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Fall 2008Vol. 4, No. 3

It could’ve been a landmark “loss of opportunity” case.And, maybe it was.Regardless of which perspective one subscribes to, the Michi-

gan Supreme Court’s 85-page decision in Stone v.Williamson, etal., has givenmedical-malpractice practitioners lots to talk about.The case started off with allegations that Carl Stone’s doctor’s

failure to diagnose an aortic aneurysm caused the aneurysm torupture, which led to the amputa-tion of both of Stone’s legs.By the time the case

reached the SupremeCourt, the two ma-jor questions werewhether the casewas truly one of“loss of opportunity”and whether theMichigan Court ofAppeals “loss of op-portunity” decisionin Fulton v. Beau-montHospital, et al.,was “correctly decided.”The answers to both

questions was “no,” butbecause the answersemerged by way of threeseparate opinions— noneof which garnered morethan three signatures —more questions arose.As such, in the stories

that follow, MichiganLawyers Weekly has at-tempted to address someof the issues raised bythe Supreme Court’s de-cision in Stone:• In light of the conclu-sion by six of the jus-tices that the case wasnot a “loss of opportu-nity” case, is their discussion of Fulton and the Courtof Appeals “loss of opportunity” analysis dicta?

• What does Stone say about the elements of “loss ofopportunity” cases, e.g., are “failure to diagnose” cases perse “loss of opportunity” cases?

• What didn’t the justices like about Fulton?• How does Fulton square with the Supreme Court’srules of statutory interpretation?

• Did Fulton’s “ambiguity” analysis lead the courtto the right result?

Lost opportunity?Or maybe not so much

By Todd C. Berg, Esq.

Melissa Boodt’s defective no-tice of intent to sue shouldn’thave gotten her wrongful-deathmedical-malpractice lawsuit dis-missed with prejudice.At worst, under the Michigan

Supreme Court’s “presumption ofthe validity of pleadings” doc-trine, it should’ve resulted in adismissal without prejudice.In 2007, the Supreme Court

announced the doctrine, whichcauses two things to happenwhen a party rebuts the “pre-sumed validity” of a pleading thattolls the statute of limitations:• The statute of limitations re-sumes running.

• And, the case is dismissedwithout prejudice so the plain-tiff “would then have whatevertime remains in the period oflimitations within which tofile” a valid pleading.Applied to Boodt’s case, a dis-

missal without prejudice should’vegiven her 267 days to get a non-de-fective notice of intent on file.Two hundred and sixty-seven

days is the amount of time thatremained in the statute of limi-tations when Boodt tolled it byfiling her “presumptively valid”notice of intent.And, thus, it should’ve been

how much time she had leftwhen the statute of limitationsresumed running after her no-tice’s “presumed validity” was re-butted nearly two years later.But what should’ve happened

isn’t what did happen whenBoodt’s case reached the SupremeCourt.

Without mentioning the “pre-sumption of the validity of plead-ings” doctrine, a four-justice ma-jority in Boodt v. Borgess MedicalCenter, et al., concluded Boodt’slawsuit had properly been thrownout of court.Because her notice of intent

was defective, said the per curi-am opinion joined by Chief Jus-tice Clifford W. Taylor and Jus-tices Maura D. Corrigan, RobertP. Young Jr. and Stephen J.Markman, she hadn’t tolled thestatute of limitations.And, without the statute of

limitations tolled, Boodt’s un-timely lawsuit that followed war-ranted dismissal with prejudice,the justices said.DavidWaltz died from an anox-

ic brain injury on Oct. 6, 2001,during surgery being performedby Dr. Michael Andrew Lauer.On Jan. 13, 2003,Melissa Boodt,

as personal representative of

David Waltz’s estate, served Dr.Michael Andrew Lauer with hernotice of intent to sue, as requiredby MCL 600.2912b.And, on June 19, 2003, she

filed her wrongful-death medicalmalpractice complaint and ac-companying affidavit of merit.(The two-year statute of limita-tions for malpractice actions wasdue to expire on Oct. 6, 2003.)In July 2005, summary dispo-

sition was granted in Lauer’s fa-vor based on Boodt’s failure toallege in her notice of intent allthat the statute required.The Michigan Court of Ap-

peals reversed, but the SupremeCourt sided with Lauer and thetrial court.In reaching its conclusion, the

majority cited Kirkaldy v. Rim, etal., one of its 2007 decisions thatcreated the “presumption of thevalidity of pleadings” doctrine.

Med-mal suit thrown outbecause MSC did not‘presume’ NOI’s ‘validity’

Failure to apply2007 doctrine

costsplaintiff

267 daysfor refiling

MSC loses opportunity tochange the law. Page 14.COA’s analysis of ‘ambiguity’misses statute’smeaning. Page17.Words added to statuteby COA. Page 16.Justices dislike ‘Fulton’—can’t agreewhy. Page 17.‘Failure to diagnose’ nota ‘loss’ case. Page 16.

Legislative Preview —Medical MalpracticeBy Todd C. Berg, Esq.

No longer will medical-mal-practice plaintiffs have to allegein their notices of intent to suethe “manner” in which a doctor’sbreach of the standard of careproximately caused their injuries.That is, of course, if Rep.Mark

Meadows’ proposed amendmentto the notice of intent to suestatute becomes law.Currently,MCL 600.2912b(4)(e)

requires a medical-malpracticeplaintiff to state the following inher or his notice of intent to sue:

“The manner in which it isalleged the breach of the stan-dard of practice or care wasthe proximate cause of the in-jury claimed in the notice.”

Under Meadows’ House Bill

6277, which was introduced onJune 24, 2008, however, the “man-ner” language would be dropped.According to the East Lansing

Democrat’s amendment, thestatute would require plaintiffsto provide “a description of theinjury that the claimant con-tends was a [or the] proximateresult” of the doctor’s allegedbreach of the standard of care.Asked why he was proposing to

relieve plaintiffs of the burden ofproving how a breach of the stan-dard of care caused the injuries atissue, Meadows said he wasn’t.“I do not agree that the plain-

tiff has been relieved of any re-sponsibility to describe the na-ture of the breach and theproximate causation,” he toldMichigan Lawyers Weekly.East Lansing attorney James P.

Dalton, however, said he begs todiffer.“Eliminating the need for

plaintiffs to articulate the man-ner by which alleged negligencecaused the injury … decreasesthe value of the NOI and sub-verts [its purpose, which is to ad-vance] the prospect of pre-suitsettlement,” he said.“Plaintiffs have the burden of

proof,” Dalton said. “Why not re-quire … as the original statutedid … [that] the basic elementsof a cause of action be stated inan NOI …?”According to Southfield attor-

ney Mathew L. Turner, Mead-ows’ proposed change would dojust that.“Under the amendment,” he

said, “a plaintiff would only needto state the injury proximatelycaused by the breach, which isthe standard of proof at the timeof trial.”Royal Oak attorney Mark R.

Granzotto agreed.“In light of Boodt, I believe the

amendment is necessary,” he said.In Boodt v. Borgess Medical

Center, et al., the Supreme Courtheld the proximate cause “state-ment” in Melissa Boodt’s noticeof intent to sue didn’t sufficientlydescribe the “manner” in whichthe breach of the standard of carecaused the decedent’s death.(See, “Mind your ‘manner.’”)Boodt had alleged: “If the stan-

dard of care had been followed,Mr.Waltz would not have died onOctober 11, 2001.”Granzotto said Meadows’

amendment would correct the“absurdity” ofBoodt to the extentthe Supreme Court’s decision “re-quir[es] a lawyer to explain to adoctor … the scientific/medical‘manner’ in which … a particularinjury occurred.”For Dalton, however, dropping

the “manner” requirement fromthe statute was only part of the

NOIs may lose their ‘manners’House bill proposes dropping ‘manner/proximate cause’ requirement from ‘notice of intent’ statute

Continued on page 12


Blue Cross recognizes the AAAHC’Searly option survey for ASF participation

Earlier this year, Blue Cross BlueShield of Michigan (BCBSM) publishedits amendment to the BCBSM Evidence-of-Need (“EON”) requirements for ambu-latory surgery facilities (ASFs). Thesechanges, in pertinent part:• Correlated the EON surgical volume

standard with the Michigan Certificate of

Need standard for a new facility, whichcurrently is 1,128 cases per operatingroom (OR) per year.• Changed the ASF review period (for

EON compliance) from every other yearto approximately every three years.• Extended the grace period for facilities

that do not meet the full EON volume re-quirement from two years to three years.The grace period will apply to facilitieswithin 80 percent of theminimum volume.• Modified the calculation of BCBSM

market share, resulting in a market-share adjustment of 30 percent in theLower Peninsula, and 40 percent in theUpper Peninsula.• Reduced the minimum volume report-

ing period from six months to four months.• Eliminated the need for multi-special-

ty ASFs to have a minimum of three ORs.As revised, the newminimum standard forall facilities (single- and multi-specialty)located in nonrural areas is two ORs andone OR for all rural-based facilities.These changes were reflected in the

BCBSM Ambulatory Surgery FacilityParticipation Agreement.A related ASF development with BCB-

SM, which potentially might be of signif-icant benefit to new facilities in Michigan,will not be formally published by BCB-SM. Specifically, until August 2008, BCB-

SM declined to recognize the Accredita-tion Association for Ambulatory HealthCare (AAAHC) New Facility/MedicareDeemed Status Survey, known as theEarly Option Survey, or EOS.As a result, but for the policy change re-

garding the EOS, any ASF that had reliedupon AAAHC (the preeminent accredita-tion body for ASFs) for its initial Medicarecertification would have been unable toapply for BCBSM participation until suchtime as that facility was to become eligi-ble for a full (i.e., a one- or three-year) ac-creditation survey from AAHC. For mostASFs, this typically would occur at orshortly before the one-year anniversary ofthe facility performing its first case.Obtaining Medicare certification

through an accrediting organization (anAO), such as AAAHC, assumed greaterimport as a result of a Nov. 5, 2007, memofrom the Centers for Medicare and Medi-caid Services to State Survey Agency Di-rectors. In that memo, CMS apprised theDirectors that initial surveys of ASFswould be a Tier 4 (i.e., the lowest) priori-ty and recommended that providers (in-cluding ASFs) consider obtainingMedicare certification through a CMS-approvedAO to avoid “the expense of timewaiting for a no-cost CMS survey.”Thus, at the time CMS was implicitly

directing new ASFs to consider the ac-creditation option for Medicare certifica-tion, BSBSM, through its initial policy,was erecting obstacles to this approach.The problem arose from the fact that, fora new ASF, AAAHC offered only a six-month or one-year EOS (i.e., the “full” —one- or three-year — accreditation optionwas not available), but BCBSMwould notrecognize the EOS.Following negotiations, BCBSM ad-

vised on Aug. 13, 2008, that the organiza-tion “will accept the one-year early-op-tion accreditation from AAAHC.” EllenWard of BCBSM further noted that BCB-SM “will be changing the wording on theapplication, and I will be notifying ourASF Liaison committee of the decision,but I do not intend to publish any otherformal notification.”As a result, new ASFs that avail them-

selves of the one-year EOS option fromAAAHC will have such accreditation rec-ognized by BCBSM for EON purposes.ASFs should note, however, that BCB-SM’s recognition of the EOS does not ex-tend to those with only a six-month ac-creditation term.In any case, as indicated above,

providers should not expect any formalnotification of this policy change, otherthan on the application itself.

2 • Michigan Medical Law Report Fall 2008 Cite this page 3 M.L.R. 42

Business of MedicineBy Carey F. Kalmowitz, Esq.

Carey F. Kalmowitzis a partner atWachler & Associ-ates, P.C., where hepractices in all ar-eas of health carelaw, with specificconcentration on thecorporate and fi-nancial aspects of

health care, including certificate ofneed, compliance investigations, cor-porate fraud & abuse/Stark andthird party payment and reimburse-ment. Contact him at (248) 544-0888or [email protected].

Will Michigan courts be open to suitsalleging Heparin-related injuries?‘Negligent manufacturing’key to surviving drugimmunity lawsMass Torts — AnalysisBy Melissa P. Stewart, Esq.

When the Food and Drug Administra-tion (FDA) declared Vioxx unsafe, and itsmanufacturers pulled it from pharmacyshelves, Michigan residents harmed bythe drug were left without any other re-course for their injuries.That’s because in its current form,

Michigan’s products liability statute pro-vides a near blanket immunity for drugmanufacturers whose medications havereceived FDA approval.Nevertheless, there may be some hope

for those injured or killed by the latestdrug to be recalled for fear of its danger-ous side effects.Last year, reports began to circulate

that Heparin — a popular blood thinnermanufactured by Baxter International —had been increasingly linked to severe al-lergic reactions and even death.Just like Vioxx, it was eventually de-

clared unsafe and voluntarily pulled fromthe market.But, Southfield attorney Mark J. Bern-

stein said, that’s where the similarities end.“Vioxx’s manufacturer,Merck, did not ad-

equately disclose the risks associated withthe drug,” he said. “With Heparin, we arelooking at negligent manufacturing.”Specifically, published reports began to

surface that the increased allergic reac-tions resulted from a contaminated in-gredient imported from China.According to anApril 30 article published

by The NewYork Times, FDA officials testi-fied before the House Subcommittee onOversight and Investigations that “[a] thirdof the material in some batches of the thin-ner heparin were contaminants.”Moreover, it reported that Baxter Inter-

national “bought heparin ingredients fromChangzhou SPL from 2004 to 2008, butdidn’t inspect the facility until September2007.”In Bernstein’s estimation, that makes

all the difference for Michigan claimants.“The FDA approved the drug, but it

didn’t give them the license or authorityto make it the wrong way,” he said. “It’slike saying your car is approved to drive

on the freeway, but then you go out anddrive drunk.”By focusing on a negligent manufactur-

ing claim, Bernstein believes he will beable to survive Michigan’s drug immunitylaws — as well as federal preemption —even if he chooses to file his cases locally.As such, he is currently in the process

of gathering clients with the hope of filinga class-action lawsuit against Baxter In-ternational.“We received hundreds of calls about

Heparin,” he said.But, despite an anticipated green light

from the courts, the process has present-ed its fair share of challenges.“Frequently in a drug case, you have a

signature injury, where the only way aperson could have a particular set ofsymptoms is as a result of a specific drugor defect,” Bernstein said. “Heparin does-n’t have one — people are sick with a con-stellation of symptoms or presentations.”Regardless of where he ultimately files

suit, Bernstein said he hopes, at the endof the day, his work with Heparinclaimants will shed some light on Michi-gan’s drug immunity laws.“This situation should raise another red

flag as to why Michigan’s law is so mis-

guided, because any reliance on the FDAto keep us safe from dangerous drugs isfoolish, careless and reckless,” he said.Detroit lawyer J. Douglas Peters agreed.“The fundamental problem is one of

trust in the system,” he said, because“China does not have the manufacturingquality control that we take for granted inthe United States.”A lack of sufficient oversight by the

FDA — coupled with an inability forMichigan residents to litigate claims aris-ing from drug-related injuries — com-pounds the issue, he said.“The regulatory system seems to be

failing,” Peters said. “The FDA, in partic-ular, has been failing repeatedly since theadvent of fast track approval [for drugs].”But, even though preemption issues

continue to loom large, Peters predictsthat “the pendulum is about to swing theother way” in favor of more stringentFDA oversight in drug approval andmanufacturing.“There have been enough horrible sto-

ries, between Vioxx, Resulin, Bextra andnow Heparin,” he said. “It used to be we’dgo years and never see a defective drug,but during the last eight years, defectivedrugs per se have blossomed.”

ContentsCompliance Corner...........................3

Verdicts & Settlements.....................6

Pending Legislation ........................10

NEWS STORIES

‘Back where things started’ ...........14

COA’s ‘ambiguity’ analysis missesmeaning of ‘loss of opportunity’statute ............................................17

Controversial biopsy linked topatient’s death ...............................14

Down with ‘Fulton’ .........................17

Failure to comply with discoveryorder proves fatal ...........................13

Lack of specifics about ‘manner’of death sinks med-malplaintiff’s NOI..................................13

MSC says ‘failure to diagnose’ claimnot ‘loss of opportunity’ case .........16

Three words ..................................16

Will Michigan courts be open tosuits alleging Heparin-relatedinjuries? ...........................................2

GUEST FEATURES

Business of MedicineBe there ... or pay up......................8Blue Cross recognizes the AAAHC’Searly option survey.........................2Health Care JusticeAllegations of unprofessionalbehavior .......................................19Block-lease arrangementinterpreted by OIG as suspectjoint venture ...................................7Membership application leadsto attorney fee sanctions .............15Nursing home abuse subject ofCourt of Appeals interpretation ......8Tax fraud whistleblower awards ..18Why physicians need to knowabout the NPDB ..............................4

Michigan Medical Law Report • 3Fall 2008Cite this page 3 M.L.R. 43

On Aug. 19, 2008, the Centers for Med-icare and Medicaid Services (CMS) pub-lished final Stark rules in its 2009 FinalHospital Inpatient Prospective PaymentSystems rule (Final Rule). The Final Rulecontains several important revisions to theStark regulations, some of which will re-quire physicians, hospitals, or other healthcare providers, to unwind or restructuretheir arrangements.Some of the new Stark rules are not ef-

fective until Oct. 1, 2009, to give partieswith arrangements that are impacted bythe new rules time to unwind or restruc-ture, but other provisions areeffective Oct. 1, 2008.In addition to these new

Stark changes, health careproviders must stay tuned foradditional significant Starkand Medicare payment regu-latory changes, which are ex-pected to be published in No-vember 2008 as part of the2009 Medicare Final Physi-cian Fee Schedule, and in fu-ture regulations.With all of the recent regu-

latory changes, health careproviders should have theirarrangements reviewed to en-sure that they continue to be incompliance with the Stark law.A synopsis of the Final Rule

Stark changes is as follows:• “Stand in the shoes”

provisions Effective Oct. 1,2008, only physicians whohave an ownership or invest-ment interest in their physi-cian organizations (e.g., grouppractice) will be required tostand in the shoes (SITS) ofthose organizations.The SITSdoctrine no longer applies tonon-owner physicians. CMSalso carves out an exceptionfor physicians participating infinancial arrangements thatsatisfy the Stark exception foracademic medical centers.The SITS concept is used for purposes ofdetermining whether a physician has a di-rect or indirect financial relationship witha DHS entity.• “Set in advance” and amendments

to agreements:CMS now states that it isreversing its prior position and permittingmulti-year agreements to be amended af-ter the first year without violating Stark’s“set in advance” requirement.• Period of disallowance: Effective

Oct. 1, 2008, CMS establishes a rule thatsets the outer limit of the time periodduring which referrals are prohibited as aresult of a financial relationship that failsto satisfy a Stark exception. Disallowancebegins when the relationship fails to sat-isfy an exception and ends no later thanthe date that it satisfies an exception andthe parties have returned any overpay-ments or paid any underpayments.

• Alternative method for compli-ance: Effective Oct. 1, 2008, if a financialrelationship complied with an applicableStark exception, except for meeting thesignature requirement, Medicare pay-ments to the entity will be permitted if thesignature requirement is complied withwithin 30 days (for knowing failures) or90 days (for inadvertent failures) afterthe commencement of the relationship.

• “Per-click” leasing arrange-ments: Effective Oct. 1, 2009, CMS elim-inates the use of “per-click” fee payments

in space and/or equipment leases whenthe payments reflect services provided topatients referred between the parties.This “per-click” fee prohibition applies toboth direct leasing arrangements and in-direct leasing arrangements (e.g., leasesbetween physician-owned leasing com-panies and hospitals).• Percentage-based leasing arrange-

ments: Effective Oct. 1, 2009, CMS elimi-nates percentage-based compensation inspace and equipment leases, paralleling itstreatment of “per-click” payments in spaceand equipment leases.Under the Final Rule,compensation for the rental of office space orequipment that is determined using a for-mula based on a percentage of the revenueraised, earned, billed, collected, or otherwiseattributable to the services performed, orbusiness generated in the office space, or theservices performed or business generatedthrough the use of equipment is prohibited.• Services provided “under ar-

rangements”:Effective Oct. 1, 2009, boththe hospital that bills for services provid-ed “under arrangements” and the entitythat provides the services to the hospitalwill be considered to be furnishing “desig-nated health services” (DHS) under Stark.This change will effectively eliminate a re-ferring physician’s ability to own interestsin such service providers.• Exception for obstetrical mal-

practice insurance subsidies: Effec-tive Oct. 1, 2008, CMS adds an alterna-tive exception for subsidies of malpracticeinsurance premiums provided by hospi-tals, federally qualified health centersand rural health clinics.

• Ownership or investment inter-est in retirement plans: Effective Oct.1, 2008, CMS narrows the so-called “re-tirement plan exception” to ensure thatreferring physicians cannot use it toevade Stark’s self-referral prohibition byinvesting in a DHS entity via their em-ployer’s retirement plan. Under the FinalRule, only a physician’s ownership or in-vestment interest in their employer-sponsored retirement plan is protected.

