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 wont pay extra-care costs associated with some never events. i. Eventually backs off b/c of arguments that its not easy to control. b. Pay for Performance (Hasnt 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 theyre 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 b. Promote traditional American values i. Provide a system to right wrongs, access to justice ii. Promote personal responsibility & accountability iii. Need a right, not enough to be angry c. Provide needed compensation d. 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 infirmity b. 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 deviancesomething 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

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. uncertainty b. There is a best treatment (so it is up to a doctor to know and use that treatment) c. Medicine is an exact science d. Standardized steps that should be taken/medical care a standard product e. More care is better than less care (even though more can be harmful) f. Money is no object g. 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 risk b. Surgeons 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 design i. 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 patient i. Benefits: can specify criteria and standards of good care, establish a range of acceptable practice, assures documentation, attributes responsibility ii. 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 patients current and future health care status that can be attributed to antecedent health care. i. Pros: focuses on what works, integratedconsiders patients 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 life 2. Reduction of pain/Elimination of pain 3. Reduction of symptoms/Removing these symptoms 4. Gratification of patients desires? psych state?

a. Promoting security/integrity of body/person 5. Avoiding unnecessary costs a. Promoting efficiency in health care 6. Promoting the greater good a. Innovation? General health of population? 7. What role for patients 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 board i. A lot of events dont end up w/boardMDs take care of their own d. Malpractice awards i. Clientele of one hosp more willing to sue than others ii. Most people that experience an adverse event dont sue e. Process evaluation of performance in treating a particular condition i. Subjective, time-consuming, difficult to assess f. 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 thats not MDs fault. h. Scope of hospital services as evaluated by external source such as JCAHO i. Market j. 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 Oath b. 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 oversight i. Joint Commission, accreditation; government regulation, certification e. Greater 3rd party oversight i. managed care, insurance, employers f. Greater medical profession oversight i. ethical standards, licensing boards, clinical standards of practice g. Recourse to judicial system i. malpractice suits, abuse/neglect statutes, criminal proceedings 5. Medical Practice Variation and the Nature of Quality in Medicine 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 (nonsurgical) 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: Wennenbergs 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 wasnt approved by the Physicians Desk Reference (PDR) and an algorithm. But defendants counter by saying that these standards are not binding nor even 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 worlds 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 patients 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 Error 1. Iatrogenesis: injury caused by doctors and health care institutions. a. Tradl focus is on indiv MDs; misses many causes of poor quality health care. 2. Prevalence of Medical Error 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 injury i. Much of which does not lead to a tort suit or other action b. Reviewed 30,121 1984 NY hospital records i. Injuries resulting from medical management/interventions: 3.7% ii. 25% of all adverse events resulted from negligent care, 1% of all cases iii. 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 factors i. 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 disability g. Eight times as many patients suffered from injury from negligence as filed malpractice claim i. 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 death b. 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. - 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 wont 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 dont 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 Surgery i. Survey of hand surgeons (n = 1000) 1. 20% operated on wrong site at least once in career 2. another 16% prepared to do, but caught at last minute 3. highest workloads had highest incidence ii. Causes 1. bilateral symmetry 2. interval of time from exam 3. abnormalities on both sides 4. disregarding patient/family member 5. sidedness of X-rays & other imagery 6. a surgeon is sometimes wrong, but never in doubt 7. absence of double-checks in the system 8. 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 believed 3. 1300-2700 occur annually in U.S. 4. 2004 Joint Commission: hospital staffs must take an operating room timeout to verify patients identify, confirm procedure to be performed, & ensure all needed equipment present 5. Current prevention strategies inadequate a. 1 hospital w/this policy had 14 wrong-site errors in 18 mos b. The Forgotten Sponge, etc. i. 1 study estimated 1 per 10,000 surgeries ii. 2/3 actual sponges, other 1/3 were surgical instruments iii. 1 case for each typical large hospital iv. Solutions? 1. sponges with loops produced in 1940s a. attached to 2 metal ring hung outside operative field

b. harvest when done 2. produced sponges with radiopaque dye a. shows up on x-ray b. x-ray every surgical site before suture 3. standard protocol with 4 separate counts 4. detecto-wand, automatic sponge counters c. Sending Patients Home Too Soon i. Most frequently associated with ERs ii. 1 in 25 patients with myocardial infarction mistakenly sent home 1. 12,000 people per year 2. much higher death rate than MI victims who are correctly diagnosed & hospitalized iii. 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 home b. non-whites 2. Some physicians more likely to admit vs send home a. younger doctors less likely to admit b. risk-seekers more likely to send home i. vs. risk-avoiders iv. Solutions? 1. Break decisionmaking into steps; make a system to weigh evidence d. 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 dept to another iii. Discharge: patient misunderstands follow-up iv. Confusing orders for meds, etc. 1. sound-alikes, abbreviations v. Solutions? 1. fewer handoffs 2. standardized procedures (e.g., discharge, rounds) 3. electronic records 4. read-backs, SBAR, rounds on shift change, FDA e. Adverse Drug Events (ADE) --#1 most frequent medical error i. Any problem resulting from a drug 1. side effect, improper usage, error in prescribing ii. Poor handwriting iii. Popular medications with similar names 1. e.g., Cerebyx v. Celebrex, Zyprexa v. Zyrtec 2. FDA starting to push manufacturers to avoid 3. tall man lettering for suffixes w/ same prefix (ClomiPHENE v. ClomiPRAMINE) iv. Similar bottles w/ similar labels

