S.Y. Tan, MD, JD

Question: Which of the following statements regarding medical peer review is best?

A) The purpose is to evaluate quality of patient care and monitor physician performance.

B) A physician under peer review must be accorded due process, which at a minimum includes notice and opportunity to be heard.

C) Proceedings are confidential and nondiscoverable.

D) Medical peer review has been criticized for being biased, inconsistent, and lacking transparency.

E) All are correct.

Answer: E. Medical peer review, a requirement of the Joint Commission, has been called the cornerstone of quality assurance. A committee of doctors typically reviews applications for hospital staff membership, reappointments, and medical care rendered. To encourage candid, effective, and meaningful discussions, federal and state laws shield committee members from liability by granting qualified immunity and protecting the confidential information from discovery.

Due process, antitrust liability, and records protection are three issues in peer review deserving of special attention.

The requirements of procedural due process are typically spelled out in hospital medical staff bylaws. In addition, peer review deliberations and decisions are expected, as specifically outlined at Yale-New Haven (Conn.) Hospital, to be consistent, timely, rational, defensible, balanced, and useful.¹

One of the earlier litigated cases was Silver v. Castle Memorial Hospital,² which involved a Hawaii neurosurgeon whose hospital privileges were not renewed after a 1-year probationary period. The court found that prior to his termination, Dr. Silver was never provided with specific written charges as to why his performance was not deemed acceptable, and the hospital board made its decision prior to an ineffective hearing. The court emphasized that due process required fair and thorough consideration. The doctor must be on notice that a hearing is available to him, and be given timely notification sufficiently prior to the hearing for him to adequately prepare a defense.

Other requirements include the provision of a written statement specifying the reasons for any adverse decision, which must come from substantial evidence produced at the hearing. As such, the board cannot rely on ex parte communications that were not made known to the doctor in question.

The doctor who is judged wanting in peer review not infrequently files an antitrust lawsuit in retaliation, claiming an anticompetitive intent.

The most publicized case is Patrick v. Burget,³ which dealt with an adverse peer review action against Dr. Timothy Patrick, a vascular surgeon. His decision to leave the Astoria Clinic in Oregon for an independent practice was followed by revocation of his hospital privileges for alleged substandard care, but Dr. Patrick claimed that the medical staff’s true purpose was to eliminate him as a competitor.

After Dr. Patrick won a $2.1 million jury verdict, the hospital appealed the decision and was initially successful in invoking the so-called "state action doctrine" immunity against antitrust liability. However, the U.S. Supreme Court unanimously found that the "state action doctrine" required proof of active state supervision of the peer review process, which was not evident in the case.

Following Burget, the U.S. Congress enacted the Health Care Quality Improvement Act of 1986,⁴ in the belief that the threat of liability under federal antitrust laws unreasonably discouraged physicians from participating in effective professional peer review. The act confers immunity upon participants sitting in judgment so long as the action taken was in the furtherance of quality health care, and the process carried out in a legitimate fashion with appropriate due process safeguards. These safeguards include, among others, a reasonable effort to obtain the facts, an adequate notice and hearing procedure, a reasonable belief that the action was warranted, and reporting any adverse outcome to the National Practitioner Data Bank.

A third issue in peer review involves disclosure. State statutes universally require that peer review be carried out in confidence, and committee minutes are to be nondiscoverable. This is to allow participants to speak freely and candidly without risk of legal discovery in the event there is an accompanying or subsequent malpractice lawsuit.

However, motions by plaintiff attorneys for production of supposedly protected documents may occasionally prove successful. Where federal laws conflict with state statutes, one federal court has asserted that its interests in "ascertaining the truth through an examination of all the available facts" would trump a state’s concern for privacy.

Courts have also found certain clinical information to be beyond statutory protection. For example, a Missouri appellate court ordered the production of hospital quality assurance and infection control records sought by the plaintiff. The Connecticut Supreme Court has made a similar determination, and the Nevada Supreme Court has ruled that hospital incident reports are not covered by the state peer review privilege.

What about an aggrieved physician who sues the committee members and hospital? Is he/she entitled to the records?

The Supreme Court of Pennsylvania has held that there was no statutory protection of such records where a physician challenged his own peer review process, because the statute’s intent was directed only at preventing disclosure to outside litigants in negligence actions.

West Covino Hospital v. Superior Court⁵ went even further. In that malpractice case against a surgeon, the California Supreme Court allowed a physician who served on the peer review committee to voluntarily testify about the confidential proceedings, to the obvious distress of the hospital as well as other members who had neither volunteered nor agreed to such disclosure. The court reasoned that the confidentiality rule was intended to preclude involuntary testimony, not that given voluntarily by one with access to peer review information.

Unfortunately, the decision may spawn unintended consequences. For example, the Joint Commission has instituted confidential medical error reporting systems designed to improve patient safety. These programs are unlikely to go very far if physicians were to fear disclosure without consent.

Peer review is an integral part of medical practice, and self-scrutiny is a laudable expression of quality assurance. Professional organizations such as the Joint Commission and the American Medical Association understandably support the practice.

The AMA, for example, subscribes to the view that peer review, which "balances the physician’s rights to exercise medical judgment freely with the obligation to do so wisely and temperately," is both necessary and ethical, so long as principles of due process are observed.⁶

Still, some observers both inside and outside the profession are skeptical. They believe that deliberations by a commonly transient, unschooled, and inexperienced committee sitting in judgment are too often tainted by conflicts of interest, refusal to censure a colleague, or a punitive agenda based on biases and/or anticompetitive motives.

In 2008, Lumetra, a nonprofit health care consulting organization, completed a legislature-sponsored study of medical peer review in the state of California.⁷ It found a "broken" system that needed a "major fix." There were significant inconsistencies in the way entities conducted peer review, variations in the selection and application of criteria, and confusion over reporting requirements. The authors felt that these variations could result in the perpetuation of the provision of substandard care, which in turn imperiled public safety.

Among its recommendations was a redesign of the peer review process to include establishing a separate, independent peer review organization with no vested interest in the review outcome except the protection of the public, improved physician education of the process, and public disclosure.

References

1. Yale-New Haven Hospital, Department of Physician Services: www.ynhh.org/vSiteManager/Upload/Images/Professionals/OPPE.pdf.

2. Silver v. Castle Memorial Hospital, 497 P.2d 564 (Haw. 1972).

3. Patrick v. Burget, 108 S. Ct. 1658 (1988).

4. 42 U.S.C.A. Sections 11101-11152.

5. West Covino Hospital v. Superior Court, 718 P.2d 119 (Cal 1986).

6. Code of Medical Ethics of the American Medical Association, 2012-2013 edition, section 9.10.

7. Comprehensive Study of Peer Review in California Final Report. Available at www.mbc.ca.gov/publications/peer_review.pdf.

Dr. Tan is professor emeritus of medicine and former adjunct professor of law at the University of Hawaii, and currently directs the St. Francis International Center for Healthcare Ethics. This article is meant to be educational and does not constitute medical, ethical, or legal advice. Some of the articles in this series are adapted from the author’s 2006 book, "Medical Malpractice: Understanding the Law, Managing the Risk," and his 2012 Halsbury treatise, "Medical Negligence and Professional Misconduct." For additional information, readers may contact the author at [email protected].

Question: Which of the following statements regarding medical peer review is best?

A) The purpose is to evaluate quality of patient care and monitor physician performance.

B) A physician under peer review must be accorded due process, which at a minimum includes notice and opportunity to be heard.

C) Proceedings are confidential and nondiscoverable.

D) Medical peer review has been criticized for being biased, inconsistent, and lacking transparency.

E) All are correct.

Answer: E. Medical peer review, a requirement of the Joint Commission, has been called the cornerstone of quality assurance. A committee of doctors typically reviews applications for hospital staff membership, reappointments, and medical care rendered. To encourage candid, effective, and meaningful discussions, federal and state laws shield committee members from liability by granting qualified immunity and protecting the confidential information from discovery.

Due process, antitrust liability, and records protection are three issues in peer review deserving of special attention.

The requirements of procedural due process are typically spelled out in hospital medical staff bylaws. In addition, peer review deliberations and decisions are expected, as specifically outlined at Yale-New Haven (Conn.) Hospital, to be consistent, timely, rational, defensible, balanced, and useful.¹

One of the earlier litigated cases was Silver v. Castle Memorial Hospital,² which involved a Hawaii neurosurgeon whose hospital privileges were not renewed after a 1-year probationary period. The court found that prior to his termination, Dr. Silver was never provided with specific written charges as to why his performance was not deemed acceptable, and the hospital board made its decision prior to an ineffective hearing. The court emphasized that due process required fair and thorough consideration. The doctor must be on notice that a hearing is available to him, and be given timely notification sufficiently prior to the hearing for him to adequately prepare a defense.

Other requirements include the provision of a written statement specifying the reasons for any adverse decision, which must come from substantial evidence produced at the hearing. As such, the board cannot rely on ex parte communications that were not made known to the doctor in question.

The doctor who is judged wanting in peer review not infrequently files an antitrust lawsuit in retaliation, claiming an anticompetitive intent.

The most publicized case is Patrick v. Burget,³ which dealt with an adverse peer review action against Dr. Timothy Patrick, a vascular surgeon. His decision to leave the Astoria Clinic in Oregon for an independent practice was followed by revocation of his hospital privileges for alleged substandard care, but Dr. Patrick claimed that the medical staff’s true purpose was to eliminate him as a competitor.

After Dr. Patrick won a $2.1 million jury verdict, the hospital appealed the decision and was initially successful in invoking the so-called "state action doctrine" immunity against antitrust liability. However, the U.S. Supreme Court unanimously found that the "state action doctrine" required proof of active state supervision of the peer review process, which was not evident in the case.

Following Burget, the U.S. Congress enacted the Health Care Quality Improvement Act of 1986,⁴ in the belief that the threat of liability under federal antitrust laws unreasonably discouraged physicians from participating in effective professional peer review. The act confers immunity upon participants sitting in judgment so long as the action taken was in the furtherance of quality health care, and the process carried out in a legitimate fashion with appropriate due process safeguards. These safeguards include, among others, a reasonable effort to obtain the facts, an adequate notice and hearing procedure, a reasonable belief that the action was warranted, and reporting any adverse outcome to the National Practitioner Data Bank.

A third issue in peer review involves disclosure. State statutes universally require that peer review be carried out in confidence, and committee minutes are to be nondiscoverable. This is to allow participants to speak freely and candidly without risk of legal discovery in the event there is an accompanying or subsequent malpractice lawsuit.

However, motions by plaintiff attorneys for production of supposedly protected documents may occasionally prove successful. Where federal laws conflict with state statutes, one federal court has asserted that its interests in "ascertaining the truth through an examination of all the available facts" would trump a state’s concern for privacy.

Courts have also found certain clinical information to be beyond statutory protection. For example, a Missouri appellate court ordered the production of hospital quality assurance and infection control records sought by the plaintiff. The Connecticut Supreme Court has made a similar determination, and the Nevada Supreme Court has ruled that hospital incident reports are not covered by the state peer review privilege.

What about an aggrieved physician who sues the committee members and hospital? Is he/she entitled to the records?

The Supreme Court of Pennsylvania has held that there was no statutory protection of such records where a physician challenged his own peer review process, because the statute’s intent was directed only at preventing disclosure to outside litigants in negligence actions.

West Covino Hospital v. Superior Court⁵ went even further. In that malpractice case against a surgeon, the California Supreme Court allowed a physician who served on the peer review committee to voluntarily testify about the confidential proceedings, to the obvious distress of the hospital as well as other members who had neither volunteered nor agreed to such disclosure. The court reasoned that the confidentiality rule was intended to preclude involuntary testimony, not that given voluntarily by one with access to peer review information.

Unfortunately, the decision may spawn unintended consequences. For example, the Joint Commission has instituted confidential medical error reporting systems designed to improve patient safety. These programs are unlikely to go very far if physicians were to fear disclosure without consent.

Peer review is an integral part of medical practice, and self-scrutiny is a laudable expression of quality assurance. Professional organizations such as the Joint Commission and the American Medical Association understandably support the practice.

The AMA, for example, subscribes to the view that peer review, which "balances the physician’s rights to exercise medical judgment freely with the obligation to do so wisely and temperately," is both necessary and ethical, so long as principles of due process are observed.⁶

Still, some observers both inside and outside the profession are skeptical. They believe that deliberations by a commonly transient, unschooled, and inexperienced committee sitting in judgment are too often tainted by conflicts of interest, refusal to censure a colleague, or a punitive agenda based on biases and/or anticompetitive motives.

In 2008, Lumetra, a nonprofit health care consulting organization, completed a legislature-sponsored study of medical peer review in the state of California.⁷ It found a "broken" system that needed a "major fix." There were significant inconsistencies in the way entities conducted peer review, variations in the selection and application of criteria, and confusion over reporting requirements. The authors felt that these variations could result in the perpetuation of the provision of substandard care, which in turn imperiled public safety.

Among its recommendations was a redesign of the peer review process to include establishing a separate, independent peer review organization with no vested interest in the review outcome except the protection of the public, improved physician education of the process, and public disclosure.

References

1. Yale-New Haven Hospital, Department of Physician Services: www.ynhh.org/vSiteManager/Upload/Images/Professionals/OPPE.pdf.

2. Silver v. Castle Memorial Hospital, 497 P.2d 564 (Haw. 1972).

3. Patrick v. Burget, 108 S. Ct. 1658 (1988).

4. 42 U.S.C.A. Sections 11101-11152.

5. West Covino Hospital v. Superior Court, 718 P.2d 119 (Cal 1986).

6. Code of Medical Ethics of the American Medical Association, 2012-2013 edition, section 9.10.

7. Comprehensive Study of Peer Review in California Final Report. Available at www.mbc.ca.gov/publications/peer_review.pdf.

Dr. Tan is professor emeritus of medicine and former adjunct professor of law at the University of Hawaii, and currently directs the St. Francis International Center for Healthcare Ethics. This article is meant to be educational and does not constitute medical, ethical, or legal advice. Some of the articles in this series are adapted from the author’s 2006 book, "Medical Malpractice: Understanding the Law, Managing the Risk," and his 2012 Halsbury treatise, "Medical Negligence and Professional Misconduct." For additional information, readers may contact the author at [email protected].

Question: Which of the following statements regarding medical peer review is best?

A) The purpose is to evaluate quality of patient care and monitor physician performance.

B) A physician under peer review must be accorded due process, which at a minimum includes notice and opportunity to be heard.

C) Proceedings are confidential and nondiscoverable.

D) Medical peer review has been criticized for being biased, inconsistent, and lacking transparency.

E) All are correct.

Answer: E. Medical peer review, a requirement of the Joint Commission, has been called the cornerstone of quality assurance. A committee of doctors typically reviews applications for hospital staff membership, reappointments, and medical care rendered. To encourage candid, effective, and meaningful discussions, federal and state laws shield committee members from liability by granting qualified immunity and protecting the confidential information from discovery.

Due process, antitrust liability, and records protection are three issues in peer review deserving of special attention.

The requirements of procedural due process are typically spelled out in hospital medical staff bylaws. In addition, peer review deliberations and decisions are expected, as specifically outlined at Yale-New Haven (Conn.) Hospital, to be consistent, timely, rational, defensible, balanced, and useful.¹

One of the earlier litigated cases was Silver v. Castle Memorial Hospital,² which involved a Hawaii neurosurgeon whose hospital privileges were not renewed after a 1-year probationary period. The court found that prior to his termination, Dr. Silver was never provided with specific written charges as to why his performance was not deemed acceptable, and the hospital board made its decision prior to an ineffective hearing. The court emphasized that due process required fair and thorough consideration. The doctor must be on notice that a hearing is available to him, and be given timely notification sufficiently prior to the hearing for him to adequately prepare a defense.

Other requirements include the provision of a written statement specifying the reasons for any adverse decision, which must come from substantial evidence produced at the hearing. As such, the board cannot rely on ex parte communications that were not made known to the doctor in question.

The doctor who is judged wanting in peer review not infrequently files an antitrust lawsuit in retaliation, claiming an anticompetitive intent.

The most publicized case is Patrick v. Burget,³ which dealt with an adverse peer review action against Dr. Timothy Patrick, a vascular surgeon. His decision to leave the Astoria Clinic in Oregon for an independent practice was followed by revocation of his hospital privileges for alleged substandard care, but Dr. Patrick claimed that the medical staff’s true purpose was to eliminate him as a competitor.

After Dr. Patrick won a $2.1 million jury verdict, the hospital appealed the decision and was initially successful in invoking the so-called "state action doctrine" immunity against antitrust liability. However, the U.S. Supreme Court unanimously found that the "state action doctrine" required proof of active state supervision of the peer review process, which was not evident in the case.

Following Burget, the U.S. Congress enacted the Health Care Quality Improvement Act of 1986,⁴ in the belief that the threat of liability under federal antitrust laws unreasonably discouraged physicians from participating in effective professional peer review. The act confers immunity upon participants sitting in judgment so long as the action taken was in the furtherance of quality health care, and the process carried out in a legitimate fashion with appropriate due process safeguards. These safeguards include, among others, a reasonable effort to obtain the facts, an adequate notice and hearing procedure, a reasonable belief that the action was warranted, and reporting any adverse outcome to the National Practitioner Data Bank.

A third issue in peer review involves disclosure. State statutes universally require that peer review be carried out in confidence, and committee minutes are to be nondiscoverable. This is to allow participants to speak freely and candidly without risk of legal discovery in the event there is an accompanying or subsequent malpractice lawsuit.

However, motions by plaintiff attorneys for production of supposedly protected documents may occasionally prove successful. Where federal laws conflict with state statutes, one federal court has asserted that its interests in "ascertaining the truth through an examination of all the available facts" would trump a state’s concern for privacy.

Courts have also found certain clinical information to be beyond statutory protection. For example, a Missouri appellate court ordered the production of hospital quality assurance and infection control records sought by the plaintiff. The Connecticut Supreme Court has made a similar determination, and the Nevada Supreme Court has ruled that hospital incident reports are not covered by the state peer review privilege.

What about an aggrieved physician who sues the committee members and hospital? Is he/she entitled to the records?

The Supreme Court of Pennsylvania has held that there was no statutory protection of such records where a physician challenged his own peer review process, because the statute’s intent was directed only at preventing disclosure to outside litigants in negligence actions.

West Covino Hospital v. Superior Court⁵ went even further. In that malpractice case against a surgeon, the California Supreme Court allowed a physician who served on the peer review committee to voluntarily testify about the confidential proceedings, to the obvious distress of the hospital as well as other members who had neither volunteered nor agreed to such disclosure. The court reasoned that the confidentiality rule was intended to preclude involuntary testimony, not that given voluntarily by one with access to peer review information.

Unfortunately, the decision may spawn unintended consequences. For example, the Joint Commission has instituted confidential medical error reporting systems designed to improve patient safety. These programs are unlikely to go very far if physicians were to fear disclosure without consent.

Peer review is an integral part of medical practice, and self-scrutiny is a laudable expression of quality assurance. Professional organizations such as the Joint Commission and the American Medical Association understandably support the practice.

The AMA, for example, subscribes to the view that peer review, which "balances the physician’s rights to exercise medical judgment freely with the obligation to do so wisely and temperately," is both necessary and ethical, so long as principles of due process are observed.⁶

Still, some observers both inside and outside the profession are skeptical. They believe that deliberations by a commonly transient, unschooled, and inexperienced committee sitting in judgment are too often tainted by conflicts of interest, refusal to censure a colleague, or a punitive agenda based on biases and/or anticompetitive motives.

In 2008, Lumetra, a nonprofit health care consulting organization, completed a legislature-sponsored study of medical peer review in the state of California.⁷ It found a "broken" system that needed a "major fix." There were significant inconsistencies in the way entities conducted peer review, variations in the selection and application of criteria, and confusion over reporting requirements. The authors felt that these variations could result in the perpetuation of the provision of substandard care, which in turn imperiled public safety.

Among its recommendations was a redesign of the peer review process to include establishing a separate, independent peer review organization with no vested interest in the review outcome except the protection of the public, improved physician education of the process, and public disclosure.

References

1. Yale-New Haven Hospital, Department of Physician Services: www.ynhh.org/vSiteManager/Upload/Images/Professionals/OPPE.pdf.

2. Silver v. Castle Memorial Hospital, 497 P.2d 564 (Haw. 1972).

3. Patrick v. Burget, 108 S. Ct. 1658 (1988).

4. 42 U.S.C.A. Sections 11101-11152.

5. West Covino Hospital v. Superior Court, 718 P.2d 119 (Cal 1986).

6. Code of Medical Ethics of the American Medical Association, 2012-2013 edition, section 9.10.

7. Comprehensive Study of Peer Review in California Final Report. Available at www.mbc.ca.gov/publications/peer_review.pdf.

Dr. Tan is professor emeritus of medicine and former adjunct professor of law at the University of Hawaii, and currently directs the St. Francis International Center for Healthcare Ethics. This article is meant to be educational and does not constitute medical, ethical, or legal advice. Some of the articles in this series are adapted from the author’s 2006 book, "Medical Malpractice: Understanding the Law, Managing the Risk," and his 2012 Halsbury treatise, "Medical Negligence and Professional Misconduct." For additional information, readers may contact the author at [email protected].

QUESTION: The medical staff at the newly opened hospital is putting together a set of bylaws covering credentialing, peer review, and patient-care quality assurance. The doctors are mostly independent contractors and not hospital employees. The administration, obsessed with financial solvency, wishes to retain veto power over decisions affecting staff privileges. In potential disputes affecting the hospital and its medical staff, which of the following is true?

A. The Joint Commission subscribes to the view that hospital administration rather medical staff has overall authority over clinical privileges decisions.

B. Economic credentialing is universally regarded as unethical and illegal.

C. Medical bylaws are a contractual agreement.

D. A hospital can never make unilateral changes in the medical staff bylaws.

E. The medical staff is an integral part of the hospital’s organizational structure, with its powers wholly independent of the hospital’s governing board.

BEST ANSWER: A. Doctors with hospital privileges typically organize themselves into a formal medical staff, with its powers derived from the hospital’s governing board. Professional organizations such as the American Medical Association believe that the medical staff of a facility should be self governing, with its own enforceable set of bylaws. The general view is that these bylaws do not create a binding contractual agreement.

For example, when Dr. George T. O’Byrne sued Santa Monica–UCLA Medical Center where he held medical staff privileges, the California Court of Appeal ruled that the hospital’s fiduciary duty is to its shareholders and the public – but not to its physicians – and that the medical staff bylaws did not constitute a contract (OByrne v. Santa Monica-UCLA Medical Center, 114 Cal.Rptr.2d 575 [Cal. Ct. App. 2001]).

