HCAD 650 United Medical and Dental College Wk 2 Business Transactions Discussion

Week 2 Discussions PowerPoint

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(1) Stop and Review as you watch the video

(2) Re-review the video before discussions:

(3) Download the PowerPoint to review discussion requirements before discussions.

(4) Complete all the questions.

Use only classroom materials to complete the discussion. This would include the textbooks, weblinks, the classroom law library, and compliance library.

Make sure toRead:The Tracks We Leave: Ethics and Management Dilemmas in Healthcare, Third Edition: Case Study, Chapter 10 – Failed Hospital Merger: Richland River Valley Healthcare Systems(pages 149 – 159)

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  • Topic: Contracting for Compliance
  • In the Law of Health Care Administration, 9th Edition. Read:

  • Ch. 5 Contracts (pages. 175-189)
  • Ch 13 Competition and Antitrust Law (pages 489 – 523)
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  • Part 1:  Critical Analysis of the Law

    Evaluate the legal risks and consequences that can arise for failing to comply with laws that impact contracts.  Evaluate one of the following laws:Certificate of NeedAntitrustCorporate Practice of Medicine (CPOM)Evaluate one of the contract clauses from the list below.  For the  clause selected indicate the type of risk it will mitigate and how you would use the contract clause as a  risk mitigation tool.Alternative dispute resolution (ADR) clausesLimitation of Liability clausePeriodic Reporting and Right to AuditTermination clausesLegal Compliance clauseData Protection ClauseInsurance requirement to cover liability

  • How would a comprehensive cloud-based contract management system limit contract risk?   How would a comprehensive contract management system prevent the problems in The Tracks We Leave, Chapter 10 Failed Hospital Merger: Richland River Valley Healthcare System? Be specific and demonstrate understanding of the risks and how the compliance tool can be used specifically to control the risks.
  • Part 2:  Strategic Compliance with the Law

    You are an administrator in a very busy clinic in the same managed care organization (MCO)  as the local hospital.  Five of your providers (Dollar Docs) regularly refer to a nearby home health agency the five own. The home health agency is the sole provider of home health services in a five-county area. The home health agency wants to expand and open more home health agencies in other counties and be the sole provider in those counties as well.  The home health agency is located in Maryland which requires a certificate of need for home health.  The home health agency would like to employ a physician.

  • What laws (from the list in part 1) does this arrangement violate? Why? What are the consequences of the violation(s)?
  • Create an action plan with three actions you could take to correct the problem including the specific compliance strategy selected.
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  • In the Law of Health Care Administration, 9th Edition. Read:Ch. 5 Contracts (pages. 175-189)Ch 13 Competition and Antitrust Law (pages 489 – 523)eBook UMGC Library Permalink: http://ezproxy.umgc.edu/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=nlebk&AN=2361947&site=eds-live&scope=site&profile=edsebook
  • Common Healthcare Statues
    Federal Statutes
    Name, Abbreviation
    Focus of the law
    Web link
    Affordable Care Act (ACA)
    The law Increases access to affordable health care
    Summary of the Affordable Care Act (ACA)

    Summary of the Affordable Care Act


    Antitrust Laws
    • Sherman Act prohibits mergers that allow one organization to dominate the
    market with a monopoly.
    • Federal Trade Commission Act (FTCA) bans unfair competition
    • Clayton Act prohibits unfair business practices that limit trade
    The Antitrust laws
    https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/antitrustlaws
    21st Century Cures Act (Cures Act)
    The laws focuses on evidence based treatment for mental and behavioral health.
    21st Century Cures Act
    https://www.samhsa.gov/about-us/who-we-are/laws-regulations
    Discrimination Laws
    • Title VII makes it illegal to discrimination based on race, color, national origin,
    sex, or religion
    • The pregnancy discrimination act prohibits discrimination against those who
    are pregnant.
    • The Equal Pay Act requires equal pay for equal work regardless of gender.
    • The ADA prohibits disability discrimination and requires reasonable
    accommodation that is not an undue burden.
    • The ADEA prohibits discrimination against those 40 and over
    • GINA prohibits discrimination based on genetic information.
    • The Rehab Act prohibits discrimination against a person with a disability in the
    federal government.
    Laws Enforced by the EEOC
    https://www.eeoc.gov/statutes/laws-enforced-eeoc
    Emergency Medical Treatment and Active Labor Act (EMTALA)
    The law that requires an emergency room to conduct an medical screening exam and
    stabilize a patient before transfer or discharge.
    EMTALA Law
    https://www.law.cornell.edu/uscode/text/42/1395dd
    Employment Laws