• Burden of proof: Under the FinalRule, CMS revises the regulations to

place the burden of proof inappeals of Stark-based pay-ment denials on the entityappealing the denial. Thisburden is consistent with theburden of proof on Medicareproviders and suppliers ap-pealing payment denialsbased upon other reasons,such as a failure to meet acondition of coverage.

• Disclosure of Finan-cial Relationships Report(DFRR): The Final Rule an-nounces that CMS is pro-ceeding with its proposal tosend the DFRR to 500 hospi-tals. The DFRR is designedto collect information re-garding the ownership andinvestment interests andcompensation arrangementsbetween hospitals and physi-cians.

• Medicare Stark pay-ment denial code: Al-though not part of the FinalRule, it is significant forhealth care providers to notethat Medicare carriers andintermediaries have nowbeen given a specific code todeny payment to providersdue to violations of Stark.

Stand in the shoes (SITS)Under the Final Rule, a physician who

has an ownership or investment interestin a physician organization (e.g., grouppractice) is deemed to stand in the shoesof his or her physician organization, buta physician who has only a compensationarrangement (or one with only titularownership interest) need not be treatedas standing in the shoes of such organi-zation.A titular ownership interest is an own-

ership interest in which the physician isnot able or entitled to receive any of thefinancial benefits of ownership or invest-ment, including, but not limited to, thedistribution of profits, dividends, pro-ceeds of sale or similar return on invest-ment (e.g., captive PC). For physicianswho are not required to be treated as“standing in the shoes,” an entity mayelect to apply “stand in the shoes” on acase-by-case basis.The new SITS rule does not apply to

arrangements that satisfy the require-ments of the academic medical center(AMC) exception, but CMS declined to fi-nalize a separate exception for compen-sation arrangements involving missionsupport payments or similar paymentsin the context of AMCs or integrated de-livery systems.CMS also declined to extend the cur-

rent SITS moratorium applicable toAMCs and integrated health care deliv-ery systems beyond its Dec. 4, 2008,deadline. However, the new revisions tothe SITS rule should allow an indirectcompensation analysis of many arrange-ments to be preserved.

New Stark rules:Yet morearrangements to be restructured

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Andrew Wachler and Adrienne Dresevicare partners with the health care law firmofWachler &Associates, P.C.The firm rep-resents physicians, ambulatory surgerycenters and other health care entities andproviders with respect to their health carelegal needs.Wachler and Dresevic special-ize in a number of areas, including but notlimited to: Stark and fraud and abuseanalysis; transactional and corporate mat-ters; compliance; audit defense; reimburse-ment and contracting matters; licensure,staff privilege and third-party payor de-participation matters; and health carefraud defense.They can be reached at (248)544-0888 or at [email protected] [email protected].

All physicians should be familiar withthe National Practitioner Data Bank(NPDB), the online clearinghouse for in-formation about medical practitioners’histories. However, not all physicians maybe aware of the types of occurrences thatcan be properly reported to the NPDB andthus dramatically affect credentialing op-portunities.While the NPDB is not accessible by the

public at large, information in the databank is available to state licensing boards,hospitals and other health care entities(such as HMOs and PPOs), professionalsocieties, and certain federal agencies suchas the Health and Human Services Officeof the Inspector General (HHS-OIG).Hospitals and other health care entities

rely heavily on information contained inthe NPDB in making physician staffingand credentialing decisions. For example,hospitals are required to query the NPDBwhenever a practitioner applies for privi-leges and medical staff membership, andthe NPDB must be reviewed every twoyears for information on practitioners onthe medical staff. Therefore, physiciansshould be extremely familiar with whatcan be reported to the NPDB.Without a clear understanding of the

types of actions commonly reported, unfa-vorable information — which may or maynot be totally accurate — can be perma-nently included in a physician’s profile,thus seriously hampering a physician’scareer and ability to relocate.Physicians can help prevent adverse and

unfair information from being added to theNPDB by contesting summary suspensionor other adverse credentialing actionsthrough mechanisms provided in hospitalbylaws and/or policies and procedures.Therefore, it is important to understand

when and why certain kinds of incidentsare reported to the NPDB, so that appro-priate action can be taken to prevent suchdamaging information from being widelyavailable.

Background on the NPDBThe NPDB was originally launched as

part of the Health Care Quality Improve-ment Act of 1986 (HCQIA). The HCQIAwas passed by Congress to prevent in-competent practitioners from relocatingstate to state by creating a mechanism todisclose evidence of harmful or incompe-tent performance.Legislators also hoped that the creation

of a central database would encouragestates, hospitals, and professional soci-eties to report adverse actions takenagainst practitioners. In 1990, the NPDBbegan officially collecting reports on med-ical malpractice payments and adverse li-censure, clinical privileges, and profes-sional society membership actions.In 1997, the NPDB was required to co-

ordinate operations with the new Health-care Integrity and Protection Databank(HIPDB), which was designed to prevent

healthcare fraud and abuse. The HIPDBis a national collection program for re-porting and disclosing certain final ad-verse actions taken against health careproviders, practitioners, and suppliers,such as exclusions fromMedicare or Med-icaid programs. By law, the NPDB andHIPDB were required to coordinate oper-ations, so that information reported to theHIPDB would also appear on the NPDBand vice-versa.Modern technology has enabled the

NPDB-HIPDB to be accessed or “queried”swiftly and easily by eligible entities, suchas hospitals, medical examination or oth-er state licensing boards, health care en-tities, and professional societies.When the NPDB originally began col-

lecting physician reports back in 1990, alltransactions were paper-based and aquery response time averaged around sixweeks. Now, all queries and submissionsare conducted online, and the averagequery response time is less than one hour.

Why the NPDB is importantThe advent of technology now means

that information about physicians can bequickly disseminated to health care entitiesacross the county. Furthermore, all reportsmade to the NPDB are permanent and willnot be expunged after the passage of time.A correction or void submitted by the re-porting entity is the only way to remove in-formation from a physician’s profile.Among the types of information re-

portable to the NPDB are exclusions fromMedicare/Medicaid and other federal pro-grams, medical malpractice payments,and adverse clinical privilege actions.Let’s examine the latter two.

Medical malpractice paymentsNPDB guidelines require the reporting

of any kind of medical malpractice pay-ment made on behalf of a physician, den-tist, or other health care practitioner insettlement or in satisfaction (in whole orin part) of a claim or judgment againstthat practitioner.This encompasses claims based on sub-

standard care, professional incompetence,or professional misconduct. The reportmust include a detailed narrative de-scribing the patient (age, sex,medical con-dition, etc.) and the alleged acts or omis-sions upon which the medical malpracticeclaim is based.If a practitioner is dismissed from a

lawsuit prior to the settlement of judg-ment, any payment made to the plaintiffis not reportable. In addition, paymentsmade by the practitioner in a personal ca-pacity are not reportable. However, if thedismissal from a lawsuit is a condition ofa settlement or release, then the paymentis reportable.Thus, it is important for physicians to

carefully monitor all malpractice litiga-tion (even if payments are to be made bythe hospital or insurance carrier) and toobtain early dismissal before settlementnegotiations are undertaken. A physicianis well-advised to engage a personal at-torney for such purpose.

What kinds of actionsare reportable

While most physicians probably knowthat the revocation of clinical privileges isreportable, there are several nuances tokeep in mind. For example, even in situa-tions in which a physician voluntarily sur-renders or withdraws hisor her requestfor clinical privileges, this can still be re-ported to the NPDB if the surren-der/withdrawal follows an investigationof professional competence or conduct oris made in exchange for not investigatinga physician’s conduct.To take this example a step further,

suppose “Dr. Smith” is a physician at ahospital with privileges in pulmonary

care. He is privately planning on relocat-ing to a new state in the near future, so hedoes not renew his clinical privileges atthe hospital.Unbeknownst to Smith, the hospital is

investigating him based on an allegationby another staff physician that Smith hasa substance abuse problem and is a threatto patient safety.Even if the allegation turns out to be

false, and even if Smith has no idea thathe is being investigated, his failure to re-new his clinical privileges while under in-vestigation is a reportable event. This isbecause a practitioner’s awareness thatan investigation is being conducted is nota requirement for reportability.Other examples of reportable adverse

actions include:• Summary suspension if lasting more

than 30 days and based on professionalcompetence or conduct. (Adverse actionsinvolving censures, reprimands or admon-ishments are not reportable to the NPDB.)• Denial of an initial application for

clinical privileges, if the denial is the re-sult of a professional review action relat-ed to professional competence or conduct.• Granting of clinical privileges that are

more limited than those requested, if thelimitation is the result of the practitioner’sprofessional competence and conduct.• Non-renewal of clinical privileges, if

based on professional competence or con-duct. (The non-renewal of clinical privi-leges is not reportable if based on facilityresources or a change in the institution’sthreshold eligibility criteria.)• Reduction or revocation of clinical

privileges, even without demotion or dis-missal, if related to professional compe-tence and conduct.• Reduction or revocation of privileges

combined with demotion or dismissal, ifbased on professional competency orconduct.In order to avoid having unfavorable re-

ports issued to the NPDB, physicians

should fully exercise their fair hearing/dueprocess and appeal rights under medicalstaff bylaws and procedures/policies. Alldisputes regarding reported informationmust be handled through the reportingentity, not through the NPDB.In addition, adverse actions on clinical

privileges are not reportable until theyare made final by the health care entity,meaning that the physician has received ahearing and completed the appealsprocess as provided for by the hospitalbylaws. (An exception applies if summarysuspension or restriction subject to laternotice and hearing is enforced because ofan imminent threat to a patient’s healthand safety.)In addition, if a report of adverse action

has already been made to the NPDB, thephysician can still appeal the report asprovided by the hospital bylaws and/orpolicies and procedures. Although practi-tioners with reports in the NPDB mayadd statements to the reports, which willbe disclosed to queries, it is more effectiveto simply reduce the chances of such a re-port being made.Conflicts do arise in hospital settings,

and physicians may be subjected to ad-verse action for simply refusing to take ac-tion which, in their opinion, deviates fromthe standard of care or for innocently re-porting what they believe to be improperprocedures within the hospital (suspiciousbilling activity, failure to maintain com-plete medical records, etc.).These physicians can be branded as

troublemakers and forced to endure un-fair suspensions, probations, or adverseactions to clinical privileges. Physicianswho feel adverse action has been takenagainst them should consult with an ex-perienced health care attorney to protectany rights they may have and to preventdamaging reports about them being madeto the NPDB.


Why physiciansneed to knowabout the NPDBHealth Care JusticeBy Mercedes L. Varasteh, Esq.

Mercedes L.Varastehis an associate withFrank, Haron, Wein-er and Navarro PLC,where she focuses herpractice on federalFalse Claims Act/qui tam litigation,and representingphysician groups,

individual physicians and home healthagencies with issues pertaining to re-imbursement, licensing, hospital gov-ernance, and medical staff credential-ing/privileges. Contact her at (248)952-0400 or [email protected].


Last, CMS did not finalize its earlierproposal to apply SITS to owners of DHSentities beyond physician organizations.

‘Set in advance’ andamendments to agreementsIn response to a comment in the pream-

ble discussion of the Final Rule, CMS in-dicates that it has reconsidered andchanged its earlier Stark II Phase III FinalRule position, that a multi-year agreementfor rental of office space or a personal serv-ice arrangement may not be amended dur-ing its term without violating the Starkexceptions’ requirement that the compen-sation under the arrangement be “set inadvance” for the term of the agreement.This position was widely criticized as

imposing additional transaction costs onthe parties to these agreements by re-quiring them to terminate an existingagreement and enter into a new agree-ment on modified terms rather than sim-ply amending the agreement.CMS now states that in light of the new

final revisions with respect to percentage-based and “per-click” compensation for-mulae, an agreement is permitted to beamended as long as the following criteriaare met:• All of the requirements of an applica-

ble exception are satisfied;• The amended rental charges or com-

pensation (or the compensation formula) isdetermined before the amendment is im-plemented, and the formula is sufficientlydetailed so it can be verified objectively;• The formula for amended rental

charges does not take into account thevolume or value of referrals or other busi-ness generated by the referring physician;• The amended rental charges or com-

pensation (or the compensation formula)remains in place for at least one year fromthe date of the amendment.

Period of disallowance fornon-compliant relationshipsIn the Final Rule, CMS finalizes its ear-

lier proposal to provide that from the timethat a financial relationship fails to satis-fy a Stark exception to a period no laterthan the date that the financial relation-ship satisfies all of the requirements of aStark exception (including returning anyoverpayments or paying any underpay-ments), a physician may not refer DHS tothe entity and the entity may not billMedicare.These new rules create an outside lim-

it for the period of disallowance and arenot intended to prevent parties from ar-guing that the period of disallowance end-ed sooner on the theory that the financialrelationship ended earlier.CMS cautions, however, that the begin-

ning and end dates of a financial relation-ship for purposes of the disallowance peri-od do not necessarily correspond with theterm of the parties’ written agreement.

Alternative methodfor compliance

A host of Stark compensation excep-tions include a signature requirement.The Final Rule adopts a provision whichpermits payments to an entity that fullycomplied with an applicable Stark excep-tion, except with respect to a signature re-quirement, if:• the failure to comply with the signa-

ture requirement was inadvertent and theentity rectifies the failure to comply with-in 90 days after the commencement of thefinancial relationship (without regard towhether referrals have occurred or com-pensation paid); or• the failure to comply with the signa-

ture requirement was not inadvertent(knowing) and the entity rectifies the fail-ure within 30 days after the commence-ment of the financial relationship.This new exception may only be used

once every three years with respect to thesame referring physician.

Prohibition on ‘per-click’ space,equipment lease arrangementsUnder the Final Rule, CMS prohibits

the use of “per-click” payments for spaceand equipment leasing arrangements.CMS makes clear that the prohibition on“per-click” payments applies regardless ofwhether the physician is personally thelessor or whether the lessor is an entity inwhich the referring physician has an own-ership or investment interest.

This limitation applies where the lessoris a DHS entity that refers patients to aphysician or physician organization lessee.This new “per-click” prohibition, com-

bined with the prohibition on percentage-based compensation formulae, will have asignificant effect on current leasing jointventure arrangements whereby referringphysicians and hospitals or others haveformed a joint venture entity for the pur-pose of leasing space or equipment to ahospital or other DHS entity on a variablefee basis.The Final Rule now requires that to the

extent there are any physician investorsin the joint venture leasing entity that re-fer to the lessee entity, the lease paymentsbetween the lessee and the joint venturemay not be based on either:• a percentage of revenue raised, earned,

billed, collected or otherwise attributable tothe services performed or business gener-ated in the space or through use of theequipment; or• per-unit rental charges, to the extent

that such charges reflect services providedto patients referred between the parties.

Percentage-basedleasing arrangements

In an earlier proposal, CMS planned oneliminating percentage-based compensa-tion arrangements except in the context ofpersonally performed service agreements.CMS nowmodifies its earlier position, andfinalizes a rule that eliminates all per-centage-based compensation only in thecontext of space and equipment leases.Specifically, the Final Rule amends

the current Starkexceptions for therental of officespace, the rentalof equipment,fair market valuecompensationarrangementsand indirectcompensationarrangementsto prohibit theuse of compensa-tion formulaefor space orequipment leasesbased on a per-centage of therevenue raised,earned, billed,collected or oth-erwise attributa-ble to the servic-es performed orbusiness generat-ed in the leasedoffice space orto the servicesperformed on orbusiness generat-ed by the use ofleased equipment.In implementing this rule, CMS effec-

tively ends all percentage-based arrange-ments for the lease of space or equipment,whether structured as direct or indirect fi-nancial arrangements. Current percent-age lease arrangements that run afoul ofthis new prohibition will need to be re-structured prior to Oct. 1, 2009.

‘Under arrangements’under attack

Under current Stark law, only entitiesthat bill Medicare for DHS are consideredDHS entities. The Final Rule significant-ly expands the definition of “entity” to in-clude entities that perform services thatare in turn billed as DHS by another en-tity. As a practical matter, this changemeans that referring physicians likelywill not be able to have an ownership orinvestment interest in “under arrange-ments” service providers.Because this change will require the

unwinding or restructuring of many “un-der arrangements” transactions (e.g.,physician-owned entities that provideservices to hospitals “under arrange-ments”), CMS delayed the effective dateuntil Oct. 1, 2009.Under the current Stark regulations,

because the “under arrangements” serviceprovider is not considered a DHS entity,the Stark analysis focuses on the rela-tionship between the hospital and the re-ferring physicians associated with theservice provider.These arrangements are analyzed as

either direct financial arrangements (if areferring physician stands in the shoes ofthe service provider) or indirect financialarrangements (if “stand in the shoes” does

not apply) and generally can be struc-tured to fit within a direct or indirect com-pensation exception.Under the Final Rule, any financial re-

lationship between the service providerand the physicians who refer patients to itfor services that the hospital bills “underarrangements” will need to comply with aStark exception.Direct compensation exceptions should

be available to protect referrals from theservice provider’s non-owner physicians,but very few exceptions are available forreferring physicians who own an interestin the service provider. In most cases, theonly exception that could apply is the ex-ception for rural providers.CMS makes clear that even if a service

provider, such as a cardiac-catheteriza-tion lab, performs services that would nototherwise be DHS if the services wereprovided and billed by the serviceprovider in a freestanding setting, theservices become DHS and the serviceprovider becomes a DHS entity when ahospital bills for those services pursuantto an “under arrangements” contract asthe services are considered inpatient oroutpatient hospital services.CMS did not define when an entity is

considered to be “performing” DHS. CMSstates that the common meaning of theterm should apply. CMS states in pream-ble commentary that it considers a physi-cian or physician organization to haveperformed DHS “if the physician or physi-cian organization does the medical workfor the service and could bill for the serv-ice, but the physician or physician organ-ization has contracted with a hospital

and the hospitalbills for the serv-ice instead.”However, CMS

states that itwould not consid-er a lessor ofequipment orspace, a providerof management,billing services,or personnel, oran entity thatfurnishes sup-plies that are notseparately bill-able but are usedin the perform-ance of medicalservices to beperforming DHS.Left unclear is

whether an entitythat does some,but not substan-tially all, of the“medical work”for the service(such as a turn-key managementservice provider)will be considered

to be performing DHS.Additionally, because of the new “per-

click” and percentage-based compensationprohibitions discussed above, even if notdeemed to be a DHS entity, many of thesearrangements will no longer meet a Starkexception.

Alternative exceptionfor obstetrical malpractice

insurance subsidiesThe Stark regulations currently include

an exception for obstetrical malpracticeinsurance premium subsidies that meetthe federal anti-kickback safe harbor. TheFinal Rule includes a new alternative ex-ception that protects subsidies paid by ahospital, federally qualified health carecenter or rural health clinic if 10 specificrequirements are met.Under the new alternative, among oth-

ers, the physician’s practice must be locat-ed in a primary care Health ProfessionalShortage Area, rural area, or area with ademonstrated need for obstetrical services;or at least 75 percent of the physician’s ob-stetrical patients must live in a medicallyunderserved area or are part of a medical-ly underserved population.

Ownership or investmentinterests in retirement plansUnder current Stark regulations, own-

ership and investment interests do notinclude an interest in a retirement plan.The Final Rule modifies this exception toaddress concerns regarding potential cir-cumvention of the self-referral prohibi-tion by referring physicians investingthrough retirement plans in a DHS entity

that he or she would be prohibited frominvesting in directly.CMS revises the retirement plan excep-

tion to except only ownership or invest-ment interests in an entity “that [arise]from a retirement plan offered by that en-tity to physician (or a member of his orher immediate family) through the physi-cian’s (or immediate family member’s) em-ployment with that entity.”Accordingly, under the Final Rule, a re-

ferring physician, for example, that is em-ployed by a practice that furnishes in-of-fice ancillary services (practice) and,through his employment with practice,has an interest in the practice’s retire-ment plan, and the practice’s retirementplan then invests in a home health agency(HHA), will need to rely upon an owner-ship exception for his investment in theHHA, just as if he or she invested in theHHA directly. As a practical matter, un-less the rural provider exception applies,there likely is no applicable ownershipexception.

‘Burden of proof’In the Final Rule, CMS clarifies that

when a DHS entity appeals a claim forpayment that was denied on the basisthat it was furnished pursuant to a pro-hibited referral, the DHS entity has theburden of proof at each level of the ap-peals process to establish that the servicewas not furnished pursuant to a prohibit-ed referral.The burden of production on each issue

at each level of appeal is initially on theDHS entity, but may shift to CMS or itscontractors depending on the evidence theDHS entity presents. CMS notes that thisapproach is consistent with the currentMedicare claims appeals process.Given the far reach of Medicare’s Re-

covery Audit Contractors (RACs) andCMS’s new Stark payment denial code, inthe near future, providers may be facedwith RAC auditors (who are paid on acontingency basis) denying services basedon Stark violations. Although this raisesseveral issues not addressed in this arti-cle, it certainly should change one’s per-spective on the fairness of requiring theclaimant to establish the burden of proofat each level of the appeals process.