A similar situation appears to hold in Minnesota, where the medical staff accused Avera Marshall Regional Medical Center of unilateral credentialing and revision of the bylaws, and interference with quality assurance operations (Avera Marshall Medical Staff v. Avera Marshall Regional Medical Center, 836 N.W.2d 549 [Minn. Ct. App. 2013]). Both the trial court and the court of appeals have held that the medical staff lacked the legal capacity to bring a lawsuit and that the bylaws were not a contract (the final decision of the Minnesota Supreme Court is pending).

The Joint Commission’s view is that the hospital administration has the ultimate authority over clinical privileges of its medical staff, in support of the legal doctrine that a hospital can be held liable for the torts of its practitioners. This notion of corporate liability, which includes negligent credentialing, stemmed from the seminal Darling case (Darling v. Charleston Community Hospital, 211 N.E.2d 253 [Ill. 1965]) where the court held the hospital liable for failing to adequately review the qualifications and performance of a negligent medical staff member. Dr. Alexander, the doctor at issue, had applied a plaster cast too tightly, which caused the college football player to eventually lose his leg.

Other cases followed, including the infamous California case of Gonzales v. Nork, 573 P.2d 458 (Cal. 1978), in which a drug-abusing doctor misrepresented himself as being qualified to perform laminectomies. Even in jurisdictions such as Minnesota, which does not specifically recognize negligent credentialing as a legal cause of action, its supreme court has allowed this legal theory to go forward.

Two recurring issues tending to embroil hospital and staff in conflict are unilateral actions by a medical center and the use of economic credentialing.

The usual procedure for amending the bylaws is for the medical staff to initiate and approve changes before subjecting them for final endorsement by the hospital board. Thus, when a Florida hospital unilaterally refused to re-credential two qualified radiation oncologists because of its intention to exclusively contract with the University of Miami School of Medicine for all radiation oncology procedures, the jury found in favor of the aggrieved doctors, awarding them $2.5 million in lost profits and $20.25 million in punitive damages (Columbia/JFK Medical Center v. Spunberg, 784 So.2d 541 (Fla. App. Ct. 2001).

Likewise, a small Georgia hospital tried to close its cardiology department in order to enter into an exclusive contract with a separate group of cardiologists. The Georgia Court of Appeals held that a hospital could not deprive physicians of access to its facilities unless stated in the bylaws or specifically agreed to in an individual contract (Satilla Health Services v. Bell, 633 S.E.2d 575 [Ga. Ct. App. 2006]).

However, under some narrow circumstances, a hospital can act unilaterally, without medical staff agreement, especially where the bylaws are silent on the point. Illinois recently ruled that a medical center could, without physician assent, increase physician malpractice premium limits to $1,000,000 per occurrence and $3,000,000 aggregate for multiple occurrences (from $200,000 and $600,000, respectively). Its appellate court allowed the change, holding that physician enforcement of its bylaws were restricted only to matters of clinical competence (Fabrizio v. Provena United Samaritans, 857 N.E.2d 670 [Ill. S.Ct. 2006]).

And in Lo v. Provena Covenant Hospital, 796 N.E.2d 607 (Ill. App. Ct. 2003), a hospital unilaterally and summarily suspended a cardiovascular surgeon who allegedly had twice the national mortality rate. The medical staff leadership had not been responsive to the hospital’s concern of imminent danger to patients. The Illinois Appellate Court made the finding that in this "anomalous" case, the hospital’s actions were neither arbitrary, capricious, nor in violation of the bylaws.

A second area of conflict between doctors and hospitals is hospitals’ use of economic factors in credentialing, where financial factors are used to profile – and determine – a physician’s application for privileges.

For example, a staff gynecologist risked losing her 19-year membership at Baptist Health Medical Center in Little Rock, Ark., because her physician-husband owned an interest in a competing hospital specializing in spinal surgery. The case settled when the husband divested his competing ownership. In Arkansas, the courts have ruled that Baptist Health’s policy wherein a physician who holds a financial interest in a competing hospital is ineligible for privileges at any Baptist Health hospital is both unconscionable and illegal, and the hospital economic credentialing policy tortiously interfered with the physicians’ existing and prospective business relationships (Murphy v. Baptist Health, 373 S.W.3d 269 [Ark. 2010]).

But other jurisdictions have not adopted this view. The South Dakota Supreme Court has ruled that a hospital administration may refuse applicants to the medical staff based on economic criteria (

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Mahan v. Avera St. Lukes, 621 N.W.2d 150 [S.D. S.Ct. 2001]). The court questioned the legal right of certain members of the medical staff to open a competing ambulatory surgery center. In a subsequent case, the same court held that in the absence of specific prohibitions in the bylaws, a hospital could use economic credentialing in its staffing determinations.

Even for physicians with only an occasional hospital practice, the following pointers from the book "The Biggest Legal Mistakes Physicians Make and How to Avoid Them," edited by Steven Babitsky and James J. Mangraviti Jr., may prove useful:

1) Failing to practice in a collegial manner.

2) Impugning the quality of care of the hospital, nurses, and other physicians.

3) Not knowing the hospital’s policies and procedures.

4) Not involving consultants when the issue is out of one’s specialty.

5) Not accepting constructive criticism and suggestions.

6) Failing to seek approval before prescribing unorthodox drugs or treatment.

7) Failing to respond promptly to inquiries about care or behavior.

8) Failing to follow up on an agreement resolving an issue.

9) Acting as though the hospital is lucky to have such a physician.

10) Not calling a lawyer when necessary.

Dr. Tan is professor emeritus of medicine and former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. Some of the articles in this series are adapted from the author’s 2006 book, "Medical Malpractice: Understanding the Law, Managing the Risk," and his 2012 Halsbury treatise, "Medical Negligence and Professional Misconduct." For additional information, readers may contact the author at [email protected].

QUESTION: The medical staff at the newly opened hospital is putting together a set of bylaws covering credentialing, peer review, and patient-care quality assurance. The doctors are mostly independent contractors and not hospital employees. The administration, obsessed with financial solvency, wishes to retain veto power over decisions affecting staff privileges. In potential disputes affecting the hospital and its medical staff, which of the following is true?

A. The Joint Commission subscribes to the view that hospital administration rather medical staff has overall authority over clinical privileges decisions.

B. Economic credentialing is universally regarded as unethical and illegal.

C. Medical bylaws are a contractual agreement.

D. A hospital can never make unilateral changes in the medical staff bylaws.

E. The medical staff is an integral part of the hospital’s organizational structure, with its powers wholly independent of the hospital’s governing board.

BEST ANSWER: A. Doctors with hospital privileges typically organize themselves into a formal medical staff, with its powers derived from the hospital’s governing board. Professional organizations such as the American Medical Association believe that the medical staff of a facility should be self governing, with its own enforceable set of bylaws. The general view is that these bylaws do not create a binding contractual agreement.

For example, when Dr. George T. O’Byrne sued Santa Monica–UCLA Medical Center where he held medical staff privileges, the California Court of Appeal ruled that the hospital’s fiduciary duty is to its shareholders and the public – but not to its physicians – and that the medical staff bylaws did not constitute a contract (OByrne v. Santa Monica-UCLA Medical Center, 114 Cal.Rptr.2d 575 [Cal. Ct. App. 2001]).

A similar situation appears to hold in Minnesota, where the medical staff accused Avera Marshall Regional Medical Center of unilateral credentialing and revision of the bylaws, and interference with quality assurance operations (Avera Marshall Medical Staff v. Avera Marshall Regional Medical Center, 836 N.W.2d 549 [Minn. Ct. App. 2013]). Both the trial court and the court of appeals have held that the medical staff lacked the legal capacity to bring a lawsuit and that the bylaws were not a contract (the final decision of the Minnesota Supreme Court is pending).

The Joint Commission’s view is that the hospital administration has the ultimate authority over clinical privileges of its medical staff, in support of the legal doctrine that a hospital can be held liable for the torts of its practitioners. This notion of corporate liability, which includes negligent credentialing, stemmed from the seminal Darling case (Darling v. Charleston Community Hospital, 211 N.E.2d 253 [Ill. 1965]) where the court held the hospital liable for failing to adequately review the qualifications and performance of a negligent medical staff member. Dr. Alexander, the doctor at issue, had applied a plaster cast too tightly, which caused the college football player to eventually lose his leg.

Other cases followed, including the infamous California case of Gonzales v. Nork, 573 P.2d 458 (Cal. 1978), in which a drug-abusing doctor misrepresented himself as being qualified to perform laminectomies. Even in jurisdictions such as Minnesota, which does not specifically recognize negligent credentialing as a legal cause of action, its supreme court has allowed this legal theory to go forward.

Two recurring issues tending to embroil hospital and staff in conflict are unilateral actions by a medical center and the use of economic credentialing.

The usual procedure for amending the bylaws is for the medical staff to initiate and approve changes before subjecting them for final endorsement by the hospital board. Thus, when a Florida hospital unilaterally refused to re-credential two qualified radiation oncologists because of its intention to exclusively contract with the University of Miami School of Medicine for all radiation oncology procedures, the jury found in favor of the aggrieved doctors, awarding them $2.5 million in lost profits and $20.25 million in punitive damages (Columbia/JFK Medical Center v. Spunberg, 784 So.2d 541 (Fla. App. Ct. 2001).

Likewise, a small Georgia hospital tried to close its cardiology department in order to enter into an exclusive contract with a separate group of cardiologists. The Georgia Court of Appeals held that a hospital could not deprive physicians of access to its facilities unless stated in the bylaws or specifically agreed to in an individual contract (Satilla Health Services v. Bell, 633 S.E.2d 575 [Ga. Ct. App. 2006]).

However, under some narrow circumstances, a hospital can act unilaterally, without medical staff agreement, especially where the bylaws are silent on the point. Illinois recently ruled that a medical center could, without physician assent, increase physician malpractice premium limits to $1,000,000 per occurrence and $3,000,000 aggregate for multiple occurrences (from $200,000 and $600,000, respectively). Its appellate court allowed the change, holding that physician enforcement of its bylaws were restricted only to matters of clinical competence (Fabrizio v. Provena United Samaritans, 857 N.E.2d 670 [Ill. S.Ct. 2006]).

And in Lo v. Provena Covenant Hospital, 796 N.E.2d 607 (Ill. App. Ct. 2003), a hospital unilaterally and summarily suspended a cardiovascular surgeon who allegedly had twice the national mortality rate. The medical staff leadership had not been responsive to the hospital’s concern of imminent danger to patients. The Illinois Appellate Court made the finding that in this "anomalous" case, the hospital’s actions were neither arbitrary, capricious, nor in violation of the bylaws.

A second area of conflict between doctors and hospitals is hospitals’ use of economic factors in credentialing, where financial factors are used to profile – and determine – a physician’s application for privileges.

For example, a staff gynecologist risked losing her 19-year membership at Baptist Health Medical Center in Little Rock, Ark., because her physician-husband owned an interest in a competing hospital specializing in spinal surgery. The case settled when the husband divested his competing ownership. In Arkansas, the courts have ruled that Baptist Health’s policy wherein a physician who holds a financial interest in a competing hospital is ineligible for privileges at any Baptist Health hospital is both unconscionable and illegal, and the hospital economic credentialing policy tortiously interfered with the physicians’ existing and prospective business relationships (Murphy v. Baptist Health, 373 S.W.3d 269 [Ark. 2010]).

But other jurisdictions have not adopted this view. The South Dakota Supreme Court has ruled that a hospital administration may refuse applicants to the medical staff based on economic criteria (

<cf number="\"2\"">’</cf>

Mahan v. Avera St. Lukes, 621 N.W.2d 150 [S.D. S.Ct. 2001]). The court questioned the legal right of certain members of the medical staff to open a competing ambulatory surgery center. In a subsequent case, the same court held that in the absence of specific prohibitions in the bylaws, a hospital could use economic credentialing in its staffing determinations.

Even for physicians with only an occasional hospital practice, the following pointers from the book "The Biggest Legal Mistakes Physicians Make and How to Avoid Them," edited by Steven Babitsky and James J. Mangraviti Jr., may prove useful:

1) Failing to practice in a collegial manner.

2) Impugning the quality of care of the hospital, nurses, and other physicians.

3) Not knowing the hospital’s policies and procedures.

4) Not involving consultants when the issue is out of one’s specialty.

5) Not accepting constructive criticism and suggestions.

6) Failing to seek approval before prescribing unorthodox drugs or treatment.

7) Failing to respond promptly to inquiries about care or behavior.

8) Failing to follow up on an agreement resolving an issue.

9) Acting as though the hospital is lucky to have such a physician.

10) Not calling a lawyer when necessary.

Dr. Tan is professor emeritus of medicine and former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. Some of the articles in this series are adapted from the author’s 2006 book, "Medical Malpractice: Understanding the Law, Managing the Risk," and his 2012 Halsbury treatise, "Medical Negligence and Professional Misconduct." For additional information, readers may contact the author at [email protected].

QUESTION: The medical staff at the newly opened hospital is putting together a set of bylaws covering credentialing, peer review, and patient-care quality assurance. The doctors are mostly independent contractors and not hospital employees. The administration, obsessed with financial solvency, wishes to retain veto power over decisions affecting staff privileges. In potential disputes affecting the hospital and its medical staff, which of the following is true?

A. The Joint Commission subscribes to the view that hospital administration rather medical staff has overall authority over clinical privileges decisions.

B. Economic credentialing is universally regarded as unethical and illegal.

C. Medical bylaws are a contractual agreement.

D. A hospital can never make unilateral changes in the medical staff bylaws.

E. The medical staff is an integral part of the hospital’s organizational structure, with its powers wholly independent of the hospital’s governing board.

BEST ANSWER: A. Doctors with hospital privileges typically organize themselves into a formal medical staff, with its powers derived from the hospital’s governing board. Professional organizations such as the American Medical Association believe that the medical staff of a facility should be self governing, with its own enforceable set of bylaws. The general view is that these bylaws do not create a binding contractual agreement.

For example, when Dr. George T. O’Byrne sued Santa Monica–UCLA Medical Center where he held medical staff privileges, the California Court of Appeal ruled that the hospital’s fiduciary duty is to its shareholders and the public – but not to its physicians – and that the medical staff bylaws did not constitute a contract (OByrne v. Santa Monica-UCLA Medical Center, 114 Cal.Rptr.2d 575 [Cal. Ct. App. 2001]).

A similar situation appears to hold in Minnesota, where the medical staff accused Avera Marshall Regional Medical Center of unilateral credentialing and revision of the bylaws, and interference with quality assurance operations (Avera Marshall Medical Staff v. Avera Marshall Regional Medical Center, 836 N.W.2d 549 [Minn. Ct. App. 2013]). Both the trial court and the court of appeals have held that the medical staff lacked the legal capacity to bring a lawsuit and that the bylaws were not a contract (the final decision of the Minnesota Supreme Court is pending).

The Joint Commission’s view is that the hospital administration has the ultimate authority over clinical privileges of its medical staff, in support of the legal doctrine that a hospital can be held liable for the torts of its practitioners. This notion of corporate liability, which includes negligent credentialing, stemmed from the seminal Darling case (Darling v. Charleston Community Hospital, 211 N.E.2d 253 [Ill. 1965]) where the court held the hospital liable for failing to adequately review the qualifications and performance of a negligent medical staff member. Dr. Alexander, the doctor at issue, had applied a plaster cast too tightly, which caused the college football player to eventually lose his leg.

Other cases followed, including the infamous California case of Gonzales v. Nork, 573 P.2d 458 (Cal. 1978), in which a drug-abusing doctor misrepresented himself as being qualified to perform laminectomies. Even in jurisdictions such as Minnesota, which does not specifically recognize negligent credentialing as a legal cause of action, its supreme court has allowed this legal theory to go forward.

Two recurring issues tending to embroil hospital and staff in conflict are unilateral actions by a medical center and the use of economic credentialing.

The usual procedure for amending the bylaws is for the medical staff to initiate and approve changes before subjecting them for final endorsement by the hospital board. Thus, when a Florida hospital unilaterally refused to re-credential two qualified radiation oncologists because of its intention to exclusively contract with the University of Miami School of Medicine for all radiation oncology procedures, the jury found in favor of the aggrieved doctors, awarding them $2.5 million in lost profits and $20.25 million in punitive damages (Columbia/JFK Medical Center v. Spunberg, 784 So.2d 541 (Fla. App. Ct. 2001).

Likewise, a small Georgia hospital tried to close its cardiology department in order to enter into an exclusive contract with a separate group of cardiologists. The Georgia Court of Appeals held that a hospital could not deprive physicians of access to its facilities unless stated in the bylaws or specifically agreed to in an individual contract (Satilla Health Services v. Bell, 633 S.E.2d 575 [Ga. Ct. App. 2006]).

However, under some narrow circumstances, a hospital can act unilaterally, without medical staff agreement, especially where the bylaws are silent on the point. Illinois recently ruled that a medical center could, without physician assent, increase physician malpractice premium limits to $1,000,000 per occurrence and $3,000,000 aggregate for multiple occurrences (from $200,000 and $600,000, respectively). Its appellate court allowed the change, holding that physician enforcement of its bylaws were restricted only to matters of clinical competence (Fabrizio v. Provena United Samaritans, 857 N.E.2d 670 [Ill. S.Ct. 2006]).

And in Lo v. Provena Covenant Hospital, 796 N.E.2d 607 (Ill. App. Ct. 2003), a hospital unilaterally and summarily suspended a cardiovascular surgeon who allegedly had twice the national mortality rate. The medical staff leadership had not been responsive to the hospital’s concern of imminent danger to patients. The Illinois Appellate Court made the finding that in this "anomalous" case, the hospital’s actions were neither arbitrary, capricious, nor in violation of the bylaws.

A second area of conflict between doctors and hospitals is hospitals’ use of economic factors in credentialing, where financial factors are used to profile – and determine – a physician’s application for privileges.

For example, a staff gynecologist risked losing her 19-year membership at Baptist Health Medical Center in Little Rock, Ark., because her physician-husband owned an interest in a competing hospital specializing in spinal surgery. The case settled when the husband divested his competing ownership. In Arkansas, the courts have ruled that Baptist Health’s policy wherein a physician who holds a financial interest in a competing hospital is ineligible for privileges at any Baptist Health hospital is both unconscionable and illegal, and the hospital economic credentialing policy tortiously interfered with the physicians’ existing and prospective business relationships (Murphy v. Baptist Health, 373 S.W.3d 269 [Ark. 2010]).

But other jurisdictions have not adopted this view. The South Dakota Supreme Court has ruled that a hospital administration may refuse applicants to the medical staff based on economic criteria (

<cf number="\"2\"">’</cf>

Mahan v. Avera St. Lukes, 621 N.W.2d 150 [S.D. S.Ct. 2001]). The court questioned the legal right of certain members of the medical staff to open a competing ambulatory surgery center. In a subsequent case, the same court held that in the absence of specific prohibitions in the bylaws, a hospital could use economic credentialing in its staffing determinations.

Even for physicians with only an occasional hospital practice, the following pointers from the book "The Biggest Legal Mistakes Physicians Make and How to Avoid Them," edited by Steven Babitsky and James J. Mangraviti Jr., may prove useful:

1) Failing to practice in a collegial manner.

2) Impugning the quality of care of the hospital, nurses, and other physicians.

3) Not knowing the hospital’s policies and procedures.

4) Not involving consultants when the issue is out of one’s specialty.

5) Not accepting constructive criticism and suggestions.

6) Failing to seek approval before prescribing unorthodox drugs or treatment.

7) Failing to respond promptly to inquiries about care or behavior.

8) Failing to follow up on an agreement resolving an issue.

9) Acting as though the hospital is lucky to have such a physician.

10) Not calling a lawyer when necessary.

Dr. Tan is professor emeritus of medicine and former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. Some of the articles in this series are adapted from the author’s 2006 book, "Medical Malpractice: Understanding the Law, Managing the Risk," and his 2012 Halsbury treatise, "Medical Negligence and Professional Misconduct." For additional information, readers may contact the author at [email protected].

Question: R, a woman with diabetes and Parkinson’s disease, executed an advance medical directive (AMD) when she was aged 70 years. Her AMD stipulated that no extraordinary measures be taken should she become terminally ill or permanently comatose, and she named her sister as her agent with durable power of attorney (DPA). Ten years later, at age 80 years, R sustained a stroke, which left her with hemiparesis and loss of cognitive function. She remained comatose for a week and was dependent on a feeding tube. Her sister decided to honor the AMD and stop all medical treatment including artificial nutrition and hydration. Given the above scenario, which of the following is most accurate?

A. R’s AMD sprang into effect when she became decisionally incapacitated.

B. An AMD can direct only the forgoing of life-sustaining treatment, not the continuation of treatment measures.

C. AMD’s are mandatory under the 1990 Federal Patient Self-Determination Act, and those without an AMD are required to make one upon admission to a hospital.

D. Those with DPA for health-care decisions are obligated to carry out the patient’s instructions but can also override them.

E. In the absence of an AMD or DPA, the attending doctor makes the final decision in the best interest of the patient.

Answer: A. An advance medical directive (AMD), sometimes called a living will, is a legally binding document executed by a competent person that provides instructions for future health-care decisions if and when that person loses decisional capacity. One can elect to forgo some or all life-sustaining measures, or to continue receiving all treatments. In 1990, Congress enacted the Federal Patient Self Determination Act, which allows patients to stipulate in advance the nature of their healthcare should they become incapacitated. Additionally, they can appoint an agent or proxy, said to have durable power of attorney (DPA) for health-care decisions, to speak for them. Agents are required to carry out, not override, the patient’s wishes. The Federal Act requires all hospitals to inquire into whether a patient has an AMD and to provide information on the subject, but the Act does not mandate that everyone should execute one. All 50 states, beginning with California in 1976, have enacted legislation on AMDs. In the absence of an AMD and DPA, a surrogate decision maker, sometimes court appointed, directs the care. The attending doctor provides the prognosis, but does not make the final decision to forgo or continue treatment.

Physicians are obligated by law to respect wishes regarding whether to forgo or continue therapy, and, if contrary to their conscience, transfer the patient to a willing health-care provider. In some jurisdictions, a patient’s wish to discontinue artificial nutrition and hydration, for example, via nasogastric or G-tube, requires a specific opt-in or opt-out choice. AMD instructions become relevant when the patient is terminally ill, but many jurisdictions allow their applicability in nonterminal conditions such as irreversible unconscious states or where the likely risks and burdens of treatment would outweigh the expected benefits (Hawaii is such a state under HRS 327E-16).

A recent review of 3,746 patients who had died between 2000 and 2006 showed that those with AMDs were more likely to want limited care or comfort care rather than all possible care, with the vast majority receiving treatment compatible with their wishes. Those who had assigned a durable power of attorney were less likely to die in the hospital or receive all care possible. The authors concluded that patients who have prepared AMDs received care that was strongly associated with their preferences. Other observers are less sanguine, noting that in only two-thirds of the time were decisions consistent, and one-third of patients changed their preferences in the face of actual illness, usually in favor of treatments rejected in advance. Surrogate agreement was only 58%, and surrogates tended to overestimate their loved one’s desire for treatment.

