improve information access

1. ex. computerizing medical recordsiv. Error proofing

1. “forcing functions”, computerized systems for medication ordersv. Standardization

vi. Training1. Greater emphasis on possible errors and how to prevent them

vii. Absorption of errors1. Efficient, routine identification of errors.2. Buffers should be built into each system so errors can be absorbed

before they cause harm or identified in time to be intercepted.viii. Eliminate psychological precursors

1. Fear, supportive working environment, time pressures, fatigueix. Systems modifications/cultural change

c. Risk managers (Traditional Approach)i. Paid by hospital, often a lawyer

ii. The “risk” seeking to manage is mostly hospital’s risk of being suediii. 3 main tasks when called about a case

1. Settle everyone down2. Assess hospital’s liability3. Help control damages

iv. After receiving call, gather available factsv. Not an objective investigation

vi. Crisis management

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vii. After legal dust settles, work to prevent future errorsviii. Incident report

d. Hospital quality assurance programsi. Focus more narrowly on patient care

ii. Wider range of quality concerns (not just patient mishaps)iii. Rely on incident reportsiv. Primary reliance on hospital committees

1. Oversee quality of various hospital functionse. Clinical standards/practice parameters

i. Develop in complicated wayii. Decentralized process: pros & cons

iii. Issues: Innovation; Geographical variations; Practice variationsf. FDA Rule on Bar-Code Labeling for Pharmaceuticals (Feb. 2004)

i. Bar codes required on all prescription drugs & vaccines, some over-the-counter, & all blood & blood products

1. National Data Code number (linear bar code standard format)2. Specific packaging & location not established3. As of April 2006, manufacturers must bar code existing drugs

ii. Goal: improve patient safety1. Estimated 50% increase in interception of medication errors

(413,000 fewer adverse drug errors) & $41 billion savings associated with errors

iii. April 2005: ¼ of hospitals had fully or partially adopted bar-code technology for medication administration

1. Lack of electronic records in which to incorporate2. Lack of systems approach3. Not included on all unit-doses4. No deadline for implementation

g. National Practitioner Data Banki. Effort to prevent doctors with disciplinary history in one state from

moving to another & practicing thereii. Mandated reports by

1. State disciplinary & licensure boards2. Hospitals & other entities engaging in peer review processes

iii. Licensure boards have access to Data Bank to check on licenseesiv. Hospitals must check:

1. For physicians applying for staff privileges2. Periodically for physicians who hold staff privileges

v. General public not allowed access1. Proposals for allowing increase access

vi. GAO critical of information containedh. Pay for Performance

i. Found to have little impact on care qualityi. Mandated Reporting of “Never Events”j. Report Cards

8. Approaches to Quality Improvement

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a. Enhance traditional forces of professional ethics & socializationb. Expand the role of the marketplace

i. disseminate info to consumers & buyers of healthc. Improve current modes of self-regulation

i. accreditation, medical staff privileges, medical licensing actionsd. Improve process by which patient sues for malpracticee. Govt intervention, setting standards & demanding better processes & outcomes

II. THE PROFESSONAL-PATIENT RELATIONSHIPA. The Contract Between Patient and Physician

Establishing a physician-patient relationship is usually a prereq to a professional malpractice suit (and once physician-patient relationship is established, the law imposes a higher level of duty on physicians. It’s a fiduciary duty of sorts. A fiduciary obligation in medicine means that the physician focuses exclusively on the patient’s health; the patient assumes the doctor’s single-minded devotion to him; and the doctor-patient relationship is expected to be free of conflict. Thus, note the element of “trust” as a theme in analyzing medical ethics.)

1. General Rule: If not their patient, MD owes no duty to individual to treat or disclose problems discovered.

a. pre-employment physicals, insurance eligibility (exams re auto accident claim)b. GR: MD must consent, expressly or impliedly, before MD-patient relationship

createdi. workplace exams (partic if routine) may impose duty

c. No patient-healthcare provider relationship existed between Medical Center and patient when MC did not undertake to advise patient regarding, or to treat for, any disease, illness, or medical condition and undertook only to determine the gender of the baby. MC only owed patient the duty to perform the sonogram in a non-negligent manner. No duty so no liability when technician sees bowel outside baby’s body and doesn’t notify patient. Esquivel v. Waters (Ct of Appeals, Kansas, 2007).

d. EXCEPTION: In some courts, the existence/absence of relationship simply a factor to be weighed in determining liability; not outcome determinative

i. Daly v. United States (9th Cir. 1991): failure of radiologist to disclose chest x-ray abnormalities discovered during pre-employment physical

2. GR: MD in private practice can contract for services as sees fita. MD can refuse to enter into a K or to treat patient (even in emergency conditions)b. MDs may limit their:

i. specialtyii. scope of practice

iii. geographic areaiv. hours/conditions under which they will see patient

1. e.g., specific procedure, office visits, consultc. No obligation to offer outside competence & trainingd. No obligation to offer beyond scope of original agreemente. Can transfer responsibility by referring to another MD

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f. May expressly contract for specific resulti. parol evidence may be used to fill in gaps

3. Once established, obligation of “continuing attention”a. e.g., surgeon responsible for post-op complicationsb. give time to find alternative carec. obligation ceases when nothing more can do for patient

4. Offer: when patient goes to MD’ office with particular problem5. Acceptance: when MD examines patient

a. MD free to send patient away, relieves of any duty6. Implied K usual basis for patient/MD relationship

a. Majority rule is that if there is an exam, there’s a relationship, but if no MD exam, then no relationship

b. Refusal to treat after relationship established is abandonment, and it may also be malpractice. To avoid malpractice, need to give patient time to seek alternative care.

c. MD on-call: one case says there is a duty. Arguably an exception to the general rule. On the hook if participate in diagnosis, prescribe, or agreement w/hosp or health plan—preexisting obligation—puts them on the hook. If only on call, no relationship b/c we want on call physicians.

d. No relationship if one MD reviews another MD’s patient’s labs/consults.e. Quasi-contractual basis as opposed to a traditional contractual analysis. We

impute to both patient and physician reasonable intentions and standard conventions.

7. A duty may exist when public policy favors the recognition of a duty or when the harm is particularly foreseeable. Millard v. Corrado (MO, 1999)

a. Factors that courts should consider in deciding whether to recognize a legal duty:i. Social consensus that the interest is worth protecting;

ii. Foreseeability of harm and the degree of certainty that the protected person suffered the injury;

iii. Moral blame society attaches to the conduct; iv. Prevention of future harm; v. Consideration of cost and ability to spread the risk of loss;

vi. Economic burden on the actor and the community.b. Court recognized a MD-patient relationship when general surgeon listed as on-

call yet did not respond to his page (left for four hours); should have provided notice to the hospital (easy step; high risk if don’t take it).

8. Specific Promises and Warranties of Cure: a. Where MD promises particular surgical results, may be held liable for breach of

that express warranty. Mills v. Patei. Mills filed suit against Dr. Pate after 2 liposuction surgeries for: (1)

negligently failing to warn & obtain IC; (2) causing/failing to correct abdominal irregularities.

b. Rarely successfuli. Not fair to hold physicians to promises b/c it’s unpredictable, it’s

therapeutic to tell patients they’ll get better—trust important.

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c. Courts generally require clear proof, clear and convincing evidence, or the promise to be written.

d. “Therapeutic assurances” vs. Express warranties9. Advantages to a contract claim:

a. Statute of limitations typically longer than tort action.b. need not establish the medical standard of care; expert testimony not needed.c. May even be viable when MD has made risk disclosure (IC satisfied)d. Offers a remedy to who underwent procedure b/c of enticements of MD

10. Breach of the K:a. MD may promise to use a certain procedure then use an alternativeb. Where the MD promises a particular result which fails to occur.

i. Some states require the promise to be in writing (Statute of Frauds)11. Damages available for a breach:

a. Expectancy: amt to place in position he would be in if K had been performedb. Restitution: amt equivalent to the benefit conferred by upon c. Reliance: π recover expenditures made and for other detriment

12. Limiting Liability and Exculpatory Clausesa. Courts typically uphold waivers of the right to sue, if:

i. The waiver of negligence is clearly described,ii. The activity is a voluntary one,

iii. The waiver freely given by a party who understands what he is giving up,iv. There is not a serious imbalance of bargaining power.

b. An agreement between a (charitable research) hospital and an entering patient affects the public interest and as a consequence, the exculpatory provision is invalid. It would then be against public policy to release liability when in the “public interest.” Tunkl v. Regents of Univ. of CA

i. Public Interest factors: What courts look to:1. business of type generally thought suitable for public regulation2. performing service of great importance to public3. service a matter of practical necessity for some members of public4. holds self out as willing to perform service for any member of

public seekingii. Facts: required to sign liability release at admission. In consideration of

lower rates as nonprofit, charitable institution, released from liability for negligent acts of employees if used due care in selecting employees. Negligence of two physicians led to death. stipulated to due care.

c. Refusal to accept treatment based on religious or deeply held beliefs will/can partially limit patients’ right to sue. Consent form assuming the risk for refusal of a blood transfusion upheld as valid. Shorter v. Drury (Wash. 1985)

i. H&W signed Refusal to Permit Blood Transfusions—released hospital from responsibility for untowards results due to refusal to permit blood use. Surgeon accidentally lacerated uterus, profuse bleeding, shock, death. MD pled 1st with wife, then with husband, but refused. Agreed transfusion would have saved life. Jury: MD’s negligence proximate cause of death, but patient assumed risk & 75% at fault (Defendants only 25% to blame). Damages of $412,000 reduced to $103,000

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ii. This ruling makes sense I think. Refusing transfusion is mostly to blame here. And you don’t want hospitals to just refuse all Jehovah’s Witneses, so you kind of got to let hospitals have enforceable waiver forms.

B. Informed Consent: The Physician’s Obligation1. Historical Development of IC

Informed consent has developed out of strong judicial deference toward individual autonomy, reflecting a belief that an individual has a right to be free from nonconsensual interference with his or her person, and a basic moral principle that it is wrong to force another to act against his or her will.

a. Decisions made by physicians i. “Do no harm,” but comprehension of medical matters beyond capacity of

patient & thus no role in decision makingii. MD’s prerogative & obligation: job is to get patients to agree with them

iii. The “expert”: as the expert, the MD decides course of treatmentiv. Deception okay if patient’s best interest

b. Antecedents of ICTort action for battery(During the first period of doctrinal development, the doctrine of battery provided the theoretical underpinnings for a cause of action... Thus, when a surgeon removes or operates on a part of the body he and the patient had not discussed, a battery action lies.)

i. Focus of battery claim re IC1. Autonomy2. Self-determination3. Dignity 4. Absence of discussion/consent

c. Phrase 1st used in 1957 California case; Quickly spread through the ’60si. Shock to the medical community

ii. Initially primarily a battery claim1. Did a disclosure occur re proposed treatment?2. Evolved to encompass alternatives & risks3. 1972-present: legislative retrenchment & judicial inertia

a. Move to foundation in negligenced. Features of a Battery Claim

i. Straight-forward focusii. Doesn’t require establishing standard of care

iii. Proof of causation simpleriv. Physician’s/patient’s beliefs irrelevantv. Permits punitive damages

e. Shift to Negligence Doctrinei. Criticisms of battery cause of action

1. Some courts require complete absence2. Some legislatures abolished as foundation

ii. Shift viewed by many as favoring MDsiii. Negligent nondisclosure

1. show MD failed to act in customary manner 2. number of exceptions available

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3. must establish causal link a. medical injury causationb. decision causation

4. less availability of punitive damage2. Negligence as the Basis for Recovery: Two Competing Standards for Disclosure

a. “Reasonable Patient” ( Canterbury v. Spence) rule : “A risk is thus material when a reasonable person, in what the physician knows or should know to be the patient’s position, would be likely to attach significance to the risk or cluster of risks in deciding whether or not to forego the proposed therapy.”

i. “No less than any other aspect of negligence, the issue of nondisclosure must be approached from the viewpoint of the reasonableness of the physician’s divulgence in terms of what he knows or should know to be the patient’s informational needs.”

ii. MD bears no responsibility for discussion of hazards the patient has already discovered or those having no apparent materiality to patient’s decision on therapy. Canterbury

iii. Eases ’s burden of proof, b/c it’s for trier of fact to decideiv. Expert needed to clarify the treatments and the probabilities of risks (but

not as to whether any info of the material risks was given at all).b. Professional disclosure standard : What a reasonable MD similarly situated would

disclose.i. Expert testimony needed; favorite of tort reform legislation

ii. Justifications for the professional disclosure standard:1. Protects good medical practice—shouldn’t be concerned w/juries2. Patient standard would force MDs to spend unnecessary time

discussing every possible risk, interfering with needed flexibility3. Only MDs can accurately evaluate the psychological and other

impact that risk would have on particular patients.4. Malpractice costs limited by keeping cases away from the jury

iii. Courts usually require the to offer medical testimony to establish:1. That a reasonable medical practitioner in the same or similar

community would make this disclosure,2. That the defendant did not comply with the community standard.

c. 25 states + DC use patient std; 23 use professional stdd. Ps prevail w/ patient standard = 27%e. Ps prevail w/ professional std = 17%

3. MD must consider disclosure of:a. Diagnosis—incl medical steps preceding, tests, and their alternativesb. Proposed treatment

i. Nature and Purpose ofii. Material Risks of

iii. Likely outcome ofc. Alternative diagnoses/ treatment: Doctors should disclose:

i. Risks / consequencesii. Probability of success

iii. Some: disclose even if option more hazardous

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d. Some: prognosis if treatment declined i. i.e. what outcome if no treatment

Cobbs v. Grant: The court in Cobbs stated that a patient must be apprised not only of the “risks inherent in the procedure [prescribed, but also] the risks of a decision not to undergo the treatment, and the probability of a successful outcome of the treatment.”

Wecker v. Amend: court held that patient should be warned/informed of the pros/cons of “watchful waiting” (i.e., doing nothing), as opposed to treating.

Note that most courts don’t consider the patient’s state of mind in informed consent cases (assuming the patient is competent); instead, they focus on whether the physician’s disclosure was adequate. At least one case, though, Macy v. Blatchford, found that a reasonable jury might find that the past sexual relationship between doctor and patient would impede the patient’s ability to appreciate the significance of the disclosure...

4. Specific Risk Informationa. A surgeon’s experience or lack thereof may be material to a patient’s decision

about whether to proceed with that particular doctor or whether or not to go with the medical procedure itself. Johnson v. Kokemoor (Wis. 1996) (This was the case where the doctor lied/gave false info about how often he has performed the surgery and under-exaggerated the risks involved.)

b. When different MDs have substantially different success rates with the same procedure and a reasonable person in the patient’s position would consider such information material, the court may admit this statistical evidence (people would reasonably want to know the morbidity and mortality rates associated with a surgery!)

c. Court may admit evidence that an MD should have made patient aware of a lower risk surgery with a diff, more experienced surgeon in a better-equipped facility.

d. Most courts resist requiring statistics be disclosed b/c med is an inexact science.

-- Under Ditto v. McCurdy, however, court held that “under the circumstances of the present case [doctor who was not a plastic surgeon messed up breast implant surgery], we decline to hold that a physician has a duty to affirmatively disclose his or her qualifications or the lack thereof to a patient.”

5. Problems in Obtaining ICa. 2004 IOM report: 1 out of 2 adult patients has problems understanding info given

i. particularly elderly, illiterate, semi-literate, non-English speaking, unacculturated, hard of hearing, heard of seeing, emotionally upset, mentally challenged

ii. may pretend to understand (shame)iii. tendency to shut down when receive bad news

b. Should informed consent be suspended during a public health emergency?

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i. FDA (2006): IC not required for in vitro diagnostic devices to identify chemical, biological, radiological, or nuclear agents

1. concern that delayed testing may threaten life of subject2. rapid ID of agent needed to assist others who have been exposed

6. Disclosure of Statistical Mortality Information - Patients with diseases such as cancer usually face a reduced life expectancy even with the best medical treatment. Such patients would presumably like to know as much as possible about their life expectancy for a variety of reasons: estate planning, goodbyes to family and friends, fortifying themselves to face death for personal and religious reasons. Must the doctor inform the patient of his life expectancy based on statistical tables?

