HSA515 Week 4 Scenario Script: Health Care Policy, Law, and Ethics - Civil Procedures,
Practices and Corporate Structure
Slide # Scene/Interaction
Slide 1 Scene 1: Exterior Strayer
University Building/Classroom
Slide 2 Scene 2
Professor Charles enters
classroom and introduces the
topics for today’s lesson and
begins the lecture.
Narration
Prof Charles: Hello everyone….welcome back
to class. Today, we are going to discuss civil
procedures, practices, and corporate structure.
Trials, especially jury trials, are vital to
fostering the respect of the public in the civil
justice system. Trials do not represent the failure
of the system. This class is important in
understanding the law as it applies to the
courtroom. Although many of the procedures
leading up to and followed during a trial will be
discussed, civil procedures and trial practice are
governed by each state’s statutory requirements.
Cases on a federal level are governed by federal
statutory requirements.
The pleadings of a case are the written
statements of fact and law filed with a court by
the parties to a lawsuit. The complaint is the
first pleading in a lawsuit that is filed by the
plaintiff. A demurrer is a pleading filed by a
defendant challenging the legal sufficiency of a
complaint. An answer to a complaint is a
pleading, which admits or denies the specific
allegations set forth in the complaint and
constitutes a general appearance by a defendant.
A bill of particulars is a request for a written
itemization of the claims, which a defendant can
demand from the plaintiff to determine what the
details of a claim are. A defendant may also file
a cross-compliant and bring other parties into a
law suit by the process.
Let’s first discuss the summons and complaint.
Who can tell us what a summons and a
complaint are?
Casey: A summon is a service of process on a
defendant and a return to the court of that
process by the person who served it. In other
words, it is when an issue has been called in the
courts to come back together. And, Wow, a
complaint is any formal legal document that is
issued by the plantiff to hopefully supports a claim
against someone or a group.

Donald: A first pleading filed with the court in a

negligence action is the complaint. The
complaint identifies the parties to a suit, states a
cause of action, and includes a demand for
damages. The complaint is filed by the plaintiff
and is the first statement of a case by the
plaintiff against the defendant.

Prof. Charles: Absolutely… What specific

formalities must be observed in the service of a
summons for proper jurisdiction?

Casey: The formalities dictate the manner in

which a summons is to be delivered, the period
within which service must be effected, and the
geographical limitations which service must be
made. Where the service cannot be possible, the
action may have to be brought into a different
court.

Prof. Charles: What may the defendant do to

defeat the plaintiff’s complaint initially?

Donald: In the preliminary motions, the

defendant may cite possible errors that would
defeat the plaintiff’s case stating the summons
was served improperly, that the action was
brought in the wrong jurisdiction, or that there
was something technically incorrect in the
complaint.

Prof. Charles: Great job Donald! Now let’s

take a closer look at how the defendant may file
a counterclaim.
Slide 3 Check Your Understanding

Which of the following is a

demurrer?

A. Pleading of facts.

B. Formal objection
by defendant to a
lawsuit.

C. A bill of particulars.

Correct Feedback:

B. A demurrer is a formal
objection by one of the defendant
to a lawsuit that the evidence
presented by the plaintiff is
insufficient to sustain the case.

Slide 4 Scene 3 Prof. Charles: Discovery is the process of

investigating the facts of a case before trial.

The objective of discovery to obtain information

and facts and gather evidence about the case in
preparation for trial. It is the principal fact-finding
method in the litigation process.
The objective of discovery is to obtain evidence
before the trial and isolate and narrow the issues
before trial developing leads to gather further
evidence.

Discovery rules were developed to prevent trial

by ambush. To deny a party the right to know all
witnesses to be called to testify before trial is an
insult to this principle. A deposition is a
discovery technique used by parties to learn
more regarding the nature and substance of each
other’s case.