    Fair Labor Standards Act (FLSA) sets the work week at 40 hours, sets
    minimum wage, and establishes overtime for non-exempt employees.
    Family Medical leave Act (FMLA) allows for leave time to care for an
    immediate family members with a medical illness or for military leave.
    FLSA
    https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/FairLaborStandAct.pdf
    FMLA
    https://www.dol.gov/agencies/whd/fmla
    Fraud and Abuse
    • Fraud and abuse laws ensure health care program integrity.
    • The False Claims Act prohibits improper billing by federal contractors.
    • The Anti-kickback statutes prohibits remuneration for referrals in health care.
    • The Physician Self Referral Law prohibits a physician or family member from
    referring a patient to a designated health service (DHS) at an organization the
    physician or close family member owns.
    A Roadmap for New Physicians: Fraud and Abuse laws
    https://oig.hhs.gov/compliance/physician-education/01laws.asp
    Health Care Quality Improvement Act (HCQIA)
    The law established the National Practitioner Data Bank (NPDD), provides due
    process protections for providers, and immunity for those engaged in peer review if
    legal requirements are met.
    The Healthcare Quality Improvement Act
    https://www.namss.org/Portals/0/Education/Cred101
    PreWork/The%20Healthcare%20Quality%20Improvement%20Act.pdf
    Health Insurance Portability and Accountability Act (HIPAA)
    The law that sets standards for privacy and security of protected health information
    (PHI) It also sets portability standards to transfer health insurance from one
    organization to another.
    HIPAA for Professionals https://www.hhs.gov/hipaa/for-professionals/index.html
    Hill Burton
    The federal law that allows for federal funds to help w8ith facility building in exchange
    for the facility providing free or reduced cost care.
    Hill-Burton Free and Reduced -Cost Health Care
    https://www.hrsa.gov/get-health-care/affordable/hill-burton/index.html
    Labor Laws
    The National Labor Relations Act (NLRA) and amendments gives workers the right to
    organize into unions, created the National Labor Relations Board (NLRB), and
    prohibits union and management unfair labor practices.
    NLRA
    https://www.nlrb.gov/guidance/key-reference-materials/national-labor-relations-act
    Patient Safety and Quality Improvement Act (PSQIA)
    The laws defines patient safety work product and obligations
    Patient Safety and Quality Improvement Act of 2005 Statute and Rule
    https://www.hhs.gov/hipaa/for-professionals/patient-safety/statute-and-rule/index.html
    Rules of Procedure (Federal)
    The rules that govern the process of litigation including discovery and time frames for
    federal lawsuits.
    Federal Rules of Civil Procedure https://www.law.cornell.edu/rules/frcp
    Federal Rules of Criminal Procedure
    https://www.law.cornell.edu/rules/frcrmp
    Sarbanes Oxley Act (SOX)
    The law that requires honest and reliable financial reporting.
    What is the Sarbanes–Oxley Act – Summary of Key Provisions
    https://www.sarbanes-oxley-101.com/sarbanes-oxley-compliance.htm
    Substance Use-Disorder Prevention that Promotes Opioid Recovery and
    Treatment (SUPPORT)
    The law to strengthen opioid response by increased addiction screening and
    encouraging evidence based care and treatment for addiction.
    SUPPORT Act
    https://www.samhsa.gov/about-us/who-we-are/laws-regulations
    Tax Exemption Laws
    The laws that set requires to be classified as a charitable organization and exempt
    from tax.
    IRS: Charities and Non=profits
    https://www.irs.gov/charities-and-nonprofits
    State Statutes
    Advanced Directives
    The law that gives people the right to establish a do not resuscitate order (DNR),
    living will, or Medical Order for Life Sustaining Treatment (MOLST)
    Maryland Advanced Directives
    https://www.marylandattorneygeneral.gov/Health%20Policy%20Documents/adirective
    .pdf
    Certificate of Need (CON)
    The law that regulations documentation to support the need for a health care facility
    or high cost medical services or equipment.
    CON-Certificate of Need State Laws
    https://www.ncsl.org/research/health/con-certificate-of-need-state-laws.aspx
    Corporation Laws
    The laws that outline the steps to form a corporate form of business in thestate.
    How to Form a Corporation
    https://www.nolo.com/legal-encyclopedia/form-corporation-how-to-incorporate30030.html
    Corporate Practice of Medicine ( CPOM)
    The law in some states that prohibits a corporation from practicing medicine by
    employing a physician.,
    AMA Issue Brief: Corporate Practice of Medicine
    file:///C:/Users/Ann/Downloads/corporate-practice-of-medicine-issuebrief_1%20(4).pdf
    Informed Consent
    The state law that sets standards for informed consent.
    Maryland Informed Consent law
    https://www.marylandattorneygeneral.gov/Health%20Policy%20Documents/alzchap2.
    pdf
    Licensing Laws
    Laws that set state requirements for licensing to obtain and keep a health care
    professional license.
    Maryland Department of health licensing Boards
    https://health.maryland.gov/Pages/boards.ASPX
    Medical malpractice
    The laws that set the time frame and standards to file a medical negligence claim.
    Maryland Medical malpractice laws
    https://www.nolo.com/legal-encyclopedia/maryland-medical-malpractice-laws.html
    Medical Record laws
    The laws that state the obligation to create and keep, retain and destroy medical
    records.
    Medical Record laws
    https://statelaws.findlaw.com/health-care-laws/medical-records.html
    Reporting laws
    Laws that place requirements on health care professionals and organizations to report
    abuse and neglect, infectious disease.
    Maryland Reporting Obligations that May apply to Investigators or other members of
    the research team
    https://www.hopkinsmedicine.org/institutional_review_board/guidelines_policies/guide
    lines/reporting_obligations.html
    Rules of Civil and Criminal Procedure (State)
    The rules that govern the process of litigation including discovery for state lawsuits.
    Maryland Rules
    https://govt.westlaw.com/mdc/Browse/Home/Maryland/MarylandCodeCourtRules?gui
    d=ND4CC33B09CCE11DB9BCF9DAC28345A2A&originationContext=documenttoc&t
    ransitionType=Default&contextData=(sc.Default)
    Chapter 10
    Copyright 2020. ACHE Management Series.
    All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law.
    Failed Hospital Merger:
    Richland River Valley
    Healthcare System
    Case Stu d y
    The scenic Richland River meandered through historically prosperous Clay County.
    In the heart of this fertile valley lay the charming and picturesque city of Richland.
    The suburban area surrounding Richland, with its rolling hills and abundance of
    natural beauty, had attracted developers and now boasted elite resorts and retirement communities for the wealthy. The population of Clay County, including the
    city of Richland, was just under 500,000.
    Clay County was proud of its healthcare services and touted them in its promotions to attract new industry to the area. The county had six hospitals—four in the
    city of Richland and two in the outlying suburban areas. Suburban Medical Center
    was a 150-bed general acute care hospital, and Community Behavioral Health Center
    was a 50-bed residential center with an innovative and highly regarded outpatient
    treatment center. In the city of Richland, the healthcare providers of choice for the
    vast majority of the population were Trinity Medical Center and Sutton Memorial
    Hospital. The other two general acute care hospitals in the city, both with fewer than
    200 beds, were not considered major players in the healthcare arena of Clay County.
    While both Trinity and Sutton Memorial were well-respected providers of highquality healthcare, they were very different in mission and structure. Trinity Medical
    Center was a faith-based organization that was part of a larger, regional religious
    system. Its mission was to care for those in need regardless of their ability to pay,
    and as a result, Trinity provided the vast majority of indigent care in Clay County. Its
    programs had been developed in response to the needs of the younger ­population it
    tended to serve. Enormous resources had been committed to its high-risk ­obstetrics
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    program, neonatal intensive care unit, and pediatrics program with its attendant
    pediatrics intensive care unit. Trinity was also the designated Level I trauma center
    for the county and had committed considerable resources to its critical care programs, which included surgical and medical intensive care units and renal dialysis
    and burn units. In addition to its general medical and surgical units, it operated
    oncology, cardiology, and orthopedics programs, all supported by active outpatient
    clinics and rehabilitation programs. The professional personnel at T
    ­ rinity, especially
    the nurses, were exceptionally loyal to the hospital and were highly skilled, competent, and compassionate. Although they were unionized, Trinity had implemented
    strong, effective management–employee programs, and the unions were committed to the continued success of the Trinity organization.
    The J. Blair Sutton Memorial Hospital was a privately owned, richly endowed
    healthcare organization whose namesake had been the founder of Sutton Manufacturing and Construction Inc., a company that had brought great wealth to its
    founder and employment to many of the residents of Richland. The Sutton family
    was “old money” and had originally acquired its wealth from sawmills along the
    Richland River. J. Blair Sutton had been quick to respond to modern technologies,
    and when the time was right, he had diversified his holdings and entered commercial construction and the manufacturing of doors, windows, and lumber products.
    That was in the 1940s, and now the Sutton name and its products were known
    nationwide. To manage the family money, the Sutton progeny had moved from
    Richland to New York City, but the Sutton name still graced the streets of Richland
    on schools, avenues, plazas, and prominent buildings throughout the community.
    J. Blair Sutton Memorial Hospital was one such legacy. The 275-bed acute care
    hospital was renowned throughout the state for its cardiology services, including a
    respected and successful open heart surgery program, an orthopedic surgery program specializing in hip replacements, and a cancer care program that had attracted
    nationally recognized oncologists and cancer surgeons. In addition to these “pillars
    of excellence,” Sutton Memorial offered general medical/surgical, obstetrics, and
    pediatrics services, but these programs commanded fewer resources because the
    hospital’s mission was to serve the healthcare needs of the “older” families of Clay
    County. The governing board of Sutton Memorial had no problem supporting this
    mission. After all, Trinity very capably and compassionately cared for the indigent
    in Clay County. Sutton Memorial’s mission was to provide healthcare to those who
    continued to commit their personal wealth to enrich the Richland community. This
    mission was in keeping with J. Blair Sutton’s personal philosophy, deeply rooted in
    American capitalism and the right of individuals to reap the rewards and privileges
    of their hard work. His philosophy did not abide government intervention of any
    manner, and accordingly, the Sutton Memorial board had done all that it could for
    as long as it could to legally avoid caring for Medicare and Medicaid patients. The
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    hospital had operated on a cash basis until the recent past. This system was very
    appealing to the members of the Sutton Memorial board, the majority of whom
    were corporate executives with companies of international stature who had been
    recruited to the board by the influential Sutton family.
    In contrast, the Trinity governing board comprised representatives of the community, the religious order, and local bank and corporate executives. These two
    governing boards, very different in philosophy, had little reason to interact. They
    did not travel in the same social circles, and the Sutton Memorial board members
    were most often out of town running their corporations in other states. The Sutton
    Memorial board met quarterly, while the Trinity board, with its local members, met
    monthly. The administrations of the two organizations seemed content with maintaining the status quo. After all, both organizations were operating well. Strong
    governing boards at both hospitals made it clear to their respective CEOs that their
    jobs were to manage operations. In spite of their differences, the two organizations
    amicably coexisted in the city of Richland, each successful in its own right.
    All of this was about to change as national for-profit hospital corporations were
    emerging as a force in healthcare. Indeed, one of these corporations, Continental
    Healthcare, began purchasing private, not-for-profit hospitals in Clay County. Continental had already purchased one of the smaller hospitals in the city of Richland
    and had also entered into negotiations with Suburban Medical Center. Both Trinity
    and Sutton Memorial were alarmed and fearful of losing their positions of prominence in Clay County. After much separate discussion, the governing board at
    each hospital arrived at the same conclusion: The hospital needed to partner with
    another organization to shore up its position in the community. As each organization sought an appropriate partner, it became clear that all they had was each other.
    The governing boards of the two organizations took the lead in exploring the