Arato v. Avedon (Ca. 1993)a. Court doesn’t require as a matter of law the disclosure of statistical morbidity

rates. b. MD has duty to disclose all facts that materially affect patient’s rights & interests

i. Scope of disclosure measured by amount of knowledge patient needs to make informed choice—all information “material” to decision.

ii. information MD knows or should have known would be regarded as significant by a reasonable person in patient’s position

1. not require to address patient’s nonmedical interestsiii. answer on questionnaire not determinative

c. Statistical morbidity values are inherently unreliable and offer little assurance regarding the fate of the indiv patient.

d. Arato v. Avedon: Didn’t disclose high statistical mortality rate. Ct found general jury instruction regarding disclosure material to patient fine.

i. surgeon: great anxiety, medically inappropriate to discloseii. oncologist: want truth, not “cold shower,” deprive of hope

iii. little predictive value when applied to individual iv. did tell most die, at great risk, & incurable if returns v. looked for cues inviting follow-up for more direct/difficult Qs

vi. neither spouse asked for life expectancy in 70 visits during year vii. concluded had as much info as wanted

viii. Consent given to painful treatment. Died a year after initial surgery-- What do we think of this? Was the court merely applying the Cobbs analysis, as it says it was? Why did it refuse to make a disclosure requirement? Did it just want to give the lay jury some wiggle room? Is life expectancy data so inherently untrustworthy that patients should not be told? Wanted to let physician make judgment call as to what patient needed to hear (knowing if patient is, say, overly anxious and/or not likely to properly interpret the statistics in a healthy way)? I think this last consideration makes sense: instead of a statistic that people are likely to understand, doctor should just say generally what they need to hear (“great risk”; very good chance...; etc)

- Courts have generally refused to find a hospital or physician negligent for failing to advise patients that they were eligible for government funding. See, e.g., Mraz v. Taft.

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7. Disclosure of Physician Conflicts of InterestMedical professionals are in a position of dominance with regard to their patients. The relationship is inherently unequal. The physician has superior knowledge produced by long years of training and practice, expertise the patient cannot have; the physician is less concerned about the patient’s health than is the patient; the patient is often anxious and ill-equipped to process complex medical information; and the physician can usually get another patient more easily than the patient can obtain another doctor. Patients are thus vulnerable, and this vulnerability imposes on physicians a “trust,” a fiduciary obligation justified by the physician’s dominant position in the relationship.

Moore v. Regents of the University of Californiaa. A MD must disclose personal interests unrelated to the patient’s health, whether

research or economic, that may affect the MD’s professional judgment. Under the duty to obtain informed consent, a doctor must disclose his intent in using a patient for research and economic gain.

b. If fail to disclose such interests, may give rise to a cause of action for either:i. #1: breach of fiduciary duty to disclose facts material to consent

ii. #2: performance of medical procedure without ICc. Scope of disclosure measured by patient’s need

i. based on what material to decisiond. Reasonable patient would want to know economic interest that might affect

professional judgmenti. research interest is potential conflict

ii. may tempt to order test of marginal benefit for patientiii. may consciously/unconsciously take into accountiv. prerogative of patient, not MD

Note case: Estrada v. Jacques: court held that a patient had the right to know (have disclosed to him) that a particular treatment/surgery was experimental.

8. Causation Complexitiesa. Must be causal relationship between failure to disclose & damage/harm to patient

i. Breach of duty of informed consent alone not sufficient ii. Show disclosure would have resulted in decision not to accept treatment

1. only protect from consequences would avoid if knew riskb. Objective vs. Subjective test

i. Objective: what prudent person in pt’s position would have decided1. patient’s testimony relevant, but not dominate; reasonableness2. endorsed by Canterbury v. Spence (DC 1972), which held that a

doctor has a duty to disclose all reasonable information about a proposed treatment to his patients.

ii. Subjective: what the particular patient would have done1. post-hoc analysis; purely hypothetical / a guess2. places MD in jeopardy of patient’s hindsight & bitterness3. too difficult for fact-finder4. relies solely on patient-witness

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- The court in Cheung v. Cunningham preferred the use of a subjective standard: the court held that the subjective standard was preferable over Canterbury’s objective standard because “the totally objective standard...denies the individual’s right to decide what is to be done with his or her body and may deny the individual the right to base consent on proper information in light of their individual fears, apprehensions, religious beliefs and the like.”

*** Note: I think I will want to have a strong opinion about whether the objective or subjective standard is preferable! [I agree with the statement in Cheung but feel that it fails to take into consideration the difficulties applying such a standard would bring to litigation...would increase litigation costs and put more physician’s on the hook I think...instead, I think the objective standard is fairer; patient’s with idiosyncratic beliefs should be required ex ante to make those beliefs known and then that should take weight.

9. Damage IssuesIn a typical informed consent case, the plaintiff is informed of a certain risk, undergoes treatment, and suffers a bad result. The plaintiff then argues that if the risks had been disclosed, he would not have undergone the procedure and would have avoided the risk that materialized, either by choosing another alternative or doing nothing. Damages are then measured by comparing the bad outcome with the probable result if an alternative procedure were performed, or nothing was done. Since informed consent is a patient autonomy violation, it is also a claim that may allow for punitive damages under the right set of facts.

a. Punitive Damages may be available in an IC case b/c IC is a patient autonomy violation. Tisdale v. Pruitt (SC Ct Ap 1990)

i. Court allowed for punitive damages based on MD’s admissions even though battery count had been dismissed. Ct found MD’s actions and attitude constituted reckless behavior, justifying punitive damages.

1. MD admitted didn’t read chart; pardon my “goof.” “vibes” that patient wanted D&C (dilation and curettage). (Basically, the patient went to see this doctor for a second opinion, and he examines her and decides to give her an abortion without getting her consent :O.... What the...?!)

b. Punitive damages are typically awarded as part of the damage claims for an intentional tort such as battery. The focus is on the reprehensible nature of ’s conduct, which may be reckless or motivated by malice or fraud.

i. Negligence covers situations where surgery was authorized but the consent was uninformed. No punitive damages for simple negligence.

Note case: Smith v. Wilfong: If a material fact is concealed with the intention to mislead a patient, fraud may be found, and the patient’s consent to a procedure is vitiated.

10. Exceptions to the Duty to Disclosea. Unconscious or otherwise incapable of consent and harm from a failure to treat is

imminent & outweighs any harm threatened by the proposed treatmenti. If possible, still attempt to secure relative’s consent

ii. Right of MD to act in a true emergency w/o patient consent.

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b. When risk-disclosure poses such a threat of detriment to the patient as to become unfeasible or contraindicated from medical point of view

i. So ill/emotionally distraught as to 1. prevent rational decision2. complicate/hinder treatment3. pose psychological damage to patient

ii. Where the patient has consented to a procedure to remedy his condition, he is presumed to have consented to all steps necessary to correct it, even though the procedure in fact used varies from that authorized specifically.

iii. Sound medical judgment that disclosure threatens patient’s well beingiv. Carefully circumscribe because can devour rulev. Not justified by fear the patient will withhold consent to treatment MD

feels the patient really needs—paternalistic notions.c. Burden to show exceptions rests with MD

i. Patient has made out prima facie caseii. Relevant evidence usually in hands of MD alone

Emergencies: The common law has long recognized the right of a doctor in a true emergency to act without patient consent, so long as he acts in conformity with customary practice in such emergencies. Jackovach v. Yocum.

-An unconscious or incompetent patient cannot consent, and the physician may turn to a substitute decisionmaker, such as a spouse or a sibling. Even disorientation may be enough for most courts to allow such substitution. See King v. Our Lady of the Lake Regional Medical Center.

Therapeutic Privilege: Note that therapeutic privilege has the risk of swallowing the entire doctrine of informed consent... if merely withhold info believe the patient couldn’t handle. You will want to be able to point to a particular reason (a strong one, preferably).

Waiver: What if a patient tells the doctor, “I don’t want to know a thing!” Can a patient be forced to receive a full disclosure when he/she self-autonomously wants to be ignorant as the risks (because would find it troubling, etc)?

C. Informed Consent: The Institution’s Obligation?1. Consent forms are universally & sequentially used in institutions

a. Courts have said little about such forms2. Legal responsibility to obtain is MD’s, not the hospital’s 3. Many states: treat as presumptively valid consent

a. Burden on patient to rebut presumption4. Institutional resp. to ensure that a patient’s IC is obtained generally exists only in:

a. Documentation of patient consent for the record (if nurse fails to document the consent, as may be required by hospital’s internal policies), and

b. Hospital participation in experimental procedure5. Studies: consent forms achieve little

a. most patients fail to recall

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b. intend to intimidate patients & poorly understoodc. legally spawned ritual; difficult to readd. fail to provide lesser risks, likelihood of success, alternatives

D. Confidentiality and Disclosure in the Physician-Patient Relationship1. The information disclosed to a physician during the course of the relationship between

physician and patient is confidential to the greatest possible degree. a. Patient should feel free to make a full disclosure of information to the physician in

order that the physician may most effectively provide needed services. i. American Medical Association’s Principles of Medical Ethics

b. Emphasis on confidentiality came b/c of: (1) AIDS—it was so stigmatizing, and terrible disclosures occurred; and (2) nature of the way the medical world has changed, electronic records make it easy to get info out.

Breaches of Confidence:One of the most important obligations owed by a professional to a patient is the protection of confidences revealed by the patient to the professional. State courts have developed common law rules to protect these confidences. The Federal Medical Privacy Rules under HIPAA provide an elaborate protective framework for patient information. These state and federal obligations are discussed in this section.

Example case: Humphers v. First Interstate Bank of Oregon:Summary: Plaintiff gave birth to daughter who she later gave up for adoption. After some years, the daughter wanted to find her mother, so doctor who delivered her helped her to do so (he was one of only 3 people who knew, including mother and her new husband). Plaintiff mother sued doctor claiming that he breached his contractual duty of confidentiality and invaded her privacy.Holding: appellate court was correct in holding that the doctor committed breach of confidentiality (although no invasion of privacy was found).

Note case: Medical records often play a pivotal role in medical malpractice cases. By the time a malpractice action comes to trial, memories may have dimmed as to what actually occurred at the time negligence is alleged to have taken place, leaving the medical record as the most telling evidence. Medical records, if properly authenticated, will usually be admitted under the business records exception to the hearsay rule. Because either documentation or inadequate care or inadequate documentation of care may result in liability, physicians are sometimes tempted to destroy records or to alter them to reflect the care they wish in retrospect they had rendered. There is nothing wrong with correcting records, so long as corrections are made in such a way as to leave the previous entry clearly readable and the new entry clearly identified as a corrected entry. Conscious concealment, fabrication, or falsification of records may result in an inference of awareness of guilt. Pisel v. Stamford Hospital..

2. Causes of Action for breach of confidentiality:a. Contractual claim

i. Longer S/L ii. No remedy for emotional injury unless emotional security was object of K

iii. Remedy for breach of K unavailable to 3rd parties

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iv. Awkward fiction if patient lacked decision-making capacity (age, mental)b. Invasion of privacy / malpractice

i. Includes breaches of standards of conduct beyond contractual agreementii. But requires expert testimony re customary care

iii. Tort of breach of confidential relationship (Doe v. Medlantic Health Care Group (DC Ct App 2003))

1. The unconsented, unprivileged disclosure to a 3rd party of nonpublic info that the has learned w/in confidential relationship (In this case, a janitor had HIV and got tons of ridicule because another person he worked with, who served as a temporary receptionist at a hospital, had seen his medical records there. Sued the hospital for not properly following caution/cautious procedures in keeping his medical records confidential. Court also denied that expert testimony was needed in this case, since the hospital breached its own protocols on this procedure).

c. Intentional Infliction of Emotional Distressi. Encompasses emotional distress

ii. No claim if no intent to harm or not reckless3. Foundations for c/a for disclosure of info obtained during confidential relationship:

a. (1) Physician-patient privilegei. Only a testimonial privilege, not a general obligation to maintain conf.

ii. Does not require the MD to keep info from employers or insurers.iii. Statutorily created and does not exist in all jurisdictions and does not

apply in non-diversity federal court proceedings.iv. Subject to many exceptions.v. Only applies to confidential disclosures made to a MD in the course of

treatment and is easily waived.b. (2) Licensing statutesc. (3) Common law physician-patient fiduciary relationshipd. Contours of duty established by these external legal sources

i. key: adoption statute specifically mandated secrecyii. but also place limits on duty

1. may be obligated to report, protect4. Privacy v. Confidentiality Claims

a. Both assert right to control informationi. Though not every secret involves “private” information

b. Breach of privacy can be committed by anyonei. Confidentiality claim: only target person who holds info in confidence

(e.g., MD)c. Privacy focuses on both P’s right & D’s wrong

i. K claim has rights spelled outd. 4 forms of privacy torts, though not all adopted

i. appropriation of name/likenessii. unreasonable/offensive intrusion upon seclusion

iii. public disclosure of private factsiv. publicity which places in “false light” in public eye

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e. Court: in this case, can only proceed on breach of confidentiality claim, not privacy claim. No general invasion of privacy: MD didn’t approach Ramona, pry, or seek out. The daughter invaded patient’s privacy, the MD failed to keep a secret. There’s not a general obligation not to invade other’s privacy.

i. Humphers v. 1st Interstate Bank of Oregon (Ore. 1985) Daughter given up for adoption. MD gives Dawn letter with untrue statement that administered medication made it important for her to find her biological mother, Ramona. R sues MD for emotional distress.

5. Can disclose if true medical need for info (Humphers suggests)a. For safety, public interest, to protect others

6. Evidence that there were significant lapses in the enforcement of the hospital’s protocols to safeguard medical records, and that pointed to a hospital employee as the source of the unauthorized disclosure, sufficed to permit the jury to conclude that the hospital breached its duty as a fiduciary to maintain the confidentiality of the patients medical records.

a. Suit against hospital for negligence in permitting Goldring (hosp. employee) access to confidential (AIDs) pt information. (Doe v. Medlantic Health Care Group (DC Ct App 2003))

7. Federal Medical Privacy Standards/HIPAAa. HIPAA: address harms suffered by accumulation & use of medical infob. Regulatory approach

i. Disclosure only if permitted under specific exceptionsii. Sanctions:

1. Fines, with each disclosure = $1002. Civil penalties only if “willful.” No penalties if failure to comply

was due to reasonable cause & corrected within 30 days.3. Knowing violation = criminal penalty (max $50k, 1 year)4. HHS seeks & promotes voluntary compliance

c. Doesn’t authorize c/a for breach (no right to sue)i. Tho may establish standard of care re confid/disclosure of med info

d. Test: “minimum necessary”i. Covered entities must make reasonable efforts to disclose only the

minimum necessary to achieve the purpose for which the protected health information (PHI) is being used or disclosed.

e. Is the party accused of breaching patient confidentiality a “covered entity”? If so, that party may be protected by various HIPAA provisions.

i. has c/a for unauthorized disclosure and for invasion of privacy when Clinic sent records to HR person at ’s place of employment (Nestle) for “workers’ comp coverage.” Clinic not a covered entity under HIPAA, no such thing as “circle of confidentiality,” and disclosure was not for a purpose covered in HIPAA. Herman v. Kratche (Ohio App. 2006)

ii. Court held that the clinic had a fiduciary duty to plaintiff, and the clinic breached that duty when it sent plaintiff’s non-work-related medical records to Nestle. Moreover, as soon as Nestle open the records, the clinic became the proximate cause of plaintiff’s harm.

f. Misapplications of HIPAA

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i. ER nurse tells man he cannot stay with father-in-law while elderly man was being treated after a stroke

ii. Nurse threatens man with eviction & arrest for scanning his relative’s medical chart to prove to her that she is about to administer a dangerous second round of sedatives

iii. Birthday parties in nursing homes canceled for fear revealing resident’s DOB a violation

iv. Patients are assigned code names in MD’s waiting rooms so can be summoned without identification (e.g., Zebra, Elvis)

v. Nurses in ER refused to telephone parents of ailing students themselves, insisting a friend call

g. HIPAA creates a new standard of care for the handling of confidential patient information, and courts are likely to take notice of the standards and any violation of them in evaluating a negligence suit against a hospital or medical office. Acosta v. Byrum Et Al.