Confidential communications made by a client

and an attorney to one another are protected by
attorney-client privilege.
Who can tell the class what the three elements
required to successfully assert attorney-client
privilege?

Donald: Professor Charles, the first element is

both parties must agree that the attorney-client
relationship does or will exist; . The second is
the client must seek advice from the attorney;
and third, communications between the attorney
and client must be identified to be confidential.

Prof. Charles: Impressive! Now, let’s discuss

the role of the expert witness. The expert
witness is one who is accepted by the court as
having the training, skills, experience, and
education to inform the jury and court on
knowledge outside the experience of the
average jury and court.

Casey: Just to be clear, is the expert qualified

based on his/her training, skills, education, and
experience in the technical issues or special
knowledge areas concerning the facts of the
case?

Prof. Charles: Yes and the expert witness’

qualifications to be an expert are explained to
the court. When two experts in a trial disagree,
the jury will decide which one to believe. The
jury determines the facts in a case and makes a
determination of the particular standards of
conduct required in all cases in which the
judgment of reasonable people might differ.

Now, lets’ let's turn to the responsibilities of the

healthcare corporation as well as legal risks.
Most healthcare organizations operate as
corporations, although some are sole
proprietorships or partnerships. Generally, the
authority of a corporation is expressed in the
law under which the corporation is chartered
and in the articles of incorporation. The
existence of this authority creates certain duties
and liabilities for governing boards of trustees
or directors and their individual members.

Casey: So, the hospital Board has a

 responsibility to provide a safe environment for
the patient?

Prof. Charles: Yes. The corporate negligence

doctrine imposes on hospitals an implied duty
to patients to select competent physicians, who,
even though they are independent practitioners,
would be providing hospital care to their
patients though staff privileges.

The hospital assumes the duty of supervising

the competence of its physicians. The hospital
which does not supervise its physicians to
prevent patient harm or injury is liable for
corporate negligence. Ideally, the corporate
body conducts its business and physician
supervision through a variety of committees.
Some of these committees are the Executive
Committee, the Finance Committees, the Joint
Conference Committee, and the Planning
Committee.
Slide 5 Check Your Understanding

One of the ways of restoring

trust in the physician, the
hospital, and the insurer is to
____________.

A. Inform patients of their

rights and responsibilities.

B. Conduct yourself in a
pleasant manner.

C. Offer professional
discounts.

D. Provide reviews and rating

of the facility and staff.

Correct Feedback:

A. Inform patients of their

rights and responsibilities
 are one of the ways of
restoring trust in the
physician, the hospital,
and the insurer.

Slide 6 Check Your Understanding

The benchmark case in the

healthcare field that has had a
major impact on the liability
of healthcare organizations,
Darling v. Charleston
Community Memorial
Hospital, enunciated the
doctrine of ______________.

A. Respondeat superior.

B. Corporate scrutiny

C. Corporate negligence

Correct Answer:

C. The benchmark case in the

healthcare field that has had a
major impact on the liability of
healthcare organizations, Darling
v. Charleston Community
Memorial Hospital, enunciated
the doctrine of Corporate
negligence.

Slide 7 Scene 4 Prof. Charles: Now let’s continue our

Discussion of Governing Body
Responsibilities
discussion of the duties ascribed to the
individual members of the governing body.
Can anyone give some examples of the
governing body’s duty to act responsibly?
Casey: I think I can name a few. The
governing body is responsible for selecting the
hospital CEO to act as their agent in the
management of the hospital. The governing
body is responsible for obeying all state, local,
and federal laws, and compliance with
accreditation standards of accrediting bodies.

Prof. Charles: Very good, Casey! Those are

all great examples.

Donald: Prof. Charles…what about conflicts of

interest involving board members?

Prof. Charles: Donald, that is a great

question…. a conflict of interest involves those
situations in which a person has an opportunity
to promote self-interests that could have a
detrimental effect on an organization with which
he or she has a special relationship, for example
an employee or board member. The potential for
conflict of interest exists for individuals at all
levels within an organization. Each board
member must submit in writing all possible or
actual conflicts of interest. Membership on the
governing body of a public organization must
not be for private gain.