AMDs direct future end-of-life treatment in a hospital setting, and do not typically address emergency measures taken by ambulance personnel. The National POLST (Physician Orders for Life-Sustaining Treatment) Paradigm grew out of the need to address outpatient emergency treatment especially for seriously ill and frail patients. POLST, now available in many states across the country, is in actuality a medical order signed by the patient’s doctor directing what is and is not to be done, for example, intubation, defibrillation, etc. It does not replace the AMD but is complementary in ensuring respect for a patient’s medical wishes.

Unsurprisingly, there has been litigation over AMDs. Some of the earlier cases tended to favor the health-care institution’s refusal to cease life-sustaining treatment. In Bartling v. Glendale Adventist Medical Center, 184 Cal App 3d 961 (1986), a needle biopsy caused a patient’s lung to collapse. The patient had to be placed in restraints as he tried to remove the ventilator tubes. He had earlier executed a living will and a durable power of attorney for health care, and the family, agreeing to release the hospital and doctors from any civil liability, asked that the ventilator be removed. Instead, the hospital merely tried to "wean" him, and planned to resuscitate him in the event of a cardiopulmonary arrest. Unfortunately, no other facility was willing to accept him in transfer. However, in a defense verdict, the court held that although case law was evolving toward a greater recognition of patients’ rights, it could not be said that a common legal standard existed to guide the medical community.

The case of Osgood v. Genesys St. Joseph Hospital (No. 94-26731-NH, Mich 1996) gave a different result. The patient had a long history of seizures, and the doctors warned that a massive one could leave her in a persistent vegetative state. The patient named her mom as having durable power of attorney. One month later, the patient suffered a massive seizure but was kept alive on a ventilator with full medical support consisting of tube feeding, dialysis, blood transfusions, and medications. Although asked to have these measures removed, the hospital allegedly said they were not life support, but were "comfort care." After 2 months, the patient awoke and was able to be discharged home. However, she remained bedridden and spent most of her time "rhythmically screaming and thrashing" for hours on end, saying, "bury me". The family won a jury award of $16.5 million, which was reduced to $1.4 million on appeal.

A third case, Noonkester v. Kline, was a 1996 defense verdict for a doctor who instituted aggressive treatment despite his patient’s rejection of extraordinary measures evident in his living will. The patient, Mr. Noonkester, had Lou Gehrig’s disease and had instructed the doctor to write a DNR order. He gave his ex-wife power of attorney, and even made arrangements to be taken to a hospice in an emergency, where he planned to die peacefully. When Mr. Noonkester developed breathing problems from pneumonia, the ambulance took him to the hospital instead, and the doctor ordered a ventilator. The patient gave a "thumbs up" when told of the treatment plan, and 3 months later wrote a letter thanking Dr. Kline of the Scripps Clinic for saving his life. Although he had refused to have the ventilator removed, deeming it to be a suicidal act that he opposed, he subsequently sued Dr. Kline for interfering with his preplanned death and continuing costs of living. The jury took all of 45 minutes to return a unanimous verdict for Dr. Kline.

The contents of an AMD may be subject to differing interpretations, as was the case in Wright v. Johns Hopkins Health Systems Corp., 728 A.2d 166 (Md. 1999). A patient with AIDS arrested following a blood transfusion and was resuscitated but left in a comatose state for 10 days before dying. The family alleged that the aggressive treatment violated the patient’s living will instructions, but their lawsuit against the hospital was unsuccessful. Maryland’s Court of Appeals agreed with the hospital and the lower court that the living will could not take effect since no doctor had certified that he was in a terminal state and that his death was imminent.

The late Daniel Callahan, a prominent philosopher-ethicist, eloquently stated that dying in America has over the centuries "evolved from the sacred to the secular, private to institutional, and natural to artifactual." AMDs are a modern attempt to address the many dilemmas and emotions surrounding death. Patient autonomy and palliative care have rightly taken center stage. This may in part be the result of a seminal paper in 1995, which reported on a multicenter study of critically ill patients and their wishes regarding DNR and other end-of-life issues. The authors found that the wishes of many of the patients were ignored, and that 50% were in moderate or severe pain. Incredibly, physician treatment failed to change despite nurse intervention with prognostic information and patient preference.

¹42 USC 1395cc(f), 1396a(w) (1994).

² Silveira MJ et al., Advance Directives and Outcomes of Surrogate Decision Making Before Death. (N. Engl. J. Med. 2010; 362:1211-8).

³ Lee et al., Do Patients’ Treatment Decisions Match Advance Statements of Their Preference? (J. Clin. Ethics 1998; 9:258-62).

⁴ See www.polst.org

⁵ A controlled trial to improve care for seriously ill hospitalized patients.1995 "SUPPORT" trial. (JAMA 1995; 274:1591-8).

Question: R, a woman with diabetes and Parkinson’s disease, executed an advance medical directive (AMD) when she was aged 70 years. Her AMD stipulated that no extraordinary measures be taken should she become terminally ill or permanently comatose, and she named her sister as her agent with durable power of attorney (DPA). Ten years later, at age 80 years, R sustained a stroke, which left her with hemiparesis and loss of cognitive function. She remained comatose for a week and was dependent on a feeding tube. Her sister decided to honor the AMD and stop all medical treatment including artificial nutrition and hydration. Given the above scenario, which of the following is most accurate?

A. R’s AMD sprang into effect when she became decisionally incapacitated.

B. An AMD can direct only the forgoing of life-sustaining treatment, not the continuation of treatment measures.

C. AMD’s are mandatory under the 1990 Federal Patient Self-Determination Act, and those without an AMD are required to make one upon admission to a hospital.

D. Those with DPA for health-care decisions are obligated to carry out the patient’s instructions but can also override them.

E. In the absence of an AMD or DPA, the attending doctor makes the final decision in the best interest of the patient.

Answer: A. An advance medical directive (AMD), sometimes called a living will, is a legally binding document executed by a competent person that provides instructions for future health-care decisions if and when that person loses decisional capacity. One can elect to forgo some or all life-sustaining measures, or to continue receiving all treatments. In 1990, Congress enacted the Federal Patient Self Determination Act, which allows patients to stipulate in advance the nature of their healthcare should they become incapacitated. Additionally, they can appoint an agent or proxy, said to have durable power of attorney (DPA) for health-care decisions, to speak for them. Agents are required to carry out, not override, the patient’s wishes. The Federal Act requires all hospitals to inquire into whether a patient has an AMD and to provide information on the subject, but the Act does not mandate that everyone should execute one. All 50 states, beginning with California in 1976, have enacted legislation on AMDs. In the absence of an AMD and DPA, a surrogate decision maker, sometimes court appointed, directs the care. The attending doctor provides the prognosis, but does not make the final decision to forgo or continue treatment.

Physicians are obligated by law to respect wishes regarding whether to forgo or continue therapy, and, if contrary to their conscience, transfer the patient to a willing health-care provider. In some jurisdictions, a patient’s wish to discontinue artificial nutrition and hydration, for example, via nasogastric or G-tube, requires a specific opt-in or opt-out choice. AMD instructions become relevant when the patient is terminally ill, but many jurisdictions allow their applicability in nonterminal conditions such as irreversible unconscious states or where the likely risks and burdens of treatment would outweigh the expected benefits (Hawaii is such a state under HRS 327E-16).

A recent review of 3,746 patients who had died between 2000 and 2006 showed that those with AMDs were more likely to want limited care or comfort care rather than all possible care, with the vast majority receiving treatment compatible with their wishes. Those who had assigned a durable power of attorney were less likely to die in the hospital or receive all care possible. The authors concluded that patients who have prepared AMDs received care that was strongly associated with their preferences. Other observers are less sanguine, noting that in only two-thirds of the time were decisions consistent, and one-third of patients changed their preferences in the face of actual illness, usually in favor of treatments rejected in advance. Surrogate agreement was only 58%, and surrogates tended to overestimate their loved one’s desire for treatment.

AMDs direct future end-of-life treatment in a hospital setting, and do not typically address emergency measures taken by ambulance personnel. The National POLST (Physician Orders for Life-Sustaining Treatment) Paradigm grew out of the need to address outpatient emergency treatment especially for seriously ill and frail patients. POLST, now available in many states across the country, is in actuality a medical order signed by the patient’s doctor directing what is and is not to be done, for example, intubation, defibrillation, etc. It does not replace the AMD but is complementary in ensuring respect for a patient’s medical wishes.

Unsurprisingly, there has been litigation over AMDs. Some of the earlier cases tended to favor the health-care institution’s refusal to cease life-sustaining treatment. In Bartling v. Glendale Adventist Medical Center, 184 Cal App 3d 961 (1986), a needle biopsy caused a patient’s lung to collapse. The patient had to be placed in restraints as he tried to remove the ventilator tubes. He had earlier executed a living will and a durable power of attorney for health care, and the family, agreeing to release the hospital and doctors from any civil liability, asked that the ventilator be removed. Instead, the hospital merely tried to "wean" him, and planned to resuscitate him in the event of a cardiopulmonary arrest. Unfortunately, no other facility was willing to accept him in transfer. However, in a defense verdict, the court held that although case law was evolving toward a greater recognition of patients’ rights, it could not be said that a common legal standard existed to guide the medical community.

The case of Osgood v. Genesys St. Joseph Hospital (No. 94-26731-NH, Mich 1996) gave a different result. The patient had a long history of seizures, and the doctors warned that a massive one could leave her in a persistent vegetative state. The patient named her mom as having durable power of attorney. One month later, the patient suffered a massive seizure but was kept alive on a ventilator with full medical support consisting of tube feeding, dialysis, blood transfusions, and medications. Although asked to have these measures removed, the hospital allegedly said they were not life support, but were "comfort care." After 2 months, the patient awoke and was able to be discharged home. However, she remained bedridden and spent most of her time "rhythmically screaming and thrashing" for hours on end, saying, "bury me". The family won a jury award of $16.5 million, which was reduced to $1.4 million on appeal.

A third case, Noonkester v. Kline, was a 1996 defense verdict for a doctor who instituted aggressive treatment despite his patient’s rejection of extraordinary measures evident in his living will. The patient, Mr. Noonkester, had Lou Gehrig’s disease and had instructed the doctor to write a DNR order. He gave his ex-wife power of attorney, and even made arrangements to be taken to a hospice in an emergency, where he planned to die peacefully. When Mr. Noonkester developed breathing problems from pneumonia, the ambulance took him to the hospital instead, and the doctor ordered a ventilator. The patient gave a "thumbs up" when told of the treatment plan, and 3 months later wrote a letter thanking Dr. Kline of the Scripps Clinic for saving his life. Although he had refused to have the ventilator removed, deeming it to be a suicidal act that he opposed, he subsequently sued Dr. Kline for interfering with his preplanned death and continuing costs of living. The jury took all of 45 minutes to return a unanimous verdict for Dr. Kline.

The contents of an AMD may be subject to differing interpretations, as was the case in Wright v. Johns Hopkins Health Systems Corp., 728 A.2d 166 (Md. 1999). A patient with AIDS arrested following a blood transfusion and was resuscitated but left in a comatose state for 10 days before dying. The family alleged that the aggressive treatment violated the patient’s living will instructions, but their lawsuit against the hospital was unsuccessful. Maryland’s Court of Appeals agreed with the hospital and the lower court that the living will could not take effect since no doctor had certified that he was in a terminal state and that his death was imminent.

The late Daniel Callahan, a prominent philosopher-ethicist, eloquently stated that dying in America has over the centuries "evolved from the sacred to the secular, private to institutional, and natural to artifactual." AMDs are a modern attempt to address the many dilemmas and emotions surrounding death. Patient autonomy and palliative care have rightly taken center stage. This may in part be the result of a seminal paper in 1995, which reported on a multicenter study of critically ill patients and their wishes regarding DNR and other end-of-life issues. The authors found that the wishes of many of the patients were ignored, and that 50% were in moderate or severe pain. Incredibly, physician treatment failed to change despite nurse intervention with prognostic information and patient preference.

¹42 USC 1395cc(f), 1396a(w) (1994).

² Silveira MJ et al., Advance Directives and Outcomes of Surrogate Decision Making Before Death. (N. Engl. J. Med. 2010; 362:1211-8).

³ Lee et al., Do Patients’ Treatment Decisions Match Advance Statements of Their Preference? (J. Clin. Ethics 1998; 9:258-62).

⁴ See www.polst.org

⁵ A controlled trial to improve care for seriously ill hospitalized patients.1995 "SUPPORT" trial. (JAMA 1995; 274:1591-8).

Question: R, a woman with diabetes and Parkinson’s disease, executed an advance medical directive (AMD) when she was aged 70 years. Her AMD stipulated that no extraordinary measures be taken should she become terminally ill or permanently comatose, and she named her sister as her agent with durable power of attorney (DPA). Ten years later, at age 80 years, R sustained a stroke, which left her with hemiparesis and loss of cognitive function. She remained comatose for a week and was dependent on a feeding tube. Her sister decided to honor the AMD and stop all medical treatment including artificial nutrition and hydration. Given the above scenario, which of the following is most accurate?

A. R’s AMD sprang into effect when she became decisionally incapacitated.

B. An AMD can direct only the forgoing of life-sustaining treatment, not the continuation of treatment measures.

C. AMD’s are mandatory under the 1990 Federal Patient Self-Determination Act, and those without an AMD are required to make one upon admission to a hospital.

D. Those with DPA for health-care decisions are obligated to carry out the patient’s instructions but can also override them.

E. In the absence of an AMD or DPA, the attending doctor makes the final decision in the best interest of the patient.

Answer: A. An advance medical directive (AMD), sometimes called a living will, is a legally binding document executed by a competent person that provides instructions for future health-care decisions if and when that person loses decisional capacity. One can elect to forgo some or all life-sustaining measures, or to continue receiving all treatments. In 1990, Congress enacted the Federal Patient Self Determination Act, which allows patients to stipulate in advance the nature of their healthcare should they become incapacitated. Additionally, they can appoint an agent or proxy, said to have durable power of attorney (DPA) for health-care decisions, to speak for them. Agents are required to carry out, not override, the patient’s wishes. The Federal Act requires all hospitals to inquire into whether a patient has an AMD and to provide information on the subject, but the Act does not mandate that everyone should execute one. All 50 states, beginning with California in 1976, have enacted legislation on AMDs. In the absence of an AMD and DPA, a surrogate decision maker, sometimes court appointed, directs the care. The attending doctor provides the prognosis, but does not make the final decision to forgo or continue treatment.

Physicians are obligated by law to respect wishes regarding whether to forgo or continue therapy, and, if contrary to their conscience, transfer the patient to a willing health-care provider. In some jurisdictions, a patient’s wish to discontinue artificial nutrition and hydration, for example, via nasogastric or G-tube, requires a specific opt-in or opt-out choice. AMD instructions become relevant when the patient is terminally ill, but many jurisdictions allow their applicability in nonterminal conditions such as irreversible unconscious states or where the likely risks and burdens of treatment would outweigh the expected benefits (Hawaii is such a state under HRS 327E-16).

A recent review of 3,746 patients who had died between 2000 and 2006 showed that those with AMDs were more likely to want limited care or comfort care rather than all possible care, with the vast majority receiving treatment compatible with their wishes. Those who had assigned a durable power of attorney were less likely to die in the hospital or receive all care possible. The authors concluded that patients who have prepared AMDs received care that was strongly associated with their preferences. Other observers are less sanguine, noting that in only two-thirds of the time were decisions consistent, and one-third of patients changed their preferences in the face of actual illness, usually in favor of treatments rejected in advance. Surrogate agreement was only 58%, and surrogates tended to overestimate their loved one’s desire for treatment.

AMDs direct future end-of-life treatment in a hospital setting, and do not typically address emergency measures taken by ambulance personnel. The National POLST (Physician Orders for Life-Sustaining Treatment) Paradigm grew out of the need to address outpatient emergency treatment especially for seriously ill and frail patients. POLST, now available in many states across the country, is in actuality a medical order signed by the patient’s doctor directing what is and is not to be done, for example, intubation, defibrillation, etc. It does not replace the AMD but is complementary in ensuring respect for a patient’s medical wishes.

Unsurprisingly, there has been litigation over AMDs. Some of the earlier cases tended to favor the health-care institution’s refusal to cease life-sustaining treatment. In Bartling v. Glendale Adventist Medical Center, 184 Cal App 3d 961 (1986), a needle biopsy caused a patient’s lung to collapse. The patient had to be placed in restraints as he tried to remove the ventilator tubes. He had earlier executed a living will and a durable power of attorney for health care, and the family, agreeing to release the hospital and doctors from any civil liability, asked that the ventilator be removed. Instead, the hospital merely tried to "wean" him, and planned to resuscitate him in the event of a cardiopulmonary arrest. Unfortunately, no other facility was willing to accept him in transfer. However, in a defense verdict, the court held that although case law was evolving toward a greater recognition of patients’ rights, it could not be said that a common legal standard existed to guide the medical community.

The case of Osgood v. Genesys St. Joseph Hospital (No. 94-26731-NH, Mich 1996) gave a different result. The patient had a long history of seizures, and the doctors warned that a massive one could leave her in a persistent vegetative state. The patient named her mom as having durable power of attorney. One month later, the patient suffered a massive seizure but was kept alive on a ventilator with full medical support consisting of tube feeding, dialysis, blood transfusions, and medications. Although asked to have these measures removed, the hospital allegedly said they were not life support, but were "comfort care." After 2 months, the patient awoke and was able to be discharged home. However, she remained bedridden and spent most of her time "rhythmically screaming and thrashing" for hours on end, saying, "bury me". The family won a jury award of $16.5 million, which was reduced to $1.4 million on appeal.

A third case, Noonkester v. Kline, was a 1996 defense verdict for a doctor who instituted aggressive treatment despite his patient’s rejection of extraordinary measures evident in his living will. The patient, Mr. Noonkester, had Lou Gehrig’s disease and had instructed the doctor to write a DNR order. He gave his ex-wife power of attorney, and even made arrangements to be taken to a hospice in an emergency, where he planned to die peacefully. When Mr. Noonkester developed breathing problems from pneumonia, the ambulance took him to the hospital instead, and the doctor ordered a ventilator. The patient gave a "thumbs up" when told of the treatment plan, and 3 months later wrote a letter thanking Dr. Kline of the Scripps Clinic for saving his life. Although he had refused to have the ventilator removed, deeming it to be a suicidal act that he opposed, he subsequently sued Dr. Kline for interfering with his preplanned death and continuing costs of living. The jury took all of 45 minutes to return a unanimous verdict for Dr. Kline.

The contents of an AMD may be subject to differing interpretations, as was the case in Wright v. Johns Hopkins Health Systems Corp., 728 A.2d 166 (Md. 1999). A patient with AIDS arrested following a blood transfusion and was resuscitated but left in a comatose state for 10 days before dying. The family alleged that the aggressive treatment violated the patient’s living will instructions, but their lawsuit against the hospital was unsuccessful. Maryland’s Court of Appeals agreed with the hospital and the lower court that the living will could not take effect since no doctor had certified that he was in a terminal state and that his death was imminent.

The late Daniel Callahan, a prominent philosopher-ethicist, eloquently stated that dying in America has over the centuries "evolved from the sacred to the secular, private to institutional, and natural to artifactual." AMDs are a modern attempt to address the many dilemmas and emotions surrounding death. Patient autonomy and palliative care have rightly taken center stage. This may in part be the result of a seminal paper in 1995, which reported on a multicenter study of critically ill patients and their wishes regarding DNR and other end-of-life issues. The authors found that the wishes of many of the patients were ignored, and that 50% were in moderate or severe pain. Incredibly, physician treatment failed to change despite nurse intervention with prognostic information and patient preference.

¹42 USC 1395cc(f), 1396a(w) (1994).

² Silveira MJ et al., Advance Directives and Outcomes of Surrogate Decision Making Before Death. (N. Engl. J. Med. 2010; 362:1211-8).

³ Lee et al., Do Patients’ Treatment Decisions Match Advance Statements of Their Preference? (J. Clin. Ethics 1998; 9:258-62).

⁴ See www.polst.org

⁵ A controlled trial to improve care for seriously ill hospitalized patients.1995 "SUPPORT" trial. (JAMA 1995; 274:1591-8).

Question: On antitrust, the U.S. courts have made the following statements, except:

A. To agree to prices is to fix them.

B. There is no learned profession exception to the antitrust laws.

C. To fix maximum price may amount to a fix of minimum price.

D. A group boycott of chiropractors violates the Sherman Act.

E. Tying arrangement in the health care industry is per se illegal.

Answer: E (see Jefferson Parish Hospital below). In the second part of the 20th century, the U.S. Supreme Court and other appellate courts began issuing a number of landmark opinions regarding health care economics and antitrust. Group boycotts were a major target, as was price fixing. This article briefly reviews a few of these decisions to impart a sense of how the judicial system views free market competition in health care.

In AMA v. United States (317 U.S. 519 [1943]), the issue was whether the medical profession’s leading organization, the American Medical Association, could be allowed to expel its salaried doctors or those who associated professionally with salaried doctors. Those who were denied AMA membership were naturally less able to compete (hospital privileges, consultations, etc.).

The U.S. Supreme Court held that such a group boycott of all salaried doctors was illegal because of its anticompetitive purpose, even if it allegedly promoted professional competence and public welfare.

Wilk v. AMA (895 F.2d 352 [1990]) was the culmination of a number of lawsuits surrounding the AMA and chiropractic. In 1963, the AMA had formed a Committee on Quackery aimed at eliminating chiropractic as a profession. The AMA Code of Ethics, Principle 3, opined that it was unethical for a physician to associate professionally with chiropractors. In 1976, Dr. Wilk and four other licensed chiropractors filed suit against the AMA, and a jury trial found that the purpose of the boycott was to eliminate substantial competition without corresponding procompetitive benefits.

The U.S. Court of Appeals for the Seventh Circuit subsequently affirmed the lower court’s finding that the AMA violated Section 1 of the Sherman Act in its illegal boycott of chiropractors, although the court did not answer the question as to whether chiropractic theory was in fact scientific. The court inquired into whether there was a genuine reasonable concern for the use of the scientific method in the doctor-patient relationship, and whether that concern was the dominating, motivating factor in the boycott, and if so, whether it could have been satisfied without restraining competition.

The court found that the AMA’s motive for the boycott was anticompetitive, believing that concern for patient care could be expressed, for example, through public-education campaigns. Although the AMA had formally removed Principle 3 in 1980, it nonetheless appealed this adverse decision to the U.S. Supreme Court on three separate occasions, but the latter declined to hear the case.

In Goldfarb v. Virginia State Bar (421 U.S. 773 [1975]), the Virginia State Bar enforced an "advisory" minimum fee schedule for legal services. The U.S. Supreme Court found that this was an agreement to fix prices, holding, "This is not merely a case of an agreement that may be inferred from an exchange of price information ... for here a naked agreement was clearly shown, and the effect on prices is plain."

