Hot Topics in Physician Regulatory Exposure: Recent Developments with the Texas State Board of Medical Examiners and in Federal Case

Governor Rick Perry responded to the media attention last year with a $200,000 grant to enable the Board to re-open a back-load of cases that had lain dormant for the last several years. Governor Perry also expected the Board to launch at least 150 new investigations by August 31, 2003. In addition to what has been by Governor Perry, Dr. Patrick plans to ask the legislature to give the Board more money and enhanced enforcement power. He has even proposed a controversial competency-testing program.

 The Board’s newfound toughness is not limited to an increased number of disciplinary investigations. According to Dr. Patrick, the Board is also administering a tougher brand of discipline. “Sitting in that little room, trying to make decisions about somebody's fate, we all get a little weak in the knees,” Dr. Patrick told reporters last October. “We're less weak-kneed than we used to be.”

During its February 5-7, 2004 Board meeting, the Board disciplined 34 physicians, including 9 license revocations and 5 suspensions.  Most suspensions, revocations and restrictions were assessed for drug and/or alcohol violations, or sexual relationships with patients.  The majority of reprimands and administrative fines were assessed for medical errors, improper record keeping or submitting false claims.  In extreme cases, licenses were revoked for soliciting “the murder for hire of a patient,” “possession of a firearm while under a restraining order,” and conviction of “several felonies related to plague research.”

Senate Bill 104 revised Section 164.059 of the Texas Occupation Code, which allows the Board to suspend a physician’s license without a hearing.  On February 13, 2004 the Board exercised its power by temporarily suspending his license of a Houston physician who it deemed was a threat to public welfare.  The length of his suspension is indefinite and will remain in effect pending full review of the case. Under the Rules, the Board must notify the physician of the suspension and schedule a hearing before a disciplinary panel ten days after providing said notice.  If the disciplinary panel affirms the suspension of the physician’s license, the matter is referred to an informal compliance meeting “as soon as practicable.”  The practical effect of such a suspension, is that the physician and his or her attorney are provided precious little time to respond to the Board’s allegations and, must respond to a Board that has already determined that the physician is a threat.  If the physician is unable to overturn the suspension at the initial hearing, he or she then faces an uphill battle in subsequent proceedings, combating an assumption of guilt every step of the way.

What to Expect When the Board Comes Calling

In recent years many of the federal and state agencies that regulate how physicians must practice have become increasingly vigilant in their investigative and enforcement activities.  To many physicians, increased regulatory scrutiny presents new problems, since it invariably means that an increased number of competent, honest physicians will find themselves the targets of administrative investigations or disciplinary actions.  These administrative agencies include the Department of Health and Human Services Office of Inspector General (“OIG”), the Texas State Board of Medical Examiners, as well as various state agencies under the direction of the Texas Attorney General, such as Medicaid Program Integrity and the Elder Law and Public Health Division.  The way in which a physician handles an administrative investigation – particularly during the initial stages of the investigation – can mean the difference between a closed investigation and an extended and expensive court battle.

If the investigation is conducted by the Texas State Board of Medical Examiners (Board), it usually begins with a notice requesting records or a response to specific allegations. Sometimes an investigation may also begin with a letter from a Medicare carrier requesting information. In either case, it is usually best to contact an attorney immediately and fax him or her the letter. Although most health care providers have done nothing intentionally wrong, the inquiry often throws them off balance or makes them angry. This can result in the exercise of poor judgment. For instance, many physicians ignore such letters or throw them away. Though this may seem hard to believe, it frequently happens. A reaction like this, of course, only makes matters worse; this problem is not going to just go away. In instances where agents actually show up at a provider’s office, the pressure felt by the physician is more intense. Providers who are convinced of their own innocence may “spill their guts.” In the other extreme, providers equally convinced they have done nothing wrong may be uncooperative, act overly defensive, or even hostile. This can lead to additional charges brought against the physician and increased suspicion. For instance, providers who do not let agents into their offices or who tell their employees not to speak to agents, face potential fines or imprisonment for obstruction of justice.