v. Wrong doses/misleading instructions 1. 4 grams over 4 days vi. Overlooked drug interactions 1. all drugs have side effects vii. Multiple steps viii. Conscious behavior v. automatic behavior 1. errors/mistakes v. slips 2. slips pose the greater threat in health environment ix. Solutions? 1. reprimand transgressor 2. Computerized Physician Order Entry (CPOE) 3. decision-support 4. forcing functionsbut revenge effect if unwieldy 5. assign boring, repetitive tasks to machines 6. bar-coding 7. adjust physical environment f. Nosocomial Infections i. CDC: caregiver adherence to hand-washing standards averages around 50%; Some hospitals have less than a 20% adherence rate ii. Solutions? 1. Provide alternative methods for disinfection 2. Offering rubbing alcohol in ICU increased adherence from 40% to 60% 3. Make disinfectant visible & easily accessible in patient room 6. Separating Complications from Errors a. Complications frequent even with perfect technique i. difficult to attribute bad outcome to poor technique b. Complications fewer when surgeon/ hospital do a lot of a procedure c. Steep learning curves for new techniques d. 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 Recordspp. 37-40 i. Health Information Technology includes: 1. Electronic medical records: computer patient records 2. Computerized Physician Order Entry: enter orders (drugs, tests) 3. Electronic Prescribing: create/manage/process Rxs 4. Clinical Decision Support Systems: offer best practice recs ii. 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 tests 2. Higher quality patient care 3. Improved emergency care outcomes 4. More efficient prescription drug processing 5. Fewer patient burdens 6. Better disaster preparation 7. Increased public health monitoring iv. Problems/Issues: 1. Expensivesoftware, hardware, time spent learning the system. Incentives problem. Once in place, economic savings may be substantial. 2. Lack of interoperabilityno standardization yet. 3. Privacy risks for patients. b. Leape, Error in Medicine (1994) i. Accept errors as inevitable ii. Reduce reliance on memory iii. Improve information access 1. ex. computerizing medical records iv. Error proofing 1. forcing functions, computerized systems for medication orders v. Standardization vi. Training 1. Greater emphasis on possible errors and how to prevent them vii. Absorption of errors 1. 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, fatigue ix. Systems modifications/cultural change c. Risk managers (Traditional Approach) i. Paid by hospital, often a lawyer ii. The risk seeking to manage is mostly hospitals risk of being sued iii. 3 main tasks when called about a case 1. Settle everyone down 2. Assess hospitals liability 3. Help control damages iv. After receiving call, gather available facts v. Not an objective investigation vi. Crisis management vii. After legal dust settles, work to prevent future errors viii. Incident report d. Hospital quality assurance programs i. Focus more narrowly on patient care ii. Wider range of quality concerns (not just patient mishaps) iii. Rely on incident reports

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iv. Primary reliance on hospital committees 1. Oversee quality of various hospital functions e. Clinical standards/practice parameters i. Develop in complicated way ii. Decentralized process: pros & cons iii. Issues: Innovation; Geographical variations; Practice variations f. FDA Rule on Bar-Code Labeling for Pharmaceuticals (Feb. 2004) i. Bar codes required on all prescription drugs & vaccines, some over-thecounter, & all blood & blood products 1. National Data Code number (linear bar code standard format) 2. Specific packaging & location not established 3. As of April 2006, manufacturers must bar code existing drugs ii. Goal: improve patient safety 1. Estimated 50% increase in interception of medication errors (413,000 fewer adverse drug errors) & $41 billion savings associated with errors iii. April 2005: of hospitals had fully or partially adopted bar-code technology for medication administration 1. Lack of electronic records in which to incorporate 2. Lack of systems approach 3. Not included on all unit-doses 4. No deadline for implementation g. National Practitioner Data Bank i. Effort to prevent doctors with disciplinary history in one state from moving to another & practicing there ii. Mandated reports by 1. State disciplinary & licensure boards 2. Hospitals & other entities engaging in peer review processes iii. Licensure boards have access to Data Bank to check on licensees iv. Hospitals must check: 1. For physicians applying for staff privileges 2. Periodically for physicians who hold staff privileges v. General public not allowed access 1. Proposals for allowing increase access vi. GAO critical of information contained h. Pay for Performance i. Found to have little impact on care quality i. Mandated Reporting of Never Events j. Report Cards 8. Approaches to Quality Improvement a. Enhance traditional forces of professional ethics & socialization b. Expand the role of the marketplace i. disseminate info to consumers & buyers of health c. Improve current modes of self-regulation i. accreditation, medical staff privileges, medical licensing actions d. Improve process by which patient sues for malpractice

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e. Govt intervention, setting standards & demanding better processes & outcomes II. THE PROFESSONAL-PATIENT RELATIONSHIP A. 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. Its a fiduciary duty of sorts. A fiduciary obligation in medicine means that the physician focuses exclusively on the patients health; the patient assumes the doctors singleminded 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 created i. 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 nonnegligent manner. No duty so no liability when technician sees bowel outside babys body and doesnt 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 fit a. MD can refuse to enter into a K or to treat patient (even in emergency conditions) b. MDs may limit their: i. specialty ii. scope of practice iii. geographic area iv. hours/conditions under which they will see patient 1. e.g., specific procedure, office visits, consult c. No obligation to offer outside competence & training d. No obligation to offer beyond scope of original agreement e. Can transfer responsibility by referring to another MD f. May expressly contract for specific result i. parol evidence may be used to fill in gaps 3. Once established, obligation of continuing attention a. e.g., surgeon responsible for post-op complications b. give time to find alternative care c. obligation ceases when nothing more can do for patient

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4. Offer: when patient goes to MD office with particular problem 5. Acceptance: when MD examines patient a. MD free to send patient away, relieves of any duty 6. Implied K usual basis for patient/MD relationship a. Majority rule is that if there is an exam, theres 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 planpreexisting obligationputs 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 MDs patients 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 dont 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. Pate i. 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 successful i. Not fair to hold physicians to promises b/c its unpredictable, its therapeutic to tell patients theyll get bettertrust important. c. Courts generally require clear proof, clear and convincing evidence, or the promise to be written. d. Therapeutic assurances vs. Express warranties 9. 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

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10. Breach of the K: a. MD may promise to use a certain procedure then use an alternative b. 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 performed b. Restitution: amt equivalent to the benefit conferred by upon c. Reliance: recover expenditures made and for other detriment 12. Limiting Liability and Exculpatory Clauses a. 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 regulation 2. performing service of great importance to public 3. service a matter of practical necessity for some members of public 4. holds self out as willing to perform service for any member of public seeking ii. 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 Transfusionsreleased 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: MDs 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 ii. This ruling makes sense I think. Refusing transfusion is mostly to blame here. And you dont want hospitals to just refuse all Jehovahs Witneses, so you kind of got to let hospitals have enforceable waiver forms. B. Informed Consent: The Physicians Obligation 1. 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

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will. a. Decisions made by physicians i. Do no harm, but comprehension of medical matters beyond capacity of patient & thus no role in decision making ii. MDs prerogative & obligation: job is to get patients to agree with them iii. The expert: as the expert, the MD decides course of treatment iv. Deception okay if patients 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 IC 1. Autonomy 2. Self-determination 3. Dignity 4. Absence of discussion/consent c. Phrase 1st used in 1957 California case; Quickly spread through the 60s i. Shock to the medical community ii. Initially primarily a battery claim 1. Did a disclosure occur re proposed treatment? 2. Evolved to encompass alternatives & risks 3. 1972-present: legislative retrenchment & judicial inertia a. Move to foundation in negligence d. Features of a Battery Claim i. Straight-forward focus ii. Doesnt require establishing standard of care iii. Proof of causation simpler iv. Physicians/patients beliefs irrelevant v. Permits punitive damages e. Shift to Negligence Doctrine i. Criticisms of battery cause of action 1. Some courts require complete absence 2. Some legislatures abolished as foundation ii. Shift viewed by many as favoring MDs iii. Negligent nondisclosure 1. show MD failed to act in customary manner 2. number of exceptions available 3. must establish causal link a. medical injury causation b. decision causation 4. less availability of punitive damage 2. 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 patients position, would be likely to attach significance to the risk or cluster of risks in