The court rejected the defendant’s argument that the practice of law was not a trade or commerce intended to be under Sherman Act scrutiny, declaring there was to be no "learned profession" exemption.

However, it noted that special considerations might apply, holding that "It would be unrealistic to view the practice of professions as interchangeable with other business activities, and automatically to apply to the professions antitrust concepts, which originated in other areas. The public service aspect, and other features of the professions, may require that a particular practice, which could properly be viewed as a violation of the Sherman Act in another context, be treated differently."

Following Goldfarb, there remains no doubt that professional services – legal, medical, and other services – are all to be governed by the antitrust laws.

A flurry of health care–related antitrust cases, including Patrick v. Burget (to be discussed in part 3), reached the courts in the 1980s. In Arizona v. Maricopa County Medical Society (457 U.S. 332 [1982]), the county medical society set maximum allowable fees that member physicians could charge their patients, presumably to guard against price gouging. However, the U.S. Supreme Court, using the tough illegal per se standard, characterized the agreement as price fixing, despite it being for maximum rather than minimum fees.

The court ruled, "Maximum and minimum price fixing may have different consequences in many situations. But schemes to fix maximum prices, by substituting perhaps the erroneous judgment of a seller for the forces of the competitive market, may severely intrude upon the ability of buyers to compete and survive in that market. ... Maximum prices may be fixed too low ... may channel distribution through a few large or specifically advantaged dealers. ... Moreover, if the actual price charged under a maximum price scheme is nearly always the fixed maximum price, which is increasingly likely as the maximum price approaches the actual cost of the dealer, the scheme tends to acquire all the attributes of an arrangement fixing minimum prices."

At issue in Jefferson Parish Hospital District No. 2 v. Hyde (466 U.S. 2 [1984]) was an exclusive contract between a group of four anesthesiologists and Jefferson Parish Hospital in the New Orleans area. Dr. Hyde was an independent board-certified anesthesiologist who was denied medical staff privileges at the hospital because of this exclusive contract. The exclusive arrangement in effect required patients at the hospital to use the services of the four anesthesiologists and none others, raising the issue of unlawful "tying," where a seller requires a customer to purchase one product or service as a condition of being allowed to purchase another.

In a rare unanimous decision, the U.S. Supreme Court, while agreeing that the contract was a tying arrangement, nonetheless rejected the argument that it was per se illegal or that it unreasonably restrained competition among anesthesiologists. The court reasoned that the hospital’s 30% share of the market did not amount to sufficient market power in the provision of hospital services in the Jefferson Parish area. Pointing out that every patient undergoing surgery needed anesthesia, the court found no evidence that any patient received unnecessary services, and it noted that the tying arrangement that was generally employed in the health care industry improved patient care and promoted hospital efficiency.

Tying arrangements in health care are frequently analyzed under a rule of reason standard instead of the strict per se standard, and the favorable decision in this specific case depended heavily on the hospitals’ relatively small market power.

Finally, consider a case on insurance reimbursement and a group boycott against a third-party payer. In Federal Trade Commission v. Indiana Federation of Dentists (476 U.S. 447 [1986]), dental health insurers in Indiana attempted to contain the cost of dental treatment by limiting payments to the least expensive yet adequate treatment suitable to the needs of the patient. The insurers required the submission of x-rays by treating dentists for review of their insurance claims.

Viewing such review of diagnostic and treatment decisions as a threat to their professional independence and economic well-being, members of the Indiana Dental Association and later the Indiana Federation of Dentists agreed collectively to refuse to submit the requested x-rays. These concerted activities resulted in the denial of information that dental customers had requested and had a right to know, and forced them to choose between acquiring the information in a more costly manner or forgoing it altogether.

The lower court had ruled in favor of the dentists, but the U.S. Supreme Court reversed. It agreed that in the absence of concerted behavior, an individual dentist would have been subject to market forces of competition, creating incentives for him or her to comply with the requests of patients’ third-party insurers. But the conduct of the federation was tantamount to a group boycott, which unreasonably restrained trade. The court noted that while this was not price fixing as such, no elaborate industry analysis was required to demonstrate the anticompetitive character of such an agreement.

Dr. Tan is professor emeritus of medicine and former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. Some of the articles in this series are adapted from the author’s 2006 book, "Medical Malpractice: Understanding the Law, Managing the Risk", and his 2012 Halsbury treatise, "Medical Negligence and Professional Misconduct." For additional information, readers may contact the author at [email protected].

Question: On antitrust, the U.S. courts have made the following statements, except:

A. To agree to prices is to fix them.

B. There is no learned profession exception to the antitrust laws.

C. To fix maximum price may amount to a fix of minimum price.

D. A group boycott of chiropractors violates the Sherman Act.

E. Tying arrangement in the health care industry is per se illegal.

Answer: E (see Jefferson Parish Hospital below). In the second part of the 20th century, the U.S. Supreme Court and other appellate courts began issuing a number of landmark opinions regarding health care economics and antitrust. Group boycotts were a major target, as was price fixing. This article briefly reviews a few of these decisions to impart a sense of how the judicial system views free market competition in health care.

In AMA v. United States (317 U.S. 519 [1943]), the issue was whether the medical profession’s leading organization, the American Medical Association, could be allowed to expel its salaried doctors or those who associated professionally with salaried doctors. Those who were denied AMA membership were naturally less able to compete (hospital privileges, consultations, etc.).

The U.S. Supreme Court held that such a group boycott of all salaried doctors was illegal because of its anticompetitive purpose, even if it allegedly promoted professional competence and public welfare.

Wilk v. AMA (895 F.2d 352 [1990]) was the culmination of a number of lawsuits surrounding the AMA and chiropractic. In 1963, the AMA had formed a Committee on Quackery aimed at eliminating chiropractic as a profession. The AMA Code of Ethics, Principle 3, opined that it was unethical for a physician to associate professionally with chiropractors. In 1976, Dr. Wilk and four other licensed chiropractors filed suit against the AMA, and a jury trial found that the purpose of the boycott was to eliminate substantial competition without corresponding procompetitive benefits.

The U.S. Court of Appeals for the Seventh Circuit subsequently affirmed the lower court’s finding that the AMA violated Section 1 of the Sherman Act in its illegal boycott of chiropractors, although the court did not answer the question as to whether chiropractic theory was in fact scientific. The court inquired into whether there was a genuine reasonable concern for the use of the scientific method in the doctor-patient relationship, and whether that concern was the dominating, motivating factor in the boycott, and if so, whether it could have been satisfied without restraining competition.

The court found that the AMA’s motive for the boycott was anticompetitive, believing that concern for patient care could be expressed, for example, through public-education campaigns. Although the AMA had formally removed Principle 3 in 1980, it nonetheless appealed this adverse decision to the U.S. Supreme Court on three separate occasions, but the latter declined to hear the case.

In Goldfarb v. Virginia State Bar (421 U.S. 773 [1975]), the Virginia State Bar enforced an "advisory" minimum fee schedule for legal services. The U.S. Supreme Court found that this was an agreement to fix prices, holding, "This is not merely a case of an agreement that may be inferred from an exchange of price information ... for here a naked agreement was clearly shown, and the effect on prices is plain."

The court rejected the defendant’s argument that the practice of law was not a trade or commerce intended to be under Sherman Act scrutiny, declaring there was to be no "learned profession" exemption.

However, it noted that special considerations might apply, holding that "It would be unrealistic to view the practice of professions as interchangeable with other business activities, and automatically to apply to the professions antitrust concepts, which originated in other areas. The public service aspect, and other features of the professions, may require that a particular practice, which could properly be viewed as a violation of the Sherman Act in another context, be treated differently."

Following Goldfarb, there remains no doubt that professional services – legal, medical, and other services – are all to be governed by the antitrust laws.

A flurry of health care–related antitrust cases, including Patrick v. Burget (to be discussed in part 3), reached the courts in the 1980s. In Arizona v. Maricopa County Medical Society (457 U.S. 332 [1982]), the county medical society set maximum allowable fees that member physicians could charge their patients, presumably to guard against price gouging. However, the U.S. Supreme Court, using the tough illegal per se standard, characterized the agreement as price fixing, despite it being for maximum rather than minimum fees.

The court ruled, "Maximum and minimum price fixing may have different consequences in many situations. But schemes to fix maximum prices, by substituting perhaps the erroneous judgment of a seller for the forces of the competitive market, may severely intrude upon the ability of buyers to compete and survive in that market. ... Maximum prices may be fixed too low ... may channel distribution through a few large or specifically advantaged dealers. ... Moreover, if the actual price charged under a maximum price scheme is nearly always the fixed maximum price, which is increasingly likely as the maximum price approaches the actual cost of the dealer, the scheme tends to acquire all the attributes of an arrangement fixing minimum prices."

At issue in Jefferson Parish Hospital District No. 2 v. Hyde (466 U.S. 2 [1984]) was an exclusive contract between a group of four anesthesiologists and Jefferson Parish Hospital in the New Orleans area. Dr. Hyde was an independent board-certified anesthesiologist who was denied medical staff privileges at the hospital because of this exclusive contract. The exclusive arrangement in effect required patients at the hospital to use the services of the four anesthesiologists and none others, raising the issue of unlawful "tying," where a seller requires a customer to purchase one product or service as a condition of being allowed to purchase another.

In a rare unanimous decision, the U.S. Supreme Court, while agreeing that the contract was a tying arrangement, nonetheless rejected the argument that it was per se illegal or that it unreasonably restrained competition among anesthesiologists. The court reasoned that the hospital’s 30% share of the market did not amount to sufficient market power in the provision of hospital services in the Jefferson Parish area. Pointing out that every patient undergoing surgery needed anesthesia, the court found no evidence that any patient received unnecessary services, and it noted that the tying arrangement that was generally employed in the health care industry improved patient care and promoted hospital efficiency.

Tying arrangements in health care are frequently analyzed under a rule of reason standard instead of the strict per se standard, and the favorable decision in this specific case depended heavily on the hospitals’ relatively small market power.

Finally, consider a case on insurance reimbursement and a group boycott against a third-party payer. In Federal Trade Commission v. Indiana Federation of Dentists (476 U.S. 447 [1986]), dental health insurers in Indiana attempted to contain the cost of dental treatment by limiting payments to the least expensive yet adequate treatment suitable to the needs of the patient. The insurers required the submission of x-rays by treating dentists for review of their insurance claims.

Viewing such review of diagnostic and treatment decisions as a threat to their professional independence and economic well-being, members of the Indiana Dental Association and later the Indiana Federation of Dentists agreed collectively to refuse to submit the requested x-rays. These concerted activities resulted in the denial of information that dental customers had requested and had a right to know, and forced them to choose between acquiring the information in a more costly manner or forgoing it altogether.

The lower court had ruled in favor of the dentists, but the U.S. Supreme Court reversed. It agreed that in the absence of concerted behavior, an individual dentist would have been subject to market forces of competition, creating incentives for him or her to comply with the requests of patients’ third-party insurers. But the conduct of the federation was tantamount to a group boycott, which unreasonably restrained trade. The court noted that while this was not price fixing as such, no elaborate industry analysis was required to demonstrate the anticompetitive character of such an agreement.

Dr. Tan is professor emeritus of medicine and former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. Some of the articles in this series are adapted from the author’s 2006 book, "Medical Malpractice: Understanding the Law, Managing the Risk", and his 2012 Halsbury treatise, "Medical Negligence and Professional Misconduct." For additional information, readers may contact the author at [email protected].

Question: On antitrust, the U.S. courts have made the following statements, except:

A. To agree to prices is to fix them.

B. There is no learned profession exception to the antitrust laws.

C. To fix maximum price may amount to a fix of minimum price.

D. A group boycott of chiropractors violates the Sherman Act.

E. Tying arrangement in the health care industry is per se illegal.

Answer: E (see Jefferson Parish Hospital below). In the second part of the 20th century, the U.S. Supreme Court and other appellate courts began issuing a number of landmark opinions regarding health care economics and antitrust. Group boycotts were a major target, as was price fixing. This article briefly reviews a few of these decisions to impart a sense of how the judicial system views free market competition in health care.

In AMA v. United States (317 U.S. 519 [1943]), the issue was whether the medical profession’s leading organization, the American Medical Association, could be allowed to expel its salaried doctors or those who associated professionally with salaried doctors. Those who were denied AMA membership were naturally less able to compete (hospital privileges, consultations, etc.).

The U.S. Supreme Court held that such a group boycott of all salaried doctors was illegal because of its anticompetitive purpose, even if it allegedly promoted professional competence and public welfare.

Wilk v. AMA (895 F.2d 352 [1990]) was the culmination of a number of lawsuits surrounding the AMA and chiropractic. In 1963, the AMA had formed a Committee on Quackery aimed at eliminating chiropractic as a profession. The AMA Code of Ethics, Principle 3, opined that it was unethical for a physician to associate professionally with chiropractors. In 1976, Dr. Wilk and four other licensed chiropractors filed suit against the AMA, and a jury trial found that the purpose of the boycott was to eliminate substantial competition without corresponding procompetitive benefits.

The U.S. Court of Appeals for the Seventh Circuit subsequently affirmed the lower court’s finding that the AMA violated Section 1 of the Sherman Act in its illegal boycott of chiropractors, although the court did not answer the question as to whether chiropractic theory was in fact scientific. The court inquired into whether there was a genuine reasonable concern for the use of the scientific method in the doctor-patient relationship, and whether that concern was the dominating, motivating factor in the boycott, and if so, whether it could have been satisfied without restraining competition.

The court found that the AMA’s motive for the boycott was anticompetitive, believing that concern for patient care could be expressed, for example, through public-education campaigns. Although the AMA had formally removed Principle 3 in 1980, it nonetheless appealed this adverse decision to the U.S. Supreme Court on three separate occasions, but the latter declined to hear the case.

In Goldfarb v. Virginia State Bar (421 U.S. 773 [1975]), the Virginia State Bar enforced an "advisory" minimum fee schedule for legal services. The U.S. Supreme Court found that this was an agreement to fix prices, holding, "This is not merely a case of an agreement that may be inferred from an exchange of price information ... for here a naked agreement was clearly shown, and the effect on prices is plain."

The court rejected the defendant’s argument that the practice of law was not a trade or commerce intended to be under Sherman Act scrutiny, declaring there was to be no "learned profession" exemption.

However, it noted that special considerations might apply, holding that "It would be unrealistic to view the practice of professions as interchangeable with other business activities, and automatically to apply to the professions antitrust concepts, which originated in other areas. The public service aspect, and other features of the professions, may require that a particular practice, which could properly be viewed as a violation of the Sherman Act in another context, be treated differently."

Following Goldfarb, there remains no doubt that professional services – legal, medical, and other services – are all to be governed by the antitrust laws.

A flurry of health care–related antitrust cases, including Patrick v. Burget (to be discussed in part 3), reached the courts in the 1980s. In Arizona v. Maricopa County Medical Society (457 U.S. 332 [1982]), the county medical society set maximum allowable fees that member physicians could charge their patients, presumably to guard against price gouging. However, the U.S. Supreme Court, using the tough illegal per se standard, characterized the agreement as price fixing, despite it being for maximum rather than minimum fees.

The court ruled, "Maximum and minimum price fixing may have different consequences in many situations. But schemes to fix maximum prices, by substituting perhaps the erroneous judgment of a seller for the forces of the competitive market, may severely intrude upon the ability of buyers to compete and survive in that market. ... Maximum prices may be fixed too low ... may channel distribution through a few large or specifically advantaged dealers. ... Moreover, if the actual price charged under a maximum price scheme is nearly always the fixed maximum price, which is increasingly likely as the maximum price approaches the actual cost of the dealer, the scheme tends to acquire all the attributes of an arrangement fixing minimum prices."

At issue in Jefferson Parish Hospital District No. 2 v. Hyde (466 U.S. 2 [1984]) was an exclusive contract between a group of four anesthesiologists and Jefferson Parish Hospital in the New Orleans area. Dr. Hyde was an independent board-certified anesthesiologist who was denied medical staff privileges at the hospital because of this exclusive contract. The exclusive arrangement in effect required patients at the hospital to use the services of the four anesthesiologists and none others, raising the issue of unlawful "tying," where a seller requires a customer to purchase one product or service as a condition of being allowed to purchase another.

In a rare unanimous decision, the U.S. Supreme Court, while agreeing that the contract was a tying arrangement, nonetheless rejected the argument that it was per se illegal or that it unreasonably restrained competition among anesthesiologists. The court reasoned that the hospital’s 30% share of the market did not amount to sufficient market power in the provision of hospital services in the Jefferson Parish area. Pointing out that every patient undergoing surgery needed anesthesia, the court found no evidence that any patient received unnecessary services, and it noted that the tying arrangement that was generally employed in the health care industry improved patient care and promoted hospital efficiency.

Tying arrangements in health care are frequently analyzed under a rule of reason standard instead of the strict per se standard, and the favorable decision in this specific case depended heavily on the hospitals’ relatively small market power.

Finally, consider a case on insurance reimbursement and a group boycott against a third-party payer. In Federal Trade Commission v. Indiana Federation of Dentists (476 U.S. 447 [1986]), dental health insurers in Indiana attempted to contain the cost of dental treatment by limiting payments to the least expensive yet adequate treatment suitable to the needs of the patient. The insurers required the submission of x-rays by treating dentists for review of their insurance claims.

Viewing such review of diagnostic and treatment decisions as a threat to their professional independence and economic well-being, members of the Indiana Dental Association and later the Indiana Federation of Dentists agreed collectively to refuse to submit the requested x-rays. These concerted activities resulted in the denial of information that dental customers had requested and had a right to know, and forced them to choose between acquiring the information in a more costly manner or forgoing it altogether.

The lower court had ruled in favor of the dentists, but the U.S. Supreme Court reversed. It agreed that in the absence of concerted behavior, an individual dentist would have been subject to market forces of competition, creating incentives for him or her to comply with the requests of patients’ third-party insurers. But the conduct of the federation was tantamount to a group boycott, which unreasonably restrained trade. The court noted that while this was not price fixing as such, no elaborate industry analysis was required to demonstrate the anticompetitive character of such an agreement.

Dr. Tan is professor emeritus of medicine and former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. Some of the articles in this series are adapted from the author’s 2006 book, "Medical Malpractice: Understanding the Law, Managing the Risk", and his 2012 Halsbury treatise, "Medical Negligence and Professional Misconduct." For additional information, readers may contact the author at [email protected].

This article introduces United States antitrust laws and discusses their application in health care. Part 2 will summarize major court decisions covering that subject.

Question: Antitrust laws:

A. Are based in part on the physician-patient trust relationship.

B. Prohibit anticompetitive behavior.

C. Regulate business activities but not professional services.

D. A, B, and C are correct.

E. B and C are correct.

Answer: B. Economic interests are best served in a freely competitive marketplace. Trade restraints such as price fixing and monopolization tend to promote inefficiency and increase profit for the perpetrators, at the expense of consumer welfare.

Accordingly, Congress enacted the Sherman Antitrust Act way back in 1890 to promote competition and outlaw unreasonable restraint of trade. Additional laws prohibit mergers that substantially lessen competition, price discrimination, and unfair trade practices. Collectively, these are known as the antitrust laws, the term reflecting their initial purpose to prevent commercial traders from forming anticompetitive groups or "trusts."

The Department of Justice (DOJ), the Federal Trade Commission (FTC), and their state counterparts enforce these laws, which have nothing whatsoever to do with the doctor-patient trust relationship.

Section I of the Sherman Act, the paramount antitrust statute, declares that "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal." Section II stipulates, "Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony."

Other important laws are Sections 4 and 7 of the Clayton Antitrust Act and Section 5(a)(1) of the Federal Trade Commission Act, which outlaws "unfair methods of competition in or affecting commerce ... " Additionally, all states have their own antitrust statutes, which in some cases may be more restrictive than the federal laws are.

These laws initially targeted anticompetitive business practices. In 1975, the U.S. Supreme Court declared that there was to be no "learned profession" exemption, although special considerations may apply.¹ However, activities of state government officials and employees are exempt from antitrust scrutiny under the so-called "state action doctrine," which confers immunity if an exemption is clearly articulated and affirmatively expressed as state policy, and there is active state supervision of the conduct in question.

Antitrust issues are ubiquitous in health care, and fall into seven major categories: 1) price fixing; 2) boycotts; 3) market division; 4) monopolization; 5) joint ventures; 6) exclusive contracts, and 7) peer review.

1. Price fixing. An agreement to fix prices is the most egregious example of anticompetitive conduct, so much so that the courts will use a per se analysis, i.e., without need to consider other factors, to arrive at its decision. Price fixing does not require any party to show market dominance or power, and its presence can be inferred from circumstances and agreements, which can be either oral or written.

For example, physician fee schedules or guidelines by a medical association would constitute price fixing. Even an agreement to fix maximum prices, as opposed to minimum prices, has been ruled illegal. At a practical level, physicians should avoid sharing pricing information with anyone, especially with colleagues, unless strict FTC "safety zone" criteria are satisfied.

2. Boycotts. Group boycotts are usually per se illegal, but in the health care industry, a rule of reason analysis is frequently used. Courts will look at the circumstances and purpose of the boycott, its pro- and anti-competitive effects, and whether there are other less restrictive ways to achieve the purported goal.

Affiliating physicians face this risk when forming alliances, as boycott questions may arise when a doctor is inappropriately excluded, which deprives him/her from earning a living in the relevant market.

A related controversial issue is the unionization of doctors. Unionization protects labor rights, especially those of medical residents, and offers greater parity in collective bargaining. On the other hand, the danger is in tying a physician’s obligations to the interests of other workers who may not share the same ethical commitment to patients.²

Strikes by doctors are likely to interfere with patient care, raise serious ethical questions, and may also be in violation of antitrust laws although boycotts for sociopolitical and noncommercial reasons are not specifically prohibited.

3. Market division. Agreements to restrict competition by dividing or allocating territories or patients are illegal per se under the Sherman Act.

4. Monopolization. Section 2 of the Sherman Act prohibits monopolization and attempts to monopolize. Examples are predatory pricing, long-term exclusive contracts, and refusal to deal. Mergers and acquisitions may substantially lessen competition with the tendency to create a monopoly, and they are subject to Section 7 of the Clayton Act. Proof of monopolization requires an inquiry into the relevant product and geographic markets (usually greater than 50%-60% market share), and regularly requires an economist’s expertise at trial.

As a general proposition, restraint of trade and monopolistic charges are difficult to prove. Monopoly through "the exercise of skill, foresight, and industry" does not constitute monopolizing conduct.

5. Joint ventures. The two main ways physicians form network joint ventures are: 1) join together in an entity with shared financial risks and clinical integration, and 2) join a looser network without integration to simply facilitate the flow of information for contracting purposes between physicians and other payers, the so-called messenger method.

Many health delivery systems involve joint venture agreements among practitioners or groups of health professionals and health care institutions, e.g., physician hospital organizations (PHOs), independent practice associations (IPAs), and preferred physician organization (PPOs). Physicians and physician practice groups may become targets if their attempted efforts at joint ventures are deemed to be a pretext for price fixing or otherwise anticompetitive.