    merger of Trinity and Sutton Memorial. The administrations of the two organizations were only minimally involved and, for the most part, remained focused on
    daily operations. Each governing board engaged the services of a consultant to
    explore the feasibility of the merger. Following the consultants’ reports, both Trinity
    and Sutton Memorial decided a merger into a system was in each organization’s
    best interests. At this point the two governing boards met for their first face-to-face
    discussion, during which they decided to jointly engage the services of a nationally
    known consulting firm with experience in successfully implementing the mergers
    of healthcare organizations. The consulting firm’s report clearly laid out enormous
    benefits, both present and future, that would accrue to both organizations once
    the merger was fully implemented. This report evolved into the only strategic plan
    used by the newly merged system and showed savings of millions of dollars from
    ­merging business operations and sharing expensive medical technology. The report
    also promised that the merger would increase bargaining power with health plans.
    Chapter 10: Failed Hospital Merger: Richland River Valley Healthcare System
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    151
    An initial step in the process was to determine the asset value of each organization. Trinity’s assets were valued at $25 million more than those of Sutton Memorial. For the two organizations to enter into the merger as equal partners, Trinity
    placed $25 million into a newly created foundation for the merged system, named
    Richland River Valley Healthcare System (RRVHS), to use for healthcare programs
    in Clay County. Although it agreed to this resolution, the Sutton Memorial board
    was visibly annoyed with the results of the asset valuation. Its members were unaccustomed to being second best at anything.
    As the implementation of the merger moved forward, both sides agreed that the
    RRVHS governing board would have 25 members: 12 from Trinity, 12 from Sutton
    Memorial, and the new RRVHS CEO. The RRVHS board would be responsible for strategic planning and financial oversight of the system. Sutton Memorial would appoint
    the first board chair for a two-year term. Trinity would then appoint the next board
    chair for a two-year term, and so on. As it turned out, the most powerful and influential
    members of each hospital board were appointed to the system board, while the hospital boards retained the less powerful members. The hospital governing boards would
    now be responsible for operations, credentialing, and facilities management at their
    respective organizations. The powerful RRVHS board decided that the hospital governing boards would no longer receive operating budgets or routine financial reports.
    The RRVHS board would provide financial oversight of both hospitals and would
    control the flow of financial information. Friction soon developed between the system
    board and the hospital boards, whose members became so frustrated at one point
    that the two hospital boards considered joint legal action against the system board.
    The RRVHS board further decided that neither of the current hospital CEOs
    was capable of assuming the position of system CEO and hired an executive search
    firm to recruit an experienced system CEO. The RRVHS board, with powerful representatives from both hospitals, could not agree on an acceptable candidate to lead
    the newly merged entity. This dissension resulted in a lengthy and combative CEO
    search that left the new entity adrift with no management leadership for over a year.
    Curtis Tower was finally hired as system CEO. During the recruitment process,
    Tower made it clear that the board needed to leave the management of the new system to him, and the search committee agreed to this condition. Soon after Tower
    assumed leadership responsibilities, however, he realized the board was either
    unwilling or unable to stay out of the management of the new system. The RRVHS
    board directed Tower to fire all of the senior administrators at both hospitals and
    conduct a national search to replace them. By following this directive, Tower lost
    vital corporate memory at a time when it may have been needed most. The corporate cultures of both organizations were visibly shaken by this massive administrative turnover. Organizational values were questioned by the staffs of both hospitals,
    who became increasingly anxious in the uncertain environment.
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    Part II: Case Studies and Moral Challenges
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    Amid all of this uncertainty, physicians in Clay County became a major influential force. Throughout the merger process, the hospitals’ two medical staffs had
    been relegated to the sidelines. But a new opportunity presented itself in Richland:
    Physicians Partners Inc., a proprietary corporation that purchased and operated
    physician practices, began buying physician practices in Richland. Now the RRVHS
    board and the two hospital boards had a common worry: What if their admitting
    physicians decided to admit elsewhere? A group of ten physicians who controlled
    most of the admissions, referrals, and outpatient ancillary services at both Trinity
    and Sutton Memorial began approaching board members at social gatherings with
    an idea. These physicians had lost their ability to leverage one hospital against the
    other with the creation of RRVHS. Now with Physician Partners Inc. rolling into
    town, the physicians had bargaining power once more. They suggested that RRVHS
    purchase their practices and asserted that through their personal connections to a
    renowned East Coast medical school, they could arrange for the establishment of
    an affiliated major medical clinic in Richland that would attract national and international patients. Such a clinic would secure the success of the new merger.
    RRVHS entered into what proved to be a very lucrative arrangement for the
    physicians involved, and news of the agreement and the planned medical school–­
    affiliated clinic disseminated rapidly throughout the medical community. Questions
    about who would control the clinic and, more important, who would be allowed to
    practice there were put to the RRVHS board. Dissension among the medical staff
    was palpable. Those physicians who continued to practice independently gave
    the RRVHS board an ultimatum: If plans for the clinic went forward, they would
    boycott both hospitals. The RRVHS board rejected the proposed affiliated clinic.
    The contract physicians became angry and resentful. The independent physicians
    remained distrustful and hostile. Throughout these discussions, negotiations, and
    agreements, the administrations of both hospitals had been absent.
    Two years into the merger, RRVHS had yet to consolidate clinical services as
    recommended by the consultant’s plan guiding implementation. The hospitals,
    four miles apart, were still duplicating all but business operations.
    Equally troubling was the lack of medical staff consolidation. The differences in
    medical staff organization and structure at the two hospitals had proven to be significant barriers. Medical staff officers at Trinity were elected by the general medical
    staff, while medical staff officers at Sutton Memorial were appointed by the Sutton
    Memorial board. After much political maneuvering, it was agreed that consolidated
    medical staff officers would be elected, but the decision was just one more contentious issue between the two hospitals.
    The administrative offices for the system were constructed in available space
    at Sutton Memorial, which further increased ill will between the hospitals. The
    members of the two hospital governing boards did not like each other, and more
    Chapter 10: Failed Hospital Merger: Richland River Valley Healthcare System
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    153
    significant, their counterparts on the RRVHS board did not like each other either.
    The governing styles of the two hospitals were in conflict. Sutton Memorial took
    a corporate approach to healthcare delivery: Be innovative, operate efficiently, and
    practice good business management. Social status was important to its members.
    Trinity operated more like a public institution—process oriented and committed to
    care for all, regardless of ability to pay. Business operations were not its top priority,
    nor was the social status of its members.
    The main barriers to the successful merger of the two organizations were the
    steadfast separation of all clinical services and disagreement over the allocation of
    capital resources for new programs and services. New clinical services to be based
    at one hospital or the other could never get past the planning stage. Administrative
    resources were spent, but no program materialized in return.
    Frustrated and angry with the system, a high-profile group of surgeons began
    plans for a physician-owned surgicenter. At about this same time, amid falling
    patient volumes and problems with accounts receivable at both hospitals, a major
    donor withdrew her $72 million pledge to the cardiology program at Sutton Memorial on the grounds that the pledge was to Sutton and not to RRVHS.
    Unable to consolidate clinical services and demoralized by the constant conflict and financial woes, the RRVHS board finally agreed on something: to dissolve
    the merger. Within the first year following the dissolution of RRVHS, Continental
    Healthcare moved quickly to purchase both hospitals, which it now operates as
    separate healthcare facilities.
    Case originally published in a slightly different format in Mistakes in Healthcare Management: Identification, Correction and Prevention, edited by Paul B. Hofmann and Frankie
    Perry. Copyright © 2005 Cambridge University Press. Reprinted with permission.
    Eth ics I ssu es
    Roles of governance and management: Were the roles of governance and manage-
    ment being played out during the merger of Trinity and Sutton Memorial into
    RRVHS appropriate and consistent with the mission of the two hospitals? Were the
    actions of the principals involved in the best interests of patients and others served?
    Fear-based action: Was the decision to pursue a merger based on a well-thought-
    out plan for the betterment of healthcare in the community? Or was it fear
    based and motivated by a desire to retain power and prestige?
    Culture issues: Did the two hospital boards give appropriate consideration to the
    culture, values, and ethical standards guiding their respective organizations and
    how they might mesh in the newly merged system?
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    Failure to include medical staff: Was a successful merger possible without involv-
    ing the physicians in its planning and implementation? Was clinical integration
    possible without physician leadership?
    Stewardship of community resources: Did the two organizations have an ethical
    responsibility to use community resources prudently for the good of the ­community?
    Ethical responsibilities to employees: Did the administrators and governing
    boards of the two hospitals, and later those of the merged system, have an ethical responsibility to adequately inform employees about—and involve them in—
    decisions that were being made that affected their employment, their healthcare,
    and their community? Were employees key stakeholders in these proceedings?
    Discu ssio n
    Roles of Governance and Management
    The RRVHS case is like a very bad play where the actors don’t know their lines
    or the roles they should be playing. The governing boards of the two institutions
    began exploring the possibility of a merger on their own instead of initiating
    joint discussions that included management and medical staff. A more inclusive
    approach might have identified potential obstacles to overcome. Neglecting to
    include management and the medical staff in all discussions and planning doomed
    the merger to failure. Following the merger agreement, the RRVHS governing
    board blurred their lines of authority and responsibility even more as they began
    micromanaging the system and withholding needed financial information from
    the governing boards of the two hospitals.
    The American Hospital Association (AHA) is clear about board responsibilities and the difference between the board’s policy-making responsibilities and
    management’s operational responsibilities. The AHA’s “Top Ten Principles and
    Practices of Great Boards” read in part as follows (AHA 2019):
    Boards have an oversight function, but great boards govern—they don’t try to run
    operations—explicitly or subtly. They are careful not to “get into the weeds” with
    overly detailed operational questions and micro-managing day‐to‐day decisions. . . .
    Governance—especially in large, complex organizations such as hospitals and health
    systems—is most effective when directors focus their work on higher-level strategic
    choices, priorities, and future directions. Great boards create the space for great
    management to operate.
    In simpler terms, the governing board’s responsibility is to see the “why,” whereas
    the “what” and “how” are management’s job.
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    155
    At RRVHS, administrative leadership should have played a major role in
    seeing that governing board members clearly understood their functions and
    responsibilities and had continuing education opportunities to keep abreast of
    changes in the field. Administrators also should have been active in the selection
    and engagement of the consultants to make certain that all drawbacks and barriers
    to the merger were explored along with the advantages and benefits. And finally,