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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 physicians divulgence in terms of what he knows or should know to be the patients informational needs. ii. MD bears no responsibility for discussion of hazards the patient has already discovered or those having no apparent materiality to patients decision on therapy. Canterbury iii. Eases s burden of proof, b/c its for trier of fact to decide iv. 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 practiceshouldnt be concerned w/juries 2. Patient standard would force MDs to spend unnecessary time discussing every possible risk, interfering with needed flexibility 3. 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 std d. Ps prevail w/ patient standard = 27% e. Ps prevail w/ professional std = 17% 3. MD must consider disclosure of: a. Diagnosisincl medical steps preceding, tests, and their alternatives b. Proposed treatment i. Nature and Purpose of ii. Material Risks of iii. Likely outcome of c. Alternative diagnoses/ treatment: Doctors should disclose: i. Risks / consequences ii. Probability of success iii. Some: disclose even if option more hazardous 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.

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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 dont consider the patients state of mind in informed consent cases (assuming the patient is competent); instead, they focus on whether the physicians 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 patients ability to appreciate the significance of the disclosure... 4. Specific Risk Information a. A surgeons experience or lack thereof may be material to a patients 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 patients 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 IC a. 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? 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 subject 2. 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

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doctor inform the patient of his life expectancy based on statistical tables? Arato v. Avedon (Ca. 1993) a. Court doesnt require as a matter of law the disclosure of statistical morbidity rates. b. MD has duty to disclose all facts that materially affect patients rights & interests i. Scope of disclosure measured by amount of knowledge patient needs to make informed choiceall information material to decision. ii. information MD knows or should have known would be regarded as significant by a reasonable person in patients position 1. not require to address patients nonmedical interests iii. 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: Didnt disclose high statistical mortality rate. Ct found general jury instruction regarding disclosure material to patient fine. i. surgeon: great anxiety, medically inappropriate to disclose ii. 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. 7. Disclosure of Physician Conflicts of Interest Medical 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 patients 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 physicians dominant position in the relationship. Moore v. Regents of the University of California

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a. A MD must disclose personal interests unrelated to the patients health, whether research or economic, that may affect the MDs 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 IC c. Scope of disclosure measured by patients need i. based on what material to decision d. Reasonable patient would want to know economic interest that might affect professional judgment i. research interest is potential conflict ii. may tempt to order test of marginal benefit for patient iii. may consciously/unconsciously take into account iv. 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 Complexities a. 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 risk b. Objective vs. Subjective test i. Objective: what prudent person in pts position would have decided 1. patients testimony relevant, but not dominate; reasonableness 2. 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 done 1. post-hoc analysis; purely hypothetical / a guess 2. places MD in jeopardy of patients hindsight & bitterness 3. too difficult for fact-finder 4. relies solely on patient-witness - The court in Cheung v. Cunningham preferred the use of a subjective standard: the court held that the subjective standard was preferable over Canterburys objective standard because the totally objective standard...denies the individuals 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 physicians on the hook I think...instead, I think the objective standard is fairer; patients with idiosyncratic beliefs should be required ex ante to make those beliefs known and then that should take weight.

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9. Damage Issues In 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 MDs admissions even though battery count had been dismissed. Ct found MDs actions and attitude constituted reckless behavior, justifying punitive damages. 1. MD admitted didnt 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 patients consent to a procedure is vitiated. 10. Exceptions to the Duty to Disclose a. Unconscious or otherwise incapable of consent and harm from a failure to treat is imminent & outweighs any harm threatened by the proposed treatment i. If possible, still attempt to secure relatives consent ii. Right of MD to act in a true emergency w/o patient consent. 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 decision 2. complicate/hinder treatment 3. 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 patients well being iv. Carefully circumscribe because can devour rule v. Not justified by fear the patient will withhold consent to treatment MD feels the patient really needspaternalistic notions.

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c. Burden to show exceptions rests with MD i. Patient has made out prima facie case ii. 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 couldnt 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 dont 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 Institutions Obligation? 1. Consent forms are universally & sequentially used in institutions a. Courts have said little about such forms 2. Legal responsibility to obtain is MDs, not the hospitals 3. Many states: treat as presumptively valid consent a. Burden on patient to rebut presumption 4. Institutional resp. to ensure that a patients 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 hospitals internal policies), and b. Hospital participation in experimental procedure 5. Studies: consent forms achieve little a. most patients fail to recall b. intend to intimidate patients & poorly understood c. legally spawned ritual; difficult to read d. fail to provide lesser risks, likelihood of success, alternatives D. Confidentiality and Disclosure in the Physician-Patient Relationship 1. 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 Associations Principles of Medical Ethics b. Emphasis on confidentiality came b/c of: (1) AIDSit 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.

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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 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 agreement ii. 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

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3.

4.

5. 6.

testimony was needed in this case, since the hospital breached its own protocols on this procedure). c. Intentional Infliction of Emotional Distress i. Encompasses emotional distress ii. No claim if no intent to harm or not reckless Foundations for c/a for disclosure of info obtained during confidential relationship: a. (1) Physician-patient privilege i. 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 statutes c. (3) Common law physician-patient fiduciary relationship d. Contours of duty established by these external legal sources i. key: adoption statute specifically mandated secrecy ii. but also place limits on duty 1. may be obligated to report, protect Privacy v. Confidentiality Claims a. Both assert right to control information i. Though not every secret involves private information b. Breach of privacy can be committed by anyone i. Confidentiality claim: only target person who holds info in confidence (e.g., MD) c. Privacy focuses on both Ps right & Ds wrong i. K claim has rights spelled out d. 4 forms of privacy torts, though not all adopted i. appropriation of name/likeness ii. unreasonable/offensive intrusion upon seclusion iii. public disclosure of private facts iv. publicity which places in false light in public eye e. Court: in this case, can only proceed on breach of confidentiality claim, not privacy claim. No general invasion of privacy: MD didnt approach Ramona, pry, or seek out. The daughter invaded patients privacy, the MD failed to keep a secret. Theres not a general obligation not to invade others 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. Can disclose if true medical need for info (Humphers suggests) a. For safety, public interest, to protect others Evidence that there were significant lapses in the enforcement of the hospitals 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

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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/HIPAA a. HIPAA: address harms suffered by accumulation & use of medical info b. Regulatory approach i. Disclosure only if permitted under specific exceptions ii. Sanctions: 1. Fines, with each disclosure = $100 2. 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. Doesnt 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 plaintiffs non-work-related medical records to Nestle. Moreover, as soon as Nestle open the records, the clinic became the proximate cause of plaintiffs harm. f. Misapplications of HIPAA 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 relatives 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 residents DOB a violation iv. Patients are assigned code names in MDs 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.