The Board initiates Disciplinary proceedings based on either complaints or reports of malpractice claims. Since 1996, the number of formal complaints against Texas physicians has nearly doubled. Complaints are typically made by patients, pharmacists, nurses, or other physicians. The most common complaints allege the non-therapeutic prescription of a drug or treatment, unprofessional conduct resulting from professional incompetence, or a mental or physical impairment.

 The Texas Occupational Code also grants the Board authority to investigate physicians who have had three or more malpractice claims filed against them within a five-year period. As the number of malpractice claims will likely decrease, it is difficult to know just how selective the Board will be in the cases it chooses to investigate. In some parts of Texas, half of the doctors have malpractice claims pending, and this appears to be a growing trend. Some believe, however, that the Board’s increased vigilance may help to alleviate the malpractice crisis and skyrocketing insurance rates by at least removing the few bad doctors who account for the small percentage of lawsuits that prove meritorious at trial.

  There is no doubt that organized medicine has always pursued the goal of removing physicians who practice bad medicine. The 2002 media blitz on the Board provides just the impetus needed to achieve that goal. This is a good thing. On the flip side, however, the Board’s increased disciplinary caseload means that more and more physicians will find themselves face-to-face with a politically charged Board when they are guilty of nothing more than the misfortune of having a disgruntled, overzealous patient file a groundless complaint. This is not a good thing.

How to Handle the Disciplinary Process

So how seriously should a physician take a disciplinary proceeding? That depends on how seriously the physician takes losing his license to practice medicine. This may seem obvious, but it is amazing how many physicians consult with an attorney after losing their license or being dangerously close to this point. Invariably they believe that they did nothing wrong and thought they had nothing to worry about. Often, by the time they consult with a lawyer, they are already at odds with the Board, which makes it all the more difficult for the lawyer to help them. 

They key to getting through an administrative investigation is to remain calm, professional, and polite, while at the same time acting prudently. The first thing a provider should do when dealing with government agents, is to identify the agent in charge and ask to read the documents authorizing the search. These documents will usually be a request for medical records, subpoena (generally from the OIG), or search warrant. A physician’s rights, and the rules the agents must follow, are different depending on what type of document authorizes the search. If the authorization is only a request for records or an agency subpoena, the agents are generally not entitled to immediate access or entry. On the other hand, if they present you with a valid search warrant issued by a judge or magistrate, they are entitled to immediate entry and access to your records.

 Most likely the physician’s first contact with the Board will be a request for records or information. A physician has the right to see the complaint that has been made against him and he should request a copy of the complaint if it is not provided.  Initially, the physician goes through an informal hearing in which a Board member, acting as prosecutor, will present to the Board the facts the staff reasonably believes it could prove by competent evidence or qualified witnesses. The physician has the right to be present and the right to present a defense that they reasonably believe could be proved by competent evidence or qualified witnesses. Although the hearing is called informal, it should not be taken lightly, and the physician does have the right to have counsel present.

 After the Board member and physician have completed their presentations, the Board representatives will either propose a disciplinary recommendation or recommend closing the case. Sadly, and perhaps tragically, some physicians actually choose to ignore their notice of the informal hearing and decide simply to wait, believing that the Board will see that they have not done anything wrong. This is very unfortunate, since often a strong presentation by the physician or the physician’s counsel can quickly resolve the complaint. Even if the Board does not close the case, there is an opportunity to reach an informal agreed settlement, stipulating certain conditions related to the complaint. For example, if the physician has been abusing drugs, the agreed settlement might require the physician to attend weekly narcotics anonymous meetings and undergo mandatory urine tests.  A word to the wise about Agreed Settlements, they should be taken seriously and their terms must be complied with in their entirety.  Regardless of the terms of the Settlement Agreement, reaching this type of agreement is a much more favorable outcome than having your license suspended.

If an Agreed Settlement is not reached, the Board will serve the physician with a formal complaint, and the physician will have to appear before an administrative law judge with the State Office of Administrative Hearings (SOAH). This is a real lawsuit and should be treated as such.  Therefore, if counsel was not obtained for the informal hearing, it would be a mistake not to obtain counsel now.  The formal complaint will allege specific violations of a statute or rules, and will also require the intense preparation of evidence, witnesses, and expert reports. Although there is potential to appeal the SOAH decision in district court, within thirty days of the final decision, reversals on appeal are rare.

