2014 Health Law

Case UpdatePresented by:

S. Todd HemphillAttorney at Law

POYNER SPRUILL LLP

Raleigh, North Carolina

September 19, 2014

Medical

Malpractice

Recent Developments in…

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Goodman v. Living Centers-Southeast, ___

N.C. App. ___, 759 S.E.2d 676 (17 June 2014)

• Plaintiff , decedent’s Administrator, alleged that in Sept. 2008, nursing home staff improperly placed I.V. pole next to decedent’s bed.

• Pole fell on decedent, causing serious injury.

• After hospital treatment, decedent transferred to a different nursing home, where he died in October 2008.

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Goodman .v Living Centers-Southeast

• Plaintiff filed lawsuit Oct. 2010, dismissed Jan. 2012, re-filed Jan. 2013.

• Defendant moved to dismiss on statute of repose for med mal actions under G.S. 1-15(c).

“[I]n no event shall an action be commenced more than four years from the last act of the defendant giving rise to the cause of action[.]”

• Superior Court dismissed, and Plaintiff appealed.

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Goodman .v Living Centers-Southeast

• Court of Appeals reversed.

• Claim was for ordinary negligence, not medical malpractice.

So statute of repose did not apply.

• Defendants’ actions were manual in nature.

• Key facts were that Plaintiff:

Never actually alleged med mal; and

Did not obtain an expert certification under Rule 9(j).

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Wiggins v. East Carolina Health-Chowan, 760 SE2d 323 (1 July 2014)

• Plaintiff Wiggins admitted to hospital for

labor and delivery.

• Labor induced Friday night, paused during

the night, and restarted Saturday morning.

• Vaginal exam at 1 p.m. revealed umbilical

cord prolapse.

• Attending physician called and emergency

c-section performed.

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Wiggins v. East Carolina Health-Chowan

• Plaintiff filed suit, alleging that negligent delivery cause brain damage to child.

• During the trial, several expert witnesses testified that an umbilical cord prolapse is not common and qualified as an emergency.

• All of the medical providers testified that Wiggins showed no risk factors for an umbilical cord prolapse.

• During the charge conference, the trial court granted Chowan’s request to give an instruction to the jury regarding the sudden emergency doctrine.

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Wiggins v. East Carolina Health-Chowan

• “A person who, through no negligence of his own, is suddenly and unexpectedly confronted with imminent danger to himself and others, whether actual or apparent, is not required to use the same judgment that would be required if there were more time to make a decision.”

• The person’s duty is to use that degree of care which a reasonable and prudent person would use under the same or similar circumstances.

Wiggins v. East Carolina Health-Chowan

• First case in NC of sudden emergency doctrine in medical negligence setting.

• Court concluded that healthcare providers are held to a higher standard than lay people.

• Problem with judge’s instruction. The charge instructed the jury to simultaneously apply conflicting standards:

the “standards of practice among members of the same healthcare profession with similar training and experience situated in the same or similar communities at the time the health care is rendered.”

the duty to “use that degree of care which a reasonable and prudent person would use under the same or similar circumstances.”

Certificate

of Need

Recent Developments in…

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CaroMont Health, Inc. v. CON Section, 751

S.E.2d 244 (3 Dec. 2013)

• GGC filed CON application in 2011 to develop outpatient GI-endoscopy ASC in Gaston County.

• Application approved, and CaroMont appealed.

• At close of Petitioners’ evidence, the ALJ issued Recommended Decision dismissing the case on the merits and for lack of substantial prejudice.

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CaroMont Health, Inc. v. CON Section

• The Final Agency Decision-maker upheld the ALJ’s Recommended Decision.

• Following prior holding in Parkway Urology, Court held that CaroMont’s competitor status did not demonstrate substantial prejudice.

• But the Court went further here.

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CaroMont Health, Inc. v. CON Section

• The Court in Parkway Urology found that Rex Hospital had just relied on its status as a competitor, and had not shown specific harm.

• Here, Court acknowledged presentation of evidence of competitive harm, but that wasn’t enough.

• Slip. Op. p. 16 – “Here, although CaroMont presented evidence of specific harm, the harm resulted solely from the CON's introduction of additional competition.”

CaroMont Health v. CON Section

• Court then backtracked a little, finding:

CaroMont’s evidence of harm speculative, and

CaroMont failed to show that the harm would be the result of the award of the CON.

• “I[t] is not enough that the non-applicant's witness simply attempts to quantify the projected harm. The evidence must both be persuasive and demonstrate that the harm was caused by the CON approval.” Slip Op. at 28.

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Surgical Care Affiliates, LLC v. CON

Section, (19 Aug. 2014)

• WakeMed’s CON application to relocate two existing specialty ASC ORs from Southern Eye Opthalmic Surgery Center to WakeMed Raleigh campus as shared ORs was approved by the CON Section.

• Competitors SCA and Blue Ridge filed a Petition for Contested Case Hearing challenging the approval.

• ALJ issued a Final Decision upholding CON Section decision, and SCA/Blue Ridge appealed.

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Surgical Care Affiliates, LLC v. CON Section

Substantial Prejudice as a Matter of Law

1. Because ALJ ignored prior summary

judgment determination; and

2. Because Agency failed to follow its

own rules for conversion to

multispecialty ASC in approving

WakeMed application

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Surgical Care Affiliates, LLC v. CON Section

1. ALJ had ruled on summary judgment that there was

enough evidence on the record to show substantial

prejudice and denied summary judgment.

• Court of Appeals said that ALJ’s Order taken out of

context. Other language in SJ Order said ALJ wasn’t

deciding case on the merits.

• Reliance on Hospice at Greensboro case inapplicable,

because that case did not involve CON application review.