i. Heather Acosta a patient & employee of Psychiatric Associates. Office manager used MD’s access code to retrieve Acosta’s psych & other healthcare records; provided info to 3rd parties w/o her consent. As result, Acosta experienced severe emotional distress. Violated rules/regs of University, hospital, & HIPAA. Claim against MD for negligent infliction of emotional distress (NIED); knew/should have known would cause severe emotional distress. Court: sufficiently states claim for NIED. HIPAA provided standard of care. Acosta v. Byrum (2006)

8. HIPAA Problemsa. HIPAA only covers a health care provider who “transmits any health information

in electronic form in connection with a transaction covered by this subchapter” (§ 164.104(a)(3))

i. If a totally cash practice, MD can sell patient lists to marketersb. “Individually identifiable health information” & thus protected info may not be

disclosed unless comply w/ §164.502 (Uses & Disclosures)i. Can’t place patient forms out for all to see

c. Leaving pt phone # on cell after responding to a page a violation: MD revealed something about a patient. Patient can file a complaint. Because minor violation (colleague’s knowledge of phone # a de minimus harm; patient implicitly authorized disclosure by paging), Office of Civil Rights unlikely to act.

i. OCR charge: resolve “by informal means whenever possible.” d. Disclosing identity/health problem of a patient to 3rd party who doesn’t fall under

any recognized exception a violation.i. Patient can file complaint with Office of Civil Rights but cannot sue for

damages or other relief under HIPAA—no private c/a authorized1. OCR can impose sanctions if willful

e. HIPAA allows only limited marketing to consumer. § 164.508(a)(3): covered entity must obtain patient authorization for use/disclosure of protected health information

i. Unless face-to-face communication or nominal promotional gift

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ii. § 164.501: marketing = any communication that encourages recipient to purchase or use product/service, unless product/service that is part of benefits, associated with treatment, or linked to case management/care coordination

1. If info “sold” before marketed, then must have patient’s OK

III. LIABILITY OF HEALTH CARE PROFESSIONALS: MEDICAL MALPRACTICE, PROVING NEGLIGENCE- This chapter will examine the framework for a malpractice suit against health care professionals and the doctrinal and evidentiary dimensions of such litigation. As you read the chapter, think about the cases and materials on three levels. First, how is the plaintiff’s case proved and how does the defendant counter it? Second, how does the tort doctrine respond to different categories of medical error? And third, how does malpractice litigation affect medical practice and the cost and quality of medical care?

A. Introduction 1. Reasons why litigation against MDs has increased dramatically over past 50 years:

a. Improvements in technology/scienceb. More patients (3rd party financing)c. Modern rules of pleading & practice d. More experts available/willing to testifye. Some: modern juries (& judges) more sympatheticf. Broadening of tort base

2. Prima Facie Casea. owed duty to care for safety (or rights) of the plaintiffb. Duty breached by by failing to exercise proper standard of care in delivery of

professional care, services, or treatmentc. Breach was proximate cause of injury to Pd. Injuries significant enough to be considered compensable / damages

3. Duties owed by MDs to Patientsa. Duty to conduct proper examinationb. Duty to make a proper diagnosis c. Duty to provide proper treatmentd. Duty to oversee course of treatmente. Duty to refer to a specialistf. Duty not to abandon the patientg. Duty to keep abreast of medical knowledge

B. The Standard of Care1. National Standard Based on Reasonably Available Resources: Hall v. Hilbun (Miss.

1985) (note: this case also stands as an example of a “locality rule”)a. Each MD may with reason and fairness be expected to possess or have reasonable

access to such medical knowledge as is commonly possessed or reasonably available to minimally competent MDs in the same specialty or general field of practice throughout the US, given the facilities, resources and options available.

b. Compliance with local practice is evidence of due care but not conclusive.2. “Customary” practice: what MD customarily/ordinarily does under circumstances

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a. Cedes determination of standard to medical profession. Trier of fact is not allowed to reject the practice as improper.

i. Conformity to customary practice a conclusive shield for MD.ii. See Doe v. American Red Cross Blood Serv (held that “in a professional

negligence cause of action, the standard of care that the plaintiff must prove is that the professional failed to conform to the generally recognized and accepted practices in his profession. If the plaintiff is unable to demonstrate that the professional failed to conform to the generally recognized and accepted practices in his profession, then the professional can not be found liable as a matter of law.”)

b. 4 Variations:i. National standard

ii. National standard based on reasonably available resources1. Locality, proximity of specialists and special facilities for

diagnosis and treatment may be taken into account.iii. Similar locality ruleiv. Locality rule

1. Prob: conspiracy of silence. For this reason, the locality rule has been displaced in many states by the national standard test, but many courts, like Hall, also allow evidence describing the practice limitation under which the defendant doctor labors.

3. “Reasonableness” standard:a. what reasonable MD in same specialty would do in similar circumstances

4. “Respectable minority” doctrinea. the two schools of thought ruleb. the honest error in judgment rule

5. “Reasonable patient” standard6. Expert Testimony:

a. Plaintiff’s expert can testify regarding:i. nat’l std re competence, diligence, skill, & prudence

ii. will respond that local resource limitationsb. An expert can testify re local resource limitations when s/he:

i. Familiarizes self w/ facilities, resources, services, & optionsii. Visits facilities, listens to other witnesses describe, interacts with MDs in

area, or properly predicated/phrased hypoc. Defendant rebuts plaintiff’s expert by:

i. Bringing own expert re national standardii. Pointing to deficiencies in local resources

iii. Attacking P’s expert knowledge of local resources7. Problems w/MDs establishing what is “customary practice”:

a. No systematic way of determining what is customary; b. Can be subject to hindsight bias; c. Complaint that the adversarial process has slick experts not committed to

accuracy or the most knowledgeable about the field; d. No random sample of scientific opinion—not the most accurate assessment of the

standard;

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e. Encourages extreme positions; f. May not know what’s customary—rely on what has worked for them; g. Failure to evolve—static, don’t keep up with changes in practice.

8. Suggested reformsa. using statistical studies of similar casesb. decision analysisc. practice guidelinesd. court-appointed expertse. certified by state medical societyf. survey methodology (e.g., 30-50 MDs read 1-page abstract & complete brief

questionnaire)g. peer review/oversight of expert testimonyh. require that provide on pro bono basis

9. Methods of Proving Negligencea. Use of own experts

i. Usually of same specialty as , need not be board certified as long as proper education and experience in subject of suit.

ii. FRE 702: a witness qualified as an expert may testify in the form of an opinion. Qualified by skill, training, or experience

b. Practice guidelines/parameters (as codified standards of care):i. May need to be published by a medical society

ii. Hinlicky v, Dreyfuss: defense could introduce clinical guidelines/algorithm from Am Heart Assn as demonstrative evidence of the steps MD had followed in clearing patient for surgery. But not stand-alone evidence of standard of care/not substantive evidence.

iii. Often disclaimers attached to professional guidelines.-- Note that clinical guidelines raise difficult legal questions, since they potentially offer an authoritative and settled statement of what the standard of care should be for a given treatment or illness. A court has several choices when such guidelines are offered as evidence: (1) Such a guideline might be evidence of the customary practice in the medical profession. However, using guidelines as evidence of professional custom is problematic if they are ahead of prevailing medical practice. A guideline could also serve as evidence of a “respectable” minority practice. (2) Clinical guidelines can be used to impeach the opinion of an expert witness. Roper v. Blumenfeld (note case). (3) Such guidelines might be used as an affirmative defense by physicians in a malpractice suit to show compliance with accepted practice (Kentucky allows this).

c. Pharmaceutical package insert instruct & warningsd. Physicians Desk Reference (PDR)

i. Allowed as some evidence if supported by expert testimony.e. Judicial Notice/ Judicial Standard Setting

i. courts may make a finding of negligence per seii. Helling v. Carey (Wash. 1974). Court held as a matter of law that the

reasonable standard that should have been followed the giving of a pressure test for glaucoma due to the risk/benefit analysis. (Disease was rare, to be true, but the harm would be quite great if occurred and, moreover, the test was simple and low cost to do.) Quotes J. Hand:

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“Courts must in the end say what is required; there are precautions so imperative that even their universal disregard will not excuse their omission.”

iii. Note that Helling v. Carey is one of a small number of cases that rejects customary medical practice as being sufficient standard of care.

f. Substantive use of learned treatisei. Expert must explain and assist, particularly if an article and doesn’t fall

w/in learned treatise exception (if not universally accepted, not a LT)g. Expert reliance on research findings

i. Daubert : Rejects the Frye test of “general acceptability” as a threshold test of admissibility of novel scientific evidence.

ii. Instead, holds that: The judge is the gatekeeper of novel scientific evidence, w/the responsibility to assess the reliability of an expert’s testimony, its relevance, and the underling reasoning or methodology.

iii. And: that expert testimony must have a valid scientific connection to the issues in the case, and be based on “scientifically valid principles.”

iv. Know the difference between Frye and Daubert tests!!!h. Cross-examine defendant’s experts

i. call as adverse witnessi. Admission by defendantj. Testimony by plaintiff if qualifiedk. Common knowledge in situations where a layperson could understand the

negligence without the assistance of experts.l. Res Ipsa Loquitur

i. The accident must be of a kind which ordinarily does not occur in the absence of someone’s negligence; it must be caused by an agency or instrumentality w/in the exclusive control of the ; it must not have been due to any voluntary action or contribution on the part of the plaintiff.

ii. Most states: Jury may infer was in some way negligent but is not compelled to conclude negligence.

iii. A few states: π who proves res ipsa should win unless can rebut.m. Strict liabilityn. Peer Review Materials; Peer immunity statute

i. Records of quality assurance program & testimony by persons participating in/appearing before shall be confidential & privileged

ii. Info otherwise available from original sources are not immune merely because presented to program

iii. Any person who supplied information to or member of program may not be prevented from testifying, but may not be asked about testimony or opinions formed during committee participation

C. Negligent Infliction of Mental Distress1. Most medical malpractice suits are negligence suits for physical injury and lost wages

suffered by the patient, or in a wrongful death action, for damages that include harm to the deceased’s relatives. However, s may also be able to sue a health care provider for the negligent infliction of emotional distress under particularly egregious circumstances,

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even w/o tangible physical injury or impact, and w/o the need for expert testimony on the standard of care and its violation.

2. ’s negligence must have produced an actual threat of physical harm to or -bystander reasonably appreciated the peril.

a. -bystander must observe the events.b. If a contractual relationship forms the basis for liability, some juris have held that

the injured party need not have observed the disaster as foreseeability not reqd. i. Ex. negligent delivery of baby when mother unconscious

3. Example: Strasel v. Seven Hills OB-GYN Assoc. (Ohio Ct. App. 2007): Sonogram showed sac in uterus, pregnancy didn’t appear viable. MD performed D&C (w/o doing 2nd sonogram) Still pregnant, panic attacks, worry. Healthy child—but had been placed in physical peril. So try to sue for negligent infliction of mental distress upon mother, and court agrees that she had a viable cause of action.

- Look at Rowe v. Bennett. In this case, a lesbian therapist undertook the treatment of a lesbian patient, even though this lesbian physician had developed an emotional relationship with the patient’s lover. The Maine Supreme Court held that the nature of the therapist-patient relationship could provide the basis for a claim of emotional distress.

D. Duties to Contest Reimbursement LimitsSolo practice is no longer the norm in American medical practice. Most physicians by now are either in group practices of three or more or are employees or contractors. Health care is more constrained by explicit financial limits now. Institutions that provide health care – such as hospitals or nursing homes – and entities that pay for health care – including insurers and self-insured employees – now oversee the work of the medical professionals who practice within them or whose care they purchase. The use of prospective payment systems and the expansion of managed care organizations have imposed substantial constraints on the formerly open ended fee-for-service system.... Cost-constrained systems now create tensions between cost control and quality of care. Heavy pressure is put on physicians to reduce diagnostic tests, control length of stay in hospitals, and trim the fat out of medical practice. But while experience these restraints, physicians are likely to be caught between duties to patients and duties to the institutions in which they now operate. Accordingly:

1. A MD may have an obligation to assist patients in obtaining payment for health care.a. Must be aware of reimbursement constraints to properly advise patients.b. No financial duty to rescue, but may have to fill out forms.

2. A MD operating within a constrained reimbursement structure and an institutional bureaucracy is expected to be familiar w/limits on payment. Wickline v. State. Look at slide about this case!

a. Patient’s insurance rejected request for addl days in hospital. MD aware could telephone to request additional days but didn’t. Discharged, later leg amputated. (Court says that the cost restraints cannot be allowed to corrupt medical judgment; however, in this case, medical judgment was corrupted by the restraints, so not liable).

3. External utilization review bodies can be held liable for negligent review if a pt suffers harm through denial of care. Under the right facts, MD is jointly liable.

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4. Some courts have allowed plaintiffs to plead a duty of a MD to assist patients in finding other sources of funding for expensive procedures.

E. Defenses to a Malpractice Suit- A physician defendant in a malpractice suit has a range of defenses available. Some are familiar affirmative defenses such as statutes of limitations. Most defense arguments however involve an argument that either the physician acted according to the standard of care of some subgroup of practitioners, or merely made an error of judgment not rising to the level of malpractice.

Standard of Care1. acted w/in Standard of Care

a. Respectable minority rule : Where two or more schools of thought exist among competent members of the medical profession concerning proper medical treatment for a given ailment, each of which is supported by responsible medical authority, it is not malpractice to be among the minority in a given city who follow one of the accepted schools. Chumbler v. McClure (6th Cir. 1974)

i. Restrictions on the defense (varies by state):1. Size of the respectable minority

a. In PA: “considerable number of MDs”2. Failures to properly diagnose—where only one agreed approach to

each type of infection3. Weight given to experts as to good practice—can’t wholly reject

b. “Reasonable and prudent” physician test: Rejects “respectable minority” or “considerable # of MDs” doctrine (because the practice, although done at one time, no longer was recognized or acceptable, thus no longer a good standard of negligence). Instead, the court said: the standard is whether a reasonable and prudent member of the profession would undertake the mode or form of treatment under the same or similar circumstances. Henderson v. Heyer-Schulte Corp. (Tx.Ap.1980)

- But note that the two standards espoused above, each applied in different jurisdictions, bring about different jury instructions (obviously). So consider the implications of this!- Also note that jurisdictions that apply the “two schools of thought” standard often impose restrictions on this defense. For instance, in Pennsylvania, this defense is limited to cases in which “a considerable number of physicians” adhere to the minority school of thought.

2. ’s error didn’t rise to level of negligence/med mala. Honest error in judgment doctrine: allows for a range of uncertainty in

choosing between alternative treatments. i. MD is not responsible for an honest error in judgment in choosing

between accepted methods of treatment.b. Clinical/Therapeutic Innovation

Much of medical practice requires taking standard tools and altering them to fit the needs of particular patients. Surgeons in particular are constantly innovating; physicians often prescribe drug for off-label uses. The question is how to evaluate innovations in light of customary practices.

i. Therapeutic innovation is permissible to avoid serious consequences. A MD is presumed to have the knowledge and skill necessary to use some innovation to fit the peculiar circumstances of each case. Innovation aims

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to help the particular patient of the MD but lacks sufficient evaluation to be able to say that there is “a reasonable expectation of success.”

1. New method of injecting contrast medium need not go through experimental stage. Brook v. St. John’s Hickey Mem’l Hsp.(Ind.78)

- a radiologist injected contrast medium into the calves of the patient leg rather than the buttocks (the recommended site). The patient later experienced injury and sued the doctor, alleging that the doctor was trying an untested medical experiment as the injection site was not specifically recommended by the medical community. The court disagreed and held that the doctor had professional reasons (articles cautioned against an injection in the buttocks for young children and the procedure was successful in the past). Moreover, a physician is presumed to have the knowledge and skill necessary to use some innovation to fit the peculiar circumstances of each case.

2. Off-label drug use/Drug Therapy Innovations:Drug therapies also raise questions of clinical experimentation, both in off-label uses of drugs, and in the appropriate dosages for particular diseases and patients.