The bottom line is that the new Texas State Board of Medical Examiners means business. A disciplinary proceeding brought by the Board is not to be taken lightly. This is not to say that discipline is the end of a medical career. Even when physicians have made mistakes, the Board is often willing to workout a solution if the physician takes the matter seriously and shows a willingness to work with the Board. On the other hand, even a minor act of malfeasance, e.g. ignoring the proceeding completely, can result in the termination of a physician’s license if the physician is disrespectful or does not take the matter seriously. The 2002 media hype over the Board’s ‘leniency’ in disciplining Texas physicians had a significant impact. In the coming year, physicians can expect one thing from the Texas State Board of Medical Examiners – increased scrutiny into their practice.

Conclusion

Due to political pressures arising from rising health care expenditures and malpractice lawsuits, physicians should expect greater scrutiny of their practice by governmental agencies.  While physicians were successful in achieving a cap on medical malpractice damages in Texas, the increased scrutiny of doctors has resulted in a stronger Board and more doctors finding themselves the target of investigations. Because investigations of the kind described in this article are usually unexpected, it is always a good idea to have procedures in place in advance. It is also a good idea for the physician to speak with their staff about how they should respond.  With the Board facing sunset review by the legislature in 2005, it is likely that physicians will continue to find themselves under more scrutiny by a better-funded and more powerful Board.

Case Study Examples

A.  Allegation of Alcohol Abuse  

1.  Factual Analysis  

            The Board accused a doctor of intemperate use of alcohol that could endanger a patient’s life.  A co-worker of the physician reported that the physician acted belligerently and came to work one morning smelling like alcohol.  The co-worker called the police, who asked the doctor to leave the premises.  Based on the complaint of the co-worker and the physician’s prior DWI, the Board opened an investigation.  See Notice Letter, Attachment 1.

The physician responded on her own to the complaint by sending the medical practice questionnaire and a rambling letter that was not helpful.  See Response, Attachment 2.

2.  Legal Course of Action

Faced with notification that she would have to attend an informal settlement conference, the physician hired counsel.  See Notice, Attachment 3.  The Board provided a summary of allegations, which included numerous attachments.  See Summary, Attachment 4.  The doctor was informed that   affidavits of former employees where the physician worked were taken.  See Affidavit, Attachment 5.  This is a typical investigatory procedure for the Board to obtain affidavits of co-workers or others involved.  In preparing the defense for the doctor a request was made of all complaints involving the license.  See Request, Attachment 6.  A formal response was also prepared, which included affidavits of witnesses and character witnesses.  Expert testimony was also used.  See Formal Response, Attachment 7.  The additional response included the expert report of Dr. Simon Whitney who holds both a medical and law license.  See Report, Attachment 8.  

3.  Outcome

            Based on the testimony of the doctor’s witnesses at the informal settlement conference and the written material submitted, the investigation was closed.  See Notice, Attachment 9.

4.  Lesson Learned

            It is hoped that the physician learned that even the allegation of intemperate alcohol use can have dire consequences.  These allegations coupled with the doctor’s attempt to handle the complaint herself may have led to disastrous consequences.  The use of extensive testing by an independent source proved that the doctor did not have an alcohol problem.

B.  Allegation of Sexual Abuse

1.  Factual Analysis  

            A physician engaged in a sexual relationship with a patient.  The patient was a nurse who worked at the hospital with the doctor and to whom the doctor had prescribed medication.  By prescribing medication to her, the doctor triggered a doctor/patient relationship that made their sexual relationship a violation of the Board’s rules. 

            In the summer of 2000 the doctor received notice from the Texas Board of Medical Examiners that a complaint had been filed against him.  The husband of the nurse was probably the one who complained about the doctor.  He was accused of engaging in unprofessional conduct and prescribing a drug that is non-therapeutic in the manner the drug is prescribed. The prescription for the nurse was not properly documented.

            The physician handled the initial complaint without assistance of counsel and entered into an agreed order that required him to perform certain activities in order to remain in compliance.  The Order was poorly written and did not specify it’s duration.  See Order, Attachment 10. 