Casey: So, is it safe to say conflict of interest is

presumed to exist when a board member or a
firm with which he or she is associated with
may benefit or lose from the passage of a
proposed action?

Prof. Charles: Yes, Casey. I believe that is a

pretty good distinction.

Donald: I think that the discussion on

governing body responsibilities has really
clarified some questions for me. I would still
like to know a little more about how health care
boards should structure financial arrangements
to avoid liabilities with the federal government.

Prof. Charles: Well, that is a great lead-in to


Slide 8 Scene 5
Discussion on increase in assets
and decrease in liabilities.
the next topic, which is Safe-Harbor
Regulations.
Prof. Charles: Healthcare service organizations
must comply with Safe Harbor Regulations to
avoid or be exempt from prosecution by the
Federal Trade Commission and the Department
of Justice, which is commonly called (DOJ).
and the Federal Trade Commission. The federal
law became effective on July 9, 1991. The law
forbids health providers to be obligated to refer
business to a business ventures or to have an
investment tied to business referrals. Illegal
remunerations or kickbacks are a felony under
the law. Safe Harbor regulations are published
by the DOJ and violations can result in civil or
criminal sanctions, as well as exclusion from
Medicare and Medicaid programs.
Who can give an example of a Safe Harbor
regulation?
Donald: The Safe Harbor prohibits a hospital to
pay an employee, who has no real genuine
employment relationship with the hospital, for
providing non-covered items or services.
Prof. Charles: Exactly… A health plan can
offer price reductions to a hospital as long as
both comply with all of the applicable
standards.
Legal counsel and the Chief Compliance Officer
(CCO) must be involved in all matters affecting
Safe Harbor regulations.
Casey: Professor, in our discussion, you have
provided us with a significant amount of
information about corporate responsibility.
Since we are on this subject, I would like for
you to talk about board responsibility and
antitrust safety.
Prof. Charles: The DOJ and the Federal Trade
Commission TC have issued policy statements
 designed to educate and instruct healthcare
board members on issues surrounding mergers
and joint ventures. These statements outline the
analysis the federal agencies will use to review
conduct that falls outside antitrust safety zones.
The issues pertaining to these antitrust safety
zones have to do with mergers and joint
ventures, hospital participation in exchange of
price and cost information, physician network
joint ventures, joint purchasing arrangements
among healthcare providers, and hospital joint
ventures involving high-technology or other
expensive medical equipment.

Federal agencies are available to review

potential conduct that falls outside antitrust
safety zones and advise health providers on
possible violations.

Donald: So, the federal agencies are available

to help health providers avoid possible
violations?

Prof. Charles: Yes, Donald, the federal

agencies have a timetable to respond to health
provider’s requests for advice on prohibited
remuneration and safe-harbor statutory schemes.
Slide 9 Scene 6 Prof Charles: We are just about near the end of
the day. Let’s go over what we learned in this
Summary lesson.

Today, our discussion focused on the civil

procedure, trial practice, and corporate
structure. We learned about the various
procedures leading up to and following a trial
and the role of state and federal governments.

We also reviewed the role of the governing

body in overseeing and controlling the
corporation’s activities. There was further
discussion of the role of the health service
organization’s responsibility for providing a safe
patient environment. Antitrust laws and
standards were addressed declaring patients
have free choice of goods and services so that
health providers can protect themselves from
anti-competitive activities and antitrust claims.

Before we adjourn, are there any questions?

Donald: I have no questions; I think that the

information was clearly presented, Professor.

Casey: No questions for me. I enjoyed today’s

lesson and I look forward to next week.

Professor Charles: That’s good to hear. Enjoy

your day and I will see you next time. Please
take the time to complete the threaded
discussions for this week.