The Disclosure of FinancialRelationships Report

The Final Rule announces that CMS isproceeding with its proposal to send theDisclosure of Financial Relationships Re-port (DFRR) to 500 hospitals (generalacute care and specialty).The DFRR is designed to collect informa-

tion concerning the ownership/investmentinterests and compensation arrangementsbetween hospitals and physicians.Hospitalsthat receive the DFRR will have 60 days torespond. CMS may decide to decrease (butnot increase) the number of hospitals thatwill receive the DFRR.CMS notes that although it has author-

ity to impose civil monetary penalties of upto $10,000 per day for late submissions, itis using the Final Rule to inform the pub-lic that it will issue a letter to any hospitalthat does not return a completed DFRR,inquiring as to why the hospital failed todo so, before imposing such penalties.Also, CMS reiterated that it will give

hospitals extensions of time to completethe DFRR submission “upon a demon-stration of good cause”.

What’s next?Clearly, many of the Stark changes in

the Final Rule will require modification,restructuring, or unwinding of existingarrangements. CMS has given providers ayear to comply with many of the signifi-cant changes. However, CMS is not doneyet, as many additional Stark andMedicare payment rules are expected tobe published this year as part of the 2009Medicare Final Physician Fee Schedule.These expected changes relate to

Medicare’s anti-markup prohibition, newIDTF requirements for physician’s fur-nishing imaging services in the office, anda new Stark gainsharing exception. Fur-ther, CMS has also promised future pro-posals which may narrow the in-office an-cillary services exception, an exceptionthat is crucial to many group practicesproviding ancillary services (e.g., imag-ing, lab, PT) through their offices.Health care providers should consult

with a qualified health care attorney toassist in interpreting the voluminous ex-isting rules, new rules, and future propos-als and how these rules and changes mayapply to existing or future arrangements.

Compliance CornerContinued from page 3


VERDICTS FOR DOCTORS

Man’s small bowelperforation wasn’tconsidered med-mal‘Reasonable effort’made to checkfor problems,experts say; jury agreesKenneth Zdrojewski, 60, presented to

Dr. Christopher Bruck in February 2004about the possibility of a small bowel ob-struction. Zdrojewski had undergone pre-vious abdominal surgery and was at riskfor forming adhesions.On April 22, 2004, Bruck performed a

laparoscopic procedure to take down someof the adhesions. Apparently, during theprocedure or shortly thereafter, a perfora-tion resulted in Zdrojewski’s small bowel.At the conclusion of the procedure andbefore withdrawing instruments, Bruck“walked the small bowel” its entire length,checking its integrity. No injury was not-ed to the small bowel.Zdrojewski continued to have postoper-

ative pain, which was not unusual for a la-paroscopic procedure. The day after sur-gery, Bruck visited with Zdrojewski, whoappeared to be improving. Later that af-ternoon, Bruck went off-call and Dr. PaulM. Doroghazi came on-call.That evening, Zdrojewski’s condition de-

teriorated dramatically. Bruck returnedthe next morning and took Zdrojewski tosurgery. Zdrojewski went on to developnecrotizing fasciitis and, at the time of di-agnosis, there was little that could be done.Zdrojewski was transferred to Detroit

Receiving Hospital on an emergency ba-sis, and died on the operating table.The expert witness support explained

that Bruck’s follow-up with Zdrojewskiwas within the standard of care, and saidthat a perforation of the small bowel dur-ing a laparoscopic procedure is not med-ical malpractice. Bruck, they continued,made a “reasonable effort” to inspect thebowel postoperatively for any complicat-ing injury, but none was observed.The jury found unanimously for the de-

fendant.

Type of action: Medical malpracticeType of injuries: Patient deathName of case: Estate of KennethZdrojewski v. Christopher Bruck, M.D.Court/Case no./Date: Bay County CircuitCourt; 06-3458-NH; May 9, 2008Tried before: JuryName of judge: Joseph K. SheeranDemand: $350,000Highest offer: $175,000Verdict amount: No causeMost helpful experts: Dan Hunt, D.O.,Lansing; Jay Collins, M.D., West BranchInsurance carrier:The Doctors CompanyAttorney for plaintiff: WithheldAttorney for defendant: Brett Bean

Leak detection, how itwas handled disputedSpillage after bariatric surgery washandled correctly, jury decidesThe plaintiff, Janice Peet, who was 40

years old at the time of the alleged mal-practice, was a microfilmer for the State ofMichigan. On June 10, 2001, she under-went a vertical banded gastroplasty(stomach stapling) for weight loss by Dr.Richard Paul Beshore.During the surgery, Beshore detected

and repaired a perforation at the junctureof two staple lines. Five days later, an X-ray with contrast showed a leak in thesame area. A follow-up X-ray on June 18showed a much larger leak. Beshore un-successfully attempted to repair the leakthe next day.At the end of June, Peet was transferred

to another medical institution for furthercare. She eventually underwent numerousprocedures to repair fistulas and abscess-es. The stomach procedure was “takendown” in December 2001, and a differentbariatric procedure was performed in Oc-tober 2002 at the University of Michigan.The plaintiffs argued that Beshore

should have performed an X-ray within 48hour of the first operative procedure, be-cause a leak was detected during this op-

eration and this X-ray would have showna leak. It was further argued that the six-day delay and continued spill of stomachcontents caused the subsequent repairsurgery to be unsuccessful.The defense argued that as long as the

leak was draining and the patient wasclinically stable, conservative manage-ment was appropriate. The jury agreedand ruled no cause of action.(Note: Peet died in October 2004 from

unrelated pancreatic cancer. Before herdeath, she filed for bankruptcy, and Ran-dall L. Frank, the estate’s Chapter 7 bank-ruptcy trustee, substituted for her estatein his case. Peet’s husband voluntarilydismissed a loss of consortium claim onthe second day of trial to avoid evidenceconcerning marital problems.)

Type of action: Medical malpracticeType of injuries: Leak of stomach con-tents resulting in abdominal pain from mul-tiple fistulas and abscesses requiring mul-tiple surgeriesName of case: Frank (bankruptcy trusteefor Estate of Janice Peet), et al., v.Beshore, et al.Court/Case no./Date: Eaton County Cir-cuit Court; 03-884-NH; June 19, 2008Tried before: JuryName of judge: Calvin E. OsterhavenHighest offer: $35,000Verdict amount: No cause of actionMost helpful experts: Dr. Gary Weiss,Flint; Dr. Keith Marshall, WarrenInsurance carrier: ProNationalAttorney for plaintiff: WithheldAttorney for defendant: Michael W.Stephenson, David M. NelsonKey to winning: Demonstrating to the jurythat the defendantʼs actions and inactionswere supported by the entire medical record

Asthma, heart attackdisputed as cause ofdeath of smokerEstate of decedent claimed doctorfailed to diagnose blockage

The plaintiff ’s dece-dent, Ilene Robins,presented sporadical-ly over the years to awalk-in clinic operat-ed by defendant TilakGarg, M.D. ThoughRobins had asthma,she was a smoker. Shealso had a family his-tory of coronary arterydisease and had labvalues showing elevat-

ed cholesterol levels.When she allegedly awoke with shoul-

der and back pain, she presented to Garg’sclinic five hours later. She suffered an ap-parent cardiac arrest and died in his of-fice. The autopsy shows a recent heart at-tack and extensive scarring on her heart.The plaintiff ’s estate claimed Garg

failed to timely follow-up on coronary dis-ease symptoms, including high choles-terol, lipids and other risk factors. Also,plaintiff ’s experts opined that Robins diedof a blockage of her left anterior descend-ing artery, which could have been diag-nosed and treated.The estate of the decedent, who is sur-

vived by a husband and four children,sought $6,000 in medical and funeral ex-penses, $120,000 in past wages, and$400,000 in future wages.The defense contended that Robins died

of an asthma attack and not from a my-ocardial infraction. Also, it was arguedthat the heart damage studied at autopsywas to the small vessels of her heart,which wouldn’t have been enough to causea massive heart attack. Finally, the de-fense contended that Robins was compar-atively negligent as a result of her half-pack-a-day smoking habit combined withher asthmatic condition.The jury believed she died of an asthma

attack and, even if she died of a heart at-tack, the attack could not have been pre-dicted or prevented by Garg. After delib-erating 50 minutes, a no cause of actionverdict was reached.

Type of action: Medical malpracticeType of injuries: Death

Name of case: Michael Robins, for Estateof Ilene Robins, v. Garg, et al.Court/Case no./Date: Oakland CountyCircuit Court; 02-041909-NH; March 31,2008Tried before: JuryName of judge: John I. MacDonaldDemand: $500,000Verdict amount: No causeMost helpful experts: Tom Graves, M.D.,New Baltimore; L. Dragovic, M.D., Pontiac;Steve Almany, M.D., Royal OakInsurance carrier: ProAssuranceAttorney for plaintiff: WithheldAttorney for defendant: D. JenniferAndreou, Emily BallenbergerKey to winning: Disputing cause ofdeath; showing significant contributorynegligence

VERDICTS AGAINST DOCTORS

Doctor’s signaturescrutinized in caseagainst insurance co.Benefit payments were sought for 3patients after alleged accidentIn this direct-provider lawsuit, plain-

tiff Zigmond Chiropractic, P.C sought en-titlement for payment of benefits fortreatment allegedly rendered to claimantsWillie Green, Richard Cutshaw and StevieTaylor, none of whom were presented aswitnesses at trial.Dr. Boris Zigmond said he saw Cutshaw

in his office starting March 21, 2006. Hisinitial exam found cervical disc displace-ment, lumbar disc herniation, cervicalradiculopathy and thoraco-lumbar, amongother things. Thirty visits were noted inthe progressive evaluation notes betweenMarch 22, 2006, and June 6, 2006.Cutshaw was referred by Zigmond to Dr.

RizwanQadir of Neuroscience,P.C., for painin the lower back. Records submitted byQadir indicate Cutshaw was seen 10 timesbetween March 23, 2006, and April 12,2006. It was noted that Neuroscience rentsspace in the building owned by Zigmond.Zigmond also treated Green starting

March 22, 2006, for headache, neck, shoul-der and arm pain stemming from an al-leged automobile accident, with 30 visitsnoted between March 23, 2006, and June6, 2006. Taylor’s 28 visits to Zigmond ranbetween March 22, 2006, and June 2,2006, and also stemmed from an auto ac-cident. Both Green and Taylor were re-ferred to Qadir for 10 and nine visits, re-spectively, during the same periods.A handwriting expert was brought in to

analyze Zigmond’s signature, and foundthat out of 88 forms with Zigmond’s sig-nature, only two had Zigmond’s true sig-nature. Experts also discredited Zig-mond’s records, citing a poor case historytaken on each, and that Neuroscience’srecords of the three allegedly injured par-ties also were incomplete.Defense counsel called for Zigmond to

produce items such as a passport, checkregister and front desk sign-in sheet,which Zigmond did not provide and didnot offer a convincing explanation as towhy each item was not produced.Because Zigmond and Neuroscience

failed to meet their burden of proof — in-cluding proving the three claimants suf-fered injuries from auto accidents thatwere never proven to actually have hap-pened; offering records that are credible;and providing only services within theMichigan scope of chiropractic under MCL333.16401 — a no cause of action decisionwas rendered.

Type of action:First-party no fault provider lawsuitType of injuries: Neck and back injuriesName of case: Zigmond Chiropractic,P.C., et al v. Titan Insurance Co.Court/Case no./Date:Oakland County Circuit Court;07-081683-NF; June 12, 2008Tried before: JudgeName of judge: Colleen A. OʼBrienDemand: 50 percent of bills paidHighest offer: $650 case evaluationVerdict amount: No causeSpecial damages:Defendant is entitled to seek attorney feespursuant to MCL 500.3148(2)Most helpful experts:

Michael Sinke, OkemosInsurance carrier: Titan Insurance Co.Attorney for plaintiff: WithheldAttorney for defendant:David Joseph Lankford, Daniel T. Rizzo

Surgeon foundresponsible inpancreatic deathDefense claimsmultiple biopsieswere necessary; jury disagreesIn August 2002, Brenda Miller, a 39-

year-old married mother of three, was hos-pitalized because of common bile duct ob-struction due to an impacted gallstone.Anendoscopic retrograde cholangiopancre-atography procedure was unsuccessful, sodefendant Dr. Donato M. Cabrera per-formed surgery to remove the stone.Miller also had acute pancreatitis becauseof the gallstone.Cabrera biopsied the pancreas multiple

times, causing seven of weeks hospital-ization and repeated bouts of infection.Miller died three days after dischargefrom the hospital.Cabrera claimed the biopsy was neces-

sary to rule out cancer, given the “woody”feel of pancreas. He also claimed the pa-tient died because of heart failure unre-lated to the biopsy.According to Richard J. Dimanin, who

represented the plaintiff, evidence showedthe biopsy was unnecessary, as pancreat-ic cancer is a death sentence and wastreated in major medical centers, not onefound in Saginaw at the time. Also, a GIspecialist diagnosed acute pancreatitis be-fore surgery.The defendant admitted that standard of

care prohibited biopsy on patient with acutepancreatitis, as did all surgery experts. Au-topsy slides demonstrated that patient diedof reactivation of sepsis related to biopsy.Because Miller’s official autopsy did not

specify a cause of death, her estate filedsuit, alleging wrongful death. The plain-tiffs argued that the pancreatic biopsywas the proximate cause of Miller’s death.The jury agreed and awarded $1.8 mil-

lion to the estate.

Type of action: Medical malpracticeType of injuries: DeathName of case: Miller, et al., v. St. MaryʼsMedical Center, et al.Court/Case no./Date: Saginaw CountyCircuit Court; 04-52640-NH-4;June 20, 2008Tried before: JuryName of judge: Fred BorchardVerdict amount: $1.8 millionInsurance carrier: AP CapitalAttorney for plaintiff:Richard J. Dimanin, Terry CiroccoAttorney for defendant: Withheld

Boy born with braindamage, speech delaysDelivery, blood transfusion shouldhave happened sooner, plaintiffs say

The plaintiff-motherwas being treated pre-natally at a hospitalclinic, and made mostof her appointments.Prenatal ultrasoundsshowed she wouldlikely have a smallbaby and showed evi-dence of a small sub-chorionic bleed in thefirst term. She was or-dered to have continu-

ing ultrasounds and nonstress tests, butshe missed nine nonstress test appoint-ments.At 41 weeks, the plaintiff-mother was ad-

mitted for induction of labor due to the sus-picion she was going to have a small baby.Fetal monitoring was mostly reassuring.At 10:13 p.m., the records documented a

“sudden gush of bright red blood.” Subse-quently, heart tones were bradycardic,then lost altogether. The ultrasoundshowed severe bradycardia.An emergencyC-section was performed within 29 min-utes of the bleeding.The plaintiff-minor had a low Apgar’s

score and blood gases and suffered hypoxic-ischemic encephalopathy according to therecords. He was a normal size at delivery.The records further showed the bleeding

in labor was due to vasa previa, a very rarecondition where fetal blood vessels trans-verse the lower uterine segment and thebaby bleeds out near the time of delivery.Fetal brain damage can occur within

Verdicts & Settlements

ANDREOU

REITER

On Aug. 19, 2008, the Department ofHealth and Human Services Office of In-spector General (OIG) issued an advisoryopinion (No. 08-10) analyzing a proposedblock-lease arrangement.The OIG concluded that the arrange-

ment could violate the federal Anti-Kick-back Statute, 42 U.S.C. § 1320a-7b (AKS),and trigger government enforcement ac-tivities, including imposition of adminis-trative sanctions.Block leasing is a tactic used to struc-

ture “sharing” arrangements for medicalequipment traditionally afforded and pur-chased only by large health care organi-zations like hospitals or nursing homes.The details of the arrangements vary, butin many cases, two or more practices forma new corporate entity to purchase an ex-pensive piece of equipment and thenblock-lease it back, together with ancillaryspace, personnel and supplies, to the own-er-practices. In others, physician practicescollaborate to block lease the equipmentfrom an unaffiliated entity.The arrangements typically are de-

signed, or at least intended, to complywith the technical requirements of safeharbors and exceptions promulgated bythe OIG and Centers for Medicare andMedicaid Services under the AKS andanti-self-referral law, 42 U.S.C. § 1395nn(Stark). These typically require that com-pensation:• Be set in advance in awritten agreement;• Reflect the fair market value of similaritems or services provided in an arm’s-length transaction; and

• Not vary with the volume or value of re-ferrals among the parties.For example, a block lease typically re-

quires the lessee practice to rent theequipment (and ancillary items and serv-ices) for pre-determined blocks of timethat are not subject to change during itsterm.

The proposed arrangementThe OIG opinion was requested by a

group practice that operates a freestand-ing facility providing radiation andchemotherapy treatment, including in-tensity-modulated radiation therapy serv-ices (IMRT) to cancer patients, many of

whom are referred by area urologists.The group practice and the urologists

proposed to enter into a series of part-timeblock leases and associated agreements toperform and support the IMRT services.Each would include a space lease for theuse of examination and treatment rooms,an equipment lease for the use of theIMRT equipment, and a personnel servic-es lease for the use of the personnel, in-cluding independent contractor physi-cians, to perform and supervise the IMRTservices.Under the proposed arrangement, the

group practice also planned to provide thenecessary ancillary supplies, and to billthird-party payers on behalf of the urolo-gists using the urologists’ billing numbers.The urologists agreed to pay the group

practice an amount determined by an in-dependent consultant to reflect the fairmarket value of the services provided,which was fixed and set in advance in awritten agreement with a minimum one-year term.However, the parties anticipated that

the group practice would collect fees fromthird-party payers, subtract and retainthe amounts owed under the leases andrelated contracts, and turn over the re-mainder to the urologists.

OIG analysisThe OIG reached back to its 2003 Spe-

cial Advisory Bulletin on “ContractualJoint Ventures” to analyze the proposedarrangement. In the bulletin (availableonline at http://oig.hhs.gov/fraud/docs/alertsandbulletins/042303SABJointVentures.pdf), the OIG had identified thefollowing “indicia” of “suspect” joint ven-tures and found that parties to these ven-tures could be subject to administrativesanctions or even criminal prosecution:•New line of business: The owner ex-pands into a related line of business de-pendent on referrals from the owner’s ex-isting business and primarily intendedto serve the owner’s existing patient base.

• Scope of services provided by themanager/supplier: The owner neitheroperates the new business itself norcommits substantial financial, capital,or human resources to the venture, butinstead contracts out virtually all oper-ations of the new business, which billsin the name of the owner.

• Captive referral base; little or nobona fide business risk: Although thearrangement may appear to put theowner at risk, the risk is actually mini-mal because of the owner’s ability to in-fluence referrals.

• Natural competitor as partner: Themanager/supplier is an establishedprovider of the same services as theowner’s new line of business and absentthe arrangement would be a competitorto the new business.

•Remuneration: The owner and manag-er/supplier share in the economic benefitof the new business, the owner throughresidual profits and themanager/supplierthrough the contracts. Aggregate pay-ments vary with the volume or value ofnew business generated for the new busi-ness by the owner; the parties effectivelyshare the profits of the new business.

• Exclusivity: One or both parties agreenot to compete with the other or thenew business.The OIG made clear in the bulletin that

the presence or absence of any one of theabove criteria would not necessarily bedeterminative of whether a particulararrangement was suspect, and cautionedthat even arrangements involving lessdelegation or non-competing parties couldbe problematic.Turning back to the more recently pro-

posed IMRT arrangement, the OIG con-cluded that the block lease arrangementwould establish just the sort of contractu-al joint venture that it earlier had dis-couraged in the bulletin.In issuing its opinion, the OIG reiterat-

ed an important point made in the 2003bulletin: even assuming the AKS safe har-

bors were met for each individual agree-ment in the transaction, this could protectonly the remuneration flowing from theurologists to the group practice, not the ef-fective remuneration from the group prac-tice to the urologists in the form of an op-portunity to generate fees for services theythemselves would not normally provide.The opinion underscores some of the

complexity of the fraud and abuse lawsand reminds providers of the risks of vio-lation. Practices involved in block-leasearrangements are encouraged to havethose arrangements reviewed by experthealth care counsel.Some may need to be restructured to

avoid the “suspect” characteristics first de-scribed in the bulletin; others may need tobe unwound. Additional steps to mitigatepotential exposuremaymerit consideration.


minutes, where the baby loses 50 percentof his or her blood volume, as was the casehere.After the delivery, plaintiff-minor was

transfused with plasmate within nineminutes of delivery. He was transfusedwith packed red blood cells within 58 min-utes of the delivery.The plaintiffs asserted that delivery

should have occurred within 15 minutesof the bleeding during labor, instead of 29minutes, and that transfusion withpacked red blood cells should have oc-curred within 30 minutes of the delivery,instead of 58 minutes.The defense position was that with the

vasa previa, brain damage likely oc-curred at the time of the bleeding due toextreme fetal blood loss and hypov-olemia. Therefore, sooner delivery wouldnot have made a difference in outcome.Defendants also asserted that the 30-minute C-section rule applied, and thatthis C-section occurred within 29 min-utes. Finally, the defense asserted that

the plaintiff-minor’s injuries were not assevere as claimed by the plaintiffs. Theattending physician had a note in thechart indicating a delay in anesthesiaand transfusion.The plaintiff-minor showed great im-

provement as he grew older. His IQ wasfound to be in the low-normal range andhe had little or no evidence of cerebral pal-sy by age 5 1⁄2. He does, however, havespeech delays.The parties settled the matter for $1.1

million.