1. MDs may be found negligent if their decision to use a drug off-label is sufficiently careless, imprudent, or unprofessional.

a. Majority: a prescription drug’s labeling or PDR reference is admissible to prove the standard of care , but only if the also introduces other expert testimony regarding the standard of care. Richardson v. Miller (Tenn. CA 2000)

b. Minority: drug labeling prima facie evidence of SOC.ii. Medical experimentation = when a MD treats his patient in conformity

w/a protocol crafted to test a hypothesis and to add to the body of medical knowledge.

1. May be acceptable to courts when conventional treatments are largely ineffective or where the patient is terminally ill and has little to lose by experimentation w/potentially useful treatments.

iii. Medical practice assumes accepted therapies designed solely to enhance the wellbeing of an individual patient or client and that have a reasonable expectation of success.

AFFIRMATIVE DEFENSES:An affirmative defense is one that a defendant can raise by the pleadings, and may lead to a dismissal of the lawsuit in response to a defendant’s motion to dismiss or summary judgment. Such defenses are ruled on by the trial court judge, not the jury, and thus can resolve a case without letting the jury ever hear the plaintiff’s case. A defendant asserting an affirmative defense may not contest negligence, but instead argue that other factors excuse his conduct as a matter of law or prevent the plaintiff from suing him at all. - Consider a defense of conflicting legal duty. A doctor who releases info about a patient’s medical condition normally violates the patient’s right to confidentiality, but in some situations he is legally required to inform others of a patient’s medical condition. If a patient suffers a gunshot wound, the doctor treating him must inform the police; if he

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has a contagious disease, the doctor must inform the department of health in the state; if child abuse is suspected, the authorities must be notified.- Consent is perhaps the most frequently asserted affirmative defense in medical malpractice cases. Doctors and hospitals have tried to protect themselves from malpractice suits by having patients sign consent forms before patients receive treatment. Other less commonly asserted affirmative defenses are available under the right circumstances, such as the statute of limitations and Good Samaritan laws.

3. Statute of Limitations- Malpractice litigation is subject in most states to its own statute of limitation, often shorter than other civil litigation. The complication in medical cases is often the problem of when the plaintiff “discovers” her injury.a. Rationale: give MD a reasonable opportunity to develop/present defense while

relevant evidence still existsb. Discovery rule: a cause of action accrues when--

i. old rule : the right to bring an action arose—when med error occurredii. option #1: when rsbl patient would initially realize harm/injury occurred

iii. #2: when patient initially realized harm/injury occurred iv. #3: when rsbl patient would realize wrongful conduct caused the harmv. #4: when patient realized wrongful conduct caused the harm

1. Hardi v. Mezzanotte (D.C. 2003)vi. #5: when patient told that cause of action existed

4. Good Samaritan Statutea. Relieves from liability if render emergency aid in good faith but nevertheless

cause or enhance injuryb. In hospital setting, no immunity if:

i. provided in ordinary course of workii. employment K imposes duty to render emergency treatment

c. Typically doesn’t protect: i. gross negligence or willful misconduct

ii. bad faith responseiii. non-emergency situation iv. if expectation of paymentv. if patient objected to assistance & provided anyway

vi. emergency created by the MD 5. Comparative negligence/ Contributory Fault of the Patient- Patients through their own mistakes or lifestyle often enhance, or even cause, their injuries. People don’t take their doctor’s advice; they fall of their diets, stop exercising, start smoking, or act in a variety of ways counterproductive to their lifestyle. Very few tort cases have raised a patient’s lifestyle choice as a defense to a malpractice case. (Consider: Azzara)

a. Aim: ameliorate harshness of contributory negligence doctrinei. Contributory negligence kept from recovering where any fault

b. recovers so long as ’s fault not greater than Di. Pretreatment health habits not relevant; no normative lifestyle.

ii. Ostrowski v. Azzara: Irritated toe, complicated by diabetes, heavy smoker. Failure to adhere to diet, & resulting circulatory problems

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(This is an interesting case... What if the choice/lifestyle is not easy to change? Do we find it fair to either bar recovery or to not hold them accountable for it at all?) (other interesting examples of potential comparative/contributory negligence cases: engaging in unprotected homosexual sex on regular basis and then contracting HIV; committing suicide in response to something Defendant has done; etc...)- Also note the argument of assumption of risk (although this is less commonly argued in medical malpractice cases).

6. Avoidable consequencesa. No damages if damages could have been avoided by exercise of ordinary careb. Focus: ’s carelessness occurring after ’s negligence. Examine whether post-

treatment conduct significant cause of increased damages.7. (Aggravation of a) Preexisting condition

a. MD only liable for amount of harm actually caused by negligence8. Particularly susceptible victim (not a defense)

a. MD/defendant takes patient/plaintiff as finds herb. Poor health not an excuse for negligent care

9. Causation problems /Lack of causation (CA: negl a “substantial factor”)a. Prox Cause req’d: “But for” ’s conduct, wouldn’t have suffered injury

i. injury a natural & probable consequence of ’s neglii. inferred from facts of case

b. Problems: i. Multiple Tortfeasors / Joint Tortfeasor Doctrine

1. GR: If parties act together to commit a wrong or independent acts unite to cause a single injury, then considered to act jointly (vs separate tortfeasors)

2. Factors:a. Similar dutyb. Same evidencec. Indivisible injuryd. Similar time, place, or result

3. If existing injury aggravated by malpractice, burden shifts to s to show who is responsible for damages

4. Multiple Defendants & Burden Shiftinga. Where 1 of several s caused harm but can’t show which

one, burden shifts to the s to come forward or be held jointly & severally liable.

b. Res ipsa loquitur doctrine. Think of the Ybarra case...judicial attempt to protect an obviously deserving plaintiff against multiple defendants (when don’t know precisely who is at fault and no one is talking).

ii. Missed Diagnosisiii. Preexisting injuries/underlying disease

c. To resolve causal responsibilityi. rules governing joint & several liability

ii. may use “loss of a chance” doctrine

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iii. may look to “relative risk”d. Most states continue to use proximate cause

i. CA: prox cause confusing; use “substantial factor” test1. liability even if conduct only a contributing factor2. particularly if multiple medical actors / concurrent causation

e. Robins v. Garg (Mich.Ct.App. 2007) MD had a (cholesterol) baseline, all within normal range. Pt came in later w/asthma. Didn’t check cholesterol for 12 yrs. Patient, it turns out, wasn’t taking (was refusing) cholesterol medication. Dies in doctor’s office one day of a hearth attack. Defendant argues it wasn’t his action per se that killed her, while plaintiff asserts that the doctor should have been more forceful in giving follow-up tests. Court thinks there’s enough to go to the jury (sufficient issue of material fact).

F. Damages/ Damage Innovations-In the typical malpractice case, the available damages are the standard tort list: medical expenses, past and future; lost wages; diminished future earning capacity; loss of consortium; and noneconomic losses such as pain and suffer. In many health care settings, however, the alleged malpractice of the provider occurs to a patient who has a preexisting illness, such as a cancer patient. If the patient’s chances of recovery are less than fifty percent, the old rule would deny recovery. The problem is one of both causation – did a provider’s inaction increase the risk to the patient – and damage – exactly how should harm be quantified in such a situation (for one thing, we want physician’s to have economic incentive to take care of patient’s with survival of less than 50%).

1. Typical damages:a. Costs of treating the conditionb. Medical expenses past & futurec. Lost wages/impaired earning capacityd. General damages, primarily pain & suffering

2. Punitive damages extremely rarea. Need intentional, wanton, or reckless conductb. Focus on impatience & inattention to conditionc. While rare, may be deserved in some casesd. Some: look at MD’s financial status to see if deterrent effect without being

excessive3. Loss of Chance Doctrine

a. 3 primary judicial approachesi. All or nothing

1. <51% chance of survival, gets $02. 51% or more, gets full recovery3. Doesn’t require certainty, but more than possibility—reasonable

probability of survivalii. Loss of an appreciable or substantial chance of recovery

1. Manipulates burden of proof re proximate cause rather than acknowledging the lost chance as the real injury.

iii. Increased Risk of Harm: Liability for value of lost chance1. Recovery is for reduction in likelihood of more favorable outcome

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a. Chance of survival itself has value2. Need only show deprived of chance of survival3. Virtually any % enough to get to jury

b. Compensation options i. Award full damages

ii. Discount for % of harm causediii. Value of patient’s life reduced in proportion to lost chanceiv. Allow jury to determine value of lost chance

c. Herskovits v. Group Health Puget Sound— A ∆ can be liable for damages if the π can show that the ∆'s negligence caused a statistical reduction in the chances of the π's survival. But only entitled to damages caused directly by premature death, not to all damages caused by death.

IV. LIABILITY OF HEALTH CARE INSTITUTIONSA. Introduction

1. Hospital liability greatest in ER settings.2. Underreporting of errors in mandatory reporting states.3. Hospitals w/a “no blame” model not holding MDs accountable.4. Top 10 Hospital Malpractice Claims:

a. Medication errorsb. Diagnosis failuresc. Negligent supervisiond. Delays in treatmente. Failure to obtain consentf. Lack of proper credentialing or technical skillg. Unexpected deathh. Iatrogenic injury (e.g., nosocomial & wound infections, fractures)i. False expectations, emotional distressj. Lack of teamwork, communication

5. History of Institutional Liabilitya. No attempt to treat or cure—hospitals where you went to die

i. Few physicians visited/associated with institutionsii. Relied on philanthropy of wealthy & religious groups

b. Late 1800s, more central role for hospitalsi. Antiseptics allowed hospitals to be safer places.

c. 1900s: control shifted from trustees to MDsi. MDs became dependent on hospital affiliation

d. Hospital was only liable if negligent in administrative or housekeeping functionsi. Charitable immunity protected through the 1940s

e. Industry changesi. Hospitals: charity to business

1. Corporate concepts of accountability & control, bottom lineii. Pervasively regulated: state & federal

1. Qs whether appropriate industry for free market principlesiii. Treatment more complex; more technology & staffiv. MD independence undercut from # of directions

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1. MDs relationships with hospitals much more complexv. Emphasis on quality control

1. Insistence that hospitals monitor/influencevi. Expectation that at least emergency care available

vii. Advertising—willingness to draw on halo-effect of non-profit statusviii. Care provider, not just facility provider

B. Agency Law and the Test of “Control”Employees: Hospitals are comprised of employees – nurses, technicians, clerks, custodians, cooks – who are clearly agents of the hospital under vicarious liability principles. The hospital sets their hours, wages and working conditions. When employees are negligent, the hospital is vicariously liable for their acts as a result of the master-servant relationship of agency law. (See Grimm below).

1. Medical Staff and Hospital GovernanceThe hospital-physician relationship is an unusual one by corporate standards. A typical hospital may have several categories of practicing physicians, but the largest group is comprised of private physicians with staff privileges. These physicians are not typically employees of the hospital but rather independent contractors. The hospital is therefore not easily targeted as a defendant in a malpractice suit. Only if the doctor whose negligence injured a patient is an employee could the hospital be reached through the doctrine of vicarious liability. The hospital was independently liable only if it were negligent in its administrative or housekeeping functions, for example causing a patient to slip and fall on a wet floor. Otherwise, the hospital was often immune from liability. This has changed as the courts have confronted the evolution of the modern hospital and expanded the vicarious liability in the health care setting. (See Scott.)

a. Private MDs w/ staff privilegesi. Largest group of MDs in hospital

ii. Staff privileges include the right to admit/discharge their private patients to hospital & right to use facilities of the hospital

iii. Govern provision of medical services. iv. Own bylaws & officers, appoint own committees

b. Hospital governing board: limited authority over MDsi. Must approve bylaws, granting of privileges

ii. Can approve/disapprove particular actions but can’t discipline directlyiii. Can’t appoint admin officers w/ direct authority over MDs

2. When employees are negligent, the hospital is vicariously liable for their acts as a result of the master-servant relationship of agency law/respondeat superior.

3. Violations of a statute treated as negligence per se, giving rise to a rebuttable presumption of negligence. (Cases where statute used as evidence of SOC).

a. Cts resistant to application of negligence per se to health care institutions unless the standard is specific and supported by health care testimony.

b. 17 yo gives birth to child, father also patient’s stepfather, present in delivery room and in patient’s hospital room while patient naked, present during breastfeeding. Statute: health care professionals & non-medical service providers must immediately report knowledge/ suspicion of child abuse. P: hospital negligent for failure to immediately report child abuse & liable for damages resulting from failure. Grimm v. Summit Co. Children Services Bd. (Ohio Ct. App. 2006)

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4. Two elements are required to establish an agency relationship: (1) the principal must consent, either express or impliedly, to the agent’s acting on the principal’s behalf, and (2) the agent must be subject to the principal’s control. In a hospital-physician relationship, the primary focus is on whether the hospital generally controlled, or had the right to control, the conduct of the MD in his work performed at the hospital.

a. Scott v. SSM Healthcare St. Louis (Mo. Ct. App. 2002): The mere fact that a MD retains independent medical judgment will not preclude a court, in an otherwise proper case, from finding the existence of an employer-employee relationship between a hospital and a MD when otherwise sufficiently meets the two elements required to establish an agency relationship. (About sufficient extent of control.)

C. Independent Contractors and Vicarious Liability Absent evidence of indicia of control sufficient to make a physician the employee of a hospital, courts have turned to traditional agency tests that evaluate situations in which health care institutions are vicariously liable for the negligence of their independent contractors.

1. General Rule: If a MD is an independent contractor, the hospital is not liable for his negligence.

2. Apparent Agency: For a hospital to be held liable for a MD’s negligence under an apparent agency theory, a must establish that:

a. (1) the hospital either committed an act that would cause a reasonable person to believe that the MD in question was an agent of the hospital, or, by failing to take an action, created a circumstance that would allow a reasonable person to hold such a belief, and

i. Hosp is generally deemed to have held itself out as the provider of care unless it gave patient contrary notice (disclaimer—consent forms).

b. (2) the plaintiff relied on the apparent agency relationship.i. Patient looks to hospital for services, not the indiv MD.

ii. Emergency room services; Marketing campaignsc. Burless v. West Virginia Univ. Hsps: In this case, court looks to the above two

rules/considerations. to determine whether apparent agency exists. Thus, since a hospital (held itself out as provider of care), and plaintiff relied on that apparent agency, we assume apparent agency, unless it gave the patient contrary notice. In this case, the hospital did have both patient plaintiffs sign a disclaimer waiver which read that “I understand that the faculty physicians and resident physicians who provide treatment in the hospital are not employees of the hospital,” which the court ordinarily would say is sufficient notice to get the hospital off the hook. However, this particular disclaimer wasn’t helpful because it required patients to be able to distinguish between types of physicians, which wasn’t reasonable.

3. Nondelegable Duty Doctrinea. In emergency room context, hospital may owe a common law nondelegable duty

to render competent services to its emergency room patients. (ER patients cannot be reasonably expected to carefully read and digest a boilerplate admission form and distill from it the kernel of knowledge that the physician who treats them at the hospital is not the hospital’s agent.)

b. Similar to “inherent function” test used by some courts that refuse to allow the independent defense in ER or radiology services.

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c. Other courts reach the same result by characterizing the duty of a hospital that uses MD independent contractors as a contractual or fiduciary duty to patients.

d. Public policy:i. Give parties w/ crucial duties incentive to meet duties

ii. “Practice of medicine”: more than just specific directivesiii. Patients choose based on reputation & advertising of hospital

e. Nature of service controls, not patient’s reliance/ understanding re status of MDs

D. Hospital Direct LiabilityPatients may suffer injury in hospitals in many ways: they may fall out of bed because the

bedrail is not raised; they may slip on the way to the bathroom; they may be given the wrong drug in their IV line; the MRI machine may not be working. If expert testimony is not needed, that is, if an ordinary person could evaluate the failure, then the case may not be considered malpractice but rather ordinary negligence. Negligence may have a different statute of limitations and may not be subject to restrictive legislative restrictions on malpractice recovery such as certificates of merit, caps on noneconomic losses, or other restrictions.

