Every once in a while a story of hardball confrontation between Physicians and Hospitals over physician recruitment contracts run amok surfaces in telltale litigation. Dureza v. Tenet Healthcare Corporation, an unpublished opinion of District 2 of the California Second Appellate District, filed on November 22, 2005, provides an interesting study. It includes all of the drama of a hospital utilizing the career crunching vulnerabilities of a physician to negative reporting to the Material Practitioner Data Bank to avoid the financial ramifications of lucrative physician recruitment contracts and “on call” agreements which turn out to be unprofitable to the hospital. Tenet of course has been rigorously defending a fraud and abuse attack brought by the U.S. Attorney in San Diego, California over alleged abuses of its physician recruitment program through two jury trials (the first resulted in a hung jury).
Federal Stark law and anti-kickback statute regulations prescribe specific parameters for hospital recruitment programs and generally mandate preexisting evidence of specific community need and no requirement of referrals underpinning the recruitment.
Tenet apparently recruited Dr. Catalino Dureza in November of 2001, to move his neurosurgery practice to its facility, Desert Regional Medical Center, in exchange for a $50,343.00 a month income guarantee and a $1,000 per 24 hours of call stipend.
In early May 2003, the hospital cut off the compensation to Dr. Dureza, the CEO advising him that the number of his surgeries had declined and that he needed to increase them. Thereafter the Hospital notified Dr. Dureza that until the FDA lifted its “prohibition” on the use of the Cadence Titanium Cement Restrictor” in spinal surgeries he would be suspended if he continued their use. (Dr. Dureza contends that there was never a prohibition, but that the FDA had just not gotten around to final approval yet, which it apparently did on June 19, 2003).
On June 1, 2003 Dr. Dureza sent the hospital a notice of his resignation from the medical staff effective June 30th. The hospital CEO convinced him that the better course of action would be to take a six-month leave of absence (which unknown to the doctor required Board approval).
On June 4, 2003 the doctor formally requested a leave of absence and of the expiration of his malpractice insurance on June 30, 2003.
On June 25, 2003, the hospital notified Dr. Dureza that his leave of absence would not commence until July 17, 2003 and he would be expected to provide “on call” services from July 7-July 14, 2003.
In a letter dated July 7, 2003 the Hospital advised plaintiff,
Recently, you requested your pending resignation from the Medical Staff be changed to a leave of absence. As you are aware, the Medical Staff is currently investigating certain incidents concerning your care of patients at Desert Regional Medical Center [this was actually the first notice to Dr. Dureza]. As such, please be aware that California Business and Professions Code Section 805 requires that a report be submitted to the Medical Board of California within fifteen days after a physician resigns a physician resigns or takes a leave of absence from membership, staff or employment after the receipt of a notice of investigation has been received by the practitioner. Accordingly, should you decide to resign from the Medical Staff or take a leave of absence prior to the conclusion of the investigation commenced by the Medical Staff, a report will be sent to the Medical Board of California and the National Practitioner Data Bank setting forth the subject of the investigation.
On July 16, 2003, the day before the hospital’s governing body was to approve plaintiff’s leave of absence, the hospital Medical Staff suspended plaintiff’s staff membership and privileges at the hospital.
Thereafter the hospital posted pictures of plaintiff identifying him as being dangerous and a security risk.
On July 30, 2003, the hospital filed a report with the Medical Board of California regarding Dr. Dureza’s suspension “based upon serious concerns about Dr. Dureza’s failure to respond while on ER call and lack of timely follow-up of hospitalized patients.”
In February of 2004, Dr. Dureza filed a suit for damages against the hospital for breach of contract and an assortment of torts and also abandoned his administrative appeals for reinstatement.
California has a statute called the Strategic Lawsuit Against Public Participation Statute (“SLAPP”). SLAPP provides a statutory defense to lawsuits brought to chill the valid exercise of Constitutional Rights of Freedom of Speech and Petitions for redress of grievances.
The hospital moved to dismiss Dr. Dureza’s complaint and later amendments to it on the basis that it arose from its Sec. 805 report to the Medical Board and was thus barred.
The California Court of Appeals rejected the hospital’s interpretation of SLAPP holding that the mere fact that the doctor’s action was filed after the prohibited activity took place does not mean that it arose from such activity. The Court found that the gravamen of Dr. Dureza’s lawsuit to be that the defendants engaged in a course of conduct directed at avoiding their contractual obligations to pay the doctor.
If Dr. Dureza’s allegations can be proven, Tenet may well rue the hot house effects of playing hardball in a glass house. The case, if it continues to trial, should provide interesting instruction to both that involved and the uninvolved.