Type of action: Medical malpracticeType of injuries: Brain damage, speechdelaysName of case: WithheldCourt/Case no./Date: Withheld; withheld;April 2, 2008Name of judge: WithheldSettlement amount: $1.1 millionMost helpful experts: InFocus ResearchGroupAttorney for plaintiff: Jesse M. ReiterAttorney for defendant: Withheld

SETTLEMENTS

Common bile ductclipped during surgeryAfter follow-up care,patient hasabdominal, digestive problemsOn Feb. 11, 2005, the plaintiff patient

presented to the defendant hospital withabdominal pain.A diagnosis of cholecysti-tis (infection and inflammation of the gallbladder) was made.During the gall bladder removal sur-

gery, the defendant doctor cut and clippedthe patient’s common bile duct, when heshould have cut the cystic duct.After surgery, the patient was sent to

the general floor. When his condition didnot improve, a diagnostic workup was per-formed and a bile leak was diagnosed.Thepatient was then transferred to a differenthospital for follow-up surgery to fix theclipped common bile duct, which was doneFeb. 22, 2005.The patient underwent a Roux-en-Y

hepaticojejunostomy surgery to correctthe problems caused by the first doctor’snegligence. The procedure is the surgicalfashioning of a direct connection be-

tween the hepatic duct and the jejunumin order to drain bile directly from theliver when injury has damaged the com-mon bile duct.Because of the injury to the common

bile duct and the subsequent surgeries,the patient has continued abdominaland digestive problems, including prob-lems when eating sweets and spicyfoods.The only defense put forth in this case

is that injury to the common bile duct is aknown risk of the procedure and is notnegligence.The case settled for $235,000.

Type of action: Medical negligenceType of injuries: Common bile duct injuryduring gall bladder removal surgeryName of case: ConfidentialCourt/Case no./Date: Macomb CountyCircuit Court; confidential; June 13, 2008Name of judge: Peter MaceroniSettlement amount: $235,000Most helpful experts: Dr. MichaelLeitman, New YorkAttorney for plaintiff: Frank T. AielloAttorney for defendant: WithheldKey to winning: Admissions obtainedfrom defendant at deposition

Verdicts & SettlementsContinued from page 6

Block-lease arrangement interpreted by OIG as suspect joint venture

Health Care JusticeBy Rosanna J. Willis, Esq.

Rosanna J. Willis isan associate atMiller Canfield,where she focuses inhealth law, mergersand acquisitions,and general busi-ness law. She rou-tinely analyzes com-plex health-care

related business ventures for properstructure under federal and statehealth-care laws, and has guidedclients through the health-care facili-ty licensure and certificate of needprocess. Contact her at (248) 267-3276or [email protected].


The Michigan Court of Appeals has is-sued a published decision interpreting thePublic Health Code requirement thatnursing home administrators and direc-tors of nursing must immediately reportabuse,mistreatment or harmful neglect ofresidents to the Department of Commu-nity Health. (People v Edenstrom, Aug. 5,2008.)In the last several years, the Attorney

General’s Health Care Fraud Division hasbrought criminal charges against a num-ber of nursing home administrators(NHAs) and directors of nursing (DONs)for failing to report incidents resulting ininjury to residents of nursing homes andlong-term care facilities.MCL 333.21771 requires NHAs and

DONs to “immediately report” any phys-ical, mental or emotional abuse, mis-treatment or harmful neglect of a resi-dent by nursing home licensees or theiremployees. The attorney general hasmaintained that a violation of this regu-latory requirement is a misdemeanor un-

der the Public Health Code’s catch-allprovision, MCL 333.1299.These prosecutions have resulted in

great concern and uncertainty in the long-term care community, especially becausesome of the incidents were investigated byDepartment of Community Health (DCH)surveyors who concluded that no neglectoccurred and no citation was warranted.The difficulties have been aggravated

by the lack of any clear definition of“abuse, mistreatment and harmful neg-lect” and the inconsistent reporting re-quirements of parallel federal regulations.The Court of Appeals’ opinion providessome guidance but unfortunately leaveskey issues undecided.In Edenstrom, an oxygen-dependent

resident was in a nursing home’s desig-nated smoking area. Before lighting theresident’s cigarette, a certified nursing as-sistant (CNA) turned off the oxygen butdid not remove a nasal cannula. Residualoxygen ignited, resulting in burns andsmoke inhalation. After a prompt investi-gation, the administrator concluded theincident was an accident and therefore, noreport of “harmful neglect” was made toDCH.The Court of Appeals affirmed the dis-

missal of the failure-to-report charge,holding that the CNA’s actions were not“harmful neglect” within the meaning ofMCL 333.21771(2), and therefore, no re-port was required by the defendant NHA.Because the statute does not define

“harmful neglect,” the court adopted the“peculiar and appropriate meaning” of theterm which “has primarily been pre-scribed by the Department of CommunityHealth.”The court relied on the department’s

complaint and facility reported incident

manual. The manual states that “neglectmeans failure to provide goods and serv-ices necessary to avoid physical harm,mental anguish, or mental illness” and“basically, neglect involves the failure of astaff person to carry out his/her duties inregard to a resident.”However, this broad interpretation is

limited by a statement that neglect cita-tions are normally issued only “wherethere is significant actual harm resultingfrom a failure to act in the presence of theknowledge of what should be done andthe capability to provide the requiredservices.” (Emphasis in the original.)The Court of Appeals found that the

nursing home’s smoking policy did not re-quire removing the cannula before light-ing a cigarette. The CNA apparently didnot know about the risks of lighting ciga-rettes when a resident is wearing a can-nula and did not receive any in-servicetraining related to the subject.As a result, the court concluded that the

CNA did not fail to carry out her duties.Instead, “she did what she knew to do”and did not fail “to act in the presence ofthe knowledge of what should be done.”However, the court held that neglect

does not need to be willful or intentional.The failure to perform required acts orknown duties, even if careless or uninten-tional, can constitute neglect.The court then discussed the duty to re-

port if an NHA or DON has “reason to be-lieve” that abuse or neglect “was or is sus-pected to be the cause” of harm to aresident. Again, the court relied on themanual, which expects an NHA or DON toexercise judgment in determining whetheran incident involved abuse or neglect.Although not all injuries must be re-

ported, it is not sufficient to determine

that the incident was an accident. Someaccidents can involve reportable neglect.The court noted that DCH has interpretedthe statute broadly, so that overreportingis more desirable than underreporting.The Court of Appeals held that no

harmful neglect occurred and, therefore,the NHA was not required to make a re-port under MCL 333.21771(2).As a result,several key issues were not decided.Michigan’s Public Health Code only re-

quires a report of “harmful neglect”; thefederal regulatory requirements mandatea report of “neglect.” In some cases, therehave been disputes as to whether the al-leged neglect caused the injury or harmsuffered by the resident, and in turn,whether the NHA or DON believed thatthere was a causal relationship betweenthe neglect and harm.The court also did not determine the

criminal liability of a DON or NHA whobelieves, mistakenly but in good faith,that an incident did not involve harmfulneglect. Given the manual’s imprecise def-inition of the term, there can be reason-able disagreement as to whether an em-ployee’s acts or omissions rose to the levelof neglect.Moreover, the Court of Appeals did not

decide whether a failure to report underthis statute can be charged as a crime inaddition to constituting a regulatory vio-lation. In several cases, the defendantshave argued that the language of the Pub-lic Health Code does not authorize crimi-nal prosecutions for failure to report un-der MCL 333.21771(2).This is a critical question because any

conviction involving abuse or neglectthreatens the licenses and careers ofNHAs and DONs. Unfortunately, the is-sue remains unresolved for now.

State Court of Appeals interprets statutory duty toreport abuse or neglect of nursing home residents

No-show patients are a part of any med-ical practice. Over the years, physiciansand other practitioners have developednumerous policies in an attempt to pre-vent no-shows.Most practices institute such policies

as a deterrent rather than for the purposeof actually collecting additional fees, sincecollections efforts can be more expensivethen the fees collected.Some practitioners have instituted an

up-front approach, requiring patients toreserve their appointment slots with a de-posit. This deposit is cashed if the patientfails to make their scheduled appointment.Regardless of the policy implemented, it

is crucial that the policy is clear and uni-formly applied to patients.Any no-show policy implemented by a

practitioner should be written and incor-

porated into a financial consent formsigned by the patient so that the patienthas actually agreed to the charge for pur-poses of collecting.According the American Medical Asso-

ciation’s (AMA) Position Statement on In-formed Financial Consent, a medical prac-titioner should give the patient sufficientinformation regarding the likely feescharged by the practice so that the patientis able to make an informed decision pri-or to the provision of medical services.The financial consent should say some-thing to the effect of: “I agree to be boundby the attached no-show policy.”Further, for the purpose of notification,

the practitioner should post the no-showpolicy in a conspicuous place within theoffice, in addition to having the patientsign a new financial consent form that in-

cludes the no-show policy.In developing a patient no-show policy,

a practitioner needs to be aware of his/herpractice’s history and needs. It is vitalthat patients understand that their be-havior and failure to keep appointmentscan damage their health as well as thehealth of other patients. Many practiceshave implemented telephone remindersystems to notify patients of appoint-ments in the next 24 to 48 hours. Otherscharge a percentage of the appointmentfee. Some practitioners overbook patients,assuming that a percentage of patientswill not show.As noted above, a new trend in patient

no-show policies is to make patients re-serve their appointment with a deposit. Ifthe patient fails to appear for his/her ap-pointment or give proper notice, the de-

posit is cashed.After making an initial de-posit, patients should be much more faith-ful about showing up, or least providingnotice if they cannot make their appoint-ment. Again, patients must be informed ofthe policy and understand that they willlose their deposit if they miss their ap-pointments.The implemented no-show policy should

be reasonable to avoid patient complaintsand the transfer of good patients to otherproviders. For example, a policy may statethat a patient who arrives more than 30minutes late shall be assessed the no-show fee. But, if patients are routinely re-quired to wait 30 minutes or more fromthe scheduled appointment time, the hy-pothetical policy is likely unreasonable.It may be advisable for a policy to have

some flexibility, for instance, by allowing apatient one occasion to waive the no-showfee.The policy should recognize that thereare some situations in which a patientcannot cancel with greater than 24 hoursnotice. Some policies may explicitly statethat the practice shall forgive one missedappointment, but, beyond that, failure tocancel will result in the stated fee of theno-show policy.Any patient no-show policy implement-

ed by a practitioner should be clear anduniformly applied to all patients. The pa-tients should also be provided with amplenotification of the no-show policy so thatthe practitioner can properly enforce andcollect any no-show fee charged to a pa-tient. Requiring a patient to deposit fundsprior to the appointment may effectivelydeter and modify patients’ behavior tolimit a practice’s no-shows.

Bethere ...or pay upDeveloping a patient no-showpolicy for your practice

Business of MedicineBy Jeffrey R. Campbell, Esq.

Jeffrey R. Campbellis an associate atWachler & Associ-ates, P.C., where hespecializes in trans-actional and corpo-rate matters; compli-ance; audit defense;reimbursement andcontracting matters;

and staff privilege and third-partypayer departicipation matters. Con-tact him at (248) 544-0888 or [email protected].

Health Care JusticeBy Richard C. Kraus, Esq.

Richard C. Kraus isa shareholder atFoster, Swift, Collins& Smith, P.C., wherehe specializes in thepractice areas ofhealth care, criminaldefense and com-mercial litigation.Contact him at (517)

371-8104 or [email protected]


LegislativeCommittee MembersContact information for state senators canbe found at http://senate.michigan.gov.Contact information for state houserepresentatives can be found athttp://house.michigan.gov.

COMMITTEE ON HEALTH POLI CYHouse• Kathy Angerer (D)Chair, 55th District

• Mike Simpson (D)Majority Vice-Chair, 65th District

• Barb Byrum (D)67th District

• Brenda Clack (D)34th District

• Marc R. Corriveau (D)20th District

• Andy Coulouris (D)95th District

• Marie Donigan (D)26th District

• Ted Hammon (D)50th District

• Robert B. Jones (D)60th District

• Mary Valentine (D)91st District

• Lisa Wojno (D)28th District

• Bert Johnson (D)5th District

• Edward Gaffney (R)Minority Vice-Chair, 1st District

• Joe Hune (R)47th District

• Jim Marleau (R)46th District

• Kevin Green (R)77th District

• Richard Ball (R)85th District

• Brian N. Calley (R)87th District

• David Robertson (R)51st District

• Tim Moore (R)97th District

Senate• Thomas M. George (R)Chair, 20th District

• Bruce Patterson (R) Vice Chair, 7thDistrict

• Alan Sanborn (R)11th District

• Jason Allen (R)37th District

• Hansen Clarke (D)Minority Vice-Chair, 1st District

• John Gleason (D)27th District

• Gilda Z. Jacobs (D)14th District

COMMITTEE ON SENIO R HEALTH,SECURIT Y AND RETIR EMENTHouse• Robert B. Jones (D)Committee Chair, 60th District

• Bob Constan (D)Majority Vice-Chair, 16th District

• Richard Ball (R)Minority Vice-Chair, 85th District

• Hoon-Yung Hopgood (D)22nd District

• LaMar Lemmons Jr. (D)2nd District

• Rebekah Warren (D)53rd District

• Kevin Green (R)77th District

• Fulton Sheen (R)88th District

• John Stahl (R)82nd District

COMMITTEE ON I NSURANCEHouse• Virgil Smith (D)Committee Chair, 7th District

• Barbara Farrah (D)Majority Vice-Chair, 13th District

• Joe Hune (R)Minority Vice-Chair, 47th District

• Paul Condino (D)35th District

• Bob Constan (D)16th District

• Bert Johnson (D)5th District

• LaMar Lemmons Jr. (D)2nd District

Michigan MedicalLegislation ReportFollowing is a list of bills pending in the MichiganLegislature related to health care and healthcare professionals. Detailed information andanalysis on this and other pending legislationcan be found at www.michiganlegislature.org.

HOUSE BILLS• HB 6307 — Dental Equipment and AmalgamSeparators“Except as otherwise provided, this section ap-plies to a dentist who uses dental amalgam andto a dentist who removes dental amalgam. Thissection does not apply to any of the following:“(a) Oral and maxillofacial surgeons.“(b) Oral and maxillofacial radiologists.“(c) Oral pathologists.“(d) Orthodontists.“(e) Periodontists.“(f) Dentists while providing services in a dentalschool or in a hospital.“On or before Dec. 31, 2013, a dentist describedin subsection (1) shall install or have installedand use on each wastewater drain in the den-tist’s office that is used to discharge dentalamalgam a separator that has an efficiency of 95percent or more as determined through testingin accordance with standards published by theinternational organization for standardization inISO 11143:1999 ‘Dental equipment —Amalgamseparators.’“On or before the expiration of 90 days after theeffective date of this section, the Michigan boardof dentistry shall promulgate rules regardingbest management practice for dental amalgamcollection, disposal, and recycling and the reten-tion and inspection of dental office records re-garding the following:“(a) The type of dental amalgam separator in-

stalled and in use in the office.“(b) The method used to dispose of or recycle

the dental amalgam waste collected.“(c) The shipping or other delivery records doc-

umenting the transfer of the dental amalgamwaste collected to licensed recyclers or dis-posers.

“(d) The maintenance of the dental amalgamseparator.

“(e) Compliance with best management practices.“A violation of subsection (1) or (2) or a rulepromulgated under subsection (3) is a violationof section 16221(h).“Beginning on the effective date of this section,this section preempts and supersedes any localordinance, regulation, or resolution that imposesconflicting, different, or additional standards orrequirements on dentists than those contained inthis section or rules promulgated by the boardunder this section. A local unit of governmentshall not enact, adopt, maintain, or enforce an or-dinance, regulation, or resolution that imposesconflicting, different, or additional standards orrequirements on dentists than those contained inthis section or rules promulgated by the boardunder this section, including, but not limited to,the requirement to obtain a permit that limits thedischarge of mercury into wastewater with alimitation greater than that capable of beingachieved by full compliance with this section.”Sponsor: Marie DoniganStatus: Referred to Committee on Health Policy

• HB 6354 — Guide Dogs to Remain with Own-er in Health Facilities or Agencies“Except as otherwise provided in this section, aguide dog or other service animal that is accom-panying an individual with disabilities, which an-imal is especially trained and educated for thatpurpose, shall be allowed to stay with the indi-vidual with disabilities in a health facility oragency. During an emergency situation, thehealth facility or agency shall presume that ananimal that is accompanying an individual withdisabilities is a guide dog or other service animalthat is especially trained and educated for thatpurpose if the animal is wearing a guide dog orleader dog harness, a blaze orange leash and col-lar, a hearing dog cape, or a service animal back-pack. After an emergency situation has been sta-bilized or during a nonemergency situation, thehealth facility or agency may require the individ-ual with disabilities to produce a pictured identi-fication card certifying that the animal wastrained by a qualified organization or trainer thattrains guide dogs or other service animals. Thehealth facility or agency may use the list of qual-ified organizations and trainers maintained bythe department of labor and economic growth as

required in section 502c of the Michigan penalcode, 1931 PA 328,MCL 750.502c, for verificationpurposes under this section.“A health facility or agency may refuse to allowa guide dog or other service animal to stay withthe individual with disabilities if any of the fol-lowing circumstances exist:“(a) The animal is out of control and the individ-

ual with disabilities is ineffective in regain-ing control.

“(b) The animal poses a direct threat to thehealth and safety of others.

“(c) The animal is interfering with the function-ing of the health facility or agency staff.

“(d) There is no room in the health facility oragency for the animal.

“(e) The animal poses a threat to the sterility ofthe health facility or agency and sterility isessential due to infection.

“(f ) The animal is allowed to run free or roam inthe health facility or agency.

“(g) The animal is not in a guiding harness or ona leash and under the control of the individ-ual with disabilities or other appropriate in-dividual at all times while in the health fa-cility or agency.

“(h) The individual with disabilities is unable toproduce a pictured identification card as re-quired in subsection (1).

“A health facility or agency that refuses to allowa guide dog or other service animal to stay withan individual with disabilities under subsection(2) shall take reasonable steps to ensure that theanimal is delivered to a family member of the in-dividual with disabilities or other appropriatecaretaker. As soon as practical, the health facil-ity or agency shall inform the individual withdisabilities or his or her legal representative ofthe action it has taken with regard to the animal.“As used in this section, ‘guide dog or otherservice animal’ and ‘individual with disabilities’mean those terms as used in 40 USC 3103.”Sponsor: Hoon-Yung HopgoodStatus: Referred to Committee on Health Policy

• HB 6381 — Reuse of Certain Medical Equip-ment and Supplies“A health care provider shall not use any singleuse product on a patient if that single use prod-uct was previously used.“A person that violates this section is guilty of afelony punishable by imprisonment for not morethan 10 years or a fine of not more than $50,000,or both.“As used in this section:“(a) ‘Health care provider’ means a health facil-

ity or agency or a health professional thatutilizes single use products in furnishingmedical, surgical, or dental treatment orcare to patients.

“(b) ‘Health professional’ means an individual li-censed, certified, or authorized to engage ina health profession under article 15.

“(c) ‘Single use product’ means an item of med-ical equipment or medical supplies that isintended for one use or on a single patientduring a single procedure.”

Sponsor: Michael SakStatus: Referred to Committee on Health Policy

SENATE BILLS• SB 1311 — Medical Benefit Plan Carriers Of-fering Incentives to Physicians or Other HealthCare professionals for Prescribing Certain Med-ications“A carrier or any person acting on a carrier’s be-half shall not do any of the following:“(a) Pay a physician or other health care profes-

sional to prescribe a specific drug or type ofdrug.

“(b) Pay a physician, pharmacist, or other healthcare professional to switch a stable patientfrom one drug to another specific drug ortype of drug.

“(c) Provide financial incentives to a physician orother health care professional to prescribe aspecific drug or type of drug.