Most hospital cases will require expert testimony of some sort. If the case involves the standard of care applicable to a hospital rather than one of the medical staff physicians, then the courts will look at the standard applicable to hospitals of that type, and inquire into the professional judgment of providers or decisions of a hospital governing body, or the administration of the hospital. Such breaches of duty are considered malpractice, are subject to the rules pertaining to such cases, and require expert testimony.

1. Shift from liability hospital may face for negligence of medical staff to hospital’s liability for “own” acts & omissions.

a. Hospital the major arena where see increase but also nursing homes, clinics, etc.b. Various barriers to suing gradually erodingc. Why increased liability:

i. Judicial enforcement of industry’s own “best” vision of quality assurance & accountability

ii. Concern that leaving improvement of quality of care to institutional oversight has been a failure

iii. General trend in tort/regulatory law to more consciously protect those injured by risk-creating activity

2. Categories of Potential Direct Liability of Hospitalsa. Negligence in maintaining facilitiesb. Negligence in providing & maintaining medical equipmentc. Negligence in hiring, supervising, & retaining nurses & other staffd. Failing to have in place procedures to protect patients

3. Negligence actions against Hospitals: a. must establish the applicable standard of care, a deviation from that standard by

the , and a causal relationship between that deviation and the ’s injury.b. Standard: what a reasonably prudent hospital would do

i. Washington v. Washington Hsp. Ctr: Recommendation of a professional association & article speaking of emerging standard have bearing on expert opinion; what other hospitals are doing (such as Harvard Hospital)

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ii. Particularly telling was that hospital made procurement request & memo saying that without would not meet national standard

iii. : facility negligent for not providing capnograph. Pt deprived of oxygen during general anesthesia for abortion/tubal ligation. Expert’s opinion (that it was an “emerging standard” that was being used in some hospitals) was sufficient to create issue for jury.

- hospital may be liable if equipment is not adequate, not adequately staffed, if facility not adequate, etc.

4. Duties to Treat Patients—Hospital owes duty of care to patients, but what happens when the patient’s insurance runs out but the hospital staff believes that the standard of care requires continued hospitalization?

a. Duty to make reasonable effort to monitor & oversee treatment prescribed by MDs

b. Duty not to institute policy that interferes w/ MD’s medical judgmentc. Duty not to institute policy requiring discharge when insurance expires &

interferes w/ med judgment of MDi. Muse v. Charter Hsp. of Winston-Salem (NC Ct Ap 1995) Staff: lacked

autonomy & believed had to discharge when insurance expired (even though doctor thought ptent neeed to remain hospitalized). MDs misgivings & frustration evident. Hosp could have acted w/knowing & reckless indifference to rights of others. Court: there was sufficient evidence for a jury to find willful and wanton conduct on behalf of the hospital in this case because of its policy.

5. Corporate Negligence: direct imposition of corporate negligence liability on hosp for the failure of administrators and staff to properly monitor and supervise the delivery of health care within the hospital.

a. Corporate negligence is a doctrine under which the hospital is liable if it fails to uphold the proper standard of care owed the patient, which is to ensure the patient’s safety and well-being while at the hospital.

i. Theory creates a nondelegable duty to the patient.b. In determining the duty or standard of care of the hospital, custom (care

customarily offered by hospitals in the community) is relevant but not conclusive. Regulations, standards, & bylaws perform much the same function.

i. Regs don’t conclusively determine standard but instructive for jury.c. Today’s hospital does more than furnish facilities

i. Employ sufficient staff, charge/collect for servicesii. Patients expect hospital will attempt to cure

d. Desirable & feasible that hospital assume certain responsibilities for care of pte. Hospital has 4 general duties:

i. Maintain safe & adequate facilities & equipmentii. Select & Retain only competent MDs

1. Negligent Credentialing: Hosp has an obligation to its patients to investigate the qualifications of medical staff.

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a. Jury may consider whether the hospital has complied with Joint Commission standards in ascertaining MD qualification. (Surgeon didn’t have a particular qualification license (not a mandatory one either) and failed the exam several times. Court says a jury may consider whether the hospital itself considered this in its credentialing of the surgeon.) Carter v. Hucks-Folliss.

iii. Oversee all persons who practice medicine within its wallsiv. Formulate, adopt, & enforce adequate rules & policies to ensure quality

care for patientsv. Other duties (Darling v. Charleston Community Memorial Hospital – case

where nurses didn’t look to see if there was circulation in the patient’s leg, which was in a cast...and hospital in general failed to review the doctor’s work on the patient, which necessitated the amputation of the leg)

1. Duty to provide sufficient # of trained bedside nursesa. Nurses have independent obligations to care for patients, to

advocate for patients when care is substandard in a hospital.2. Duty to require consult w/ staff skilled in treatment or to review

treatment providedf. must show that the hospital had actual or constructive knowledge of the

defect or procedures which created the harm.g. The hospital’s negligence must be a substantial factor in bringing about the harm

to the injured party.h. Hospital is liable where:

i. Hospital staff member fails to report changes in patient’s condition orii. Fails to question a MD’s order which is not in accord with standard

medical practiceiii. And patient is injured as a result.

i. Darling v. Charleston Community Memorial Hsp. (Ill. 1965)i. 18 yo broke leg playing football. Taken to ER, leg placed in plaster cast.

Leg swelling, gangrene, amputationii. Plaintiffs: hospital negligent for:

1. permitting MD to do this type of work2. not requiring MD to keep his procedures up to date3. failure to adequately supervise (via med staff)4. especially since put MD on emergency duty5. failure to require consultation after complications6. failure of nurses to check every 10-20 minutes

j. Thompson v. Nason Hosp. (Pa. 1991): Sufficient Q of material fact whether hospital was negligent in supervising quality of medical care given where--

i. Staff had duty to observe, supervise, or control the actual treatment of the patient and failed to do so

ii. failure to monitor med services providediii. ignored R&R requiring MD consultsiv. staff aware of deteriorating condition, yet did nothing

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k. Peer Review Immunity and Corporate Negligence:Credentialing decisions may be the central feature of corporate negligence claims, but such decisions are often the most difficult to prove. Virtually all American jurisdictions have peer review immunity statutes that block access to hospital decision making about physician problems that have been discovered.

l. Peer review statutes provide for the confidentiality of peer review proceedings and grant some immunity to those involved in the credentialing process.

i. Criteria for recognizing duty as matter of common law: 1. The tort [of negligent credentialing] is inherent in, or the natural

extension of, a well-established common law right2. The tort is recognized in other common law states3. Doesn’t create tension with other applicable laws4. The importance of the protections provided outweigh any such

tensionsii. Larson v. Wasemiller (Minn. 2007): holds that a claim of negligent

credentialing is not precluded by the peer review statute, so can still go after the peer review board (i.e., the hospital) despite the partial immunity in the peer review statute.

-- Check out the “Love Surgeon” Hyp on p.455 for exam! Should be good!

6. Negligent Misrepresentationa. Elements:

i. supplied false info in the course of matters in which it had a pecuniary interest

ii. had legal duty to supply correct info to Piii. breached its duty (omission or commission)iv. suffered harm as result of justifiable reliance upon the misrepresentation

b. Hospital referred MD who was essentially a druggie who the found falling asleep at to other hosp; promised a good referral to avoid litigation (or, rather, just failed to disclose the problems they were having with the druggie doctor when the other hospital inquired about him in their hiring process – the referring hospital just gave it’s standard letter and didn’t answer questions really). MD then performs negligent operation. Hosp liable. Court wants hospitals to report such matters even if against their pecuniary interests to do so (obviously, public policy dictates that they disclose) Kadlec Med. Ctr. v. Lakeview Anesthesia Assoc. (D. La. 2005)

c. Hosp and MD may have a duty to notify a family member of the patient’s discharge where pt poses a risk of harm to others. Tarasoff

V. ACCESS TO HEALTH CARE: THE OBLIGATION TO PROVIDE CAREA. Accessing Health Care in the US (look at slides from class!)

Some general concerns: disparate ability to pay concerns; race-based disparities in treatment; access barriers by medical conditions

1. Traditional rule re MD/patient relationship:a. Private, entirely voluntary K, refuse for any reason

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b. MD free to pick & choose, not “open to the public”c. No legal or ethical obligation to provide health care

2. No federal constitutional right to health carea. Federal government/states have no duty to provide

3. Doctrines under pressure as health care increasingly seen as critical & a righta. Health spending projected to outpace GDP next decadeb. 1965: 6%, 1980: 9%, currently 17%, projected 20% by 2015 c. Steady increase in uninsured (20% of adults, 46 million) & underinsured (38%)d. Concerns over racial & economic disparities; international comparisons

4. Responses:a. Some states: consumer Bill of Rights (FL) & right of accessb. State constitution may provide affirmative right to health carec. Mass./U.S. health care reform legislation

i. mandates that ERs provide, low income residents purchase hc insurance, health insur exchanges

d. Legislation that relieves of liability if care under certain circumstances i. Good Samaritan laws

e. Some hospitals: free basic care for uninsured5. AMA ethical principles: “obligation to share” in providing care to indigent

a. MDs providing charity care: 1996-97: 76%, 2000-01: 71.5%, 2004-05: 68%6. 1980-83: 24% of patients unstable when transferred

a. lack of insurance: reason for 87% of transfersb. significant reduction in Medicaid payments at time

B. Common Law ApproachesThe traditional legal principle governing the physician-patient relationship is that it is a voluntary and personal relationship which the physician may choose to enter or not. Legal obligations on the part of providers to furnish care operate as exceptions to this general rule. Most of the expansion of duties to provide care has been legislation. Only very limited legal obligations have emerged from common law doctrine, as will be seen in the Ricks v. Budge case below.

1. Ricks v. Budge (Utah 1937) Kicked out of hospital, finger gets amputated. Doctor refused to treat him after began car.

2. Main takeaway: MD, if begins treatment, has the duty to continue treatment so long as case requires attention absent agreement limiting service. The obligation of continuing attention can be terminated only by:

a. Cessation of necessity giving rise to relationshipb. Discharge of MD by patientc. MD withdrawal after reasonable notice to enable patient to obtain other care

3. MD-patient relationship is dependent upon contract, either express or implied. If no MD/pt relationship at the time the person presents himself for treatment, MD not liable for refusing to respond even if the patient is in urgent need of medical assistance.

a. No evidence of contract (and thus no duty to treat) when:i. It was reasonable to ask who was patient’s MD & to state the patient

should call that MD & see what he wants done.ii. Discussing case with nurse did not constitute acceptance of case

- Childs v. Weis (Tex. 1969):

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4. No recovery for a discriminatory refusal to provide medical treatment. Williams v. US (4th

Cir. 2001)a. Public hospital’s ER has a CL duty to provide treatment, as a “public utility.”

(GA) Williams v. U.S.: Does not extend to private hospitals.b. Wiliams v. U.S.: went to ER of Cherokee Indian Hospital. Federal act prohibits

from treating non-Indians, with exception of emergency treatment which hospital permitted but not required to provide. Staff refused to treat or refill oxygen tank because not Indian. Referred to hospital 10 miles away, arrived in extreme distress & died next day. could not recover. Court: legal commands not same as moral command. Can’t hold this private hospital under this anti-discrimination rule (plus, it would seem, I think, that they were following their rules of only providing for Indians...would seem to distinguish it from a case of racial animus; it’s as if the legislature carved out a specific, racially-discriminatory exception in the case of Indian Hospitals).

5. Ct may find a MD has a duty to treat a particular patient based on a contractual commitment to a 3d party.

a. Hiser v. Randolph: MD had obligation to treat b/c of on-call contract w/hosp.6. Circumstances Under Which MD May Terminate Relationship

a. Mutual consentb. Explicit dismissal by patientc. Services needed outside MD’s competence & trainingd. Services needed outside scope of original agreement

i. e.g., limited to type of procedure, office visit, consultatione. Failure of patient to cooperate with care

i. implied unilateral termination by patientC. Statutory Exceptions to the Common Law Rule

1. Hill-Burton Act (1946)a. Provided federal funds to states for construction of hospitalsb. Constructed hospitals must provide regardless of ability to payc. “community service obligation”

2. EMTALA (1986) a. originally: Emergency Medical Treatment & Active Labor Actb. today: Emergency Medical Treatment & Labor Act

3. Combat discriminatory practice of hospitals that transfer, discharge, or refuse to treat indigent patients coming to ERs because of high costs associated with treating them

4. Applies to all Medicare participating hospitals operating an ERa. Hospitals not required to offer ER servicesb. Protections not limited to Medicare beneficiaries

i. Anyone coming to hospital seeking emergency medical services5. Applies both to hospital & individual MD

a. DHHS OIG enforces for federal govt against bothb. Penalties include fines & exclusion from Medicare program (23-day track)

i. Few penalties, fines small, exclusions rareii. Patient can bring civil suit for damages against hospital

1. No private right of action against treating MD. Baber6. Emergency Departments

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a. Number of people visiting EDs rose from 90 million in 1996 to 117 million in 2007 (30%)

i. Number of EDs fell by 425 (1993-2003)b. EDs serve as chief source of care for nation’s 46 million uninsured c. ED crowding

i. patients often “boarded” for 48 hours or moreii. overcrowding leads to ambulance diversions

iii. but hospital-wide problem: patients back up in ED because can’t get admitted to inpatient beds

d. ¾ of hospitals report difficulty finding specialists to take emergency/trauma callsi. often treat w/o compensation because uninsured & face higher medical

liability exposure7. 3 Primary Requirements of EMTALA:

a. Provide an appropriate medical screening exam to anyone coming to ER seeking medical care

i. “coming to ER” = w/in 250 yards of hospitalii. “appropriate medical screening”—standard individualized for each

hospital; rejects use of national standard.1. Need only be “appropriate” & w/in hospital’s capability2. Must provide “routinely available” ancillary services3. Only required to apply their standard screening procedure

uniformly4. No guarantee will correctly diagnose—OK under EMTALA so

long as not so substandard as to amount to no exam5. Baber v. Hosp. Corp. of Am. (crazy pt hits head and gets a medical

screening; pt claims hospital failed to provide “appropriate medical exam” and also to stabilize the pt)

b. If emergency medical condition present, must provide treatment necessary to stabilize unless:

i. Patient requests transfer in writing knowing of hospital’s obligations,ii. MD certifies that benefits to patient of transfer in unstabilized condition

outweigh the risks, OR1. Unclear if i and ii are conjunctive or disjunctive.

iii. If no MD available, another qualified person certifies and it’s an appropriate transfer.

c. Can’t transfer if condition not stabilized or receiving facility not appropriate or hasn’t agreed to accept.

d. “Emergency medical condition”: (A) a medical condition manifesting itself by acute symptoms of sufficient severity (incl. severe pain) such that the absence of immediate medical attention could reasonably be expected to result in—

i. placing the health of the individual (or, w/respect to a pregnant woman, the health of the woman or her unborn child) in serious jeopardy,

ii. serious impairment to bodily functions, oriii. serious dysfunction of any bodily organ or part; or

(B) w/respect to pregnant woman having contractions—(i) that there is inadequate time to effect a safe transfer to another hospital before delivery, or (ii) that

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transfer may pose a threat to the health or safety of the woman or the unborn child.

e. “Stabilize/d”: no material deterioration is likely to result from transfer.f. Transfer requirements don’t apply unless hospital determines patient suffers from

emergency medical condition (EMC) Baberi. Plaintiff must show:

1. Patient had emergency medical condition2. Hospital knew of condition

a. EMTALA requires actual knowledge of EMC3. Patient not stabilized before transfer4. Prior to transfer of non-stabilized patient, hospital didn’t obtain

proper consent or follow appropriate procedures8. Impact of EMTALA

a. ED visits rose, # of EDs fell b. EDs chief source of care for 46 million uninsuredc. Ambulances fail to acct for crowding & different expertised. Shortage of on-call specialists

i. Unwilling to deal w/ inadequate reimbursement due to large #s of emergency pts uninsured or covered by Medicaid; liability risks; unwilling to be on call late or early

e. Recommendations (2006 IOM Report)i. Fed program to reimburse hsp that provide significant amounts of

uncompensated emergency careii. Better ED management, info technologies

iii. Stop “boarding” of patients except in extreme cases (waiting for beds to open up)

iv. Regionalize delivery of emergency caref. 43% of patients presented to EDs had illnesses not categorized as emergent or

urgent. Lack of primary care provider cited for almost ½ of this use. (1993 GAO)g. Operating “at capacity” or “over capacity”: (2002 Lewin Group study)

i. nearly 80% of urban EDs ii. 60% of all hospital EDs

iii. 60% of urban teaching hospitals spent at least some time on diversion in a given year (30% of all hospitals)

h. ED use increased per capita 550% from 1955 to 1980 vs 30% hospital use 9. ADA/ § 504 of Rehabilitation Act

a. Exception to c/l presumption that no duty to provide medical care absent contractual obligation

b. § 504 of the Rehabilitation Act of 1973i. Prohibits discrimination based “solely” on disability of “otherwise

qualified individual”1. If services refused for reasons in add’n to discrimination, no claim

ii. Claims can only target recipients of federal fundingc. ADA (1990)

i. Removed “solely” language; Prohibits discrimination “because of the disability”

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ii. Title I: employers, Title II: public entities, iii. Title III: private entities that provide public accommodations &/or

services (e.g., MDs) (need not receive federal funding)d. Prohibit discrimination against persons who are handicapped or disabled

i. § 504 enforced by DHHSii. ADA public accommodations provision enforced by DOJ

iii. Both Acts provide private right of action10. Title VI of the 1964 Civil Rights Act

a. Designed to prevent discrimination against minorities in federally-funded programs

i. “No person . . . shall, on the ground of race, color, or national origin, be excluded from participation in . . . or be subjected to discrimination under any program or activity receiving Federal financial assistance”

b. Most hospitals, nursing homes, & other health-related institutions are recipients of federal financial assistance through Hill-Burton Act or Medicare/Medicaid programs

c. Specifically provides only for administrative enforcement, but implied private right of action

i. Cannot seek termination of federal assistance, but can recover damages & equitable relief

ii. Only intentional discrimination is actionable via private suit (fed govt must pursue disparate impact claim)

VI. INSURANCE AND MANAGED CAREA. Managed Care Organizations (MCOs)

1. Private health insurance = managed care2. Combines 2 functions: reimbursement framework + health care delivery system3. Encompasses continuum of plans

a. From little more than preauthorization of hospital admission to staff model HMOs4. Manage care by:

a. Restricting access to pre-selected providersb. Utilization review reduce costs, maximize valuec. Creating incentives for limiting cost of care

5. Key liability issue is incentives given MDs6. 5 Areas of Liability for MCOs:

a. Denial of services i. Funding denied for lack of “medical necessity”

ii. Certain conditions, experimental treatments excluded iii. Need link between lack of treatment & patient injuryiv. leading case: Fox v. Healthnet (CA 1993)

1. Jury awarded 89 million, 79 in punitive.b. Referrals to incompetent health care providers

i. Competence of panel, specialistsii. Restrictions on who can use

c. Use of incompetent “gatekeepers” i. use of non-MDs; competence of primary MD, Utilization Review

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d. Financial incentives linked to incompetent care e. Delays in processing requests

7. Impact of Rising Health Care Costsa. Rising costs are changing the way Americans use the healthcare systemb. 6 in 10 Americans with health insurance reported being responsible for paying

more for their health plan in the past yeari. 81% of these said resulted in their consulting with MDs more carefully

about treatment options/costsc. 64% go to MD only for more serious conditions/symptomsd. 50% delayed going to MDe. 28% skipped or did not fill doses of prescriptions

8. Insurance and managed care contracts are governed by contract law.a. Ambiguous coverage provisions are liberally construed in favor of insured. b. When an insurer seeks to deny ins coverage based on an exclusionary clause in

an ins policy, the clause must be clear and free from doubt.i. Lubeznik v. Healthchicago (Ill. App. Ct. 1994): “appropriate medical

technology boards” not defined; doesn’t indicate who & how will determine. Ct grants injunction after ins co denies coverage for “experimental” procedure.

pt had ovarian cancer and MD wanted to take out bone marrow before doing chemotherapy, the insurance company said this was experimental, and the plan contract said that experimental treatments are denied

the contract defined experimental when the plan consults with 'appropriate' medical boards to determine that it was experimental

the MD who worked for the plan denied it, saying treatment was experimental, before he consulted with medical boards..

Dist Ct issued injunction against insurance company.. appeal court, here, affirmed

basic rule of contract interpretation - is that when language is ambiguous, then must construe ambiguity in a liberal fashion in favor of the insured because of the unequal bargaining power..

B. Tort Liability of Managed Care: Regulation of Private Health Insurance Under State Law

1. Historically, States had primary responsibility for regulating insurance.2. Great deal of statutory/regulatory legislation at the state level3. Traditionally, insurance regulations tend to not fit managed care well

a. Denial of claim for services rendered i. vs. refusal to approve procedure prospectively

b. Less need for cash reservesc. Marketing abuses may be comparabled. Claims abuses may necessitate grievance proceduree. Arguably greater need for access (Colonial Life Insurance)

4. “Community rating”: look at larger pool on which to base your actuarial computations (not just actual pool of employees). With a larger employer, more room for negotiating. With a small employer, at the mercy of the plan.

a. NY law requiring this upheld in Colonial Life Insuranceb. Facts of that Colonial: P challenges requiring commercial insurers to employ

community ratings and to provide open enrollment: statute requires risk pooling across insurance in the entire state, and insurance companies have to pay up

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c. Holding: this statute is upheld as a valid exercise of legislature’s power to regulate

-- Under “community rating,” premium rates are based on the allocation of total costs to all the individuals or groups to be insured, without regard to the past experience of any particular subgroup. Community or class rating has the advantage of allowing an insurer to apply a single rate or set of rates to a large number of people, thus simplifying the process of determining premiums.-Under “experience rating,” the past experience of the group to be insured is used to determine the premium. For employer groups, experience rating would take into account the company’s own history of claims and other expenses. The advantage of experience rating is that it adjusts the cost of insurance for a specific group in a manner more commensurate with the expected cost of that particular group than is possible through the exclusive use of manual rates. Also helpful for competition reasons: unless an insurer can provide coverage to such groups at a reasonable cost, it runs the risk of losing such policyholders to another insurer which more closely reflects the expected costs of their programs in its rates.

5. Open enrollment: can’t deny access if willing to pay premiums.a. In order to implement, NY Dep’t of Insurance established a mandatory pool

system in 7 regions of state. Insures availability of health care ins across state. i. Court: not a tax ($ not going to the state) and not an unconstitutional

taking of property b/c there’s no const’ly protected interest in having a healthier than average pool. Colonial Life Ins. v. Curiale (NY AD ’94)

6. Other State Regulations Pertinent to Small Group Accessa. Require coverage (open enrollment) & guarantee renewal to small groups

i. access for high-risk applicantsb. Limit/exclude use of preexisting conditions clausesc. Band range: Set the lowest and highest premiums.

i. Rating bands: requiring that the highest premiums charged not be more than a specified percentage higher than the lowest premiums charged

d. Community rating vs Experience rating: calculates premiums based oni. Community: on the basis of real and expected costs in a geographic area.

ii. Experience: based on the race/age/class of the populatione. Minimum loss ratios:

i. Co. can only make so much money. Must pay out so much in benefits.C. State Regulation of Managed CareManaged Care Organizations (MCOs) differ from traditional health insurers, of course, insofar as they manage care. As Marmor and Hacker note above, they do this through restricting members to the use of particular providers, reviewing the utilization of services, and creating incentives for limiting the cost of care. Some MCOs also attempt to oversee the quality of limiting the cost of care. Though managed care was generally welcomed at first as offering the potential both to restrain costs and to improve quality, beginning the in the late 1990s a decided “backlash” against managed care gathered steam. There was a general perception – encouraged by the media – that managed care controls had become excessive, threatening access to care. Almost every state has adopted some form of legislation, nearly 1000 statutes in all, during the last half of the 1990s. While many of these statutes address fairly narrow problems, a number of states have adopted comprehensive legislation addressing a variety of problems. The following law, adopted

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in 2000 in Massachusetts, addresses most of the issues with which such legislation has been concerned.Mass. Reform Legislation see below and also, if need be, the slides from Class!!

1. Office of Patient Protection a. Internet siteb. Make managed care info readily available

i. health plan report cardii. chart: premium revenue vs. hc expenditures

iii. quality assurance data2. Must cover emergency /transport services for Emergency Medical Conditions

a. OK to require hospital ER to contact for authorization of post-stabilization services, BUT deemed granted if no response within 30 minutes

i. if disagreement, attending MD prevails b. Can’t discourage from using pre-hosp emergency medical service system or 911

3. Can’t refuse to contract with or compensate otherwise eligible MD because advocated on behalf of patient (want MDs to speak up for pts)

a. Tho can require to hold confidential specific compensation termsi. MDs don’t want it known what their prices are

4. Can’t require MD to indemnify MCO for any expenses (ex. attys fees, settlements) and liabilities associated with claims brought against MCO based on MCO’s management decisions, Utilization Review provisions or other policies

5. MCO must provide to enrollees in clear language:a. Services/benefits entitled tob. Limitations on scope of carec. Locations & manner for obtaining health cared. Criteria for disenrollment/enrollment denial

i. Can be disenrolled if don’t pay premiums, move out of the area, commit fraud, abusing your physician—physical or verbal (ignore what physician says, abuse your health care costs).

e. Method for resolving complaintsf. Description for obtaining out-of-network referrals g. Description of UR & quality assurance programsh. List of prescription drugs excluded from formulary (approved meds)i. Procedures for determining if experimental / investigationalj. How to obtain report regarding grievances & # for office of patient protection

6. MCO must provide to enrollees & applicants:a. List of providers in network (by specialty & location)b. Process by which clin guidelines/UR criteria developedc. Voluntary & involuntary disenrollment rate

7. MCO must provide to office of patient protectiona. Independent evals of satisfaction & qualityb. % of MDs who voluntarily & involuntarily terminatec. % of premium revenue expended for hc servicesd. Total # of grievances, # approved/denied/withdrawn

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8. No incentive plans that specifically induce a reduction, delay, or limit in specific, covered services. MCOs shall not profit from denying or withholding medically necessary & appropriate services.

a. But allow capitation payments (fixed fees) or share risk agreements9. MCO must provide to MDs information regarding:

a. Stop loss protectioni. Limits to how much you can be exposed under these incentive plans.

b. Minimum patient population sizei. In some of plans, have to take on even thousands of patients.

c. Identification of services for which MD is at riskd. MCO must conduct annual consumer satisfaction survey

10. Conduct Utilization Review pursuant to written plana. UR pursuant to written criteriab. Denials made by person licensed in appropriate specialtyc. Initial determination within 2 days of receiving all necessary info

i. with provider notified by phone within 24 hoursd. Written notification of denial include substantive clinical justification & info

based on.e. MD opportunity to seek reconsideration by clinical peer reviewer

11. Maintain formal internal grievance processa. Written resolution within 30 days (starting when ins co has all relevant info)b. Expedited resolution policyc. Resolution within 5 days if terminal illnessd. Grievance not properly acted upon deemed resolved in favor of insured

12. External review panela. Review panel maintained by office of patient protectionb. 3 unrelated/objective review agencies (random assignment)c. Disposition within 60 days

13. Not preclude use of any other remedy (K/tort)14. MDs:

a. If disenroll primary MD, 30 day notice to patientsi. If terminally ill patient, keep MD. Pregnant patients can keep MD.

b. Allow primary MD to authorize standing referral for specialty health care under certain circumstances (for specialists)

c. Applicant MDs denied must be given written reasond. No terminations of MD without causee. Treating MD shall make all clinical decisionsf. MCO shall cover all medically necessary services that are covered benefits

D. State Laws Regulating MCO Networks1. Free choice of providers laws

a. Limit the ability of MCOs to build provider networks. Prohibit MCOs from restricting their members to particular providers or limit the size of the cost-sharing obligations that MCOs can impose on members who go out of plan.

2. Any willing provider lawsa. Require MCOs to accept into their network any provider who is willing to accept

the terms offered by the MCO.

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3. Network adequacya. Require MCOs to maintain an acceptable ratio of providers to enrollees.

4. Guarantee access to particular specialistsa. Ex. gynecologists or pediatriciansb. Standing referrals for those with chronic conditions

5. Continuity of care requirementsa. Assure plan members continuing access to a particular health care provider for a

period of time after the plan terminates the provider.6. Prompt payment laws

a. Require insurers to pay “clean” (complete and not disputed) provider claims w/in ranges of 15-60 days

E. Utilization Controls1. Time limits on UR process2. Disclosure of UR criteria3. Provide in writing the basis for the denial4. Internal consumer grievance & appeal procedures5. External/independent reviews

a. Required by 44 states. Usually an independent reviewer makes the decision.6. Statutory definition of medical necessity7. Mandated coverage (e.g., emergency care)8. Length of stay (“drive through delivery”)9. Access to off-formulary drugs or clinical trials10. Banning of “gag” clauses11. Independent consumer assistance programs12. Provision for liability suits against plans

F. Provider Incentives1. To combat MCO use of financial incentives (which transfer risk to MDs or hospitals by

paying providers a fixed fee—capitation)2. Many states purport to ban financial incentives

a. Usually prohibit incentives that “deny, reduce, limit or delay medically nec care”b. Usually go on to say they’re not intended to prohibit MCOs from using capitation

payments or other risk-sharing arrangements. Have little effect.3. Limit excessive incentives (by state statute)

a. Ex. restricting the proportion of a provider’s income that can be put at risk or the size of the pool of patients or providers over which the risk is spread; requiring stop-loss insurance

4. Require disclosure of financial incentivesa. Probs: Most receive insurance through employment and have limited choice; Not

clear how patients can use info about incentive plans structures; Imposes costs on regulators and on MCOs

G. Quality Regulation1. Require MCOs have quality assurance/ improvement program2. MCO must take quality of care into consideration in credentialing hc providers3. Require/encourage MCOs to seek accreditation4. Report cards or other forms of disclosure

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VII. TORT LIABILITY OF MANAGED CAREManaged care organizations may also be defendants in liability suits, facing the same theories that hospitals face. “managed care” is a phrase often used to describe organizational groupings that attempt to control the utilization of health care services through a variety of techniques, including prepayment by subscribers for services on a contract basis, use of physicians as “gatekeepers” for hospital and specialty services, and others. The groups cover a wide variety of plans – from plans that require little more than preauthorization of patient hospitalization, to staff model HMOs – that focus on utilization and price of services. The goal is reduction of health care costs and maximization of value to both patient and payer. A MCO is a reimbursement framework combined with a health care delivery system, an approach to the delivery of health care services that contrasts with “fee for service” medicine. Managed care is usually distinguished from traditional indemnity plans by the existence of a single entity responsible for integrating and coordinating the financing and delivery of services that were once scattered between providers and payers.

Managed care rapidly supplanted fee-for-service medicine. By 2006 fewer than 10 percent of employees in all firms were enrolled in conventional plans, with small firms as low as 4 percent. In 1980 by contrast, only five to ten percent of the workforce was enrolled in such plans. By 2006, employment based health insurance covered 155 million members.

Managed care plan liability is limited to a shrinking universe of plans. The Employee Retirement Income Security Act of 1974 (ERISA) preempts either explicitly or by U.S. Supreme Court interpretation the vast majority of managed care plans that are employment based and ERISA-qualified....See that section. The following discussion is therefore applicable to managed care plans that fall in the shrinking category of non-ERISA qualified plans for which federal preemption is not a defense to the defendant, or to the increasingly limited range of theories that the Supreme Court has left open to plaintiffs in state courts.A. Vicarious LiabilityHealth maintenance organizations (HMOs) and Independent Practice Associations (IPAs) in theory face the same vicarious and corporate liability questions as hospitals, since they provide services through physicians, whether the physicians are salaried employees or independent contractors. These medical services can injure patient/subscribes, leading to a malpractice suit for such injuries... Vicarious liability theories provided the first wave of successful litigation against managed care organizations.

