Presentation for the NC Society of Health Care Attorneys 2014 Healh Law Case Update - Includes recent developments in Medical Malpractice, Certificate of Need, Licensing agencies and boards, Affordable Care Act (ObamaCare), and other cases of note

1. 2014 Health Law
Case Update
Presented by:
S. Todd Hemphill
Attorney at Law
POYNER SPRUILL LLP
Raleigh, North Carolina
September 19, 2014

2. Recent Developments in…
Medical
Malpractice
2

3. Goodman v. Living Centers-Southeast, ___
N.C. App. ___, 759 S.E.2d 676 (17 June 2014)
• Plaintiff , decedent’s Administrator, alleged
that in Sept. 2008, nursing home staff
improperly placed I.V. pole next to
decedent’s bed.
• Pole fell on decedent, causing serious
injury.
• After hospital treatment, decedent
transferred to a different nursing home,
where he died in October 2008.
3

4. Goodman .v Living Centers-Southeast
• Plaintiff filed lawsuit Oct. 2010, dismissed Jan.
2012, re-filed Jan. 2013.
• Defendant moved to dismiss on statute of
repose for med mal actions under G.S. 1-
15(c).
“[I]n no event shall an action be commenced more
than four years from the last act of the defendant
giving rise to the cause of action[.]”
• Superior Court dismissed, and Plaintiff
appealed.
4

5. Goodman .v Living Centers-Southeast
• Court of Appeals reversed.
• Claim was for ordinary negligence, not
medical malpractice.
 So statute of repose did not apply.
• Defendants’ actions were manual in nature.
• Key facts were that Plaintiff:
 Never actually alleged med mal; and
 Did not obtain an expert certification under Rule
9(j).
5

6. Wiggins v. East Carolina Health-Chowan,
760 SE2d 323 (1 July 2014)
• Plaintiff Wiggins admitted to hospital for
labor and delivery.
• Labor induced Friday night, paused during
the night, and restarted Saturday morning.
• Vaginal exam at 1 p.m. revealed umbilical
cord prolapse.
• Attending physician called and emergency
c-section performed.
6

7. Wiggins v. East Carolina Health-Chowan
• Plaintiff filed suit, alleging that negligent delivery
cause brain damage to child.
• During the trial, several expert witnesses testified
that an umbilical cord prolapse is not common and
qualified as an emergency.
• All of the medical providers testified that Wiggins
showed no risk factors for an umbilical cord
prolapse.
• During the charge conference, the trial court
granted Chowan’s request to give an instruction to
the jury regarding the sudden emergency doctrine.
7

8. Wiggins v. East Carolina Health-Chowan
• “A person who, through no negligence of his
own, is suddenly and unexpectedly confronted
with imminent danger to himself and others,
whether actual or apparent, is not required to
use the same judgment that would be required
if there were more time to make a decision.”
• The person’s duty is to use that degree of
care which a reasonable and prudent
person would use under the same or similar
circumstances.

9. Wiggins v. East Carolina Health-Chowan
• First case in NC of sudden emergency doctrine in medical
negligence setting.
• Court concluded that healthcare providers are held to a
higher standard than lay people.
• Problem with judge’s instruction. The charge instructed the
jury to simultaneously apply conflicting standards:
 the “standards of practice among members of the same healthcare
profession with similar training and experience situated in the
same or similar communities at the time the health care is
rendered.”
 the duty to “use that degree of care which a reasonable and
prudent person would use under the same or similar
circumstances.”

10. Recent Developments in…
Certificate
of Need
10

11. CaroMont Health, Inc. v. CON Section, 751
S.E.2d 244 (3 Dec. 2013)
• GGC filed CON application in 2011 to
develop outpatient GI-endoscopy ASC in
Gaston County.
• Application approved, and CaroMont
appealed.
• At close of Petitioners’ evidence, the ALJ
issued Recommended Decision
dismissing the case on the merits and for
lack of substantial prejudice.
11

12. CaroMont Health, Inc. v. CON Section
• The Final Agency Decision-maker upheld
the ALJ’s Recommended Decision.
• Following prior holding in Parkway
Urology, Court held that CaroMont’s
competitor status did not demonstrate
substantial prejudice.
• But the Court went further here.
12

13. CaroMont Health, Inc. v. CON Section
• The Court in Parkway Urology found that Rex
Hospital had just relied on its status as a
competitor, and had not shown specific harm.
• Here, Court acknowledged presentation of
evidence of competitive harm, but that wasn’t
enough.
• Slip. Op. p. 16 – “Here, although CaroMont
presented evidence of specific harm, the harm
resulted solely from the CON's introduction of
additional competition.”