The DOJ and FTC have promulgated guidelines regarding joint venture structures and will perform a review of the proposal upon request.³

However, under Obamacare, which promotes the efficient integration of health services through competition such as accountable care organizations, these guidelines are likely to be revised in the near future.

6. Exclusive contracts. Many hospitals have exclusive contracts with health professionals such as radiologists, anesthesiologists, and pathologists. Patients using the facility may be forced to use the services of these providers ("tying arrangement"). If the hospital does not possess requisite market power, or force the acceptance of the service, such agreements may pass antitrust scrutiny.

7. Peer review. The Health Care Quality Improvement Act (42 U.S.C. §§ 1101 et seq.) immunizes physicians and others performing peer review activities from federal antitrust claims so long as peer review was carried out: 1) in reasonable belief that the action was in furtherance of quality health care; 2) after reasonable effort to obtain the facts; 3) after an adequate notice and hearing procedure; 4) in reasonable belief that the action was warranted; and 5) any adverse outcome was reported to the National Practitioners’ Data Bank.

A doctor who is judged wanting in peer review occasionally asserts a discriminatory or anticompetitive intent, and may file a retaliatory lawsuit. One caveat: Peer review deliberations are always held in strict confidence. Disparaging a doctor under review in an unrelated forum constitutes a violation of the peer review process, which risks nullification of discovery protection and antitrust immunity.

Antitrust problems are highly fact dependent and analytically complex, and therefore require counsel with special expertise and experience. Issues are surprisingly prevalent and may be counterintuitive, affecting not only parties in joint ventures and mergers, but also the solo office or hospital practitioner. Matters of medical staffing, joint purchasing, information exchange, managed care negotiation, peer review and price agreements are some examples.

Penalties are severe, and may cover more than simple cease and desist orders. Some behavior constitutes criminality punishable by prison terms, though this is rare in the health care arena.

More often, the guilty parties face heavy monetary fines from both governmental officials as well as private litigants who can join in the lawsuit and stand to benefit from awards of treble damages and attorneys’ fees.

References:

1. Goldfarb v. Virginia State Bar 421 U.S. 773, 1975.

2. Code of Medical Ethics, AMA, 9.025, 2012-2013 edition.

3. Statements of Antitrust Enforcement Policy in Health Care. Department of Justice and Federal Trade Commission (1996).

Dr. Tan is professor emeritus of medicine and former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical or legal advice. Some of the articles in this series are adapted from the author’s 2006 book, "Medical Malpractice: Understanding the Law, Managing the Risk," and his 2012 Halsbury treatise, "Medical Negligence and Professional Misconduct." For additional information, readers may contact the author at [email protected].

This article introduces United States antitrust laws and discusses their application in health care. Part 2 will summarize major court decisions covering that subject.

Question: Antitrust laws:

A. Are based in part on the physician-patient trust relationship.

B. Prohibit anticompetitive behavior.

C. Regulate business activities but not professional services.

D. A, B, and C are correct.

E. B and C are correct.

Answer: B. Economic interests are best served in a freely competitive marketplace. Trade restraints such as price fixing and monopolization tend to promote inefficiency and increase profit for the perpetrators, at the expense of consumer welfare.

Accordingly, Congress enacted the Sherman Antitrust Act way back in 1890 to promote competition and outlaw unreasonable restraint of trade. Additional laws prohibit mergers that substantially lessen competition, price discrimination, and unfair trade practices. Collectively, these are known as the antitrust laws, the term reflecting their initial purpose to prevent commercial traders from forming anticompetitive groups or "trusts."

The Department of Justice (DOJ), the Federal Trade Commission (FTC), and their state counterparts enforce these laws, which have nothing whatsoever to do with the doctor-patient trust relationship.

Section I of the Sherman Act, the paramount antitrust statute, declares that "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal." Section II stipulates, "Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony."

Other important laws are Sections 4 and 7 of the Clayton Antitrust Act and Section 5(a)(1) of the Federal Trade Commission Act, which outlaws "unfair methods of competition in or affecting commerce ... " Additionally, all states have their own antitrust statutes, which in some cases may be more restrictive than the federal laws are.

These laws initially targeted anticompetitive business practices. In 1975, the U.S. Supreme Court declared that there was to be no "learned profession" exemption, although special considerations may apply.¹ However, activities of state government officials and employees are exempt from antitrust scrutiny under the so-called "state action doctrine," which confers immunity if an exemption is clearly articulated and affirmatively expressed as state policy, and there is active state supervision of the conduct in question.

Antitrust issues are ubiquitous in health care, and fall into seven major categories: 1) price fixing; 2) boycotts; 3) market division; 4) monopolization; 5) joint ventures; 6) exclusive contracts, and 7) peer review.

1. Price fixing. An agreement to fix prices is the most egregious example of anticompetitive conduct, so much so that the courts will use a per se analysis, i.e., without need to consider other factors, to arrive at its decision. Price fixing does not require any party to show market dominance or power, and its presence can be inferred from circumstances and agreements, which can be either oral or written.

For example, physician fee schedules or guidelines by a medical association would constitute price fixing. Even an agreement to fix maximum prices, as opposed to minimum prices, has been ruled illegal. At a practical level, physicians should avoid sharing pricing information with anyone, especially with colleagues, unless strict FTC "safety zone" criteria are satisfied.

2. Boycotts. Group boycotts are usually per se illegal, but in the health care industry, a rule of reason analysis is frequently used. Courts will look at the circumstances and purpose of the boycott, its pro- and anti-competitive effects, and whether there are other less restrictive ways to achieve the purported goal.

Affiliating physicians face this risk when forming alliances, as boycott questions may arise when a doctor is inappropriately excluded, which deprives him/her from earning a living in the relevant market.

A related controversial issue is the unionization of doctors. Unionization protects labor rights, especially those of medical residents, and offers greater parity in collective bargaining. On the other hand, the danger is in tying a physician’s obligations to the interests of other workers who may not share the same ethical commitment to patients.²

Strikes by doctors are likely to interfere with patient care, raise serious ethical questions, and may also be in violation of antitrust laws although boycotts for sociopolitical and noncommercial reasons are not specifically prohibited.

3. Market division. Agreements to restrict competition by dividing or allocating territories or patients are illegal per se under the Sherman Act.

4. Monopolization. Section 2 of the Sherman Act prohibits monopolization and attempts to monopolize. Examples are predatory pricing, long-term exclusive contracts, and refusal to deal. Mergers and acquisitions may substantially lessen competition with the tendency to create a monopoly, and they are subject to Section 7 of the Clayton Act. Proof of monopolization requires an inquiry into the relevant product and geographic markets (usually greater than 50%-60% market share), and regularly requires an economist’s expertise at trial.

As a general proposition, restraint of trade and monopolistic charges are difficult to prove. Monopoly through "the exercise of skill, foresight, and industry" does not constitute monopolizing conduct.

5. Joint ventures. The two main ways physicians form network joint ventures are: 1) join together in an entity with shared financial risks and clinical integration, and 2) join a looser network without integration to simply facilitate the flow of information for contracting purposes between physicians and other payers, the so-called messenger method.

Many health delivery systems involve joint venture agreements among practitioners or groups of health professionals and health care institutions, e.g., physician hospital organizations (PHOs), independent practice associations (IPAs), and preferred physician organization (PPOs). Physicians and physician practice groups may become targets if their attempted efforts at joint ventures are deemed to be a pretext for price fixing or otherwise anticompetitive.

The DOJ and FTC have promulgated guidelines regarding joint venture structures and will perform a review of the proposal upon request.³

However, under Obamacare, which promotes the efficient integration of health services through competition such as accountable care organizations, these guidelines are likely to be revised in the near future.

6. Exclusive contracts. Many hospitals have exclusive contracts with health professionals such as radiologists, anesthesiologists, and pathologists. Patients using the facility may be forced to use the services of these providers ("tying arrangement"). If the hospital does not possess requisite market power, or force the acceptance of the service, such agreements may pass antitrust scrutiny.

7. Peer review. The Health Care Quality Improvement Act (42 U.S.C. §§ 1101 et seq.) immunizes physicians and others performing peer review activities from federal antitrust claims so long as peer review was carried out: 1) in reasonable belief that the action was in furtherance of quality health care; 2) after reasonable effort to obtain the facts; 3) after an adequate notice and hearing procedure; 4) in reasonable belief that the action was warranted; and 5) any adverse outcome was reported to the National Practitioners’ Data Bank.

A doctor who is judged wanting in peer review occasionally asserts a discriminatory or anticompetitive intent, and may file a retaliatory lawsuit. One caveat: Peer review deliberations are always held in strict confidence. Disparaging a doctor under review in an unrelated forum constitutes a violation of the peer review process, which risks nullification of discovery protection and antitrust immunity.

Antitrust problems are highly fact dependent and analytically complex, and therefore require counsel with special expertise and experience. Issues are surprisingly prevalent and may be counterintuitive, affecting not only parties in joint ventures and mergers, but also the solo office or hospital practitioner. Matters of medical staffing, joint purchasing, information exchange, managed care negotiation, peer review and price agreements are some examples.

Penalties are severe, and may cover more than simple cease and desist orders. Some behavior constitutes criminality punishable by prison terms, though this is rare in the health care arena.

More often, the guilty parties face heavy monetary fines from both governmental officials as well as private litigants who can join in the lawsuit and stand to benefit from awards of treble damages and attorneys’ fees.

References:

1. Goldfarb v. Virginia State Bar 421 U.S. 773, 1975.

2. Code of Medical Ethics, AMA, 9.025, 2012-2013 edition.

3. Statements of Antitrust Enforcement Policy in Health Care. Department of Justice and Federal Trade Commission (1996).

Dr. Tan is professor emeritus of medicine and former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical or legal advice. Some of the articles in this series are adapted from the author’s 2006 book, "Medical Malpractice: Understanding the Law, Managing the Risk," and his 2012 Halsbury treatise, "Medical Negligence and Professional Misconduct." For additional information, readers may contact the author at [email protected].

This article introduces United States antitrust laws and discusses their application in health care. Part 2 will summarize major court decisions covering that subject.

Question: Antitrust laws:

A. Are based in part on the physician-patient trust relationship.

B. Prohibit anticompetitive behavior.

C. Regulate business activities but not professional services.

D. A, B, and C are correct.

E. B and C are correct.

Answer: B. Economic interests are best served in a freely competitive marketplace. Trade restraints such as price fixing and monopolization tend to promote inefficiency and increase profit for the perpetrators, at the expense of consumer welfare.

Accordingly, Congress enacted the Sherman Antitrust Act way back in 1890 to promote competition and outlaw unreasonable restraint of trade. Additional laws prohibit mergers that substantially lessen competition, price discrimination, and unfair trade practices. Collectively, these are known as the antitrust laws, the term reflecting their initial purpose to prevent commercial traders from forming anticompetitive groups or "trusts."

The Department of Justice (DOJ), the Federal Trade Commission (FTC), and their state counterparts enforce these laws, which have nothing whatsoever to do with the doctor-patient trust relationship.

Section I of the Sherman Act, the paramount antitrust statute, declares that "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal." Section II stipulates, "Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony."

Other important laws are Sections 4 and 7 of the Clayton Antitrust Act and Section 5(a)(1) of the Federal Trade Commission Act, which outlaws "unfair methods of competition in or affecting commerce ... " Additionally, all states have their own antitrust statutes, which in some cases may be more restrictive than the federal laws are.

These laws initially targeted anticompetitive business practices. In 1975, the U.S. Supreme Court declared that there was to be no "learned profession" exemption, although special considerations may apply.¹ However, activities of state government officials and employees are exempt from antitrust scrutiny under the so-called "state action doctrine," which confers immunity if an exemption is clearly articulated and affirmatively expressed as state policy, and there is active state supervision of the conduct in question.

Antitrust issues are ubiquitous in health care, and fall into seven major categories: 1) price fixing; 2) boycotts; 3) market division; 4) monopolization; 5) joint ventures; 6) exclusive contracts, and 7) peer review.

1. Price fixing. An agreement to fix prices is the most egregious example of anticompetitive conduct, so much so that the courts will use a per se analysis, i.e., without need to consider other factors, to arrive at its decision. Price fixing does not require any party to show market dominance or power, and its presence can be inferred from circumstances and agreements, which can be either oral or written.

For example, physician fee schedules or guidelines by a medical association would constitute price fixing. Even an agreement to fix maximum prices, as opposed to minimum prices, has been ruled illegal. At a practical level, physicians should avoid sharing pricing information with anyone, especially with colleagues, unless strict FTC "safety zone" criteria are satisfied.

2. Boycotts. Group boycotts are usually per se illegal, but in the health care industry, a rule of reason analysis is frequently used. Courts will look at the circumstances and purpose of the boycott, its pro- and anti-competitive effects, and whether there are other less restrictive ways to achieve the purported goal.

Affiliating physicians face this risk when forming alliances, as boycott questions may arise when a doctor is inappropriately excluded, which deprives him/her from earning a living in the relevant market.

A related controversial issue is the unionization of doctors. Unionization protects labor rights, especially those of medical residents, and offers greater parity in collective bargaining. On the other hand, the danger is in tying a physician’s obligations to the interests of other workers who may not share the same ethical commitment to patients.²

Strikes by doctors are likely to interfere with patient care, raise serious ethical questions, and may also be in violation of antitrust laws although boycotts for sociopolitical and noncommercial reasons are not specifically prohibited.

3. Market division. Agreements to restrict competition by dividing or allocating territories or patients are illegal per se under the Sherman Act.

4. Monopolization. Section 2 of the Sherman Act prohibits monopolization and attempts to monopolize. Examples are predatory pricing, long-term exclusive contracts, and refusal to deal. Mergers and acquisitions may substantially lessen competition with the tendency to create a monopoly, and they are subject to Section 7 of the Clayton Act. Proof of monopolization requires an inquiry into the relevant product and geographic markets (usually greater than 50%-60% market share), and regularly requires an economist’s expertise at trial.

As a general proposition, restraint of trade and monopolistic charges are difficult to prove. Monopoly through "the exercise of skill, foresight, and industry" does not constitute monopolizing conduct.

5. Joint ventures. The two main ways physicians form network joint ventures are: 1) join together in an entity with shared financial risks and clinical integration, and 2) join a looser network without integration to simply facilitate the flow of information for contracting purposes between physicians and other payers, the so-called messenger method.

Many health delivery systems involve joint venture agreements among practitioners or groups of health professionals and health care institutions, e.g., physician hospital organizations (PHOs), independent practice associations (IPAs), and preferred physician organization (PPOs). Physicians and physician practice groups may become targets if their attempted efforts at joint ventures are deemed to be a pretext for price fixing or otherwise anticompetitive.

The DOJ and FTC have promulgated guidelines regarding joint venture structures and will perform a review of the proposal upon request.³

However, under Obamacare, which promotes the efficient integration of health services through competition such as accountable care organizations, these guidelines are likely to be revised in the near future.

6. Exclusive contracts. Many hospitals have exclusive contracts with health professionals such as radiologists, anesthesiologists, and pathologists. Patients using the facility may be forced to use the services of these providers ("tying arrangement"). If the hospital does not possess requisite market power, or force the acceptance of the service, such agreements may pass antitrust scrutiny.

7. Peer review. The Health Care Quality Improvement Act (42 U.S.C. §§ 1101 et seq.) immunizes physicians and others performing peer review activities from federal antitrust claims so long as peer review was carried out: 1) in reasonable belief that the action was in furtherance of quality health care; 2) after reasonable effort to obtain the facts; 3) after an adequate notice and hearing procedure; 4) in reasonable belief that the action was warranted; and 5) any adverse outcome was reported to the National Practitioners’ Data Bank.

A doctor who is judged wanting in peer review occasionally asserts a discriminatory or anticompetitive intent, and may file a retaliatory lawsuit. One caveat: Peer review deliberations are always held in strict confidence. Disparaging a doctor under review in an unrelated forum constitutes a violation of the peer review process, which risks nullification of discovery protection and antitrust immunity.

Antitrust problems are highly fact dependent and analytically complex, and therefore require counsel with special expertise and experience. Issues are surprisingly prevalent and may be counterintuitive, affecting not only parties in joint ventures and mergers, but also the solo office or hospital practitioner. Matters of medical staffing, joint purchasing, information exchange, managed care negotiation, peer review and price agreements are some examples.

Penalties are severe, and may cover more than simple cease and desist orders. Some behavior constitutes criminality punishable by prison terms, though this is rare in the health care arena.

More often, the guilty parties face heavy monetary fines from both governmental officials as well as private litigants who can join in the lawsuit and stand to benefit from awards of treble damages and attorneys’ fees.

References:

1. Goldfarb v. Virginia State Bar 421 U.S. 773, 1975.

2. Code of Medical Ethics, AMA, 9.025, 2012-2013 edition.

3. Statements of Antitrust Enforcement Policy in Health Care. Department of Justice and Federal Trade Commission (1996).

Dr. Tan is professor emeritus of medicine and former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical or legal advice. Some of the articles in this series are adapted from the author’s 2006 book, "Medical Malpractice: Understanding the Law, Managing the Risk," and his 2012 Halsbury treatise, "Medical Negligence and Professional Misconduct." For additional information, readers may contact the author at [email protected].

Question: A 71-year-old woman with heart disease and breast cancer was hospitalized for uncontrolled diabetes and a hip fracture. There, she suffered two grand mal seizures that could not be controlled with anticonvulsants, and the patient lapsed into coma. Her daughter became the surrogate decision maker, and she made it clear that her mother always said she wanted everything done.

After several weeks, the physicians decided that further care would be futile. The chair of the ethics committee took the view that the family’s opinion was not relevant, because cardiopulmonary resuscitation (CPR) was not a genuine therapeutic option and would be "medically contraindicated, inhumane, and unethical." Accordingly, the attending physician entered a do-not-resuscitate (DNR) order despite strong protest from the daughter. The patient died shortly thereafter without receiving CPR.

In this actual case where the daughter filed a negligence lawsuit against the hospital, which of the following statements is incorrect?

A. The defendant’s expert relied upon the position paper of the American Thoracic Society, which states that life support "can be limited without the consent of patient or surrogate when the intervention is judged to be futile."

B. Futile intervention may be defined as treatment that would be highly unlikely to result in a meaningful survival of the patient.

C. The jury found that if competent, the patient would have wanted CPR and would have wanted ventilation until death.

D. The jury found such treatment would be futile.

E. The jury entered a verdict of negligence.

Answer: E. The above narrative is based on Gilgunn v. Massachusetts General Hospital (verdict issued April 21, 1995) and adapted from an article by the prominent ethicist Alexander M. Capron.¹ All of the options listed were evident at trial, except that it was a defense verdict, i.e., no negligence. The case remains the best-known litigated example of medical futility. In earlier cases such as Wanglie² and Baby K,³ the courts had avoided addressing the issue directly.

Gilgunn supports the notion that futility of CPR can trump a patient’s family insistence on having such intervention. But being a trial court verdict, it lacks the precedential authority that an appellate decision would confer.

The verdict also was not without its critics. As Mr. Capron wrote:

"But to allow Mrs. Gilgunn’s physicians to impose this view, however widely held, on their patient is the equivalent of allowing them to abandon the patient. We still need means ... to reach a social consensus on whether health professionals should have authority to decide, among the interventions patients (or surrogates) will accept, which will actually be provided and which they may withhold based upon their evaluation of the worth of the outcome. When we come to adopt such policies, we would do well to ponder long and hard before adopting a utilitarian measure that affords the waning lives of the most vulnerable in our society less protection from unilateral decisions by powerful professionals."¹

In 1999, the District of Columbia Court of Appeals agreed with a trial court’s order to issue a DNR order for a neglected 2-year-old child who was born prematurely with serious medical problems and virtually nonexistent cognition, but who could still experience pain.⁴ The biological mother and putative father appealed, but the Court of Appeals affirmed. The court held, among other things, that the standard of proof required for issuance of a DNR order is clear and convincing evidence, and the applicable standard is the best interests of the child test rather than a substituted judgment standard. However, this case pitted the biological parents against a court-appointed guardian, rather than the medical providers.

The American Medical Association’s current Code of Ethics urges that when neither a patient nor surrogate is able or available to make a decision regarding CPR, an attending physician contemplating a DNR order should consult another physician or a hospital ethics committee if one is available.⁵ If the physician determines that a request for resuscitation would not be medically effective, "the physician should seek to resolve the conflict through a fair decision-making process, when time permits." In an earlier version,⁶ the AMA stated: "CPR may be withheld if, in the judgment of the treating physician, an attempt to resuscitate the patient would be futile."

DNR orders are at the heart of the futility conundrum, especially because CPR is a highly invasive, low-success procedure (notable exceptions exist, however). Medical futility denotes treatment that cannot confer an overall benefit on the whole person even if it can restore some physiologic variable.⁷ The Latin word "futilis" means leaky, and in Greek mythology, the daughters of Danaus were condemned in the underworld to draw water in leaky sieves, conveying the full meaning of futility.

The debate is over whether an intervention, however hopeless and ineffective, can ever be characterized as completely futile. Moreover, without absolute certainty, will this suffice to override a patient’s insistence on having that treatment?

Others have countered that absoluteness is an unrealistic standard, and that inhumane suffering and costs are relevant factors to ponder. The AMA has clearly stated that "physicians are not ethically obligated to deliver care that, in their best professional judgment, will not have a reasonable chance of benefiting their patients," and "patients should not be given treatments simply because they demand them."⁸

One legal consequence of discontinuing medical treatment that ends with a patient’s demise is the specter of criminal prosecution, although charges of homicide are unlikely to prevail.

In a landmark California case, Barber v. Superior Court of Los Angeles County,⁹ the court recognized that "a physician is authorized under the standards of medical practice to discontinue a form of therapy which in his medical judgment is useless. ... If the treating physicians have determined that continued use of a respirator is useless, then they may decide to discontinue it without fear of civil or criminal liability."

In Kansas v. Naramore,¹⁰ the state appeals court reversed and entered a verdict of acquittal despite a jury finding Dr. Naramore guilty over his provision of palliative treatment. The court noted that the burden of proof to establish the criminal guilt of a physician for acts arising out of providing medical treatment is higher than that necessary to find medical malpractice or to impose medical licensure discipline. It held that "with no direct evidence of criminal intent, it is highly disturbing that testimony by such an impressive array of apparently objective medical experts, who found the defendant’s actions to be not only noncriminal, but medically appropriate, can be dismissed as ‘unbelievable’ and not even capable of generating reasonable doubt."

Notwithstanding widely accepted ethical notions of medical futility, there are state and federal statutes touching on DNR orders that warrant careful attention.

For example, New York Public Health Law Section 2962, paragraph 1, states: "Every person admitted to a hospital shall be presumed to consent to the administration of cardiopulmonary resuscitation in the event of cardiac or respiratory arrest, unless there is consent to the issuance of an order not to resuscitate as provided in this article." This raises the question as to whether it is ever legally permissible to enter a unilateral DNR order against the wishes of the patient.