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Acosta v. Byrum Et Al. i. Heather Acosta a patient & employee of Psychiatric Associates. Office manager used MDs access code to retrieve Acostas 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 Problems a. 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 marketers b. Individually identifiable health information & thus protected info may not be disclosed unless comply w/ 164.502 (Uses & Disclosures) i. Cant 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 (colleagues 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 doesnt 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 HIPAAno private c/a authorized 1. 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 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 patients 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 plaintiffs 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?

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A. Introduction 1. Reasons why litigation against MDs has increased dramatically over past 50 years: a. Improvements in technology/science b. More patients (3rd party financing) c. Modern rules of pleading & practice d. More experts available/willing to testify e. Some: modern juries (& judges) more sympathetic f. Broadening of tort base 2. Prima Facie Case a. owed duty to care for safety (or rights) of the plaintiff b. Duty breached by by failing to exercise proper standard of care in delivery of professional care, services, or treatment c. Breach was proximate cause of injury to P d. Injuries significant enough to be considered compensable / damages 3. Duties owed by MDs to Patients a. Duty to conduct proper examination b. Duty to make a proper diagnosis c. Duty to provide proper treatment d. Duty to oversee course of treatment e. Duty to refer to a specialist f. Duty not to abandon the patient g. Duty to keep abreast of medical knowledge B. The Standard of Care 1. 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 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 resources 1. Locality, proximity of specialists and special facilities for diagnosis and treatment may be taken into account.

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3. 4. 5. 6.

7.

8.

9.

iii. Similar locality rule iv. 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. Reasonableness standard: a. what reasonable MD in same specialty would do in similar circumstances Respectable minority doctrine a. the two schools of thought rule b. the honest error in judgment rule Reasonable patient standard Expert Testimony: a. Plaintiffs expert can testify regarding: i. natl std re competence, diligence, skill, & prudence ii. will respond that local resource limitations b. An expert can testify re local resource limitations when s/he: i. Familiarizes self w/ facilities, resources, services, & options ii. Visits facilities, listens to other witnesses describe, interacts with MDs in area, or properly predicated/phrased hypo c. Defendant rebuts plaintiffs expert by: i. Bringing own expert re national standard ii. Pointing to deficiencies in local resources iii. Attacking Ps expert knowledge of local resources 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 opinionnot the most accurate assessment of the standard; e. Encourages extreme positions; f. May not know whats customaryrely on what has worked for them; g. Failure to evolvestatic, dont keep up with changes in practice. Suggested reforms a. using statistical studies of similar cases b. decision analysis c. practice guidelines d. court-appointed experts e. certified by state medical society f. survey methodology (e.g., 30-50 MDs read 1-page abstract & complete brief questionnaire) g. peer review/oversight of expert testimony h. require that provide on pro bono basis Methods of Proving Negligence a. Use of own experts

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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 & warnings d. 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 se ii. 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: 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 treatise i. Expert must explain and assist, particularly if an article and doesnt 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 experts 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!!!

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h. Cross-examine defendants experts i. call as adverse witness i. Admission by defendant j. Testimony by plaintiff if qualified k. 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 someones 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: who proves res ipsa should win unless can rebut. m. Strict liability n. 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 Distress 1. 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 deceaseds relatives. However, s may also be able to sue a health care provider for the negligent infliction of emotional distress under particularly egregious circumstances, 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 didnt appear viable. MD performed D&C (w/o doing 2nd sonogram) Still pregnant, panic attacks, worry. Healthy childbut 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 patients lover. The Maine Supreme Court held that the nature of the therapist-patient 29

relationship could provide the basis for a claim of emotional distress. D. Duties to Contest Reimbursement Limits Solo 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. Patients insurance rejected request for addl days in hospital. MD aware could telephone to request additional days but didnt. 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. 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 Care 1. 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

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2. Failures to properly diagnosewhere only one agreed approach to each type of infection 3. Weight given to experts as to good practicecant 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 didnt rise to level of negligence/med mal a. 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 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. Johns Hickey Meml 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 offlabel is sufficiently careless, imprudent, or unprofessional. 31

a. Majority: a prescription drugs 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 defendants 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 plaintiffs 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 patients medical condition normally violates the patients right to confidentiality, but in some situations he is legally required to inform others of a patients medical condition. If a patient suffers a gunshot wound, the doctor treating him must inform the police; if he 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 exists b. Discovery rule: a cause of action accrues when-i. old rule: the right to bring an action arosewhen med error occurred ii. 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 harm v. #4: when patient realized wrongful conduct caused the harm 1. Hardi v. Mezzanotte (D.C. 2003)

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vi. #5: when patient told that cause of action existed 4. Good Samaritan Statute a. Relieves from liability if render emergency aid in good faith but nevertheless cause or enhance injury b. In hospital setting, no immunity if: i. provided in ordinary course of work ii. employment K imposes duty to render emergency treatment c. Typically doesnt protect: i. gross negligence or willful misconduct ii. bad faith response iii. non-emergency situation iv. if expectation of payment v. 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 dont take their doctors 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 patients lifestyle choice as a defense to a malpractice case. (Consider: Azzara) a. Aim: ameliorate harshness of contributory negligence doctrine i. Contributory negligence kept from recovering where any fault b. recovers so long as s fault not greater than D i. 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 (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 consequences a. No damages if damages could have been avoided by exercise of ordinary care b. Focus: s carelessness occurring after s negligence. Examine whether posttreatment conduct significant cause of increased damages. 7. (Aggravation of a) Preexisting condition a. MD only liable for amount of harm actually caused by negligence 8. Particularly susceptible victim (not a defense) a. MD/defendant takes patient/plaintiff as finds her b. Poor health not an excuse for negligent care 9. Causation problems/Lack of causation (CA: negl a substantial factor) a. Prox Cause reqd: But for s conduct, wouldnt have suffered injury i. injury a natural & probable consequence of s negl ii. inferred from facts of case