“(d) Provide a cash bonus or other reward to aphysician or other health care professionalfor compliance with medical benefit planguidelines regarding drugs to be used.

“(e) Withhold a portion of a physician’s or otherhealth care professional’s compensation orfinancially penalize a physician or otherhealth care professional in some other wayfor failure to comply with specific medica-tion use mandates.

“(f ) Provide incentives or other inducements to aphysician or other health care professional

to prescribe a specific drug or type of drug.“(g) Engage in any other activity that may be

viewed as a kickback for prescribing a spe-cific drug or type of drug.

“On or before Feb. 1, May 1, Aug. 1, and Nov. 1every year, a carrier shall report all of the fol-lowing to the attorney general for the immedi-ately preceding quarter:“(a) Any payments, financial incentives, or other

inducements to physicians or other healthcare professionals that may be viewed as aninducement to a physician or other healthcare professional to prescribe a specificdrug or type of drug or to switch a stable pa-tient from one drug to another specific drugor type of drug.

“(b) Any other information the attorney generalrequires.

“Except as otherwise provided in subsection (3),on or before Feb. 1, May 1, Aug. 1, and Nov. 1every year, a physician or other health care pro-fessional shall report all of the following to theattorney general for the immediately precedingquarter:“(a) The receipt of any payments, financial in-

centives, or other inducements from carriersthat may be viewed as an inducement toprescribe a specific drug or type of drug. Aphysician or other health care professionalis not required under this subdivision to re-port regular compensation that is paid forthe health care or consulting services ofthat physician or other health care profes-sional, unless it is tied to the prescribing ofa specific drug or type of drug.


“On or before Feb. 1, May 1, Aug. 1, and Nov. 1every year, a pharmacist shall report all of thefollowing to the attorney general for the imme-diately preceding quarter:“(a) Any payments, financial incentives, or other

inducements to physicians or other healthcare professionals that may be viewed as aninducement to a physician or other healthcare professional to switch a stable patientfrom one drug to another specific drug ortype of drug.


“The attorney general shall promptly investigatepossible violations of this act based upon infor-mation received from any source, including tipssubmitted from the general public.“A person who violates this act is subject to a civ-il fine not to exceed $25,000 for each violation.”Sponsor: Bruce PattersonStatus: Referred to Committee on Health Policy

• SB 1355 — Require Emergency Room or Ur-gent Care Clinic to Offer Emergency Contraception“Before the expiration of 30 days after the ef-fective date of this section, the department shallprepare and distribute to health facilities andagencies that provide emergency or urgent caremedically and factually accurate written infor-mation about emergency contraception. On andafter the expiration of 30 days after the effectivedate of this section, a health facility or agencythat provides emergency or urgent care shallprovide to all persons who provide care to vic-tims of criminal sexual conduct in that facility thewritten information about emergency contra-ception prepared under this subsection.“A health facility or agency that provides emer-gency or urgent care shall promptly provide to apatient who is a female victim of criminal sexu-al conduct and who is of childbearing age acopy of the written information about emergencycontraception prepared under subsection (1) andshall promptly offer emergency contraception tothat female victim. If the female victim of crimi-nal sexual conduct who is of childbearing age re-quests emergency contraception, the health fa-cility or agency shall administer emergencycontraception to that female victim.”Sponsor: Gilda JacobsStatus: Referred to Committee on Health Policy

• SB 1357 — Requirement for a Pharmacist toFill Prescriptions Without Bias“A pharmacist shall not dispense a drug requir-ing a prescription under the federal act or a lawof this state except under authority of an originalprescription or an equivalent record of an origi-nal prescription approved by the board.“A pharmacist may dispense a prescription writ-ten and signed or transmitted by facsimile, elec-tronic transmission, or other means of communi-cation by a physician prescriber in a state otherthan Michigan, but not including a prescription fora controlled substance as defined in section 7104

Pending Legislation

except under circumstances described in section17763(e), only if the pharmacist in the exercise ofhis or her professional judgment determines all ofthe following:“(a) That the prescription was issued pursuant to

an existing physician-patient relationship.“(b) That the prescription is authentic.“(c) That the prescribed drug is appropriate and

necessary for the treatment of an acute,chronic, or recurrent condition.

“A pharmacist or a prescriber shall dispense aprescription only if the prescription falls withinthe scope of practice of the prescriber.“A pharmacist shall not knowingly dispense a pre-scription after the death of the prescriber or patient.“A pharmacist shall not refuse to dispense ortransfer a prescription based solely on his or herethical, moral, or religious beliefs.“In addition to the grounds set forth in part 161,the disciplinary subcommittee may fine, repri-mand, or place a pharmacist licensee on proba-tion, or deny, limit, suspend, or revoke the licenseof a pharmacist or order restitution or communi-ty service for a violation or abetting in a violationof this part or rules promulgated under this part,or for 1 or more of the following grounds:“(a) Permitting the dispensing of prescriptions

by an individual who is not a pharmacist,pharmacist intern, or dispensing prescriber.

“(b) Permitting the dispensing of prescriptions by apharmacist intern, except in the presence andunder the personal charge of a pharmacist.

“(c) Selling at auction drugs in bulk or in openpackages unless the sale has been approvedin accordance with rules of the board.

“(d) Promoting a prescription drug to the public inany manner.

“(e) In addition to the prohibition contained insection 7405(1)(e), dispensing a prescriptionfor a controlled substance as defined in sec-tion 7104 that is written and signed or trans-mitted by facsimile, electronic transmission,or other means of communication by a physi-cian prescriber in a state other than Michi-gan, unless the prescription is issued by aphysician prescriber who resides adjacent tothe land border between this state and anadjoining state or resides in Illinois or Min-nesota and who is authorized under the lawsof that state to practice medicine or osteo-pathic medicine and surgery and to prescribecontrolled substances and whose practicemay extend into this state, but who does notmaintain an office or designate a place tomeet patients or receive calls in this state.

“(f) Refusing to dispense or transfer a prescrip-tion based solely on his or her ethical, moral,or religious beliefs.”

Sponsor: Deborah CherryStatus: Referred to Committee on Health Policy

• SB 1442 — Practice of Reusing Certain Med-ical Supplies“Except as otherwise provided in this section, ahealth care provider shall not use a reprocessedsingle-use device on a patient. A health careprovider may use a reprocessed single-use de-vice on a patient if the health care provider ob-tains the patient’s signed, written consent as re-quired under this section. If obtained under thissection, the health care provider shall include thesigned, written consent in the permanent medicalrecord of the patient.“Except as otherwise provided in this section, ahealth care provider shall provide to each patienton admission or registration a written notice thatdescribes all of the following:“(a) The practices of the health care provider re-

garding reprocessed single-use devices, in-cluding the circumstances under which re-processed single-use devices are used, andthe safeguards taken by the health careprovider to ensure the safety of the patientunder those circumstances.

“(b) The potential risks of using reprocessed sin-gle-use devices generally and in the specif-ic application with regard to that patient.

“The written notice required in subsection (3)shall provide the patient an opportunity to con-sent or refuse consent to the use of reprocessedsingle-use devices on the patient. The healthcare provider shall not use the patient’s refusal to

Pending LegislationContinued


• Gino Polidori (D)15th District

• Bettie Cook Scott (D)3rd District

• Mike Simpson (D)65th District

• Lisa Wojno (D)28th District

• Judy Emmons (R)70th District

• Dave Hildenbrand (R)86th District

• David Law (R)39th District

• Tim Moore (R)97th District

• Tory Rocca (R)30th District

• Edward Gaffney (R)1st District

COMMITTEE ON JUDICI ARYSenate• Wayne Kuipers (R)Chair, 30th District

• Alan L. Cropsey (R)Vice-Chair, 33rd District

• Gretchen Whitmer (D)Minority Vice-Chair, 23rd District

• Alan Sanborn (R)11th District

• Bruce Patterson (R) 7th District• Hansen Clarke (D)1st District

• Michael Prusi (D)38th District

House• Paul Condino (D)Committee Chair, 35th District

• Andy Coulouris (D)Majority Vice-Chair, 95th District

• Tonya Schuitmaker (R)Minority Vice-Chair, 80th District

• Steve Bieda (D)25th District

• Marc R. Corriveau (D)20th District

• Mark S. Meadows (D)69th District

• Andy Meisner (D)27th District

• Bettie Cook Scott (D)3rd District

• Virgil Smith (D)7th District


• David Law (R)39th District

• Kevin Elsenheimer (R)105th District

• John Stakoe (R)44th District

• Rick Jones (R)71st District

• Tory Rocca (R)30th District

COMMITTEE ON TAX POLICYHouse• Steve Bieda (D)Committee Chair, 25th District

• Paul Condino (D)Majority Vice-Chair, 35th District

• Barbara Farrah (D)13th District

• Robert B. Jones (D)60th District

• Jeff Mayes (D)96th District

• Andy Meisner (D)27th District

• Tim Melton (D)29th District

• Joel Sheltrown (D)103rd District


• Coleman A. Young II (D)4th District

• Kim Meltzer (R)Minority Vice-Chair, 33rd District

• Fulton Sheen (R)88th District

• Glenn Steil Jr. (R)72nd District

• John Pastor (R)19th District

• Brian Palmer (R)36th District

• Lorence Wenke (R)63rd District

• Brian N. Calley (R)87th District



But the justices didn’t cite the case for— or even acknowledge — its applicationof the doctrine.(Like the majority, the Boodt dissent, in

an opinion authored by Justice Michael F.Cavanagh and signed by Justices Eliza-beth A. Weaver and Marilyn Kelly, madeno mention of the “presumption of the va-lidity of pleadings” doctrine.)The doctrine got its start in Saffian v.

Simmons in January 2007, where a med-ical-malpractice defendant tried to dodgehis “affidavit of meritorious defense” re-quirement by claiming the plaintiff ’s “de-fective” affidavit of merit didn’t triggerhis duty to file.A unanimous court rejected the defen-

dant’s argument.Affirming the default judgment against

him, the justices said the “defectiveness”of the plaintiff ’s affidavit was a determi-nation for the court to make, not him.“[W]hen an affidavit is filed, it is pre-

sumed valid,” the justices said. “It is onlyin subsequent judicial proceedings thatthe presumption can be rebutted.”Five months after Saffian, however, the

“presumption of the validity of pleadings”doctrine really got its teeth.The case was Kirkaldy v. Rim, et al., and

the Supreme Court took the next stepwith the doctrine by laying out what hap-pens when a pleading loses its presumedvalidity.In Kirkaldy, the issue was whether the

plaintiff ’s medical-malpractice lawsuitshould’ve been dismissed with prejudiceafter it was determined the plaintiff ’s af-fidavit of merit was defective.

Bolstered by two published MichiganCourt of Appeals decisions, the defendantsargued the filing of a defective affidavitwas tantamount to the filing of no affidavit.Thus, they said, a defective affidavit

couldn’t have tolled, and didn’t toll, thestatute of limitations.

A unanimous Supreme Court disagreed.In doing so, the justices both reinforced

and built upon Saffian’s points.By holding “the period of limitations

was tolled on that date” when Kirkaldyfiled her “defective” affidavit of merit, theydemonstrated that a pleading is “pre-

sumed valid” when filed.And, by noting an affidavit tolls the lim-

itations period “until the validity of the af-fidavit is successfully challenged in ‘subse-quent judicial proceedings,’” the justicesreaffirmed that a pleading retains its “pre-sumption of validity” unless and until ajudge says otherwise.But where the Supreme Court broke

the newest ground with the “presumptionof the validity of pleadings” doctrine wasin what the justices did next.Instead of adopting the defendants’

Court of Appeals-inspired approach, theyrejected it.For a pleading that tolls the statute of

limitations, such as an affidavit of merit,the loss of its presumed validity doesn’trender its tolling effect void from the be-ginning, the justices suggested.Instead, it causes things to pick up where

they left off when the pleading was filed.In other words, the justices said, a suc-

cessful challenge to a pleading’s “pre-sumption of validity” “cause[s] the periodof limitations to resume running.”Which is why, the justices said, “the prop-

er remedy is dismissal without prejudice.”“Plaintiff would then have whatever

time remains in the period of limitationswithin which to file a” valid pleading, theunanimous Kirkaldy court said.

If you would like to comment on this story,please contact Todd C. Berg at (248) 865-3113 or [email protected].

Med-mal suitContinued from page 1

problem with Meadows’ bill.The other part, he said, was its creation

of a double standard.Even though plaintiffs, under Meadows’

amendment, would no longer be requiredto make a “manner/proximate cause”statement, defendants would still be obli-gated to allege the converse, Dalton said.Under Meadows’ amendment, subsec-

tion (7)(d) remains unchanged.It requires defendants to state the

“manner in which … the alleged [mal-practice] … was not [the] proximate causeof the claimant’s alleged injury …”Dalton said, “I just don’t see how the

changes he proposes in this particularprovision accomplish any sensible objec-tive related to the concept of a notice of in-tent to sue, other than to trade one set ofperceived inequities for another.”According to the Michigan Legislature

Web site, no action has been taken onHouse Bill 6277 since its assignment tothe House Judiciary Committee onJune 25, 2008.

NOIs lose‘manners’Continued from page 1

‘Presumptive’ objectionsThe following are arguments— and responses thereto— that may be raised regarding the ap-plication of the “presumption of the validity of pleadings” doctrine to notices of intent to sue,such as the one in Boodt v. Borgess Medical Center, et al.

“A notice of intent isn’t a pleading and, thus, the ‘presumptionof the validity of pleadings’ doctrine doesn’t apply.”

Although the doctrine’s name implies it applies only to “pleadings,” theMichigan Supreme Court’sapplication of the doctrine shows otherwise. In both Saffian v. Simmons and Kirkaldy v. Rim, et al.,a unanimous Supreme Court applied the doctrine to a medical-malpractice plaintiff’s “affidavit ofmerit,” which is not listed among the short and exclusive list of what the Supreme Court deems tobe a pleading in Michigan Court Rule 2.110.

“The Michigan Supreme Court has already said a defective notice of intentdoesn’t toll the statute of limitations.”

In Roberts v. Mecosta County General Hospital, et al. (Roberts I), the Supreme Court held “thatthe statute of limitations cannot be tolled under MCL 600.5856(d) unless notice is given in com-pliance with all the provisions of MCL 600.2912b.” The Roberts I court, however, didn’t apply the“presumption of the validity of pleadings” doctrine.

“The tolling requirements for affidavits of merit, which were at issue in Saffianand Kirkaldy, and notices of intent to sue, oneof which was at issue in Boodt, are different and, thus, the presumed validity ofpleadings doctrine doesn’t apply to notices as it does to affidavits.”

The tolling requirements of MCL 600.5856 are identical for affidavits and notices. According tosubsection (c), notices must be “in compliance with” the demands of the notice of intent to suestatute, MCL 600.2912b. And, according to subsection (a), affidavits must be “in compliancewith” the demands of the affidavit of merit statute, MCL 600.2912d.

The latter point is confirmed by the Supreme Court’s decisions in Scarsella v. Pollak andKirkaldy.

And, the point is undiminished by the fact that the “in compliance with” language appearsnowhere in subsection (a) of MCL 600.5856. The words “affidavit of merit” appear nowherein either MCL 600.1901 or MCL 600.5856(a), yet the Supreme Court the Supreme Court has heldunequivocally that an affidavit of merit is essential to both commencing a medical-malprac-tice action and tolling the statute of limitations therein.

‘Presumptive’doctrineBelow are the highlights of the“presumption of the validity of pleadings”doctrine as developed in Saffian v. Simmonsand Kirkaldy v. Rim, et al.

• When a pleading — even one that doesn’tcome within the Michigan SupremeCourt’s definition of “pleading” inMichigan Court Rule 2.110 — is filed, “it ispresumed valid.”

• A pleading loses its “presumption ofvalidity” only if the presumption has been“rebutted” “in subsequent judicialproceedings.”

• If the pleading’s effect is to toll the statuteof limitations, then loss of its “presumptionof validity” will yield two results: (1) thestatute of limitations will “resumerunning”; and (2) the plaintiff’s case isdismissed without prejudice.

• The time that remained in the statute oflimitations when the pleading was initiallyfiled is presumably the time that remainsafter the pleading’s presumed validity hasbeen rebutted and the statute oflimitations has resumed running.

• The plaintiff “would then have whatevertime remains in the period of limitationswithin which to file” a valid pleading.

consent to the use of reprocessed single-use de-vices to in any way limit the patient’s access tohealth care, including the use of an original de-vice. The written notice required in subsection (3)shall meet all of the following requirements:“(a) Be separate from all other documents pro-

vided to the patient.“(b) Be in plain language.“(c) Provide a place to indicate the patient’s con-

sent or refusal to consent.“(d) Provide a signature line for the patient.“(e) Be approved by the department.“A health care provider shall submit a written no-tice required in subsection (3) to the department forapproval before use under this section. The de-partment shall approve a written notice submittedto it under this subsection if it meets the require-ments of subsections (3) and (4), including the ad-equacy of the notice itself and the adequacy of thedescription of potential risks provided in the notice.“Except as otherwise provided in this section, onadmission or registration of a patient, a healthcare provider shall require the attending physicianor the attending physician’s designee to do all of

the following:“(a) Describe verbally the contents of the written

notice required in subsection (3) to the pa-tient, including the patient’s opportunity toconsent or refuse consent to the use of re-processed single-use devices.

“(b) Ensure that the patient understands the con-tents of the written notice required in sub-section (3).

“(c) If necessary, arrange for an interpreter to fa-cilitate the patient’s comprehension of thewritten notice required in subsection (3).

“If a health care provider has admitted or regis-tered a patient in compliance with this section, thehealth care provider is not required to complywith this section during subsequent admissions orregistrations of the same patient if the health careprovider verifies that the patient’s provision or re-fusal of consent to the use of reprocessed single-use devices is recorded in the permanent medicalrecord of the patient and unless the patient re-vokes consent in a subsequent written documentprovided to the health care provider. A health careprovider shall comply with a patient’s written rev-ocation, which is effective regardless of its form.“A reprocessor is liable for the safety and effec-tiveness of any reprocessed single-use device. Ahealth care provider who fails to fulfill the in-

formed patient consent requirement in this sec-tion is also liable. An original manufacturer is notliable for the use, safety, or effectiveness of a re-processed single-use device unless the originalmanufacturer has expressly and specifically con-sented to the use of the reprocessed device inthat specific instance.“A person shall promptly notify the department ifthe person performing the reuse, recycling, repro-cessing, or refurbishing for reuse, or providing forthe reuse of a single-use device or the recondi-tioning or rebuilding of a single-use device, be-comes aware of information that suggests that asingle-use device that was reused, recycled, re-processed, refurbished, reconditioned, or rebuilt bya person or entity may meet any of the following:“(a) Caused or contributed to a death or serious

injury.“(b) Malfunctioned.“(c) The single-use device, or a similar device,

that would be reused, recycled, reprocessed,or refurbished by a health facility or agency orother entity on behalf of the health facility oragency, would be likely to cause a death orserious injury if a malfunction were to occur.

“Failure of a reprocessor or health care provider tocomply with this section is prima facie evidencethat the reprocessing of the device alone has ren-

dered a reprocessed single-use device unreason-ably dangerous and unfit for its intended use.“A person who violates this section is subject to afine of not less than $10,000 for the first offenseand not less than $20,000 for the second and sub-sequent offenses. Remedies provided under thissection are not exclusive of any other remediesthat may be pursued against a reprocessor orhealth care provider.”Sponsor: Bill HardimanStatus: Referred to Committee on Health Policy

• SB 1448 — Coverage for Certain AudiologicalScreening, Diagnosis, and Treatment“A health care corporation group or nongroupcertificate shall provide coverage for audiologicalscreening, diagnosis, and treatment and shall pro-vide coverage for the cost of a hearing aid for amember covered under the certificate who is cer-tified as deaf or severely hearing impaired by a li-censed physician or licensed audiologist.“Coverage under subsection (1) may be subject todollar limits, co-payments, deductibles, or coin-surance provisions that apply generally under thecertificate.”Sponsor: Tupac HunterStatus: Referred to Committee on Economic De-velopment and Regulatory Reform

Pending LegislationContinued from page 11


Michigan Supreme Court —Medical Malpractice: AnalysisBy Todd C. Berg, Esq.