14. CaroMont Health v. CON Section
• Court then backtracked a little, finding:
 CaroMont’s evidence of harm speculative, and
 CaroMont failed to show that the harm would be
the result of the award of the CON.
• “I[t] is not enough that the non-applicant's
witness simply attempts to quantify the
projected harm. The evidence must both be
persuasive and demonstrate that the harm was
caused by the CON approval.” Slip Op. at 28.
14

15. Surgical Care Affiliates, LLC v. CON
Section, (19 Aug. 2014)
• WakeMed’s CON application to relocate two
existing specialty ASC ORs from Southern Eye
Opthalmic Surgery Center to WakeMed Raleigh
campus as shared ORs was approved by the CON
Section.
• Competitors SCA and Blue Ridge filed a Petition for
Contested Case Hearing challenging the approval.
• ALJ issued a Final Decision upholding CON Section
decision, and SCA/Blue Ridge appealed.
15

16. Surgical Care Affiliates, LLC v. CON Section
Substantial Prejudice as a Matter of Law
1. Because ALJ ignored prior summary
judgment determination; and
2. Because Agency failed to follow its
own rules for conversion to
multispecialty ASC in approving
WakeMed application
16

17. Surgical Care Affiliates, LLC v. CON Section
1. ALJ had ruled on summary judgment that there was
enough evidence on the record to show substantial
prejudice and denied summary judgment.
• Court of Appeals said that ALJ’s Order taken out of
context. Other language in SJ Order said ALJ wasn’t
deciding case on the merits.
• Reliance on Hospice at Greensboro case inapplicable,
because that case did not involve CON application review.

18. Surgical Care Affiliates, LLC v. CON Section
2. Agency failure to follow rules:
• Court of Appeals said that this might constitute a
substantive argument on the merits;
• Discussed prior State Personnel Commission case, but
distinguished because case decided before substantial
prejudice requirement added to the APA.
• APA now requires petitioner to show both Agency error
and substantial prejudice;
• Therefore, even if there had been a failure to follow
Agency rules, not enough to show substantial prejudice to
SCA and Blue Ridge.

19. Surgical Care Affiliates, LLC v. CON Section
Substantial Prejudice by Competitive Disadvantage
• Petitioners argued that because the Southern Eye ORs
were underutilized, they were not considered in the SMFP
inventory for determination of need.
• But at the WakeMed Raleigh campus, they would, and that
such a change constituted substantial prejudice, which
would reduce the need for ORs in Wake County.
• Petitioners argued that reduced need in the SMFP
constituted substantial prejudice.

20. Surgical Care Affiliates, LLC v. CON Section
• Court of Appeals rejected this argument.
• Relied on Parkway Urology ruling that
substantial prejudice required showing of
concrete, actual and particularized harm.
• Petitioners could not show that they
definitely plan to expand business, or would
apply if more ORs were added to future
SMFPs.

21. Recent Developments in…
Licensing
Agencies
and Boards
21

22. North Carolina Board of Dental Examiners
v. FTC, 717 F.3d 359 (4th Cir., 31 May 2013), cert.
granted, no. 13-534 (Supreme Court, 3 Mar. 2014 )
• NC Dental Board had been directing non-dentists to stop
providing teeth whitening services or products, claiming a
violation of NC Dental Practice Act.
• FTC found, and 4th Circuit Ct. of Appeals affirmed, that Board’s
notice not considered State action immune from suit
• Supreme Court granted certiorari, and case will be heard on
October 14.
• This case gives the Supreme Court an opportunity to decide
whether these state boards established by the legislature but
appointed by private actors, are state or private actors.
22

23. Recent Developments in…
The
Affordable
Care Act
23

24. ACA Exchanges
• Section 36B of the ACA makes tax credits available as a
subsidy to people who purchase health insurance through
Exchanges that are “established by the State under
section 1311” of the Act.
• Where states don’t establish Exchanges, section 1321 of
the Act gives the federal government authority to do so for
them.
• Currently, 14 state (plus D.C.) Exchanges, and 36 federal
Exchanges.
• ACA also requires a penalty who do not obtain coverage.