On the other hand, Hawaii Revised Statutes 327E-13(d) notes: "This chapter shall not authorize or require a health care provider or institution to provide health care contrary to generally accepted health care standards." This has been interpreted as allowing the prevailing standard of care to serve as the yardstick of propriety.

Finally, the federal "antidumping" law governing emergency treatment in hospitals, widely known as EMTALA (Emergency Medical Treatment & Labor Act), requires all emergency departments to provide treatment necessary to prevent the material deterioration of the individual’s condition. This would always include the use of CPR unless specifically rejected by the patient or surrogate, because the law does not contain a "standard of care" or futility exception.

References

1. Capron, A.M., Abandoning a Waning Life. Hastings Center Report 1995;25:24-6.

2. In re the conservatorship of Helga M. Wanglie, No. PX-91-283, District Probate Division, 4th Judicial District of the County of Hennepin, State of Minnesota.

3. In the Matter of Baby "K", 16 F.3d F. Supp. 590 (E.D. VA 1993). WL 38674 (4th Cir. 1994).

4. In re K.I., 735 A.2d 448 (D.C. Ct. App. 1999).

5. Code of Ethics of the AMA, section 2.22, 2012-2013 edition.

6. JAMA 1991;265:1868-71.

7. Ann. Int. Med. 1990;112:949-54.

8. Code of Ethics of the AMA, section 2.035, 2012-2013 edition.

9. Barber v. Superior Court of Los Angeles County, 147 Cal. App. 3d 1006 (1983).

10. Kansas v. Naramore, 965 P.2d 211 (Kan. 1998).

Dr. Tan is professor emeritus of medicine and former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author at [email protected].

Question: A 71-year-old woman with heart disease and breast cancer was hospitalized for uncontrolled diabetes and a hip fracture. There, she suffered two grand mal seizures that could not be controlled with anticonvulsants, and the patient lapsed into coma. Her daughter became the surrogate decision maker, and she made it clear that her mother always said she wanted everything done.

After several weeks, the physicians decided that further care would be futile. The chair of the ethics committee took the view that the family’s opinion was not relevant, because cardiopulmonary resuscitation (CPR) was not a genuine therapeutic option and would be "medically contraindicated, inhumane, and unethical." Accordingly, the attending physician entered a do-not-resuscitate (DNR) order despite strong protest from the daughter. The patient died shortly thereafter without receiving CPR.

In this actual case where the daughter filed a negligence lawsuit against the hospital, which of the following statements is incorrect?

A. The defendant’s expert relied upon the position paper of the American Thoracic Society, which states that life support "can be limited without the consent of patient or surrogate when the intervention is judged to be futile."

B. Futile intervention may be defined as treatment that would be highly unlikely to result in a meaningful survival of the patient.

C. The jury found that if competent, the patient would have wanted CPR and would have wanted ventilation until death.

D. The jury found such treatment would be futile.

E. The jury entered a verdict of negligence.

Answer: E. The above narrative is based on Gilgunn v. Massachusetts General Hospital (verdict issued April 21, 1995) and adapted from an article by the prominent ethicist Alexander M. Capron.¹ All of the options listed were evident at trial, except that it was a defense verdict, i.e., no negligence. The case remains the best-known litigated example of medical futility. In earlier cases such as Wanglie² and Baby K,³ the courts had avoided addressing the issue directly.

Gilgunn supports the notion that futility of CPR can trump a patient’s family insistence on having such intervention. But being a trial court verdict, it lacks the precedential authority that an appellate decision would confer.

The verdict also was not without its critics. As Mr. Capron wrote:

"But to allow Mrs. Gilgunn’s physicians to impose this view, however widely held, on their patient is the equivalent of allowing them to abandon the patient. We still need means ... to reach a social consensus on whether health professionals should have authority to decide, among the interventions patients (or surrogates) will accept, which will actually be provided and which they may withhold based upon their evaluation of the worth of the outcome. When we come to adopt such policies, we would do well to ponder long and hard before adopting a utilitarian measure that affords the waning lives of the most vulnerable in our society less protection from unilateral decisions by powerful professionals."¹

In 1999, the District of Columbia Court of Appeals agreed with a trial court’s order to issue a DNR order for a neglected 2-year-old child who was born prematurely with serious medical problems and virtually nonexistent cognition, but who could still experience pain.⁴ The biological mother and putative father appealed, but the Court of Appeals affirmed. The court held, among other things, that the standard of proof required for issuance of a DNR order is clear and convincing evidence, and the applicable standard is the best interests of the child test rather than a substituted judgment standard. However, this case pitted the biological parents against a court-appointed guardian, rather than the medical providers.

The American Medical Association’s current Code of Ethics urges that when neither a patient nor surrogate is able or available to make a decision regarding CPR, an attending physician contemplating a DNR order should consult another physician or a hospital ethics committee if one is available.⁵ If the physician determines that a request for resuscitation would not be medically effective, "the physician should seek to resolve the conflict through a fair decision-making process, when time permits." In an earlier version,⁶ the AMA stated: "CPR may be withheld if, in the judgment of the treating physician, an attempt to resuscitate the patient would be futile."

DNR orders are at the heart of the futility conundrum, especially because CPR is a highly invasive, low-success procedure (notable exceptions exist, however). Medical futility denotes treatment that cannot confer an overall benefit on the whole person even if it can restore some physiologic variable.⁷ The Latin word "futilis" means leaky, and in Greek mythology, the daughters of Danaus were condemned in the underworld to draw water in leaky sieves, conveying the full meaning of futility.

The debate is over whether an intervention, however hopeless and ineffective, can ever be characterized as completely futile. Moreover, without absolute certainty, will this suffice to override a patient’s insistence on having that treatment?

Others have countered that absoluteness is an unrealistic standard, and that inhumane suffering and costs are relevant factors to ponder. The AMA has clearly stated that "physicians are not ethically obligated to deliver care that, in their best professional judgment, will not have a reasonable chance of benefiting their patients," and "patients should not be given treatments simply because they demand them."⁸

One legal consequence of discontinuing medical treatment that ends with a patient’s demise is the specter of criminal prosecution, although charges of homicide are unlikely to prevail.

In a landmark California case, Barber v. Superior Court of Los Angeles County,⁹ the court recognized that "a physician is authorized under the standards of medical practice to discontinue a form of therapy which in his medical judgment is useless. ... If the treating physicians have determined that continued use of a respirator is useless, then they may decide to discontinue it without fear of civil or criminal liability."

In Kansas v. Naramore,¹⁰ the state appeals court reversed and entered a verdict of acquittal despite a jury finding Dr. Naramore guilty over his provision of palliative treatment. The court noted that the burden of proof to establish the criminal guilt of a physician for acts arising out of providing medical treatment is higher than that necessary to find medical malpractice or to impose medical licensure discipline. It held that "with no direct evidence of criminal intent, it is highly disturbing that testimony by such an impressive array of apparently objective medical experts, who found the defendant’s actions to be not only noncriminal, but medically appropriate, can be dismissed as ‘unbelievable’ and not even capable of generating reasonable doubt."

Notwithstanding widely accepted ethical notions of medical futility, there are state and federal statutes touching on DNR orders that warrant careful attention.

For example, New York Public Health Law Section 2962, paragraph 1, states: "Every person admitted to a hospital shall be presumed to consent to the administration of cardiopulmonary resuscitation in the event of cardiac or respiratory arrest, unless there is consent to the issuance of an order not to resuscitate as provided in this article." This raises the question as to whether it is ever legally permissible to enter a unilateral DNR order against the wishes of the patient.

On the other hand, Hawaii Revised Statutes 327E-13(d) notes: "This chapter shall not authorize or require a health care provider or institution to provide health care contrary to generally accepted health care standards." This has been interpreted as allowing the prevailing standard of care to serve as the yardstick of propriety.

Finally, the federal "antidumping" law governing emergency treatment in hospitals, widely known as EMTALA (Emergency Medical Treatment & Labor Act), requires all emergency departments to provide treatment necessary to prevent the material deterioration of the individual’s condition. This would always include the use of CPR unless specifically rejected by the patient or surrogate, because the law does not contain a "standard of care" or futility exception.

References

1. Capron, A.M., Abandoning a Waning Life. Hastings Center Report 1995;25:24-6.

2. In re the conservatorship of Helga M. Wanglie, No. PX-91-283, District Probate Division, 4th Judicial District of the County of Hennepin, State of Minnesota.

3. In the Matter of Baby "K", 16 F.3d F. Supp. 590 (E.D. VA 1993). WL 38674 (4th Cir. 1994).

4. In re K.I., 735 A.2d 448 (D.C. Ct. App. 1999).

5. Code of Ethics of the AMA, section 2.22, 2012-2013 edition.

6. JAMA 1991;265:1868-71.

7. Ann. Int. Med. 1990;112:949-54.

8. Code of Ethics of the AMA, section 2.035, 2012-2013 edition.

9. Barber v. Superior Court of Los Angeles County, 147 Cal. App. 3d 1006 (1983).

10. Kansas v. Naramore, 965 P.2d 211 (Kan. 1998).

Dr. Tan is professor emeritus of medicine and former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author at [email protected].

Question: A 71-year-old woman with heart disease and breast cancer was hospitalized for uncontrolled diabetes and a hip fracture. There, she suffered two grand mal seizures that could not be controlled with anticonvulsants, and the patient lapsed into coma. Her daughter became the surrogate decision maker, and she made it clear that her mother always said she wanted everything done.

After several weeks, the physicians decided that further care would be futile. The chair of the ethics committee took the view that the family’s opinion was not relevant, because cardiopulmonary resuscitation (CPR) was not a genuine therapeutic option and would be "medically contraindicated, inhumane, and unethical." Accordingly, the attending physician entered a do-not-resuscitate (DNR) order despite strong protest from the daughter. The patient died shortly thereafter without receiving CPR.

In this actual case where the daughter filed a negligence lawsuit against the hospital, which of the following statements is incorrect?

A. The defendant’s expert relied upon the position paper of the American Thoracic Society, which states that life support "can be limited without the consent of patient or surrogate when the intervention is judged to be futile."

B. Futile intervention may be defined as treatment that would be highly unlikely to result in a meaningful survival of the patient.

C. The jury found that if competent, the patient would have wanted CPR and would have wanted ventilation until death.

D. The jury found such treatment would be futile.

E. The jury entered a verdict of negligence.

Answer: E. The above narrative is based on Gilgunn v. Massachusetts General Hospital (verdict issued April 21, 1995) and adapted from an article by the prominent ethicist Alexander M. Capron.¹ All of the options listed were evident at trial, except that it was a defense verdict, i.e., no negligence. The case remains the best-known litigated example of medical futility. In earlier cases such as Wanglie² and Baby K,³ the courts had avoided addressing the issue directly.

Gilgunn supports the notion that futility of CPR can trump a patient’s family insistence on having such intervention. But being a trial court verdict, it lacks the precedential authority that an appellate decision would confer.

The verdict also was not without its critics. As Mr. Capron wrote:

"But to allow Mrs. Gilgunn’s physicians to impose this view, however widely held, on their patient is the equivalent of allowing them to abandon the patient. We still need means ... to reach a social consensus on whether health professionals should have authority to decide, among the interventions patients (or surrogates) will accept, which will actually be provided and which they may withhold based upon their evaluation of the worth of the outcome. When we come to adopt such policies, we would do well to ponder long and hard before adopting a utilitarian measure that affords the waning lives of the most vulnerable in our society less protection from unilateral decisions by powerful professionals."¹

In 1999, the District of Columbia Court of Appeals agreed with a trial court’s order to issue a DNR order for a neglected 2-year-old child who was born prematurely with serious medical problems and virtually nonexistent cognition, but who could still experience pain.⁴ The biological mother and putative father appealed, but the Court of Appeals affirmed. The court held, among other things, that the standard of proof required for issuance of a DNR order is clear and convincing evidence, and the applicable standard is the best interests of the child test rather than a substituted judgment standard. However, this case pitted the biological parents against a court-appointed guardian, rather than the medical providers.

The American Medical Association’s current Code of Ethics urges that when neither a patient nor surrogate is able or available to make a decision regarding CPR, an attending physician contemplating a DNR order should consult another physician or a hospital ethics committee if one is available.⁵ If the physician determines that a request for resuscitation would not be medically effective, "the physician should seek to resolve the conflict through a fair decision-making process, when time permits." In an earlier version,⁶ the AMA stated: "CPR may be withheld if, in the judgment of the treating physician, an attempt to resuscitate the patient would be futile."

DNR orders are at the heart of the futility conundrum, especially because CPR is a highly invasive, low-success procedure (notable exceptions exist, however). Medical futility denotes treatment that cannot confer an overall benefit on the whole person even if it can restore some physiologic variable.⁷ The Latin word "futilis" means leaky, and in Greek mythology, the daughters of Danaus were condemned in the underworld to draw water in leaky sieves, conveying the full meaning of futility.

The debate is over whether an intervention, however hopeless and ineffective, can ever be characterized as completely futile. Moreover, without absolute certainty, will this suffice to override a patient’s insistence on having that treatment?

Others have countered that absoluteness is an unrealistic standard, and that inhumane suffering and costs are relevant factors to ponder. The AMA has clearly stated that "physicians are not ethically obligated to deliver care that, in their best professional judgment, will not have a reasonable chance of benefiting their patients," and "patients should not be given treatments simply because they demand them."⁸

One legal consequence of discontinuing medical treatment that ends with a patient’s demise is the specter of criminal prosecution, although charges of homicide are unlikely to prevail.

In a landmark California case, Barber v. Superior Court of Los Angeles County,⁹ the court recognized that "a physician is authorized under the standards of medical practice to discontinue a form of therapy which in his medical judgment is useless. ... If the treating physicians have determined that continued use of a respirator is useless, then they may decide to discontinue it without fear of civil or criminal liability."

In Kansas v. Naramore,¹⁰ the state appeals court reversed and entered a verdict of acquittal despite a jury finding Dr. Naramore guilty over his provision of palliative treatment. The court noted that the burden of proof to establish the criminal guilt of a physician for acts arising out of providing medical treatment is higher than that necessary to find medical malpractice or to impose medical licensure discipline. It held that "with no direct evidence of criminal intent, it is highly disturbing that testimony by such an impressive array of apparently objective medical experts, who found the defendant’s actions to be not only noncriminal, but medically appropriate, can be dismissed as ‘unbelievable’ and not even capable of generating reasonable doubt."

Notwithstanding widely accepted ethical notions of medical futility, there are state and federal statutes touching on DNR orders that warrant careful attention.

For example, New York Public Health Law Section 2962, paragraph 1, states: "Every person admitted to a hospital shall be presumed to consent to the administration of cardiopulmonary resuscitation in the event of cardiac or respiratory arrest, unless there is consent to the issuance of an order not to resuscitate as provided in this article." This raises the question as to whether it is ever legally permissible to enter a unilateral DNR order against the wishes of the patient.

On the other hand, Hawaii Revised Statutes 327E-13(d) notes: "This chapter shall not authorize or require a health care provider or institution to provide health care contrary to generally accepted health care standards." This has been interpreted as allowing the prevailing standard of care to serve as the yardstick of propriety.

Finally, the federal "antidumping" law governing emergency treatment in hospitals, widely known as EMTALA (Emergency Medical Treatment & Labor Act), requires all emergency departments to provide treatment necessary to prevent the material deterioration of the individual’s condition. This would always include the use of CPR unless specifically rejected by the patient or surrogate, because the law does not contain a "standard of care" or futility exception.

References

1. Capron, A.M., Abandoning a Waning Life. Hastings Center Report 1995;25:24-6.

2. In re the conservatorship of Helga M. Wanglie, No. PX-91-283, District Probate Division, 4th Judicial District of the County of Hennepin, State of Minnesota.

3. In the Matter of Baby "K", 16 F.3d F. Supp. 590 (E.D. VA 1993). WL 38674 (4th Cir. 1994).

4. In re K.I., 735 A.2d 448 (D.C. Ct. App. 1999).

5. Code of Ethics of the AMA, section 2.22, 2012-2013 edition.

6. JAMA 1991;265:1868-71.

7. Ann. Int. Med. 1990;112:949-54.

8. Code of Ethics of the AMA, section 2.035, 2012-2013 edition.

9. Barber v. Superior Court of Los Angeles County, 147 Cal. App. 3d 1006 (1983).

10. Kansas v. Naramore, 965 P.2d 211 (Kan. 1998).

Dr. Tan is professor emeritus of medicine and former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author at [email protected].

Question: Mrs. P sustained multiple fractures after a drunk driver struck her car. The orthopedic surgeon accidentally nicked her femoral artery during surgery, which resulted in profuse hemorrhage requiring six units of packed red blood cells. Although she survived, Mrs. P was left with irreversible renal failure, and she now requires lifelong dialysis. Which of the following is correct?

A. The drunk driver’s negligence may be both a factual and proximate cause of all of Mrs. P’s injuries.

B. The surgeon’s action may be deemed a factual, a concurring, or a superseding cause.

C. The surgeon will be successfully sued for malpractice.

D. Only A and B are correct.

E. All are correct.

Answer: D. The surgeon may be successfully sued for malpractice if the nicking of the artery is shown to be a negligent act. This is by no means a foregone conclusion, as a bad outcome is not necessarily indicative of negligence. The measure of legal negligence is what is to be ordinarily expected of a surgeon under similar situations.

For example, expert testimony may establish exculpatory circumstances such as an obscured surgical field, anomalous anatomy, emergency conditions, etc., that would free the surgeon from liability.

Causation issues have long plagued courts and scholars, earning epithets like "a thicket of complexities" and "a simplicity that is deceptive." Causation inquires into both factual and proximate cause. Factual cause deals with whether there is a physical and sequential cause-effect relationship between a defendant’s negligence and a plaintiff’s injuries. It uses the "but-for" test, which stipulates that the defendant’s conduct is a factual cause of a plaintiff’s injuries if the plaintiff’s harm would not have occurred but for defendant’s conduct, i.e., in the absence of the defendant’s tortious conduct.

A recent case is illustrative (BNM v. National University of Singapore, [2014] SGHC 05). An obese, middle-aged man drowned while swimming in the university pool. Lifeguards were on duty, but they were neither aware of where the emergency equipment was kept nor adequately trained in cardiopulmonary resuscitation. Efforts to revive the swimmer failed.

At autopsy, the victim was found to have cardiomegaly and advanced coronary artery disease, with old foci of myocardial scarring. The coroner testified that the victim probably suffered a major cardiac event, such as an arrhythmia, prior to drowning.

On the issue of causation, the court held that because of his severe underlying heart disease, the deceased was not likely to have survived, even if the lifeguards had acted more promptly, i.e., the negligent lifeguards did not factually cause the victim’s death.

A more important inquiry into causal connectivity is captured in the term "proximate cause," which is meant to prevent indeterminate liability. It is sometimes referred to as legal cause.

Unfortunately, there is no bright line to define what constitutes a sufficient causal nexus, and courts are therefore occasionally forced to base their decision on their sense of practical policy and justice. In some cases, an intervening event results in causing, or aggravating, harm suffered by the victim, but the original defendant may be freed of liability if the intervening event constitutes a superseding cause, i.e. unforeseeable event with unforeseeable results.

The opposite is a concurring cause. For example, rescuers may sometimes act negligently following a tortious event leading to aggravated injuries. If such conduct and damages were deemed foreseeable, that would constitute a concurring cause, and the initial wrongdoer then becomes liable for both the original and any aggravated injuries.

A variant of proximate cause is when the harm suffered is a natural expectation of the underlying condition, and the wrongdoer’s negligence simply deprived the victim of some chance of reducing that risk. This is known as the "loss of a chance" doctrine, which has been variously considered a part of causation analysis, a separate tort, or a means to apportion damages.

It asserts that the damage or loss that will materialize or had already materialized, could have been prevented or improved upon – had the victim not been deprived of an opportunity. Loss of a chance is simply another way of saying that the defendant’s conduct has increased the risk of harm to the plaintiff.

The doctrine is well established in contract law, especially where only economic losses are at issue, the key requirement there being that the lost opportunity be real or substantial, and not speculative. The seminal case, Chaplin v. Hicks ([1911] 2 KB 786), dealt with a late notification in a competition, which caused a plaintiff to lose her chance as a finalist to win a prize. The court ruled that the damage was not too remote, and the plaintiff did not have to prove that she would have won the competition.

In clinical negligence, allegations of loss of a chance often arise from an omission to treat or a failure to diagnose, which in turn may deprive the patient of an opportunity of a better outcome. In some U.S. and most Commonwealth jurisdictions, its successful application requires that the underlying condition prior to an individual’s negligence be associated with a better than even chance of cure to begin with.

The controversy arises over what level of risk reduction or lost opportunity is necessary to constitute proximate causation. How large the chance of an adverse outcome and how much of a reduction in that chance are required as a matter of law? Some courts assert that the lost opportunity is relevant only if the plaintiff’s prognosis for survival is better than 50% to begin with, whereas others reject this numerical imperative, especially in cases alleging a delayed diagnosis of cancer.

Proximate cause is the law’s intended mechanism to limit indeterminate liability. Thus, whether a defendant’s negligent conduct constitutes proximate cause is often dispositive in personal injury litigation. However, the term is frequently misunderstood, and has caused much confusion because it has sometimes been used interchangeably with legal cause, or used to include factual cause. And, of course, there can be more than one proximate cause for any given injury.

Reflecting this complexity, the California Supreme Court now disallows confusing jury instructions regarding proximate cause, suggesting instead that the jury be simply directed to determine whether the defendant’s conduct was a contributory factor in the plaintiff’s injury (Mitchell v. Gonzales, 819 P.2d 872 [Cal. 1991]).

Dr. Tan is professor emeritus of medicine and former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006) and his Halsbury treatise, "Medical Negligence and Professional Misconduct" (2012). For additional information, readers may contact the author at [email protected].

Question: Mrs. P sustained multiple fractures after a drunk driver struck her car. The orthopedic surgeon accidentally nicked her femoral artery during surgery, which resulted in profuse hemorrhage requiring six units of packed red blood cells. Although she survived, Mrs. P was left with irreversible renal failure, and she now requires lifelong dialysis. Which of the following is correct?

A. The drunk driver’s negligence may be both a factual and proximate cause of all of Mrs. P’s injuries.

B. The surgeon’s action may be deemed a factual, a concurring, or a superseding cause.

C. The surgeon will be successfully sued for malpractice.

D. Only A and B are correct.

E. All are correct.

Answer: D. The surgeon may be successfully sued for malpractice if the nicking of the artery is shown to be a negligent act. This is by no means a foregone conclusion, as a bad outcome is not necessarily indicative of negligence. The measure of legal negligence is what is to be ordinarily expected of a surgeon under similar situations.

For example, expert testimony may establish exculpatory circumstances such as an obscured surgical field, anomalous anatomy, emergency conditions, etc., that would free the surgeon from liability.