Be more specific.That’s the lesson from the Michigan Su-

preme Court’s decision in Boodt v. BorgessMedical Center, et al.In Boodt, a four-justice majority held

Melissa Boodt’s notice of intent to sue, filedin a wrongful-death medical-malpracticeaction on behalf of David Waltz’s estate,wasn’t specific enough in its allegations.In particular, her statutorily required

proximate cause statement — which theMichigan Court of Appeals called a “per-functory statement, taken by itself” —didn’t describe the “manner” by which abreach of the standard of care causedWaltz’s death, the justices said.And, said the justices, neither did the

notice’s other allegations, even “when thenotice is read in its entirety.”By contrast, the Court of Appeals had

said that, with the benefit of the other no-tice allegations, “there [was] no real guess-work” about what Boodt alleged proxi-mately caused Waltz’s death.East Lansing attorney James P. Dal-

ton, who, along with fellow East Lansingattorney Curtis R. Hadley, represents de-fendant Dr. Michael Lauer, said Boodt’smessage was clear.“Read the statute and do what it says to

do,” he told Michigan Lawyers Weekly.“Some specificity is required,… and, whenin doubt, be as specific as you can be.”Southfield attorney Matthew L.Turner,

who represents Melissa Boodt, agreed asto what practitioners should take awayfrom Boodt— but with some caveats.“I think we now understand that we

need some cause and effect in order topass the proximate cause test,” he said.But how much?That’s the question Turner said the Su-

preme Court should’ve really focused onanswering.The “court tells what is not good

enough, but it has never given us an ex-

ample of what is good enough,” he said. “Itwould certainly be nice if the SupremeCourt would give us some guidance as towhat statements actually pass muster.”In Boodt, a four-justice majority held

Melissa Boodt’s notice of intent to sue,filed in the wrongful-death medical-mal-practice action on behalf of David Waltz’sestate, was insufficient.For her statutorily required proximate

cause “statement,”Boodt alleged,“If the stan-dard of care had been followed, Mr. Waltzwould not have died on October 11, 2001.”The Supreme Court, in a per curiam deci-

sion signed by Chief Justice CliffordW.Tay-lor and Justices Maura D. Corrigan, RobertP. Young Jr. and Stephen J. Markman, saidthat wasn’t enough, given the “notice of in-tent to sue” statute’s requirements.Boodt’s “statement” doesn’t describe

“‘the manner’” in which the breach of thestandard of care proximately causedWaltz’s death, the justices said.According to MCL 600.2912b(4)(e), be-

fore a medical-malpractice plaintiff cansue, she must provide the potential defen-dants with “a statement” of the “manner inwhich it is alleged the breach of the stan-dard of practice or care was the proximatecause of the injury claimed in the notice.”The majority also concluded the other

allegations in Boodt’s notice failed to fill inthe blanks of the proximate cause picture.“Even when the notice is read in its en-

tirety, it does not describe the manner inwhich the breach was the proximate causeof the injury,” the justices said.The “notice merely indicates [the de-

fendant doctor] caused perforation andthat he then failed to do several thingsthat he presumably should have done …,”the justices said.But that still doesn’t “describe the man-

ner in which these actions or the lackthereof caused Waltz’s death,” they said.Although it was alleged in the notice,

the justices didn’t address Boodt’s allega-tion that “[d]uring the procedure, the de-fendant caused a perforation which led …to Mr.Waltz[’s] … death.”For Justice Michael F. Cavanagh, howev-

er, that was the first allegation from Boodt’snotice that he mentioned in his dissentingopinion.“I believe that this is a statement of the

manner in which [the doctor’s] breach wasthe proximate cause of Waltz’s death,” hesaid, pointing also to Boodt’s allegationsthat, ifWaltz’s doctor had taken the actionshe should have,Waltz wouldn’t have died.Joined in his dissent by Justices Eliza-

beth A. Weaver and Marilyn Kelly, Ca-vanagh articulated twice — albeit slight-ly differently each time — his assessmentof the sum of Boodt’s allegations.First, he said, “Plaintiff ’s NOI alleges

that [the doctor’s] breach caused a perfora-tion ofWaltz’s artery and deprivedWaltz ofthe enumerated means that would havehelped him survive the emergency.”And, then, Cavanagh said, “Plaintiff al-

leges … that [the doctor] negligentlycausedWaltz’s death by the continued ad-ministration of an anticoagulant after in-ternal bleeding was detected.”Of the latter comment, the justice said

“[t]his allegation is readily ascertainablein plaintiff ’s NOI.”The majority, however, wasn’t so con-

vinced.“[C]ontrary to the dissent’s contention,”

the four justices wrote, “this statementcannot be found anywhere in the notice ofintent.”Accordingly, Michigan Lawyers Weekly

turned to the experts to find out how, if atall, Boodt’s outcome would have been dif-ferent if Boodt’s notice had alleged some-thing similar to Cavanagh’s statement.“Presumably,” Turner said, “had the

statement been a quote, the NOI wouldhave passed muster.”But, he said, such a splitting of hairs

was the epitome of form over substance.“If one is being honest, all of the infor-

mation in that statement was readily as-certainable in the notice,” Turner said.Dalton didn’t answer Lawyers Weekly’s

question about Cavanagh’s assessment ofBoodt’s notice.Instead, he suggested the bar hadn’t

been set unreasonably high for Boodt.

“If Ms. Boodt had made some attempt toset forth the manner in which the claimedmalpractice caused the death of Mr.Waltz,even if that claim turned out to be incor-rect, ultimately, I suspect the court wouldhave allowed the NOI to pass muster un-der the statute,” Dalton said.Royal Oak attorney Mark R. Granzotto,

who authored Boodt’s supplemental andrehearing briefs, responded to LawyersWeekly’s request for comment, but didn’tanswer the question regarding Ca-vanagh’s statement.The following attorneys didn’t respond

to requests for comment: Grand RapidsattorneyWilliam L.Henn, who representsBorgess Medical Center; Berkley attor-ney Jules B. Olsman, who authored theamicus curiae brief for Citizens for BetterCare; and Detroit attorney David R. Park-er, who authored the amicus curiae brieffor the Michigan Association for Justice.The 16-page decision is Boodt v. Borgess

Medical Center, et al. (Lawyers WeeklyNo. 06-67023).

Lack of specifics about ‘manner’ ofdeath sinks med-mal plaintiff’s NOI

The “court tells what is not good enough,but it has never given us an example ofwhat is good enough. It would certainlybe nice if the Supreme Court would giveus some guidance as to what statementsactually pass muster.”— Southfield attorney Matthew L. Turner

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By Melissa P. Stewart, Esq.

A recent order issued by the MichiganSupreme Court denying a medical-mal-practice plaintiff leave to appeal has ef-fectively dismissed her claim that defen-dant doctors failed to timely diagnose andtreat her decedent for a descending tho-racic aortic aneurysm.But, depending on who you ask, it

seems as though she may only have her-self to blame.According to an unpublished Michigan

Court of Appeals opinion signed by judgesMichael J. Talbot and Kirsten Frank Kel-ly, plaintiff Tracy Drake failed to complywith a court order, which ultimately ledthe trial court to preclude her expert wit-ness testimony.“During the hearing conducted on Nov.

18, 2005, the trial court ordered plaintiffto identify in writing the expert witnessesat trial by Nov. 20, 2005,” the court wrote.“Plaintiff was instructed to try schedulingthe depositions for those experts and toappear on Dec. 2, 2005 prepared to sched-ule the depositions if she had been unsuc-cessful in confirming deposition dates.”But, when Drake appeared at the Dec. 2

hearing, she had neither provided the wit-ness list nor was she prepared to schedulethe depositions.Although the trial court gave her a an-

other chance to comply with its order —allowing her until 5 p.m. that day to pro-vide defendants with a complete list of ex-pert witnesses she intended to call at tri-al — it ultimately ruled against her.In an attempt to comply with the order,

Drake had referred the trial court to a se-ries of letters wherein she identified 28potential expert witnesses and seven pos-sible depositions dates.For the trial court — and ultimately, the

Court of Appeals and Supreme Court — itwasn’t enough.“[A] court may preclude a party from in-

troducing expert testimony at trial as a

sanction for disobeying a discovery order,”the Court of Appeals said. Here, “[h]adplaintiff simply provided the court-orderedlist that clearly identified those expertsshe intended to testify at trial, discoverysanctions would have been avoided.”Although Drake appealed the decision

to the Supreme Court — reasoning thatthe trial court, and in turn, the Court ofAppeals abused its discretion in so ruling— the high court declined in a 4-3 order totake the case, reasoning, “we are not per-suaded that the question presentedshould be reviewed by this court.”The order was signed by Chief Justice

Clifford W. Taylor and justices Maura D.Corrigan, Robert P. Young, Jr. and

Stephen J. Markman.According to Richard C. Kraus, who rep-

resented defendant Dr.Amy Schantz-Rontal,the high court’s order is not surprising.“From a practical perspective, the Court

of Appeals simply confirmed that a trialcourt must have the authority and discre-tion to enforce its scheduling and discoveryorders,” he explained. “The case law re-quires courts to exercise caution and con-sider alternatives before imposing case-dispositive sanctions, [but] Judges KellyandTalbot correctly applied that standard,concluding that the trial court ‘displayedgreat patience in providing plaintiff nu-merous opportunities to comply with itsdiscovery orders and deadlines.’”Added Graham K. Crabtree, counsel for

defendant Dr. Vasudev Ananthram, “In acase such as this, where the question onappeal is whether or not the trial courtabused its discretion, and no such abusecan be found on the facts presented, an af-firmance of the trial court’s decision is al-ways consistent with public policy.”Meanwhile, Court of Appeals Judge E.

Thomas Fitzgerald — and later, JusticesElizabeth A.Weaver and Marilyn Kelly —had a different take on the situation.“[T]he trial court’s order striking all of

plaintiff ’s expert witnesses as a sanctionfor failing to comply with discovery was anabuse of discretion,” Fitzgerald wrote in adissent adopted by Weaver and Kelly. “Al-though striking witnesses is an appropri-ate sanction in some cases, it is importantto remember that the policy of this state fa-vors meritorious determination of issues.”For Judith A. Sherman, who represents

defendant Dr. Sadasiva Reedy, Fitzger-ald’s sentiment highlights precisely whythe Court of Appeals reached the only ap-propriate conclusion.“The dissent by Judge Fitzgerald — as

adopted by Justices Kelly and Weaver —merely serves to point out with exquisitesimplicity that trial court discovery rul-ings are reviewed at the appellate level for

abuse of discretion,” she said. “What onejudge may find harsh, another may findentirely appropriate; [t]herefore, when ig-noring a court’s order, a party is most cer-tainly proceeding at his or her own risk.”Attorneys for the plaintiff, Mark R.

Granzotto and Ramona C. Howard, didnot respond to a request for comment intime for deadline.

Failure to comply with discovery order proves fatal to med-mal caseMSC refuses to address order excluding all of plaintiff ’s expert witnesses

“What one judge may find harsh, anothermay find entirely appropriate; [t]herefore,when ignoring a court’s order, a party ismost certainly proceeding at his or herown risk.”

— Ann Arbor lawyer Judith A. Sherman


By Melissa P. Stewart, Esq.

A Saginaw County jury recently buckedthe norm by awarding a $1.8 million med-ical-malpractice verdict against a promi-nent area surgeon.The unusual outcome stemmed from

the death of 39-year-old Brenda Miller.Miller presented to the emergency room

in August 2002, complaining of abdominalpain and appearing jaundiced.Just over seven weeks later, she died in

her home.According to St. Clair Shores attorney

Richard J. Dimanin, Miller’s death wascaused by a pancreas biopsy conductedby defendant Dr. Donato M. Cabrera dur-ing an operation to remove an impactedgallstone — believed to be the source ofMiller’s pain.“Dr. Cabrera and a resident operated on

Aug. 6 to remove the stone… [but] a stonewas not found,” he said. “The pancreas waspalpated, found to be ‘woody,’ [and] multi-ple biopsies were taken of the pancreas.”The procedure, he said, proved to be fa-

tal for Miller.But, Dimanin said, her death should

not have come as a surprise.“The pancreas is a unique organ … [be-

cause] it is the only organ that can digestitself,” he explained. “Surgeons dread in-juring or operating upon it because its di-gestive juices often spill into the abdomen,causing massive infection and death.”Cabrera performed the biopsy to rule

out pancreatic cancer, but Dimanin saiddoing so amounted to malpractice for tworeasons.First, “if Mrs. Miller did have pancreatic

cancer, this would have been a death sen-tence [given that the survival rate is 0 to 15percent] and a biopsy was useless,” he said.And, “since the ‘gold standard’ for diagnosisof pancreatic cancer was done at major med-ical centers — and not in Saginaw at thetime— she should have been transferred tosuch a center [if a biopsy was necessary].”

As such, although Miller’s official au-topsy did not specify a cause of death, herfamily filed suit anyway, alleging wrong-ful death.When the case proceeded to trial, said

Detroit lawyer Terrance J. Cirocco — whorepresented the plaintiff along with Di-manin — “the issue … was whether thepancreatic biopsy was indicated.”

In short, he said, it was not.“The pancreatic biopsy was not indicat-

ed, and it was the proximate cause of[Miller’s] death,” he said. “Our surgicalexpert explain[ed] to the jury that therewas absolutely no reason to subject Mrs.Miller to the risks [associated with one].”What’s more, Cirocco said, “Our inde-

pendently retained pathology expert was

able to persuade the jury that the CountyMedical Examiner and the pathologistwho performed the autopsy were sloppyand wrong in their duties.”Apparently, the Saginaw County jury

agreed.At the end of the day, they awarded

Miller’s estate nearly $2million in damages.For Dimanin, the result served as proof

that “plaintiff attorneys must try casesand not be afraid of the consequences.“Substantial verdicts can be obtained

in any venue, despite bad track recordsin a county,” he said, suggesting the casewas only the second substantial victoryin Saginaw for a medical-malpracticeplaintiff in over a decade. (A search ofMichigan Lawyers Weekly’s archives re-vealed that only one other million-dollarmedical-malpractice verdict has been re-ported since 1993.)Beyond that, Cirocco and Dimanin both

agreed the outcome could have wider im-plications on medical-malpractice casesas a whole.“The insurance companies must be de-

feated at their own game of insisting ontrial and not settling valid cases,” Di-manin said.Therefore, added Cirocco, “you must con-

tinue to try ‘no-offer’ medical-malpracticecases, hope for a jury verdict, and pursue‘bad faith’ actions to break the spirit of thecurrent insurance climate in this state.”Saginaw lawyer Stephan M. Gaus, who

represents the defendant, did not respondto a request for comment.

A Verdicts and Settlements Report ofthe case,Miller, et al. v. St.Mary’s MedicalCenter, et al., can be found on page 6 ofthis issue, and on our Web site,www.milawyersweekly.com.

If you would like to comment on thisstory, please contact the editor at (248) 865-3105 or [email protected].

Controversial biopsy linked to patient’s deathRural jury awards rare million-dollar verdict in wrongful-death case

“The pancreas is a unique organ … [because] it isthe only organ that can digest itself. Surgeons dreadinjuring or operating upon it because its digestivejuices often spill into the abdomen, causing massiveinfection and death.”

— St. Clair Shores attorney Richard J. Dimanin

Michigan Supreme Court —Medical MalpracticeBy Todd C. Berg, Esq.

The Michigan Court of Appeals “loss ofopportunity” analysis in Fulton v. Beau-mont Hospital, et al. lives on.That’s because those portions of the

Michigan Supreme Court’s recent 85-pageopinion criticizing Fulton’s interpretation ofthe “loss of opportunity” statute were dicta.And, the reason they were dicta is be-

cause the case ended up not being a “lossof opportunity” case.“Six of the justices believe that this is not

a lost-opportunity case,” wrote Chief Jus-tice Clifford W. Taylor in his three-justicelead opinion in Stone v.Williamson, et al.The justices to whom Taylor was refer-

ring were Justices Maura D. Corrigan andRobert P. Young Jr., who joined his leadopinion, and Justices Michael F. Ca-vanagh, Elizabeth A.Weaver and MarilynKelly, who joined in a separate opinion.Justice Stephen J. Markman, however,

concluded Stone was a “loss of opportuni-ty” case.Nevertheless, Markman found common

ground with Taylor, Corrigan and Youngon Stone’s impact on Fulton.In footnote 14 of Taylor’s opinion, the

chief justice said, “because a majority ofjustices hold that this is not a lost-oppor-tunity case, the issue of the correctness ofFulton cannot be reached, and Fulton’s ap-proach remains undisturbed as themethodof analyzing lost-opportunity cases.”And, in footnote 26 of his opinion,Mark-

man said he thought “Chief Justice Tay-lor’s analysis in this regard is correct.”(According to Michigan Court Rule

7.215(J)(1), a published Court of Appealsopinion, such Fulton, that has been nei-ther overruled nor modified by theSupreme Court is binding precedent.)Carl Stone sued Dr. David Williamson,

Jackson Radiology Consultants, P.C., andW.A. Foote Memorial Hospital for medical-malpractice, claimingWilliamson’s allegedfailure to diagnose an aortic aneurysm

caused the aneurysm to rupture, whichresulted in Stone having his legs ampu-tated at mid-thigh.The jury found for Stone, andWilliamson

and the other defendants appealed.They claimed Stone hadn’t carried his

burden of proving the defendants’ allegednegligence had caused him to lose an op-portunity to achieve a better result thatwas greater than 50 percent.According to the “loss of opportunity”

statute, the second and final sentence ofMCL 600.2912a(2), “In an action allegingmedical malpractice, the plaintiff cannotrecover for loss of an opportunity to sur-vive or an opportunity to achieve a betterresult unless the opportunity was greaterthan 50%.”Relying on Fulton, which was decided in

2002, the Court of Appeals affirmed, find-ing the trial court had properly instructedthe jury on the law.In Fulton, the court determined the

“lost” opportunity, for purposes of thestatute’s 50 percent requirement, is thepercentage point difference between aplaintiff ’s pre-malpractice and post-mal-practice opportunities.In its order granting leave to appeal in

Stone, the Supreme Court instructed theparties to address whether Stone was actu-ally a “loss of opportunity” case, i.e., whetherthe “loss of opportunity” statute applied.Additionally, the justices were also curi-

ous to hear what the parties thought aboutwhether Fulton was “correctly decided.”Although the justices were unanimous

in their rejection of Fulton — albeit fordifferent reasons — their consensus wasovershadowed by the six justices’ “concur-rence” that Stone wasn’t a “loss of oppor-tunity” case.Taylor said Stone pleaded and proved

“the traditional elements of medical mal-practice,” which included proof Stone hadsuffered physical injuries, i.e., “amputa-tions and other injuries.”And, Cavanagh agreed.Stone “proved a traditional medical-

malpractice claim based on his physicalinjuries …,” he said.

Accordingly, Taylor and Cavanagh, intheir respective opinions, affirmed theCourt of Appeals decision, which upheldthe jury’s verdict. (Markman did, too, butfor different reasons.)Given that Black’s Law Dictionary and

theMichigan Supreme Court have defined“obiter dicta” as statements in an opinionthat are “not necessarily … essential to de-termination of the case in hand” and“therefore not precedential,” MichiganLawyersWeekly asked the experts for theirthoughts on the dicta issue and what effectStone might have on Fulton.Southfield attorney Noreen L. Slank,

who authored the amicus curiae brief forProNational Insurance Company, saidStone was going to have “no effect.”“With six justices deciding Stone isn’t a

loss of opportunity case, what the justiceshave to say about the Fulton 50 percent-age point drop interpretation of thestatute is dicta,” she said.As such, Slank said, “Fulton ‘lives’” and

“the Fulton 50 percentage point drop rulestill governs.”Detroit attorney David R. Parker, who

authored the amicus curiae brief for Dr.Roy Waddell, however, said he wasn’t sosure what the bench and bar would makeof Fulton in the post-Stone era.“We have a real conundrum,” he told

Lawyers Weekly.“None of the justices would utilize the

[loss of opportunity] calculation method ofthe Fulton case, … but somehow Fulton,itself, is not overruled,” Parker said. “If Iever have reason to bring a loss of oppor-tunity case, I would be hesitant to ignoreFulton— or to rely upon it.”He said that’s because the justices’ crit-

icism in Stonemay have weakened Fultonto the point the Court of Appeals may“seize the opportunity to ‘differentiate’ thefacts of the next ‘loss of opportunity’” caseand kill off Fulton once and for all.”

Fulton was a 2-1 decision, and in En-sink v. Mecosta County General Hospital,et al. (2004), the court followed Fultononly because it was required to by Michi-gan Court Rule 7.215(J)(1).