25. IRS Rules
• The IRS enacted rules interpreting Section 36B of the
ACA to apply to both state and federal Exchanges.
• Two cases, from the D.C. Circuit and the 4th Circuit,
challenged IRS rules.
• Plaintiffs, groups of individuals and employers
residing in states which did not establish Exchanges,
contended that they were not subject to the subsidies
and penalties of Section 36B of the ACA.

26. Why this matters
• The tax credits offered through the Exchanges are the
mechanism by which millions of Americans are projected
to be able to obtain affordable health insurance.
• Without the credits, people in states with federal
Exchanges:
 Would not be able to afford health insurance,
and
 Would have to pay a penalty for not obtaining health
insurance.

27. Halbig v. Burwell, __ F3d __ (D.C. Cir. 22 July
2014), judgment vacated, rehearing en banc granted
(4 Sept. 2014)
• D.C. Circuit panel held 2-1 that:
 (A) the unambiguous language of the ACA shows that
a federal Exchange is not an Exchange under Section
36B of the Act, and therefore the IRS is not authorized
to provide tax credits for insurance purchased on
federal Exchanges;
 (B) the Appellants’ reading of the Section 36B would
not render other parts of the ACA absurd;
 (C) legislative history does not clearly support the
government’s position.
27

28. Halbig v. Burwell
• Language of the Act – Court concluded that Section 36B
limited subsidies to Exchanges created under Section
1311, that is, only state Exchanges.
• Court rejected government’s argument on absurd results.
Accepted plaintiff’s alternative reasons why Congress may
have intended to incorporate these conflicts.
• Found legislative history was not sufficiently clear to
conclude Congress intended a different result.
28

29. Halbig v. Burwell
• Dissent took a different approach.
 Relied on Supreme Court’s 1984 Chevron v.
NRDC ruling, deferring to agency construction of
statute, “so long as it is permissible.”
“Simply put, § 36B(b) interpreted as
Appellants urge would function as a poison
pill to the insurance markets in the States
that did not elect to create their own
Exchanges. This surely is not what Congress
intended.”
29

30. King v. Burwell, __ F3d __ (4th Cir. 22 July 2014)
• Substantive analysis was similar to the
dissent’s analysis in Halbig.
• However the Court focused more on the
Chevron two-step analysis of a challenge to
an agency’s construction of a statute:
1. A court first looks to the “plain meaning” of the
statute to determine if the regulation responds
to it. If it does, that is the end of the inquiry
and the regulation stands.
30

31. King v. Burwell
2. If the statute is susceptible to multiple
reasonable interpretations, the court then
moves to Chevron’s second step and defers
to the agency’s interpretation so long as it is
based on a permissible construction of the
statute.
• Court found that language of APA was
ambiguous and subject to multiple
interpretations.

32. King v. Burwell
• Because IRS interpretation was a reasonable interpretation,
Court upheld it.
 “[T]he economic framework supporting the Act would crumble if
the credits were unavailable on federal Exchanges.
Furthermore, without an exception to the individual mandate,
millions more Americans unable to purchase insurance without
the credits would be forced to pay a penalty that Congress
never envisioned imposing on them. The IRS Rule avoids both
these unforeseen and undesirable consequences and thereby
advances the true purpose and means of the Act. It is thus
entirely sensible that the IRS would enact the regulations it did,
making Chevron deference appropriate.”

33. Other Cases
of Note
33

34. Questions?
34

35. Thank You…
35
S. Todd Hemphill
THemphill@PoynerSpruill.com
POYNER SPRUILL LLP
Raleigh, North Carolina