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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 duty b. Same evidence c. Indivisible injury d. 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 Shifting a. Where 1 of several s caused harm but cant 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 dont know precisely who is at fault and no one is talking). ii. Missed Diagnosis iii. Preexisting injuries/underlying disease c. To resolve causal responsibility i. rules governing joint & several liability ii. may use loss of a chance doctrine iii. may look to relative risk d. Most states continue to use proximate cause i. CA: prox cause confusing; use substantial factor test 1. liability even if conduct only a contributing factor 2. 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. Didnt check cholesterol for 12 yrs. Patient, it turns out, wasnt taking (was refusing) cholesterol medication. Dies in doctors office one day of a hearth attack. Defendant argues it wasnt 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 theres 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 patients chances of recovery are less than fifty percent, the old rule would deny recovery. The problem is one of both causation did a providers inaction increase the risk to the patient and damage exactly how should harm be quantified in such a situation (for one thing,

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we want physicians to have economic incentive to take care of patients with survival of less than 50%). 1. Typical damages: a. Costs of treating the condition b. Medical expenses past & future c. Lost wages/impaired earning capacity d. General damages, primarily pain & suffering 2. Punitive damages extremely rare a. Need intentional, wanton, or reckless conduct b. Focus on impatience & inattention to condition c. While rare, may be deserved in some cases d. Some: look at MDs financial status to see if deterrent effect without being excessive 3. Loss of Chance Doctrine a. 3 primary judicial approaches i. All or nothing 1. <51% chance of survival, gets $0 2. 51% or more, gets full recovery 3. Doesnt require certainty, but more than possibilityreasonable probability of survival ii. 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 chance 1. Recovery is for reduction in likelihood of more favorable outcome a. Chance of survival itself has value 2. Need only show deprived of chance of survival 3. Virtually any % enough to get to jury b. Compensation options i. Award full damages ii. Discount for % of harm caused iii. Value of patients life reduced in proportion to lost chance iv. Allow jury to determine value of lost chance c. Herskovits v. Group Health Puget Sound A can be liable for damages if the can show that the 's negligence caused a statistical reduction in the chances of the 's survival. But only entitled to damages caused directly by premature death, not to all damages caused by death. IV. LIABILITY OF HEALTH CARE INSTITUTIONS A. 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 errors b. Diagnosis failures

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c. Negligent supervision d. Delays in treatment e. Failure to obtain consent f. Lack of proper credentialing or technical skill g. Unexpected death h. Iatrogenic injury (e.g., nosocomial & wound infections, fractures) i. False expectations, emotional distress j. Lack of teamwork, communication 5. History of Institutional Liability a. No attempt to treat or curehospitals where you went to die i. Few physicians visited/associated with institutions ii. Relied on philanthropy of wealthy & religious groups b. Late 1800s, more central role for hospitals i. Antiseptics allowed hospitals to be safer places. c. 1900s: control shifted from trustees to MDs i. MDs became dependent on hospital affiliation d. Hospital was only liable if negligent in administrative or housekeeping functions i. Charitable immunity protected through the 1940s e. Industry changes i. Hospitals: charity to business 1. Corporate concepts of accountability & control, bottom line ii. Pervasively regulated: state & federal 1. Qs whether appropriate industry for free market principles iii. Treatment more complex; more technology & staff iv. MD independence undercut from # of directions 1. MDs relationships with hospitals much more complex v. Emphasis on quality control 1. Insistence that hospitals monitor/influence vi. Expectation that at least emergency care available vii. Advertisingwillingness to draw on halo-effect of non-profit status viii. 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 Governance The 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.

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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 privileges i. 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 MDs i. Must approve bylaws, granting of privileges ii. Can approve/disapprove particular actions but cant discipline directly iii. Cant 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 patients stepfather, present in delivery room and in patients 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) 4. Two elements are required to establish an agency relationship: (1) the principal must consent, either express or impliedly, to the agents acting on the principals behalf, and (2) the agent must be subject to the principals 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 MDs 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

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i. Hosp is generally deemed to have held itself out as the provider of care unless it gave patient contrary notice (disclaimerconsent 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 campaigns c. 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 wasnt helpful because it required patients to be able to distinguish between types of physicians, which wasnt reasonable. 3. Nondelegable Duty Doctrine a. 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 hospitals agent.) b. Similar to inherent function test used by some courts that refuse to allow the independent defense in ER or radiology services. 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 directives iii. Patients choose based on reputation & advertising of hospital e. Nature of service controls, not patients reliance/ understanding re status of MDs D. Hospital Direct Liability Patients 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 hospitals liability

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for own acts & omissions. a. Hospital the major arena where see increase but also nursing homes, clinics, etc. b. Various barriers to suing gradually eroding c. Why increased liability: i. Judicial enforcement of industrys 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 Hospitals a. Negligence in maintaining facilities b. Negligence in providing & maintaining medical equipment c. Negligence in hiring, supervising, & retaining nurses & other staff d. 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) 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. Experts 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 PatientsHospital owes duty of care to patients, but what happens when the patients 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/ MDs medical judgment c. Duty not to institute policy requiring discharge when insurance expires & interferes w/ med judgment of MD i. 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

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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 patients 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 dont conclusively determine standard but instructive for jury. c. Todays hospital does more than furnish facilities i. Employ sufficient staff, charge/collect for services ii. Patients expect hospital will attempt to cure d. Desirable & feasible that hospital assume certain responsibilities for care of pt e. Hospital has 4 general duties: i. Maintain safe & adequate facilities & equipment ii. Select & Retain only competent MDs 1. Negligent Credentialing: Hosp has an obligation to its patients to investigate the qualifications of medical staff. a. Jury may consider whether the hospital has complied with Joint Commission standards in ascertaining MD qualification. (Surgeon didnt 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 walls iv. Formulate, adopt, & enforce adequate rules & policies to ensure quality care for patients v. Other duties (Darling v. Charleston Community Memorial Hospital case where nurses didnt look to see if there was circulation in the patients leg, which was in a cast...and hospital in general failed to review the doctors work on the patient, which necessitated the amputation of the leg) 1. Duty to provide sufficient # of trained bedside nurses a. 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 provided f. must show that the hospital had actual or constructive knowledge of the defect or procedures which created the harm. g. The hospitals negligence must be a substantial factor in bringing about the harm to the injured party. h. Hospital is liable where:

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i. Hospital staff member fails to report changes in patients condition or ii. Fails to question a MDs order which is not in accord with standard medical practice iii. 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, amputation ii. Plaintiffs: hospital negligent for: 1. permitting MD to do this type of work 2. not requiring MD to keep his procedures up to date 3. failure to adequately supervise (via med staff) 4. especially since put MD on emergency duty 5. failure to require consultation after complications 6. 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 provided iii. ignored R&R requiring MD consults iv. staff aware of deteriorating condition, yet did nothing 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 right 2. The tort is recognized in other common law states 3. Doesnt create tension with other applicable laws 4. The importance of the protections provided outweigh any such tensions ii. 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 Misrepresentation a. Elements:

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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 P iii. 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 its standard letter and didnt 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 patients discharge where pt poses a risk of harm to others. Tarasoff V. ACCESS TO HEALTH CARE: THE OBLIGATION TO PROVIDE CARE A. 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 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 care a. Federal government/states have no duty to provide 3. Doctrines under pressure as health care increasingly seen as critical & a right a. Health spending projected to outpace GDP next decade b. 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 access b. State constitution may provide affirmative right to health care c. 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 uninsured 5. 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 transfers b. significant reduction in Medicaid payments at time B. Common Law Approaches

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The 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 relationship b. Discharge of MD by patient c. 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 patients 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): 4. No recovery for a discriminatory refusal to provide medical treatment. Williams v. US (4th Cir. 2001) a. Public hospitals 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. Cant 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; its 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 consent b. Explicit dismissal by patient c. Services needed outside MDs competence & training d. Services needed outside scope of original agreement i. e.g., limited to type of procedure, office visit, consultation e. Failure of patient to cooperate with care i. implied unilateral termination by patient

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C. Statutory Exceptions to the Common Law Rule 1. Hill-Burton Act (1946) a. Provided federal funds to states for construction of hospitals b. Constructed hospitals must provide regardless of ability to pay c. community service obligation 2. EMTALA (1986) a. originally: Emergency Medical Treatment & Active Labor Act b. 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 ER a. Hospitals not required to offer ER services b. Protections not limited to Medicare beneficiaries i. Anyone coming to hospital seeking emergency medical services 5. Applies both to hospital & individual MD a. DHHS OIG enforces for federal govt against both b. Penalties include fines & exclusion from Medicare program (23-day track) i. Few penalties, fines small, exclusions rare ii. Patient can bring civil suit for damages against hospital 1. No private right of action against treating MD. Baber 6. Emergency Departments 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 nations 46 million uninsured c. ED crowding i. patients often boarded for 48 hours or more ii. overcrowding leads to ambulance diversions iii. but hospital-wide problem: patients back up in ED because cant get admitted to inpatient beds d. of hospitals report difficulty finding specialists to take emergency/trauma calls i. often treat w/o compensation because uninsured & face higher medical liability exposure 7. 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 hospital ii. appropriate medical screeningstandard individualized for each hospital; rejects use of national standard. 1. Need only be appropriate & w/in hospitals capability 2. Must provide routinely available ancillary services 3. Only required to apply their standard screening procedure uniformly 4. No guarantee will correctly diagnoseOK under EMTALA so long as not so substandard as to amount to no exam 5. Baber v. Hosp. Corp. of Am. (crazy pt hits head and gets a medical screening; pt claims hospital failed to provide appropriate medical

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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 hospitals obligations, ii. MD certifies that benefits to patient of transfer in unstabilized condition outweigh the risks, OR 1. Unclear if i and ii are conjunctive or disjunctive. iii. If no MD available, another qualified person certifies and its an appropriate transfer. c. Cant transfer if condition not stabilized or receiving facility not appropriate or hasnt 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, or iii. 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 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 dont apply unless hospital determines patient suffers from emergency medical condition (EMC) Baber i. Plaintiff must show: 1. Patient had emergency medical condition 2. Hospital knew of condition a. EMTALA requires actual knowledge of EMC 3. Patient not stabilized before transfer 4. Prior to transfer of non-stabilized patient, hospital didnt obtain proper consent or follow appropriate procedures 8. Impact of EMTALA a. ED visits rose, # of EDs fell b. EDs chief source of care for 46 million uninsured c. Ambulances fail to acct for crowding & different expertise d. 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 care ii. 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 care

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f. 43% of patients presented to EDs had illnesses not categorized as emergent or urgent. Lack of primary care provider cited for almost 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 1973 i. Prohibits discrimination based solely on disability of otherwise qualified individual 1. If services refused for reasons in addn to discrimination, no claim ii. Claims can only target recipients of federal funding c. ADA (1990) i. Removed solely language; Prohibits discrimination because of the disability 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 DHHS ii. ADA public accommodations provision enforced by DOJ iii. Both Acts provide private right of action 10. 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 CARE A. Managed Care Organizations (MCOs) 1. Private health insurance = managed care 2. Combines 2 functions: reimbursement framework + health care delivery system 3. Encompasses continuum of plans

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4.

5. 6.

7.

8.

a. From little more than preauthorization of hospital admission to staff model HMOs Manage care by: a. Restricting access to pre-selected providers b. Utilization review reduce costs, maximize value c. Creating incentives for limiting cost of care Key liability issue is incentives given MDs 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 injury iv. 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, specialists ii. Restrictions on who can use c. Use of incompetent gatekeepers i. use of non-MDs; competence of primary MD, Utilization Review d. Financial incentives linked to incompetent care e. Delays in processing requests Impact of Rising Health Care Costs a. Rising costs are changing the way Americans use the healthcare system b. 6 in 10 Americans with health insurance reported being responsible for paying more for their health plan in the past year i. 81% of these said resulted in their consulting with MDs more carefully about treatment options/costs c. 64% go to MD only for more serious conditions/symptoms d. 50% delayed going to MD e. 28% skipped or did not fill doses of prescriptions 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; doesnt 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

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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 level 3. 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 reserves c. Marketing abuses may be comparable d. Claims abuses may necessitate grievance procedure e. 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 Insurance b. 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 c. Holding: this statute is upheld as a valid exercise of legislatures 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 companys 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: cant deny access if willing to pay premiums. a. In order to implement, NY Dept 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 theres no constly 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 Access a. Require coverage (open enrollment) & guarantee renewal to small groups i. access for high-risk applicants b. Limit/exclude use of preexisting conditions clauses c. Band range: Set the lowest and highest premiums. i. Rating bands: requiring that the highest premiums charged not be more than

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a specified percentage higher than the lowest premiums charged d. Community rating vs Experience rating: calculates premiums based on i. Community: on the basis of real and expected costs in a geographic area. ii. Experience: based on the race/age/class of the population e. Minimum loss ratios: i. Co. can only make so much money. Must pay out so much in benefits. C. State Regulation of Managed Care Managed 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 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 site b. Make managed care info readily available i. health plan report card ii. chart: premium revenue vs. hc expenditures iii. quality assurance data 2. 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. Cant discourage from using pre-hosp emergency medical service system or 911 3. Cant 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 terms i. MDs dont want it known what their prices are 4. Cant require MD to indemnify MCO for any expenses (ex. attys fees, settlements) and liabilities associated with claims brought against MCO based on MCOs management decisions, Utilization Review provisions or other policies 5. MCO must provide to enrollees in clear language: a. Services/benefits entitled to b. Limitations on scope of care c. Locations & manner for obtaining health care d. Criteria for disenrollment/enrollment denial i. Can be disenrolled if dont pay premiums, move out of the area, commit fraud, abusing your physicianphysical or verbal (ignore what physician says, abuse your health care costs).