2.  Legal Course of Action

The physician believed the order was effective for one year when it was actually indefinite.  Once it became clear the physician was no longer complying with the order, the Board ordered him to explain his reasons for non-compliance.  See Allegations of Agreed Order Violations, Attachment 11.  When the probation/show compliance hearing was set, the physician hired The Bennett Law Firm to represent him.  A brief was prepared to respond to the allegations.  See Show Compliance Brief, Attachment 12. 

3.  Outcome

            Based on the presentation at the hearing a new Order was drafted, which included the following statement:  “However, the non-compliance resulted from a reasonable misunderstanding in the terms of the Order.  Specifically, the Respondent reasonably misunderstood that he had to petition the termination of the Order.”  See Revised Agreed Order, Attachment 13.

4.  Lessons to be Learned

            The physician should never have entered into an Agreed Order without counsel.  By aggressive action at the probation/revocation hearing, counsel was able to keep the doctor’s license from being revoked and was able to negotiate an extension of the Agreed Order for one year.  After the one-year time period, the physician may re-apply for termination of the Order. 

C.  Medical Peer Review

1.  Factual Analysis

            Dr. John Doe was a surgeon with privileges at Harris County Hospital. He had a close relationship with an OR nurse, Nurse Jane Darling. Dr. Doe was very impressed by Nurse Darling’s work in the OR. He thought they were good friends; they would talk after leaving the OR, she would greet him whenever she saw him in the parking lot and they even had lunch on several occasions. Additionally, they would discuss their personal lives: he would tell her about his family and she would discuss her pending divorce. He would hug her or lightly kiss her forehead to say goodbye to her. Nurse Darling never complained to Dr. Doe that she did not enjoy his friendship and that she felt uncomfortable by their relationship and the way he touched her. On her birthday, Dr. Doe gave Nurse Darling a card signed by himself and his wife. Later that day he arranged to give Nurse Darling her birthday present – a bottle of wine and a pendant. He invited her to share some wine with him at the hotel next to the hospital to celebrate her birthday before he drove home. Nurse Darling declined. The next day, Nurse Darling reported Dr. Doe to the Human Resources Department at the hospital. She wrote a complaint that said that the way Dr. Doe treated her made her very uncomfortable. She complained about his hugs and kisses on the forehead, the amount of time he would talk to her, and the birthday gifts he gave her. She also said that she felt that this relationship threatened her job.  See attached Exhibit 14. Pursuant to hospital bylaws, an Ad Hoc Committee meets to investigate Nurse Darling’s complaints. They issue a report recommending that Dr. Doe lose his privileges at the hospital. This report is sent to the Medical Executive Committee. Dr. Doe is suspended without pay.

The Medical Executive Committee meets and allows Dr. Doe to appear before them.  See attached Exhibit 15. They too decide that he has failed to meet the qualifications required for a physician to be awarded privileges at Harris County Hospital. The Medical Executive Committee sends a letter to the CEO of the hospital recommending the revocation of Dr. Doe’s privileges. A letter is sent to Dr. Doe informing him of his right to a hearing under the by laws.  See attached Exhibit 16.  He is notified of the time, date and location of the hearing, the witnesses that will be called, his right to counsel, his right to call his own witnesses and cross-examine the hospital’s witnesses, and his right to present evidence and rebut the hospital’s evidence.  See attached Exhibit 17. Dr. Doe sends a letter to the hospital informing them that he will attend the hearing. In the letter he also states that Nurse Darling exaggerated her allegations and at no time ever indicated to him that she was uncomfortable with her relationship. He also alleges that the hospital is discriminating against him because of his ethnicity. Dr. Doe then decides to hire an attorney to represent him at the hearing.

2.  Legal Course of Action

            Dr. Doe’s attorney attempts to negotiate a resolution for him that would not involve a report being made by Harris County Hospital to the National Practitioner Data Bank. His early negotiations are unsuccessful.  See attached Exhibit 18.

Dr. Doe’s attorney, in preparation for the hearing, refers him to a psychiatrist for an evaluation to determine whether Dr. Doe may have a medial condition that is causing him to misinterpret or misunderstand his relationship with Nurse Darling. The psychiatrist who evaluates Dr. Doe concludes that he is not suffering from any type of medical condition and that he is not delusional. The psychiatrist also notes that Dr. Doe seems genuinely puzzled as to Nurse Darling’s allegations.  See attached Exhibit 19.