    strong hospital leadership would have insisted on being an integral part, along
    with the medical staff, of all merger discussions and negotiations.
    Had administrators from both hospitals been included in the merger discussions from the beginning, they could have ensured that the missions and values
    of their respective organizations were not compromised. Moreover, the participation of administrative and clinical representatives would have led to a broader
    and more balanced perspective on the situation. Board members sometimes have
    difficulty setting aside their self-interests and staying focused on what is good
    for the organization and for the community (Greene 2012). Because some board
    members inevitably lose their places at the table when a merger occurs, decisions
    made solely by the board may be skewed by individual board members’ attempts
    to secure their positions.
    Fear-Based Action
    Although fear may be a great motivator, it rarely brings the success of a wellthought-out strategy and transitional plan based on community needs and mutually beneficial collaboration. The two organizations going into this merger had
    operated in isolation from each other for years. Neither knew anything about the
    other. The merger was like a marriage without a courtship. The consultants, if
    experienced in mergers, should have forewarned the organizations of the potential
    perils. Effective management, if involved, may have foreseen the difficulties. The
    governing boards, on the other hand, seemed too concerned about their own selfinterests and power to recognize the problem.
    Culture Issues
    Healthcare managers know a lot about corporate culture. They know that the
    leadership of an organization is responsible for establishing the organization’s culture. They know that a culture will accept or reject change, can create a negative
    or positive work environment, can promote teamwork or not, and can be ethical
    or not. A simple definition of culture is “the way we do things around here” (Scanlan 2010). Perhaps culture is much more than that. Certainly, culture consists
    of behaviors and how business is conducted, but it also encompasses values and
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    beliefs and reflects how members of governance, workforce, and management in
    an organization think and feel. Culture is a guiding philosophy about what is right
    and what is important. Organizations considering a merger tend to function best
    when their guiding philosophies are aligned.
    Executive coach and former hospital CEO Larry Scanlan (2010) reminds us
    that “culture will eat strategy” and maintains that “unresolved culture conflicts can
    cripple or terminate a merger.” Accordingly, he cautions leaders to have a solid
    understanding of their own organizational culture and to know when cultural differences between organizations make a successful merger unlikely.
    Sutton Memorial and Trinity had very different cultures and value systems.
    Their differences seem not to have been given the consideration they deserved,
    especially at the board level. Power is a difficult thing to share, especially when
    values clash. Symbolism can become a source of friction if one of the hospitals in
    the merger is perceived to have such symbolic advantages as being the source of
    the new CEO, having more representatives on the board, being where the system
    offices are located, or controlling how publicity about the new system is crafted.
    Although J. Daniel Beckham (2012), past chair of the board of directors of
    the American Marketing Association, agrees that culture is an important consideration when it comes to leadership and “there may be occasions when culture
    is well-positioned to eat strategy,” he cautions that “a view of culture as fixed,
    omnipotent and sacred engenders passivity on the part of leaders.” He challenges
    leaders to execute strategies that may overpower or change culture.
    Regardless of their views on the primacy of culture, effective leaders are mindful of their organization’s culture and the need to nurture it in ways that promote
    teamwork, collaboration, and organization-wide commitment to mission. Lack
    of respect for the influence of culture may result in careless and wasteful use of
    resources and failure to fulfill ethical responsibilities to communities served.
    Failure to Include Medical Staff
    The exclusion of key physicians and medical staff leaders from discussions about
    the feasibility of the RRVHS merger can only be described as ill-informed and
    misguided. Certainly, if the administrators of the two hospitals had been active participants in the discussions, they would have enlightened the boards about the need
    for physicians’ insights, awareness of internal politics, and knowledge of the medical
    community, all of which are crucial to any clinical integration. Governing boards
    and administrators must never lose sight of the fact that healthcare is driven by physicians and that the success of a healthcare organization depends in large part on the
    quality and expertise of its clinical staff. A successful merger is impossible without “a
    strong and definitive plan for working with your medical staff ” (Morrissey 2012).
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    Stewardship of Community Resources
    The failed RRVHS merger is an example of what typically happens when personal
    ambitions and goals take priority over an organization’s mission and the s­ tewardship
    of community resources. All hospitals “share a common bond—a covenant . . . to
    serve as stewards of valued community assets—local hospitals” (Brown 2005, 206).
    The hospital board’s fiduciary responsibility is to protect its organization’s assets
    and to act in good faith on behalf of the organization, not for personal benefit.
    The governing board members at RRVHS were not attentive to their stewardship
    of community resources or protection of the organization’s assets. Struggles for
    power and control over an extended period of time wasted resources and raised the
    additional ethical question of what happens to patient care programs when time,
    energy, and capital are diverted elsewhere. The failure to eliminate duplication of
    services squandered the assets of both the health system and the community.
    Ethical Responsibilities to Employees
    The Code of Ethics of the American College of Healthcare Executives (ACHE
    2017) is clear about a healthcare executive’s ethical and professional responsibilities to employees. Maintaining a safe work environment that is conducive to
    ethical conduct, proper utilization of employees’ skills and abilities, and freedom
    from harassment and discrimination are critical to providing high-quality and
    safe patient care. Poor communication with employees creates an environment
    of uncertainty, dissension, and mistrust. When management does not communicate appropriately, pseudoleaders do—often through rumor, innuendo, and false
    information. The anxiety and pessimism that result are inevitably reflected in
    exchanges with patients and coworkers.
    Failure to recognize that employees are key stakeholders in the future of the
    merged organization ignores that the people who carry out the mission of patient
    care, whether directly or indirectly, are important contributors to the success of
    the organization. It also does not take into account that employees rely on the
    security of their employment and may be unable to relocate if they lose their jobs.
    Whereas administrators and board members may move on to other positions in
    other communities, employees are, for a variety of reasons, frequently locked into
    the community where they are employed.
    Further contributing to the uncertain work environment at RRVHS is what
    appears to be the arbitrary firing of senior managers with the accompanying loss of
    corporate history, experience, and knowledge. Such upheaval fosters feelings that
    the organization lacks direction and that its leadership cannot be trusted. Were the
    fired managers treated fairly and ethically?
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    Many of these problems could have been avoided by implementing a wellthought-out employee communication strategy and plan aimed at acquiring
    employee input into the process and buy-in to the merger.
    Lessons Learned
    Although RRVHS is an example of a failed hospital merger, the lessons learned
    from this case are valuable to healthcare executives and governing boards who may,
    in the future, need to consider merging their healthcare organization with another.
    A clear rationale, a comprehensive feasibility study, and a well-thought-out implementation plan are essential to success.
    Even after a merger is finalized, important work still needs to be done if the
    merger is to achieve the anticipated benefits. Peregrine and Nygren (2013) suggest
    eight follow-up steps that will ensure that the goals of the merger are realized:
    1. Appoint a new leader who is qualified to achieve the vision.
    2. Restructure departments and services to gain efficiency and avoid
    redundancy.
    3. Name the new organization; roll out the image and branding initiative to
    create a shared identity.
    4. Articulate the values and behaviors that will characterize the culture.
    5. Make it clear to all that change must occur.
    6. Focus on the strategic plan.
    7. Honor post-closing agreements.
    8. Communicate often.
    A leadership team representative of governance, administration, and the medical
    staff will be needed to successfully complete the merger implementation.
    A 2013 AHA study that analyzed the impact of hospital mergers found the
    number of mergers to be relatively small—only 316 mergers in six years (Stempniak 2013). However, as the Affordable Care Act was implemented and healthcare
    moved to more efficient systems that coordinate care and emphasize cost savings
    and population health, it was a safe speculation that more mergers would occur.
    And that did, in fact, happen: Five years later, Kaufman Hall (2018) reported
    115 hospital mergers and acquisitions in 2017, an increase of almost 13 percent
    over 2016 and the highest number of announced mergers and acquisitions since
    the consulting firm began monitoring them in 2000. Kaufman Hall called it
    a “transformative year for healthcare deal making” and noted that “intellectual
    capital, brand and presence, network infrastructure, risk-bearing capabilities, care
    continuum, clinical and business intelligence, consumerism, capital resources,
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    and diversified operations represent the most frequently cited benefits of these
    transformative partnerships.” For this reason, Kaufman Hall predicts the number
    of mergers and acquisitions will continue to rise. There is sufficient reason and
    little doubt that healthcare executives and their boards need to be cognizant of the
    potential pitfalls to avoid in these future transactions.
    Referen c es
    American College of Healthcare Executives (ACHE). 2017. Code of Ethics. As amended
    November 13. www.ache.org/about-ache/our-story/our-commitments/ethics/achecode-of-ethics.
    American Hospital Association (AHA). 2019. “The Top 10 Principles and Practices
    of Great Boards.” Accessed March 26. https://trustees.aha.org/sites/default/files/
    trustees/Great-Boards-reprint-Top_Ten_Practices_of_Great_Boards.pdf.
    Beckham, D. 2012. “Overestimating the Importance of Culture.” Hospitals & Health
    Networks Daily, August 16.
    Brown, F. 2005. “Failed Hospital Merger: Richland River Valley Healthcare System
    Commentary.” In Management Mistakes in Healthcare: Identification, Correction and
    Prevention, edited by P. B. Hofmann and F. Perry, 201–14. New York: Cambridge
    University Press.
    Greene, J. 2012. “A New Voice at the Table.” Trustee 65 (3): 8–12.
    Kaufman Hall. 2018. “2017 in Review: The Year M&A Shook the Healthcare
    Landscape.” Published January 29. www.kaufmanhall.com/ideas-resources/
    research-report/2017-review-year-ma-shook-healthcare-landscape.
    Morrissey, J. 2012. “Life After a Merger.” Trustee 65 (10): 8–12.
    Peregrine, M. W., and D. Nygren. 2013. “Merger’s Closed. What’s Next?” Trustee 66
    (4): 13–14.
    Scanlan, L. 2010. “Hospital Mergers: Pay Attention to Those Culture Issues.” Hospitals
    & Health Networks Daily, August 16.
    Stempniak, M. 2013. “New Study Analyzes Impact of Hospital Mergers.” Hospitals &
    Health Networks Daily, June 3.
    160 Part II: Case Studies and Moral Challenges
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    CHAPTER
    CONTRACTS AND INTENTIONAL TORTS
    5
    Copyright 2020. Health Administration Press.
    All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law.
    After reading this chapter, you will
    • know the essential elements of a valid, enforceable contract;
    • understand why contract law is important to physician–patient and
    hospital–patient relationships;
    • appreciate how the contract principle of breach of warranty can
    apply to the healthcare setting; and
    • grasp the basics of intentional torts and how they apply to
    healthcare professionals.
    Think Like a Lawyer
    In the 1973 movie The Paper Chase, the Shakespearean actor John Houseman
    won an Academy Award for portraying Charles W. Kingsfield, a stern, intimidating contracts law professor. A highlight of the film is Kingsfield’s description of the Socratic method—a type of philosophical inquiry commonly used
    in law schools. To a room filled with first-year students, he explains that this
    technique comprises a series of questions followed by the students’ answers,
    and that it is intended to stimulate critical thinking rather than simply convey