Additionally, an evenly split vote pre-vented a conflict panel from being con-vened in Ensink.In Klein v. Kik, et al. (2005), however,

where the court followed Fulton, no dis-sent was filed nor was a conflict panel re-quested — even though Judge Michael R.Smolenski, who was the dissenting judgein Fulton, authored Klein.Royal Oak attorney Mark R. Granzotto,

who authored the amicus curiae brief forthe Michigan Association for Justice, saidhe didn’t see Fulton’s future as being toobright.Dicta or no dicta, he said, “the rather

basic fact is that all seven members of thecourt have ruled in this opinion that Ful-ton was wrongly decided.”And, that makes Stone “perhaps the

loudest sub silentio overruling of an ex-isting precedent in history,” Granzottotold Lawyers Weekly.As for his prediction of how courts will

handle the Fulton aspect of Stone, he said“the logical course for the Court of Ap-peals to follow if [a real loss of opportuni-ty case comes] before it is to declare aconflict panel with Fulton since the mem-bers of that court can now safely concludethat Fulton was wrong.”The following attorneys didn’t respond

toMichigan LawyersWeekly’s requests forcomment:Detroit attorney Susan Healy Zitter-

man, who represents defendants Dr. DavidWilliamson, Jackson Radiology Consult-ants P.C., andW.A. Foote Memorial Hospi-tal; Grand Rapids attorney William L.Henn, who authored the amicus curiaebrief for theMichigan Health and HospitalAssociation; Berkley attorney Jules B.Ols-man, who authored the amicus curiaebrief for Citizens for Better Care.Detroit attorney Joanne Geha Swan-

son, who authored the amicus curiae brieffor the Michigan State Medical Society,was unavailable for comment.


‘Back where things started’ Status quo on ‘loss of opportunity’ analysis continuesdespite MSC’s criticism of ‘Fulton v.Beaumont Hospital’


Physicians considering litigation basedon an adverse peer review or a creden-tialing dispute should exercise caution ifthey want to avoid the possibility of beinghit with the defendant’s attorney’s fees.Recently, the U.S. District Court for the

Middle District of Georgia held that aphysician who unsuccessfully sued thehospital where he worked, in addition totwo staff physicians involved in the plain-tiff doctor’s peer review process, was re-quired to reimburse the hospital and itsstaff physicians for attorney’s fees andcosts pursuant to an “Applicant’s Consentand Release” (Release) he signed when heapplied for medical staff privileges at thedefendant hospital.The amount the plaintiff doctor must

pay has yet to be determined, but withthree defendants seeking fees, includingthe two staff physicians and their groupprofessional corporation, it could easilyturn out to be a substantial sum.When it comes to peer review actions,

attorney’s fees are available under theHealth Care Quality Improvement Act ifthe plaintiff ’s claims are found to be friv-olous or otherwise without merit. 42U.S.C. § 11113. Although generally infre-quent, courts have assessed attorney’sfees against a losing plaintiff, sometimesin the hundreds of thousands of dollars.(See Sklaroff v. Allegheny Health Educa-tion Research Foundation, 1996 WL665519 (E.D.Pa. Nov. 13, 1996).)However, provisions found in medical

staff privilege applications or bylaws canalso be used to hold a physician responsi-ble for costs incurred in unsuccessful legalaction. This can leave physicians vulnera-

ble when they bring meritorious casesstemming from peer review or credential-ing disputes.In the case of Adeduntan v. Hospital

Auth. of Clark City,No.3:04-CV-065 (CDL)(M.D. Ga. July 31, 2008), a physician, Dr.Azeez Adeduntan, who was unsuccessfulin prosecuting a peer review actionagainst the defendant hospital andseveral physicians involved in thepeer review process, was re-quired to reimburse the hospitaland those physicians for theirattorneys fees and costs.The case arose out of the

medical peer review of plain-tiff’s performance during anemergency abdominal aor-tic aneurysm procedure.Following the peer re-view, the plaintiff doc-tor asserted federalclaims against thedefendants for racialand national origindiscrimination,an-titrust violationsand state lawclaims for neg-ligent and in-tentional in-fliction ofemotionaldistress.The

courtulti-

matelygrantedsummary judg-ment for the defendanthospital and its staff physi-cians. Additionally, the court deter-mined that “the Release and the condi-tions contained therein [were] valid andenforceable,” and that the plaintiff waslegally obligated to reimburse all threedefendants’ attorney’s fees and costs.The language of the Release provided:

“If ... I [Adeduntan] institute legal actionagainst the Hospital [Athens RegionalMedical Center] and/or its Medical Staffmembers and do not prevail, I agree to re-imburse the Hospital and any MedicalStaff members named in the action forany and all costs incurred in defendingthe legal action, including reasonable at-torneys’ fees.”Adeduntan was “required to

execute the form in order to apply formedical staff appointment and privilegesat Athens Regional [Medical Center].”This case serves as a reminder that

even a document that appears innocuous,such as a simple application, may containprovisions that operate to protect one par-ty at the expense of the other. This is whyit is important for physicians to careful-

ly review staff privilege applica-tions and medical staff by-

laws before signingthem or initiating

peer reviewlitiga-

tion, asthe resultscould be costly.It is important to recog-

nize that credentialing litigationis on the rise because of numerouscourt decisions allowing such disputes tomove into the courts. In the absence of acontractual requirement, such as thosefound in staff privilege applications, mostAmerican courts cannot impose attorneyfee obligations on losing litigants.Therefore, it would be reasonable to ex-

pect that most staff privilege applicationswould be promptly amended to includelanguage such as that found in the Re-lease signed by Adeduntan. Physiciansshould be on the lookout for the types ofprovisions that medical staff privilege ap-plications could contain, including releaseand attorney fee language.When it comes to agreements between

physicians and hospitals, one should nev-er assume that there is such a thing as astandard form agreement or typical boil-erplate language. These kinds of formsare drafted by one party to protect its owninterests, and this is often accomplishedat the expense of the other party.

It is in physicians’ best interest to beproactive and take steps to pro-

tect themselves from riskyrelease and attorney

fee languagehidden in

staff

priv-ilegeappli-cationsandmedicalstaffbylaws.Dependingon the appli-cant’s specialty,and state law,the languagemay or may not benegotiable.A good health

care attorney, howev-er, is essential to re-view the application,research the issue andattempt to obtain anymodifications. As always,

even a document that appears innocu-ous, such as a simple “application,” maycontain time-bombs that can lay dormantfor many years

Health Care JusticeBy David L. Haron, Esq.

David L. Haron is aprincipal at Frank,Haron, Weiner andNavarro, PLC. Hispractice includes allaspects of healthcare law, complexlitigation, businesstransactions andreal estate planning

and development. As a qui tamlawyer, he has recovered more than$100 million from corporations andindividuals who fraudulently re-ceived funding from the taxpayers.Contact him at (248) 952-0400 [email protected].

Application for medical staff membershipleads to sanctions on the attorney fee

Paging all doctors...

E-mail: [email protected] or call: 1-800-678-5297 for exciting advertising opportunities.

Exciting changes going onin your practice?New hospital affiliationor promotion?Alert your colleagues in the medical community.

Run a professional announcement in the next issue of


Michigan Supreme Court


“Failure to diagnose” claims are not“loss of opportunity” cases.That’s the conclusion to be drawn from

the two, 3-justice opinions the MichiganSupreme Court issued recently in Stone v.Williamson, et al.In Stone, Carl Stone alleged his doc-

tor’s failure to diagnose an aorticaneurysm caused the aneurysm to rup-ture, which resulted in both of Stone’slegs being amputated.The Supreme Court had to decide

whether Stone’s claim was a “loss of op-portunity” claim and, thus, governed bythe requirements of the “loss of opportu-nity” statute, MCL 600.2912a(2).Or whether it was a “traditional” med-

ical-malpractice claim and, thus, beyondthe reach of the “loss of opportunity”statute.Stone’s doctor — and his doctor’s prac-

tice, the hospitalwhere his doctor hadprivileges and sever-al amici curiae —took the position intheir briefs that all“failure to diagnose”cases, includingStone’s, are “loss ofopportunity” cases.Stone — and his

supporting amici cu-riae — disagreed.“Failure to diag-

nose” cases, he said,are “loss of opportu-nity” cases only ifthe plaintiff pleadsand proves them assuch.And, Stone said

he did neither in hiscase.Six justices agreed

with him.“[T]his is not a

lost-opportunitycase,” said ChiefJustice Clifford W.Taylor, in an opinionjoined by JusticesMaura D. Corriganand Robert P. Young Jr.In reaching that conclusion, Taylor not-

ed, among other things, that Stone didn’tplead or prove his case as one of “lost op-portunity.”Instead, the chief justice said, Stone al-

leged and proved his doctor’s failure to di-agnose caused physical injuries, i.e., rup-ture, amputations — not the “loss of theopportunity” to avoid those injuries.Justice Michael F. Cavanagh concurred.In an opinion joined by Justices Eliza-

beth A. Weaver andMarilyn Kelly, Ca-vanagh pointed outthat, while Stone did“not assert … aclaim for loss of op-portunity,” he didprove “a traditionalmedical-malpracticeclaim based on hisphysical injuries …”Consequently, by

ruling as they did,the justices also —at least implicitly —rejected the “‘failureto diagnose’ equals‘loss of opportunity’”argument.As laid out in the

briefs of Stone’s doc-tor and others, theargument was that“failure to diag-nose” cases are re-ally “loss of oppor-tunity” casesbecause all thatthe “failure to diag-nose” actually causes is the plaintiff “tolose an opportunity for a better result.”Physical injuries in “failure to diag-

nose” cases are caused not by the “failureto diagnose,” the argument contends, butby the underlying illness or conditionthat went undiagnosed.Stone and his supporting amici said

the doctor’s approach turned “causation”on its head.He pointed out in his brief that, for

causation purposes, Michigan law hasnever distinguished “between acts ofcommission (directly injuring someone)[and] omission (failure to diagnose).”And, were it to start now, Stone said,

the effect would be that all of the “actsof omission” cases would automaticallybecome “loss of opportunity” cases and,thus, subject to the statute’s require-ments.According to the second and final

sentence of MCL 600.2912a(2), “In anaction alleging medical malpractice,the plaintiff cannot recover for loss ofan opportunity to survive or an oppor-tunity to achieve a better result unlessthe opportunity was greater than 50%.”Without explicitly saying so, the six

justices, again, sided with Stone.For instance, by concluding he had

pleaded and proved a “failure to diag-nose” caused his physical injuries, i.e.,rupture, amputations, and other injuries,the justices effectively closed the door onthe defendant’s argument that a “failureto diagnose” can only cause the loss of theopportunity to avoid physical injuries,

and not the physical injuries, themselves.Ann Arbor attorney Donald W. Ferris

Jr., who represents Carl Stone, said theimportance of Taylor’s and Cavanagh’sopinions can’t be overstated.“A failure to diagnose that leads to

physical injury is a traditional medical-malpractice case,” he said. “If there’s aphysical injury, then it’s not a ‘loss of op-portunity’ case.”Royal Oak attorney Mark R. Granzot-

to, who authored the amicus curiae brieffor the Michigan Association for Justice,was even more specific about Stone’s sig-nificance.“The single most important thing for

lawyers and judges to get out of theStone case” is that “six justices haveruled that if you sue for a particularphysical injury— as opposed to suing fora lost opportunity — your case is notgoverned by the final sentence” of the“loss of opportunity” statute, MCL600.2912a(2).Detroit attorney David R. Parker, who

authored an amicus curiae brief for Dr.Roy Waddell, agreed Stone will changehow so-called “loss of opportunity” caseswill be viewed.He said the effect of Stone will be that

“cases involving similar claims” —“medical malpractice was a proximatecause of the plaintiff ’s loss of his legs andleft hip” — “are not to be treated as loss-of-opportunity cases.”What’s more, Parker said, it will be

more difficult now for medical-malprac-tice defendants to persist in their pre-

Stone “attempt[s] torecast every claiminto a ‘loss of oppor-tunity’ mold.”Not everyone, how-

ever, saw Stone asbeing so significant.“The release of

Stone has no effecton the litigation oflost opportunity cas-es,” said Southfieldattorney Noreen L.Slank, who authoredthe amicus curiaebrief for ProNationalInsurance Company.Slank said the

Michigan Court ofAppeals 2005 pub-lished decision inKlein v. Kik, et al.,“remains the bindingprecedent on what isand isn’t a lost op-portunity case.”In Klein, a unani-

mous panel held theplaintiff ’s “failure to

diagnose” claim was a “loss of opportuni-ty” case because the “undiagnosed” cancercaused the plaintiff ’s death, not the “fail-ure to diagnose.”At the most, said

the Klein judges,“the only causaltheory connecting[defendant’s allegedmalpractice] to thedecedent’s death isthat the delay in di-agnosis exacerbat-ed the decedent’scondition and de-prived him of thechance he wouldhave had to surviveif he had been prop-erly diagnosed …”

Klein was nei-ther mentioned noroverruled by thejustices in Stone.Additionally,

Slank said, Stonehas “no effect …about what is or is-n’t a lost-opportuni-ty case because thesix justices who de-cided Stone wasn’ta lost opportunitycase split evenlyand applied two dif-ferent rationales.”Consequently,

she said, Stone is“a non-preceden-tial plurality opin-ion” that “cannotbind anyone butthe parties …”“That means the case cannot help any-

one resolve their problems of proof inthese cases,” Slank said. “Period.”The following attorneys didn’t respond

toMichigan LawyersWeekly’s requests forcomment:Detroit attorney Susan Healy Zitter-

man, who represents defendants Dr. DavidWilliamson, Jackson Radiology Consult-ants P.C., andW.A. Foote Memorial Hospi-tal; Grand Rapids attorney William L.Henn, who authored the amicus curiaebrief for theMichigan Health and HospitalAssociation; Berkley attorney Jules B.Ols-man, who authored the amicus curiaebrief for Citizens for Better Care.Detroit attorney Joanne Geha Swan-

son, who authored the amicus curiae brieffor the Michigan State Medical Society,was unavailable for comment.


“If there’s aphysicalinjury, thenit’s not a ‘lossof opportunity’case.”

— Ann Arborattorney

Donald W.Ferris

“The releaseof Stone hasno effect onthe litigation

of lostopportunity

cases.”

— Southfieldlawyer

Noreen L. Slank

It will be moredifficult fordefendants “torecast everyclaim into a‘loss ofopportunity’mold.”

— Detroitattorney David

R. Parker

“Six justiceshave ruled

that if you suefor a particularphysical injury

… your case isnot governed

by the finalsentence”

of MCL600.2912a(2).

— Mark R.Granzotto,Royal Oak

attorney

The Michigan Court of Appeals in Ful-ton v. Beaumont Hospital, et al., violatedone of the Michigan Supreme Court’s car-dinal rules of statutory interpretation.The court added words to a statute.What’s more, the court all but admitted it.In Fulton, the court was faced with in-

terpreting the words “the opportunity”from the phrase “the opportunity wasgreater than 50%.”The phrase is found in the “loss of op-

portunity” statute’s second sentence.According to MCL 600.2912a(2), a med-

ical-malpractice plaintiff can’t “recover forloss of an opportunity to survive or an op-portunity to achieve a better result unlessthe opportunity was greater than 50%.”[Emphasis added.]After determining the words “the op-

portunity” were ambiguous, and after ex-amining the statute’s history, the two-judge Fulton majority settled on aninterpretation.The words “the opportunity” didn’t just

mean “the opportunity,” the judges said.Instead, said the judges, they meant

“the loss of the opportunity.”“[W]e conclude that MCL 600.2912a(2)

requires a plaintiff to show that the loss ofthe opportunity to survive or achieve abetter result exceeds fifty percent,” wroteJudge Michael J. Talbot in an opinion

joined by Judge Kurtis T.Wilder.As such, under the Fulton majority’s in-

terpretation, the “loss of opportunity” statuteis to be read as saying plaintiff ’s can’t “re-cover for loss of an opportunity to survive oran opportunity to achieve a better result un-less the loss of the opportunity was greaterthan 50%.” [Emphasis added.]The Fulton judges were open about the

statutory supplementation that went intotheir statutory interpretation.“[F]or the language of the statute to

plainly indicate that the latter interpre-tation of the statute was intended,” thejudges said, “the words ‘loss of’ must be in-ferred to modify opportunity.”Reading the words “the loss of” into the

phrase “the opportunity was greater than50%” is significant for two reasons.First, it goes against the Michigan

Supreme Court’s strongly worded and oft-repeated rule of statutory interpretationthat courts are powerless to change statu-tory language:

“[C]ourts may not ‘rewrite the plainstatutory language and substituteour own policy decisions for those al-ready made by the Legislature.’ … Inshort, this court ha[s] no authority toadd words or conditions to thestatute.” Rowland v. WashtenawCounty Road Commission.

And, second, by adding — or “inferring”— two words to the statute, the Fultonmajority has altered the proofs that a “lossof opportunity” plaintiff must present.Rather than proving the opportunity he

or she suffered a “loss of” due to allegedmedical-malpractice was “greater than50%,” the plaintiff must show that theamount by which that opportunity was re-duced by malpractice, i.e., “the loss of theopportunity,” was “greater than 50%.”Paul Fulton, on behalf of his deceased

wife Julie’s estate, sued her doctors, alleg-ing their failure to timely diagnose cervi-cal cancer resulted in a loss of Julie’s op-portunity to survive.The testimony was that Julie would’ve

had an 85 percent “chance to survive” ifher cervical cancer had been properly andtimely diagnosed.But, because it wasn’t, her chance of

surviving had dropped 20-25 percentagepoints to 60-65 percent by the time thecancer was actually discovered.Julie’s doctors moved unsuccessfully for

summary disposition, claiming she hadn’tmade out a “loss of opportunity” case be-cause her “lost opportunity,” i.e., the dif-ference between her pre- and post-mal-practice opportunities to survive, wasn’tgreater than 50 percent.The trial court said all Julie had to

prove under the “loss of opportunity”statute was that her “initial opportunityto survive was greater than fifty percent”— which Julie’s was.Her doctors appealed and the Court of

Appeals reversed.“[W]e conclude that MCL 600.2912a(2)

requires a plaintiff to show that the loss ofthe opportunity to survive or achieve abetter result exceeds fifty percent,” thetwo-judge majority said.And, even though the statute said “the

opportunity was greater than 50%,” thejudges said their “interpretation comportswith the language of and the history be-hind MCL 600.2912a(2).” [Emphasisadded.]The judges said nothing, however, about

their comment earlier in the opinion thatthe interpretation they ultimately reachedrequired the words “loss of” to be “inferredto modify ‘opportunity.’”In a separate opinion, Judge Michael R.

Smolenski dissented.He said the “loss of opportunity”

statute “only requires a plaintiff to showthat the decedent’s initial opportunity tosurvive was greater than fifty percentand that the alleged malpractice moreprobably than not reduced that opportu-nity to survive.”

— TODD C. BERG, ESQ.

Three words COA’s ‘loss of opportunity’ analysis reads ‘theopportunity’ tomean ‘the loss of the opportunity’

MSC says ‘failure to diagnose’ claim not ‘loss of opportunity’ case


The Michigan Supreme Court thinksit’s time to retire the Michigan Court ofAppeals “loss of opportunity” analysis inFulton v. Beaumont Hospital, et al.The hang-up is, they just can’t agree on

why.In Stone v. Williamson, et al., a “loss of

opportunity” case that turned out to notbe a “loss of opportunity” case, threeschools of thought surfaced about howFultonmay have misinterpreted the “lossof opportunity” statute.The first school of thought was ex-

pressed by Chief Justice CliffordW.Taylorin an opinion joined by Justices Maura D.Corrigan and Robert P. Young Jr.According to the chief justice, Fulton’s

fatal flaw was that it is based on an “un-enforceable” statute that lends itself to“multiple, contradictory interpretations,”and “creates by implication a new cause ofaction contrary to common law.”

Justice Michael F. Cavanagh, in an opin-ion joined by Justices Elizabeth A.Weaverand Marilyn Kelly, conveyed a secondschool of thought about Fulton—all with-out actually identifying the case by name.Under Cavanagh’s analysis, the argu-

ment would be that Fulton failed to accordthe “loss of opportunity” statute’s wordsand phrases their proper common lawmeaning — as they were expressed in theSupreme Court’s decision in Falcon v.Me-morial Hospital, et al.According to Cavanagh, it was in Falcon

that the Supreme Court created the com-mon law claim of “loss of opportunity,” andit was this common law creation that theLegislature sought to codify in the “loss ofopportunity” statute.Finally, there was the third school of

thought as articulated by Justice StephenJ. Markman.And, what that boiled down to was that

Fulton was on the right track, but theCourt of Appeals didn’t take things farenough in its calculation of what consti-tutes a “lost opportunity” due to allegedmedical malpractice.According to the second and final sen-

tence of MCL 600.2912a(2), “In an actionalleging medical malpractice, the plaintiffcannot recover for loss of an opportunityto survive or an opportunity to achieve abetter result unless the opportunity wasgreater than 50%.”What that means, according to the two-

judge Fulton majority, is a plaintiff mustprove his “lost opportunity,” i.e., the dif-ference between a plaintiff ’s pre- andpost-malpractice opportunities to surviveor achieve a better result, was greaterthan 50 percentage points.Below are the highlights of the justices’

opinions about why Fulton was not “cor-rectly decided”:

Taylor /Corrigan/Young• Fulton is based on a statute that is“unenforceable,” creates “a paradox,”“cannot be interpreted as written,”presents two “equally plausible,” yet“fully contradictory constructions,” and“creates by implication a new cause ofaction contrary to common law.”• Fulton shouldn’t have been treated asa “loss of opportunity” case. “[B]ecause

the patient in Fulton would likely havesurvived had she received a timelydiagnosis, I would assert that the claimshould have been treated as one forordinary medical malpractice and thatthe lower courts erred in applying to itthe doctrine of lost opportunity.”