Dr. Doe’s attorney also calls other physicians with whom Dr. Doe works on a daily basis and asks them to write letters in support of Dr. Doe. Four physicians who have worked in the OR with both Dr. Doe and Nurse Darling write letters in support of Dr. Doe. The letters all state that none of the physicians has ever seen Dr. Doe behave in an inappropriate manner.

A hearing examiner is appointed and the hearing is held. Nurse Darling is not present to testify. The hospital presents testimony from other nurses who worked with Nurse Darling. Dr. Doe again denies any inappropriate conduct. The hearing examiner makes a ruling to revoke Dr. Doe’s medical privileges and the Medical Executive Committee upholds that ruling. They send him a letter notifying him of the revocation of his privileges and his right to an appellate review.

3.  Outcome

            Dr. Doe is given the opportunity to resign from the hospital. He writes a letter of resignation and makes his resignation effective the day of the hearing. The hospital accepts his resignation and because it was made effective before the hearing, the decision of the hearing is moot and the hospital has nothing to report to the National Practitioner’s Data Bank. Dr. Doe is give back pay by the hospital so that he is paid through the date of his resignation.  See attached Exhibit 20.

4.  Lessons to be Learned

            Once allegations of sexual harassment have been made against a physician the chances of maintaining privileges at a hospital becomes extremely slim.  Although, the Medical Executive Committee may make allowances for cultural differences and misunderstandings, constant physical touching and overtures are never appropriate in the workplace.

D.  Peer Review/Legal Malpractice

1.  Factual Analysis

Dr. Leslie Marbles is an OB/GYN with privileges at McAllen Medical Center. She is a very serious physician and is very involved with her own clinic. Because of this, many of the other physicians and hospital staff do not know her very well. She has had ongoing problems with a nurse who works in her office. This nurse, Nurse Davis, has many personal problems, including drug use, and she repeatedly discusses these problems at work. Nurse Davis also has a difficult time getting along with the other nurses and office staff employed by Dr. Marbles. After an extremely inappropriate outburst, Dr. Marbles decides to terminate Nurse Davis’ employment. Nurse Davis then secures a job with Dr. Smith, the head of labor and delivery at McAllen.

Dr. Marbles has also had some difficulty working with the labor and delivery nurses at the hospital. After one difficult delivery where she thought the nurses mishandled the patient’s care, she reported two nurses to their supervisor. Ever since that incident those nurses have been very difficult for Dr. Marbles to work with and they have begun a gossip campaign about the way in which she handles her office.

A few months later, one of Dr. Marble’s patients has a ruptured uterus, which requires an emergency c-section. After the surgery, the infant is in distress and has a grim prognosis. One month later the infant dies. The hospital’s Quality Review Committee investigates this case as part of their normal procedure and in anticipation of a possible lawsuit. Dr. Marbles, when reviewing the patient’s chart notices that the nurses’ notes have been altered. She adds an addendum to the chart explaining this. The Quality Review Committee decides that Dr. Marbles acted within the standard of care when treating her patient. They also, however, send her a letter admonishing her for placing the addendum in the patient’s chart.

The next week Dr. Marbles receives a letter notifying her that her privileges have been suspended pending the outcome of a peer review hearing. The letter contains two allegations: 1) that she had administered a labor inducing-drug without the knowledge and consent of several patients and 2) that she had failed to report pending litigation on her application for renewal of hospital privileges.  After she receives this letter she demands to have hospital administration search her office to look for the drug. Administration refuses, but she does have the McAllen police do a search, which is witnessed by another physician at McAllen.

Dr. Marbles is then sent a letter inviting her to attend a meeting of the Medical Executive Committee. She hires a lawyer to represent her at this meeting.

2.  Legal Course of Action

When the meeting commences, Dr. Marbles’ attorney is allowed to make a statement. There are no other witnesses present. The Committee decides to uphold the suspension. After this, Dr. Marbles is notified of her right to a peer review hearing pursuant to McAllen’s by laws.