    information. The Socratic method is, essentially, teaching by asking.
    Kingsfield struts slowly across the dais; glares at the timorous tyros
    before him; and announces that in his classroom there are no absolute
    answers, only an endless string of questions. The students are his patients on
    an operating table, and he is a neurosurgeon whose questions are instruments
    that probe their brains.
    He stops. He stares. After a dramatic pause, and with a stentorian voice
    worthy of King Lear, he concludes: “You teach yourselves the law, but I train
    your mind. You come in here with a skull full of mush, and you leave thinking
    like a lawyer!” Yes, contracts law can teach you how to think like a lawyer—or
    at least teach you enough to know when to call on a lawyer for solid advice.
    In chapter 1, you learned that law is either public or private. However,
    law can be categorized in other ways as well—for example, there is criminal law
    and civil law, and civil law has subdivisions; exhibit 5.1 shows this taxonomy.
    175
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    AN: 2361947 ; Stuart Showalter.; The Law of Healthcare Administration, Ninth Edition
    Account: s4264928.main.edsebook
    176
    T h e Law of H e a l th c a re Ad mi n i stra ti o n
    EXHIBIT 5.1
    A Taxonomy
    of Law
    Law
    Criminal
    Misdemeanor
    Civil
    Felony
    Express
    Contracts
    Implied
    Intentional
    Torts
    Negligent
    Strict
    Liability
    Contracts and Intentional Torts as Bases of Liability
    liability
    Legal
    responsibility
    for one’s acts or
    omissions.
    cause of action
    The basis of a
    lawsuit; sufficient
    legal grounds and
    alleged facts that,
    if proven, would
    constitute all the
    requirements for
    the plaintiff to
    prevail.
    When people think of liability in healthcare, they usually think of medical malpractice, a form of negligence. Negligence is the most common type of malpractice,
    but medical malpractice can also be based on breach of contract or the commission
    of intentional torts. In fact, many malpractice suits allege more than one cause of
    action. (The reasons for multiple allegations are discussed later in the chapter.1)
    The existence of a legal duty is essential to any liability case, and the
    concept of duty tends to change as our society and values change. The legal
    duty may be imposed by constitution, legislation, common law (including
    negligent or intentional torts), or even contract. In healthcare, special legal
    duties arise from the contractual aspects of the physician–patient relationship.2
    This chapter does not address the law of contracts as it relates to operational issues such as employment, materials management, facilities maintenance, and procurement. Although many of the basic principles discussed
    here apply to those areas, too, a full discussion of the breadth of contracts
    law is beyond the scope of this text; indeed, the subject of contracts occupies
    an entire semester course in the typical law school curriculum. As with the
    human resources chapter, we will only hit the highlights here.
    Elements of a Contract
    In simple terms, four conditions must exist for a contract to be valid:
    1. Both parties must be legally competent to enter into the contract.
    Contracts entered into by mentally incompetent persons are not
    valid—and neither are most contracts entered into by minors.
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    C hap ter 5: C ontrac ts and Intentional Tor ts
    2. There must be a meeting of the minds. One party must make an offer—
    to buy or sell, for example—and the other party must accept that offer.
    The terms of the offer and acceptance must be identical.
    3. Consideration must be given. Consideration is the price paid for the
    contract, but it need not be in the form of money. It may also be a
    promise (a) to do something you otherwise would not be required to
    do or (b) to refrain from doing something you otherwise would be
    able to do.
    4. The purpose of the contract must be legal. A contract with a hit man
    to assassinate another person is void because its purpose is illegal.
    Likewise, many exculpatory contracts—those in which one party
    excuses the other from liability in advance—are invalid because they are
    against public policy.
    Contracts may be express (written, spoken) or implied. Many of our
    day-to-day human interchanges are implied contracts. For example, consider
    a patron ordering lunch in a restaurant. Implicit in the situation is this offer:
    “If you serve me what I order, I will pay the bill.” By taking the order and
    serving the food, the restaurant has accepted the patron’s offer and a contract
    exists. The offer and acceptance are rarely expressed as such in words, but
    the contract is valid nonetheless. Similarly, the doctor–patient relationship
    includes an offer (“If you treat me, my insurance or I will pay you”) and an
    acceptance (“We’ve scheduled your appointment for next Tuesday”).
    177
    consideration
    Essentially,
    payment;
    something of value
    (not necessarily
    money) that
    is given (or
    promised) in
    return for what
    is received (or
    promised).
    exculpatory
    Absolving or
    clearing of blame;
    from Latin ex
    (from) + culpa
    (guilt).
    The Physician–Patient Relationship
    The physician–patient relationship is based on contract principles because
    the physician agrees to provide treatment in return for payment. Professional
    liability can arise if this contract is breached. In the absence of a contract
    between physician and patient, the law usually imposes no duty on the physician to treat the patient, although it may impose other duties on the physician. For example, like other passersby, physicians have no legal obligation
    to help accident victims, and although Good Samaritan statutes provide
    protection if they do, with some exceptions the statutes typically do not
    require anyone to act.3
    This principle was illustrated in Childs v. Weis, a Texas case decided in
    1969, before better standards for emergency care were enacted.4 Childs, a
    Dallas woman who was seven months pregnant, was out of town when she
    began to hemorrhage and suffer labor pains. At two o’clock in the morning,
    Childs presented herself to a small rural hospital’s emergency department
    where a nurse examined her; called a staff physician (presumably at home);
    and, on the basis of what the doctor said, told her to go to her doctor in
    Dallas. Childs left the hospital and about an hour later gave birth in her car.
    Good Samaritan
    statutes
    Provisions of
    law that provide
    immunity from
    liability for
    persons who
    provide emergency
    care at the scene
    of an accident.
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    178
    T h e Law of H e a l th c a re Ad mi n i stra ti o n
    Legal Decision Point
    You are at a beach in Florida having a picnic with
    your significant other. You notice a man struggling
    in the surf. You run to his rescue, but a minute or
    so later, while struggling through the waves, you
    notice that your companion is about to finish the
    last of the wine, so you abandon your effort and
    return to the picnic blanket before the wine is
    gone.
    What were your legal and moral responsibilities before you began to assist the victim? Were
    they the same after you began? Do the answers
    change depending on whether you were trained
    in ocean rescue or cardiopulmonary resuscitation?
    What if you were an off-duty emergency medical
    technician? What other facts might you want to
    know before you answer?
    Twelve hours later, the infant died. The
    court held that the physician had no duty
    to Childs because no physician–patient
    relationship had been established. (Again
    note: this case is more than half a century
    old. Times and the law have changed since
    then.)
    The hospital’s and nurse’s duties
    are a different matter, of course. As noted
    in chapter 10, federal law now requires
    emergency department personnel to stabilize emergency conditions irrespective
    of whether a provider–patient relationship
    exists (see Legal Decision Point).
    Creation of the Relationship
    The contract necessary to form a physician–
    patient relationship can be express (e.g.,
    when you fill out financial responsibility
    forms at the doctor’s office), implied (e.g.,
    when you make a follow-up appointment and are seen by the doctor), or even
    inferred from the circumstances. Consider this situation: A patient is unconscious or otherwise unable to consent to treatment, but an emergency exists
    and the physician proceeds. The law will presume (infer) that a contract exists.
    Although this presumption is a legal fiction, it prevents unjust enrichment
    by requiring the patient to pay for services he presumably would have contracted for had he been competent. Whether express, implied, or inferred, the
    ­physician–patient contract is bilateral; that is, it imposes duties on both parties.
    Although clear enough in the abstract, these “black-letter” principles
    are often difficult to apply in practice. For example, physicians commonly
    and informally consult one another regarding their patients’ diagnosis and
    treatment, and the consulted physician may not see the patient or know her
    name. Do these informal hallway consults create a physician–patient relationship? Generally, the answer is no.
    For example, in Oliver v. Brock,5 Dr. Whitfield was treating Anita
    Oliver in rural Demopolis, Alabama, for injuries sustained in an automobile
    accident. During a telephone conversation with a colleague named Dr. Brock
    about another patient, Dr. Whitfield casually mentioned Ms. Oliver’s treatment and asked for Dr. Brock’s opinion. According to Dr. Whitfield’s affidavit (see Legal Decision Point), Dr. Brock told him the treatment seemed to
    be correct under the circumstances. The conversation was apparently informal and gratuitous, and one can almost imagine Dr. Whitfield saying, “Oh,
    by the way, what do you think about this other situation I have?”
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    C hap ter 5: C ontrac ts and Intentional Tor ts
    179
    Dr. Brock practiced in Tuscaloosa,
    which is about 60 miles from Demopolis.
    Legal Decision Point
    In his affidavit he introduced himself as
    “one of the Defendants in the above styled
    An affidavit is a written document in which the
    cause,” and asserted that he never saw
    affiant—the one who signs the document—swears
    the patient, talked to her or her family, or
    under penalty of perjury that the facts asserted in
    even learned her name. He admitted that
    the statement are true. Affidavits generally cannot
    he occasionally talked to Dr. Whitfield by
    substitute for in-court testimony because they are
    not subject to cross-examination. However, affiphone (apparently to discuss patients), but
    davits are sometimes used to support arguments
    he continually emphasized that he did not
    on collateral matters, especially if the opposing
    know Anita Oliver and that she had never
    attorney does not object. In Oliver v. Brock, affibeen his patient. His affidavit concluded, “I
    davits were used to support Dr. Brock’s position
    have never been employed or requested to
    that he did not have a doctor–patient relationship
    care for or treat Anita Oliver and I have not
    with Oliver, and by the plaintiffs to support their
    own position.
    been employed or requested to advise anyWho do you suppose wrote the affidavits in
    one with regard to her medical problems.”
    this case? Are any of their assertions not, strictly
    As result of Dr. Whitfield’s course
    speaking, facts? If you were opposing counsel,
    of treatment, which presumably had been
    would you object to the use of such affidavits? If
    at least casually supported by Dr. Brock,
    you were the judge, what weight would you give
    Anita Oliver ended up suffering further
    them? If you could cross-examine Dr. Whitfield
    (the treating physician who consulted with Dr.
    injury. In her own affidavit as plaintiff, the
    Brock), what questions would you ask him about
    patient’s mother, Cathy Oliver, stated, “I
    his assertions?
    became concerned regarding the care and
    treatment rendered or done by Dr. Whitfield and . . . Dr. Whitfield told me that he
    would call Dr. Brock in Tuscaloosa to get some advise [sic] on how to treat
    my daughter’s injuries.” She said that Whitfield later told her that Dr. Brock
    told him that the treatment was correct and should be continued. Her affidavit concludes, “I sincerely believe that Dr. Brock took part in the treatment
    of my daughter and that he is at fault for the serious injuries suffered by my
    daughter as a result of this treatment.”
    After reviewing the evidence, such as it was, the Supreme Court of
    Alabama unanimously decided that there was no doctor–patient relationship
    between Dr. Brock and Anita Oliver, so the physician could not be held liable
    for the injuries the patient sustained as a result of the treatment. One of the
    justices summarized this position clearly in a concurring opinion:
    The mere discussion between professional people of hypothetical situations cannot be viewed as a basis for liability. To hold otherwise would tend to adversely
    affect the quality of the services they offer to members of the public. Physicians,
    lawyers, dentists, engineers, and other professionals, by comparing problemsolving approaches with other members of their disciplines, have the opportunity
    to learn from one another. Possessing this freedom, they are better positioned to
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    180
    T h e Law of H e a l th c a re Ad mi n i stra ti o n