1. Rejects notion that cost-containment role entitles HMOs to special considerationa. Petrovich v. Share Health Planb. Holding and Rule: Yes. An HMO can be vicariously liable for the negligence of

its independent contractor physicians via apparent authority or implied authority.2. GR: No vicarious liability for acts of independent contractors. But vicarious liability may

be imposed for the actions of independent contractors where an agency relationship is established under either the doctrine of apparent authority or the doctrine of implied authority.

3. Apparent (ostensible) authority; P must show:a. MCO held self out as the provider of health care, w/o informing the patient that

the care is given by independent contractorsb. Patient justifiably relied on conduct of MCO by looking to the MCO to provide

health care services, rather than to a specific MD.4. Implied authority = Actual authority, circumstantially proved

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a. Where the facts and circumstances show that the exerted sufficient control over the alleged agent so as to negate that person’s independent contractor status, at least w/respect to third parties.

b. Cardinal consideration: whether the alleged agent retains the right to control the manner of doing the work (rather than actual control)

5. MCO owes a duty to avoid contracting with deficient providers or negotiating contract terms which require or unduly encourage denials of service or below-standard performance by its providers.

a. Pagarigan v. Aetna U.S. Healthcare (Cal.Ct.Ap. 2005)b. Facts: Johnnie Pagarigan, a member of an Aetna HMO plan, entered a nursing

home after suffering a stroke. While in the nursing home, Pagarigan's condition deteriorated, and she suffered an infection which her children later claimed was caused by negligence. The nursing home allegedly delayed transferring Pagarigan to an acute care hospital in a timely fashion, and Pagarigan died.

c. Following the death of their mother, the appellants sued Aetna alleging negligence, wrongful death, and elder abuse. They claimed that Aetna, which had contracted with a management services company, which subsequently contracted with several physician groups who, in turn, contracted with the nursing home that cared for Pagarigan, was liable for the denial of care and malpractice allegedly committed by the nursing home.

d. The California Court of Appeals concluded that California Civil Code § 3428, concerning duties of health care service plans and managed care entities, imposes a duty of care on HMOs that contract out medical care responsibilities and coverage decisions to providers. Specifically, the court determined that HMOs owe a duty of due care to enrollees when choosing providers with whom to contract, and a duty to avoid provider contracts containing capitation terms which "forseeably require or unduly encourage below-standard care." According to the court, HMOs must avoid contracting with deficient providers or negotiating contract terms which encourage below-standard performance.

B. Direct Institutional Liability: Corporate Negligence1. Where the HMO is providing health care services (the same/similar functions as hospital)

rather than merely providing money to pay for services, the duties applicable to hospitals should be equally applied to an HMO.

a. Corporate liability doctrine previously applied to hospitals—ensures patient’s safety & well-being while at hospital. A non-delegable duty.

b. Shannon v. McNulty2. Court looks to 4 duties (that were set out in Thompson v. Nason Hospital):

a. Use of “reasonable care” in maintenance of safe & adequate facilities/equipmentb. Select/retain only competent MDs c. Oversee all persons who practice medicine within wallsd. Adopt/enforce rules/policies to ensure quality care for pts

3. When MCO interjects self into the rendering of medical decisions, HMO decisions must pass test of medical reasonableness

4. Duty to oversee dispensing of advice by nurses5. HMO also vicariously liable for negligent rendering of services by triage nurses

C. Physician Incentive Systems

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1. MD’s employment contract w/MCO not discoverable. Whether MD/HMO contract had an incentive system in place discouraging staff MDs from ordering diagnostic tests and from making referrals is not relevant to whether MD breached the standard of care.

a. It doesn’t matter if you can show medical judgment was corrupted by MC; motive not relevant in a med mal case...

b. Brannan v. Northwest Permanente, P.C. (W.D. Wash. 2006)

Is this case controversial??? This seems like a bad ruling to me... Understand!A: in the notes, this is apparently the general rule among courts (even though they get plenty of outsider criticism!). There are counterexamples in the courts though: Sweede v. Cigna Health Plan. One reason for the paucity of such opinions may be the difficulty inherent in proving what motivates physician decision making....How would we prove that the physician was motivated by the HMO payment structure rather than patient safety? Moreover, some point out that there is little evidence showing that HMO incentives have a detrimental effect on patient care.... While incentives may create conflicts of interest, they also may give physicians flexibility in their clinical decision making.

VIII. THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 (ERISA)A. Other Federal Statutes That Affect Health Plans

1. ADAa. Constraint on ability of employers & insurers to discriminate against a person

with a disability in providing health insurance2. HIPAA

a. Limits use of preexisting condition clausesb. Prohibits intragroup discrimination in coverage & ratesc. Certain protections in small group / individual insurance markets

3. COBRAa. Gives employee ability to maintain health insurance for a period of time if lose

job (tho must pay for)i. Prexisting disability doesn’t disqualify

B. ERISA Preemption of State Health Insurance Regulation1. History of ERISA Preemption

a. 1974 context: i. Defaults & administrative malfeasance in pension funds

ii. Fee-for-service predominant health care financing model at time of enactment

b. 2 main effects of ERISA:i. Establish uniform national standards for employee benefit plans

ii. Preempt state regulation of these benefit plansc. Gave federal right to sue to recover denied benefits

i. Imposed fiduciary obligations on plan fiduciariesd. 1980s & ’90s, primary role deregulatory

i. Blocked states attempts at plan regulationii. Blocked state common law actions against plans

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2. §514 Explicitly exempts state regulation of insurance from preemption, while also prohibiting state regulation of self-insured plans.

a. ERISA “supercede[s] any & all State laws insofar as they . . . relate to any employee benefit plan”

i. “State law” = “all laws, decisions, rules, regulations, or other State action having the effect of law”

b. “Savings clause”: exempts from preemption “any law of any State which regulates insurance”

c. Exception of its own: “deemer clause”—”an employee benefit plan . . . shall [not] be deemed to be an insurance company” subject to state regulation under the savings clause

i. Self-insured falls w/in deemer clause, which means they’re outside the savings clause and state cannot regulate them.

3. §502 provides for exclusive federal court jurisdiction over and an exclusive federal cause of action for cases that could be brought as ERISA claims.

a. Participant/beneficiary can sue to:i. Recover benefits due under plan

1. Can’t get damages.ii. Enforce rights under plan

iii. Clarify rights to future benefitsiv. Compel plan fiduciary to make good to plan losses caused by breach of

fiduciary dutiesv. Obtain an injunction to enforce terms of plan

vi. Obtain “other appropriate equitable relief” to enforceb. SCOTUS: this “comprehensive & reticulate scheme” of ERISA remedies leaves

no scope for creation of state remedies against ERISA plans & thus preempts any such remedies

i. Exclusive federal court jurisdiction over ERISA claimsii. Exclusive fed c/a for cases that could be brought as ERISA claims

4. Initially/From outset, SCOTUS read preemptive scope very broadlya. 1st case on § 514: Alessi (1980)

i. “pension plan regulation…exclusively a federal concern”ii. Preempts not just state laws that directly regulate pension plans, but also

laws that indirectly affect themb. Shaw (1984): a law “relates to” a benefit plan “if it has a connection with or

reference to such a plan”i. Avoid “need for interstate Employers to administer their plans differently

in each State in which they have employees”c. Metropolitan Life (I) v. Massachusetts (1985):

i. But MA statute mandating minimum mental health benefits was “law which regulated insurance” thus saved from preemption & enforceable

ii. : wrongfully denied & delayed disability benefits. Sought compensatory/punitive damages.

iii. SCOTUS: no authorization for “extracontractual” damages. “Congress did not intend to authorize other remedies”

1. “interlocking, interrelated, & interdependent remedial scheme”

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d. Pilot Life (1987)i. : sued under state law for tortious breach of contract for wrongful

termination of disability benefitsii. State law not “specifically directed” toward insurance industry

1. Savings clause doesn’t apply, not saved from § 514 preemptioniii. Congress intended § 502 to provide exclusive remedy for improper

processing of claims for benefits1. Even if “saved” from § 514 preempt, still preempted under § 502

e. Metropolitan Life (II) v. Taylor (1987)i. 3rd form of preemption: complete preemption

ii. Any case that could be brought against ERISA plan as a § 502 benefits claim, is a claim “arising under the laws of the United States”

iii. Thus can remove to federal court (under law of federal jurisdiction) even if ERISA nowhere mentioned in plaintiff’s complaint

1. Defeats well-pleaded complaint rule5. ERISA By the End of the 1980s:

a. § 514 broadly preempts any SL that refers to or is connected with an ERISA plani. “Savings Clause” in § 514 saves from preemption those state laws that

regulate insuranceb. SL claims that could be brought as claims for benefits, are preempted by § 502

i. & can be removed into federal court, where they will be dismissed unless re-formulated to match § 502 remedies

c. ERISA does not provide any “extracontractual” damages for injuries caused by claim denials

6. Challenges of the 1990s:a. #1: Nature of health care benefits changed

i. 1974 model: retroactive fee-for-service reimbursement1. ERISA benefit cases focused on who pays for service already

given (ERISA plan, patient)ii. 1990s: Employer’s health benefit plans became Managed Care plans

1. Not payment dispute, but whether provide at all/timelya. Staff-model HMO, utilization review, network limitations

2. § 502 remedies inadequate when not denial of pay, but loss of life/disability b/c refused to provide/approve nec med care

3. Could reach under state tort law, but remove to fed ct under complete preempt & dismiss b/c

a. § 514 preempts all state laws governing ERISA plansb. § 502 preempts all state remedies against ERISA plansc. ERISA provides no remedy beyond cost of denied service

b. #2: SCOTUS seemed to soften positioni. Travelers (1995): Abandoned literal reading of § 514 & focused on

purpose. Laws that only indirectly affect benefit plans are not preempted unless “acute” economic consequences for plans.

1. State reg required hsps to charge lower rates to Blue Cross plans than commercial plans.

2. Court acknowledged “related to“ ERISA plans

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a. “really, universally, relations stop nowhere”b. Fell within scope of traditional state health care regulations

ii. Pegram v. Herdrich (2000)1. Decisions involving both coverage & treatment might be subject to

state malpractice law (in dicta)2. Traditional state domain preserved from preemption by Travelers

iii. Rush Prudential HMO v. Moran (2002)1. State law that subjected ERISA plan decisions to external review

saved from preemption because law also regulates insurance. c. #3: Lower courts tried to find way to provide remedy to beneficiaries suffering

consequences of negligent managed care treatment decisionsi. MDs can’t escape liability by working for ERISA MCOs

ii. ERISA MCOs vicariously liable for malpractice of employees or “apparent” employees

iii. Dukes v. U.S. Healthcare (3d Cir. 1995)1. State tort claims challenging treatment decision that affected the

“quality” of care not preempted2. vs. claims challenging decisions affecting “quantity”

iv. “Mixed” decisions of coverage & treatment subject to state negligence lawsuits (citing Pegram dicta)

v. Most state courts still held state tort remedies preempted by § 502 or § 5147. Rush Prudential HMO v. Moran (USSC 2002)

a. No question law “related to” employee benefit plan thus potentially subject to preemption under § 514 . However, state law saved from preemption as a law regulating insurance (“savings clause”)

i. Still § 502 has independent preemptive force (Pilot Life) but external review statute doesn’t provide alter remedy to §502—merely a “second opinion” & “savings clause” prevails.

ii. SCOTUS ruled that the federal Employee Retirement Income Security Act (ERISA) did not preempt an Illinois medical-review statute.

iii. ERISA envisions a national standard for welfare and pension plans so state laws which "relate to" ERISA plans are preempted under Section 514 of ERISA. However, ERISA contains a "savings" clause which saves state laws which regulate insurance under Section 514(b). The statute at issue in Moran regulated insurance, which is one of the functions HMOs perform. Although HMOs provide healthcare as well as insurance, the statute does not require choosing a single or primary function of an HMO. Congress has long recognized that HMOs are risk-bearing organizations subject to state regulation. Finally, allowing States to regulate the insurance aspects of HMOs will not interfere with the desire of Congress for uniform national standards under ERISA.

b. Dissent: this “2nd opinion” is binding on ERISA plan, thus its an alternative remedy

i. Law designed to increase chances sympathetic pts get desired treatmentii. Will raise cost of insurance, make less accessible to Employers, & less

attractive to E’rs; 40 other states have similar lawsc. Some argue better to abandon Pilot Life, which created § 502 preemption whole

cloth in 1st place. But Rush reaffirms Pilot Life & sets basis for Davila which strongly reaffirms 502 preemption.

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d. Rush facts: Illinois law guaranteed independent medical review of denied claims. Moran: pain & numbness in right shoulder. Primary care MD unsuccessfully administered “conservative” treatments. Recommended unconventional treatment by unaffiliated specialist. Preauthorization required by MCO medical director—denied as not “medically necessary” & proposed standard surgery by affiliated MD. Failed to provide requested independent review.

e. Moran sued in state court to force compliance with state law. Rush removed to federal court c/a “completely preempted” under ERISA.

8. ERISA preemption covers vast majority of insurance & managed care plansa. Exceptions:

i. Insurance provided on individual basis (including self-employed)ii. Workers’ compensation, uninsured auto plans

iii. Church or government plansiv. Other plans that are not employment-related

9. Three types of Preemptiona. Broad, but uncertain & perhaps shrinking scope of § 514 preemption

(“ordinary”/conflict preemption)i. Growing importance of “savings clause” gives states considerable

authority to regulate insured ERISA plansii. Tho state laws authorizing tort claims against MCOs are still

preemptedb. § 502 “complete” jurisdictional preemption lands cases in fed cts

(superpreemption)i. Oust state claims/remedies that would take place of §502

10. “Deemer” clause of § 514a. Permits ERISA plans to escape state regulation by becoming self-insuredb. Limits states’ aggressiveness in regulating ERISA plans

11. Relationship between § 514 & § 502a. Early cases focused on § 514 “relate to” express preemptionb. § 502 conflict preemption has emerged as independent form of substantive

preemption (particularly in Davila)c. Preemptive reach not coextensive

i. § 514 broader in reach (potentially preempting all state laws that “relate to” benefit plans)

ii. § 502 only preempts laws that recognize or establish claims that could have been brought as § 502 claims

iii. “Savings clause” of § 514 protects many state reg. laws from preemption1. Some however are still preempted by § 502 (state laws authorizing

state claims against employee benefit plans)12. ERISA: Substantive Requirements

a. § 401(a): ERISA fiduciaries oblig to act “solely” in interest of plan participants for exclusive purpose of providing benefits to them

i. Must act “prudently” in discharging this obligationb. § 102: must provide participants “summary plan description”

i. Including a description of their rights

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c. § 503: plans must provide participants whose claims are denied w/ adequate notice of denial & reasons for denial

i. “reasonable opportunity” for “fair & full” reviewii. “reasonable” procedures governing filing of claims, notification of

determination, & appeal of adverse determination:1. No appeal fees, max 2 appeals required before can sue under §5022. No denials for failing to obtain prior approval where emergency3. Max 72 hours for “urgent care claims”, pre-service claims w/in 15

days, post-service claims w/in 30 days4. Scientific/clinical basis for denial or statement; free upon request5. State’s external review procedures optional for participants

a. Participant not required to exhaust before filing §502 suitC. ERISA Preemption and State Health Care Reform

1. ERISA limits the ability of states to reform health care.2. §514 of ERISA broadly preempts “any and all State laws insofar as they may now or

hereafter relate to any employee benefit plan” covered by ERISA.a. ”Relates to” is expansive/broad language. Directly upon a plan vs. indirectly

impacts a plan. Court says this directly impacts.b. ERISA provides comprehensive regulation, primary goal is to provide a uniform

regime. States can regulate providers, can’t re-structure. c. B/c MD’s health care act effectively requires employers in MD covered by the

Act to restructure their employee health insurance plans, it conflicts w/ERISA’s goal of permitting uniform nationwide administration of these plans. MD Act preempted by ERISA. Retail Industry Leaders Assn v. Fiedler (4th Cir. 2007)

i. Maryland Act crafted to just cover Wal-Mart. ii. Court: “Because Maryland’s Fair Share Health Care Fund Act effectively

requires employers in Maryland covered by the Act to restructure their employee health insurance plans, it conflicts with ERISA’s goal of permitting uniform nationwide administration of these plans. We conclude therefore that the Maryland Act is preempted by ERISA.”

iii. “In contrast to Travelers and Dillingham, the Fair Share Act directly regulates employers’ structuring of their employee health benefit plans.”

iv. “Second, the choices given in the Fair Share Act, on which the Secretary relies to argue that the Act is not a mandate on employers, are not meaningful alternatives by which an employer can increase its healthcare spending to comply with the Fair Share Act without affecting its ERISA plans.”