Causation issues have long plagued courts and scholars, earning epithets like "a thicket of complexities" and "a simplicity that is deceptive." Causation inquires into both factual and proximate cause. Factual cause deals with whether there is a physical and sequential cause-effect relationship between a defendant’s negligence and a plaintiff’s injuries. It uses the "but-for" test, which stipulates that the defendant’s conduct is a factual cause of a plaintiff’s injuries if the plaintiff’s harm would not have occurred but for defendant’s conduct, i.e., in the absence of the defendant’s tortious conduct.

A recent case is illustrative (BNM v. National University of Singapore, [2014] SGHC 05). An obese, middle-aged man drowned while swimming in the university pool. Lifeguards were on duty, but they were neither aware of where the emergency equipment was kept nor adequately trained in cardiopulmonary resuscitation. Efforts to revive the swimmer failed.

At autopsy, the victim was found to have cardiomegaly and advanced coronary artery disease, with old foci of myocardial scarring. The coroner testified that the victim probably suffered a major cardiac event, such as an arrhythmia, prior to drowning.

On the issue of causation, the court held that because of his severe underlying heart disease, the deceased was not likely to have survived, even if the lifeguards had acted more promptly, i.e., the negligent lifeguards did not factually cause the victim’s death.

A more important inquiry into causal connectivity is captured in the term "proximate cause," which is meant to prevent indeterminate liability. It is sometimes referred to as legal cause.

Unfortunately, there is no bright line to define what constitutes a sufficient causal nexus, and courts are therefore occasionally forced to base their decision on their sense of practical policy and justice. In some cases, an intervening event results in causing, or aggravating, harm suffered by the victim, but the original defendant may be freed of liability if the intervening event constitutes a superseding cause, i.e. unforeseeable event with unforeseeable results.

The opposite is a concurring cause. For example, rescuers may sometimes act negligently following a tortious event leading to aggravated injuries. If such conduct and damages were deemed foreseeable, that would constitute a concurring cause, and the initial wrongdoer then becomes liable for both the original and any aggravated injuries.

A variant of proximate cause is when the harm suffered is a natural expectation of the underlying condition, and the wrongdoer’s negligence simply deprived the victim of some chance of reducing that risk. This is known as the "loss of a chance" doctrine, which has been variously considered a part of causation analysis, a separate tort, or a means to apportion damages.

It asserts that the damage or loss that will materialize or had already materialized, could have been prevented or improved upon – had the victim not been deprived of an opportunity. Loss of a chance is simply another way of saying that the defendant’s conduct has increased the risk of harm to the plaintiff.

The doctrine is well established in contract law, especially where only economic losses are at issue, the key requirement there being that the lost opportunity be real or substantial, and not speculative. The seminal case, Chaplin v. Hicks ([1911] 2 KB 786), dealt with a late notification in a competition, which caused a plaintiff to lose her chance as a finalist to win a prize. The court ruled that the damage was not too remote, and the plaintiff did not have to prove that she would have won the competition.

In clinical negligence, allegations of loss of a chance often arise from an omission to treat or a failure to diagnose, which in turn may deprive the patient of an opportunity of a better outcome. In some U.S. and most Commonwealth jurisdictions, its successful application requires that the underlying condition prior to an individual’s negligence be associated with a better than even chance of cure to begin with.

The controversy arises over what level of risk reduction or lost opportunity is necessary to constitute proximate causation. How large the chance of an adverse outcome and how much of a reduction in that chance are required as a matter of law? Some courts assert that the lost opportunity is relevant only if the plaintiff’s prognosis for survival is better than 50% to begin with, whereas others reject this numerical imperative, especially in cases alleging a delayed diagnosis of cancer.

Proximate cause is the law’s intended mechanism to limit indeterminate liability. Thus, whether a defendant’s negligent conduct constitutes proximate cause is often dispositive in personal injury litigation. However, the term is frequently misunderstood, and has caused much confusion because it has sometimes been used interchangeably with legal cause, or used to include factual cause. And, of course, there can be more than one proximate cause for any given injury.

Reflecting this complexity, the California Supreme Court now disallows confusing jury instructions regarding proximate cause, suggesting instead that the jury be simply directed to determine whether the defendant’s conduct was a contributory factor in the plaintiff’s injury (Mitchell v. Gonzales, 819 P.2d 872 [Cal. 1991]).

Dr. Tan is professor emeritus of medicine and former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006) and his Halsbury treatise, "Medical Negligence and Professional Misconduct" (2012). For additional information, readers may contact the author at [email protected].

Question: Mrs. P sustained multiple fractures after a drunk driver struck her car. The orthopedic surgeon accidentally nicked her femoral artery during surgery, which resulted in profuse hemorrhage requiring six units of packed red blood cells. Although she survived, Mrs. P was left with irreversible renal failure, and she now requires lifelong dialysis. Which of the following is correct?

A. The drunk driver’s negligence may be both a factual and proximate cause of all of Mrs. P’s injuries.

B. The surgeon’s action may be deemed a factual, a concurring, or a superseding cause.

C. The surgeon will be successfully sued for malpractice.

D. Only A and B are correct.

E. All are correct.

Answer: D. The surgeon may be successfully sued for malpractice if the nicking of the artery is shown to be a negligent act. This is by no means a foregone conclusion, as a bad outcome is not necessarily indicative of negligence. The measure of legal negligence is what is to be ordinarily expected of a surgeon under similar situations.

For example, expert testimony may establish exculpatory circumstances such as an obscured surgical field, anomalous anatomy, emergency conditions, etc., that would free the surgeon from liability.

Causation issues have long plagued courts and scholars, earning epithets like "a thicket of complexities" and "a simplicity that is deceptive." Causation inquires into both factual and proximate cause. Factual cause deals with whether there is a physical and sequential cause-effect relationship between a defendant’s negligence and a plaintiff’s injuries. It uses the "but-for" test, which stipulates that the defendant’s conduct is a factual cause of a plaintiff’s injuries if the plaintiff’s harm would not have occurred but for defendant’s conduct, i.e., in the absence of the defendant’s tortious conduct.

A recent case is illustrative (BNM v. National University of Singapore, [2014] SGHC 05). An obese, middle-aged man drowned while swimming in the university pool. Lifeguards were on duty, but they were neither aware of where the emergency equipment was kept nor adequately trained in cardiopulmonary resuscitation. Efforts to revive the swimmer failed.

At autopsy, the victim was found to have cardiomegaly and advanced coronary artery disease, with old foci of myocardial scarring. The coroner testified that the victim probably suffered a major cardiac event, such as an arrhythmia, prior to drowning.

On the issue of causation, the court held that because of his severe underlying heart disease, the deceased was not likely to have survived, even if the lifeguards had acted more promptly, i.e., the negligent lifeguards did not factually cause the victim’s death.

A more important inquiry into causal connectivity is captured in the term "proximate cause," which is meant to prevent indeterminate liability. It is sometimes referred to as legal cause.

Unfortunately, there is no bright line to define what constitutes a sufficient causal nexus, and courts are therefore occasionally forced to base their decision on their sense of practical policy and justice. In some cases, an intervening event results in causing, or aggravating, harm suffered by the victim, but the original defendant may be freed of liability if the intervening event constitutes a superseding cause, i.e. unforeseeable event with unforeseeable results.

The opposite is a concurring cause. For example, rescuers may sometimes act negligently following a tortious event leading to aggravated injuries. If such conduct and damages were deemed foreseeable, that would constitute a concurring cause, and the initial wrongdoer then becomes liable for both the original and any aggravated injuries.

A variant of proximate cause is when the harm suffered is a natural expectation of the underlying condition, and the wrongdoer’s negligence simply deprived the victim of some chance of reducing that risk. This is known as the "loss of a chance" doctrine, which has been variously considered a part of causation analysis, a separate tort, or a means to apportion damages.

It asserts that the damage or loss that will materialize or had already materialized, could have been prevented or improved upon – had the victim not been deprived of an opportunity. Loss of a chance is simply another way of saying that the defendant’s conduct has increased the risk of harm to the plaintiff.

The doctrine is well established in contract law, especially where only economic losses are at issue, the key requirement there being that the lost opportunity be real or substantial, and not speculative. The seminal case, Chaplin v. Hicks ([1911] 2 KB 786), dealt with a late notification in a competition, which caused a plaintiff to lose her chance as a finalist to win a prize. The court ruled that the damage was not too remote, and the plaintiff did not have to prove that she would have won the competition.

In clinical negligence, allegations of loss of a chance often arise from an omission to treat or a failure to diagnose, which in turn may deprive the patient of an opportunity of a better outcome. In some U.S. and most Commonwealth jurisdictions, its successful application requires that the underlying condition prior to an individual’s negligence be associated with a better than even chance of cure to begin with.

The controversy arises over what level of risk reduction or lost opportunity is necessary to constitute proximate causation. How large the chance of an adverse outcome and how much of a reduction in that chance are required as a matter of law? Some courts assert that the lost opportunity is relevant only if the plaintiff’s prognosis for survival is better than 50% to begin with, whereas others reject this numerical imperative, especially in cases alleging a delayed diagnosis of cancer.

Proximate cause is the law’s intended mechanism to limit indeterminate liability. Thus, whether a defendant’s negligent conduct constitutes proximate cause is often dispositive in personal injury litigation. However, the term is frequently misunderstood, and has caused much confusion because it has sometimes been used interchangeably with legal cause, or used to include factual cause. And, of course, there can be more than one proximate cause for any given injury.

Reflecting this complexity, the California Supreme Court now disallows confusing jury instructions regarding proximate cause, suggesting instead that the jury be simply directed to determine whether the defendant’s conduct was a contributory factor in the plaintiff’s injury (Mitchell v. Gonzales, 819 P.2d 872 [Cal. 1991]).

Dr. Tan is professor emeritus of medicine and former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006) and his Halsbury treatise, "Medical Negligence and Professional Misconduct" (2012). For additional information, readers may contact the author at [email protected].

Question: Which of the following is incorrect?

A. Medical malpractice lawsuits arising out of social media interactions are still uncommon.

B. Comments shared by an ex-employee with friends on Facebook may breach doctor-patient confidentiality, with liability imputed to the doctor-employer.

C. Using the same platform, a doctor must promptly rebut disparaging comments on Yelp in order to protect his or her reputation.

D. An employment contract should cover matters concerning confidentiality and privacy.

E. Staff should use office computers only for work-related activities.

Answer: C. Physicians’ widespread use of social media sites such as Facebook, LinkedIn, and Twitter has spawned novel issues of professional liability. Use of such media, augmented by ubiquitous mobile devices such as smartphones and tablets, typically involves physician-to-physician and physician-to-patient communications but may also be personal in nature. Many patients have approached their doctors to "friend" them on Facebook. About a third of all doctors are said to have received such requests, and about a quarter have accepted. Other doctors are regular or occasional bloggers, offering views both medical and nonmedical.

While embracing the immense value of social media, the physician must remain mindful of the legal and ethical risks that such networking poses. State medical boards are facing increasing complaints of online professional breach, and civil lawsuits can be expected to mount.

Allegations of medical malpractice can arise if there is a showing that negligent conduct has caused an injury of some kind. Though currently uncommon, one can expect such lawsuits to proliferate. To be sure, there will be arguments about whether there exists a doctor-patient relationship from which a duty of care arises (Internal Medicine News, "Liability in the Internet Age," April 15, 2011, p. 74), but liability can come about in unexpected ways.

In a recent Massachusetts case, a pediatrician faced a malpractice suit that alleged a failure to diagnose diabetes and diabetic ketoacidosis. An offer to settle followed quickly once it was realized that the plaintiff’s attorney had discovered the defendant’s publicly blogged details about his deposition and trial preparation (American Medical News, "Internet won’t protect your secret identity," Aug. 13, 2007) Lesson: Use the blogosphere to educate, not vent; and never presume to successfully hide behind the veil of anonymity.

There are other legal issues. For example, some state employment laws forbid navigating the Internet in search of an applicant’s medical or criminal history, as such searches are permissible only after a tentative job offer has been made.

Another legal issue involves staff who use office computers or mobile devices for personal activities. This should be pointedly forbidden, as any negligence may be imputed to the doctor under the doctrine of vicarious liability. Current or former staff may unwittingly or even intentionally disclose confidential details of patients. So, as a risk-management strategy, employment contracts should address all of these matters proactively.

In addition to civil suits by an aggrieved patient and/or family, the doctor may face civil and criminal sanctions under the federal Health Insurance Portability and Accountability Act (HIPAA) and other statutes. All professional liability carriers are keen to assist their insured members in formulating office policies and procedures that govern privacy, confidentiality, and disclosure, and practitioners should take advantage of this service.

The ethics surrounding social media typically center on privacy;, for example, should a liver transplant physician use social media to ferret out a patient’s recent drinking habits?

Where there is professional misconduct arising out of Internet postings, a state medical board may launch an investigation. A preliminary study indicates that the most common violations are inappropriate patient communication of a sexual nature, Internet prescribing for unknown individuals, and online misrepresentation of credentials (JAMA 2012;307:1141-2).

In a recent illustrative article, the same authors posed 10 hypothetical scenarios to determine the need for disciplinary action (Ann. Int. Med. 2013;158:124-30). The evaluators deemed 4 of the 10 definitely worthy of investigation: misleading information about clinical outcomes, using images without consent, misrepresenting credentials, and inappropriately contacting patients. Other vignettes thought to be probably reprehensible were the depiction of alcohol intoxication, violating patient confidentiality, and using discriminatory speech. There was even concern raised regarding derogatory speech toward patients, showing alcohol use without intoxication, and providing clinical narratives without violating confidentiality.

Errant behavior may be observed early in one’s training. Most medical schools have identified instances of unprofessional student online postings such as breaching patient confidentiality, using profane or discriminatory language, depiction of intoxication, and sexually suggestive material (JAMA 2009;302:1309-15).

It may be impossible to separate personal from professional use of social media, so it has been suggested that ethical guidelines be framed in terms of appropriateness rather than boundaries (JAMA 2013;310:581-2).

Physicians must remain mindful that their online postings are searchable and permanent, notwithstanding the facade of anonymity. Venting of frustration or work stress is rarely justified in the public domain of the Internet.

One doctor, reportedly with some 3,000 followers, gained recent notoriety – and criticism – with his sarcasm, profanity, and patient-bashing through his tweets. Another was fined $500 and lost hospital privileges for posting information traceable to a specific person, despite not divulging the patient’s identity (American Medical News, "Anonymous posts: Liberating or unprofessional?" July 11, 2011).

Recognizing the growing prevalence of doctors’ participation on social media, a growing number of professional organizations – including the American Medical Association, the American College of Physicians, and the Mayo Clinic, among others – have offered guidelines in this area. Most relevantly, the Federation of State Medical Boards, a national nonprofit organization representing the 70 medical and osteopathic boards of the United States and its territories, has published a reader-friendly report entitled, "Model Policy Guidelines for the Appropriate Use of Social Media and Social Networking in Medical Practice."

Then there is the patient who posts negative comments about his or her doctor, say, on Yelp. Occasionally, these comments are derogatory, even defamatory. Such online attacks are difficult to counter, but engaging in an online war is more likely to be aggravating than salutary and adds unwanted publicity.

The preferred way is to attempt to identify the source and to request that the material be removed from the website, either by the poster or the domain host. If a simple request fails, an attorney’s letter, a subpoena, or a judge’s restraining order may be warranted. Occasionally, a defamation suit, even if time consuming and expensive, may prove necessary – and successful.

Dr. Tan is professor emeritus of medicine and former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006).

Question: Which of the following is incorrect?

A. Medical malpractice lawsuits arising out of social media interactions are still uncommon.

B. Comments shared by an ex-employee with friends on Facebook may breach doctor-patient confidentiality, with liability imputed to the doctor-employer.

C. Using the same platform, a doctor must promptly rebut disparaging comments on Yelp in order to protect his or her reputation.

D. An employment contract should cover matters concerning confidentiality and privacy.

E. Staff should use office computers only for work-related activities.

Answer: C. Physicians’ widespread use of social media sites such as Facebook, LinkedIn, and Twitter has spawned novel issues of professional liability. Use of such media, augmented by ubiquitous mobile devices such as smartphones and tablets, typically involves physician-to-physician and physician-to-patient communications but may also be personal in nature. Many patients have approached their doctors to "friend" them on Facebook. About a third of all doctors are said to have received such requests, and about a quarter have accepted. Other doctors are regular or occasional bloggers, offering views both medical and nonmedical.

While embracing the immense value of social media, the physician must remain mindful of the legal and ethical risks that such networking poses. State medical boards are facing increasing complaints of online professional breach, and civil lawsuits can be expected to mount.

Allegations of medical malpractice can arise if there is a showing that negligent conduct has caused an injury of some kind. Though currently uncommon, one can expect such lawsuits to proliferate. To be sure, there will be arguments about whether there exists a doctor-patient relationship from which a duty of care arises (Internal Medicine News, "Liability in the Internet Age," April 15, 2011, p. 74), but liability can come about in unexpected ways.

In a recent Massachusetts case, a pediatrician faced a malpractice suit that alleged a failure to diagnose diabetes and diabetic ketoacidosis. An offer to settle followed quickly once it was realized that the plaintiff’s attorney had discovered the defendant’s publicly blogged details about his deposition and trial preparation (American Medical News, "Internet won’t protect your secret identity," Aug. 13, 2007) Lesson: Use the blogosphere to educate, not vent; and never presume to successfully hide behind the veil of anonymity.

There are other legal issues. For example, some state employment laws forbid navigating the Internet in search of an applicant’s medical or criminal history, as such searches are permissible only after a tentative job offer has been made.

Another legal issue involves staff who use office computers or mobile devices for personal activities. This should be pointedly forbidden, as any negligence may be imputed to the doctor under the doctrine of vicarious liability. Current or former staff may unwittingly or even intentionally disclose confidential details of patients. So, as a risk-management strategy, employment contracts should address all of these matters proactively.

In addition to civil suits by an aggrieved patient and/or family, the doctor may face civil and criminal sanctions under the federal Health Insurance Portability and Accountability Act (HIPAA) and other statutes. All professional liability carriers are keen to assist their insured members in formulating office policies and procedures that govern privacy, confidentiality, and disclosure, and practitioners should take advantage of this service.

The ethics surrounding social media typically center on privacy;, for example, should a liver transplant physician use social media to ferret out a patient’s recent drinking habits?

Where there is professional misconduct arising out of Internet postings, a state medical board may launch an investigation. A preliminary study indicates that the most common violations are inappropriate patient communication of a sexual nature, Internet prescribing for unknown individuals, and online misrepresentation of credentials (JAMA 2012;307:1141-2).

In a recent illustrative article, the same authors posed 10 hypothetical scenarios to determine the need for disciplinary action (Ann. Int. Med. 2013;158:124-30). The evaluators deemed 4 of the 10 definitely worthy of investigation: misleading information about clinical outcomes, using images without consent, misrepresenting credentials, and inappropriately contacting patients. Other vignettes thought to be probably reprehensible were the depiction of alcohol intoxication, violating patient confidentiality, and using discriminatory speech. There was even concern raised regarding derogatory speech toward patients, showing alcohol use without intoxication, and providing clinical narratives without violating confidentiality.

Errant behavior may be observed early in one’s training. Most medical schools have identified instances of unprofessional student online postings such as breaching patient confidentiality, using profane or discriminatory language, depiction of intoxication, and sexually suggestive material (JAMA 2009;302:1309-15).

It may be impossible to separate personal from professional use of social media, so it has been suggested that ethical guidelines be framed in terms of appropriateness rather than boundaries (JAMA 2013;310:581-2).

Physicians must remain mindful that their online postings are searchable and permanent, notwithstanding the facade of anonymity. Venting of frustration or work stress is rarely justified in the public domain of the Internet.

One doctor, reportedly with some 3,000 followers, gained recent notoriety – and criticism – with his sarcasm, profanity, and patient-bashing through his tweets. Another was fined $500 and lost hospital privileges for posting information traceable to a specific person, despite not divulging the patient’s identity (American Medical News, "Anonymous posts: Liberating or unprofessional?" July 11, 2011).

Recognizing the growing prevalence of doctors’ participation on social media, a growing number of professional organizations – including the American Medical Association, the American College of Physicians, and the Mayo Clinic, among others – have offered guidelines in this area. Most relevantly, the Federation of State Medical Boards, a national nonprofit organization representing the 70 medical and osteopathic boards of the United States and its territories, has published a reader-friendly report entitled, "Model Policy Guidelines for the Appropriate Use of Social Media and Social Networking in Medical Practice."

Then there is the patient who posts negative comments about his or her doctor, say, on Yelp. Occasionally, these comments are derogatory, even defamatory. Such online attacks are difficult to counter, but engaging in an online war is more likely to be aggravating than salutary and adds unwanted publicity.

The preferred way is to attempt to identify the source and to request that the material be removed from the website, either by the poster or the domain host. If a simple request fails, an attorney’s letter, a subpoena, or a judge’s restraining order may be warranted. Occasionally, a defamation suit, even if time consuming and expensive, may prove necessary – and successful.

Dr. Tan is professor emeritus of medicine and former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006).

Question: Which of the following is incorrect?

A. Medical malpractice lawsuits arising out of social media interactions are still uncommon.

B. Comments shared by an ex-employee with friends on Facebook may breach doctor-patient confidentiality, with liability imputed to the doctor-employer.

C. Using the same platform, a doctor must promptly rebut disparaging comments on Yelp in order to protect his or her reputation.

D. An employment contract should cover matters concerning confidentiality and privacy.

E. Staff should use office computers only for work-related activities.

Answer: C. Physicians’ widespread use of social media sites such as Facebook, LinkedIn, and Twitter has spawned novel issues of professional liability. Use of such media, augmented by ubiquitous mobile devices such as smartphones and tablets, typically involves physician-to-physician and physician-to-patient communications but may also be personal in nature. Many patients have approached their doctors to "friend" them on Facebook. About a third of all doctors are said to have received such requests, and about a quarter have accepted. Other doctors are regular or occasional bloggers, offering views both medical and nonmedical.

While embracing the immense value of social media, the physician must remain mindful of the legal and ethical risks that such networking poses. State medical boards are facing increasing complaints of online professional breach, and civil lawsuits can be expected to mount.

Allegations of medical malpractice can arise if there is a showing that negligent conduct has caused an injury of some kind. Though currently uncommon, one can expect such lawsuits to proliferate. To be sure, there will be arguments about whether there exists a doctor-patient relationship from which a duty of care arises (Internal Medicine News, "Liability in the Internet Age," April 15, 2011, p. 74), but liability can come about in unexpected ways.

In a recent Massachusetts case, a pediatrician faced a malpractice suit that alleged a failure to diagnose diabetes and diabetic ketoacidosis. An offer to settle followed quickly once it was realized that the plaintiff’s attorney had discovered the defendant’s publicly blogged details about his deposition and trial preparation (American Medical News, "Internet won’t protect your secret identity," Aug. 13, 2007) Lesson: Use the blogosphere to educate, not vent; and never presume to successfully hide behind the veil of anonymity.