    bring theory into practice for the benefit of those whom they serve. Our decision in
    this case preserves these essential learning situations for all professional people.6
    The general rule is stated in the legal encyclopedia American Jurisprudence as follows:
    A physician is under no obligation to engage in practice or to accept professional
    employment. . . . The relation is a consensual one wherein the patient knowingly
    seeks the assistance of a physician and the physician knowingly accepts him as
    a patient. The relationship between a physician and patient may result from an
    express or implied contract . . . and the rights and liabilities of the parties thereto
    are governed by the general law of contract. . . . A physician may accept a patient
    and thereby incur the consequent duties [even if ] his services are performed gratuitously or at the solicitation and on the guaranty of a third person.7
    On the other hand, a physician need not come into direct contact with
    a patient for a doctor–patient relationship to exist. Pathologists, for example,
    have a relationship with patients even though they probably never see the
    people whose specimens they examine, the patients do not know who the
    pathologists are, and are perhaps not even conscious of the fact that pathologists are involved in their treatment.8
    Another issue involves the duty of a physician who provides services
    to someone who is not a party to the contract. For example, a physician
    conducts a preemployment examination, examines an applicant for life insurance, or examines a plaintiff for a personal injuries case. In these situations,
    the general rule is that because the typical treatment relationship does not
    exist, the physician owes no duty to the individual being examined—only to
    the party who contracted for the examination.
    Some courts, however, have found at least a limited duty toward
    the individual, even in the absence of a contractual relationship. In James
    v. United States, the plaintiff applied for a position at a shipyard and, as a
    condition of employment, was required to take a physical examination. A
    chest X-ray revealed an abnormality, but through a clerical error the physician
    never saw the X-ray or the radiologist’s report. Almost two years later, the
    plaintiff was diagnosed with an inoperable cancer. The defense argued that
    the absence of a physician–patient relationship precluded any duty of care.
    The court awarded damages anyway because “having made a chest X-ray an
    essential part of the preemployment examination to determine an applicant’s
    physical fitness, . . . defendant failed to use due care when . . . the report
    on the X-ray was not brought to the attention of the examining physician.”9
    In addition, other statutes, such as the Americans with Disabilities Act
    and various civil rights acts, both state and federal, may limit a physician’s or
    even a hospital’s ability to decline to see a patient in certain circumstances.
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    C hap ter 5: C ontrac ts and Intentional Tor ts
    Employees’ Remedies and Workers’ Compensation Laws
    Injuries or conditions incurred on the job usually lead to physician–patient
    relationships for treatment. Can the employee successfully bring a lawsuit
    against the employer or fellow employees for the workplace injury? If treatment of the condition was rendered negligently, can the employee successfully sue the healthcare provider?
    The general rule is that workers’ compensation is an employee’s
    exclusive legal remedy for a workplace injury or illness. Under that rule,
    employees are precluded from recovering from their employer or coworkers
    for negligence or other claims.10 However, when an employer operates in two
    capacities—both as an employer and as a healthcare provider, for example—
    some courts have found that the second role imposes obligations outside the
    employment relationship and a second cause of action is possible. This exception, known as the dual capacity doctrine, is seen in a pair of cases.
    In Guy v. Arthur H. Thomas Co.—a 1978 case from Ohio—the plaintiff had been a laboratory technician at the defendant hospital, where she
    operated a blood-gas apparatus that used mercury. In her complaint against
    the hospital, the plaintiff alleged that she contracted mercury poisoning from
    the apparatus, that the hospital’s clinical staff failed to diagnose her condition
    as mercury poisoning, and that her injuries were aggravated as a result of this
    alleged medical negligence.
    The Ohio Supreme Court held that the hospital, as an employer, was
    liable for workers’ compensation benefits, but in its second capacity as a
    hospital it was also liable for the medical negligence. “Appellant’s need for
    protection from malpractice was neither more nor less than that of another’s
    employee. The . . . hospital, with respect to its treatment of the appellant,
    did so as a hospital, not as an employer, and its relationship with the appellant was that of hospital–patient with all the concomitant traditional obligations.”11 (Note that today, workplace safety laws such as the Occupational
    Health and Safety Act would also come into play.)
    By way of contrast, the 2000 Maryland case Suburban Hospital v. Kirson illustrates the approach taken by the majority of courts.12 Phyllis Kirson,
    an operating room nurse, broke her right femur on August 6, 1993, when she
    slipped and fell while on the job at Suburban Hospital. The injury required
    surgical repair, and on August 13, while still recuperating in the hospital, she
    fell again and reinjured the same leg. The second fall occurred because of the
    negligence of a hospital employee, and it led to many complications and four
    additional surgeries over a 15-month period.
    For this string of injuries and lost wages, Kirson received total disability compensation from August 1993 to May 1995 and an additional 275
    weeks’ worth of permanent partial disability payments. The hospital was also
    ordered to pay all of her medical expenses.
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    181
    182
    T h e Law of H e a l th c a re Ad mi n i stra ti o n
    Then, in July 1996, Kirson filed a negligence suit against the hospital,
    the employee who caused her second fall, and a few other individuals. The
    hospital raised the “exclusive remedy” defense, and Kirson countered with
    dual capacity. After reviewing the legal literature and cases from numerous
    other jurisdictions—including the Ohio case mentioned earlier—the Maryland high court held that “dual capacity is not compatible with Maryland
    law.”13
    The court noted that it was “firmly established” in Maryland that
    worker’s compensation applies not only to the initial workplace injury
    but also to any aggravation of that injury because of medical malpractice.
    Although the aggravation here was not the result of medical malpractice per
    se, it clearly resulted from the negligence of a hospital employee in causing
    the second fall while treating the first injury. The court disposed of Kirson’s
    arguments as follows.
    In order for the subsequent injury to be compensable, it is necessary only to show
    that the injury directly resulted from improper treatment of the original compensable injury. . . . It is not necessary, as Kirson contends, to split causation hairs. . . .
    Fundamentally, Kirson’s argument attacks the social contract on which
    workers’ compensation is based. Suburban is obliged to pay compensation by way
    of disability benefits and medical expenses for the injuries sustained on August
    6 and for the injuries resulting from malpractice in the treatment of the August 6
    injuries. Having received compensation, Kirson wants the right to sue Suburban to
    recover damages which, hopefully from [her] standpoint, would exceed the amount
    of compensation paid. We hold, however, that, in exchange for the imposition of no
    fault limited liability for workplace accidents, Suburban bought peace from being
    considered as a third party when rendering hospital services to Kirson in fulfillment of its obligation [to provide medical care].14
    This result, refusing to apply the dual capacity doctrine, puts Maryland
    in line with the majority of jurisdictions that have considered the argument.
    According to the Kirson opinion, Ohio and California are the only states in
    which dual capacity has “flourished,” and even Ohio courts have declined to
    apply dual capacity in contexts other than the one at play in the 1978 case.15
    Scope of the Duty Arising from the Relationship
    The doctor–patient relationship involves a bilateral undertaking: the ­physician
    agrees to diagnose and treat the patient in accordance with the standards of
    acceptable medical practice, and the patient agrees to pay—or have insurance
    pay—for the services rendered. This understanding continues until the natural termination of the relationship. (The standards of practice and termination of the relationship are discussed later in this chapter.)
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    C hap ter 5: C ontrac ts and Intentional Tor ts
    183
    On the other hand, the patient does not contractually promise to follow the doctor’s orders, so failure to do so may excuse the physician from
    liability for untoward results. Similarly, the physician does not contractually
    promise to cure the patient, only to use best efforts to do so. In some circumstances, however, a physician’s express or implied promise may be viewed
    as a guarantee, in which case if a cure is not effected the physician could be
    held liable for breach of warranty. (This topic is discussed further later in this
    chapter.)
    Now that managed care organizations (e.g., HMOs, PPOs) dominate
    the health insurance market, the relationship is no longer simply between a
    patient and a physician; it includes the health plan’s contractual obligations
    and limitations as well. Nevertheless, the relationship is founded in contract
    principles.
    A physician may limit the scope of their practice to a designated
    geographic area, a certain medical specialty, or even to specific services (see
    Legal Brief). In McNamara v. Emmons, a woman sustained a bad cut and
    was treated by an associate of her physician.16 The next morning the patient
    left for a vacation in a town miles away. While there, she felt she needed further treatment and asked the physician to come to the town. He refused but
    gave her instructions and named a local physician whom she might call. The
    court held that in these circumstances the defendant physician was justified
    in limiting his practice to his own area. Courts in other cases have likewise
    decided that, at least when no emergency exists, a physician has no obligation to make house calls but instead may require the patient to come to the
    office for treatment.
    Duties to Persons Other than the Patient
    In many states, the contractual relationship
    between the patient and the physician not
    only allows the physician to warn certain
    persons that a patient has an infectious
    disease but also obliges the physician to
    do so. For example, state law may require
    the healthcare provider to notify the sexual
    partners of persons infected with HIV or
    diagnosed with AIDS.
    Similarly, a physician might be subject to liability when a patient injures a
    third party. In Freese v. Lemmon, a pedestrian was injured by an automobile when
    its driver suffered a seizure.17 Both the
    driver and his physician were sued by
    the injured person—the physician on the
    Legal Brief
    A dilemma is raised when a patient requests
    legitimate services that run counter to the physician’s or organization’s religious or moral convictions. This situation may occur when, for example,
    the patient requests contraceptive or abortion
    services or assistance in dying under “death with
    dignity” statutes. These issues are discussed
    elsewhere in the text (see, e.g., Law in Action
    in chapter 4), but they are noted here because
    there are contractual implications, especially for
    employed physicians.
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    184
    T h e Law of H e a l th c a re Ad mi n i stra ti o n
    theory that he was negligent in diagnosing an earlier seizure and in advising
    the driver that he could operate an automobile. The trial court dismissed
    the case against the physician, but the Supreme Court of Iowa reversed that
    outcome on the theory that an unreasonable risk of harm to a third party or
    a class of persons (i.e., other drivers) was foreseeable. The case was remanded
    for a trial on the merits of the evidence.
    In the famous case Tarasoff v. Regents of the University of California
    (also discussed in chapter 9), the California Supreme Court ruled that despite
    a confidential relationship with patients, a doctor has a duty to use reasonable care to warn persons threatened by a patient’s condition.18 The patient
    had told his psychotherapist that he intended to kill Tatiana Tarasoff, and he
    later made good on his threat. On these facts the court determined that the
    victim’s parents had a valid cause of action for failure to warn.
    Whether the injury to the third party is foreseeable is an important
    consideration in such cases. In Brady v. Hopper, a suit by persons injured in
    the assassination attempt on President Ronald Reagan in 1981, the court
    held that John Hinckley Jr.’s psychiatrist owed no duty to the plaintiffs
    because there was no evidence that Hinckley had made specific threats suggesting his intentions.19
    Termination of the Relationship and Abandonment
    Like all contracts, the one between the physician and the patient is terminated at certain points:




    When the patient is cured or dies
    When the physician and the patient mutually consent to termination
    When the patient dismisses the physician
    When the physician withdraws from the contract
    Withdrawal by a physician before the patient is cured may prompt the
    patient to claim abandonment. Whether abandonment is a breach of contract,
    an intentional tort, or negligence has been a matter of some dispute, and there
    might be valid claims for all three, especially when the physician thought the
    patient had been cured and prematurely discharged her from the hospital.20
    Abandonment may be express or implied. Express abandonment
    occurs when a physician notifies a patient that he is withdrawing from the
    case but fails to give the patient enough time to secure the services of another
    physician. In Norton v. Hamilton, the plaintiff reported that she had begun
    labor several weeks before her baby was due.21 According to the plaintiff’s
    allegations, the physician examined her and concluded that she was not in
    labor. When the pains continued, the plaintiff’s husband called the physician twice to say that his wife was still in pain. At that point, the physician
    said he was withdrawing from the case. While the husband was looking for
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    C hap ter 5: C ontrac ts and Intentional Tor ts
    a substitute physician, the plaintiff delivered her child alone and suffered
    unnecessary pain and distress. The court held that the physician’s acts would
    be abandonment, if proven. (The decision only concerned the legal principle
    that would apply; it was not a final judgment based on evidentiary findings.)
    Sometimes abandonment is inferred from the circumstances, as in the
    1963 Kentucky case Johnson v. Vaughn.22 The facts involved “a 46-year-old
    colored man” [sic] who had suffered a gunshot wound to the neck in the
    wee hours of a Saturday morning. When the patient arrived at the hospital,
    a nurse phoned Dr. Vaughn, who arrived a short time later; admitted the
    patient; treated him somewhat (although the opinion is not clear on the
    extent of that treatment); and then went home, leaving word that he was to
    be called if the patient’s condition grew worse. The record contains some
    testimony that the doctor was under the influence of alcohol at the time.
    Because the patient seemed dangerously injured, his son had a nurse
    call another doctor, Dr. Kissinger, who arrived and “gave such attention as
    appeared to be most urgent” but who felt he could not proceed further without a release from Dr. Vaughn. He called Dr. Vaughn, advising him that the
    patient was dying and needed immediate attention. At this news, Dr. Vaughn
    became “irate and vulgar,” called Dr. Kissinger “a louse” for trying to steal
    his patient, and hung up. A call from the patient’s son produced more verbal
    abuse. Finally, Dr. Vaughn said he would release the patient if he was paid
    $50 by nine o’clock the next morning. Meanwhile, 30 or 40 minutes had
    passed before Dr. Kissinger could operate, and the patient later died.
    The court held that these facts were sufficient to state a claim of abandonment against Dr. Vaughn. The opinion states, in part,
    It is a rule of general acceptance that a physician is under the duty to give his
    patient all necessary and continued attention as long as the case requires it, and
    that he should not leave his patient at a critical stage without giving reasonable
    notice or making suitable arrangements for the attendance of another physician,
    unless the relationship is terminated by dismissal or assent. Failure to observe
    that professional obligation is a culpable dereliction.23
    As this quote from the Johnson case implies, physicians can raise various defenses to claims of abandonment. If the patient dismisses the physician
    or agrees to the latter’s departure, or if the physician gives notice of withdrawal early enough for the patient to find another physician of equal ability,
    the claim will fail. Physicians have the right to limit their practice to a certain
    specialty or geographic area. A physician who is too ill to treat a patient or
    to find a substitute also has a valid defense to an abandonment claim. If a
    physician obtains a substitute physician, she has a valid defense so long as the
    substitute is qualified and the patient has enough time to find another if the
    substitute is unacceptable.
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    185
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    T h e Law of H e a l th c a re Ad mi n i stra ti o n
    Two California cases exemplify purposeful termination of the d
    ­ octor–
    patient relationship when a patient is uncooperative or disagreeable. In Payton v. Weaver, the patient was Brenda Payton, a 35-year-old indigent African
    American woman with end-stage renal disease and a history of drug and
    alcohol abuse. Her physician, Dr. Weaver, informed her that he would no
    longer continue to treat her because of her intensely uncooperative behavior,
    antisocial conduct, and refusal to follow instructions.24 Payton tried without
    success to find alternative treatment and petitioned the court to compel the
    doctor to continue treating her. The parties agreed that the physician would
    continue if she met reasonable conditions of cooperation. When she did
    not keep her part of the bargain, Dr. Weaver again notified her that he was
    withdrawing, and she again sought a court order. This time, the trial court
    found that she had violated the previous conditions and in the process had
    adversely affected other dialysis patients. The court also found that there was
    no emergency requiring treatment under a California statute,25 that the physician’s notice was sufficient to end the relationship, and that the doctor was
    not responsible for the fact that no other dialysis unit would accept her (see
    Legal Decision Point). The appellate court sustained the trial court decision,
    and Payton died pending appeal.26
    In another case, the court decided that a medical group and hospital
    must provide nonemergency care to a husband and wife. In Leach v. Drummond Medical Group, Inc., the plaintiffs,
    who were regular patients of the group
    Legal Decision Point
    practice, had written to a state agency
    commenting adversely on the performance
    of the group’s physicians.27 The practice
    End-stage renal disease (ESRD) is chronic kidney
    told the couple that, because they comfailure that has progressed to the point of requirplained to the medical board, “a proper
    ing kidney dialysis or transplant. An ESRD patient
    needs to undergo dialysis every three or four days
    physician–patient relationship” could not
    but lives a somewhat normal existence between
    be maintained and they would receive only
    treatments (subject to contributing conditions—
    30 days of care, after which they would be
    e.g., high blood pressure, diabetes).
    treated only for emergencies. The couple
    The Payton court stated that “there was no
    sued to compel continued treatment of
    emergency” in Payton’s case. Do you agree? Was
    their many health problems. (The pracshe a patient with a chronic disease, or was she
    a patient who was bound to have serial emergentice was the only medical group available
    cies? Instead of attending her appointments with
    within 100 miles.) The trial court denied
    Dr. Weaver as scheduled (which she did not), what
    relief, but the appellate court reversed the
    if she had been taken to the emergency departdecision and allowed the suit to continue.
    ment every few days in extremis and in need of
    The court decided that although one
    dialysis? If you were a hospital administrator, how
    physician may not be required to treat a
    would you advise the emergency department to
    deal with a patient such as Payton?
    patient she does not like, the group as a
    whole can be ordered to do so.28 Because
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    C hap ter 5: C ontrac ts and Intentional Tor ts
    the patients had not publicly criticized the doctor but only discreetly contacted the appropriate state agency, the court held that denying services to
    them was not justified.
    Some cases have extended the physician’s duty to the patient even after
    the doctor–patient relationship has ended. In Tresemer v. Barke, the physician
    had implanted an intrauterine device (IUD) in the plaintiff in 1972.29 The
    physician had seen the patient only on that one occasion. The plaintiff later
    suffered injury from the device (a Dalkon Shield) and filed suit against the
    physician. She alleged that he knew the risks of using the IUD but failed to
    warn her. The court held that the defendant had a duty to warn the plaintiff,
    noting that a physician is in the best position to alert a patient and that death
    or great bodily harm might be prevented as a result.30
    Liability for Breach of Contract
    In the typical physician–patient contract, the physician agrees (or implies
    agreement) to perform a service. Failure to perform the service with reasonable skill and care may give the patient a basis for filing a claim, not only for
    negligence but also for breach of contract. The previous paragraphs illustrate
    breach-of-contract cases based on abandonment; Alexandridis v. Jewett offers
    an example of a different kind of contractual breach.31
    In Alexandridis, two obstetricians agreed that one of them would
    personally deliver the patient’s second child. When the time came, however,
    the patient’s labor progressed rapidly and the obstetrician whose night it was
    to take call could not arrive at the hospital in time. The baby was delivered
    by a first-year resident, who performed an episiotomy during the process
    and damaged the patient’s anal sphincter as a result. Because the partners
    had contractually agreed to deliver the patient’s child and were more skilled
    than the resident in training who delivered the child, the court found that
    the partners would be liable for breach of contract if their greater skill would
    have protected the patient from injury.
    A physician who uses a procedure that is different from the one he
    promised to use may also be liable for breach of contract. In Stewart v. Rudner, the physician promised to arrange for an obstetrician to deliver a child by
    cesarean section.32 The patient, a 37-year-old woman who had suffered two
    stillbirths, was extremely eager to have a “sound, healthy baby.” While the
    patient was in labor, the physician told another obstetrician to “take care of
    this case” but did not tell him about the promise to perform a cesarean section. At the end of a lengthy labor, the baby was stillborn. The appellate court
    upheld a jury verdict for the patient on the ground that the physician breached
    his promise that a cesarean operation would be used to deliver the baby.
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    187
    188
    T h e Law of H e a l th c a re Ad mi n i stra ti o n
    Liability for Breach of Warranty
    Physicians are susceptible to liability not only if they promise (but fail) to
    perform a certain service but also especially if they promise that their treatment will yield a specific result but does not. A physician who guarantees a
    result gives the patient a contractual basis for a lawsuit if the treatment is not
    successful, even if it was performed skillfully. In Sullivan v. O’Conner, a professional entertainer thought her nose was too long.33 She contracted with a
    physician to have cosmetic surgery. The physician promised that the surgery
    would “enhance her beauty and improve her appearance.” The surgery was
    unsuccessful, however, and after two more operations the nose looked worse
    than before.
    Physicians do not guarantee results simply by agreeing to perform an
    operation, and drawing the line between an opinion and a guarantee is often
    difficult. The jury decided in this case, however, that there was a guarantee,
    and the appellate court affirmed the jury’s verdict for the plaintiff (see Legal
    Brief).
    Guilmet v. Campbell is well known in health law circles. The plaintiff
    had a bleeding ulcer and talked with a surgeon about a possible operation.
    He testified that the surgeon said:
    Once you have an operation it takes care of all your troubles. You can eat as you
    want to, you can drink as you want to, you can go as you please. Dr. Arena and I are