Cavanagh/Weaver /Kelly• Fulton has misinterpreted the words“the opportunity” from the phrase “theopportunity was greater than 50%.”• “[T]he opportunity” refers to theplaintiff ’s “premalpractice opportunity tosurvive or achieve a better result,” notthe difference between the pre- and post-malpractice opportunities.

Markman• Fulton was right tosubtract the post- fromthe pre-malpracticeopportunities to surviveor achieve a better result.• But Fulton misinterpreted “50%.” Thestatute says “%” or percent, not “percentagepoints.” As such, a plaintiff must show thatmedical-malpractice has caused her oppor-tunity to survive or achieve a better resultto drop by greater than 50 percent, not just50 percentage points.

— TODD C. BERG, ESQ.

Down with ‘Fulton’ MSC justices agree COA’s ‘loss of opportunity’ analysis must go, but can’t agree on why

‘Loss of Opportunity’ Analysis

Why now?In Stone v.Williamson, et al., every justice on theMichigan Supreme Court voiced her or his criticismof the Michigan Court of Appeals “loss of opportunity” analysis in Fulton v. Beaumont Hospital, et al.While, on its face, that might not seem unusual, it becomes so when one considers the number of“lost opportunities” the Supreme Court has had to do something about Fulton.First, the justices could’ve prevented Fulton from ever occurring if they’d addressed the Court ofAppeals reasoning inWickens v. Oakwood Healthcare System, et al., rather than just vacating itwithout explanation.Second, the justices could’ve straightened Fulton out if they’d stayed the course on the plaintiff’sleave application in Fulton.Instead, the justices granted leave to appeal, only to later vacate the order and deny leave.And, finally, the justices could’ve granted leave in at least three other cases where Fulton playeda central role in the cases’ outcomes: Potter v. Ingham Regional Medical Center, et al.; Ensink v.Mecosta County General Hospital, et al.; Klein v. Kik, et al.


The Michigan Court of Appeals inter-pretation of the “loss of opportunity”statute in Fulton v. Beaumont Hospital, etal., flows directly from the court’s “ambi-guity” analysis.Yet, the statutory language being ana-

lyzed doesn’t fit the courts’ definition of“ambiguous.”And, the extrinsic evidence relied on as

part of the “ambiguity” analysis is bothequivocal and at odds with the statute’splain language.In Fulton, the court had to determine

the meaning of the phrase “the opportu-nity was greater than 50%,” as it appearsin the “loss of opportunity” statute.According to MCL 600.2912a(2), a med-

ical-malpractice plaintiff can’t “recover forloss of an opportunity to survive or an op-portunity to achieve a better result unlessthe opportunity was greater than 50%.”[Emphasis added.]The hang-up for the two-judge majority

were the words “the opportunity.”“[I]t is not clear to what the Legislature

was referring when it stated that ‘the op-portunity’ must be greater than fifty per-cent,” wrote Judge Michael J. Talbot, whowas joined by Judge Kurtis T.Wilder.“‘The opportunity’ could either refer to

the plaintiff ’s initial opportunity to sur-vive or achieve a better result before thealleged malpractice or could refer to theplaintiff ’s loss of opportunity to survive orachieve a better result,” they said.After concluding “reasonable minds can

differ regarding the meaning of thestatute,” the judges declared it “ambigu-ous” and announced that “judicial con-struction is appropriate.”That meant looking at the Michigan

Supreme Court case that was widely con-sidered to be the Legislature’s “inspira-tion” for the statute.In Falcon v.Memorial Hospital, et al., the

court recognized a common law cause of ac-tion for “loss of opportunity” to survive.(The “loss of opportunity” statute, which

was enacted in 1993, three years afterFalcon was decided, recognized claims for“loss of opportunity” to both survive andachieve a better result.)The judges in Fulton seized on language

inFalconwhich they believed to be proof thefocus of “loss of opportunity” analysis should-n’t be “on the initial opportunity to survive,”but should be on “the decrease in the dece-dent’s opportunity,” i.e., “what was lost.”In particular, they found illuminating

the fact the Falcon court used the phrase

“a substantial loss of opportunity.”So illuminating, in fact, the Fulton

judges quoted the phrase five times.And, based on that phrase from Falcon,

the judges concluded the following aboutthe “loss of opportunity” statute and thewords “the opportunity”:“[W]e conclude that MCL 600.2912a(2)

requires a plaintiff to show that the loss ofthe opportunity to survive or achieve abetter result exceeds fifty percent,” wroteJudge Michael J. Talbot in an opinionjoined by Judge Kurtis T.Wilder.Since Fulton was decided in 2002, the

standard for “ambiguity” has changed.Instead of a “reasonable minds” stan-

dard, “a provision of the law is ambiguousonly if it ‘irreconcilably conflict[s]’ with an-other provision … or when it is equallysusceptible to more than a single meaning.”Under either standard, however, the

words “the opportunity” don’t fit the bill.Reasonable minds can’t differ about

whether “the opportunity”meant “the lossof the opportunity.”For instance, Random House Webster’s

College Dictionary defines “opportunity”as “a situation or condition favorable forattainment of a goal.”Whereas “loss” is defined as “failure to

preserve or maintain.”Given those definitions, “the opportuni-

ty” couldn’t be said to irreconcilably con-flict with “the loss of the opportunity.”And, if “the opportunity”was susceptible

to more than one meaning, it’s alternativemeanings wouldn’t likely be “the loss.”The two phrases are distinct in their

meanings because their words are different.And not only are their dictionary defi-

nitions different, but the Legislature hastreated them differently.Presumably, if the Legislature hadmeant

for “the opportunity” to be interpreted as“the loss of the opportunity,” it would’vesaid so — as it did elsewhere in the statutewhere it twice wrote “loss of opportunity.”But, even if the words “the opportunity”

were ambiguous, as the Fulton majorityconcluded, the Supreme Court’s rules forstatutory interpretation don’t authorizecourts to add words to statutes. (See“Three words,” above.)Furthermore,Fulton’s interpretation of

the “loss of opportunity” statute is at oddswith both the plain meaning of the statu-tory language, as discussed above, andthe extrinsic evidence.For instance, Falcon doesn’t stand for

what the Fulton majority claims — or atleast not as unequivocally as Fulton claims.

Fulton relies on the fact that Falcon

used the phrase “substantial loss of op-portunity.”The judges claimed it showed Falcon’s fo-

cus was on “loss” and not “opportunity,” and,thus,when interpreting “the opportunity wasgreater than 50%,” the “greater than 50%”should be read as applying to “the loss of theopportunity,” not just “the opportunity.”The problem with that reading of Fal-

con, however, is it ignores the sentence be-fore the one that contains the phrase “sub-stantial loss of opportunity.”In the first sentence, where the Falcon

court is actually resolving the plaintiff ’sclaim, the court states: “We are persuadedthat loss of a 37.5 percent opportunity ofliving constitutes a loss of a substantialopportunity of avoiding physical harm.”

[Emphasis added.]As such, if placement of the word “sub-

stantial” is any indicator of the focus ofthe Falcon court’s “loss of opportunity”analysis — as the Fulton judges claimed— then the focus should be on “opportu-nity,” not “loss.”That point is made stronger by the sen-

tence in Falcon that was relied on by theFulton judges.Because it had no bearing on the outcome

of the case, it was nonbinding dicta, and,thus, didn’t provide an accurate statementof the common law on “loss of opportunity.”“We need not now decide what lesser

percentage would constitute a substantialloss of opportunity,” said the Falcon court.[Emphasis added.]

COA’s ‘ambiguity’ analysis misses meaning of ‘loss of opportunity’statute

Submit YourFeature ArticlesThe Michigan Medical Law Report welcomes

articles from readers for its special feature sections.

Submissions should be seven pages or less, double

spaced (approximately 1,500 words). Submission

does not guarantee publication.

Proposed articles should be sent to

[email protected].

For more information, please

call 800-678-5297.

Internal Revenue Service (IRS) whistle-blowing has rather recently become animportant weapon in the government’sarsenal against fraud.According to theGovernment Accountability Office,each year the United States loses anestimated $345 billion in tax under-payments and fraud.However, recent amendments to the

long-standing IRS whistleblower statuteInternal Revenue Code (IRC) § 7623 nowprovide for a mandatory “bounty pay-ment” to tax-fraud whistleblowers, andthe law has been a noticeable success.According to SteveWhitlock, head of the

IRS Whistleblower Office, reward claimshave been pouring in since the amend-ments were passed in December 2006,some involving billions of dollars. Becauseinformants who provide information thatassists the IRS in the enforcement of taxlaws are eligible to receive up to 30 per-cent of the amount recovered by the IRS,this can result in substantial rewards forIRS whistleblowers.New life was breathed into the IRS

whistleblower law with the amendmentsto IRC § 7623 in December 2006 under theTax Relief and Health Care Act. Previous-ly, the law allowed the Secretary of Treas-ury to pay whistleblowers a discretionaryreward under IRC § 7623(a) “for detectingand bringing to trial and punishment per-sons guilty of violating the internal rev-enue laws or conniving at the same.”Under IRC § 7623(a), there is no mini-

mum statutory award provision, nor isthere a process for whistleblowers to ap-peal their awards if they disagree with theIRS’s determination. Now, IRC § 7623(a)generally operates as a catch-all provi-sion for claims that do not fall under thenew IRC § 7623(b).Under IRC § 7623(b), awards to whistle-

blowers are no longer entirely discre-tionary. Instead, IRC § 7623(b) entitles atax whistleblower to receive 15 to 30 per-cent of the collected proceeds, includingpenalties, interest, additions to tax and ad-ditional amounts. Additionally, under IRC§ 7623(b)(4), whistleblowers may appealtheir award determination to the UnitedStates Tax Court if they do so within 30days. This provides a conduit for whistle-blowers to object to award payments if theyfeel the amount is insufficient based ontheir involvement in the case.The IRS whistleblower statute could

easily be put to work in the medical com-munity. Last year, a Government Ac-counting Office (GAO) report found thatwhile the majority of Medicaid providerspay their taxes, thousands of others regu-larly abuse the federal tax system.The GAO’s data indicated that “[o]ver

30,000 Medicaid providers, about 5 per-cent of those paid in fiscal year 2006, hadover $1 billion of unpaid federal taxes.”The report also found these Medicaidproviders “accumulating substantial as-sets, including million-dollar houses andluxury vehicles, while failing to pay theirfederal taxes.”The Center for Medicare & Medicaid

Services (CMS) does not prevent health care

providers who have federal tax debts fromenrolling in Medicaid, generally becausefederal law acts as an obstacle by prohibit-ing the disclosure of taxpayer data to CMSand the states. CMS is also concerned thatscreening providers for tax delinquency willeat up valuable time and fiscal resourcesand could adversely affect the states’ abili-ty to provide health care to the poor.With CMS and the states left without a

mechanism to prevent these health careproviders from enrolling in or receivingMedicaid payments, physicians and theiremployees are in a unique position to detecttax fraud being committed by health careproviders and report it to the IRS under theIRS whistleblower statute IRC § 7623.Both § 7623(a) and (b) claims are initi-

ated by the whistleblower submitting,under penalty of perjury, informationon the Application for Award for Orig-inal Information Form 211. Theform requires the whistleblowerto provide his or her personalinformation,as well

as the facts pertinent to the alleged viola-tion, including how the whistleblowerlearned about the fraud and the suspect-ed amount owed by the taxpayer.The IRS encourages whistleblowers to

provide any evidence they may have withtheir initial submission of Form 211, butthere are no formal requirements at thistime regarding the format that the sub-mission of evidence must take.Because Form 211 provides a limited

amount of space, many whistleblowersand their attorneys attach an additionalDisclosure of Material Information to bet-ter inform the IRS of the fraud and piqueits interest in the case. Any other

pertinent documen-tation, such

as taxreturns,

accounting reports and other financial doc-uments, should also be included in the ini-tial submission. The more information awhistleblower can provide to the IRS, themore likely it is to initiate an investigation.Once Form 211 is filed, an analyst in the

Whistleblower Office will evaluate the in-formation provided by the whistleblowerand determine whether the case is worthpursuing. Because the IRS is solely respon-sible for prosecuting a case once it decides togo forward with a whistleblower’s claim,minimum amount requirements preserveIRS resources by ensuring that the IRS isonly required to investigate claims that willresult in a substantial monetary return.IRC § 7623(b) applies to cases against

any taxable entity as long as the tax, penal-ties, interest, additions to tax, and addi-tional amounts in dispute exceed $2million.If the taxpayer is an individual, the gross in-come must exceed $200,000 for the taxableyear that is the subject of the action.Under IRC § 7623(b)(1), the individual

whistleblower is entitled to receive anaward of “at least 15 percent but not morethan 30 percent of the collected proceeds.”However, theWhistleblower Office has thediscretion to reduce the award in caseswhere the whistleblower contributed sub-stantially less to the IRS investigation be-cause the information was based princi-pally on the disclosure of specificallegations resulting from judicial or ad-ministrative hearings, a governmental re-port, hearing, audit or investigation, orthe news media. In those cases, theaward may not exceed 10 percent ofthe collected proceeds from the ac-tion itself or any settlement inresponse to such action.The Whistleblower Officetakes into account the signif-icance of the individual’s in-formation and the role ofsuch individual whenconsidering the awardamount. If the whistle-blower is convictedof planning and ini-tiating the non-compliance, theWhistleblower Of-fice is required todeny the award.If the monetary

requirements ofIRC § 7623(b) arenot met, a casemay be brought

under the originalIRC § 7623(a) provision and it is entirelywithin the IRS’s discretion whether to payfor a whistleblower award for informationthat leads to recovery of taxes. The dis-cretionary award is paid, like IRC §7623(b), from the proceeds collected fromadministrative or judicial action resultingfrom the information provided by thewhistleblower. The discretionary maxi-mum percentage of award is 15 percent,up to $10 million. If the whistleblower isfound to have planned or initiated the ac-tions that led to the underpayment of taxor violation of internal revenue laws, theaward may be reduced.IRC § 7623(b), unlike its earlier counter-

part, also allows awards to be appealed tothe United States Tax Court.When a validclaim is submitted to the IRS Whistle-blower Office and subsequently leads toan audit or investigation resulting in thecollection of proceeds, the WhistleblowerOffice will communicate the final determi-nation, in writing, to the claimant. Allawards are subject to current federal taxreporting and withholding requirements.Clearly, the IRS whistleblower statute

is a valuable tool to curtail tax fraud andwaste by taxable entities, including Med-icaid, Medicare and other health careproviders.If you are aware of tax fraud being com-

mitted, it is in your best interest to con-tact an attorney to help you compile theinformation you need to submit a sub-stantial and convincing claim to the IRSWhistleblower Office.Besides helping the government to

eliminate tax abuse, IRS whistleblowersstand to receive a sizable portion of thegovernment’s recovery for the valuable in-formation they provide.


Health Care JusticeBy David L. Haron, Esq.and Maro E. Bush

David L.Haron (pic-tured) is a principaland Maro E.Bush isa law clerk at Frank,Haron, Weiner andNavarro, PLC.Haron’s practice in-cludes all aspects ofhealth care law,complex litigation,

business transactions and real estateplanning and development. As a quitam lawyer, he has recovered from cor-porations and people more than $100million fraudulently received from thetaxpayers. Contact him at (248) 952-0400 or [email protected]. Bushhas assisted with a variety of federalFalse Claims Act/qui tam cases in-volving health care entities andMedicare/Medicaid fraud.

Filing a Whistleblower Award ActionUnder IRC § 7623(b)(4) the claimant may appeal the award determi-nation within 30 days to the United States Tax Court. On June 2, 2008,the Tax Court issued proposed amendments to its Rules of Practice andProcedure regarding whistleblower award actions. Pursuant to theseamendments, the Tax Court has sole jurisdiction over whistlebloweraward actions. A whistleblower award action is commenced by filing apetition with the court. The petition must contain:

The Commissioner will then file an answer or motion with respect tothe petition.

Substantial tax fraud whistleblower awardsare available under certain IRC guidelines

• The petitioner’s name

• State of legal residence

• Mailing address

• The date of the determination ofthe award by the IRS Whistle-blower Office

• Statements setting forth factsupon which the petitioner relies tosupport the petitioner’s position

• The relief sought

• The signature, mailing address,and telephone number of eachpetitioner or each petitioner’scounsel, as well as counsel’s TaxCourt bar number

• A copy of the original award de-termination

• The $60 filing fee

State licensing boards, health care en-tities, and professional societies regularlyidentify and discipline physicians who en-gage in “unprofessional behavior.” By def-inition and with minor exceptions, “un-professional behavior” is an extremelyesoteric concept that is susceptible toabuse and difficult to defend against.Unless a physician has the disposition

of Mother Teresa or otherwise walks onwater, it is not difficult for a competitor orhospital to tag a physician, who for what-ever reason has become persona non gra-ta, as “unprofessional” or “disruptive” andto ultimately justify adverse action or theouster of that physician.Few physicians understand that

charges of unprofessional behavior haveserious repercussions well beyond the im-mediate hospital environment. Contraryto common assumption, the National

Practitioner Data Bank (NPDB) requiresnot only the reporting of malpractice mat-ters, but also the reporting of adverse ac-tions against physicians sanctioned for“unprofessional behavior,” where those ac-tions affect licensure, clinical privileges, orprofessional society membership.Such reports remain on file with the

NPDB permanently, unless they are void-ed or corrected by the reporting entity orthe Secretary of the U.S. Department ofHealth and Human Services pursuant tospecific and often difficult to meet re-quirements.

Though information on the NPDB isnot available to the general public, mal-practice insurers, state licensing boards,and healthcare entities of all types andacross state lines systematically query theNPDB in connection with new licensing orinsurance applications and credentialingor privilege requests. Thus, being flaggedby the NPDB for ostensible “unprofes-sional behavior” is a permanent blemishon a physician’s profile and can have sig-nificant career-long consequences.Notwithstanding, few physicians recog-

nize the building blocks of a reportable ad-

verse action in the making. Though mostrecognize that a 30-day suspension is asignificant disciplinary event that war-rants legal evaluation and action, manydo not realize that such a disciplinaryevent is commonly the final step of a se-ries of smaller adverse events, which thephysician has left unchallenged on the as-sumption that they were minor in nature.These seemingly minor adverse events

are often actions that do not have anysemblance of formality and that do nottrigger fair hearing rights; hence, they arego unaddressed by the physician. Theseseemingly minor adverse events rangefrom written complaints about the physi-cian’s conduct, even if only authored by apeer, rather than a department chair, toformal letters of reprimand.Further, they include any other state-

ments that are critical of the physician’sdemeanor and that are preserved in a writ-ten record (such as in departmental min-utes). Over time, these seemingly minoradverse events can easily paper up, withinfractions, a physician’s record and cre-dentialing file,making it significantly moredifficult to ultimately defeat a reportabledisciplinary event that builds on them.Accordingly, once any such “minor” ad-

verse event is identified, it is imperativefor physicians to develop and implement ameaningful plan of action that effectivelyaddresses the situation, rather than waitfor additional adverse events to take place.Because it is safe to assume that the

circumstances and environment in whichthe adverse event or events have takenplace are complex and laden with con-flicting interests and agendas (personal,political and financial), physicians arewell-advised to consult legal counsel com-petent in hospital/physician relations inconnection with the development of anappropriate plan of action that will ulti-mately avert a reportable event.


A leader in health and business law, Frank, Haron,

Weiner and Navarro has expertise in all areas affecting

professionals and entities in the healthcare sector.

Comprised of Michigan Super Lawyers and leaders

across the state of Michigan and beyond, Frank, Haron,

Weiner and Navarro is the legal team that you want on

your side. A full service law firm in a boutique setting.

Frank, Haron, Weiner and Navarro | 5435 Corporate Drive, Suite 225 | Troy, Michigan 48098 | 248.952.0400 | www.fhwnlaw.com

Contracts and BusinessTransactions

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Licensing

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Never discount the importance of having a planto combat allegations of unprofessional behaviorHealth Care JusticeBy Monica P. Navarro, Esq.

Monica P. Navarrois a principal atFrank, Haron,Wein-er and Navarro,PLC. She representsa wide variety of en-tities and profes-sionals in the areasof regulatory com-pliance, medical

staffing, and fraud and abuse, andthe matters she’s handled have rankedamong the top settlements in Michi-gan. Navarro serves on a number ofhealth care boards, including the Stateof Michigan Board of Psychology, andis a frequent speaker on health caretopics nationwide. Contact her at (248)952-0400 or [email protected].

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