There are other legal issues. For example, some state employment laws forbid navigating the Internet in search of an applicant’s medical or criminal history, as such searches are permissible only after a tentative job offer has been made.

Another legal issue involves staff who use office computers or mobile devices for personal activities. This should be pointedly forbidden, as any negligence may be imputed to the doctor under the doctrine of vicarious liability. Current or former staff may unwittingly or even intentionally disclose confidential details of patients. So, as a risk-management strategy, employment contracts should address all of these matters proactively.

In addition to civil suits by an aggrieved patient and/or family, the doctor may face civil and criminal sanctions under the federal Health Insurance Portability and Accountability Act (HIPAA) and other statutes. All professional liability carriers are keen to assist their insured members in formulating office policies and procedures that govern privacy, confidentiality, and disclosure, and practitioners should take advantage of this service.

The ethics surrounding social media typically center on privacy;, for example, should a liver transplant physician use social media to ferret out a patient’s recent drinking habits?

Where there is professional misconduct arising out of Internet postings, a state medical board may launch an investigation. A preliminary study indicates that the most common violations are inappropriate patient communication of a sexual nature, Internet prescribing for unknown individuals, and online misrepresentation of credentials (JAMA 2012;307:1141-2).

In a recent illustrative article, the same authors posed 10 hypothetical scenarios to determine the need for disciplinary action (Ann. Int. Med. 2013;158:124-30). The evaluators deemed 4 of the 10 definitely worthy of investigation: misleading information about clinical outcomes, using images without consent, misrepresenting credentials, and inappropriately contacting patients. Other vignettes thought to be probably reprehensible were the depiction of alcohol intoxication, violating patient confidentiality, and using discriminatory speech. There was even concern raised regarding derogatory speech toward patients, showing alcohol use without intoxication, and providing clinical narratives without violating confidentiality.

Errant behavior may be observed early in one’s training. Most medical schools have identified instances of unprofessional student online postings such as breaching patient confidentiality, using profane or discriminatory language, depiction of intoxication, and sexually suggestive material (JAMA 2009;302:1309-15).

It may be impossible to separate personal from professional use of social media, so it has been suggested that ethical guidelines be framed in terms of appropriateness rather than boundaries (JAMA 2013;310:581-2).

Physicians must remain mindful that their online postings are searchable and permanent, notwithstanding the facade of anonymity. Venting of frustration or work stress is rarely justified in the public domain of the Internet.

One doctor, reportedly with some 3,000 followers, gained recent notoriety – and criticism – with his sarcasm, profanity, and patient-bashing through his tweets. Another was fined $500 and lost hospital privileges for posting information traceable to a specific person, despite not divulging the patient’s identity (American Medical News, "Anonymous posts: Liberating or unprofessional?" July 11, 2011).

Recognizing the growing prevalence of doctors’ participation on social media, a growing number of professional organizations – including the American Medical Association, the American College of Physicians, and the Mayo Clinic, among others – have offered guidelines in this area. Most relevantly, the Federation of State Medical Boards, a national nonprofit organization representing the 70 medical and osteopathic boards of the United States and its territories, has published a reader-friendly report entitled, "Model Policy Guidelines for the Appropriate Use of Social Media and Social Networking in Medical Practice."

Then there is the patient who posts negative comments about his or her doctor, say, on Yelp. Occasionally, these comments are derogatory, even defamatory. Such online attacks are difficult to counter, but engaging in an online war is more likely to be aggravating than salutary and adds unwanted publicity.

The preferred way is to attempt to identify the source and to request that the material be removed from the website, either by the poster or the domain host. If a simple request fails, an attorney’s letter, a subpoena, or a judge’s restraining order may be warranted. Occasionally, a defamation suit, even if time consuming and expensive, may prove necessary – and successful.

Dr. Tan is professor emeritus of medicine and former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006).

Question: A doctor writes a refill for 0.075-mg Synthroid, which the pharmacist substituted with a generic l-thyroxine preparation. The doctor’s prescription did not specify "do not substitute," and the pharmacist did not call for approval before switching. One year later, the patient was noted to be in atrial fibrillation with a suppressed serum TSH (thyroid-stimulating hormone) level, but there was no earlier EKG or serum TSH measurement for comparison. Which of the following is best?

A. A generic drug is identical to the branded version in chemical composition and bioavailability.

B. Thyroxine has a narrow therapeutic index, so substitution with a generic version is forbidden.

C. The doctor should have checked serum TSH every 3 months.

D. The pharmacist should have asked for physician approval before switching.

E. In a malpractice lawsuit against the doctor, the patient’s biggest legal hurdle is to prove breach and causation.

Answer: E. Although a generic drug contains the same active chemical as its brand-name analogue and is considered "bioequivalent," it is not identical as to bioavailability (see below).

For some drugs, the health care provider should exercise greater caution when using generics, as the therapeutic window is narrow and toxicity may result. Thyroxine is such an example, but use of the generic version is still entirely within the standard of care. Checking serum TSH levels in this case is a good idea, but this does not have to be done every 3 months unless there is another change in preparation or clinical signs and/or symptoms so dictate.

Under many state statutes, there is no requirement for a pharmacist to seek physician approval prior to generic substitution, unless it is plainly written into the prescription. Choice E is best in this hypothetical situation, because the tort of negligence requires a plaintiff to prove the defendant’s breach of duty as well as causation, and both elements will face defense rebuttal under the given facts.

The U.S. Food and Drug Administration is the governmental body that regulates prescription drugs. In 1984, Congress passed the Drug Price Competition and Patent Term Restoration Act, popularly known as the Hatch-Waxman Act. This allowed generic versions of drugs to proliferate, but it also extended patent life for proprietary drug manufacturers whose profits were threatened by the onslaught of the cheaper generic copycats.

In order for the FDA to ensure that generics were equivalently safe and effective without requiring the same stringent clinical trials, it relied on the concept of bioequivalence, which is a statistical interpretation of a drug’s bioavailability. The latter measures the rate and extent of a drug’s absorption, generally defined by its maximum plasma concentration (C-max) and the area under the curve (AUC).

The FDA defines bioequivalence as "the absence of a significant difference in the rate and extent to which the active ingredient or active moiety in pharmaceutical equivalents or pharmaceutical alternatives becomes available at the site of drug action when administered at the same molar dose under similar conditions in an appropriately designed study." In statistical terms, this translates into allowing a generic to vary from 80% to 125% of the original drug.

Bioequivalent drugs are tabulated in the FDA’s Orange Book, which pharmacists rely upon when switching preparations.

In the vast majority of cases, a difference in bioavailability of a generic drug ranging from 20% less to 25% more than a brand-name drug exerts no effect on therapeutic outcome. However, in drugs with a narrow therapeutic index (the FDA’s preferred term is narrow therapeutic ratio), there is only a small difference between therapeutic and toxic plasma levels, usually less than a twofold difference between the median lethal dose and the median effective dose. Generic substitution should therefore proceed, if at all, with careful dose titration and monitoring. Some examples of drugs with a narrow therapeutic index are warfarin, digoxin, phenytoin, cyclosporin, levothyroxine, lithium, carbamazepine, clonidine, minoxidil, and theophylline.

The case of Winn Dixie of Montgomery, Inc. v. Colburn (709 So.2d 1222 [Ala. 1998]) illustrates some of the issues faced by drug substitution, although this case did not involve an actual generic switch.

In Colburn, the doctor wrote a prescription for Sedapap, a non–codeine-containing compound, to treat his patient’s migraine, but the pharmacist negligently substituted it with Fiorinal #3, which contains codeine. The doctor had checked off on the line "product selection permitted," which meant a generic substitution was acceptable. The pharmacy’s computer drug profile erroneously listed Sedapap and Fiorinal #3 as being equivalent, whereas they are in fact different compounds, therapeutically equivalent but not having generic bioequivalence.

It turned out the patient had a known serious allergy to codeine and developed an anaphylactic reaction after taking the substituted drug. The court found for the plaintiff, and held both the pharmacist and the drugstore liable for damages of $130,000. There was evidence at trial that the pharmacist had called the doctor’s office, which did not give approval for the substitution!

It is estimated that three-quarters of prescriptions are filled with generic substitutes, the law and the substantial cost savings prompting formularies to offer them to an eager public. Numerous state statutes have been enacted to regulate generic substitutions, although these laws vary in important aspects, such as permissible versus mandatory (automatic) substitutions, the roles of pharmacist and prescribing doctor, and exceptions to generic drug switch.

Prescriptions drugs cost $269.2 billion in 2011, a significant portion of total national health spending of $2.7 trillion, and are expected to cost even more, according to estimates by the Centers for Medicare and Medicaid Services. Increasing use of generics should attenuate this escalating price tag. For example, a recent study of drugs in disease prevention reported that whereas blood pressure reduction with a brand-name drug would cost an estimated $53,000 per quality-adjusted life-year (QALY), this figure would drop dramatically to less than $8,000 with the use of a generic substitute (Health Aff. (Millwood) 2011;30:1351-7).

Two 2013 U.S. Supreme Court cases address additional issues surrounding generic drugs.

In Mutual Pharmaceutical Co. v. Bartlett (133 S. Ct. 2466 [2013]), the court held that a generic manufacturer cannot be held liable for inadequate warnings if its labeling faithfully tracks that of the proprietary drug – in this case, the nonsteroidal anti-inflammatory drug sulindac. Federal law forbids any deviation from the parent label, and trumps any other legal premises otherwise afforded by state tort law. It was a case that dealt with failure to adequately warn of the rare but serious complication of toxic epidermal necrolysis, which the patient developed after using a generic version of the drug.

In Federal Trade Commission v. Actavis (133 S. Ct. 2223 [2013]), the court held that “reverse payment” agreements are subject to antitrust scrutiny to ensure they are not anticompetitive. The general issue concerns vulnerable brand-name drugs about to lose their patent protection. A generic firm would place its version into the marketplace before the parent drug’s expiration date. To avoid a costly legal battle and loss of profits in the interim, the proprietary drug manufacturer would be incentivized to negotiate for a rollback of the generic drug’s release in exchange for a payout (“pay-for-delay”).

Dr. Tan is emeritus professor of medicine and former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author at [email protected].

Question: A doctor writes a refill for 0.075-mg Synthroid, which the pharmacist substituted with a generic l-thyroxine preparation. The doctor’s prescription did not specify "do not substitute," and the pharmacist did not call for approval before switching. One year later, the patient was noted to be in atrial fibrillation with a suppressed serum TSH (thyroid-stimulating hormone) level, but there was no earlier EKG or serum TSH measurement for comparison. Which of the following is best?

A. A generic drug is identical to the branded version in chemical composition and bioavailability.

B. Thyroxine has a narrow therapeutic index, so substitution with a generic version is forbidden.

C. The doctor should have checked serum TSH every 3 months.

D. The pharmacist should have asked for physician approval before switching.

E. In a malpractice lawsuit against the doctor, the patient’s biggest legal hurdle is to prove breach and causation.

Answer: E. Although a generic drug contains the same active chemical as its brand-name analogue and is considered "bioequivalent," it is not identical as to bioavailability (see below).

For some drugs, the health care provider should exercise greater caution when using generics, as the therapeutic window is narrow and toxicity may result. Thyroxine is such an example, but use of the generic version is still entirely within the standard of care. Checking serum TSH levels in this case is a good idea, but this does not have to be done every 3 months unless there is another change in preparation or clinical signs and/or symptoms so dictate.

Under many state statutes, there is no requirement for a pharmacist to seek physician approval prior to generic substitution, unless it is plainly written into the prescription. Choice E is best in this hypothetical situation, because the tort of negligence requires a plaintiff to prove the defendant’s breach of duty as well as causation, and both elements will face defense rebuttal under the given facts.

The U.S. Food and Drug Administration is the governmental body that regulates prescription drugs. In 1984, Congress passed the Drug Price Competition and Patent Term Restoration Act, popularly known as the Hatch-Waxman Act. This allowed generic versions of drugs to proliferate, but it also extended patent life for proprietary drug manufacturers whose profits were threatened by the onslaught of the cheaper generic copycats.

In order for the FDA to ensure that generics were equivalently safe and effective without requiring the same stringent clinical trials, it relied on the concept of bioequivalence, which is a statistical interpretation of a drug’s bioavailability. The latter measures the rate and extent of a drug’s absorption, generally defined by its maximum plasma concentration (C-max) and the area under the curve (AUC).

The FDA defines bioequivalence as "the absence of a significant difference in the rate and extent to which the active ingredient or active moiety in pharmaceutical equivalents or pharmaceutical alternatives becomes available at the site of drug action when administered at the same molar dose under similar conditions in an appropriately designed study." In statistical terms, this translates into allowing a generic to vary from 80% to 125% of the original drug.

Bioequivalent drugs are tabulated in the FDA’s Orange Book, which pharmacists rely upon when switching preparations.

In the vast majority of cases, a difference in bioavailability of a generic drug ranging from 20% less to 25% more than a brand-name drug exerts no effect on therapeutic outcome. However, in drugs with a narrow therapeutic index (the FDA’s preferred term is narrow therapeutic ratio), there is only a small difference between therapeutic and toxic plasma levels, usually less than a twofold difference between the median lethal dose and the median effective dose. Generic substitution should therefore proceed, if at all, with careful dose titration and monitoring. Some examples of drugs with a narrow therapeutic index are warfarin, digoxin, phenytoin, cyclosporin, levothyroxine, lithium, carbamazepine, clonidine, minoxidil, and theophylline.

The case of Winn Dixie of Montgomery, Inc. v. Colburn (709 So.2d 1222 [Ala. 1998]) illustrates some of the issues faced by drug substitution, although this case did not involve an actual generic switch.

In Colburn, the doctor wrote a prescription for Sedapap, a non–codeine-containing compound, to treat his patient’s migraine, but the pharmacist negligently substituted it with Fiorinal #3, which contains codeine. The doctor had checked off on the line "product selection permitted," which meant a generic substitution was acceptable. The pharmacy’s computer drug profile erroneously listed Sedapap and Fiorinal #3 as being equivalent, whereas they are in fact different compounds, therapeutically equivalent but not having generic bioequivalence.

It turned out the patient had a known serious allergy to codeine and developed an anaphylactic reaction after taking the substituted drug. The court found for the plaintiff, and held both the pharmacist and the drugstore liable for damages of $130,000. There was evidence at trial that the pharmacist had called the doctor’s office, which did not give approval for the substitution!

It is estimated that three-quarters of prescriptions are filled with generic substitutes, the law and the substantial cost savings prompting formularies to offer them to an eager public. Numerous state statutes have been enacted to regulate generic substitutions, although these laws vary in important aspects, such as permissible versus mandatory (automatic) substitutions, the roles of pharmacist and prescribing doctor, and exceptions to generic drug switch.

Prescriptions drugs cost $269.2 billion in 2011, a significant portion of total national health spending of $2.7 trillion, and are expected to cost even more, according to estimates by the Centers for Medicare and Medicaid Services. Increasing use of generics should attenuate this escalating price tag. For example, a recent study of drugs in disease prevention reported that whereas blood pressure reduction with a brand-name drug would cost an estimated $53,000 per quality-adjusted life-year (QALY), this figure would drop dramatically to less than $8,000 with the use of a generic substitute (Health Aff. (Millwood) 2011;30:1351-7).

Two 2013 U.S. Supreme Court cases address additional issues surrounding generic drugs.

In Mutual Pharmaceutical Co. v. Bartlett (133 S. Ct. 2466 [2013]), the court held that a generic manufacturer cannot be held liable for inadequate warnings if its labeling faithfully tracks that of the proprietary drug – in this case, the nonsteroidal anti-inflammatory drug sulindac. Federal law forbids any deviation from the parent label, and trumps any other legal premises otherwise afforded by state tort law. It was a case that dealt with failure to adequately warn of the rare but serious complication of toxic epidermal necrolysis, which the patient developed after using a generic version of the drug.

In Federal Trade Commission v. Actavis (133 S. Ct. 2223 [2013]), the court held that “reverse payment” agreements are subject to antitrust scrutiny to ensure they are not anticompetitive. The general issue concerns vulnerable brand-name drugs about to lose their patent protection. A generic firm would place its version into the marketplace before the parent drug’s expiration date. To avoid a costly legal battle and loss of profits in the interim, the proprietary drug manufacturer would be incentivized to negotiate for a rollback of the generic drug’s release in exchange for a payout (“pay-for-delay”).

Dr. Tan is emeritus professor of medicine and former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author at [email protected].

Question: A doctor writes a refill for 0.075-mg Synthroid, which the pharmacist substituted with a generic l-thyroxine preparation. The doctor’s prescription did not specify "do not substitute," and the pharmacist did not call for approval before switching. One year later, the patient was noted to be in atrial fibrillation with a suppressed serum TSH (thyroid-stimulating hormone) level, but there was no earlier EKG or serum TSH measurement for comparison. Which of the following is best?

A. A generic drug is identical to the branded version in chemical composition and bioavailability.

B. Thyroxine has a narrow therapeutic index, so substitution with a generic version is forbidden.

C. The doctor should have checked serum TSH every 3 months.

D. The pharmacist should have asked for physician approval before switching.

E. In a malpractice lawsuit against the doctor, the patient’s biggest legal hurdle is to prove breach and causation.

Answer: E. Although a generic drug contains the same active chemical as its brand-name analogue and is considered "bioequivalent," it is not identical as to bioavailability (see below).

For some drugs, the health care provider should exercise greater caution when using generics, as the therapeutic window is narrow and toxicity may result. Thyroxine is such an example, but use of the generic version is still entirely within the standard of care. Checking serum TSH levels in this case is a good idea, but this does not have to be done every 3 months unless there is another change in preparation or clinical signs and/or symptoms so dictate.

Under many state statutes, there is no requirement for a pharmacist to seek physician approval prior to generic substitution, unless it is plainly written into the prescription. Choice E is best in this hypothetical situation, because the tort of negligence requires a plaintiff to prove the defendant’s breach of duty as well as causation, and both elements will face defense rebuttal under the given facts.

The U.S. Food and Drug Administration is the governmental body that regulates prescription drugs. In 1984, Congress passed the Drug Price Competition and Patent Term Restoration Act, popularly known as the Hatch-Waxman Act. This allowed generic versions of drugs to proliferate, but it also extended patent life for proprietary drug manufacturers whose profits were threatened by the onslaught of the cheaper generic copycats.

In order for the FDA to ensure that generics were equivalently safe and effective without requiring the same stringent clinical trials, it relied on the concept of bioequivalence, which is a statistical interpretation of a drug’s bioavailability. The latter measures the rate and extent of a drug’s absorption, generally defined by its maximum plasma concentration (C-max) and the area under the curve (AUC).

The FDA defines bioequivalence as "the absence of a significant difference in the rate and extent to which the active ingredient or active moiety in pharmaceutical equivalents or pharmaceutical alternatives becomes available at the site of drug action when administered at the same molar dose under similar conditions in an appropriately designed study." In statistical terms, this translates into allowing a generic to vary from 80% to 125% of the original drug.

Bioequivalent drugs are tabulated in the FDA’s Orange Book, which pharmacists rely upon when switching preparations.

In the vast majority of cases, a difference in bioavailability of a generic drug ranging from 20% less to 25% more than a brand-name drug exerts no effect on therapeutic outcome. However, in drugs with a narrow therapeutic index (the FDA’s preferred term is narrow therapeutic ratio), there is only a small difference between therapeutic and toxic plasma levels, usually less than a twofold difference between the median lethal dose and the median effective dose. Generic substitution should therefore proceed, if at all, with careful dose titration and monitoring. Some examples of drugs with a narrow therapeutic index are warfarin, digoxin, phenytoin, cyclosporin, levothyroxine, lithium, carbamazepine, clonidine, minoxidil, and theophylline.

The case of Winn Dixie of Montgomery, Inc. v. Colburn (709 So.2d 1222 [Ala. 1998]) illustrates some of the issues faced by drug substitution, although this case did not involve an actual generic switch.

In Colburn, the doctor wrote a prescription for Sedapap, a non–codeine-containing compound, to treat his patient’s migraine, but the pharmacist negligently substituted it with Fiorinal #3, which contains codeine. The doctor had checked off on the line "product selection permitted," which meant a generic substitution was acceptable. The pharmacy’s computer drug profile erroneously listed Sedapap and Fiorinal #3 as being equivalent, whereas they are in fact different compounds, therapeutically equivalent but not having generic bioequivalence.

It turned out the patient had a known serious allergy to codeine and developed an anaphylactic reaction after taking the substituted drug. The court found for the plaintiff, and held both the pharmacist and the drugstore liable for damages of $130,000. There was evidence at trial that the pharmacist had called the doctor’s office, which did not give approval for the substitution!

It is estimated that three-quarters of prescriptions are filled with generic substitutes, the law and the substantial cost savings prompting formularies to offer them to an eager public. Numerous state statutes have been enacted to regulate generic substitutions, although these laws vary in important aspects, such as permissible versus mandatory (automatic) substitutions, the roles of pharmacist and prescribing doctor, and exceptions to generic drug switch.

Prescriptions drugs cost $269.2 billion in 2011, a significant portion of total national health spending of $2.7 trillion, and are expected to cost even more, according to estimates by the Centers for Medicare and Medicaid Services. Increasing use of generics should attenuate this escalating price tag. For example, a recent study of drugs in disease prevention reported that whereas blood pressure reduction with a brand-name drug would cost an estimated $53,000 per quality-adjusted life-year (QALY), this figure would drop dramatically to less than $8,000 with the use of a generic substitute (Health Aff. (Millwood) 2011;30:1351-7).

Two 2013 U.S. Supreme Court cases address additional issues surrounding generic drugs.

In Mutual Pharmaceutical Co. v. Bartlett (133 S. Ct. 2466 [2013]), the court held that a generic manufacturer cannot be held liable for inadequate warnings if its labeling faithfully tracks that of the proprietary drug – in this case, the nonsteroidal anti-inflammatory drug sulindac. Federal law forbids any deviation from the parent label, and trumps any other legal premises otherwise afforded by state tort law. It was a case that dealt with failure to adequately warn of the rare but serious complication of toxic epidermal necrolysis, which the patient developed after using a generic version of the drug.

In Federal Trade Commission v. Actavis (133 S. Ct. 2223 [2013]), the court held that “reverse payment” agreements are subject to antitrust scrutiny to ensure they are not anticompetitive. The general issue concerns vulnerable brand-name drugs about to lose their patent protection. A generic firm would place its version into the marketplace before the parent drug’s expiration date. To avoid a costly legal battle and loss of profits in the interim, the proprietary drug manufacturer would be incentivized to negotiate for a rollback of the generic drug’s release in exchange for a payout (“pay-for-delay”).

Dr. Tan is emeritus professor of medicine and former adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author at [email protected].