The hearing is held a few months later. Dr. Marbles does not find out where the accusations stem from until her peer review hearing. At this time she learns that the accusation of using a labor-inducing drug with the knowledge of several patients was initiated by Nurse Davis. During the hearing, the two labor and delivery nurses, with whom Dr. Marbles had previously had problems with at the hospital, gave testimony that on two separate occasions, while working the night shift, they found the remains of a labor inducing drug in Dr. Marbles’ patient.  However, no witness could identify any particular patient by name, no dates could be given and no charts were produced.  The nurses admitted that they did not note in the patients’ charges that they allegedly found remains of the labor-inducing drug upon examination of the patients’ cervixes, nor did they otherwise report their alleged findings at the time of the alleged occurrences. 

As to the reporting of litigation issue, Dr. Marbles was one of several resident interns represented in litigation that arose from an incident during her residency. She had been instructed by her former attorney not to report this suit until he was sure that she would actually be named as a defendant because in most cases residents are dropped from the lawsuit.  A settlement was eventually worked out because of the time and economic costs of trial preparation and trial for the now practicing doctors scattered across the U.S.  The settlement was paid by the hospital in question, but a small portion of the out-of-court settlement was attributed to each of the resident doctors.  Upon settlement, the attorney for the resident doctors wrote a “To Whom It May Concern” letter concerning the litigation and the settlement outcome.  This letter was then forward by Dr. Marbles to the McAllen hospital, at which she currently had privileges.

The McAllen hospital was represented by the same law firm that represented Dr. Marbles in the malpractice suit when she was a resident.  However, a different attorney with the firm handled the McAllen hospital business.  Approximately 6 months after Dr. Marbles had forwarded the “To Whom It May Concern” to the credentialing department of the hospital, Dr. Marbles was informed of the Peer Review proceedings, during which the attorney from that same law firm continued representing the hospital.

            During the peer review process there was never an actual finding that Dr. Marbles had indeed used a labor-inducing drug or that Dr. Marbles had failed to obtain patient consent for use of the drug.  However, Dr. Marbles was found to be “lacking” and culpable, and she lost her privileges at the hospital, which also caused her to lose patients. Dr. Marbles appealed this decision and the Appellate Review Committee upheld the decision of the Medical Executive Committee.

McAllen Hospital then sent a report to the National Practitioner’s Data Bank detailing the outcome of the peer review process and reporting Dr. Marbles’ loss of privileges. This report causes her to be dropped from many provider networks and to lose her privileges at other hospitals. In turn, she is no longer able to care for many of her patients. After this happens, Dr. Marbles decides to pursue legal action against the hospital and their attorney.

3.  Outcome

Dr. Marbles files a legal malpractice lawsuit against the hospital’s attorney.  She also files a suit against the McAllen hospital for libel and slander (NPDB reports saying she improperly used a labor-inducing drug), for business disparagement and for economic damages, as well as pain and suffering due to stress and stress-aggravated medical condition, causing her to lose “time” as opposed to taking pain medication while continuing his practice. 

Her suit alleges that the hospital failed to meet the standards enumerated in the HCQIA and the TMA. She feels that the hospital’s witnesses had malicious motives for testifying against her and that the hospital knew about these motives and disregarded that knowledge when investigating the allegations. Her lawsuits are still pending, but have proven difficult.

4.  Lessons to be Learned

            It is very difficult to file a lawsuit based on what occurred during a peer review hearing because of the immunity that is afforded under the law to the participants in that proceeding. To date, only one physician in the country has been remotely successful in pursuing this type of suit.

E.  Medicaid Fraud

1.  Factual Analysis

Dr. McAllen ran a successful pain management clinic in South Texas.  Among his employees were two anesthesiologists whom he had hired shortly after they were admitted to practice.  After a few years of practicing with Dr. McAllen, the anesthesiologists became discontent with their practice and decided to leave Dr. McAllen’s pain management clinic and start their own practice in the same town.

            Once the anesthesiologists left Dr. McAllen’s clinic and started their own pain management clinic, they filed a lawsuit against Dr. McAllen under the Federal False Claims Act.   Under the Act, employees or former employees of a business may sue on behalf of the government in cases were the defendant is allege to have defrauded the government.  In these “whistleblower” or “qui tam” cases, the individuals who filed the suit may receive as much as 25% of the government’s recovery.  The anesthesiologists alleged in their suit that Dr. McAllen had improperly billed numerous procedures to the Medicare and Medicaid systems, resulting in millions of dollars in losses to the government.