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e. Method for resolving complaints f. Description for obtaining out-of-network referrals g. Description of UR & quality assurance programs h. List of prescription drugs excluded from formulary (approved meds) i. Procedures for determining if experimental / investigational j. 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 developed c. Voluntary & involuntary disenrollment rate 7. MCO must provide to office of patient protection a. Independent evals of satisfaction & quality b. % of MDs who voluntarily & involuntarily terminate c. % of premium revenue expended for hc services d. Total # of grievances, # approved/denied/withdrawn 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 agreements 9. MCO must provide to MDs information regarding: a. Stop loss protection i. Limits to how much you can be exposed under these incentive plans. b. Minimum patient population size i. In some of plans, have to take on even thousands of patients. c. Identification of services for which MD is at risk d. MCO must conduct annual consumer satisfaction survey 10. Conduct Utilization Review pursuant to written plan a. UR pursuant to written criteria b. Denials made by person licensed in appropriate specialty c. Initial determination within 2 days of receiving all necessary info i. with provider notified by phone within 24 hours d. 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 process a. Written resolution within 30 days (starting when ins co has all relevant info) b. Expedited resolution policy c. Resolution within 5 days if terminal illness d. Grievance not properly acted upon deemed resolved in favor of insured 12. External review panel a. Review panel maintained by office of patient protection b. 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 patients

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i. 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 reason d. No terminations of MD without cause e. Treating MD shall make all clinical decisions f. MCO shall cover all medically necessary services that are covered benefits D. State Laws Regulating MCO Networks 1. 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 laws a. Require MCOs to accept into their network any provider who is willing to accept the terms offered by the MCO. 3. Network adequacy a. Require MCOs to maintain an acceptable ratio of providers to enrollees. 4. Guarantee access to particular specialists a. Ex. gynecologists or pediatricians b. Standing referrals for those with chronic conditions 5. Continuity of care requirements a. 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 Controls 1. Time limits on UR process 2. Disclosure of UR criteria 3. Provide in writing the basis for the denial 4. Internal consumer grievance & appeal procedures 5. External/independent reviews a. Required by 44 states. Usually an independent reviewer makes the decision. 6. Statutory definition of medical necessity 7. Mandated coverage (e.g., emergency care) 8. Length of stay (drive through delivery) 9. Access to off-formulary drugs or clinical trials 10. Banning of gag clauses 11. Independent consumer assistance programs 12. Provision for liability suits against plans F. Provider Incentives 1. To combat MCO use of financial incentives (which transfer risk to MDs or hospitals by paying providers a fixed feecapitation) 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 theyre not intended to prohibit MCOs from using capitation

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payments or other risk-sharing arrangements. Have little effect. 3. Limit excessive incentives (by state statute) a. Ex. restricting the proportion of a providers 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 incentives a. 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 Regulation 1. Require MCOs have quality assurance/ improvement program 2. MCO must take quality of care into consideration in credentialing hc providers 3. Require/encourage MCOs to seek accreditation 4. Report cards or other forms of disclosure VII. TORT LIABILITY OF MANAGED CARE Managed 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 Liability Health 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.

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1. Rejects notion that cost-containment role entitles HMOs to special consideration a. Petrovich v. Share Health Plan b. 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 contractors b. 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 a. Where the facts and circumstances show that the exerted sufficient control over the alleged agent so as to negate that persons 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 Negligence 1. 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

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should be equally applied to an HMO. a. Corporate liability doctrine previously applied to hospitalsensures patients safety & well-being while at hospital. A non-delegable duty. b. Shannon v. McNulty 2. 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/equipment b. Select/retain only competent MDs c. Oversee all persons who practice medicine within walls d. 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 nurses 5. HMO also vicariously liable for negligent rendering of services by triage nurses C. Physician Incentive Systems 1. MDs 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 doesnt 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. ADA a. Constraint on ability of employers & insurers to discriminate against a person with a disability in providing health insurance 2. HIPAA a. Limits use of preexisting condition clauses b. Prohibits intragroup discrimination in coverage & rates c. Certain protections in small group / individual insurance markets 3. COBRA a. Gives employee ability to maintain health insurance for a period of time if lose job (tho must pay for) i. Prexisting disability doesnt disqualify B. ERISA Preemption of State Health Insurance Regulation 1. History of ERISA Preemption

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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 plans c. Gave federal right to sue to recover denied benefits i. Imposed fiduciary obligations on plan fiduciaries d. 1980s & 90s, primary role deregulatory i. Blocked states attempts at plan regulation ii. Blocked state common law actions against plans 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 clausean 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 theyre 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. Cant get damages. ii. Enforce rights under plan iii. Clarify rights to future benefits iv. Compel plan fiduciary to make good to plan losses caused by breach of fiduciary duties v. Obtain an injunction to enforce terms of plan vi. Obtain other appropriate equitable relief to enforce b. 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 claims ii. Exclusive fed c/a for cases that could be brought as ERISA claims 4. Initially/From outset, SCOTUS read preemptive scope very broadly a. 1st case on 514: Alessi (1980) i. pension plan regulationexclusively a federal concern ii. Preempts not just state laws that directly regulate pension plans, but also laws that indirectly affect them

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b. 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 d. Pilot Life (1987) i. : sued under state law for tortious breach of contract for wrongful termination of disability benefits ii. State law not specifically directed toward insurance industry 1. Savings clause doesnt apply, not saved from 514 preemption iii. Congress intended 502 to provide exclusive remedy for improper processing of claims for benefits 1. 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 plaintiffs complaint 1. Defeats well-pleaded complaint rule 5. ERISA By the End of the 1980s: a. 514 broadly preempts any SL that refers to or is connected with an ERISA plan i. Savings Clause in 514 saves from preemption those state laws that regulate insurance b. 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 reimbursement 1. ERISA benefit cases focused on who pays for service already given (ERISA plan, patient) ii. 1990s: Employers health benefit plans became Managed Care plans 1. Not payment dispute, but whether provide at all/timely a. 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