Surgical Care Affiliates, LLC v. CON Section

2. Agency failure to follow rules:

• Court of Appeals said that this might constitute a substantive argument on the merits;

• Discussed prior State Personnel Commission case, but distinguished because case decided before substantial prejudice requirement added to the APA.

• APA now requires petitioner to show both Agency error and substantial prejudice;

• Therefore, even if there had been a failure to follow Agency rules, not enough to show substantial prejudice to SCA and Blue Ridge.

Surgical Care Affiliates, LLC v. CON Section

Substantial Prejudice by Competitive Disadvantage

• Petitioners argued that because the Southern Eye ORs

were underutilized, they were not considered in the SMFP

inventory for determination of need.

• But at the WakeMed Raleigh campus, they would, and that

such a change constituted substantial prejudice, which

would reduce the need for ORs in Wake County.

• Petitioners argued that reduced need in the SMFP

constituted substantial prejudice.

Surgical Care Affiliates, LLC v. CON Section

• Court of Appeals rejected this argument.

• Relied on Parkway Urology ruling that

substantial prejudice required showing of

concrete, actual and particularized harm.

• Petitioners could not show that they

definitely plan to expand business, or would

apply if more ORs were added to future

SMFPs.

Licensing

Agencies

and Boards

Recent Developments in…

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North Carolina Board of Dental Examiners

v. FTC, 717 F.3d 359 (4th Cir., 31 May 2013), cert.

granted, no. 13-534 (Supreme Court, 3 Mar. 2014 )

• NC Dental Board had been directing non-dentists to stop

providing teeth whitening services or products, claiming a

violation of NC Dental Practice Act.

• FTC found, and 4th Circuit Ct. of Appeals affirmed, that Board’s

notice not considered State action immune from suit

• Supreme Court granted certiorari, and case will be heard on

October 14.

• This case gives the Supreme Court an opportunity to decide

whether these state boards established by the legislature but

appointed by private actors, are state or private actors.

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The

Affordable

Care Act

Recent Developments in…

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ACA Exchanges

• Section 36B of the ACA makes tax credits available as a subsidy to people who purchase health insurance through Exchanges that are “established by the State under section 1311” of the Act.

• Where states don’t establish Exchanges, section 1321 of the Act gives the federal government authority to do so for them.

• Currently, 14 state (plus D.C.) Exchanges, and 36 federal Exchanges.

• ACA also requires a penalty who do not obtain coverage.

IRS Rules

• The IRS enacted rules interpreting Section 36B of the

ACA to apply to both state and federal Exchanges.

• Two cases, from the D.C. Circuit and the 4th Circuit,

challenged IRS rules.

• Plaintiffs, groups of individuals and employers

residing in states which did not establish Exchanges,

contended that they were not subject to the subsidies

and penalties of Section 36B of the ACA.

Why this matters

• The tax credits offered through the Exchanges are the

mechanism by which millions of Americans are projected

to be able to obtain affordable health insurance.

• Without the credits, people in states with federal

Exchanges:

Would not be able to afford health insurance,

and

Would have to pay a penalty for not obtaining health

insurance.

Halbig v. Burwell, __ F3d __ (D.C. Cir. 22 July

2014), judgment vacated, rehearing en banc granted

(4 Sept. 2014)

• D.C. Circuit panel held 2-1 that:

(A) the unambiguous language of the ACA shows that a federal Exchange is not an Exchange under Section 36B of the Act, and therefore the IRS is not authorized to provide tax credits for insurance purchased on federal Exchanges;

(B) the Appellants’ reading of the Section 36B would not render other parts of the ACA absurd;

(C) legislative history does not clearly support the government’s position.

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Halbig v. Burwell

• Language of the Act – Court concluded that Section 36B

limited subsidies to Exchanges created under Section

1311, that is, only state Exchanges.

• Court rejected government’s argument on absurd results.

Accepted plaintiff’s alternative reasons why Congress may

have intended to incorporate these conflicts.

• Found legislative history was not sufficiently clear to

conclude Congress intended a different result.

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Halbig v. Burwell

• Dissent took a different approach. Relied on Supreme Court’s 1984 Chevron v.

NRDC ruling, deferring to agency construction of statute, “so long as it is permissible.”

“Simply put, § 36B(b) interpreted as Appellants urge would function as a poison pill to the insurance markets in the States that did not elect to create their own Exchanges. This surely is not what Congress intended.”

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King v. Burwell, __ F3d __ (4th Cir. 22 July 2014)

• Substantive analysis was similar to the dissent’s analysis in Halbig.

• However the Court focused more on the Chevron two-step analysis of a challenge to an agency’s construction of a statute:

1. A court first looks to the “plain meaning” of the statute to determine if the regulation responds to it. If it does, that is the end of the inquiry and the regulation stands.

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King v. Burwell

2. If the statute is susceptible to multiple

reasonable interpretations, the court then

moves to Chevron’s second step and defers

to the agency’s interpretation so long as it is

based on a permissible construction of the

statute.

• Court found that language of APA was

ambiguous and subject to multiple

interpretations.

King v. Burwell

• Because IRS interpretation was a reasonable interpretation,

Court upheld it.

“[T]he economic framework supporting the Act would crumble if

the credits were unavailable on federal Exchanges.

Furthermore, without an exception to the individual mandate,

millions more Americans unable to purchase insurance without

the credits would be forced to pay a penalty that Congress

never envisioned imposing on them. The IRS Rule avoids both

these unforeseen and undesirable consequences and thereby

advances the true purpose and means of the Act. It is thus

entirely sensible that the IRS would enact the regulations it did,

making Chevron deference appropriate.”

Other Cases

of Note

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Questions?

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Thank You…

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S. Todd HemphillTHemphill@PoynerSpruill.com

POYNER SPRUILL LLP

Raleigh, North Carolina