            The United States chose to intervene in the case and became the plaintiff.  Subsequently, the State of Texas joined the case as an intervenor.  Dr. McAllen was faced with defending his practice against the combined forces of the state and federal governments.

Upon entering the case, the United States immediately confiscated the records of Dr. McAllen.  While the government alleged that Dr. McAllen had conspired to defraud the government through numerous schemes, it would not provide him access to his own records in order that he could defend himself.  Indeed, the government’s original complaint did not cite one specific instance of fraud, instead it merely alleged, in the broadest of terms, that Dr. McAllen defrauded the government.

2.  Legal Course of Action

Dr. McAllen vehemently denied the allegations him and believed that the original case was brought by his former employees in order to harass him and improve their practices at the cost of destroying his.  All of the government’s evidence to support their claim came from the former employees of Dr. McAllen.

            Dr. McAllen’s attorneys immediately set out to secure copies of the records seized by the government.  As with other tasks in the case, the government’s obstinacy and disinterest required that the attorneys expend great effort to achieve results.  When copies of the records were finally received from the government, almost 30,000 pages, they were disheveled and out of order.  Meanwhile, McAllen’s attorneys filed motions to force the government to specifically identify instances of frauds that formed the basis of their claims.  The government finally produced a list of 50 transactions that it alleged were examples of fraudulent billing.  The government claimed it lost a whopping $600 on those claims.

An audit was done of he claims the government used as the basis for its claims and a statistical sampling of other claims showed that while some billing codes were improper for some claims, the financial impact of the mislabeling was a net benefit to the government.  A meeting was arranged between the government’s coding expert and Dr. McAllen’s coding expert to discuss the claims.  The result of the meetings has been a significant drop in the government’s zeal to pursue this case.

3.  Outcome and Lessons to be Learned

This case is ongoing and settlement discussions are taking place.  In cases such as this, it is important to understand that the government’s sole source of information is usually a disgruntled former employee who stands to profit handsomely from any recovery.  In this case, the government started out stating that they foresaw Dr. McAllen forfeiting large sums of money.  As the case has progressed it has become clear that any miscoding was unintentional and has not resulted in the losses the government initially claimed.  In many of these cases, however, the defendant is essentially battling the presumption that he is guilty and must expend time, energy and money to prove his innocence.  This case has been no exception. It is important to understand that part of the government’s strategy in cases like this is to intimidate defendants into an early settlement.  If a defendant can weather the early part of the case, he will be in a better negotiating position down the road.

F.  Sexual Harassment

1.  Factual Analysis

Dr. Ann Smith began the first day of her residency at ABC Hospital during the first week of July. The director of her program, Dr. Tom Jones took an immediate interest in her. After their first meeting, Dr. Smith goes into a supply closet. Dr. Jones follows her into the closet, which is dimly lit, and massages her neck and shoulder. Dr. Smith is upset by this, but tries to brush it off since it is only her first day at the hospital. However, each time Dr. Smith comes into contact with Dr. Jones he finds an opportunity to continue his inappropriate sexual advances towards her. He caresses her hair and face, massages her neck and back, rubs her arms, and gropes her buttocks and breasts. His advances are not limited to physical contact. Instead, he makes many verbal remarks of a sexual nature. When Dr. Smith is learning how to circumcise an infant, Dr. Jones tells her to rub and caress the infant’s penis because men enjoy this type of stimulation. He goes on to say that this type of touching will make her very popular. Dr. Smith is told by a senior resident that Dr. Jones has a reputation for singling out one first year resident to sexually harass each year.

