Holland & Hart Healthcare Law Blog

Exclusive Anethesia Arrangement Fails Personal Services Exemption Under Stark.

Normally, anesthesia services contracts do not receive a lot of scrutiny with respect to Stark or Anti-kickback Statute ("AKS") compliance. Recently, the federal 3rd Circuit Court of Appeals had a chance to review and reverse a summary judgment granted in favor of a hospital and its anesthesia providers who claimed that they were protected by the "personal services" exemption from Stark and the AKS. The Plaintiff in the Qui Tam lawsuit, United States  ex. rel. Kosenske v. Carlisle HMA, Inc., 3rd. Cir.,No. 07-4616, 2009), was a member of the anesthesia group which entered into an exclusive contract with the Carlisle Hospital for anesthesia services. The hospital provided free space and services to the anesthesia group, which is not an uncommon practice because that is generally considered part of the "arms length"negotiation price for the anesthesia services.

Physician Recruitment: Recruited Doc Bites Group in Arkansas.

Many physician recruitment efforts are three party arrangements where a physician group either solicits a hospital to help support a newly recruited physician or a hospital solicits a group as a place to practice for a new physician recruited by the hospital. Typically in these deals the group agrees to accept the recruit into its practice and to accept a guaranteed income payment from the hospital for a year.  The recruit accepts a salary from the group.  The hospital’s subsidy covers expenses and some level of income for the first year less the production of the recruit.  The recruit is required to remain practicing in the hospital’s market for two or three additional years. The amount of any subsidy is folded into a note which is forgiven by the hospital each year prorate to the fulfillment of the practice requirement.  The recruit and the practice group are jointly and severally liable on the note as it is forgiven.

Supreme Court Holds Arbitration Agreement Under F.A.A.Cannot Be Reviewed For Erroneous Conclusion of Law

There is a growing tendency to incorporate mandatory arbitration clauses in employment and other agreements as an alternative mechanism to resolve disputes. Some arbitration agreements go so far as to self define the scope of judicial review of an arbitrator’s decision. Not infrequently, there is a tension in a case between the equities or basic fairness and the law. An arbitrator, after all, is supposed to be arbitrary. He or she is supposed to quickly and economically cut through the "Gordian knot" of a dispute and do what is right.

"Arbitrition"* In Healthcare Disputes.

           In 1991, the United States Supreme Court gave strong impetus to the enforcement of arbitration agreements in employment contracts when it held that unequal bargaining power between employers and employees was an insufficient reason to hold that arbitration contracts are never enforceable in the employment context.  In Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) the court held that an age discrimination act claim can be subject to compulsory arbitration. (*The overlay of cumbersome judicial like process on equitable decision making.)

TEXAS COURT UPHOLDS HOSPITAL CEO NON-COMPETE

In Teel v. Hospital Partners of America, CA No. H-06-3991, a U.S. District Court for the Southern District of Texas – Houston Division, entered summary judgment in favor of the defendant finding as a matter of law that Mr. Teel, a former CEO of Twelve Oaks, an HPA hospital in Houston could not claim damages against HPA for its attempts an enforcing Mr. Teel’s covenant not to compete with HPA, because the covenants were enforceable under the law of the contract (North Carolina) and under the law of the jurisdiction (Texas). Mr. Teel’s contract restricted him from “owning, acquiring, developing or managing a competing hospital located within a 25-mile radius of an HPA facility or a facility that HPA was actively pursuing, for one year after his employment ended. If Mr. HPA terminated his employment without cause, Mr. Teel was to receive a severance package up to one year’s salary and benefits, if he signed an “effective release agreement in form and substance reasonably satisfactory” to HPA.

North Carolina Court Sidesteps Ethics Issue To Uphold Cardiologist Non-Compete

In evaluating public policy issues related to covenants not to compete contained in physician employment contracts, Courts are beginning to focus more on the effect of enforcement of these clear restraints of trade on the patient community. In the recent case of Calhoun et.al. v. WHA Medical Clinic, PLLC,N0. COA05-1345 (August 1, 2006), the North Carolina Court of Appeals faced not only the general applicability of the AMA Code of Ethics which disfavors non-competes, but also a specific provision in several of the plaintiff's contracts provided,

[N]o provision of this Agreement shall be enforceable by Company or Physician or any court of competent jurisdiction where local, state or federal laws and regulations and/or the AMA Code of Professional Ethics prohibits and/or discourages the conduct described in or intent of the provision(s) sought to be enforced.

Unfortunately for the plaintiff cardiologists the equities in this case swung against the doctors and the Court ducked the frailties in the trial court's interpretation of the contracts.