    specialists; there is nothing to it at all—it’s a very simple operation. You’ll be out
    of work three to four weeks at the most. There is no danger at all in this operation.
    After the operation you can throw away your pill box. In twenty years if you figure
    out what you spent for Maalox pills and doctor calls, you could buy an awful lot.
    Weigh [that cost] against an operation.34
    Legal Brief
    Sullivan v. O’Conner is a good example of the
    roles juries and appellate courts play in our legal
    system. The jury decides what the facts are, and
    the appellate court must accept those facts as true
    unless they are indisputably wrong.
    In some respects, this rule is analogous to the
    instant replay rule in professional sports. Unless
    the review shows that the official’s decision was
    clearly wrong, the call “on the field” stands.
    With this assurance, the plaintiff
    underwent the operation, during which
    his esophagus ruptured. As a result, his
    weight dropped from 170 to 88 pounds,
    and he developed hepatitis and numerous other complications. He sued the
    physician on both a negligence theory
    and a warranty (guarantee) theory. The
    jury decided that the physicians were
    not negligent but had breached their
    promise to cure. The Michigan Supreme
    Court affirmed the decision. In response
    to Guilmet, and presumably after some
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    C hap ter 5: C ontrac ts and Intentional Tor ts
    heavy lobbying by the medical profession, the state legislature later passed a
    statute requiring that any alleged promise or guarantee of a cure will be void
    unless it is in writing and signed by the physician alleged to have made it.35
    Intentional Torts
    Another basis for professional liability is intentional tort. A tort (Latin for
    “wrong”) is a civil wrong, not based on contract, that results in injury to
    another person or another person’s property or reputation.36 Torts are usually
    divided into three categories, each of which involves a different type of proof
    (see again exhibit 5.1):
    • Intentional tort, as the name implies, is a wrongful, premeditated
    action that causes injury.
    • Negligence is unintentional failure to do what a reasonably careful
    person would do under the circumstances.
    • Strict liability is incurred when a person commits a wrongful act that
    poses high risk of harm to others but did not do so intentionally or out
    of negligence.
    As noted earlier, most malpractice cases are based on negligence. Strict
    liability is uncommon in healthcare administration, but it surfaces in relation
    to defective drugs and medical devices.
    In healthcare, lawsuits based on intentional tort are less common
    than negligence cases, but they are important because they give plaintiffs
    some flexibility they would not have otherwise. There may also be multiple
    consequences for the healthcare provider who commits an intentional tort.
    Because intent is usually an essential element in proving both an intentional
    tort and a crime, many intentional torts, such as assault and battery, entail
    both criminal and civil liability. This point is significant because commission
    of a criminal act could result in revocation of one’s license to practice.
    Assault and Battery
    “Assault and battery” is actually two intentional torts. An assault is conduct
    that places a person in apprehension of being touched in a way that is insulting, provoking, or physically harmful. Battery is the actual touching (see
    Legal Brief). Both assault and battery are acts done without legal authority
    or permission. A move to kiss someone without consent is an assault, and the
    act of kissing without consent is both assault and battery. If the person were
    asleep when kissed, the perpetrator would not be committing assault because
    the person was not apprehensive. He would, however, be committing
    189
    tort
    A civil offense
    not founded on
    contract; a failure
    to conduct oneself
    in a manner
    considered proper
    under the given
    circumstances.
    intentional tort
    A category of torts
    that describes
    a civil wrong
    resulting from an
    intentional act
    on the part of the
    tortfeasor.
    tortfeasor
    A wrongdoer;
    a person who
    commits a tort.
    negligence
    Failure to comply
    with established
    standards for
    the protection of
    others; departure
    from the conduct
    expected of
    a reasonably
    prudent person
    acting under the
    same or similar
    circumstances.
    strict liability
    Automatic
    responsibility
    (without having to
    prove negligence)
    for damages
    as a result of
    possession or
    use of inherently
    dangerous
    equipment (e.g.,
    explosives), wild
    and poisonous
    animals, or assault
    weapons.
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    190
    T h e Law of H e a l th c a re Ad mi n i stra ti o n
    Legal Brief
    We accept the incidental touching that accompanies everyday life, but there are certain boundaries. For example, jostling others on a crowded
    subway train is not battery, but groping them is
    battery.
    Battery is sometimes characterized by the
    aphorism “Your right to swing your arm ends
    where my nose begins.” (But note: the swing
    that misses would be an assault if you see it
    coming.)
    informed consent
    Agreement to
    permit a medical
    procedure after
    disclosure of all
    relevant facts
    needed to make
    an intelligent
    decision.
    battery. (Obviously, kissing someone with
    permission is neither assault nor battery
    but is normally an enjoyable experience.)
    The question of consent to medical
    or surgical treatment is complex; chapter 11
    features a detailed discussion of the topic.
    For present purposes, assault and battery
    cases can be grouped into three categories:
    1. Those in which no consent for the
    touching was obtained
    2. Those in which the physician exceeded
    the scope of the consent given
    3. Those in which the consent was
    “uninformed”
    First are the intentional acts committed by a healthcare provider with no
    patient consent whatsoever. In Burton v. Leftwich, for example, a physician
    who was having trouble removing sutures from the toe of a four-year-old
    child (whose parents were apparently not much help) smacked the tot’s thigh
    several times with his open hand, leaving bruises that were visible for three
    weeks.37 An appellate court upheld a jury verdict for the plaintiffs on the
    grounds that the physician had committed battery.
    Compare that case with Mattocks v. Bell, in which a 23-month-old
    girl—whom a medical student was treating for a lacerated tongue—clamped
    her teeth on the student’s finger and would not let go.38 After a failed attempt
    to free his finger by forcing a tongue depressor into the child’s mouth, the
    student slapped her on the cheek. The parents lost the battery suit. The force
    the student used was judged to be reasonable under the circumstances.
    In the often-cited case Schloendorff v. Society of New York Hospital
    (discussed in more detail in chapter 11), a doctor was liable for battery after
    he operated on a patient who had consented only to an examination under
    anesthesia but not to an operation.39 In another case, a patient signed a
    consent form to have his kidney stones removed by a certain urologist. After
    the surgery, the patient discovered that the operation had been performed
    not by the urologist he requested but by two other members of the urologist’s medical group. He sued all three physicians for malpractice and failure
    to obtain informed consent. After the jury found for the defendants, the
    Supreme Court of New Jersey reversed the decision. It held that the plaintiff
    had claims for battery and malpractice and that even if no physical injury
    occurred, the defendants could be liable for mental anguish and perhaps even
    punitive damages.40 The court stated: “Even more private than the decision
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    C hap ter 5: C ontrac ts and Intentional Tor ts
    191
    who may touch one’s body is the decision who may cut it open and invade
    it with hands and instruments. Absent an emergency, patients have the right
    to determine not only whether surgery is to be performed on them, but also
    who shall perform it.”41
    The second and third categories of assault and battery cases will be discussed in more detail in chapter 11. For now it is sufficient to note that a case
    fitting either the second or third category can support a negligence theory
    in addition to the intentional tort of assault and battery. Negligence is the
    more common allegation, but liability on assault and battery is also possible.
    Mohr v. Williams is illustrative of this point.42 The plaintiff consented
    to an operation on her right ear. After she was anesthetized, the surgeon
    discovered that her left ear needed surgery more than the right one, so he
    operated on the left ear instead. On the ground, among others, that the surgeon’s conduct amounted to assault and battery, the appellate court upheld
    a trial court’s decision to let the case proceed.
    Although the surgeon in Mohr should have consulted the patient
    before operating on the other ear and probably should have discussed that
    possibility before beginning the surgery, a surgeon may be justified in operating beyond the scope of the original consent when an emergency makes
    obtaining the patient’s further consent impossible or dangerous. In Barnett
    v. Bachrach, a surgeon operating on a patient for an ectopic pregnancy (a
    pregnancy outside the uterus) discovered that the pregnancy was normal but
    that the patient had acute appendicitis.43 He removed the appendix and later
    sued the patient for not paying the medical bill. The patient defended the collection suit by alleging that the appendix was removed without her consent.
    In holding for the surgeon, the court noted that if he had not taken out the
    appendix, both the patient and child might have been endangered.
    These cases of extending the scope of surgery can be extremely complicated, and the outcome can depend on small factual differences. Generalizing about the proper course of action to take is difficult. For this reason,
    most hospital risk management departments have detailed surgical consent
    forms that anticipate all possible intraoperative complications and document
    the patient’s permission for the medical team to make prudential judgments
    should those complications arise during the surgery.
    Defamation
    Defamation is wrongful injury to another person’s reputation. Written
    defamation is libel, and oral defamation is slander.44 To be actionable, the
    defamatory statement must be “published”—that is, the defendant must have
    made the statement to a third party, not just to the plaintiff. In Shoemaker
    v. Friedberg,45 a physician wrote a letter to a patient, stating that she had a
    venereal disease. The patient showed the letter to two or three other women
    defamation
    The act of making
    untrue statements
    about another
    that damage
    the person’s
    reputation.
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    192
    T h e Law of H e a l th c a re Ad mi n i stra ti o n
    and later, in the presence of a friend, discussed the diagnosis with the physician. In suing him she alleged a breach of confidentiality, but the court held
    that no recovery should be allowed because the patient had herself made the
    diagnosis public. (This result is an example of what could be called the “it’s
    your own dumb fault” rule.)
    Physicians have several defenses available to them in defamation suits:
    • The truth of a statement is an absolute defense. Even a true statement,
    however, can lead to liability for invasion of privacy or breach of
    confidentiality. (See further discussion on this point later in the
    chapter and in the discussion of the Health Insurance Portability and
    Accountability Act [HIPAA] in chapter 9.)
    • Statements made in good faith to protect a private interest of the
    physician, the patient, or a third party are usually entitled to a qualified
    privilege. An example is a false but good-faith report of a sexually
    transmitted disease diagnosis to a state health department, as…

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