The physical advances by Dr. Jones never stop and begin to disrupt Dr. Smith’s work environment; rather than a learning environment; the hospital has now become a predatory environment. She is not able to concentrate on her training, as fully as she would like when Dr. Jones is present because she feels the need to protect herself from him. He continues cornering her in empty exam rooms, supply closets, and even his office. Each time he touches her in inappropriate and sexual ways, rubbing himself up against her, and making comments about her body. Dr. Jones relentless harassment prompts Dr. Smith to report this behavior to her advisor. As a result, her advisor, Dr. Thompson, distributes a copy of the sexual harassment policy to all members of the residency program. Later that same afternoon Dr. Jones approaches Dr. Smith in a supply closet and gropes her buttocks while pressing himself up against her. Dr. Smith, realizing that Dr. Jones’ behavior is not going to stop, reports this harassment to XWY Staffing, the company that staffs the residency program and employs Dr. Smith. She is assured by Mr. Johnson, at XWY, that her allegations will be investigated, that her name will not be used, and that she will not suffer any retaliation because of her report. The next day, she is informed by another physician, Dr. Hanson, that she is no longer welcome in the residency program at ABC. She meets with her advisor, Dr. Thompson, to tell him she is looking for other programs and requests that he speak to Dr. Jones about a letter of recommendation that she can use to apply to other programs. After this meeting Dr. Jones refuses to communicate with Dr. Smith. Any time he needs to provide her with information about the program he has his assistant call Dr. Smith. He also attempts to “freeze” Dr. Smith out of the program by talking to other physicians and residents and have them display hostile behavior towards Dr. Smith. The following week XWY holds a mandatory presentation regarding their sexual harassment policy. All faculty and residents are required to attend. Dr. Jones is absent and Dr. Smith sees another physician sign his name to the attendance sheet. Two weeks later, Dr. Smith receives a copy of the letter of recommendation written by Dr. Jones. It is extremely neutral and does not include any of the position feedback she has received in her evaluations by the faculty and senior residents. Additionally, she received a certified letter fro Dr. Jones alerting her to the fact that she has violated some of her job policies – namely that she left her pager in the break room one night and did not pick it up. The night in question was the night Dr. Smith broke her ankle, and Dr. Jones was aware of the fact that Dr. Smith would be unable to pick up her pager. After receiving this letter, Dr. Smith believes that she is being retaliation against for reporting the harassment and she looks for an attorney.

2.  Legal Course of Action

After an initial meeting with Dr. Smith, it becomes clear that she is seeking a resolution to this matter that would do the least amount of damage to her career. She does not wish to pursue litigation and would like to resolve this matter as quickly and as quietly as possible. Dr. Smith is seeking to recover a year of her salary, as a physician because she believes this experience will cause her to start over in another residency program. As a result, her attorney drafts a demand letter to XWY detailing some of the allegations of Dr. Jones’ conduct and outlining how Dr. Smith would like to resolve this matter. The letter includes a monetary demand for $100,000, a demand for attorneys’ fees, and a confidentiality provision. Attached to the letter is an EEOC Complaint, which details the harassment by Dr. Jones, as well as an Original Petition that outlines the entire lawsuit against XWY and Dr. Jones. The Petition alleges sexual harassment, as well as explains the hostile work environment that was created by Dr. Jones, and lists claims of retaliation. The demand letter prompts XWY to request that the parties mediate the dispute. At the mediation, the attorney for Dr. Jones and XWY denies all of Dr. Smith’s allegations and questions her mental stability. Eventually, after working for over 9 hours to reach a resolution, a settlement agreement is drafted and signed.

3.  Outcome

Dr. Smith is paid the remainder of her salary for the year and is allowed to keep her benefits. She is provided with a glowing letter of recommendation. She is also reimbursed for her attorneys’ fees and the costs of mediation. Her monetary settlement is approximately $60,000.  In addition to the money paid, XWY offers to work with her to continue her residency program in an alternative manner so that she will not have to start another program as a first year resident. In return, Dr. Smith signs a confidentiality agreement and waives her right to sue Dr. Jones, XWY, and the hospital.

4.  Lessons to be Learned

In this case, negotiation and mediation with XWY and Dr. Jones were the best course of action to meet with Dr. Smith’s wishes. If Dr. Smith had been interested in pursuing litigation this case would most likely have had a different outcome. An EEOC complaint would have been filed and then, once the EEOC provided Dr. Smith with a right to sue letter, a lawsuit would have been filed against Dr. Jones, XWY and the hospital. If a lawsuit were filed, this matter would have taken a much longer time to resolve and would have been more public. Additionally, if the case went to trial, there would be no guarantee that Dr. Smith would have been awarded the same type of settlement.