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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 plans b. 502 preempts all state remedies against ERISA plans c. ERISA provides no remedy beyond cost of denied service b. #2: SCOTUS seemed to soften position i. 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 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 decisions i. MDs cant 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 preempted 2. 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 514 7. 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 doesnt provide alter remedy to 502merely 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

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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 treatment ii. Will raise cost of insurance, make less accessible to Employers, & less attractive to Ers; 40 other states have similar laws c. 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. 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 plans a. Exceptions: i. Insurance provided on individual basis (including self-employed) ii. Workers compensation, uninsured auto plans iii. Church or government plans iv. Other plans that are not employment-related 9. Three types of Preemption a. 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 plans ii. Tho state laws authorizing tort claims against MCOs are still preempted b. 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 514 a. Permits ERISA plans to escape state regulation by becoming self-insured b. Limits states aggressiveness in regulating ERISA plans 11. Relationship between 514 & 502 a. Early cases focused on 514 relate to express preemption b. 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

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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 preemption 1. 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 obligation b. 102: must provide participants summary plan description i. Including a description of their rights c. 503: plans must provide participants whose claims are denied w/ adequate notice of denial & reasons for denial i. reasonable opportunity for fair & full review ii. 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 502 2. No denials for failing to obtain prior approval where emergency 3. Max 72 hours for urgent care claims, pre-service claims w/in 15 days, post-service claims w/in 30 days 4. Scientific/clinical basis for denial or statement; free upon request 5. States external review procedures optional for participants a. Participant not required to exhaust before filing 502 suit C. 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, cant re-structure. c. B/c MDs health care act effectively requires employers in MD covered by the Act to restructure their employee health insurance plans, it conflicts w/ERISAs 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 Marylands 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 ERISAs 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

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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 coverage b. 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 Childrens 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 D. The Relationship Between Federal ERISA Fiduciary Law and State Tort Claims Against Managed Care Plans As 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 ERISAs 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. ERISAs 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 ERISAs 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 selfinterest 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 obligations a. Apply to managing, advising, & administering of ERISA plan b. Tho Carle (in Pegram) not ERISA fiduciary merely because runs own HMO, can be fiduciary because it administers an ERISA plan

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5. 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 interests i. Unlike trustee at common law, who can only wear fiduciary hat c. ERISA fiduciary wears multiple hats; to keep plan viable i. 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 decisions e. Distinguish pure eligibility decisions from treatment decisions i. Coverage vs Diagnosing/treating patients condition ii. But practically inextricable (e.g., medical necessity questions) 1. Made by same person (treating MD) 2. Not yes-no questions, but when-and-how questions 3. Cant untangle eligibility from reasonable medical treatment judgment 6. 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 recovery 2. Replication of state malpractice actions with MCO defendants 3. ERISA not enacted to federalize malpractice litigation iv. MD employee would also be subject to liability as fiduciary 1. Makes ERISA a preemption of state malpractice law 2. Opening fed cthouse doors to claims lead to unheard of fiduc litig 3. Require clear manifestation of Cong purpose before do so E. Erisa Preemption of State Tort Litigation 1. 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

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not available under ERISA 1132. The ruling still allows Texas to enforce the THCLA in the case of governmentsponsored, 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 dont 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 law b. Join rising chorus Congress & Court should revisit unjust & increasingly tangled ERISA regime c. Regulatory Vacuum 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 damages e. Potential solution: i. Allow make-whole relief against breaching fiduciary ii. 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 administration b. 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 available ii. 502 only intended to preempt claims focused on the quantity of benefits (i.e., that promises be kept), not the quality of them iii. field traditionally occupied by state regulation F. Beneficiary Remedies Provided by ERISA ERISA 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

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members) and beneficiaries (dependents and others covered under a participants 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 ERISAs 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 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 law a. Defer to determinations of fiduciary given discretionary powers to determine eligibility for benefits b. Wont disturb reasonable interpretation 2. But conflict of interest can lower level of deference a. Factor to consider b. MCO compensated by fixed premiums & bears financial risk for claims made beyond actuarial norm c. Profit depends on whether claims exceed assumed risks 3. If substantial conflict of interest present, use alter standard of review & reduce deference a. Whether consistent w/ what non-conflicted fiduciary would decide b. 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 plan b. 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 REFORM A. Perspectives 1. 93% reported deviating from sound medical practice (i.e., engage in defensive medicine) to lower risk of malpractice exposure

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2. Most common defensive practices: a. Ordering extra diagnostic tests (incl invasive procedures) b. Making referrals against their clinical judgment c. Not caring for high-risk patients d. 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 states c. 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 a. Complexity of care; antiquated, fragmented delivery mechanism 2. Increased expectations driven by medical progress 3. Rising health care costs inflate awards 4. Changes in institutional nature of health care system increase exposure a. horizontal & vertical integration b. 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 & stable a. 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 & catchup i. sudden price increases are actually deferred costs d. Price wars (accounting practices of St. Paul Co.) e. Some: price gouging by insurance industry f. Deregulation of insurance industry by states (e.g., reviews of rate filings) C. Tort Reform 1. 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 care iii. Enhances systemic improvements iv. Punishes deficient MDs v. Correctly identifies substandard care 1. and diminishes false positives vi. Makes malpractice insurance affordable vii. Maintains/enhances availability of services viii. Treats similar cases alike & distinguishes rationally ix. Generates predictable results

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3. Possible Insurance Reforms a. New sources of insurance b. Joint underwriting associations, reinsurance exchanges, hospital self-insurance programs, state funds (patient compensation funds), provider-owned insurance companies c. Claims-made policies i. 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 i. Self-insurance pools as a temporary fix for coverage until carriers reenter a state to offer coverage. e. Hospitals provide coverage for staff MDs f. 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 Reforms a. Shorten statutes of limitations b. Regulate attorneys fees i. cap contingency fees, require judicial review c. Award costs for frivolous claims d. 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-sum i. Lump-sum enables heirs to make out, which isnt 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 awards i. noneconomic damages (typically P&S) or max recoverable per case ii. schedule pain & suffering awards h. Limit/eliminate res ipsa loquitur i. Qualifications of expert witnesses i. same specialty, devote large % of practice to j. Specify the particular locality for the standard of care i. local, similar, state (away from national standard) k. Pretrial screening panels l. Voluntary arbitration m. Mandatory alternative dispute resolution n. Mediation, Health Courts o. Medical practice guidelines as standard of care p. No-fault systems: provider-based early payment

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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 government r. Enterprise/organizational liability i. National Childhood Vaccine Injury Act of 1986

QUALITY CONTROL REGULATION: LICENSING OF HEALTH CARE PROFESSIONALS Discipline. 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. Williams 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 experts 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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