3. State initiatives that are open to a state that wants to engage employers in an attempt to expand insurance coverage:

a. Offer tax credits to employers to expand coverageb. Create voluntary purchasing pools to enhance the purchasing power of small

businesses (groups of small businesses pooling together to self-insure),c. Use Medicaid or State Children’s Health Insurance Program funds to subsidize

employment-based insurance for low-income workers,d. Require insurers to offer low cost insurance policies to small businesses

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D. The Relationship Between Federal ERISA Fiduciary Law and State Tort Claims Against Managed Care PlansAs will be seen in the next subsection, one of the most frequently litigated ERISA preemption issues involves its effect on state tort claims against managed care organizations. This issue might have been less important, however, if adequate relief had been made available under ERISA to deal with the perceived abuses of managed care. One possible route for raising claims against managed care organizations could have been through ERISA’s fiduciary obligations provisions. In 2000, however, SCOTUS slammed the door shut on this approach (see Pegram).

1. ERISA does not provide a remedy for coverage determinations by MCOs . Thus state law remedies are not preempted by the legislation. Pegram v. Herdrich

1. ERISA’s fiduciary obligation provision: 29 U.S.C. § 1104(a): fiduciaries shall discharge their duties “solely” in the interest of the participants

a. i.e., for the “exclusive purpose of (i) providing benefits to participants & (ii) defraying reasonable expenses of administering the plan”

b. 7th Cir: MCO acting as fiduciary when its MDs made challenged decisions i. Although incentives do not automatically give rise to breach of fiduciary

duty, they do when MDs delay necessary treatment for sole purpose of increasing their bonuses

2. One possible route for raising claims against MCOs would have been through ERISA’s fiduciary obligation provisions, but SCOTUS foreclosed that approach.

a. Pegram v. Herdrich (USSC 2000)b. P: fraud b/c by rewarding MDs for limiting med care, entailed inherent/anticip

breach of ERISA fiduc duty. Created incentive for MDs to make decisions in self-interest rather than exclusive interests of plan participants.

c. This MCO diff from other MCOs b/c owned by MDs. SCOTUS disagrees and refuses to distinguish: “whatever the HMO, must be rationing & induce to ration.”

3. A fiduciary w/in the meaning of ERISA must be someone acting in the capacity of manager/admin/finan advisor to an “employee welfare benefit plan”

a. Scheme decided upon in advance setting out rules under which beneficiaries entitled to care with rules governing collection of premiums, definition of benefits, submission of claims, & resolution of disagreements over claims

4. Imposition of ERISA fiduciary obligationsa. Apply to managing, advising, & administering of ERISA planb. Tho Carle (in Pegram) not ERISA fiduciary merely because runs own HMO, can

be fiduciary because it administers an ERISA plan5. ERISA fiduciary responsibilities

a. Must discharge duties “solely” in interest of participants for “exclusive purpose” of providing benefits/defraying expenses

b. No duty of “complete loyalty” to guarantee beneficiaries’ interestsi. Unlike trustee at common law, who can only wear “fiduciary hat”

c. ERISA fiduciary wears multiple hats; to keep plan viablei. Year-end payout not a fiduciary violation

1. unless design sufficiently “awkward” 2. may be oblig to disclose char of plan if affects “material interests”

d. Only wear “fiduciary hat” when making fiduciary decisionse. Distinguish “pure eligibility decisions” from treatment decisions

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i. Coverage vs Diagnosing/treating patient’s conditionii. But “practically inextricable” (e.g., medical necessity questions)

1. Made by same person (treating MD)2. Not yes-no questions, but when-and-how questions3. Can’t untangle eligibility from reasonable medical treatment

judgment6. MCO has fiduciary responsibility for “pure” eligibility decisions

a. MCO does NOT have a fiduciary oblig for mixed eligibility & treatment decisions made through its MDs

i. Herdrich/Dr. P decision was mixed (delay vs immediate care)b. If court deemed a profit incentive to ration care as a fiduciary violation w/ re to

these mixed decisions:i. Would eliminate for-profit, & possible nonprofit HMOs

ii. Otherwise, if disagreement, MD required to treat aggressively even though risky, costly, & marginally justified

iii. Any bad outcome attributed to financial incentive 1. MCO becomes guarantor of recovery2. Replication of state malpractice actions with MCO defendants3. ERISA not enacted to federalize malpractice litigation

iv. MD employee would also be subject to liability as fiduciary1. Makes ERISA a preemption of state malpractice law2. Opening fed cthouse doors to claims lead to unheard of fiduc litig3. Require clear manifestation of Cong purpose before do so

E. Erisa Preemption of State Tort Litigation1. When fed statute wholly displaces state law c/a (cause of action) through complete

preemption, state claim can be removed to fed court even though plaintiff did not raise a federal claim.

a. Congressional intent was to provide uniform regulatory regime i. State remedies would undermine. Aetna Health v. Davila (2004)

Aetna Health Inc. v. Davila, SCOTUS case that limited the scope of the Texas Healthcare Liability Act.The effective result of this decision was that the "Texas Healthcare Liability Act" (THCLA) that held utilization review decisions by Managed Care entities to a legal duty of care according to the laws of Medical practice in Texas, could not be enforced in the case of Health Benefit plans provided through private employers, because the Texas statute allowed compensatory or punitive damages to redress losses or deter future transgressions, which were not available under ERISA § 1132. The ruling still allows Texas to enforce the THCLA in the case of government-sponsored, church-sponsored, or individual health plan policies, which are saved from preemption by ERISA.

2. Properly in federal ct even if elements of state c/a don’t precisely duplicate elements of ERISA claimif “could have brought” § 502 claim

a. Could have paid for treatment themselves & sought reimbursement or sought a preliminary injunction. Davila

b. Rejects tortious breach of contract v. contract claim distinction 3. J. Ginsburg/Breyer (concur)

a. Total preemption is consistent with case lawb. Join “rising chorus” Congress & Court should revisit unjust & increasingly

tangled ERISA regimec. “Regulatory Vacuum”

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i. Host of situations in which persons adversely affected by ERISA-proscribed wrongdoing cannot gain make-whole relief

d. Need to reconsider availability of consequential damagese. Potential solution:

i. Allow make-whole relief against breaching fiduciaryii. Adopt principles of trust remedy law

4. Pre-Davila, Great variability among courts in when tort claim in state court permitted & when preempted by ERISA. Post-Pegram number of courts held that if MCO decision a “mixed eligibility & treatment decision” it was not subject to ERISA preemption.

a. argued not acts of plan administrationb. i.e., plaintiff could proceed in state court on med mal claim c. Dukes v. U.S. Healthcare (3d Cir. 1995)

i. ERISA intended to insure promised benefits availableii. § 502 only intended to preempt claims focused on the quantity of benefits

(i.e., that promises be kept), not the quality of themiii. field traditionally occupied by state regulation

F. Beneficiary Remedies Provided by ERISAERISA takes away, but ERISA also gives. ERISA obligates employee benefit plans to

fulfill their commitments to their beneficiaries, and provides a federal cause of action under §502 when they fail to do so. But the vision of health insurance that undergirds ERISA is very different from that which undergirds state insurance regulation.

State insurance regulation has generally been driven by a concern for their access rights: e.g., the right of employees to have continued access to insurance coverage when they lose their jobs; the right of insureds to obtain mental health or mammography screening coverage; the right of “any willing provider” to participate in a PPO or pharmacy benefits plan; the right of small businesses to purchase insurance at affordable rates; the right of beneficiaries to fair procedure. This body of state law looks to public utility regulation, and, more recently, civil rights laws, for its models.

The categories of law that define ERISA, on the other hand, are trust law and classical contract law. ERISA does not compel employers to provide health insurance and prohibits the states from imposing such a requirement. If, however, employers choose voluntarily (or under collective bargaining agreements) to establish health benefit plans, any contributions made by employers (or employees) to such plans are held in trust for all of the participants (employee plan members) and beneficiaries (dependents and others covered under a participant’s policy) of the plan and must be paid out according to the contract that defines its terms. If the plan fiduciary or administrator wrongfully withholds benefits, a participant or beneficiary is entitled to sue in federal or state court. If a fiduciary or administrator exercises properly delegated discretion to withhold benefits that are not expressly granted or denied by the plan, however, the court must defer to the judgment of the administrator or fiduciary. When the fiduciary or administrator wrongfully withholds benefits, moreover, no matter how egregious its conduct in doing so, the court will merely order the plan to pay the beneficiary the amount due. ERISA does not, as interpreted by SCOTUS, authorize tort relief or punitive damages.

While the limited rights that beneficiaries enjoy under ERISA trouble courts and commentators, they are consistent with ERISA’s underlying theory. State insurance laws – be they the common law of contra proferentum or statutory mandates enacted by the legislature – focus on the absolute claim of a beneficiary whose life or health is in jeopardy to the assets held

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by the insurer: your money or my life. They also honor the political claims of providers who demand their turn at the insurance trough. The health insurance pot is, apparently, infinitely elastic and must be expanded to fulfill the demands of many claimants, each of whom, considered individually, makes a compelling case.

ERISA, by contrast, sees a zero sum game. The pot is only so big, and when it is empty it is empty. To fudge the rules in favor of one beneficiary may result in the plan not being able to honor the legitimate claims of other beneficiaries. If one claimant who has been treated egregiously by the plan is permitted to recover extracontractual damages from its administrator, these damages will ultimately come out of the pockets of the other beneficiaries, who have themselves done nothing wrong. In a world of scarce resources, not everyone can be taken care of. But the administrator, nevertheless, is also a fiduciary, and there are some limits to its discretion.

1. In reviewing benefit denials, guided by principles of trust lawa. Defer to determinations of fiduciary given discretionary powers to determine

eligibility for benefitsb. Won’t disturb reasonable interpretation

2. But conflict of interest can lower level of deferencea. Factor to considerb. MCO compensated by fixed premiums & bears financial risk for claims made

beyond actuarial normc. Profit depends on whether claims exceed assumed risks

3. If substantial conflict of interest present, use alter standard of review & reduce deferencea. Whether consistent w/ what non-conflicted fiduciary would decideb. Neutralize any untoward effect of this conflict

4. Doe v. Group Hsptlzn & Med Services: denial of chemotherapy invalid.a. Chemo of blood cancer clearly covered under planb. Bone marrow transplant, while necessary to avoid disastrous side effect of chemo,

is not the procedure being used to treat the cancer. Chemo is the treatment & this is covered.

IX. TORT REFORMA. Perspectives

1. 93% reported deviating from sound medical practice (i.e., engage in defensive medicine) to lower risk of malpractice exposure

2. Most common defensive practices: a. Ordering extra diagnostic tests (incl invasive procedures)b. Making referrals against their clinical judgmentc. Not caring for high-risk patientsd. Defensive practices more widely used may become standard of care

3. States that enacted direct tort reforms had their supply of MDs increase by 3.3% in 3 years after adopting the reforms

a. Primarily a function of fewer MD retirements & greater number of “graduates”b. Not a function of lateral transfers across statesc. Relatively modest impact in that even in states w/o reforms, MD supply increased

B. Factors Contributing to “Malpractice Crisis”1. Inherent & substantial hazards of health care

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a. Complexity of care; antiquated, fragmented delivery mechanism2. Increased expectations driven by medical progress3. Rising health care costs inflate awards4. Changes in institutional nature of health care system increase exposure

a. horizontal & vertical integrationb. liability extends beyond MDs (hospitals, long-term care, managed care)

5. Cost constraints of managed care prevent MDs from passing on increased premiums to patients

6. Malpractice insurance market less profitable & stablea. Not an ideal insurance market

i. small pool, high variability, losses not independent (MDs or groups), effected by social forces, moral hazard & adverse selection distort market

b. Some: medical inflation, wage inflation (for lost earnings), & increases in severity of injury to patients outstrip malpractice premiums

c. “lumpy” market results in cycles of underpricing & catchupi. sudden price increases are actually deferred costs

d. Price wars (accounting practices of St. Paul Co.)e. Some: price gouging by insurance industryf. Deregulation of insurance industry by states (e.g., reviews of rate filings)

C. Tort Reform1. Potential Targets:

a. Expand the potential liability of: MDs? Hospitals? MCOs?2. Criteria for Evaluating Medical Malpractice System/Reforms

a. Degree to which it:i. Compensates injured patients

ii. Deters poor quality careiii. Enhances systemic improvementsiv. Punishes deficient MDsv. Correctly identifies substandard care

1. and diminishes false positivesvi. Makes malpractice insurance affordable

vii. Maintains/enhances availability of servicesviii. Treats similar cases alike & distinguishes rationally

ix. Generates predictable results3. Possible Insurance Reforms

a. New sources of insuranceb. Joint underwriting associations, reinsurance exchanges, hospital self-insurance

programs, state funds (patient compensation funds), provider-owned insurance companies

c. Claims-made policiesi. Covers claims made during the year of the policy coverage, unlike

occurrence policies, which covers claims made at any time as long as the insured doctor was covered during the time the incident giving rise to the claim occurred.

ii. Avoids the predictability problem of occurrence claims.d. Stop-gap state coverage

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i. Self-insurance pools as a temporary fix for coverage until carriers reenter a state to offer coverage.

e. Hospitals provide coverage for staff MDsf. Selective insurance marketing

i. MD mutual companies with MD-investors.g. Hospital complaint profiling

i. Spotting litigation-prone staff MDs and intervening to retrain them to avoid risks.

4. Possible Litigation Reformsa. Shorten statutes of limitationsb. Regulate attorneys’ fees

i. cap contingency fees, require judicial reviewc. Award costs for frivolous claimsd. Eliminate ad damnum clause

i. A statement in the complaint in a civil action that specifies the amount of money sought by the plaintiff.

e. Require periodic payments rather than lump-sumi. Lump-sum enables heirs to make out, which isn’t the point.

f. Modify collateral source rule to inform juries about payments to patient from other source(s) or offset award with some/all of these payments

g. Dollar limit/cap on awardsi. noneconomic damages (typically P&S) or max recoverable per case

ii. “schedule” pain & suffering awardsh. Limit/eliminate res ipsa loquituri. Qualifications of expert witnesses

i. same specialty, devote large % of practice toj. Specify the particular locality for the standard of care

i. local, similar, state (away from national standard)k. Pretrial screening panelsl. Voluntary arbitrationm. Mandatory alternative dispute resolutionn. Mediation, “Health Courts”o. Medical practice guidelines as standard of carep. No-fault systems: provider-based early payment

i. “early offers”, use of “apologies”q. Administrative systems (based on Workers’ Compensation approach)

i. Va.: “Birth-Related Neurological Injury Compensation Act”ii. Social insurance scheme moving financing out of private insurance market

& into taxation structure of governmentr. Enterprise/organizational liability

i. National Childhood Vaccine Injury Act of 1986

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QUALITY CONTROL REGULATION: LICENSING OF HEALTH CARE PROFESSIONALSDiscipline.In Re Williams:-- “...Dr. Williams dispensed controlled substances in what was, at the time, a legally permitted manner, albeit one which was disfavored by many in the medical community. The only evidence in the record on this issue was the testomoony of Dr. William’s expert witnesses that his use of controlled substances in weight control programs did not fall below the acceptable standard of medical practice. While the board had discretion to resolve evidentiary conflict and determine the weight to be given expert testimony, it cannot convert its own disagreement with an expert’s opinion into affirmative evidence of a contrary proposition where the issues is one on which medical experts are divided and there is no statute or rule governing the situation.

It should be noted, however, that where the [legislature] has prohibited a particular medical practice by stature, or where the board has done so through its rulemaking authority, [that is conclusive on the standard of care, so] the existence of a body of expert opinion supporting that practice would not excuse a violation.”

Hoover v. The Agency for Health Care Administration-- ??? fill in from class!

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